PURCHASE AND SALE AGREEMENT
BY AND AMONG
THE MANITOWOC COMPANY, INC.
SERVEND INTERNATIONAL, INC.
AND
XXXXXXX ENTERPRISES, LTD.
DATED AS OF OCTOBER 1, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS .......................................1
1.1 Accounts ..........................................1
1.2 Agreement .........................................1
1.3 Agreement Sections ................................1
1.4 Assumed Liabilities ...............................2
1.5 Xxxx of Sale ......................................3
1.6 Buildings .........................................3
1.7 Buyer .............................................3
1.8 Buyer Closing Certificate .........................3
1.9 Buyer Counsel Opinion .............................3
1.10 Closing ...........................................3
1.11 Closing Date ......................................3
1.12 Code ..............................................3
1.13 Confidentiality Agreement .........................4
1.14 Contracts .........................................4
1.15 Deed ..............................................4
1.16 Disclosure Schedule ...............................4
1.17 Distributor Contracts .............................4
1.18 Employee Benefit Plans ............................4
1.19 Employment Agreements .............................4
1.20 Equipment .........................................4
1.21 ERISA .............................................4
1.22 Escrow Agent ......................................4
1.23 Escrow Agreement ..................................5
1.24 Escrow Deposit ....................................5
1.25 Existing Contracts ................................5
1.26 Existing Indebtedness .............................5
1.27 Existing Insurance Policies .......................5
1.28 Existing Investments ..............................5
1.29 Existing Liens ....................................5
1.30 Existing Litigation ...............................5
1.31 Existing Permits ..................................5
1.32 Existing Plans ....................................5
1.33 Financial Information .............................5
1.34 Xxxxxxx ...........................................5
1.35 HSR Act ...........................................5
1.36 Indebtedness ......................................6
1.37 Intangible Assets .................................6
1.38 Inventory .........................................6
1.39 Investment ........................................6
1.40 IRB Assignment ....................................6
1.41 Knowledge of Sellers ..............................6
1.42 Law ..............................................6
1.43 Lease Assignment ..................................6
1.44 Lien ..............................................7
1.45 Liquid Assets .....................................7
1.46 Material Adverse Effect ...........................7
1.47 Noncompetition Agreements .........................7
1.48 Noncompete Compensation ...........................7
1.49 Permitted Liens ...................................7
1.50 Person ............................................7
1.51 Purchased Assets ..................................7
1.52 Purchased Contracts ...............................7
1.53 Real Property .....................................7
1.54 Records ...........................................7
1.55 Remcor Litigation .................................7
1.56 Retained Assets ...................................8
1.57 Retained Contracts ................................8
1.58 Retained Liabilities ..............................8
1.59 Seller or Sellers .................................8
1.60 Sellers Closing Certificate .......................8
1.61 Sellers Counsel Opinion ...........................8
1.62 Senior Lender .....................................9
1.63 Senior Loan .......................................9
1.64 SerVend ...........................................9
1.65 Shareholders ......................................9
ARTICLE II PURCHASE AND SALE; PURCHASE PRICE .............9
2.1 Purchase and Sale .................................9
2.2 Determination of Purchase Price ...................9
2.3 Payments .........................................10
2.4 Closing Financial Adjustments; Payment Adjustment 11
ARTICLE III OTHER AGREEMENTS ...........................12
3.1 Access and Cooperation ...........................12
3.2 Disclosure Schedule ..............................13
3.3 Duties Concerning Representations ................13
3.4 Deliveries of Information; Consultation ..........13
3.5 Acquisition Proposals ............................14
3.6 Public Announcements .............................14
3.7 Retained Liabilities .............................15
3.8 Access to Records and Employees ..................15
3.9 Referrals and Deliveries .........................16
3.10 Risk Of Loss .....................................16
3.11 Allocation of Purchase Price .....................16
3.12 Employee Matters .................................16
3.13 Effective Time of Closing ........................16
3.14 Change of Name ...................................16
3.15 Intention ........................................16
3.16 Nonassignable Contracts and Existing Permits .....17
3.17 Bulk Sales Law ...................................17
3.18 Real Property ....................................17
3.19 Noncompetition ...................................18
3.20 Termination Fee ..................................18
3.21 HSR Act ..........................................18
3.22 Ice Transport System .............................19
3.23 Distributor Contract Matters .....................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS 20
4.1 Organization; Business ...........................21
4.2 Authorization; Enforceability ....................21
4.3 No Violation or Conflict .........................22
4.4 Financial Information; Books and Records .........22
4.5 Assets ...........................................23
4.6 Contingent and Undisclosed Liabilities ...........23
4.7 Taxes ............................................23
4.8 Absence of Certain Changes .......................24
4.9 Existing Plans ...................................24
4.10 Compliance with Law ..............................26
4.11 Litigation .......................................26
4.12 Existing Contracts ...............................26
4.13 Performance of Contracts .........................28
4.14 Existing Insurance Policies ......................28
4.15 Environmental Protection .........................29
4.16 Labor Matters ....................................31
4.17 Brokers ..........................................31
4.18 Governmental Approvals ...........................32
4.19 Disclosure .......................................32
4.20 Intangible Assets ................................32
4.21 Product Matters ..................................32
4.22 Customers ........................................32
4.23 Relationships with Related Parties ...............33
4.24 Real Property ....................................33
4.25 No Other Representations or Warranties ...........33
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER ..33
5.1 Organization; Business ...........................33
5.2 Authorization; Enforceability ....................34
5.3 No Violation or Conflict .........................34
5.4 Brokers ..........................................34
5.5 Governmental Approvals ...........................34
5.6 Financial Capacity ...............................34
5.7 No Other Representations or Warranties ...........34
ARTICLE VI CONDUCT OF BUSINESS PENDING THE CLOSING ......34
6.1 Carry on in Regular Course .......................34
6.2 Use of Assets ....................................34
6.3 No Default .......................................35
6.4 Existing Insurance Policies ......................35
6.5 Employment Matters ...............................35
6.6 Contracts and Commitments ........................35
6.7 Preservation of Relationships ....................35
6.8 Compliance with Laws .............................35
6.9 Taxes ............................................35
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE BUYER ....................................35
7.1 Compliance with Agreement ........................35
7.2 Proceedings and Instruments Satisfactory .........35
7.3 No Litigation ....................................35
7.4 Representations and Warranties of the Sellers ....35
7.5 No Material Adverse Change .......................36
7.6 Deliveries at Closing ............................36
7.7 Senior Loan ......................................36
7.8 Other Documents ..................................36
7.9 Possession; Instruments of Conveyance ............36
7.10 HSR Act ..........................................36
7.11 Adjusted Cash Amount .............................36
7.12 Buyer's Bankruptcy ...............................36
ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SELLERS ............................37
8.1 Compliance with Agreement ........................37
8.2 Proceedings and Instruments Satisfactory .........37
8.3 No Litigation ....................................37
8.4 Representations and Warranties of the Buyer ......37
8.5 Deliveries at Closing ............................37
8.6 Other Documents ..................................37
8.7 Delivery of Purchase Price ......................37
8.8 HSR Act ..........................................37
8.9 Adjusted Cash Amount .............................37
8.10 Employment Agreements ............................37
ARTICLE IX INDEMNITIES ..................................38
9.1 Sellers' Indemnity ...............................38
9.2 Buyer's Indemnity ................................38
9.3 Provisions Regarding Indemnities .................39
ARTICLE X DISPUTE RESOLUTION MECHANISMS ................42
10.1 Dispute ..........................................42
10.2 Process ..........................................42
10.3 Negotiations .....................................42
10.4 Mediation ........................................42
10.5 Submission to Adjudication .......................43
10.6 General ..........................................43
ARTICLE XI TERMINATION; MISCELLANEOUS ...................44
11.1 Termination ......................................44
11.2 Rights on Termination; Waiver ....................44
11.3 Survival of Representations and Warranties .......44
11.4 Entire Agreement; Amendment ......................45
11.5 Expenses .........................................45
11.6 Governing Law ....................................45
11.7 Assignment .......................................45
11.8 Notices ..........................................45
11.9 Counterparts; Headings ...........................46
11.10 Interpretation ...................................46
11.11 Severability .....................................46
11.12 Specific Performance .............................46
11.13 No Reliance ......................................47
11.14 Exhibits and Disclosure Schedule .................47
11.15 Taxes and Fees ...................................47
11.16 Income Tax Position ..............................47
11.17 Further Assurances ...............................47
11.18 No Strict Construction ...........................47
11.19 No Materiality Acknowledgment ....................47
SIGNATURES .............................................48
EXHIBITS
1. Form of Xxxx of Sale
2. Form of Buyer Closing Certificate
3. Form of Buyer Counsel Opinion
4. Form of Employment and Noncompetition Agreements
5. Form of Escrow Agreement
6. Form of Noncompetition Agreements
7. Form of Sellers Closing Certificate
8. Form of Sellers Counsel Opinion
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of this 1st day
of October, 1997 by and among THE MANITOWOC COMPANY, INC., SERVEND
INTERNATIONAL, INC. and XXXXXXX ENTERPRISES, LTD.
RECITALS
WHEREAS, SerVend is and has been engaged in the operation of
the business of designing, manufacturing, selling and distributing ice
dispensers, beverage dispensers, ice/beverage dispensers, beverage
dispenser valves, ice machines and ancillary devices; and
WHEREAS, Xxxxxxx is and has been engaged in the operation of
the business of the ownership of certain of the Purchased Assets and
the leasing of such assets to SerVend; and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires
to purchase from Sellers, certain of the assets, rights and properties
of Sellers, upon all of the terms and subject to all of the conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the
mutual covenants, conditions and agreements set forth in this
agreement and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, it is hereby agreed
that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have
the meanings specified:
1.1 Accounts. "Accounts" shall mean all of the
accounts receivable, notes receivable and similar rights of either or
both of the Sellers, excluding any receivables from shareholders or
partners of the Sellers.
1.2 Agreement. "Agreement" shall mean this Purchase
and Sale Agreement, together with the Exhibits and the Disclosure
Schedule attached hereto, as the same may be amended from time to time
in accordance with the terms hereof.
1.3 Agreement Sections. The following terms shall
have the meanings specified in the Sections of this Agreement listed
in the following table:
TERM SECTION
---- -------
Acquisition Proposal 3.5(a)(i)
Adjusted Cash Amount 2.4(i)
Assumed Benefit Plan 4.9(d)
Buyer Indemnifiable Breach 9.3(h)(i)
Buyer Records 3.8(a)(i)
Calculation 2.4(a)
Cash Amount 2.2(b)
CERCLA 4.15(f)
Closing Financial Statements 2.4(a)
Competing Business 4.23(b)
Competing Transaction 3.5(a)(ii)
Consolidated EBITDA 2.2(c)(i)
Consolidated Net Income 2.2(c)(ii)
Consolidated Net Worth 2.2(c)(iii)
Covered Ice Transportation System 3.22(b)(i)
CPR 10.4
Disclosure Schedule Change 3.2(b)
Dispute 10.1
Effective Time of Closing 3.13
Environmental Claim 4.15(a)(i)
Environmental Hazardous Materials 4.15(a)(ii)
Environmental Laws 4.15(a)(iii)
Environmental Permits 4.15(a)(iv)
Environmental Release 4.15(a)(v)
ERISA Affiliate 4.9(b)
Ice Transportation System 3.22(b)(ii)
Independent Accountants 2.4(g)
IRBs 1.4(c)
IT Patent 3.22(b)(iii)
Lancaster Agreement 3.22(a)
Net Book Value 2.2(c)(iv)
Net Sales Price 3.22(b)(iv)
Proprietary Rights Agreements 4.16(b)
Purchase Price 2.2(a)
Replacement 10.6(g)
Request 10.4
Sellers Indemnifiable Breach 9.3(g)(i)
Sellers Records 3.8(a)(ii)
Survey 3.18(a)(i)
Title Commitments 3.18(a)(ii)
Title Company 3.18(a)(iii)
1.4 Assumed Liabilities. "Assumed Liabilities" shall
mean and be limited to:
(a) those liabilities and obligations of the Sellers
for payment and performance arising after the Effective Time of
Closing pursuant to the Purchased Contracts;
(b) the current liabilities, trade payables and
accrued expenses which: (i) have been incurred in the ordinary course
of business of Sellers; and (ii) are set forth in the Disclosure
Schedule or contained in a list delivered to Buyer at the Closing;
(c) those liabilities and obligations of the Sellers
for payment and performance after the Effective Time of Closing
pursuant to the following Indebtedness of the Sellers: (i) under the
nonrecourse promissory note, dated December 15, 1989, from Xxxxxxx to
the Indiana Employment Development Commission in the original
principal amount of $4.3 million maturing on December 1, 2004, and the
related loan agreement, trust indenture and other related mortgages,
credit and security agreements and collateral assignments; and (ii)
under the nonrecourse promissory note, dated November 27, 1991, of
Xxxxxxx to the Indiana Development Finance Authority in the original
principal amount of $3.6 million, and the related loan agreement,
trust indenture and related mortgages, credit and security agreements
and collateral assignments (the "IRBs"); and
(d) Costs, expenses and other losses arising out of or
relating to Sellers' warranty claims with respect to product sales
included in revenues reflected in the Financial Information or the
Closing Financial Statements, but only up to a maximum amount equal to
the sum of:
(i) warranty reserves included in the Closing
Financial Statements; plus
(ii) an amount equal to the aggregate value of any
and all aluminum plates delivered without charge to Buyer after the
Closing Date by Kyees Aluminum, Inc., the value of such aluminum
plates to be determined based upon Kyees Aluminum, Inc.'s quoted
prices for purchases of comparable volumes by manufacturers.
1.5 Xxxx of Sale. "Xxxx of Sale" shall mean the Xxxx
of Sale and Assumption of Liabilities in substantially the form of
Exhibit 1 attached to this Agreement.
1.6 Buildings. "Buildings" shall mean all buildings,
fixtures, structures and improvements located on the Real Property.
1.7 Buyer. "Buyer" shall mean The Manitowoc Company,
Inc., a Wisconsin corporation, and any subsidiary designated under
Section 11.7.
1.8 Buyer Closing Certificate. "Buyer Closing
Certificate" shall mean the Closing Certificate of the Buyer in
substantially the form of Exhibit 2 attached to this Agreement.
1.9 Buyer Counsel Opinion. "Buyer Counsel Opinion"
shall mean the opinion of Xxxxxxx & Xxxxx in substantially the form of
Exhibit 3 attached to this Agreement.
1.10 Closing. "Closing" shall mean the conference to be
held at 10:00 A.M., Central Time, on the Closing Date at the offices
of Xxxxxxx & Xxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
00000, or such other time and place as the parties may mutually agree
to in writing, at which the transactions contemplated by this
Agreement shall be consummated.
1.11 Closing Date. "Closing Date" shall mean: (a)
October 31, 1997; or (b) such other date as the parties may mutually
agree to in writing.
1.12 Code. "Code" shall mean the Internal Revenue Code
of 1986, as the same may be in effect from time to time.
1.13 Confidentiality Agreement. "Confidentiality
Agreement" shall mean, collectively, the letter agreements between the
Sellers, the Buyer and certain employees of the Buyer dated April 28,
1997 and April 30, 1997, and paragraph 4 of the Letter of Intent dated
as of August 24, 1997 by and among the Buyer and the Sellers.
1.14 Contracts. "Contracts" shall mean all of the
contracts, agreements, leases, relationships and commitments, written
or oral, to which either or both of the Sellers is a party or by which
either or both of the Sellers is bound, excluding agreements between
either of the Sellers and the shareholders or partners of either of
the Sellers.
1.15 Deed. "Deed" shall mean a General Warranty Deed,
in the form customarily used for the transfer of fee simple title to
real estate under Indiana law, from Xxxxxxx to the Buyer by which
Xxxxxxx conveys to the Buyer title to the Buildings and the Real
Property located at 0000 Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxx.
1.16 Disclosure Schedule. "Disclosure Schedule" shall
mean the Disclosure Schedule, dated the date of this Agreement,
delivered by the Sellers to the Buyer contemporaneously with the
execution and delivery of this Agreement and as the same may be
amended from time to time after the date of this Agreement and prior
to the Closing Date in accordance with the terms of this Agreement.
1.17 Distributor Contracts. "Distributor Contracts"
shall mean any and all Contracts of either of the Sellers whereby such
Seller appoints any Person, other than an employee of such Seller, as
a distributor, dealer, independent sales representative, independent
manufacturer's representative or other authorized reseller or sales
agent for such Seller's products.
1.18 Employee Benefit Plans. "Employee Benefit Plans"
shall mean any pension plan, profit sharing plan, bonus plan,
incentive compensation plan, stock ownership plan, stock purchase
plan, stock option plan, stock appreciation plan, employee benefit
plan, employee benefit policy, retirement plan, fringe benefit
program, insurance plan, severance plan, disability plan, health care
plan, sick leave plan, death benefit plan, or any other plan or
program to provide retirement income, fringe benefits or other
benefits to former or current employees of either Seller.
1.19 Employment Agreements. "Employment Agreements"
shall mean the Employment and Noncompetition Agreements, in
substantially the form of Exhibit 4 attached to this Agreement, to be
offered by Buyer (or any subsidiary of Buyer designated pursuant to
Section 11.7 of this Agreement) to certain key management personnel of
the Sellers, as described in Section 3.12(d) of this Agreement.
1.20 Equipment. "Equipment" shall mean all machinery,
toolings, equipment, furniture, fixtures, motor vehicles, furnishings,
parts, tools, dies, jigs, patterns, machine tools, office equipment,
computers, leasehold improvements, construction in progress and other
items of tangible personal property which are owned by either or both
of the Sellers and used by or useful to either or both of the Sellers
in the operation of their respective businesses.
1.21 ERISA. "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as the same may be in effect from time to
time.
1.22 Escrow Agent. "Escrow Agent" shall mean a bank,
trust company or other financial institution mutually selected by the
Sellers and the Buyer to serve as escrow agent under the Escrow
Agreement.
1.23 Escrow Agreement. "Escrow Agreement" shall mean
the Escrow Agreement among the Buyer, the Sellers and the Escrow Agent
in substantially the form of Exhibit 5 attached hereto.
1.24 Escrow Deposit. "Escrow Deposit" shall mean
Twelve Million Four Hundred Thousand and 00/100 Dollars ($12,400,000).
1.25 Existing Contracts. "Existing Contracts" shall
mean those Contracts which are listed and briefly described on the
Disclosure Schedule in response to Section 4.12 of this Agreement.
1.26 Existing Indebtedness. "Existing Indebtedness"
shall mean all of the Indebtedness of the Sellers, all of which is
listed and briefly described on the Disclosure Schedule.
1.27 Existing Insurance Policies. "Existing Insurance
Policies" shall mean all of the insurance policies currently in effect
and owned by either or both of the Sellers, all of which are listed
and briefly described on the Disclosure Schedule.
1.28 Existing Investments. "Existing Investments"
shall mean all Investments of either or both of the Sellers, all of
which are listed and briefly described on the Disclosure Schedule.
1.29 Existing Liens. "Existing Liens" shall mean all
Liens affecting any of the Purchased Assets, all of which are listed
and briefly described on the Disclosure Schedule.
1.30 Existing Litigation. "Existing Litigation" shall
mean those pending or threatened suits, audit inquiries, charges,
workers compensation claims, claims for bodily injury, product
warranty claims, litigation, arbitrations, proceedings, governmental
investigations, citations and actions of any kind, which are listed
and briefly described on the Disclosure Schedule.
1.31 Existing Permits. "Existing Permits" shall mean
all permits, licenses, approvals, qualifications, permissions and
governmental authorizations (including Environmental Permits) obtained
or held by either Seller with respect to the conduct of its business
as presently conducted, all of which are listed and briefly described
on the Disclosure Schedule.
1.32 Existing Plans. "Existing Plans" shall mean all
Employee Benefit Plans of either or both of the Sellers, all of which
are listed and briefly described on the Disclosure Schedule.
1.33 Financial Information. "Financial Information"
shall mean: (a) the audited consolidated financial statements of the
Sellers for the fiscal years ended December 31, 1994, December 31,
1995 and December 31, 1996; (b) the unaudited consolidated financial
statements of the Sellers for the interim period ended July 31, 1997;
(c) the books and records of account of each of the Sellers; and (d)
all other financial information relating to the financial condition of
either or both of the Sellers delivered or to be delivered by the
Sellers to the Buyer.
1.34 Xxxxxxx. "Xxxxxxx" shall mean Xxxxxxx
Enterprises, Ltd., a Kentucky limited partnership.
1.35 HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended.
1.36 Indebtedness. "Indebtedness" shall mean all
liabilities or obligations of the relevant Person, whether primary or
secondary or absolute or contingent: (a) for borrowed money; or (b)
evidenced by notes, bonds, debentures or similar instruments; or (c)
secured by Liens on any assets of that Person.
1.37 Intangible Assets. "Intangible Assets" shall mean
all of the intangible assets owned or used by either or both of the
Sellers in their respective businesses, including but not limited to
goodwill, trade secrets, know-how, data, plans, drawings, blue prints,
operating methods and procedures, proprietary information, processes,
technical knowledge, formulae, advertising formats, logos, United
States and foreign patents, patent applications, trade names
(including the "SerVend" name), trademarks, service marks, trademark
registrations, service xxxx registrations, copyrights, copyright
applications, franchise rights, customer lists, telephone numbers and
related rights. The Disclosure Schedule lists and briefly describes
or otherwise identifies all patents, patent applications, registered
trademarks, trademark applications, registered service marks and
service xxxx applications owned or held by either or both of the
Sellers, as well as any licenses pursuant to which either Seller
authorizes the use of any of the foregoing by another Person or
pursuant to which either or both of the Sellers use a patent,
trademark or service xxxx of another Person.
1.38 Inventory. "Inventory" shall mean all inventories
of either or both of the Sellers, including raw materials, store
inventories, work in process and finished goods, wherever located.
1.39 Investment. "Investment" by any Person shall
mean: (a) any transfer or delivery of cash, stock or other property
or value by that Person in exchange for Indebtedness, stock or any
other security of another Person; (b) any loan, advance or capital
contribution to or in any other Person; (c) any guaranty, creation or
assumption of any liability or obligation of any other Person; and (d)
any investments in any fixed property or fixed assets other than fixed
properties and fixed assets acquired in the ordinary course of
business of the relevant Person.
1.40 IRB Assignment. "IRB Assignment" shall mean the
assignment to and assumption by the Buyer of all of the Sellers'
rights and obligations with respect to the IRBs as of the Effective
Time of Closing.
1.41 Knowledge of Sellers. "Knowledge of Sellers"
shall mean any actual knowledge of any officer, director, shareholder
or partner of either Seller or the knowledge which any such Person
should have by virtue of information provided or directed to such
Person in Records of either of the Sellers.
1.42 Law. "Law" shall mean any federal, state, local
or other law, rule, regulation or governmental requirement of any
kind, and the rules, regulations and orders promulgated thereunder.
1.43 Lease Assignment. "Lease Assignment" shall mean
the Assignment of Lease Agreement and Landlord Consent whereby SerVend
assigns to the Buyer, and the landlord consents to such assignment,
the Lease Agreement, dated August 1, 1994, by and between B. Xxxxxxxx
Xxxx, individually and as Trustee of the X. X. Xxxx Trust Fund, and C.
Xxxxxxx Xxxx, as Trustee under the same trust (together acting as
Landlord), and SerVend as tenant, with respect to the facility located
at 0000 XX 00xx Xxxxxx, Xxxxxxxx, Xxxxxx, as such lease agreement was
assigned by Flomatic Manufacturing, Inc. to SerVend on August 31,
1994, together with the related landlord's estoppel certificate.
1.44 Lien. "Lien" shall mean, with respect to any
asset: (a) any mortgage, pledge, lien, charge, claim, restriction,
condition, easement, covenant, lease, encroachment, title defect
imposition, security interest or other encumbrance of any kind; and
(b) the interest of a vendor or lessor under any conditional sale
agreement, financing lease or other title retention agreement relating
to such asset.
1.45 Liquid Assets. "Liquid Assets" shall mean all
cash, down payments, checks, rights to refunds, security deposits,
prepaid expenses, advance payments, bank accounts and cash equivalents
of either or both of the Sellers.
1.46 Material Adverse Effect. "Material Adverse
Effect" shall mean a material adverse effect on the business, assets,
properties, results of operations, financial condition or prospects of
the Sellers, taken as a whole.
1.47 Noncompetition Agreements. "Noncompetition
Agreements" shall mean the Noncompetition Agreements, in substantially
the form attached as Exhibit 6 to this Agreement, to be entered into
between the Buyer (or any subsidiary of the Buyer designated pursuant
to Section 11.7 of this Agreement) and each of the Shareholders of
SerVend, as described in Section 3.19(c) of this Agreement.
1.48 Noncompete Compensation. "Noncompete
Compensation" shall mean the cash compensation to be paid to each
Shareholder at closing, pursuant to such Shareholder's Noncompetition
Agreement, as consideration for the Shareholder's covenant not to
compete set forth in such Noncompetition Agreement.
1.49 Permitted Liens. "Permitted Liens" shall mean
those of the Existing Liens which are expressly noted as Permitted
Liens on the Disclosure Schedule.
1.50 Person. "Person" shall mean and include a natural
person, corporation, trust, partnership, limited liability company,
limited liability partnership, association, unincorporated
organization, governmental entity, agency or branch or department
thereof, or any other legal entity.
1.51 Purchased Assets. "Purchased Assets" shall mean
all assets of either or both of the Sellers used in the conduct of
their respective businesses (except for the Retained Assets)
including, but not limited to the Accounts, the Buildings, the
Purchased Contracts, the Equipment, the Existing Insurance Policies,
the Existing Investments, the Existing Permits, the Intangible Assets,
the Inventory, the Liquid Assets, the Real Property and the Records.
1.52 Purchased Contracts. "Purchased Contracts" shall
mean all of the Contracts except for the Retained Contracts.
1.53 Real Property. "Real Property" shall mean the
parcels of real property identified by the street addresses and legal
descriptions set forth in the Disclosure Schedule which are owned or
leased by either or both of the Sellers.
1.54 Records. "Records" shall mean all books,
documents and records owned or used by either or both of the Sellers
in the conduct of their respective businesses, including personnel,
medical and accounting records, correspondence, governmentally
required records, engineering data, designs, drawings, blue prints,
plans, specifications, lists, customer lists, computer media, software
and software documentation, sales literature, catalogues, promotional
items, advertising materials and other written materials.
1.55 Remcor Litigation. "Remcor Litigation" shall mean
that former litigation styled as Remcor Products Company v. SerVend
International, Inc., and Xxxxxxx, Ltd. in the United States District
Court, Southern District of Indiana, New Albany Division, No. NA 96-
174-7 B/G.
1.56 Retained Assets. "Retained Assets" shall mean the
following assets of Sellers as of the Closing Date which, although
they may relate to Sellers' businesses, are not Purchased Assets and
are to be retained by Sellers:
(a) SerVend's franchise to be a corporation, articles
of incorporation, bylaws, minute books, stock books, corporate seals
and other corporate records having to do with the corporate
organization and capitalization of SerVend;
(b) Xxxxxxx'x Limited Partnership Agreement and other
partnership records having to do with the partnership organization and
capitalization of Xxxxxxx;
(c) Sellers' canceled checks, bank statements and tax
returns;
(d) the approximately 30 acres of vacant and
unimproved land owned by the Sellers, the legal description of which
is set forth on the Disclosure Schedule;
(e) Sellers' rights to purchase tickets to the
Kentucky Derby and season tickets to the University of Louisville
basketball and football games, together with all rights in and to, and
all other rights associated with, any seats or boxes relating to such
tickets including a season box to Xxxxxxxxx Downs spring and fall
meets;
(f) the automobiles described in the Disclosure
Schedule;
(g) the life insurance policies on the lives of
certain shareholders of SerVend described on the Disclosure Schedule;
(h) the Retained Contracts; and
(i) claims relating to any of the Retained Assets or
counterclaims relating to any of the Retained Liabilities.
1.57 Retained Contracts. "Retained Contracts" shall
mean the Distributor Contracts and any of the Existing Contracts
identified on the Disclosure Schedule as being retained by the Sellers
and not being assumed by the Buyer.
1.58 Retained Liabilities. "Retained Liabilities"
shall mean all obligations and liabilities of Sellers or otherwise
arising out of the operation of Sellers' businesses or the ownership
of the Purchased Assets prior to the Effective Time of Closing which
are not Assumed Liabilities, and any obligations and liabilities of
Sellers arising out of or relating to the ownership or operation of
any of the Retained Assets or the Retained Contracts from and after
the Effective Time of Closing.
1.59 Seller or Sellers. "Seller" or "Sellers" shall
mean, individually or collectively, Xxxxxxx or SerVend, or both.
1.60 Sellers Closing Certificate. "Sellers Closing
Certificate" shall mean the Closing Certificate of the Sellers in
substantially the form of Exhibit 7 attached to this Agreement.
1.61 Sellers Counsel Opinion. "Sellers Counsel
Opinion" shall mean the opinion of Xxxx Xxxxxxxx Xxxxxx Xxx & Vice in
substantially the form of Exhibit 8 attached to this Agreement.
1.62 Senior Lender. "Senior Lender" shall mean
NationsBank, N.A., Charlotte, North Carolina, or any other commercial
bank, financial institution or other Person from whom the Buyer
obtains the Senior Loan.
1.63 Senior Loan. "Senior Loan" shall mean the Senior
Credit Facilities in the principal amount of Two Hundred Five Million
Eight Hundred Seventy-Seven Thousand Six Hundred Fifty-Four and 00/100
Dollars ($205,877,654.00) from the Senior Lender to the Buyer.
1.64 SerVend. "SerVend" shall mean SerVend
International, Inc., a Kentucky corporation.
1.65 Shareholders. "Shareholders" shall mean Xxxxxx X.
Xxxxxxx, Xxxx Xxx Xxxxxxx (in her individual capacity and as trustee
of the trust created by the Xxxxxx X. Xxxxxxx Qualified Annuity Trust
Agreement, dated May 6, 1997), Xxxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx,
Xxxx X. Xxxxxxx, and Xxxxxx X. Xxxxxxx, who together own all of the
issued and outstanding shares of capital stock of SerVend and all of
the outstanding limited partnership interests of Xxxxxxx.
ARTICLE II
PURCHASE AND SALE; PURCHASE PRICE
2.1 Purchase and Sale. At the Closing, and upon all
of the terms and subject to all of the conditions of this Agreement:
(a) Purchased Assets. Sellers shall sell, assign,
convey and deliver to Buyer, and Buyer shall purchase and accept from
the Sellers, the Purchased Assets.
(b) Cash Amount. Buyer shall pay the Cash Amount to
the Sellers, subject to the adjustment as provided in Section 2.4 of
this Agreement.
(c) Assumed Liabilities. Buyer shall assume and agree
to pay and perform in accordance with and be bound by all of the
covenants, terms and obligations under the Assumed Liabilities.
(d) Existing Indebtedness. Buyer shall prepay the
Existing Indebtedness in full, except for the IRBs.
2.2 Determination of Purchase Price.
(a) Purchase Price. The "Purchase Price" for the
Purchased Assets shall be the sum of: (i) the amount determined in
accordance with Section 2.2(b) of this Agreement (the "Cash Amount");
plus (ii) the amount of the Assumed Liabilities; plus (iii) the amount
of the Existing Indebtedness other than the IRBs.
(b) Cash Amount. The "Cash Amount" shall be that
amount equal to:
(i) Sixty-One Million Seven Hundred Seventy
Thousand and 00/100 Dollars ($61,770,000.00); minus
(ii) the amount, if any, by which the Consolidated
Net Worth is less than Eight Million Two Hundred Seventy-Five Thousand
and 00/100 Dollars ($8,275,000.00); minus
(iii) twelve (12) multiplied by the amount, if
any, by which the Consolidated EBITDA is less than Five Million Six
Hundred Thousand and 00/100 Dollars ($5,600,000.00).
(c) Definitions. As used in this Agreement:
(i) "Consolidated EBITDA" shall mean:
(A) the Consolidated Net Income; plus
(B) the actual deductions taken on the books
and records of the Sellers in the calculation of the Consolidated Net
Income for amortization of intangibles, depreciation of fixed assets,
interest on Indebtedness of the Sellers and federal and state income
taxes of the Sellers; plus
(C) any amounts deducted in the calculation
of Consolidated Net Income for the settlement payments in the Remcor
Litigation; plus
(D) any amounts deducted in the calculation
of Consolidated Net Income for expenses related to this Agreement and
the transactions described in this Agreement.
(ii) "Consolidated Net Income" shall mean the
consolidated net after tax income of the Sellers for the period from
and after January 1, 1997 through and including the earlier of the
Effective Time of Closing or the close of business on October 31,
1997, determined in accordance with generally accepted accounting
principles as consistently applied by the Sellers. For purposes of
calculation of the Purchase Price, including the Closing Financial
Statements, the Calculation, and the payment adjustment procedures
under Sections 2.2 and 2.4 of this Agreement, any adjustments to
earnings shall be applied to the period or periods in which the
underlying liability(ies) or revenue(s), as the case may be, first
arose. If the appropriate period or periods for any such adjustment
to earnings cannot be determined, then such adjustment shall be
allocated uniformly over fiscal years 1995, 1996 and 1997, so that
five-eighteenths (5/18) of such adjustment is applied to the period to
which this Section 2.2(c)(ii) relates.
(iii) "Consolidated Net Worth" shall mean, in
each case calculated as of the Effective Time of Closing using
generally accepted accounting principles as consistently applied by
the Sellers:
(A) the Net Book Value of the Purchased
Assets; minus
(B) the Net Book Value of the Assumed
Liabilities; minus
(C) the amount of the Existing Indebtedness
to be prepaid by the Buyer pursuant to this Agreement.
(iv) "Net Book Value" shall mean for any Purchased
Asset the amount equal to the net book value of that Purchased Asset
at the Effective Time of Closing, and for any Assumed Liability, shall
mean the book amount of such liability.
2.3 Payments. At the Closing, the Buyer shall:
(a) deliver the Escrow Deposit to the Escrow Agent to
hold, invest and deliver in accordance with the terms of the Escrow
Agreement; and
(b) prepay the Existing Indebtedness other than the
IRBs; and
(c) deliver to the Sellers by a single wire transfer
of immediately available funds to an account designated by the Sellers
an amount equal to Forty-Nine Million Three Hundred Seventy Thousand
and 00/100 Dollars ($49,370,000.00); and
(d) pay Buyers' closing costs, to include any sales
and transfer taxes or fees, title insurance premiums, and title or
recording fees; and
(e) pay to each Shareholder, by wire transfer of
immediately available funds to an account designated by such
Shareholder, the amount of such Shareholder's Noncompete Compensation.
2.4 Closing Financial Adjustments; Payment Adjustment.
(a) Closing Financial Adjustments. As promptly as
practicable following the Closing Date, the Sellers shall prepare:
(i) audited consolidated financial statements of the Sellers for the
period of January 1, 1997 through and including the Effective Time of
Closing (the "Closing Financial Statements"); and (ii) a calculation
of the Consolidated EBITDA, the Consolidated Net Worth, the Purchase
Price and the Cash Payment (the "Calculation"). The Closing Financial
Statements shall be as of the Effective Time of Closing and shall be
prepared in accordance with generally accepted accounting principles
as consistently applied by the Sellers and in accordance with the
provisions of this Agreement and the Calculation shall be prepared in
accordance with the terms of this Agreement. The Sellers shall
deliver to the Buyer, as promptly as practicable after the Closing
Date and in any event within ninety (90) calendar days after the
Closing Date, the Closing Financial Statements and the Calculation.
The Buyer shall be responsible for the costs of the auditors
associated with the audit.
(b) Discussions. The Buyer and the Sellers shall,
throughout the entire period from the date of this Agreement to the
date of the deliveries required by Section 2.4(a) of this Agreement,
meet and discuss any and all financial and business matters relating
to such process and the preparation of the Closing Financial
Statements and the Calculation. If the Sellers and the Buyer cannot
resolve any disagreements among themselves, then the procedures
specified in Sections 2.4(c), (d), (e), (f), (g) and (h) of this
Agreement shall be used.
(c) Buyer's Duties. As soon as is reasonably
practicable following the Buyer's receipt of the materials described
in Section 2.4(a) of this Agreement and in any event within thirty
(30) calendar days after receipt of such deliveries, the Buyer shall
comply with either Section 2.4(d) or Section 2.4(f) of this Agreement.
(d) No Objection by Buyer. If the Buyer has no
objection to the Closing Financial Statements or the Calculation, the
amount paid by the Buyer set forth in Section 2.3 of this Agreement
shall be adjusted in the manner set forth in Section 2.4(i) of this
Agreement.
(e) Bases for Objection. The only bases upon which
the Buyer may dispute any matter in the Closing Financial Statements
or the Calculation are: (i) the inaccuracy of such matter, whether
factually or numerically; or (ii) the Closing Financial Statements or
the Calculation, or both, are not prepared as provided in this
Agreement.
(f) Objection by Buyer. If the Buyer objects to any
matter in the Closing Financial Statements or the Calculation in
accordance with Section 2.4(e) of this Agreement, the Buyer shall,
within thirty (30) calendar days after receipt of the deliveries
described in Section 2.4(a) of this Agreement: (i) notify the Sellers
in writing of such objection; and (ii) deliver to the Sellers the
calculation by the Buyer of the amounts of the Purchase Price and the
Cash Amount. If the Sellers agree with the Buyer's objection and the
Buyer's calculations, the amount paid by the Buyer pursuant to Section
2.3 of this Agreement shall be adjusted in the manner set forth in
Section 2.4(i) of this Agreement. If the Sellers do not agree with
the objection of the Buyer or with the Buyer's calculations, the
Sellers shall, within thirty (30) calendar days after receipt of
Buyer's objection, notify the Buyer in writing of such fact.
(g) Independent Accountants. The disagreement between
the Sellers and the Buyer may then be submitted by either party for
resolution to Xxxxxx Xxxxxxxx LLP, or to such other firm of
independent certified public accountants of national standing with an
office in Milwaukee, Wisconsin and which is not affiliated with the
Buyer or either Seller and which firm is agreed to in writing by the
Sellers and the Buyer (the "Independent Accountants"). Each of the
parties shall furnish, at its own expense, the Independent Accountants
and the other parties with such documents and information as the
Independent Accountants may request. Each party may also furnish to
the Independent Accountants such other information and documents as it
deems relevant with appropriate copies or notification being given to
the other party. The Independent Accountants may, at their
discretion, conduct a conference concerning the disagreement with the
Sellers and the Buyer, at which conference each party shall have the
right to present additional documents, materials and other information
and to have present its advisors, counsel and accountants. In
connection with such process, there shall be no hearings, oral
examinations, testimony, depositions, discovery or other similar
proceedings conducted by any party or by the Independent Accountants.
The Independent Accountants shall determine the proportion of their
fees and expenses to be paid by each of the Sellers and the Buyer,
based primarily on the degree to which the Independent Accountants
have accepted the positions of the respective parties.
(h) Decision. The Independent Accountants shall
promptly render their decision on the question in writing and finalize
the Closing Financial Statements and the calculation of the Purchase
Price and the Cash Amount. The decision of the Independent
Accountants shall be final and binding on the parties.
(i) Adjustments. In the event that the Cash Amount as
finally determined pursuant to this Section 2.4 of this Agreement
("Adjusted Cash Amount") is less than Sixty-Two Million Four Hundred
Thousand and 00/100 Dollars ($62,400,000.00), the difference shall be
paid to Buyer from the Escrow Deposit as set forth in the Escrow
Agreement; provided, however, if the difference between the Cash
Amount and the Adjusted Cash Amount is greater than Eight Million Four
Hundred Thousand and 00/100 Dollars ($8,400,000.00), then only such
amount of the difference shall be distributed to Buyer from the Escrow
Deposit and the balance of the difference shall be paid to Buyer by
the Sellers.
(j) Access to Buyer's Records. During the period
contemplated by this Section 2.4 of this Agreement, Sellers shall have
complete access to the relevant Records of the Buyer during normal
business hours for purposes of the matters covered by said Section
2.4.
ARTICLE III
OTHER AGREEMENTS
3.1 Access and Cooperation.
(a) Access. Upon reasonable notice, the Sellers shall
afford to the officers, employees, accountants, legal counsel and
other representatives of the Buyer full access to all of the
properties, books, contracts, commitments and records of the Sellers.
Buyer shall not unreasonably interfere with, and shall respect the
privacy of, Sellers' employees.
(b) Confidentiality Agreement. The Buyer and the
Sellers agree that the provisions of the Confidentiality Agreement
shall remain in full force and effect; provided that, at the Effective
Time of Closing, the Confidentiality Agreement shall be deemed to have
terminated without further action by the parties.
3.2 Disclosure Schedule.
(a) Disclosure Schedule. Contemporaneously with the
execution and delivery of this Agreement, the Sellers are delivering
to the Buyer the Disclosure Schedule, which is accompanied by a
certificate signed by the President of SerVend and the General Partner
of Xxxxxxx, stating that the Disclosure Schedule is being delivered
pursuant to this Agreement and is the Disclosure Schedule referred to
in this Agreement. The Disclosure Schedule is deemed to constitute an
integral part of this Agreement and to modify the representations,
warranties, covenants or agreements of the Sellers contained in this
Agreement to the extent that such representations, warranties,
covenants or agreements expressly refer to the Disclosure Schedule.
(b) Updates. Prior to the Closing Date, the Sellers
shall update the Disclosure Schedule on a weekly basis by written
notice to the Buyer to reflect any matters (i) which exist on the date
of this Agreement but which were not previously included, and (ii)
which have occurred from and after the date of this Agreement which,
if existing on the date of this Agreement, would have been required to
be described in the Disclosure Schedule. If requested by the Buyer,
the Sellers shall meet and discuss with the Buyer any change in the
Disclosure Schedule made by the Sellers which is, in the reasonable
judgment of the Buyer, has a Material Adverse Effect (a "Disclosure
Schedule Change"). If the parties cannot resolve any differences
regarding a Disclosure Schedule Change within a reasonable period of
time (not to exceed ten (10) calendar days) the Buyer may terminate
this Agreement.
3.3 Duties Concerning Representations. Each party to
this Agreement shall: (a) to the extent within its control, use
reasonable efforts to cause all of its representations and warranties
contained in Articles IV and V of this Agreement to be true and
correct in all respects on the Closing Date with the same force and
effect as if such representations and warranties had been made on and
as of the Closing Date; (b) use reasonable efforts, not to include
payments to third parties, to obtain any third party consents or
approvals required by this Agreement; and (c) use reasonable efforts
to cause all of the conditions precedent set forth in Articles VII and
VIII of this Agreement to be satisfied.
3.4 Deliveries of Information; Consultation. From
time to time prior to the Closing Date:
(a) Deliveries by the Sellers. The Sellers shall
furnish promptly to the Buyer: (i) the monthly consolidated financial
statements of the Sellers (as prepared by the Sellers in accordance
with their normal accounting procedures) promptly after such financial
statements are available; (ii) a summary of any action taken by either
Seller's shareholders or Board of Directors, or any committee thereof;
and (iii) all other information concerning the operations, properties
and personnel of the Sellers as the Buyer may reasonably request.
(b) Consultation. The Sellers shall confer and
consult with representatives of the Buyer on a regular and frequent
basis to report on operational matters of the Sellers and the general
status of ongoing business operations of the Sellers.
(c) Acquisitions. The Sellers shall notify the Buyer
immediately: (i) of any Acquisition Proposal; (ii) of any inquiry
received from any Person concerning an Acquisition Proposal; (iii) of
any request from any Person for confidential information concerning
the business of either or both of the Sellers; and (iv) if any Person
seeks to initiate or continue any discussions or negotiations with
either or both of the Sellers concerning a Competing Transaction or an
Acquisition Proposal.
3.5 Acquisition Proposals.
(a) Definitions. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Acquisition Proposal" shall mean any inquiry,
proposal or offer relating to a Competing Transaction; and
(ii) "Competing Transaction" shall mean any or all of
the following, other than the transactions described in this Agreement
or any other transaction between the Buyer and the Sellers: (A) a
merger, share exchange, consolidation, reorganization, combination or
similar transaction which involves or affects either or both of the
Sellers; or (B) a sale, transfer or other disposition of all or
substantially all of the assets of either or both of the Sellers in a
single transaction or a series of related transactions; or (C) a sale,
exchange offer or tender offer for, or acquisition by any Person or
group of Persons of beneficial ownership of a controlling interest in
either or both of the Sellers in a single transaction or series of
related transactions; or (D) a public announcement of a proposal,
plan, intention or agreement to do any of the foregoing.
(b) Acquisition Proposals. The Sellers shall not, nor
shall they permit their respective shareholders, partners, officers,
directors, employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained or
engaged by that party) to: (i) initiate, solicit, or encourage any
inquiries concerning an Acquisition Proposal or a Competing
Transaction; (ii) engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with,
any Person relating to an Acquisition Proposal or a Competing
Transaction; or (iii) facilitate any effort or attempt to make or
implement an Acquisition Proposal; or (iv) consummate, agree or commit
to consummate an Acquisition Proposal or a Competing Transaction.
The Sellers shall immediately cease or cause to be terminated any
existing activities, discussions or negotiations with any Person with
respect to any of the foregoing activities.
(c) Fees. In consideration of the substantial
expenditures of time, effort and expense undertaken and to be
undertaken by the Buyer in connection with the consummation of the
transactions contemplated by this Agreement, and notwithstanding any
provision to the contrary in this Agreement, Sellers shall pay to
Buyer the amount of $2,000,000 upon a termination of this Agreement
for any reason if such termination is a result of Sellers' termination
in connection with the Closing of any Competing Transaction, or is
followed by Sellers entering into, executing, agreeing to or closing
any Competing Transaction on or prior to April 30, 1998. In such
event, and upon payment of such amount by the Sellers to the Buyer,
the Sellers shall have no further liability or obligation of any kind
to the Buyer.
3.6 Public Announcements. Subject to each party's
disclosure obligations imposed by Law, the Buyer and the Sellers will
cooperate and consult with each other in the development and
distribution of all news releases and other public information
disclosures with respect to this Agreement or any of the transactions
contemplated by this Agreement and shall not issue any press release
or public statement without the approval of the other parties, which
approval shall not be unreasonably withheld. Sellers acknowledge
that, as a public company, Buyer is subject to legally required
disclosures, which may require Buyer to make one or more public
announcements regarding this Agreement on very short notice. Under
such circumstances, Buyer will exercise reasonable efforts to comply
with the foregoing provisions of this Section 3.6 of this Agreement,
but Buyer has the right to proceed with any public announcement
without Sellers' prior approval if Buyer is unable to obtain Sellers'
approval at a time when Buyer, on the advice of counsel, has made a
good faith determination that it is necessary to issue such public
statement.
3.7 Retained Liabilities. Except as otherwise
specifically provided for in this Agreement, Buyer is not assuming any
liabilities or obligations of Sellers, and Sellers shall pay, perform
in accordance with, be bound by and satisfy all of the Retained
Liabilities in the ordinary course of business.
3.8 Access to Records and Employees.
(a) Definitions. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Buyer Records" shall mean all books, documents
and records which are part of the Purchased Assets and relate to the
period prior to the Closing Date, including personnel records,
accounting records, correspondence, manuals, engineering data,
designs, drawings, blueprints, plans, specifications, lists, customer
lists, computer media, software and software documentation, sales
literature, catalogues, promotional items, advertising materials and
other written materials.
(ii) "Sellers Records" shall mean all books, documents
and records owned by the Sellers but which are not included in the
Purchased Assets.
(b) Buyer Records. Until January 1, 2003, the Buyer
agrees to permit the Sellers, and their attorneys, accountants, agents
and designees, such access to, and right to copy, such Buyer Records
as the Sellers may deem reasonably necessary or reasonably desirable.
Any such examination and copying shall be at the expense of the
Sellers, shall be performed at the place where the Buyer Records are
regularly maintained by the Buyer and shall not unreasonably interfere
with the normal business activities of the Buyer. The Buyer shall
notify the Sellers if at any time prior to January 1, 2003 it intends
to destroy any or all of the Buyer Records and the Sellers shall have
the right to review and remove the Buyer Records at the Sellers'
expense.
(c) Seller Records. Until January 1, 2003, the
Sellers agree to permit the Buyer, and its attorneys, accountants,
agents and designees, such access to, and right to copy, such Sellers
Records as the Buyer may deem reasonably necessary or reasonably
desirable. Any such examination and copying shall be at the expense
of the Buyer, shall be performed at the place where the Sellers
Records are regularly maintained by the Sellers and shall not
unreasonably interfere with the normal business activities of the
Sellers. The Sellers shall notify the Buyer if at any time prior to
January 1, 2003 either Seller intends to destroy any or all of the
Sellers Records, and the Buyer shall have the right to review and
remove any of the Sellers Records at the Buyer's expense.
(d) Buyer's Employees. Until January 1, 2003, the
Buyer shall afford the Sellers access to those employees of the Buyer
who were employees of either Seller prior to the Closing Date. Any
such access shall be: (i) at the request of the Sellers; (ii)
scheduled and provided on a reasonable basis taking into account the
business requirements of the Buyer; and (iii) for any proper business
purpose of the Sellers. The Sellers shall pay all reasonable out-of-
pocket expenses, excluding wages and salaries, incurred by the Buyer
in connection with this Section 3.8(d) of this Agreement.
3.9 Referrals and Deliveries. After the Closing, the
Sellers shall immediately: (a) deliver to the Buyer, in the form
received with the addition of any required endorsements by the
Sellers, any cash, checks, or other payments received by the Sellers
which belong to the Buyer; (b) refer to the Buyer any and all
inquiries from customers or suppliers of either Seller or other
Persons relating to the business of the Sellers; and (c) deliver to
the Buyer all purchase orders received by the Buyer relating to the
businesses of the Sellers.
3.10 Risk Of Loss. All risk of loss and rights to
insurance proceeds with respect to the Purchased Assets shall remain
with the Sellers until the Effective Time of Closing and, assuming the
occurrence of the Closing, shall pass to the Buyer effective as of the
Effective Time of Closing.
3.11 Allocation of Purchase Price. The Purchase Price
shall be allocated among the classes of Purchased Assets in accordance
with Section 1060 of the Code and substantially as set forth in the
Disclosure Schedule. The Buyer and the Sellers shall cooperate with
each other in the preparation and filing of IRS Form 8594 in
connection with such allocation. Neither the Buyer nor the Sellers
shall take any position (whether in audits, tax returns or otherwise)
which is inconsistent with such allocation of the Purchase Price
unless required to do so by applicable Law.
3.12 Employee Matters.
(a) Offer. The Buyer shall consider each of the
employees of the Sellers for employment following the Effective Time
of Closing, and the individual appointed by Buyer as the President of
the business and operations being acquired by Buyer from the Sellers
shall have the sole discretion to make all hiring decisions with
respect to such employees, in accordance with Buyer's standards and
policies.
(b) Termination by Sellers. Immediately prior to the
Effective Time of Closing, the Sellers shall terminate the employment
of any and all employees of the Sellers who will receive an offer of
employment from the Buyer.
(c) Employee Benefit Plans. The Buyer will, to the
extent permitted by applicable Law and the terms of the Existing Plans
of the Sellers, assume and continue the Existing Plans with respect to
the employees of the Sellers employed by the Buyer after the Effective
Time of Closing. In due course, the Buyer, in its sole discretion,
will determine whether to maintain and continue such Existing Plans or
substitute some or all of such Existing Plans with other plans
sponsored and maintained from time to time by the Buyer.
(d) Employment Agreements. Buyer shall offer an
Employment Agreement to each of the twelve employees of the Sellers
listed on Appendix 1 attached to the Form of Employment and
Noncompetition Agreement attached as Exhibit 4 to this Agreement.
3.13 Effective Time of Closing. The parties agree that
the transactions described in this Agreement shall be deemed effective
as of 11:59 P.M., Central Time, on the Closing Date (the "Effective
Time of Closing").
3.14 Change of Name. On the Closing Date, SerVend
shall deliver such documentation for filing by the Buyer as is
necessary to change SerVend's corporate name to a name that does not
include the word "SerVend" in any fashion.
3.15 Intention. It is the intention of the parties
that the Purchased Assets shall include all of the tangible and
intangible assets owned by the Sellers and used in or necessary for
the operation of the respective businesses of the Sellers on the date
of this Agreement and as of the Closing Date excepting therefrom only
the Retained Assets.
3.16 Nonassignable Contracts and Existing Permits. To
the extent that the assignment of any Purchased Contract or Existing
Permit to the Buyer pursuant to this Agreement shall require the
consent of any other Person, this Agreement shall not constitute a
contract to assign the same if an attempted assignment would
constitute a breach of such Purchased Contract or Existing Permit.
The Sellers shall use their best efforts (without paying money) and
the Buyer shall cooperate where appropriate to obtain any consent
necessary to any such assignment. If any such consent is not
obtained, the Sellers shall cooperate with the Buyer in any reasonable
arrangement requested by the Buyer designed to provide for the Buyer
the benefit, monetary or otherwise, of any such Purchased Contract or
Existing Permit including enforcement of any and all rights of the
Sellers against the other party thereto arising out of breach or
cancellation by such other party or otherwise.
3.17 Bulk Sales Law. The parties agree that any
applicable Bulk Sales Law need not be complied with in connection with
the transactions contemplated by this Agreement, but may be complied
with in the discretion of the relevant party.
3.18 Real Property.
(a) Definitions. As used in this Agreement, the
following terms shall have the meanings specified:
(i) "Survey" shall mean a certified survey map
prepared by a registered land surveyor selected by the Buyer which
shall be sufficient to enable the Title Company to eliminate all
survey exceptions relating to the surveyed Real Property other than
Permitted Liens and shall include those matters required to be
included on a land survey in accordance with the minimum standards and
detail requirements for land title surveys as jointly established and
adopted by the American Land Title Association and the American
Congress of Surveying and Mapping according to the 1992 Standards for
an Urban Survey and showing the following items (whether covered by
the minimum standard and detail requirements specified above or not):
(A) all courses and distances of the boundaries and the legal
description of the surveyed Real Property ; (B) the location and
dimensions of all improvements and their relation to lot lines and set
back and building line requirements (whether such requirements are
imposed by Law or Lien); (C) the location of all rights of way, water
courses and easements of record, whether above or (if possible) under
the ground; (D) any encroachments by the buildings, structures or
other improvements located on the surveyed Real Property over lot
lines, building lines, easements, roadways, rights of way or other
real property interests in the adjoining lands; and (E) any
encroachments by buildings, structures or other improvements located
on adjoining properties onto the surveyed Real Property.
(ii) "Title Commitments" shall mean binding
commitments issued by the Title Company for the issuance of 1970 Form
B American Land Title Association owners form of title insurance
policies with extended coverage, insuring the title in each parcel of
the Real Property to be in accordance with the terms of this
Agreement, subject only to Permitted Liens, and including all
endorsements requested by Buyer.
(iii) "Title Company" shall mean Chicago Title
Insurance Company or such other title insurance company which may be
selected by the Buyer.
(b) Exceptions. In the event Buyer elects to obtain
Title Commitments or Surveys with respect to the Real Estate, then, at
least ten (10) calendar days prior to the Closing Date, the Buyer
shall: (i) cause the Title Company to deliver to the Sellers the Title
Commitments, together with copies of all recorded documents affecting
the Real Property; and (ii) deliver to the Sellers a Survey of each
parcel of the Real Property. If the Title Commitments or the Surveys
disclose the existence of a Lien which is not a Permitted Lien, the
Sellers shall, at their election, take any of the following actions:
(i) remove or cure such Lien on or prior to the Closing Date; (ii) pay
to the Buyer an amount agreed to by the Buyer and the Sellers as fair
compensation for the fact that such Lien exists; or (iii) enable the
Title Company to expressly insure over such Lien by an endorsement
satisfactory in form and substance to the Buyer and its counsel.
(c) Expenses. The Buyer shall be responsible for the
costs, expenses and premiums for the Surveys, the Title Commitments
and the title insurance policies issued pursuant to the Title
Commitments.
3.19 Noncompetition.
(a) Noncompetition of Sellers. The Sellers jointly
and severally agree that, if the transactions contemplated by this
Agreement are consummated, they will not, directly or indirectly for
the period of five (5) years from and after the Closing Date, in the
United States of America and such other countries in which either
Seller has sold products in the two (2) year period immediately
preceding the Closing Date, own, manage, operate, control, participate
in, consult with, or be connected in any manner with, the operation,
ownership, management or control of any enterprise engaged in the
business of, or any business similar to, designing, manufacturing,
selling and distributing any ice dispenser, beverage dispenser,
ice/beverage dispenser, beverage dispenser valves or ice machines or
any other ice or beverage related equipment whether refrigerated by
ice or other means.
(b) Exception. Notwithstanding the provisions of
Section 3.19(a) of this Agreement, the Sellers shall not be prohibited
from owning or acquiring securities of any corporation or other
business enterprise that may be engaged in activities described in the
foregoing, provided that: (i) no affiliate of such Sellers is an
officer, director or employee of, or consultant to, such corporation
or business enterprise; (ii) such securities are held by such Seller
for investment purposes only and represent less than five percent (5%)
of the total equity interests of such corporation or business
enterprise; and (iii) such securities are listed on a national
securities exchange or are regularly quoted in the over the counter
market by one or more members of the National Association of
Securities Dealers.
(c) Noncompetition of Shareholders. At the Closing,
each of the Shareholders will enter into a Noncompetition Agreement
with Buyer.
3.20 Termination Fee. In consideration of the
substantial expenditures of time, effort and expense undertaken and to
be undertaken by the Sellers in connection with the transactions
described in this Agreement, and notwithstanding anything to the
contrary in this Agreement, the Buyer shall pay to the Sellers the
amount of $1,000,000 upon a termination of this Agreement by the Buyer
other than a termination pursuant to Section 11.1 of this Agreement.
In such event, and upon payment of such amount by the Buyer to the
Sellers, the Buyer shall have no further liability or obligation of
any kind to the Sellers, except for their obligations under the
Confidentiality Agreement.
3.21 HSR Act. The Buyer and the Sellers shall each:
(a) file within five (5) business days after the execution of this
Agreement with the Antitrust Division of the United States Department
of Justice and the Federal Trade Commission the pre-merger
notifications required by the HSR Act from such party, requesting
early termination of the waiting periods thereunder; (b) promptly
respond to inquiries to such party from such Persons in connection
with such filings; and (c) cooperate fully with one another in the
preparation of such filings and responses.
3.22 Ice Transport System.
(a) Pursuant to this Agreement, Buyer is acquiring an
Existing Contract dated as of September 26, 1997 between SerVend and
Xxxxxxx X. Xxxxxxxxx entitled Ice Transportation Assignment Agreement
(the "Lancaster IT Agreement"), and Buyer is assuming SerVend's
obligations under the Lancaster IT Agreement.
(b) For purposes of this Section 3.22 the following
terms shall have the meanings specified:
(i) "Covered Ice Transportation System" shall
mean an Ice Transportation System with respect to which the Buyer is
obligated to pay to Xx. Xxxxxxx X. Xxxxxxxxx a fee under the terms of
the Lancaster IT Agreement.
(ii) "Ice Transportation System" shall mean
devices and processes for transferring ice, including all components
that facilitate and control the transfer of ice, such as augers,
pumps, bulk dispensers/bins, ice flow regulators, sizers, agitators,
diverters, controllers, piping and insulation, but not including
cubers or other icemaking equipment from which ice may be carried or
the binds or dispensers to which ice may be carried, by the Ice
Transportation System.
(iii) "IT Patent" shall mean any patent or
other similar intellectual property protection applied for in or
issued by any country for any invention relating to Covered Ice
Transportation Systems.
(iv) "Net Sales Price" shall mean Buyer's invoice
price for Covered Ice Transportation Systems, FOB factory, after
deduction of regular trade and quantity discounts, but before
deduction of any other items, including but not limited to freight
allowances, cash discounts and agents' commissions. Where Covered Ice
Transportation Systems are not sold but are otherwise placed in
service, the "Net Sales Price" of such products for the purpose of
computing fees shall be the selling price at which products of similar
kind and quality, sold in similar quantities, are currently being
offered for sale by Buyer or, if not offered for sale by Buyer, are
offered for sale by other manufacturers. In the event any Covered Ice
Transportation System shall be sold for purposes of resale either (1)
to a corporation, firm or association which, or an individual who,
owns a controlling interest in Buyer by stock ownership or otherwise
or (2) to a corporation, firm or association in which Buyer owns a
controlling interest by stock ownership or otherwise, the fees to be
paid in respect to such Covered Ice Transportation System shall be
computed upon the net selling price at which the purchaser for resale
sell such Covered Ice Transportation System, rather than upon the Net
Sales of Buyer.
(c) Buyer shall pay to Sellers a fee equal to five
percent (5%) of the Net Sales Price of Covered Ice Transportation
Systems as they may be developed, improved or modified for
commercialization by Buyer; provided that the fee shall be paid: (1)
only to the extent that, after payment of the fee and payment of
royalties to Lancaster under the Lancaster IT Agreement, Buyer's gross
margin shall equal thirty percent (30%), as calculated annually by the
Buyer's audit firm in accordance with GAAP, and (2) only when the
commercial Ice Transportation System is economic-value-added ("EVA")
positive as calculated by Buyer.
(d) The fee as set forth in Section 3.22(c) shall be
paid for on sales of Covered Ice Transportation Systems consummated
during the fifteen-year period following the Closing Date.
(e) The fee payments under this Section 3.22 shall be
made within fifty (50) days after the end of each calendar year to a
single Person as designated from time to time in writing by Sellers.
Buyer shall at the same time make a report to Sellers showing the fee
due to Sellers and setting forth all necessary information and fee
calculations, including the Net Sales Price base and the determination
of any fee percentage less than five percent (5%). This report shall
accompany the payment of the annual fee.
(f) At the option of Sellers, the fee reported and
paid to them by Buyer shall be subject to verification annually by a
firm of independent certified public accountants designated by
Sellers. The cost of verification, whether by inspection,
examination, audit or otherwise, shall be borne by the Sellers unless
such inspection, examination, audit or other verification reflects
under reporting of five percent (5%) or more in the number of units
reported or underpayment of five percent (5%) or more in the fee
accrued or paid. In the event of such discrepancy, all costs of the
verification shall be paid by Buyer. Sellers shall have access to all
information gathered by the accountants with the exception of customer
identifications, and all such information shall be confidential and
shall be used solely for the purposes of verifying the fee to be paid
under this section.
(h) Buyer will provide and expend in calendar 1998
research and development funds for Covered Ice Transportation Systems
totaling $291,000. Thereafter, the provision of further research and
development funds and any decision to commercialize a Covered Ice
Transportation System shall be at the sole discretion of Buyer.
Nothing in this Agreement shall be deemed to require Buyer to pursue
commercialization of Covered Ice Transportation Systems or, if it
elects to proceed with such commercialization, to engage in any
marketing, advertising or distribution plans or programs, or to make
any minimum number of sales of Covered Ice Transportation Systems.
Sellers acknowledge and agree that Buyer is free at any time after
December 31, 1998 to discontinue any such efforts and pursuits as it
determines in its sole discretion, and its decision to do so shall not
be the basis for any claim by Sellers.
3.23 Distributor Contract Matters. The parties
acknowledge and understand that, in connection with the termination of
the Distributor Contracts that will occur as a result of the
transactions contemplated by this Agreement, Sellers may incur certain
costs and expenses including, without limitation, repurchases of
inventory and other payments that the Sellers may be required to make
to the other parties to such Distributor Contracts. Notwithstanding
that the Distributor Contracts constitute Retained Assets and
obligations arising thereunder from and after the Effective Time of
Closing constitute Retained Liabilities, it is the intention of the
parties that the Buyer will pay such costs and expenses without regard
to the provisions of Article IX. Accordingly, the Buyer agrees that,
promptly upon receipt of notice from the Sellers of the nature and
amount of any such costs and expenses reasonably incurred by Sellers,
Buyer promptly will reimburse Sellers for the amount thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby jointly and severally represents and
warrants to the Buyer that:
4.1 Organization; Business.
(a) Organization; Qualification.
(i) SerVend is a corporation duly and validly
organized and existing and in current status under the Laws of the
Commonwealth of Kentucky. The Disclosure Schedule includes a list of
all Persons who are holders of capital stock, options, warrants or
other equity interests in SerVend.
(ii) Xxxxxxx is a limited partnership duly and
validly organized and existing and in current status under the laws of
the Commonwealth of Kentucky. The Disclosure Schedule includes a list
of all Persons who are partners or holders of any other equity
interests in Xxxxxxx.
(iii) Each of the Sellers is duly qualified to
do business as a foreign corporation or partnership and is in good
standing in all jurisdictions in which either the ownership or use of
the Purchased Assets or the operation of the business of that Seller
requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect. The Disclosure
Schedule contains a list of all states and foreign jurisdictions where
each of the Sellers is so qualified.
(b) Power. Each of the Sellers has the full corporate
or partnership power and authority and all franchises, permits,
licenses, approvals, authorizations, registrations, grants and orders
necessary to carry on the business of that Seller as it is now
conducted, to own, lease and operate the Purchased Assets and to
perform all of its obligations under the Purchased Contracts.
(c) Properties. Each of the Sellers owns or has the
right to use all property, real or personal, tangible or intangible,
which is necessary for the operation of its respective business as
currently conducted.
4.2 Authorization; Enforceability.
(a) SerVend. The execution, delivery and performance
of this Agreement and all of the documents and instruments required by
this Agreement to be executed and delivered by SerVend are within the
corporate power of SerVend and have been duly authorized by all
necessary corporate action by SerVend.
(b) Xxxxxxx. The execution, delivery and performance
of this Agreement and all of the documents and instruments required by
this Agreement to be executed and delivered by Xxxxxxx are within the
partnership power of Xxxxxxx and have been duly authorized by all
necessary partnership action by Xxxxxxx.
(c) Enforceability. This Agreement is, and the other
documents and instruments required by this Agreement to be executed
and delivered by the Sellers will be, when executed and delivered by
the Sellers, the legal, valid and binding obligations of each of the
Sellers, enforceable against each of the Sellers in accordance with
their respective terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws generally affecting the rights of creditors
and subject to general equity principles.
4.3 No Violation or Conflict.
(a) No Violation. The execution, delivery and
performance of this Agreement by the Sellers do not and will not,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with or violate any Law,
the Articles of Incorporation or Bylaws of SerVend or the Limited
Partnership Agreement of Xxxxxxx;
(ii) give any governmental body or any other
Person the right to challenge the consummation of the transactions
contemplated by this Agreement or to exercise any remedy or obtain any
relief under any Law or any judgment, order or decree to which either
of the Sellers or any of the Purchased Assets may be subject;
(iii) contravene, conflict with, violate or
breach any provision, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify, any Contract;
(iv) result in the imposition or creation of any
Lien upon or with respect to the Purchased Assets; or
(v) except as disclosed on the Disclosure
Schedule, disrupt or impair any business relationship with any
supplier, customer, distributor, sales representative or employee of
either Seller so as to cause a Material Adverse Effect.
(b) Consents. Except as set forth in the Disclosure
Schedule and the IRBs, neither Seller is or will be required to give
any notice or obtain any consent or approval from any Person in
connection with the execution and delivery of this Agreement or the
consummation or performance of the transactions contemplated hereby,
except where the failure to do so would have a Material Adverse
Effect.
4.4 Financial Information; Books and Records.
(a) Financial Statements. The Sellers have delivered
to Buyer all of the Financial Information. The financial statements
(and notes where applicable) which are part of the Financial
Information are accurate and complete in all material respects and
fairly present the consolidated financial condition and the
consolidated results of operations of the Sellers as at the respective
dates of and for the periods referred to therein, all in accordance
with generally accepted accounting principles applied on a consistent
basis throughout all periods, subject, in the case of the interim
financial statements, to: (i) normal year-end and audit adjustments
and any other adjustments described therein (the effect of which will
not, on a consolidated basis, be materially adverse); and (ii) the
absence of footnotes thereto (that, if presented would not differ
materially from those included in the most recent audited balance
sheet).
(b) Corporate and Partnership Books. The books of
account, minute books, and other records of the Sellers, all of which
have been made available to Buyer, are complete and correct in all
material respects and have been maintained in accordance with sound
business practices.
(c) Accounting Books. The accounting books and
records of the Sellers: (i) are correct and complete in all material
respects; (ii) are maintained in a manner consistent with past
practice; (iii) have recorded therein all the properties and assets
and liabilities of the Sellers; and (iv) reflect all transactions
entered into by the Sellers or to which either or both of the Sellers
is a party.
(d) Bank Accounts. The Disclosure Schedule sets forth
the name of each bank in which either or both of the Sellers has an
account or safe deposit box or with which either or both of the
Sellers has an arrangement for safekeeping.
4.5 Assets.
(a) Title. The Sellers own good and valid title to
all of the Purchased Assets, free and clear of any and all Liens
except: (a) the Existing Liens on the date of this Agreement; and (b)
the Permitted Liens on the Closing Date. Sellers are in sole
possession of, and have sole control of, the Purchased Assets. All of
the tangible Purchased Assets are physically located on the Real
Property. Except as set forth on the Disclosure Schedule, none of the
Purchased Assets is leased, rented, licensed or otherwise not owned by
Sellers.
(b) All Assets. The Purchased Assets include all
assets of the Sellers which are used in or necessary for the operation
of the businesses of the Sellers as presently conducted, excepting
therefrom only the Retained Assets.
(c) Buildings and Equipment. The Buildings and
Equipment, taken as a whole, are in good operating condition and
repair and are adequate for the uses for which they are being put,
normal wear and tear excepted. No such asset is in need of
maintenance or repair, except for routine maintenance and repairs that
are not material in nature or cost.
(d) Inventory. Except to the extent of specific
reserves for obsolete or slow moving Inventory reflected in the
Financial Information, the Inventory is current, merchantable, usable
and salable at normal prices and discounts in the ordinary course of
business, and is at a level consistent with the normal practices of
the respective businesses of the Sellers.
(e) Investments. Except for the Existing Investments,
neither Seller owns, or has any right or obligation to acquire, any
Investment.
(f) Accounts. All of the Accounts have arisen from
bona fide transactions by the Sellers in the ordinary course of
business and, to the extent not previously collected, are fully
collectible in the ordinary course of business in accordance with
their terms, except to the extent of specific reserves for
uncollectible Accounts reflected in the Financial Information. None
of the Accounts is or will be at the Effective Time of Closing subject
to any counterclaim or set off.
4.6 Contingent and Undisclosed Liabilities. Except
pursuant to the deposit and collection of checks in the ordinary
course of business, neither Seller has guaranteed or become a surety
for or is otherwise contingently liable for the obligations of any
other Person. Neither Seller has any liabilities, obligations or
indebtedness of any nature (whether known or unknown and whether
absolute, accrued, contingent or otherwise), other than those which:
(a) are reflected, reserved against or disclosed in the financial
statements which are a part of the Financial Information or in the
Disclosure Schedule; or (b) arose or were incurred in the ordinary
course of business since July 31, 1997 and which are consistent in
amount and character with past practices and are not required to be
disclosed pursuant to this Agreement or the Disclosure Schedule.
4.7 Taxes.
(a) Tax Returns. Sellers have timely and properly
filed all federal, state, local and foreign tax returns (including but
not limited to income, franchise, sales, payroll, employee withholding
and social security and unemployment) which were required to be filed.
Sellers have delivered to Buyer copies of all such income tax and
other material tax returns which have been filed since December 31,
1993. All such tax returns are true, complete and correct.
(b) Payment of Taxes. Sellers have paid or made
provision for all federal, state, local, foreign or other governmental
charges (except for any sales tax obligation arising from the
transactions described in this Agreement) that may or could follow the
Purchased Assets or otherwise affect Buyer after the consummation of
the transactions contemplated in this Agreement.
(c) Tax Liens. There are no tax Liens upon any of the
Purchased Assets, except for Liens for current taxes not yet due and
payable.
(d) Withholding. Each Seller has properly withheld
and timely paid all withholding and employment taxes which it was
required to withhold and pay relating to salaries, compensation and
other amounts heretofore paid to its employees or other Persons, and
all Forms W-2 and 1099 required to be filed with respect thereto have
been timely and properly filed.
4.8 Absence of Certain Changes. Since July 31, 1997,
and except as disclosed in the Disclosure Schedule, there has not been
any:
(a) change in the financial condition, properties,
liabilities, business, results of operations or prospects of either or
both of the Sellers, such as would have a Material Adverse Effect;
(b) damage, destruction or loss which has had a
Material Adverse Effect (whether or not covered by insurance); or
(c) transactions by either or both of the Sellers
outside the ordinary course of business, except for the transactions
contemplated by this Agreement.
4.9 Existing Plans.
(a) Existing Plans. The Disclosure Schedule contains
a complete and accurate list of all Existing Plans. Except for the
Existing Plans, neither Seller maintains, nor is it bound by, any
Employee Benefit Plan. All of the Existing Plans are and at all times
have been in compliance (or have been brought into compliance) in all
respects with all applicable Laws including ERISA. Based upon the
September 16, 1996 letter from the Internal Revenue Service included
in the Disclosure Schedule, all of the Existing Plans which are
intended to meet the requirements of Section 401(a) of the Code have
been determined by the Internal Revenue Service to be "qualified"
within the meaning of the Code, and there are no facts which would
adversely affect the qualified status of any of the Existing Plans.
(b) ERISA. There is no accumulated funding
deficiency, within the meaning of ERISA or the Code, in connection
with the Existing Plans or any other benefit plan sponsored by either
or both of the Sellers or any affiliate of either of the Sellers, as
determined under Sections 414(b), (c), (m) or (o) of the Code (herein
referred to as an "ERISA Affiliate"), and no reportable event, as
defined in ERISA, has occurred in connection with such Plans. The
Existing Plans have not, nor has any trustee or administrator of the
Existing Plans, engaged in any prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Code. Neither Seller nor
any ERISA Affiliate is contributing to, nor has either Seller or any
ERISA Affiliate ever contributed to, any multi-employer plan, as
defined in ERISA.
(c) Terminated Plans. The Disclosure Schedule
describes any Employee Benefits Plan that has been terminated and the
status of such Plans, the distribution or retention of monies with
respect to said Plans, and any further obligations of the Plans or
either Seller in connection therewith. Any past Employee Benefit Plan
that has been terminated was done so in full compliance with all
applicable Laws. There is no basis for further liability or
obligation of Sellers pursuant to any past Employee Benefit Plan
sponsored by either Seller or an ERISA Affiliate.
(d) Assumed Benefit Plans. Each Existing Plan to be
assumed by Buyer in connection with the acquisition (hereinafter
referred to as an "Assumed Benefit Plan") is identified as such on the
Disclosure Schedule. With respect to each Assumed Benefit Plan:
(i) The funds available under each Assumed
Benefit Plan which is intended to be a funded plan equal or exceed the
amounts required to be paid, or which would be required to be paid, if
such Assumed Benefit Plan were terminated as of the Closing Date.
(ii) Any Assumed Benefit Plan that is intended to
qualify under Section 401(a) of the Code meets in all material
respects all requirements for qualification under Section 401(a) of
the Code and the regulations thereunder, and Seller has provided Buyer
with a copy of the most recent favorable determination letter issued
by the Internal Revenue Service concerning the Plan's qualification.
Each such Assumed Benefit Plan has been administered in accordance
with its terms and the applicable provisions of ERISA and the Code and
the regulations thereunder and no matter exists which would adversely
affect the qualified tax-exempt status of such Assumed Benefit Plan
and any related trust.
(iii) Except as disclosed on the Disclosure
Schedule, with respect to each Assumed Benefit Plan, all reports and
information relating to each such Assumed Benefit Plan required to be
filed with any governmental entity have been accurately and timely
filed; all reports and information relating to each such Assumed
Benefit Plan required to be disclosed or provided to participants or
their beneficiaries have been timely disclosed or provided; each trust
related to any Assumed Benefit Plan which is a voluntary employee
beneficiary association pursuant to Section 501(c)(9) of the Code has
received a favorable determination letter from the Internal Revenue
Service with respect to its tax-exempt status, and nothing has
occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; there exist no
restrictions on Buyer's right to terminate or decrease prospectively
the level of benefits under any Assumed Benefit Plan after the Closing
Date without liability to any employee or former employee of either
Seller; to the Knowledge of Sellers, no event has occurred or
circumstance exists that could result in a material increase in
premium costs of any Assumed Benefit Plan that is insured or a
material increase in benefit costs of any Assumed Benefit Plan that is
self-insured; to the Knowledge of Sellers, no fiduciary of an Assumed
Benefit Plan has committed a breach of any responsibility or
obligation imposed upon fiduciaries under Title I of ERISA with
respect to such Assumed Benefit Plan.
(iv) There has been delivered to Buyer, with
respect to each Assumed Benefit Plan the following: a copy of the
annual report (if required under ERISA) with respect to each such
Assumed Benefit Plan for the last three years (including all schedules
and attachments); a copy of the summary plan description, together
with each summary of material modifications, required under ERISA with
respect to such Assumed Benefit Plan; all material employee
communications relating to such Assumed Benefit Plan; a true and
complete copy of such Assumed Benefit Plan; all trust agreements,
insurance contracts, accounts or other documents which establish the
funding vehicle for any Assumed Benefit Plan and the latest financial
statements thereof; any investment management agreements,
administrative services contracts, or other agreements and documents
relating to the ongoing administration and investment of any Assumed
Benefit Plan.
(v) With respect to each such Assumed Benefit
Plan for which an annual report has been filed and delivered to Buyer,
no material adverse change has occurred with respect to the matters
covered by the latest such annual report since the date thereof.
(vi) There are no actions, suits, proceedings,
investigations or hearings pending with respect to any Assumed Benefit
Plan, or to the Sellers' Knowledge any claims (other than claims for
benefits arising in the ordinary course of an Assumed Benefit Plan)
threatened against or with respect to any Assumed Benefit Plan or any
fiduciary or assets thereof, and, to the Knowledge of Sellers, there
are no facts which could reasonably give rise to any such actions,
suits, proceedings, investigations, hearings or claims.
4.10 Compliance with Law.
(a) Operations. The present and past operation of the
businesses of the Sellers and the Purchased Assets is and has been in
compliance with all Existing Permits and Laws. To the Knowledge of
Sellers, neither Seller is currently the subject of an inspection or
inquiry regarding violations or alleged violations of any Law by any
federal, state, local or other governmental agency.
(b) Events. No event has occurred or circumstance
exists that (with or without notice or lapse of time): (i) may
constitute or result in a violation by either or both of the Sellers
of, or a failure on the part of either or both of the Sellers to
comply with, any Existing Permit or Law; or (ii) may give rise to any
obligation on the part of either or both of the Sellers to undertake,
or to bear all or any portion of the cost of, any remedial action of
any nature.
(c) Existing Permits. The Disclosure Schedule
contains a complete and accurate list of each Existing Permit. Each
Existing Permit is valid and in full force and effect, and such
Existing Permits collectively constitute all of the permits, licenses,
approvals, qualifications, permissions or authorizations necessary to
permit the Sellers to lawfully conduct and operate their respective
businesses in the manner currently conducted and to permit the Sellers
to own and use the Purchased Assets in the manner in which they
currently own and use such assets.
4.11 Litigation. Except for the Existing Litigation:
(a) there is no litigation, arbitration, proceeding, governmental
investigation, citation or action of any kind pending or, to the
Knowledge of Sellers, proposed or threatened, against or relating to
the Sellers or the Purchased Assets, nor is there any basis known to
the Sellers for any such action; and (b) there are no actions, suits
or proceedings pending or, to the Knowledge of Sellers, proposed or
threatened, against the Sellers by any Person which question the
legality, validity or propriety of the transactions contemplated by
this Agreement. Sellers have delivered to Buyer copies of all
pleadings, correspondence and other documents relating to the Existing
Litigation.
4.12 Existing Contracts. The Disclosure Schedule
contains a complete and accurate list of, and Sellers have delivered
to Buyer true and complete copies of, the Existing Contracts. The
Existing Contracts are the only Contracts to which either Seller is a
party or by which either Seller is bound which:
(a) involves the performance of services or delivery
of goods or materials by either Seller of an amount or value in excess
of $25,000 in any 12-month period;
(b) involves the performance of services or delivery
of goods or materials to either Seller of an amount or value in excess
of $25,000 in any 12-month period;
(c) was not entered into in the ordinary course of
business and involves expenditures or receipts of either Seller in
excess of $25,000 in any 12-month period;
(d) is a lease, rental or occupancy agreement,
license, installment and conditional sale agreement, or other Contract
affecting the ownership of, leasing of, title to, use of, or any
leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of less than
$10,000 and with terms of less than one year);
(e) is a licensing agreement or other Contract with
respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
nondisclosure of any of the Intangible Assets;
(f) is a joint venture, partnership or other Contract
(however named) involving a sharing of profits, losses, costs, or
liabilities by either Seller with any other Person;
(g) contains covenants that in any way purport to
restrict the business activity of either Seller or limit the freedom
of either Seller to engage in any line of business or to compete with
any Person or otherwise restricts the right of either Seller to use or
disclose any information in its possession;
(h) provides for payments to or by any Person based on
sales, purchases, or profits, other than direct payments for goods;
(i) is a power of attorney that is currently effective
and outstanding;
(j) was entered into other than in the ordinary course
of business and contains or provides for an express undertaking by
either Seller to be responsible for consequential damages;
(k) is a Contract for capital expenditures in excess
of $10,000;
(l) is a warranty, guaranty or other similar
undertaking with respect to contractual performance extended by either
Seller other than in the ordinary course of business;
(m) is a union labor contract;
(n) is a management, consulting, employment, personal
service, agency or other contract or contracts providing for
employment or rendition of services and which: (i) is in writing; or
(ii) creates other than an at will employment relationship; or (iii)
provides for any commission, bonus, profit sharing, incentive,
retirement, consulting or additional compensation; or (iv) contains
any termination or severance pay obligations or liabilities;
(o) is an agreement for the storage, transportation,
treatment or disposal of any hazardous waste or hazardous byproduct;
(p) is an agreement with either Seller or any
subsidiary or affiliate thereof, or with any director, officer,
employee or shareholder of either Seller or any subsidiary or
affiliate thereof;
(q) is an agreement with any agent, dealer,
distributor, sales representative or manufacturer's representative for
any of the products of either Seller;
(r) is any other agreement which: (A) involves an
amount in excess of $10,000; or (B) is not in the ordinary course of
business;
(s) is an agreement, note or other evidence of any
Indebtedness of either Seller; and
(t) is any other written or unwritten agreement that
is material, either in amount or significance, to the ongoing
operation of either Seller.
4.13 Performance of Contracts. Each Purchased Contract
is in full force and effect and is valid and enforceable in accordance
with its terms. Except as set forth on the Disclosure Schedule:
(a) each Seller is in material compliance with all
applicable terms and requirements of each Purchased Contract under
which that Seller has or had any obligation or liability or by which
that Seller or any of the Purchased Assets is or was bound;
(b) each other Person that has or had any obligation
or liability under any Purchased Contract under which either Seller
has or had any rights is, to the Knowledge of Sellers, in compliance
with all applicable terms and requirements of such Purchased Contract;
(c) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict
with, or result in a material violation or breach of, or give either
Seller or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to
cancel, terminate, or modify, any Purchased Contract;
(d) neither Seller has given to or received from any
other Person, at any time since July 31, 1997, any notice or other
communication (whether oral or written) regarding any actual or
alleged violation or breach of, or default under, any Purchased
Contract; and
(e) there are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material amounts
paid or payable to either Seller under current or completed Purchased
Contracts with any Person other than in the ordinary course of
business and, to the Knowledge of Sellers, no such Person has made
written demand for such renegotiation.
4.14 Existing Insurance Policies.
(a) Deliveries. Sellers have delivered to Buyer true
and complete copies of the Existing Insurance Policies, all pending
applications for an insurance policy to cover the Purchased Assets and
any statement by the auditor of Sellers' financial statements with
regard to the adequacy of the insurance coverage provided by the
Existing Insurance Policies.
(b) Existing Insurance Policies. The Existing
Insurance Policies: (i) are valid, outstanding and enforceable; (ii)
taken together, provide adequate insurance coverage for the Purchased
Assets for all risks normally insured against by a Person carrying on
the same business as either Seller; and (iii) are sufficient for
compliance with all Laws, the Existing Permits and the Contracts.
(c) Losses. The Disclosure Schedule sets forth, by
year, for the current policy year and each of the two preceding policy
years in respect of each policy for liability, property or casualty:
(i) a summary of loss experience under each policy; (ii) statement
describing each claim under each policy for an amount in excess of
$10,000; and (iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost
of such claims.
(d) Cancellation. Sellers have not received: (i) any
refusal of coverage or notice that a defense will not be afforded with
reservation of rights; or (ii) any notice of cancellation or any other
indication that any insurance policy is no longer in full force and
effect or will not be renewed or that the issuer of any such policy is
not willing or able to perform its obligations thereunder.
4.15 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any and all
administra tive, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, Liens, investigations proceedings
or notices of noncompliance or violation (written or oral) by any
Person alleging potential liability (including, without limitation,
potential liability for enforcement, investigatory costs, cleanup
costs, governmental response costs, removal costs, remedial costs,
natural resources damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from: (A) the
presence, or release into the environment, of any Environmental
Hazardous Materials at any location, whether or not owned by Sellers;
or (B) circumstances forming the basis of any violation or alleged
violation, of any Environmental Law; or (C) any and all claims by any
Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence or
Environmental Release of any Environmental Hazardous Materials.
(ii) "Environmental Hazardous Materials" shall
mean: (A) any petroleum or petroleum products, radioactive materials,
asbestos in any form, urea formaldehyde foam insulation, and
transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs) and radon gas;
and (B) any chemicals, materials or substances which are now or ever
have been defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import, under any
Environmental Law; and (C) any other chemical, material, substance or
waste, exposure to which is now or ever has been prohibited, limited
or regulated by any governmental authority.
(iii) "Environmental Laws" shall mean all
federal, state, local or foreign statutes, Laws, rules, ordinances,
codes, policy, rule of common law, regulations, judgments, and orders
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, ground
water, drinking water, wildlife, plants, land surface or subsurface
strata), including, without limitation, Laws and regulations relating
to Environmental Releases or threatened Environmental Releases of
Environmental Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Environmental Hazardous Materials.
(iv) "Environmental Permits" shall mean all
environmental, health and safety permits and governmental
authorizations.
(v) "Environmental Release" shall mean any
release, spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the atmosphere, soil,
surface water, groundwater or property.
(b) Compliance. Except as described on the Disclosure
Schedule, each Seller: (i) is in compliance with all applicable
Environmental Laws; and (ii) has not received any communication
(written or oral) that alleges that the Sellers are not or were not in
compliance with applicable Environmental Laws.
(c) Environmental Permits. Except as described on the
Disclosure Schedule, each Seller has obtained all Environmental
Permits necessary for its operations, and all such permits are in good
standing and each Seller is in compliance with all terms and
conditions of such Environmental Permits.
(d) Environmental Claims. Except as described on the
Disclosure Schedule, there is no Environmental Claim pending or, to
the Knowledge of Sellers, threatened, against the Sellers or the
Purchased Assets or against any Person whose liability for any
Environmental Claim either Seller has or may have retained or assumed
either contractually or by operation of Law, or against any real or
personal property or operation which either Seller owns, leases or
operates, nor, to the Knowledge of Sellers, is there any basis for any
such Environmental Claim.
(e) Environmental Releases. Except as described on
the Disclosure Schedule, there have been no Environmental Releases of
any Environmental Hazardous Material by either Seller or any employee
or agent of either Seller, or by any Person on real property owned,
used, leased or operated by either Seller.
(f) CERCLA. Except as described on the Disclosure
Schedule, none of the Real Property is currently listed on the
National Priorities List or the Comprehensive Environmental Response,
Compensation and Liability Information System, both promulgated under
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), or on any comparable state list,
and Sellers have not received any written notice from any Person under
or relating to CERCLA or any comparable state or local Law.
(g) Off Site Locations. Except as described on the
Disclosure Schedule, no off-site location at which either Seller has
disposed or arranged for the disposal of any waste is listed on the
National Priorities List or on any comparable state list and Sellers
have not received any written notice from any Person with respect to
any off-site location, of potential or actual liability or a written
request for information from any Person under or relating to CERCLA or
any comparable state or local Law.
(h) Environmental Hazardous Materials. Except as
described on the Disclosure Schedule, there is not and has not been
any Environmental Hazardous Materials used, generated, treated,
stored, transported, disposed of, handled or otherwise existing on,
under or about the Real Property, except for quantities of any such
Environmental Hazardous Materials stored or otherwise held on, under
or about the Real Property in substantial compliance with all
Environmental Laws and intended to be used in the operation of the
businesses of the Sellers.
(i) Tanks. Except as described on the Disclosure
Schedule, there is not now and has not been in the past any
underground or above-ground storage tank or pipeline on the Real
Property, and there has been no Environmental Release from or rupture
of any such tank or pipeline, including, without limitation, any
Environmental Release from or in connection with the filling or
emptying of such tank.
4.16 Labor Matters.
(a) Employees. The Disclosure Schedule sets forth a
complete and accurate list of the following information for each
employee of the Sellers, including each employee on leave of absence
or layoff status: employer; name; job title; current compensation paid
or payable and any change in compensation since December 31, 1996;
vacation accrued; and service credited for purposes of vesting and
eligibility to participate under the Existing Plans.
(b) Proprietary Rights. Except as set forth on the
Disclosure Schedule, no employee of either Seller is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement,
between such employee and either Seller or any other Person
("Proprietary Rights Agreement") that in any way adversely affects or
will affect: (i) the performance of that Person's duties as an
employee of either Seller; or (ii) the ability of the Buyer to conduct
its business. Except as disclosed on the Disclosure Schedule, to the
Knowledge of Sellers, no officer or other key employee of either
Seller intends to terminate employment with Sellers prior to the
Closing or with Buyer following the Closing.
(c) Strikes; etc. There has not been, there is not
presently pending or existing, and, to the Knowledge of Sellers, there
is not threatened: (i) any strike, slowdown, picketing, work stoppage,
or employee grievance process; (ii) any charge, grievance, proceeding
or other claim against or affecting either Seller relating to the
alleged violation of any Law pertaining to labor relations or
employment matters, including any charge or complaint filed by an
employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable governmental
body, organizational activity, or other labor or employment dispute
against or affecting either Seller; or (iii) any application for
certification of a collective bargaining agent.
(d) Events. To the Knowledge of Sellers, no event has
occurred or circumstance exists that could provide the basis for any
work stoppage or other labor dispute. There is no lockout of any
employees of either Seller by Sellers, and no such action is
contemplated by Sellers.
(e) Compliance. The Sellers currently are in
compliance with all Laws relating to equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health and plant closing.
(f) Claims. There is no present or former employee of
either Seller who has any claim against either Seller (whether under
Law, under any employee agreement or otherwise) on account of or for:
(i) overtime pay, other than overtime pay for the current payroll
period; (ii) wages or salaries, other than wages or salaries for the
current payroll period; or (iii) vacations, sick leave, time off or
pay in lieu of vacation, sick leave or time off, other than vacation,
sick leave or time off (or pay in lieu thereof) earned in the twelve-
month period immediately preceding the date of this Agreement.
(g) Unemployment Compensation. Each Seller has made
all required payments to its unemployment compensation reserve
accounts with the appropriate governmental departments and such
accounts have positive balances.
4.17 Brokers. Neither Seller has incurred any
brokers', finders' or any similar fee in connection with the
transactions contemplated by this Agreement.
4.18 Governmental Approvals. Except for the requisite
notices and filings by the Sellers under the HSR Act, and except for
approvals that may need to be obtained in connection with the IRB
Assignments, no permission, approval, determination, consent or waiver
by, or any declaration, filing or registration with, any governmental
or regulatory authority is required in connection with the execution,
delivery and performance of this Agreement by the Sellers.
4.19 Disclosure. Sellers have furnished to Buyer
complete and accurate copies of all documents and information
requested by Buyer. No statement of fact by the Sellers contained in
this Agreement or the Disclosure Schedule (including any supplement
thereto) contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order
to make the statements herein or therein contained, in the light of
the circumstances under which they were made, not misleading as of the
date to which it speaks.
4.20 Intangible Assets.
(a) Disclosure Schedule. The Disclosure Schedule
contains a complete and accurate list and brief description or other
identification of all patents, patent applications, registered
trademarks, trademark applications, registered service marks, and
service xxxx applications owned or held by either or both of the
Sellers, and all licenses pursuant to which either Seller authorizes
the use of any of the foregoing by another Person or pursuant to which
either or both of the Sellers use a patent, trademark or service xxxx
owned by another Person.
(b) Ownership. The Sellers own the entire right,
title and interest in and to each of the Intangible Assets. There
are no claims, demands or proceedings pending or, to the Knowledge of
Sellers, threatened by any Person contesting or challenging the
Sellers' right to use any of the Intangible Assets. There are no
patents, trademarks, trade names or copyrights owned by a Person which
either Seller is using without license to do so. The Sellers own or
possess adequate licenses or other rights to use all patents,
trademarks, trade names and copyrights necessary to conduct their
respective businesses as now conducted. All patents, patent
applications, trademarks, trade names, copyrights and rights to
discoveries or inventions (whether or not patentable) owned or held by
any employee of either Seller have been duly and effectively
transferred to the Sellers.
(c) Validity; Infringement. Neither Seller infringes
on the intellectual property rights of any other Person. To the
Knowledge of the Sellers, none of the Intangible Assets is invalid or
unenforceable.
4.21 Product Matters. The Disclosure Schedule
describes: (a) any obligation or liability of either Seller in excess
of $10,000 which is based upon any express or implied warranty
relating to any product produced, sold or shipped by either Seller
since January 1, 1995; and (b) any product recall or any other
obligation or liability of either Seller which is based upon death,
disease or injury to Person or property relating to any product
produced, sold or shipped by either Seller since January 1, 1995.
4.22 Customers. Except for ordinary customer
purchasing cycles and fluctuations, since January 1, 1997, there has
been no termination, cancellation or material curtailment of the
business relationship of either Seller with any customer or group of
affiliated customers whose purchases individually or in the aggregate
constituted more than five percent (5%) of the consolidated sales of
the Sellers for the fiscal year ended on December 31, 1996, nor, to
the Knowledge of Sellers, any notice of intent to so materially
curtail.
4.23 Relationships with Related Parties. Except as set
forth on the Disclosure Schedule, no shareholder (or any affiliate of
any shareholder) of the Sellers has, or since January 1, 1993, has
had, any interest in any property (whether real, personal, or mixed
and whether tangible or intangible), used by the Sellers. No
Shareholder (or any affiliate of a Shareholder) is or since January 1,
1993 has owned (of record or as a beneficial owner) an equity interest
or any other financial or profit interest in, a Person that has: (a)
had material business dealings or a material financial interest in any
transaction with either Seller; or (b) engaged in competition with
either Seller with respect to any line of the products or services of
either Seller (a "Competing Business") in any market presently served
by either Seller except for less than one percent of the outstanding
capital stock of any Competing Business that is publicly traded on any
recognized exchange or in the over-the-counter market. Except as set
forth on the Disclosure Schedule, no shareholder (or any affiliate of
a shareholder) of the Sellers is a party to any Contract with, or has
any claim or right against, Sellers.
42.4 Real Property.
(a) Real Property. The parcels included in the Real
Property: (i) constitute all real property and improvements owned,
leased or used by either Seller; (ii) are not in possession of any
adverse possessors; (iii) are not subject to any leases or tenancies
of any kind (except for any Existing Contract); (iv) have access to
and from a public road or street; (v) are used in a manner which is
consistent and permitted by applicable zoning ordinances and other
Laws without special use approvals or permits; (vi) are, and have been
since the date of possession thereof by the Sellers, in the peaceful
possession of the Sellers; (vii) are served by all water, sewer,
electrical, telephone, drainage and other utilities required for
normal operations of the businesses of the Sellers as presently
conducted; (viii) are not located in a flood plain, wetland or similar
restricted area such that it would hinder the use of the Real Property
in the operation of Sellers' Business as presently conducted; and (ix)
require no work or improvements to bring them into compliance with any
applicable Law.
(b) Notices. To the Knowledge of Sellers, there are
no: (i) planned or contemplated public improvements which may result
in special assessments against the Real Property or which may
adversely affect the availability of utility service to the Real
Property; or (ii) increases or contemplated increases in the assessed
value of the Real Property which would increase the estimated real
estate taxes therefor.
4.25 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article IV of
this Agreement, neither of the Sellers makes any other express or
implied representation or warranty and the Sellers hereby disclaim any
such representation or warranty with respect to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Sellers that:
5.1 Organization; Business. The Buyer is a
corporation duly and validly organized and existing and in current
status under the Laws of the State of Wisconsin. Buyer or its
subsidiary designated under Section 11.7 of this Agreement, will, by
the Closing Date, be qualified as a foreign corporation authorized to
transact business in the States of Indiana and Oregon. Subject to the
foregoing sentence and Section 3.16 of this Agreement, as of the
Closing Date, Buyer, or its subsidiary designated pursuant to Section
11.7 of this Agreement, will have all franchises, permits, licenses,
approvals, authorizations, registrations, grants and orders necessary
to own, lease and operate the Purchased Assets in pursuit of carrying
on the business heretofore conducted by the Sellers.
5.2 Authorization; Enforceability. The execution,
delivery and performance of this Agreement by the Buyer and all of the
documents and instruments required by this Agreement to be executed
and delivered by the Buyer are within the corporate power of the Buyer
and have been duly authorized by all necessary corporate action by the
Buyer. This Agreement is, and the other documents and instruments
required by this Agreement to be executed and delivered by the Buyer
will be, when executed and delivered by the Buyer, the valid and
binding obligations of the Buyer, enforceable against the Buyer in
accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws generally affecting the
rights of creditors and subject to general equity principles.
5.3 No Violation or Conflict. The execution, delivery
and performance of this Agreement by the Buyer do not and will not
conflict with or violate any Law, the Articles of Incorporation or
Bylaws of the Buyer or any contract or agreement to which the Buyer is
a party or by which Buyer is bound.
5.4 Brokers. Except for fees payable to Xxxxxx, Read
& Co., Inc. which shall be the sole responsibility of the Buyer, the
Buyer has not incurred any brokers', finders' or any similar fee in
connection with the transactions contemplated by this Agreement.
5.5 Governmental Approvals. Except for the requisite
notices and filings by the Buyer under the HSR Act and except for
approvals that may need to be obtained in connection with the IRB
Assignments, no permission, approval, determination, consent or waiver
by, or any declaration, filing or registration with, any governmental
or regulatory authority is required in connection with the execution,
delivery and performance of this Agreement by the Buyer.
5.6 Financial Capacity. Buyer has cash on hand and
definite financing commitments sufficient to satisfy all of its
obligations under this Agreement.
5.7 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article V,
none of the Buyer nor any subsidiary of the Buyer nor any other Person
makes any other express or implied representation or warranty on
behalf of the Buyer, and the Buyer hereby disclaims any such
representation or warranty with respect to the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
From and after the date of this Agreement and until the
Closing Date, each of the Sellers shall:
6.1 Carry on in Regular Course. Diligently carry on
its business in the regular course and substantially in the same
manner as heretofore and shall not make or institute any unusual or
novel methods of purchase, sale, lease, management, accounting or
operation.
6.2 Use of Assets. Use, operate, maintain and repair
all of the Purchased Assets in a normal business manner consistent
with past practices; provided that nothing herein shall obligate, or
be interpreted to obligate, Sellers to maintain a Consolidated Net
Worth in excess of $8,275,000.00.
6.3 No Default. Not do any act or omit to do any act,
or permit any act or omission to act, which will cause a breach of any
of the Contracts.
6.4 Existing Insurance Policies. Maintain all of the
Existing Insurance Policies in full force and effect.
6.5 Employment Matters. Not: (a) except as described
in the Disclosure Schedule and except for routine increases on
employee anniversary dates, grant any increase in the rate of pay of
any of the employees of either Seller; (b) institute or amend any
Employee Benefit Plan; or (c) enter into or modify any written
employment arrangement with any Person.
6.6 Contracts and Commitments. Not enter into any
contract or commitment or engage in any transaction not in the usual
and ordinary course of business and consistent with its normal
practices and not purchase, lease, sell or dispose of any capital
asset.
6.7 Preservation of Relationships. Use its reasonable
efforts to preserve its business organization intact, to retain the
services of its present officers and key employees and to preserve the
goodwill of suppliers, customers, creditors and others having material
business relationships with the Sellers.
6.8 Compliance with Laws. Comply in all respects with
all applicable Laws.
6.9 Taxes. Timely and properly file all federal,
state, local and foreign tax returns which are required to be filed,
and pay or make provision for the payment of all taxes owed by it.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
Each and every obligation of the Buyer to be performed on
the Closing Date shall be subject to the satisfaction prior to or at
the Closing of the following express conditions precedent:
7.1 Compliance with Agreement. The Sellers shall have
performed and complied in all material respects with all of their
obligations under this Agreement which are to be performed or complied
with by them prior to or on the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the
transactions contemplated by this Agreement, and all documents
incident thereto, shall be reasonably satisfactory in form and
substance to the Buyer, and the Sellers shall have made available to
the Buyer for examination the originals or true and correct copies of
all documents the Buyer may reasonably request in connection with the
transactions contemplated by this Agreement.
7.3 No Litigation. No suit, action or other
proceeding shall be pending or threatened before any court in which
the consummation of the transactions contemplated by this Agreement is
restrained or enjoined or in which the relief requested is to
restrain, enjoin or prohibit the consummation of the transactions
contemplated by this Agreement.
7.4 Representations and Warranties of the Sellers.
The representations and warranties made by the Sellers in Article IV
of this Agreement shall be true and correct in all respects when made
and as of the Closing Date with the same force and effect as though
said representations and warranties had been made at such times.
7.5 No Material Adverse Change. During the period
from the date of this Agreement to the Closing Date: (a) there shall
not have occurred, and there shall not exist on the Closing Date, any
condition or fact which has, or reasonably may be expected to have, a
Material Adverse Effect; and (b) the Purchased Assets, taken as a
whole, shall not have been materially and adversely affected by reason
of any loss, taking, condemnation, destruction or physical damage,
whether or not insured against.
7.6 Deliveries at Closing. The Sellers shall have
delivered to the Buyer the following documents, each dated the Closing
Date and properly executed by the Sellers, the Shareholders or counsel
for the Sellers or other appropriate party(ies) other than Buyer: (a)
the Xxxx of Sale; (b) the Escrow Agreement; (c) the Sellers Closing
Certificate; (d) the Sellers Counsel Opinion; (e) the Employment
Agreements; (f) a Noncompetition Agreement from each of the
Shareholders; (g) the Deed; (h) the Lease Assignment; (i) all
documents required to effect the IRB Assignments; and (j) Articles of
Amendment to SerVend's Articles of Incorporation and all other
documents necessary to change SerVend's corporate name as described in
Section 3.14 of this Agreement.
7.7 Senior Loan. The Senior Loan shall have closed
and the Buyer shall have received sufficient proceeds thereunder, and
shall have anticipated loan availability thereunder, in order to pay
the Cash Amount, prepay the Existing Indebtedness (other than the
IRBs) and pay the expenses of the Buyer in connection with the
transactions described in this Agreement.
7.8 Other Documents. The Sellers shall have delivered
to the Buyer such certificates and documents of officers of the Seller
and public officials as shall be reasonably requested by the Buyer to
establish the existence of the Sellers and the due authorization of
this Agreement and the transactions contemplated by this Agreement by
the Sellers.
7.9 Possession; Instruments of Conveyance. The
Sellers shall have delivered to the Buyer: (a) legal title to and
legal possession of the Purchased Assets; and (b) such other deeds,
bills of sale, endorsements, assignments and other good and sufficient
instruments of conveyance and transfer as shall be effective to vest
in the Buyer good and valid title to the Purchased Assets as
contemplated by this Agreement.
7.10 HSR Act. All necessary requirements of the HSR
Act shall have been complied with and any "waiting periods" applicable
to the transactions described in this Agreement which are imposed by
the HSR Act shall have expired prior to the Closing Date or shall have
been terminated by the appropriate agency.
7.11 Adjusted Cash Amount. Based on information
provided by Sellers, the Buyer shall be reasonably certain that the
Adjusted Cash Amount will be equal to or greater than Forty-Nine
Million Three Hundred Seventy Thousand and 00/100 Dollars
($49,370,000.00).
7.12 Buyer's Bankruptcy. The Buyer shall not have made
a general assignment for the benefit of its creditors, filed a
petition in bankruptcy or for reorganization or to effect a plan or
other arrangement with creditors, applied to a court for the
appointment of a receiver or custodian for its assets and properties
or ceased to function as a going concern.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS
Each and every obligation of the Sellers to be performed on
the Closing Date shall be subject to the satisfaction prior to or at
the Closing of the following express conditions precedent:
8.1 Compliance with Agreement. The Buyer shall have
performed and complied in all material respects with all of its
obligations under this Agreement which are to be performed or complied
with by it prior to or on the Closing Date.
8.2 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the
transactions contemplated by this Agreement, and all documents
incident thereto, shall be reasonably satisfactory in form and
substance to the Sellers, and the Buyer shall have made available to
the Sellers for examination the originals or true and correct copies
of all documents which the Sellers may reasonably request in
connection with the transactions contemplated by this Agreement.
8.3 No Litigation. No suit, action or other
proceeding shall be pending before any court in which the consummation
of the transactions contemplated by this Agreement is restrained or
enjoined.
8.4 Representations and Warranties of the Buyer. The
representations and warranties made by the Buyer in Article V of this
Agreement shall be true and correct in all respects when made and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made at such times.
8.5 Deliveries at Closing. The Buyer shall have
delivered to the Sellers the following documents, each dated the
Closing Date and properly executed by the Buyer or counsel for the
Buyer, as appropriate: (a) the Xxxx of Sale; (b) the Buyer Closing
Certificate; (c) the Buyer Counsel Opinion; and (d) the Escrow
Agreement.
8.6 Other Documents. The Buyer shall have delivered
to the Sellers such certificates and documents of officers of the
Buyer and of public officials as shall be reasonably requested by the
Sellers to establish the existence and good standing of the Buyer and
the due authorization of this Agreement and the transactions
contemplated by this Agreement by the Buyer.
8.7 Delivery of Purchase Price . The Buyer shall have
delivered to the Sellers the Purchase Price in accordance with
Sections 2.1 and 2.3 of this Agreement.
8.8 HSR Act. All necessary requirements of the HSR
Act shall have been complied with and any "waiting periods" applicable
to the transactions described in this Agreement which are imposed by
the HSR Act shall have expired prior to the Closing Date or shall have
been terminated by the appropriate agency.
8.9 Adjusted Cash Amount. The Sellers shall be
reasonably certain that the Adjusted Cash Amount will be equal to or
greater than Forty-Nine Million Three Hundred Seventy Thousand and
00/100 Dollars ($49,370,000.00).
8.10 Employment Agreements. Buyer shall have offered
the Employment Agreements to certain officers of Sellers as described
in Section 3.12(d) of this Agreement.
ARTICLE IX
INDEMNITIES
9.1 Sellers' Indemnity. Upon the condition that the
Closing be effected, the Sellers hereby jointly and severally
indemnify and hold the Buyer harmless from and against, and agree to
promptly defend the Buyer from and reimburse the Buyer for, any and
all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including, without limitation, reasonable
attorneys' fees and other reasonable legal costs and expenses,
including without limitation, those incurred in connection with any
suit, action or other proceeding) which Buyer may at any time suffer
or incur, or become subject to, as a result of or in connection with:
(a) any breach of any of the representations and
warranties made by either or both of the Sellers in or pursuant to
this Article IV of Agreement;
(b) any failure by either or both of the Sellers to
carry out, perform, satisfy and discharge any of their covenants,
agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and materials required to be
delivered by either or both of the Sellers pursuant to this Agreement;
(c) the Retained Liabilities;
(d) the Sellers' ownership, occupation and operation
of the Purchased Assets prior to the Effective Time of Closing;
(e) noncompliance with any applicable Bulk Sales Laws
or Plant Closing Laws in connection with the consummation of the
transactions described in this Agreement;
(f) any Environmental Release on the Real Property
prior to the Effective Time of Closing or any Environmental Claim
relating to the off-site disposal of Environmental Hazardous Materials
generated by Sellers on the Real Property prior to the Effective Time
of Closing; and
(g) any suit, action or other proceeding brought by
any Person arising out of, or in any way related to, any of the
matters referred to in Sections 9.1(a), 9.1(b), 9.1(c), 9.1(d), 9.1(e)
or 9.1(f) of this Agreement.
9.2 Buyer's Indemnity. Upon the condition that the
Closing be effected, the Buyer hereby indemnifies and holds the
Sellers harmless from and against, and agrees to promptly defend the
Sellers from and reimburse the Sellers for, any and all losses,
damages, costs, expenses, liabilities, obligations and claims of any
kind (including, without limitation, reasonable attorneys' fees and
other reasonable legal costs and expenses, including, without
limitation, those incurred in connection with any suit, action or
other proceeding) which the Sellers may at any time suffer or incur,
or become subject to, as a result of or in connection with:
(a) any breach of any of the representations and
warranties made by the Buyer in or pursuant to Article V of this
Agreement;
(b) any failure by the Buyer to carry out, perform
satisfy and discharge any of its covenants, agreements, undertakings,
liabilities or obligations under this Agreement or under any of the
documents and materials required to be delivered by the Buyer pursuant
to this Agreement;
(c) the Assumed Liabilities;
(d) Buyer's ownership, occupation and operation of the
Purchased Assets after the Effective Time of Closing (excluding,
however, any matters for which Sellers are required to indemnify Buyer
pursuant to Section 9.1 of this Agreement); and
(e) any suit, action or other proceeding brought by
any Person arising out of, or in any way related to, any of the
matters referred to in Sections 9.2(a), 9.2(b), 9.2(c), or 9.2(d) of
this Agreement.
9.3 Provisions Regarding Indemnities.
(a) Insurance Recoveries. The amounts for which an
indemnifying party shall be liable under Sections 9.1 and 9.2 of this
Agreement shall be net of any insurance proceeds actually received by
the indemnified party in connection with the facts giving rise to the
right of indemnification.
(b) Notice; Third Party Claims. The indemnified party
shall promptly notify the indemnifying party in reasonable detail of
any claim, demand, action or proceeding for which indemnification will
be sought under Section 9.1 or Section 9.2 of this Agreement, and if
such claim, demand, action or proceeding is a third party claim,
demand, action or proceeding, the indemnifying party will have the
right at its expense to assume the defense thereof using counsel
reasonably acceptable to the indemnified party. The indemnified party
shall have the right to participate, at its own expense, with respect
to any such third party claim, demand, action or proceeding. In
connection with any such third party claim, demand, action or
proceeding, the parties shall cooperate with each other and provide
each other with access to relevant books and records in their
possession. No such third party claim, demand, action or proceeding
shall be settled without the prior written consent of the indemnified
party. If a firm written offer is made to settle any such third party
claim, demand, action or proceeding and the indemnifying party
proposes to accept such settlement and the indemnified party refuses
to consent to such settlement, then: (i) the indemnifying party shall
be excused from, and the indemnified party shall be solely responsible
for, all further defense of such third party claim, demand, action or
proceeding; (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall
be the amount of the proposed settlement if the amount thereafter
recovered from the indemnified party on such third party claim,
demand, action or proceeding is greater than the amount of the
proposed settlement; and (iii) the indemnified party shall pay all
attorneys' fees and legal costs and expenses incurred after rejection
of such settlement by the indemnified party, but if the amount
thereafter recovered by such third party from the indemnified party is
less than the amount of the proposed settlement, the indemnified party
shall be reimbursed by the indemnifying party for such attorneys' fees
and legal costs and expenses up to a maximum amount equal to the
difference between the amount recovered by such third party and the
amount of the proposed settlement.
(c) Exclusivity. The rights of indemnity provided by
this Article IX of this Agreement shall be exclusive of all other
rights of indemnity or contribution, whether created by Law or
otherwise, either before or after the Effective Time of Closing,
relating in any way to the subject matter of this Agreement.
(d) Termination of Sellers' Rights. The right of the
Seller to receive indemnity provided by Section 9.2(a) of this
Agreement shall, as to any matter which has not been described in a
notice delivered to the Buyer pursuant to Section 9.3(b) of this
Agreement prior to such time, expire at 11:59 P.M., Central Time, on
November 1, 2002.
(e) Termination of Buyer's Rights. The right of the
Buyer to receive indemnity provided by Section 9.1(a) of this
Agreement shall, as to any matter which has not been described in a
notice delivered to the Sellers pursuant to Section 9.3(b) of this
Agreement prior to such time, expire at 11:59 P.M. Central Time, on
November 1, 2002.
(f) Rights on Termination. The termination of the
rights of an indemnified party to receive indemnity contained in
Sections 9.3(d) and 9.3(e) of this Agreement shall not affect that
Person's right to prosecute to conclusion any claim made by that
Person prior to the time that the relevant right of indemnity
terminates.
(g) Limitations on Sellers' Liability. The liability
of the Sellers under Section 9.1 of this Agreement shall be without
deduction or limitation, except that:
(i) the liability of the Sellers under Section
9.1(a) of this Agreement shall:
(A) not arise with respect to a single
course of conduct, related set of circumstances, occurrence or event
unless the damages suffered by an indemnified party arising therefrom
exceed Ten Thousand and 00/100 Dollars ($10,000) (a "Sellers
Indemnifiable Breach");
(B) be recoverable only if and to the extent
that the cumulative damages suffered by the Buyer for all Seller
Indemnifiable Breaches exceeds Five Hundred Fifty Thousand and 00/100
Dollars ($550,000);
(C) be limited in the aggregate to:
(1) with respect to all indemnity
claims of which Buyer has provided notice to Sellers pursuant to
Section 9.3(b) of this Agreement prior to midnight, Central Time,
on the first anniversary of the Closing Date, an amount equal to
Four Million and 00/100 Dollars ($4,000,000.00);
(2) with respect to all indemnity
claims of which Buyer has provided notice to Sellers pursuant to
Section 9.3(b) of this Agreement after midnight, Central Time, on
the first anniversary of the Closing Date but prior to midnight,
Central Time, on the second anniversary of the Closing Date, an
amount equal to Three Million and 00/100 Dollars ($3,000,000.00),
less the aggregate amount of all indemnity claims paid by Sellers
to Buyer pursuant to Section 9.1 of this Agreement with respect
to notices of indemnity claims delivered by Buyer to Sellers
prior to midnight, Central Time, on the first anniversary of the
Closing Date; and
(3) with respect to all indemnity
claims of which Buyer has provided notice to Sellers pursuant to
Section 9.3(b) of this Agreement after midnight, Central Time, on
the second anniversary of the Closing Date but prior to midnight,
Central Time, on the fifth anniversary of the Closing Date, an
amount equal to One Million 00/100 Dollars ($1,000,000.00), less
the aggregate amount of all indemnity claims paid by Sellers to
Buyer pursuant to Section 9.1 of this Agreement with respect to
notices of claims for indemnity delivered by Buyer to Sellers
prior to midnight, Central Time, on the second anniversary of the
Closing Date;
(D) the Buyer shall not be entitled to more
than one recovery for any single loss, damage, cost, expense,
liability, obligation or claim even though such may have resulted from
the breach or inaccuracy of more than one of the representations and
warranties made by the Sellers in or pursuant to this Agreement.
(ii) The liability of the Sellers under Section
9.1(b) of this Agreement for an event described in Section 3.5(c)
shall be limited to the payment of the fee described in Section 3.5(c)
of this Agreement.
(h) Limitations on Buyer's Liability. The liability
of the Buyer under Section 9.2 of this Agreement shall be without
deduction or limitation, except that:
(i) the liability of the Buyer under Section
9.2(a) of this Agreement shall:
(A) not arise with respect to a single
course of conduct, related set of circumstances, occurrence or event
unless the damages suffered by an indemnified party arising therefrom
exceed Ten Thousand and 00/100 Dollars ($10,000) (a "Buyer
Indemnifiable Breach");
(B) be recoverable only if and to the extent
that the cumulative damages suffered by the Sellers for all Buyer
Indemnifiable Breaches exceeds Five Hundred Fifty Thousand and 00/100
Dollars ($550,000);
(C) be limited in the aggregate to:
(1) with respect to all indemnity
claims of which Sellers have provided notice to Buyer pursuant to
Section 9.3(b) of this Agreement prior to midnight, Central Time,
on the first anniversary of the Closing Date, an amount equal to
Four Million and 00/100 Dollars ($4,000,000.00);
(2) with respect to all indemnity
claims of which Sellers have provided notice to Buyer pursuant to
Section 9.3(b) of this Agreement after midnight, Central Time, on
the first anniversary of the Closing Date but prior to midnight,
Central Time, on the second anniversary of the Closing Date, an
amount equal to Three Million and 00/100 Dollars ($3,000,000.00),
less the aggregate amount of all indemnity claims paid by Buyer
to Sellers pursuant to Section 9.2 of this Agreement with respect
to notices of indemnity claims delivered by Sellers to Buyer
prior to midnight, Central Time, on the first anniversary of the
Closing Date; and
(3) with respect to all indemnity
claims of which Sellers have provided notice to Buyer pursuant to
Section 9.3(b) of this Agreement after midnight, Central Time, on
the second anniversary of the Closing Date but prior to midnight,
Central Time, on the fifth anniversary of the Closing Date, an
amount equal to One Million 00/100 Dollars ($1,000,000.00), less
the aggregate amount of all indemnity claims paid by Buyer to
Sellers pursuant to Section 9.1 of this Agreement with respect to
notices of claims for indemnity delivered by Sellers to Buyer
prior to midnight, Central Time, on the second anniversary of the
Closing Date;
(D) the Sellers shall not be entitled to
more than one recovery for any single loss, damage, cost, expense,
liability, obligation or claim even though such may have resulted from
the breach or inaccuracy of more than one of the representations and
warranties made by the Buyer in or pursuant to this Agreement; and
(ii) the liability of the Buyer under Section
9.2(b) of this Agreement shall be limited to the payment of the fee
described in Section 3.20 of this Agreement.
(j) Application. A party to this Agreement may elect
to close the transactions described in this Agreement despite the fact
that certain breaches or inaccuracies of the representations and
warranties of the other parties to this Agreement may exist on the
Closing Date or the other parties may have breached certain of their
covenants contained in this Agreement. The provisions of this Article
IX of this Agreement shall not, after the Closing Date and the
consummation of the transactions described in this Agreement, apply to
any such breaches or inaccuracies of the representations and
warranties contained in this Agreement, or any such breaches of the
covenants contained in this Agreement, if such party had the right to
terminate this Agreement pursuant to Sections 7.1, 7.4, 8.1, 8.4 and
11.1 of this Agreement based on such breaches or inaccuracies, and
elected, with knowledge as to such breaches or inaccuracies, to
nonetheless proceed with the Closing.
ARTICLE X
DISPUTE RESOLUTION MECHANISMS
10.1 Dispute. As used in this Agreement, "Dispute"
shall: (a) mean any dispute or disagreement between the Buyer and the
Sellers concerning the interpretation of this Agreement, the validity
of this Agreement, any breach or alleged breach by any party under
this Agreement or any other matter relating in any way to this
Agreement; and (b) exclude any dispute or disagreement between the
Buyer and the Sellers concerning the calculation of the Purchase Price
and the Cash Amount, which shall be resolved pursuant to the
provisions of Section 2.4 of this Agreement.
10.2 Process. If a Dispute arises, the parties shall
follow the procedures specified in Sections 10.3, 10.4 and 10.5 of
this Agreement.
10.3 Negotiations. The parties shall promptly attempt
to resolve any Dispute by negotiations between the Buyer and the
Sellers. Either the Buyer or the Sellers may give the other party
written notice of any Dispute not resolved in the normal course of
business. The Buyer and the Sellers shall meet at a mutually
acceptable time and place within ten (10) calendar days after delivery
of such notice, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve
the Dispute. If the Dispute has not been resolved by these Persons
within thirty (30) calendar days of the disputing party's notice, or
if the parties fail to meet within such fifteen (15) calendar days,
either the Buyer or the Sellers may initiate mediation as provided in
Section 10.4 of this Agreement. If a negotiator intends to be
accompanied at a meeting by legal counsel, the other negotiator shall
be given at least three (3) business days' notice of such intention
and may also be accompanied by legal counsel.
10.4 Mediation. If the Dispute is not resolved by
negotiations pursuant to Section 10.3 of this Agreement, the Buyer and
the Sellers shall attempt in good faith to resolve any such Dispute by
nonbinding mediation. Either the Buyer or the Sellers may initiate a
nonbinding mediation proceeding by a request in writing to the other
party (the "Request"), and both parties will then be obligated to
engage in a mediation. The proceeding will be conducted in accordance
with the then current Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes, with the following
exceptions:
(a) if the parties have not agreed within thirty (30)
calendar days of the Request on the selection of a mediator willing to
serve, CPR, upon the request of either the Buyer or the Sellers, shall
appoint a member of the CPR Panels of Neutrals as the mediator; and
(b) efforts to reach a settlement will continue until
the conclusion of the proceedings, which shall be deemed to occur upon
the earliest of the date that: (i) a written settlement is reached; or
(ii) the mediator concludes and informs the parties in writing that
further efforts would not be useful; or (iii) the Buyer and the
Sellers agree in writing that an impasse has been reached; or (iv) is
sixty (60) calendar days after the Request and none of the events
specified in Sections 10.4(b)(i), (ii) or (iii) have occurred. No
party may withdraw before the conclusion of the proceeding.
10.5 Submission to Adjudication. If a Dispute is not
resolved by negotiation pursuant to Section 10.3 of this Agreement or
by mediation pursuant to Section 10.4 of this Agreement within 100
calendar days after initiation of the negotiation process pursuant to
Section 10.3 of this Agreement, such Dispute and any other claims
arising out of or relating to this Agreement may be heard, adjudicated
and determined in an action or proceeding filed in any state or
federal court which has jurisdiction over the parties.
10.6 General.
(a) Provisional Remedies. At any time during the
procedures specified in Sections 10.3 and 10.4 of this Agreement, a
party may seek a preliminary injunction or other provisional judicial
relief if in its judgment such action is necessary to avoid
irreparable damage or to preserve the status quo. Despite such
action, the parties will continue to participate in good faith in the
procedures specified in this Article X of this Agreement.
(b) Tolling Statutes of Limitations. All applicable
statutes of limitation and defenses based upon the passage of time
shall be tolled while the procedures specified in this Article X of
this Agreement are pending. The parties will take such action, if
any, as is required to effectuate such tolling.
(c) Performance to Continue. Each party is required
to continue to perform its obligations under this Agreement pending
final resolution of any Dispute.
(d) Extension of Deadlines. All deadlines specified
in this Article X of this Agreement may be extended by mutual
agreement between the Buyer and the Sellers.
(e) Enforcement. The parties regard the obligations
in this Article X of this Agreement to constitute an essential
provision of this Agreement and one that is legally binding on them.
In case of a violation of the obligations in this Article X of this
Agreement by either the Buyer or the Sellers, the other party may
bring an action to seek enforcement of such obligations in any court
of Law having jurisdiction over the parties.
(f) Costs. The parties shall pay: (i) their own
costs, fees, and expenses incurred in connection with the application
of the provisions of this Article X of this Agreement; and (ii) fifty
percent (50%) of the fees and expenses of CPR and the mediator in
connection with the application of the provisions of Section 10.4 of
this Agreement.
(g) Replacement. If CPR is no longer in business or
is unable or refuses or declines to act or to continue to act under
this Article X of this Agreement for any reason, then the functions
specified in this Article X of this Agreement to be performed by CPR
shall be performed by another Person engaged in a business equivalent
to that conducted by CPR as is agreed to by the Buyer and the Sellers
(the "Replacement"). If the Buyer and the Sellers cannot agree on the
identity of the Replacement within ten (10) calendar days after a
Request, the Replacement shall be selected by the Chief Judge of the
United States District Court for the Eastern District of Wisconsin
upon application. If a Replacement is selected by either means, this
Article X shall be deemed appropriately amended to refer to such
Replacement.
ARTICLE XI
TERMINATION; MISCELLANEOUS
11.1 Termination. This Agreement may be terminated and
the transactions contemplated by this Agreement may be abandoned at
any time prior to the Closing, as follows:
(a) by mutual written agreement of the Buyer and the
Sellers;
(b) by the Buyer if any of the conditions set forth in
Article VII of this Agreement shall not have been fulfilled by the
Closing;
(c) by the Sellers if any of the conditions set forth
in Article VIII of this Agreement shall not have been fulfilled by the
Closing;
(d) by the Buyer pursuant to Section 3.2(b) of this
Agreement; or
(e) by the Buyer or the Sellers if the Closing has not
occurred on or before December 31, 1997.
11.2 Rights on Termination; Waiver. If this Agreement
is terminated pursuant to Section 11.1 of this Agreement, all further
obligations of the parties under or pursuant to this Agreement shall
terminate without further liability of any party to the others,
provided that the obligations of the parties contained in Sections
3.1(b), 3.5, 3.6, 3.20, Article X, 11.2, 11.5 and 11.12 (but only as
to other surviving rights and obligations) of this Agreement shall
survive any such termination. If any of the conditions set forth in
Article VII of this Agreement have not been satisfied, the Buyer may
nevertheless elect to proceed with the consummation of the
transactions contemplated by this Agreement and if any of the
conditions set forth in Article VIII of this Agreement have not been
satisfied, the Sellers may nevertheless elect to proceed with the
consummation of the transactions contemplated by this Agreement. Any
such election to proceed shall be evidenced by a certificate signed on
behalf of the waiving party by an officer of that party.
11.3 Survival of Representations and Warranties. Upon
the condition that the Closing is effected, all representations and
warranties of the parties contained in this Agreement or made pursuant
to this Agreement shall survive the Closing Date and the Effective
Time of Closing and the consummation of the transactions contemplated
by this Agreement and shall terminate and be of no further force and
effect at 11:59 P.M. Central Time on November 1, 1999; provided that
the Sellers' representations and warranties set forth in Sections 4.1,
4.2, 4.3, and 4.7, and the representations and warranties of the Buyer
set forth in Sections 5.1, 5.2, and 5.3, shall survive until 11:59
P.M. Central Time on November 1, 2002, after which time said
representations and warranties shall terminate and be of no further
force and effect. The termination of the representations and
warranties contained in the immediately preceding sentence shall not
affect a party's right to prosecute to conclusion any claim made by
such party prior to such time.
11.4 Entire Agreement; Amendment. This Agreement and
the documents referred to in this Agreement and required to be
delivered pursuant to this Agreement constitute the entire agreement
among the parties pertaining to the subject matter of this Agreement,
and supersede: (a) the Letter of Intent dated as of August 29, 1997
by and among the Buyer and the Sellers; and (b) all prior and
contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written. There are no
warranties, representations or other agreements between the parties in
connection with the subject matter of this Agreement, except as
specifically set forth in this Agreement. No amendment, supplement,
modification, waiver or termination of this Agreement shall be binding
unless executed in writing by the Buyer and the Sellers. No waiver of
any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement, whether
or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
11.5 Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, each of the parties to
this Agreement shall pay the fees and expenses of its respective
counsel, accountants, brokers, consultants, investment bankers and
other experts incident to the negotiation and preparation of this
Agreement and consummation of the transactions contemplated by this
Agreement.
11.6 Governing Law. This Agreement shall be construed
and interpreted according to the internal Laws of the State of
Wisconsin without regard to the conflicts of Laws principles thereof.
11.7 Assignment. Prior to the Closing, this Agreement
shall not be assigned by either the Buyer or the Sellers except: (a)
with the prior written consent of the other party; and (b) by the
Buyer, to one or more direct or indirect wholly owned subsidiaries of
the Buyer, provided that the Buyer remains liable for the performance
by such subsidiary of the obligations of the Buyer under this
Agreement.
11.8 Notices. All communications or notices required
or permitted by this Agreement shall be in writing and shall be deemed
to have been given at the earlier of the date when actually delivered
to an officer of a party by personal delivery or telephonic facsimile
transmission or when deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and
addressed as follows, unless and until any of such parties notifies
the others in accordance with this Section of a change of address:
If to the Sellers: SerVend International, Inc.
and Xxxxxxx Enterprises, Ltd.
Attention: Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
with a copy to
Xxxx Xxxxxxxx Xxxxxx Xxx & Vice
Attention: Xxxx X. Xxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Fax No.: 000-000-0000
If to the Buyer: The Manitowoc Company, Inc.
Attention: Xxxx X. Xxxxxx
000 Xxxxx 00xx Xxxxxx
X.X. Xxx 00
Xxxxxxxxx, XX 00000-0000
Fax No.: 000-000-0000
with a copy to:
Xxxxxxx & Xxxxx
Attention: Xxxxxxx X. Xxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
11.9 Counterparts; Headings. This Agreement may be
executed in several counterparts, each of which shall be deemed an
original, but such counterparts shall together constitute but one and
the same Agreement. The Table of Contents and Article and Section
headings in this Agreement are inserted for convenience of reference
only and shall not constitute a part hereof.
11.10 Interpretation. Unless the context requires
otherwise, all words used in this Agreement in the singular number
shall extend to and include the plural, all words in the plural number
shall extend to and include the singular, and all words in any gender
shall extend to and include all genders.
11.11 Severability. If any provision, clause, or
part of this Agreement, or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement, or
the application of such provision, clause or part under other
circumstances, shall not be affected thereby unless such invalidity
materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
11.12 Specific Performance. The parties agree that
the Purchased Assets as a going concern constitute unique property.
There is no adequate remedy at Law for the damage which any party
might sustain for failure of the other parties to consummate the
transactions contemplated by this Agreement, and accordingly, each
party shall be entitled, at its option, to the remedy of specific
performance to enforce the transactions contemplated by this
Agreement.
11.13 No Reliance. Except for the parties to this
Agreement and any assignees permitted by Section 11.7 of this
Agreement: (a) no Person is entitled to rely on any of the
representations, warranties and agreements of the parties contained in
this Agreement; and (b) the parties assume no liability to any Person
because of any reliance on the representations, warranties and
agreements of the parties contained in this Agreement.
11.14 Exhibits and Disclosure Schedule. If a
document or matter is disclosed in the Disclosure Schedule, it shall
be deemed to be disclosed for all purposes of this Agreement without
the necessity of specific repetition or cross-reference. All
capitalized terms used in any Exhibit to this Agreement or in the
Disclosure Schedule shall have the definitions specified in this
Agreement.
11.15 Taxes and Fees. The Sellers and Buyers shall
each pay transfer taxes of any kind, sales and use taxes and recording
and filing fees which arise as a result of the conveyance of the
Purchased Assets by the Sellers to the Buyer in accordance with
applicable law and local custom.
11.16 Income Tax Position. Neither the Buyer nor
the Sellers shall take a position for income tax purposes which is
inconsistent with this Agreement.
11.17 Further Assurances. From time to time after
the Closing Date, upon the reasonable request and expense of the Buyer
and without any additional consideration, the Sellers shall execute
and deliver or cause to be executed and delivered such further
instruments of conveyance, assignment and transfer and take such
further action as the Buyer may reasonably request in order to more
effectively sell, assign, convey, transfer, reduce to possession and
record title to any of the Purchased Assets. The Sellers agree to
cooperate with the Buyer in all reasonable respects to assure to the
Buyer the continued title to and possession of the Purchased Assets in
the condition and manner contemplated by this Agreement.
11.18 No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent. In the event an ambiguity or question
of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the parties and no presumption or burden of
proof will arise favoring or disfavoring any Person by virtue of the
authorship of any of the provisions of this Agreement.
11.19 No Materiality Acknowledgment. The
specification of any dollar amount in the representations and
warranties or otherwise in this Agreement or in the Disclosure
Schedule or the inclusion of any specific item in the Disclosure
Schedule is not intended and shall not be deemed to be an admission or
acknowledgment of the materiality of such amounts or items, nor shall
the same be used in any dispute or controversy between the parties to
determine whether any obligation, item or matter (whether or not
described herein or included in the Disclosure Schedule) is or is not
material for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Purchase and
Sale Agreement to be duly executed as of the day and year first above
written.
THE MANITOWOC COMPANY, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
President & Chief Executive Officer
SERVEND INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx, President
XXXXXXX ENTERPRISES, LTD.
By: SerVend International, Inc.,
General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx, President
DISCLOSURE SCHEDULE
TO
PURCHASE AND SALE AGREEMENT
AMONG
THE MANITOWOC COMPANY, INC.
SERVEND INTERNATIONAL, INC.
AND
XXXXXXX ENTERPRISES, LTD.
OCTOBER 1, 1997
SECTION DESCRIPTION
------- -----------
1.4 Assumed Liabilities
1.25, 1.56 and 4.12 Existing Contracts and
Retained Contracts
1.26 and 4.12 Existing Indebtedness
1.27 and 4.14 Existing Insurance Policies
1.28 and 4.5(e) Existing Investments
1.29 and 4.5(a) Existing Liens
1.30 and 4.11 Existing Litigation
1.31 and 4.10(c) Existing Permits
1.32 and 4.9 Existing Plans
1.37 and 4.20 Intangible Assets
1.48 and 4.5(a) Permitted Liens
1.52 and 4.24 Real Property
1.55 Retained Assets
3.11 Allocation of Purchase Price
4.1(a)(i) Shareholders of SerVend
4.1(a)(ii) Partners of Xxxxxxx
4.1(a) Foreign Qualifications of Sellers
4.3(a)(v) Business Relationship Matters
4.3(b) Consents
4.4(d) Bank Accounts
4.5(a) Leases
4.6 Contingent Liabilities
4.13 Performance of Contracts
4.15 Environmental Matters
4.16 Employee Matters
4.21 Product Matters
4.23 Relationships with Related Parties
6.5 Certain Employee Matters
