1
Exhibit 10.16
ASSET PURCHASE AGREEMENT
among
A-M ACQUISITIONS CORP.
WATERLINK, INC.,
AERO-MOD INCORPORATED,
RESI-TECH, INC.
and
XXXXXXXX X. XXXXXX
April 26, 1996
2
TABLE OF CONTENTS
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PAGE
ARTICLE I TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES........ 1
1.1 Transfer of Assets...................................... 1
1.2 Transfer of Patents..................................... 2
1.3 Lease of Real Property.................................. 2
1.4 Assumption of Liabilities............................... 2
1.5 Method of Conveyance and Transfer....................... 2
1.6 Further Assurances...................................... 3
ARTICLE II PAYMENT OF PURCHASE PRICE............................... 3
2.1 Payment by Purchaser.................................... 3
2.2 Earn-Out................................................ 4
2.3 Allocation of Purchase Price............................ 5
2.4 Transfer Taxes.......................................... 6
ARTICLE III REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
SELLERS AND SHAREHOLDER................................. 6
3.1 Organization and Standing............................... 6
3.2 Authority of Sellers and Shareholder; Consents.......... 6
3.3 Business Relations...................................... 7
3.4 Leased Property......................................... 7
3.5 Investments in Other Entities........................... 8
3.6 Title to and Condition of Subject Assets................ 9
3.7 Financial Statements.................................... 9
3.8 Absence of Certain Changes.............................. 9
3.9 Absence of Undisclosed Liabilities...................... 11
3.10 Taxes................................................... 11
3.11 Indebtedness to Officers, Directors and Shareholders.... 12
3.12 Articles of Incorporation and By-Laws................... 12
3.13 Corporate Minutes....................................... 12
3.14 Brokerage and Finder's Fees............................. 12
3.15 Accounts Receivable..................................... 12
3.16 Employment Matters...................................... 12
3.17 No Defaults............................................. 13
3.18 Non-Trade Accounts Receivable........................... 13
3.19 Material Contracts...................................... 13
3.20 Purchase Orders......................................... 14
3.21 Indebtedness............................................ 14
(i)
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PAGE
3.22 Litigation.............................................. 14
3.23 Insurance............................................... 14
3.24 Transactions with Officers, Etc......................... 15
3.25 Employees/Independent Sales Representatives............. 15
3.26 Trademarks, Copyrights and Similar Matters.............. 15
3.27 Employee Benefit Plans and Other Plans.................. 16
3.28 Environmental Matters................................... 17
3.29 Bank Accounts........................................... 19
3.30 Compliance with Laws.................................... 19
3.31 Powers of Attorney...................................... 19
3.32 Licenses and Rights..................................... 19
3.33 Schedule of Government Reports.......................... 19
3.34 Products................................................ 19
3.35 Casualty Occurrences.................................... 20
3.36 Inventory............................................... 20
3.37 Material Misstatements or Omissions..................... 20
3.38 Investment Representations.............................. 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND WATERLINK........................................... 21
4.1 Organization and Good Standing of Purchaser
and Waterlink........................................... 21
4.2 Authority of Purchaser and Waterlink.................... 22
4.3 Certificate of Incorporation and By-Laws................ 22
4.4 Waterlink Financial Statements.......................... 22
4.5 Waterlink Authorized Capitalization..................... 22
4.6 Absence of Certain Changes.............................. 23
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
AND WATERLINK .......................................... 23
5.1 Representations True.................................... 23
5.2 All Consents Obtained................................... 23
5.3 Performance and Obligations............................. 23
5.4 Receipt of Documents by Purchaser....................... 23
5.5 No Litigation........................................... 25
5.6 Employment Agreement.................................... 25
5.7 Delivery of Books and Records........................... 26
5.8 Instruments of Transfer................................. 25
5.9 Confidentiality and Non-Compete Agreements.............. 26
5.10 Absence of Changes...................................... 26
5.11 Amended and Restated Exclusive License Agreement........ 26
(ii)
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PAGE
5.12 Lease for Leased Property.............................. 26
5.13 Environmental Investigation............................ 26
5.14 Title Commitment....................................... 26
5.15 Non-Disturbance Agreement.............................. 26
5.16 Blue Water Transaction................................. 26
5.17 SBA Loans.............................................. 26
5.18 Termination of Simplified Employee Pension Plan........ 27
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
AND SHAREHOLDER........................................ 27
6.1 Representations True................................... 27
6.2 All Consents Obtained.................................. 27
6.3 Performance of Obligations............................. 27
6.4 Receipt of Documents by Sellers and Shareholder........ 27
6.5 No Litigation.......................................... 28
6.6 Employment Agreement................................... 28
6.7 Registration Rights Agreement.......................... 28
6.8 Assumption of Liability................................ 28
6.9 Executive Committee.................................... 28
6.10 Lease for Leased Property.............................. 28
6.11 Blue Water Transaction................................. 28
ARTICLE VII CLOSING................................................ 29
ARTICLE VIII TERMINATION OF AGREEMENT............................... 29
ARTICLE IX SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION; DISPUTES.............. 30
9.1 Survival of Representations and Warranties............. 30
9.2 Sellers' and Shareholder's Indemnification............. 30
9.3 Defense of Claim....................................... 31
9.4 Purchaser's and Waterlink's Indemnification............ 31
9.5 Limitations on Indemnification......................... 32
ARTICLE X CONDUCT PRIOR TO CLOSING DATE.......................... 32
10.1 Continuation of Business............................... 32
10.2 Preservation of Business............................... 33
10.3 Consents and Approvals................................. 33
ARTICLE XI ASSIGNMENT, THIRD PARTIES, BINDING EFFECT.............. 33
(iii)
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PAGE
ARTICLE XII EXPENSES............................................... 34
ARTICLE XIII NOTICES................................................ 34
ARTICLE XIV REMEDIES NOT EXCLUSIVE................................. 35
ARTICLE XV NON-COMPETITION........................................ 35
15.1 Non-Competition Agreement.............................. 35
15.2 Disclosure of Confidential Information................. 37
ARTICLE XVI MISCELLANEOUS.......................................... 37
16.1 Counterparts........................................... 37
16.2 Captions and Section Headings.......................... 37
16.3 Possession of Acquired Assets.......................... 37
16.4 Waivers................................................ 37
16.5 Right of Inspection.................................... 37
16.6 Amendments, Supplements or Modifications............... 38
16.7 Entire Agreement....................................... 38
16.8 Governing Laws......................................... 38
16.9 Knowledge.............................................. 38
16.10 Press Releases......................................... 38
(iv)
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LIST OF EXHIBITS
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PAGE
Exhibit A Legal Description of Leased Property...........................2
Exhibit B Convertible Subordinated Promissory Note...................... 3
Exhibit C Subordinated Promissory Note.................................. 3
Exhibit D Second Subordinated Promissory Note .......................... 3
Exhibit E Allocation of Earn-Out Payment................................ 4
Exhibit F Xxxxxx Employment Agreement...................................25
Exhibit G Registration Rights Agreement.................................28
(v)
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LIST OF SCHEDULES
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PAGE
1.1 Cash Surrender of Life Insurance Policies and Associated Debt...1
1.2 Schedule of Patents.............................................2
1.4 Assumed Liabilities.............................................2
2.3 Allocation of Purchase Price....................................5
3.1 Jurisdictions of Incorporation, Qualification and
Business Conduct of Seller and Subsidiaries ....................6
3.2 Consents ...................................................7, 23
3.3 Business Relations..............................................7
3.4 Leased Property ................................................7
3.5 Equity Interests ...............................................8
3.6 Title to and Condition of Subject Assets .......................9
3.8 Absence of Certain Changes ....................................10
3.9 Undisclosed Liabilities .......................................11
3.10 Tax Waivers and Audits ........................................11
3.11 Indebtedness to Officers, Directors and Shareholders...........12
3.16 Employment Matters ........................................12, 13
3.17 Defaults...................................................... 13
3.18 Accounts Receivable ...........................................13
3.19 Contracts .............................................13, 24, 32
3.20 Purchase Orders ...............................................14
3.21 Indebtedness ..................................................14
(vi)
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PAGE
3.22 Litigation .....................................................14
3.23 Insurance ......................................................14
3.24(a) Ownership of Sellers in Certain Entities .......................15
3.24(b) Contracts With Officers, Etc. ................................. 15
3.24(c) Interest in Competitors ........................................15
3.25(a) Employees of Sellers............................................15
3.25(b) Independent or Outside Sales Representatives of Sellers.........15
3.26 Patents, Trademarks, Service Marks, Trade Names
and Copyrights ................................................ 16
3.27 Employee Benefit and Other Plans ...............................17
3.29 Bank Accounts ..................................................19
3.32 Licenses and Rights ............................................19
3.33 Government Reports .............................................19
3.34 Warranties and Customer Service Policies .................... 20
3.35 Product Liability Matters ......................................20
4.5 Authorized Capitalization.......................................22
4.6 Absence of Certain Changes......................................23
(vii)
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ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT ("Agreement") is made this 26th day of April, 1996,
among A-M ACQUISITIONS CORP., a Delaware corporation ("Purchaser"), AERO-MOD
INCORPORATED, a Kansas corporation ("Aero-Mod") RESI-TECH, INC., a Kansas
corporation ("Resi-Tech") (each a "Seller" and collectively "Sellers"),
WATERLINK, INC., a Delaware corporation ("Waterlink"), and XXXXXXXX X. XXXXXX,
sole shareholder of each Seller ("Shareholder").
R E C I T A L:
--------------
Purchaser desires to purchase, and Sellers desire to sell to Purchaser,
all of the business, assets, and goodwill of each Seller, except as otherwise
provided in this Agreement, and Purchaser desires to purchase, and Shareholder
desires (i) to sell to Purchaser, certain patents and related know-how that are
used in the business of each Seller, in exchange for cash, promissory notes and
for the assumption of certain of Sellers' liabilities and obligations, as
expressly provided in this Agreement and (ii) to lease certain real property on
which the business of Sellers is presently being conducted and on which
Purchaser, among other things, will conduct its business.
NOW, THEREFORE, Purchaser, Waterlink, Sellers and Shareholder agree as
follows:
ARTICLE I
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TRANSFER OF ASSETS AND ASSUMPTION OF LIABILITIES
------------------------------------------------
1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions in
this Agreement, except as set forth below, Sellers will convey, transfer, assign
and deliver to Purchaser on the Closing Date (defined below) all of the
business, assets, and goodwill owned or used by Sellers on the Closing Date in
the conduct of business of each Seller (together, the "Business") of every kind
and description, wherever located, known or unknown, tangible or intangible,
including, without limitation, all property, real, personal or mixed, cash on
hand and in accounts, accounts receivable, securities, deposits on contractual
obligations or otherwise, claims and rights under contracts and leases,
licenses, customer lists, trade secrets, tax refund claims and all other pending
claims and other choses in action, exclusive rights to use the names "Aero-Mod
Incorporated" or "Resi-Tech, Inc.," any derivative or combination thereof and
all other names or slogans used by Sellers in connection with the Business or
its products, all product catalogs and other advertising materials, all files,
books and records of Sellers relating to the Business, and all computer
programs, all as the same exist on the Closing Date (collectively, the "Acquired
Assets"). Notwithstanding the foregoing, the Acquired Assets will not include
(i) those certain Notes receivable of Sellers from Shareholder set forth on
SCHEDULE 1.1 of amounts up to Sixty-Two Thousand Nine Hundred and Six Dollars
and Sixty-Two Cents ($62,406.62) and (ii) the cash surrender value of certain
life insurance policies and the associated borrowings thereon as specifically
referenced on SCHEDULE 1.1, which net to an amount of up to Seven Thousand Six
Hundred and Sixty-Four Dollars and Nineteen Cents ($7,664.19) (collectively, the
"Excluded Assets").
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1.2 TRANSFER OF PATENTS. On the terms and subject to the conditions in
this Agreement, Shareholder will convey, transfer, assign and deliver to
Purchaser on the Closing Date, certain patents, patent applications or invention
disclosures set forth in SCHEDULE 1.2 and related know-how that are used in
connection with the conduct of the Business (the "Patents"), and Seller
covenants and agrees that all such assets relating to the Business are disclosed
therein. Seller will execute any documents deemed necessary by Purchaser to
secure or perfect the transfer of such Patents to Purchaser, and will provide
reasonable assistance to Purchaser in any enforcement that Purchaser may, in its
discretion, seek to undertake relative thereto.
1.3 LEASE OF REAL PROPERTY. Shareholder will lease to Purchaser certain
real property containing approximately _____ acres, together with the
improvements thereon, known for street numbering purposes as 0000 X.X. Xxxxxxx
00, Xxxxxxxxx, Xxxxxx and more particularly described on the lease (the "Lease")
attached hereto as EXHIBIT A (the "Leased Property" and, together with the
Patents and the Acquired Assets, the "Subject Assets").
1.4 ASSUMPTION OF LIABILITIES. Subject to the conditions in this
Agreement, on the Closing Date, Purchaser will deliver an undertaking in form
and substance reasonably satisfactory to Shareholder, Sellers and their counsel
pursuant to which Purchaser will assume and agree to pay, perform and discharge
(i) all obligations and liabilities of Sellers to the extent reflected or
reserved against in each Sellers balance sheet as of January 31, 1995, included
in the Financial Statements (defined below), (ii) all obligations and
liabilities of each Seller arising after the Closing Date under any contracts,
agreements, instruments and arrangements listed on SCHEDULE 1.4 to this
Agreement and (iii) all current liabilities of each Seller arising after the
date of such balance sheet in the ordinary course of business and not in
violation of this Agreement PROVIDED, HOWEVER, that Purchaser will not assume
any liability of Sellers incurred or arising in connection with (i) any tax
obligations of Sellers or Shareholder of any nature whatsoever (including
penalties, interest and additions to tax); (ii) any product liability claims
related to products shipped or in finished goods inventory as of the close of
business on the Closing Date; (iii) any liabilities related to any violation of
any Environmental Laws (defined below) arising prior to the close of business on
the Closing Date; (iv) any liabilities related to Sellers' Benefit Plans
(defined below); and (v) any liability or obligations of Sellers and/or
Shareholder to The First National Bank of Wamego or the U.S. Small Business
Administration under loan number GP 762-047-30-03-KC and related note dated
October 12, 1994. Any of the foregoing notwithstanding, Purchaser will not
assume any other obligations or liabilities of Sellers or Shareholder,
including, without limitation, those arising out of or in connection with the
negotiation and preparation of this Agreement or the consummation of the
transactions provided for in this Agreement which shall be borne personally by
Shareholder. The liabilities to be assumed by Purchaser hereunder are
collectively referred to as the "Assumed Liabilities."
1.5 METHOD OF CONVEYANCE AND TRANSFER. The conveyance, transfer and
delivery of the Subject Assets will be effected by bills of sale, endorsements,
assignments and other instruments of transfer, all in such form as Purchaser
reasonably requests, vesting in Purchaser good and marketable title to the
Subject Assets, free and clear of all covenants, conditions, easements, liens,
charges, security interests, adverse claims, encumbrances, demands or other
title defects or restrictions of any kind.
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1.6 FURTHER ASSURANCES. Each Seller and Shareholder, at any time and
from time to time after the Closing Date, upon request of Purchaser, will do,
execute, acknowledge and deliver, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be reasonably
required for the better conveying, transferring, assigning, and delivering to
Purchaser, or to its successors and assigns, and for aiding and assisting in
collecting and reducing to possession, all the Subject Assets.
ARTICLE II
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PAYMENT OF PURCHASE PRICE
-------------------------
2.1 PAYMENT BY PURCHASER.
(a) At the Closing, Purchaser will pay to Sellers and
Shareholder the purchase price for the Subject Assets, as follows:
(i) By certified or bank check in immediately available
funds or by wire transfer to an account designated by Sellers
or Shareholder, as the case may be, Two Hundred Thousand
Dollars ($200,000) payable to Aero-Mod in partial payment for
its Acquired Assets, Four Hundred Thousand Dollars ($400,000)
payable to Resi-Tech in partial payment for its Acquired
Assets and Three Hundred Thousand Dollars ($300,000) payable
to Shareholder in partial payment for the Patents.
(ii) Purchaser will issue to Shareholder, in partial
payment for the Patents, its convertible subordinated
promissory note (the "Convertible Subordinated Promissory
Note") in the form of EXHIBIT B to this Agreement, dated as of
the Closing Date and payable to Shareholder in the principal
amount of Four Hundred Thousand Dollars ($400,000). The
Convertible Subordinated Promissory Note will be convertible
into shares of common stock of Waterlink, as provided for
therein.
(iii) Purchaser will issue to Aero-Mod, in partial
payment for its Acquired Assets, its subordinated promissory
note (the "Subordinated Promissory Note") in the form of
EXHIBIT C to this Agreement, dated as of the Closing Date and
payable to Aero-Mod in the principal amount of One Hundred
Fifty Thousand Dollars ($150,000).
(iv) Purchaser will issue to Resi-Tech, in partial
payment for its Acquired Assets, its subordinated promissory
note (the "Second Subordinated Promissory Note") in the form
of EXHIBIT D to this Agreement, dated as of the Closing Date
and payable to Resi-Tech in the principal amount of One
Hundred Fifty Thousand Dollars ($150,000). The Convertible
Subordinated Promissory Note, Subordinated Promissory Note and
Second Subordinated Promissory Note are collectively referred
to as the "Promissory Notes".
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(b) After the Closing, Purchaser will pay to each of Resi-Tech
and Shareholder as additional purchase price for the Resi-Tech Acquired
Assets and the Patents, the Earn-Out Payments referred to in Section
2.2 below, if applicable.
2.2 EARN-OUT.
(a) In addition to the payments referred to in Section 2.1(a)
above and with respect to the period set forth below (the "Earn-Out
Period"), Purchaser shall pay to Resi-Tech and Shareholder the amount
set forth below (the "Earn-Out Payment") based on the adjusted earnings
before income and taxes ("Adjusted EBIT") (as more fully defined below)
of the Business. The Earn-Out Payment, if any, shall be allocated
between Resi-Tech and Shareholder as is set forth on the attached
EXHIBIT E.
(b) "Adjusted EBIT" for any period of determination shall mean
the earnings before interest (other than interest on borrowings used
for working capital purposes) and federal, state and local taxes of any
nature whatsoever of the Business and determined as if the Business was
an independent corporate entity whether or not it is subsequently
merged into another entity or other businesses or assets not relating
to the Business are operated or acquired by Purchaser, determined in
accordance with generally accepted accounting principals consistently
applied, from period to period, based on the Sellers Financial
Statements (defined below) at the Closing.
(c) In accordance with the following table, the Earn-Out
Payment shall be payable for the Earn-Out Period if the Adjusted EBIT
equals or exceeds the amount set forth below:
EARN-OUT PERIOD ADJUSTED EBIT EARN-OUT PAYMENT
--------------- ------------- ----------------
Eighteen (18) month $1,300,000 $300,000
period ending
September 30, 1997
To the extent the Earn-Out Period is different than the
expected eighteen (18) month period set forth above, the Adjusted EBIT
target will be adjusted to reflect the actual months (or partial months
based on days elapsed) included at an average expected monthly EBIT of
Seventy-Two Thousand Two Hundred Twenty-Two Dollars and Twenty-Two
Cents ($72,222.22).
For example, if there are only sixteen (16) full months after
the Closing, the Adjusted EBIT target shall be the product of the
average expected monthly EBIT of Seventy-Two Thousand Two Hundred
Twenty-Two Dollars and Twenty-Two Cents ($72,222.22) times sixteen (16)
which would equal One Million One Hundred Fifty-Five Thousand Five
Hundred and Fifty-Five Dollars and Forty Cents ($1,155,555.40).
(d) Purchaser shall deliver to each of Resi-Tech and
Shareholder within ninety (90) days of the end of the Earn-Out Period,
(i) Purchaser's financial statements covering the Earn-Out Period, and
(ii) a statement setting forth the computation and amount of Adjusted
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EBIT for the Earn-Out Period (the "Earn-out Statement") and shall pay
the Earn-Out Payment, if any, within thirty (30) days of the delivery
of the Earn-out Statement.
(e) Resi-Tech and Shareholder shall have thirty (30) days from
the date the Earn-Out Statements are delivered to it or him, as the
case may be, to furnish Purchaser with a letter requesting access to
the books and records of Purchaser necessary to compute Adjusted EBIT
and upon receipt of such request, Purchaser shall promptly make
available such books and records to Resi-Tech and Shareholder.
Resi-Tech and Shareholder shall have thirty (30) days after such access
is granted to furnish Purchaser with a letter setting forth those items
with which he or it disagrees and the reasons for each such
disagreement. The parties shall promptly seek to reconcile any such
disagreement; if they fail to reach an agreement within thirty (30)
days of receipt by Purchaser of such letter, then an independent public
accounting firm shall be retained by the parties to settle any
remaining disagreement, and the decision of said firm shall be final
and binding on all parties to this Agreement. If Resi-Tech and
Shareholder, on the one hand, and Purchaser, on the other hand, cannot
agree on an accounting firm to settle any remaining disagreement within
such thirty (30) day period, then Resi-Tech and Shareholder, on the one
hand, and Purchaser, on the other hand, shall each designate one (1)
independent public accounting firm and the firms so designated shall
select an independent public accounting firm and the decision of said
firm shall be final and binding on all parties to this Agreement. The
fees of all accounting firms involved shall be paid by the party which
fails to prevail with respect to the dispute. The payment of the
portion of the Earn-Out Payment in dispute, if any, or overpayment due
to Purchaser, if any, as the case may be, ultimately determined
(pursuant to the procedures set forth in this paragraph) to be due
Resi-Tech and Shareholder shall be made within fifteen (15) days of
such determination.
2.3 ALLOCATION OF PURCHASE PRICE. The parties agree to allocate the
purchase price, including the Assumed Liabilities and all other capitalizable
costs, among the Subject Assets for all purposes (including Financial accounting
and tax purposes) in accordance with the individual fair market value of the
Subject Assets as set forth on SCHEDULE 2.3, which schedule shall be prepared by
Purchaser and agreed to by Sellers prior to the Closing Date and shall be
adjusted post-closing to reflect actual balance sheet amounts. Purchaser and
Sellers shall file an IRS Form 8594 in accordance with the post-closing SCHEDULE
2.3 as required by Section 1060 of the Internal Revenue Code of 1986, as
amended. Aero-Mod's tax identification number is ________________________, Resi-
Tech's tax identification number is __________________, Shareholder's social
security number is __________________________, Purchaser's tax identification
number is 00-0000000 and Waterlink's tax identification number is 00-0000000.
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2.4 TRANSFER TAXES. All applicable sales and transfer taxes of any
nature whatsoever, if any, arising by reason of the transfer of the Subject
Assets under this Agreement will be borne by Sellers or Shareholder, as the case
may be.
ARTICLE III
-----------
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLERS
-----------------------------------------------------
AND SHAREHOLDER
---------------
Each Seller and Shareholder, jointly and severally, represent and
warrant to, and agree with, Purchaser and Waterlink as follows:
3.1 ORGANIZATION AND STANDING.
(a) Aero-Mod is a corporation duly organized, validly existing
and in good standing under the laws of the state of Kansas. Resi-Tech
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Kansas. Neither Seller owns any voting
stock or other capital stock of any other corporation, directly or
indirectly, nor is either Seller directly or indirectly a partner in
any general partnership. Each Seller has full power and authority to
carry on its business as and where now conducted and to own or lease
and operate its properties at and where now owned or leased and
operated by it, and is duly qualified to do business and is in good
standing in every jurisdiction in which the property owned, leased or
operated by it, or the nature of the business conducted by it, makes
such qualification necessary.
(b) Set forth on SCHEDULE 3.1 is a true and correct list of
all jurisdictions in which each Seller is qualified to do business as a
foreign corporation or partnership, and each jurisdiction where each
Seller does business or owns or leases property.
3.2 AUTHORITY OF SELLERS AND SHAREHOLDER; CONSENTS. The execution,
delivery and consummation of this Agreement by each Seller has been duly
authorized by the board of directors and the shareholder(s) of each Seller in
accordance with all applicable laws and the Articles of Incorporation and
By-Laws of each Seller, and at the Closing Date no further corporate action will
be necessary on the part of either Seller or Shareholder to make this Agreement
valid and binding on each Seller and Shareholder and enforceable against each
Seller and Shareholder in accordance with its terms. The execution, delivery and
consummation of this Agreement by each Seller and Shareholder (as applicable)
(i) is not contrary to the Articles of Incorporation or By-Laws of Seller, (ii)
does not now and will not, with the passage of time, the giving of notice or
otherwise, result in a violation or breach of, or constitute a default under,
any term or provision of any indenture, mortgage, deed of trust, lease,
instrument, order, judgment, decree, rule, regulation, law, contract, agreement
or any other restriction to which either Seller or Shareholder is a party or to
which either Seller or Shareholder or any of its or his assets are subject or
bound, (iii) will not result in the creation of any lien or other charge upon
any assets of either Seller or Shareholder, and (iv) will not result in any
acceleration or termination of any loan or security
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interest agreement to which either Seller or Shareholder is a party or to which
either Seller or Shareholder or any of its or his assets is subject or bound.
Except as may be listed on SCHEDULE 3.2, no approval or consent of any person,
firm or other entity or governmental body (including in connection with any
customer bids or proposals) is or was required to be obtained by either Seller
or Shareholder for the authorization of this Agreement or the consummation by
either Seller or Shareholder of the transactions contemplated in this Agreement.
3.3 BUSINESS RELATIONS. Other than as set forth on SCHEDULE 3.3,
Sellers are not required, in the ordinary course of business, to provide any
bonding or any other financial security arrangements in connection with any
transactions with any customers or suppliers. Sellers have not received any
notice of any disruption (including, without limitation, delayed deliveries or
allocations by suppliers) in the availability of any materials or products used
in its business and has no reason to believe that any such disruption will
occur. There are no sole source suppliers of goods, equipment or services used
by Sellers (other than public utilities) with respect to which practical
alternative sources of supply are unavailable.
3.4 LEASED PROPERTY. With respect to the Leased Property, except as
set forth on SCHEDULE 3.4:
(a) There is no condemnation proceeding or eminent domain
proceeding of any kind pending or, to the best knowledge of
Shareholder or Sellers, threatened against any of the Leased Property;
(b) The Leased Property is occupied under valid and current
certificates of occupancy or the like, and the transactions
contemplated by this Agreement will not require the issuance of any new
or amended certificates of occupancy or the like; there are no facts
known to Shareholder or Sellers which would prevent the Leased Property
from being occupied after the Closing Date in substantially the same
manner as before;
(c) The Leased Property does not violate, and all improvements
are constructed in compliance with, any applicable federal, state or
local statutes, laws, ordinances, regulations, rules, codes, orders or
requirements, including, without limitation, any building, zoning, fire
or environmental laws or codes (the "Laws and Ordinances") and
Shareholder will lease the Leased Property free from any such
violations;
(d) Sellers and/or Shareholder has obtained all appropriate
licenses, permits, building permits and occupancy permits that are
required by the Laws and Ordinances for the operations of the
businesses of Sellers on the Leased Property;
(e) There are no outstanding variances or special use permits
affecting the Leased Property or its uses;
(f) No notice of a violation of any Laws and Ordinances, or of
any covenant, condition, easement or restriction affecting the Leased
Property or relating to its use or occupancy has been given to Sellers,
nor are Sellers aware of any such violation;
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(g) No portion of the Leased Property is located within a
special flood plain area as designated by the Federal Emergency
Management Agency or other applicable government authority;
(h) The Leased Property has and will have as of the Closing
Date adequate potable water supply, storm and sanitary sewage
facilities, telephone, gas, electricity, fire protection, means of
ingress and egress to and from public highways and, without limitation,
other required public utilities. All utility lines and facilities
presently serving the Leased Property are serviced and maintained by
the appropriate public or quasi-public entity. All utilities enter the
Leased Property through adjoining public streets or, if they pass
through adjoining private land, they do so in accordance with valid
public easements;
(i) Sellers and Shareholder have no knowledge of improvements
made or contemplated to be made by any public or private authority, the
costs of which are to be assessed as special taxes or charges against
the Leased Property, and there are no present assessments;
(j) All improvements constituting the Leased Property are
without structural defects, are located entirely within the boundary
lines of the Leased Property and do not encroach upon any street or
land of others; and
(k) The Leased Property either (a) is freely accessible
directly from all public streets on which it abuts, or (b) uses
adjoining private land to access the same in accordance with valid
public easements. Sellers and Shareholder have no knowledge of any
condition which would result in the termination of such access;
(l) Sellers and Shareholder have no boundary or water drainage
disputes with the owners of any premises adjacent to the Leased
Property and have no knowledge of any such dispute involving former
owners of the Leased Property;
(m) Sellers and Shareholder have no notice of outstanding
requirements or recommendations by the insurance companies who issued
the insurance policies insuring the Leased Property, or by any board of
fire underwriters or other body exercising similar functions requiring
or recommending any repairs or work to be done on the Leased Property;
(n) Shareholder and Sellers will obtain from all mortgagees of
the Leased Property a so-called "Non-Disturbance Agreement" (the
"Non-Disturbance Agreement") assuring Purchaser that so long as
Purchaser is not in default of the Lease, Purchaser's tenancy will not
be disturbed and containing such other terms and provisions as are
reasonably acceptable to Purchaser.
3.5 INVESTMENTS IN OTHER ENTITIES. Except as set forth on SCHEDULE 3.5,
Sellers do not have any direct or indirect equity interest, or debt convertible
into any equity interest, in any entity, corporation or otherwise, or any right,
warrant or option to acquire any such interest.
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3.6 TITLE TO AND CONDITION OF SUBJECT ASSETS. Except as set forth on
SCHEDULE 3.6, each of Sellers and Shareholder own and possess and will own and
possess as of the Closing Date all right, title and interest in and to the
Subject Assets, including, without limitation, good and merchantable title to
the Subject Assets, in each case free and clear of all conveyances, conditions,
easements, liens, charges, security interests, adverse claims, encumbrances,
encroachments, reservations, easements, limitations, servitudes, other title
defects or restrictions of any nature. Each of Sellers and Shareholder have and
will have as of the Closing Date the right, power and authority to convey,
transfer, lease, assign and deliver the Subject Assets free and clear of any
title defect or restriction, including, without limitation, those enumerated in
this SECTION 3.6. All tangible Subject Assets of Sellers are in Sellers'
possession or under its control, and all equipment included in the Subject
Assets is in good operating condition and repair, subject only to routine
maintenance and ordinary wear and tear consistent with the age and use thereof,
and is fit and adequate for the purposes intended. Each of Sellers and
Shareholder enjoy peaceful and quiet possession of the Subject Assets pursuant
to or by all of the deeds, bills of sale, leases, licenses and other agreements
under which it is operating its business. The Subject Assets comprise all assets
of any kind or character necessary for the operation of Sellers' business as it
is presently conducted.
3.7 FINANCIAL STATEMENTS. Prior to the date of this Agreement, each
Seller provided Purchaser with the following financial statements of each Seller
and will provide to Purchaser monthly financial statements for the months after
January 31, 1996 (the "New Monthly Financial Statements") as soon as practicable
after the end of each month, to wit: the consolidated balance sheets and
statements of income at and for the fiscal years ended October 31, 1993, October
31, 1994 and October 31, 1995 and the consolidated balance sheets and statements
of income at and for the five (5) month period ending March 31, 1995 (the
"Sellers Financial Statements").
The Sellers Financial Statements each respectively (i) have been (and,
with respect to the New Monthly Statements, when delivered, will have been)
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods, (ii) present fairly (and, with respect to
the New Monthly Statements, when so delivered, will present fairly), in all
material respects, each Seller's financial position, results of its operations
and cash flows at and for the periods therein specified, (iii) are (and, with
respect to the New Monthly Statements, when so delivered, will be) true and
complete, (iv) are (and, with respect to the New Monthly Statements, when so
delivered, will be) consistent with the books and records of each Seller, and
(v) with respect to all of the unaudited Sellers Financial Statements, include
(and, with respect to the New Monthly Statements, when so delivered, will
include) all adjustments, consisting only of normal recurring adjustments,
required for a fair presentation. The Sellers Financial Statements will be
deemed to include any accompanying notes and schedules.
3.8 ABSENCE OF CERTAIN CHANGES. Since October 31, 1995, each Seller has
actively conducted its business in the ordinary and regular course consistent
with past practice. Since such date, there has not been any material adverse
change in the business, condition (financial or otherwise), assets, liabilities,
results of operations or prospects of Sellers. To Sellers' knowledge, there has
not occurred any event or governmental regulation or order which could cause
such a
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change, nor to Sellers' knowledge, is the occurrence of any such event,
regulation or order threatened. Except as set forth on SCHEDULE 3.8, without
limiting the generality of the foregoing, since October 31, 1995, there has not
been:
(a) Any increase made or promised in the compensation or other
remuneration payable or to become payable by Sellers to any of its
employees, agents or partners;
(b) Any mortgage or pledge of, or any other lien, charge or
encumbrance of any kind, on any of the assets, tangible or intangible,
of Sellers, except in the ordinary course of business;
(c) Any sale or transfer of any assets, except for sales of
inventory in the ordinary course of business, or settlement,
cancellation or release of any indebtedness owing to Sellers or of any
other claims of Sellers, except in the ordinary course of business;
(d) Any sale, license, assignment or transfer by Sellers or
Shareholder of any patents, trademarks, trade names or other similar
intangible assets;
(e) Any amendments or termination of any material contract,
agreement or license to which Sellers are a party or to which Sellers
or any of its assets are subject or bound;
(f) Any commitment made (through negotiations or otherwise) or
any liability incurred to any labor organization by Sellers;
(g) Any payment, declaration or setting aside by Sellers of
dividends or a return of capital or any distribution by Sellers of any
cash or other assets to any of its shareholders in redemption of or as
the purchase price for any of its capital stock or in discharge or
cancellation in whole or in part of any indebtedness owing (whether in
payment of principal, interest or otherwise) to any of its
shareholders;
(h) Any discharge or satisfaction by Sellers of any lien,
encumbrance, obligation or liability (accrued, absolute, fixed or
contingent), other than those shown on the January 31, 1996 balance
sheet of the Sellers Financial Statements that have been discharged or
satisfied in the ordinary course without acceleration and other than
those incurred and discharged in the ordinary course of business
consistent with past practice;
(i) Any transaction entered into by Sellers other than in the
ordinary course of business consistent with past practice;
(j) Any institution by Sellers of a bonus, stock option,
profit-sharing, pension plan or similar arrangement or any changes in
any such existing plans;
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(k) Any incurrence (whether discharged or not) of any
obligation or liability (whether accrued, absolute, fixed or
contingent) other than current liabilities incurred, and obligations
entered into, in the ordinary course of business consistent with past
practice;
(l) Any adverse change in collection loss experience;
(m) Any material loss, damage or destruction to any of
Sellers' properties (whether or not covered by insurance) or any labor
trouble; or
(n) Any change in accounting principles or practices from
those utilized in the preparation of the Sellers Financial Statements.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
January 31, 1996 balance sheet of the Sellers Financial Statements, or on
SCHEDULE 3.9, Sellers are not obligated for, nor are any of its assets or
properties subject to, any liabilities or adverse claims or obligations,
absolute or contingent, except those incurred in the ordinary course of business
since January 31, 1996, and Sellers are not in default with respect to any terms
or conditions of any material liability or obligation. There are no facts known
to Sellers that might reasonably serve as a basis, in whole or in part, for any
material liabilities or obligations not disclosed in this Agreement, in the
Sellers Financial Statements or in the Schedules.
3.10 TAXES.
(a) Each Seller has filed on a timely basis (or will file when
due) all income, franchise, sales, withholding and other tax returns
and reports of every nature required by law to be filed by it
accurately reflecting all taxes owing to (including any taxes required
to be withheld and paid over to) the United States or any other
government or any government subdivision, state or local, or any other
taxing authority, and has paid in full, or in the case of taxes not yet
due and payable, made adequate provision for the payment of, all taxes
(including penalties, interest and additions to tax) for which it has
or may have liability, including, without limitation, withholding taxes
and taxes payable to any jurisdiction by reason of the transfer of the
Subject Assets pursuant to this Agreement. Sellers have no knowledge of
any unassessed tax deficiency proposed or threatened against Sellers as
a result of the operation of its business or otherwise. There are no
liens on the Subject Assets as a result of any tax liabilities except
for taxes not yet due and payable. There are, and after the date of
this Agreement will be, no tax deficiencies (including penalties,
interest and additions to tax) of any kind assessed against or relating
to Sellers with respect to any taxable periods ending on or before, or
including, the Closing Date of a character or nature that would result
in liens or claims on any of the Subject Assets or on Purchaser's title
to or use of the Subject Assets, or that would result in any claim
against Purchaser.
(b) Except as set forth on SCHEDULE 3.10, there are no
outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state, local, or foreign tax
return of any nature whatsoever of Sellers for any period. The federal
income tax returns of Sellers have never been audited by the Internal
Revenue Service. No state,
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local or foreign taxing authority has audited any tax return or report
filed by Sellers for any taxable period. Sellers have furnished to
Purchaser complete and correct copies of all federal, state and foreign
tax returns filed by Sellers for each of its fiscal years beginning
after January 1, 1990. Sellers have furnished to Purchaser complete and
correct copies of all audit reports received by Sellers from the U.S.
Treasury Department, or from any state, local or foreign taxing
authority, with respect to the audit of any federal, state, local or
foreign tax return for any taxable period beginning after January 1,
1990.
3.11 INDEBTEDNESS TO OFFICERS, DIRECTORS AND SHAREHOLDERS. Other than
as listed on SCHEDULE 3.11, Sellers are not indebted to any of its current or
former shareholders, officers or directors (or to members of their immediate
families) in any amount whatever other than for salaries payable or for expenses
incurred on behalf of Sellers in the ordinary course of business.
3.12 ARTICLES OF INCORPORATION AND BY-LAWS. True, accurate and complete
copies of the Articles of Incorporation and By-laws of each Seller, together
with all amendments thereto, have been delivered to Purchaser or its counsel.
3.13 CORPORATE MINUTES. Each Seller has furnished or made available to
Purchaser and its counsel the corporate record books of such Seller and the same
are accurate and complete and reflect all resolutions adopted and all actions
taken, authorized or ratified by the shareholders and directors of such Seller.
Copies of all corporate minutes of meetings held and of all written actions
taken after the date of this Agreement will be furnished to Purchaser promptly,
and in all events, prior to the Closing Date.
3.14 BROKERAGE AND FINDER'S FEES. No shareholder, officer, director or
agent of either Seller has incurred any liability to any broker, finder or agent
for any brokerage fees, finder's fees, or commissions with respect to the
transactions contemplated by this Agreement.
3.15 ACCOUNTS RECEIVABLE. Each Seller has previously delivered to
Purchaser an aging schedule as of a date not more than thirty (30) days prior to
the date of this Agreement, which is true, correct and complete, of the accounts
receivables of such Seller as of that date. Sellers will update the list as of a
date not more than five (5) days prior to the Closing Date. The reserves for
doubtful receivables and uncollectible accounts that will be reflected on the
books of each Seller as of the Closing Date will not exceed one percent (1%) of
the then aggregate accounts receivable, and will be sufficient to provide for
any losses that may arise in connection with the collection of the accounts
receivable. The accounts receivable as reflected on the books of each Seller as
of the Closing Date, net of such reserves, will be fully collectible in the
ordinary course of business within ninety (90) days after the Closing Date,
without resort to legal proceedings. All of such accounts receivable will
represent valid claims that have arisen in the ordinary course of business.
3.16 EMPLOYMENT MATTERS.
(a) Except as set forth on SCHEDULE 3.16, Sellers are not a
party to, participant in, or bound by, any collective bargaining
agreement, union contract or employment, bonus, deferred compensation,
insurance, pension, profit sharing or similar personnel arrangement,
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any stock purchase, stock option or other stock plans or programs or
any employee termination or severance arrangement.
(b) Except as set forth on SCHEDULE 3.16, the employment by
Sellers of any person including employees of any related entity for
which either Seller provides or has provided prior to Closing any or
all compensation, benefits and/or labor supervision (whether or not
there is a written employment agreement) may be terminated for any
reason whatsoever not inconsistent with current law, without penalty or
liability of any kind.
(c) Except as set forth on SCHEDULE 3.16, there are no
administrative or judicial proceedings against either Seller active,
pending or, to the best of Sellers' and Shareholder's knowledge,
threatened under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Fair Labor Standards Act, the
Occupational Safety and Health Act, the National Labor Relations Act or
any other foreign, federal, state or local law (including common law),
ordinance or regulation relating to employees of either Seller
including employees of any related entity for which either Seller
provides or has provided prior to Closing any or all compensation,
benefits, and/or labor supervision.
(d) The relation of Sellers with its respective employees
including employees of any related entity for which either Seller
provides or has provided prior to Closing any or all compensation,
benefits, and/or labor supervision is good and there are no pending or,
to the best of Sellers' and Shareholder's knowledge, threatened labor
difficulties.
3.17 NO DEFAULTS. Except as set forth on SCHEDULE 3.17 no Seller is in
default (nor is any such default alleged to exist) under the terms of any
written or oral contract, agreement, lease, license, mortgage, deed of trust,
note, guaranty, instrument or understanding (collectively, "Contracts") to which
it is a party or to which any of its assets, business or operations is subject,
nor has any condition or event occurred, nor, to Sellers' knowledge is any
condition or event threatened, which, after notice or the passage of time, or
both, would constitute a default under any Contract. To Sellers' knowledge, no
such default, condition or event exists or is alleged to exist with respect to
the performance of any obligation of any other party to any of the Contracts.
3.18 NON-TRADE ACCOUNTS RECEIVABLE. SCHEDULE 3.18 is a true and correct
list of all of each Seller's accounts receivable (other than trade accounts
receivable).
3.19 MATERIAL CONTRACTS. SCHEDULE 3.19 is a true and correct list of
each Contract to which each Seller is a party or by which any of its assets,
businesses or operations is bound or affected. SCHEDULE 3.19 includes a
description of any consents or approvals required of third parties under the
terms of such Contracts for the consummation of the transactions contemplated by
this Agreement. SCHEDULE 3.19 excludes any Contract that (i) may be cancelled by
Sellers on thirty (30) days' notice or less without incurring a liability or
obligation on the part of Sellers for such cancellation and which is not
material to its business, condition (financial or otherwise), assets,
liabilities, results of operations or prospects, or (ii) involves or is
reasonably expected to involve the payment of consideration having an aggregate
value of less than Ten Thousand Dollars ($10,000) and that is not material to
the Business. A true, correct and complete copy of each
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written, and a description of each oral, Contract, so listed has been delivered
to Purchaser or its counsel.
3.20 PURCHASE ORDERS. SCHEDULE 3.20 is a true and complete list of all
purchase orders under which each Seller is or will become obligated to pay any
particular vendor an aggregate sum in excess of Five Thousand Dollars ($5,000).
3.21 INDEBTEDNESS. SCHEDULE 3.21 is a true and complete list of all
indebtedness, including, without limitation, trade accounts payable in excess of
Ten Thousand Dollars ($10,000) owed or to be owed by each Seller, including a
description of the terms of payment, and, if such indebtedness is secured, a
description of all properties or other assets pledged, mortgaged or otherwise
hypothecated (voluntarily or involuntarily) as security.
3.22 LITIGATION. SCHEDULE 3.22 is a true and complete list of all
administrative or judicial proceedings to which any Seller or Shareholder is a
party or, to the best of Sellers' and Shareholder's knowledge, to which it or he
is threatened to be made a party which relate, directly or indirectly, to any of
the Subject Assets, including, without limitation, proceedings that could affect
title to or interests in the Subject Assets. There is no action, suit, claim,
demand, arbitration or other proceeding or investigation, administrative or
judicial, pending or, to the best of Sellers' and Shareholder's knowledge,
threatened against or affecting any Seller or any of its assets, including,
without limitation, any relating to so-called product liability, which, if
adversely determined or resolved, would have an adverse effect on the Business,
Subject Assets, condition (financial or otherwise), results of operations or
prospects of any Seller, or any provisions of, or the validity of, or rights
under, any leases or other operating agreements, licenses, permits or grants of
authority of Sellers. Neither Sellers nor Shareholder have received notice that
it or he is the subject of any governmental investigation and neither Sellers
nor Shareholder is subject to, nor is he or it in default with respect to, any
order, writ, injunction or decree of any court, or of any federal, state, local
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. SCHEDULE 3.22 indicates which of the
matters listed are covered by valid insurance and the extent of such coverage.
3.23 INSURANCE. SCHEDULE 3.23 is a true and correct list of all the
policies of insurance covering the business, properties and assets of Sellers
presently in force (including as to each (i) risk insured against, (ii) name of
carrier, (iii) policy number, (iv) amount of coverage, (v) amount of premium,
(vi) expiration date and (vii) the property, if any, insured, indicating as to
each whether it insures on an "occurrence" or a "claims made" basis. The
insurance described on SCHEDULE 3.23 does and will, on the Closing Date, insure
Sellers in the amounts and against such perils as are generally maintained for
comparable businesses. All of the insurance policies set forth on SCHEDULE 3.23
are in full force and effect and all premiums, retention amounts and other
related expenses due have been paid, and Sellers have not received any notice of
cancellations with respect to any of the policies. Sellers have not been refused
any insurance by any insurance carrier to which it has applied for insurance
during the last five (5) years. There are no circumstances existing which would
enable any insurer to avoid liability under any of Sellers' policies.
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3.24 TRANSACTIONS WITH OFFICERS, ETC.
(a) SCHEDULE 3.24(a) is a true and correct list of the
ownership of any Seller or Shareholder in any entity that has any
existing contractual relationship, oral or written, or other business
relationship with Sellers or Shareholder.
(b) SCHEDULE 3.24(b) is a true and correct list of all
Contracts (oral or written), including, but not limited to, any loans
or leases, to which any Seller is a party and to which any of the
officers, directors or other employees or shareholders of such Seller,
or members of their immediate families or other corporations,
partnerships or other entities in which any of them has a material
interest, is also a party. SCHEDULE 3.24(b) includes a list of
indebtedness of any such person or entity to any Seller.
(c) Except as set forth on SCHEDULE 3.24(c), none of Sellers
nor any officer, director, employee or shareholder of either Seller, or
members of their immediate families or other corporations, partnerships
or other entities in which any of them has a material interest, has any
direct or indirect interest in any competitor, supplier or customer of
either Seller or in any person, firm or entity from whom or to whom
Sellers lease any property, or in any other person, firm or entity with
whom Sellers transact business of any nature.
3.25 EMPLOYEES/INDEPENDENT SALES REPRESENTATIVES.
(a) SCHEDULE 3.25(a) is a true and correct list of all
employees of each Seller and of any related entity for which either
Seller provides or has provided prior to Closing any or all
compensation, benefits and/or labor supervision (as used in this
Agreement, the term "employees" includes employees, salespersons,
consultants, agents, and all other persons associated with the
Sellers), their accrued vacation and sick pay, the nature of their
duties and the date and amount of their last increase in compensation.
A true, correct and complete copy of each written employment contract
and a description of each oral employment agreement with any employee
has been delivered to Purchaser or its counsel.
(b) SCHEDULE 3.25(b) is a true and correct list of all
independent or outside sales representatives of each Seller and of any
related entity for which either Seller provides or has provided prior
to Closing any or all compensation, benefits and/or labor supervision
("Independent Sales Representatives"), the length of time they have
been acting in such capacity and the amount of sales attributable to
each Independent Sales Representative for each of the last three years
(or such shorter period of time if acting in such capacity for less
than three years). A true, correct and complete copy of each written
agreement and a description of each oral agreement with respect to each
Independent Sales Representative has been delivered to Purchaser or its
counsel.
3.26 PATENTS, TRADEMARKS, COPYRIGHTS AND SIMILAR MATTERS.
(a) Sellers or Shareholder have never been charged with
infringement or violation of any patent, trademark, service xxxx, trade
name or copyright. Neither Seller
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nor Shareholder is using or has in any way made use of any patentable
or unpatentable invention, or any confidential information or trade
secret, of any former employer of any present or past employee of
either Seller. All patents, trademarks, service marks, trade names and
copyrights (the "Specified Items"), and all applications or
registrations (including those whose use is limited to one or more
states of the United States), owned or used by either Seller or by
Shareholder (in connection with the Business or Subject Assets) are
listed on SCHEDULE 3.26 and, to the extent indicated, have been duly
registered in, filed in or issued by the United States Patent Office or
the corresponding agency or office of each of such states. Except as
indicated on SCHEDULE 3.26, which Schedule shall include, without
limitation, the Exclusive License (as defined below) Shareholder and
Sellers are the sole and exclusive owner of, or have the sole and
exclusive rights to use, the Specified Items except for the rights of
licensees (whose names are listed on SCHEDULE 3.26) or as specified on
such Schedule. Except as set forth on SCHEDULE 3.26, none of Sellers or
Shareholder use any of the Specified Items by consent of any other
party and the same are free and clear of any attachments, liens,
claims, encumbrances or agreements. Except as listed on SCHEDULE 3.26,
there are no claims or demands of any other person, firm or corporation
pertaining to any of the Specified Items, and no proceedings have been
instituted, are pending or, to the knowledge of Sellers or Shareholder,
are threatened which challenge the right of Sellers or Shareholder in
respect of any of the Specified Items. None of the Specified Items
infringes on, or, to the knowledge of Sellers or Shareholder, is being
infringed on by others, and none of the Specified Items is subject to
any outstanding order, decree, judgment, stipulation or agreement
restricting the scope of its use.
(b) Aero-Mod and Resi-Tech are the sole and exclusive owners,
and have the full right, power and authority to transfer to Purchaser
the exclusive use of, the name "Aero-Mod Incorporated" and "Resi-Tech,
Inc." respectively. Sellers do not use the name by consent of any other
person or entity, and each Seller owns its respective name free and
clear of any attachments, liens, claims, encumbrances or agreements.
There are no claims or demands of any other person or entity pertaining
to the use of the name and no proceedings have been instituted or, to
the knowledge of the Sellers or Shareholder, are threatened, which
challenge the right of any Sellers in respect of its name; and the use
by each Seller of its name does not infringe on or, to the knowledge of
Sellers, is not being infringed on by others, and is not subject to any
outstanding order, decree, judgment, stipulation or agreement
restricting the scope of its use.
(c) True, correct and complete copies of all patents,
trademarks, service marks, trade names and copyrights, and of all
related applications or registrations, that are listed on SCHEDULE 3.26
have been delivered to Purchaser or its counsel.
3.27 EMPLOYEE BENEFIT PLANS AND OTHER PLANS.
(a) For purposes of this Section 3.27, the following
definitions apply:
(i) "Benefit Plan" means each deferred compensation,
equity compensation, pension, profit-sharing, retirement and
welfare plan, each plan,
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arrangement or policy for the provision of bonuses and/or
severance benefits, each "employee benefit plan" (as defined
in ERISA Section 3(3)) and each fringe benefit plan that a
Controlled Group Member maintains, contributes to, has
liability with respect to, or has an obligation to contribute
to;
(ii) "Controlled Group Member" means Sellers and each
other person or entity required to be aggregated with Sellers
under Code Section 414(b), (c), (m) or (o); and
(iii) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
(b) No Controlled Group Member has directly or indirectly
acted in any manner or incurred any obligation or liability, and will
not directly or indirectly act in any manner in the future or incur any
obligation or liability in the future with respect to any Benefit Plan
which has or could give rise to any liens on any of the Subject Assets,
or which could result in any liability or obligation to Purchaser,
whether arising out of the establishment, operation, administration or
termination of such Benefit Plans or the transactions contemplated by
this Agreement.
(c) No Controlled Group Member directly or indirectly
maintains, sponsors, contributes to, has an obligation to contribute to
or has liability with respect to, and has not directly or indirectly
maintained, sponsored, contributed to or had an obligation to
contribute to at any time within the ten (10) year period ending on the
Closing Date, any Benefit Plan which is subject to Title IV of ERISA
(including, without limitation, any multi employer plan subject to the
requirements of Subtitle E of such Title).
(d) SCHEDULE 3.27 is a true and correct list of all Benefit
Plans that each Seller, directly or indirectly, sponsors, maintains or
contributes to or has, directly or indirectly, sponsored, maintained,
or had an obligation to contribute to at any time within the five (5)
year period ending on the Closing Date.
(e) Each Controlled Group Member has timely provided or will
timely provide all notices and any continuation of health benefit
coverage (including, without limitation, medical and dental coverage)
required to be provided to employees, former employees or the
beneficiaries or dependents of such employees or former employees,
under Part 6 of Subtitle B of Title I of ERISA or Code Section 4980B to
the extent such notices and continuation of health benefit coverage are
required to be provided by reason of the events occurring prior to or
on the Closing Date or by reason of the transactions contemplated by
this Agreement.
3.28 ENVIRONMENTAL MATTERS.
(a) There have been no actual or threatened "releases" of
"hazardous substances" "hazardous or infections wastes," "hazardous
materials," "toxic substances,"
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pollutants, contaminants, asbestos or petroleum or petroleum-based
products ("Hazardous Substances") into the "environment" at any real
property "owned" or "operated," in whole or in part, by any Seller or
Shareholder as those terms are used in any federal, state or local law,
regulation, permit, agreement, rule or order relating to the
environment or health and safety matters, including, but not limited
to, the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601, ET SEQ. ("CERCLA") Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.)
("RCRA"), the Clean Water Act (33 U.S.C. Section 1251 ET SEQ.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.),
the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 ET SEQ.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. Section 11001 ET
SEQ.) and the Occupational Safety and Health Act (29 U.S.C. Section 651
ET SEQ.), all as amended (collectively, "Environmental Laws");
(b) There has been no "disposal" of "solid waste" as those
terms are used in RCRA at any real property owned or operated by any
Seller or Shareholder;
(c) No real property owned or operated by any Seller or
Shareholder poses an "imminent and substantial endangerment to health
or the environment" within the meaning of Sections 7002 and 7003 of
RCRA or to the public health and safety within the meaning of common
law and statutory provisions relating to nuisances;
(d) Neither Seller or Shareholder has arranged with another
for disposal or treatment, or arranged with a transporter for transport
for disposal or treatment of Hazardous Substances generated by it at a
site in violation of Environmental Laws where there has been an actual
or threatened release of Hazardous Substances into the environment;
(e) Neither Seller or Shareholder is presently in violation
of, and have not previously violated, any Environmental Laws;
(f) Each of Seller and Shareholder has obtained all permits,
registrations, plan approval and other governmental authorizations
("Governmental Authorizations") necessary under Environmental Laws to
transact its business at all locations and in the manner such business
is presently conducted and all such Governmental Authorizations are
unexpired and in good standing, and each Seller or Shareholder is in
compliance with all of the terms and conditions of such Governmental
Authorizations;
(g) Neither Seller or Shareholder has received an order,
complaint, claim, notice of violation, citizen suit demand or other
communications ("Violation"), oral or written, asserting that he or it
is in violation or has violated any provisions of Environmental Laws,
and neither Sellers nor Shareholder knows of any pending or threatened
investigation for any such alleged Violation; and
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(h) Sellers or Shareholder do not and have not permitted any
third party to use, manufacture, generate, treat, dispose of, transport
or otherwise manage or handle Hazardous Substances on or off-site of
any of the real property.
3.29 BANK ACCOUNTS. SCHEDULE 3.29 is a true and correct list of the
name of each bank, savings and loan, or other financial institution in which any
Seller has an account or safe deposit box, the names of all persons authorized
to draw on each account or to have access to each box, the number of signatures
required to be given for a withdrawal, a description of the type of account and
the balance of each account as of the most recent statement.
3.30 COMPLIANCE WITH LAWS. To the best of Sellers' knowledge, Sellers
have complied in all material respects with all laws, regulations, rules and
orders of any governmental department or agency or any other commission, board,
agency or instrumentality, federal, state or local, or other requirements of law
affecting the Business and operations and is not in default under or in
violation of any provision of any federal, state or local law, regulation, rule
or order.
3.31 POWERS OF ATTORNEY. Neither Seller has given any power of attorney
(irrevocable or otherwise) to any person or entity for any purpose.
3.32 LICENSES AND RIGHTS. Each Seller and Shareholder possesses all
franchises, licenses, easements, permits and other authorizations from
governmental or regulatory authorities and from all other persons or entities
that are necessary to permit it to engage in the Business as presently conducted
in and at all locations and places where it is presently operating, except where
the failure to possess such would not have a material adverse effect on the
Business, Subject Assets or financial condition of Sellers. Such franchises,
licenses, permits and other authorizations are listed on SCHEDULE 3.32.
3.33 SCHEDULE OF GOVERNMENT REPORTS. SCHEDULE 3.33 is a true and
correct list, and Sellers have furnished to Purchaser or its counsel complete
copies of all reports, if any, filed since December 31, 1992, by either Seller
with the Department of Labor, Equal Employment Opportunity Commission, Federal
Trade Commission, Department of Justice, Occupational Safety and Health
Administration, Internal Revenue Service (other than tax returns and standard
forms relating to compensation or remuneration of employees), Environmental
Protection Agency, Securities and Exchange Commission or Pension Benefit
Guarantee Corporation, or any similar state agency.
3.34 PRODUCTS.
(a) The products sold by Sellers conform to and meet or exceed
the standards required by all applicable laws, ordinances and
regulations now in effect and, to Sellers' knowledge, there is no
pending legislation, ordinance or regulation which if adopted or
enacted would have a material adverse effect on such products or
Sellers' business.
(b) SCHEDULE 3.34 contains a written statement accurately
describing Sellers' warranties and customer service policies and any
recurring warranty problems. Sellers do
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not have any outstanding contracts or proposals that depart from the
warranty and customer service policy and practice described in such
Schedule. To the extent transferrable, Sellers will convey to Purchaser
all its rights in manufacturers' warranties for products sold by
Sellers (which will be deemed a part of the Subject Assets). Except as
may be listed on SCHEDULE 3.34, no claims of customers or others based
on an alleged or admitted defect of material, workmanship or design or
otherwise in or in respect of any of Sellers' products are presently
pending or, to the best of Sellers' and the Shareholder's knowledge,
threatened.
3.35 CASUALTY OCCURRENCES. SCHEDULE 3.35 is a true and correct list of
occurrences during the last five (5) years of damages to persons or property
involving any defects or alleged defects in any of Sellers' products or their
design. All such occurrences are fully and adequately covered by paid-for
insurance.
3.36 INVENTORY. The inventory of each Seller consists only of items of
a quality and quantity usable and saleable in the ordinary course of business,
consistent with past practice, within such Seller's normal inventory "turn"
experience and does not include any item of inventory which has previously been
written off by such Seller. Items of below-standard quality and items not
previously readily saleable in the ordinary course of business have been written
down in value in accordance with generally accepted accounting principles to
estimated net realizable market values. The value at which the inventory is
carried on Sellers' books reflects the lower of cost (on a FIFO basis) or
estimated net realizable market value, and is based on quantities determined by
physical count.
3.37 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties made by Sellers or Shareholder in this Agreement or in any document,
statement, certificate, Schedule, chart, list, letter, compilation or other
document furnished or to be furnished to Purchaser or its counsel pursuant to
this Agreement, or in connection with the transactions contemplated under this
Agreement (collectively, the "Documents"), contain or will contain any untrue
statement of a material fact, or omit or will omit to state a material fact
necessary to make the statements of fact contained therein not misleading.
References in any Document, or in any Contract, a copy of which has been
provided to Purchaser or its counsel, to any other Document or Contract that
prior to the date of this Agreement has not been provided to Purchaser or its
counsel will not be deemed for any purposes of this Agreement to be a disclosure
of any term, provision or statement of fact of, or relating to, such other
Document or Contract.
3.38 INVESTMENT REPRESENTATIONS.
(a) Shareholder (i) is acquiring the Convertible Subordinated
Promissory Note (and any securities acquired upon conversion or
exchange therefor) for the purpose of investment and not with a view
towards the resale or distribution thereof within the meaning of the
Securities Act of 1933 (the "1933 Act"), (ii) will not sell, transfer
or otherwise dispose of the Convertible Subordinated Promissory Note
(or any securities acquired upon conversion or exchange therefor)
except in compliance with the 1933 Act, and (iii) is aware that the
Convertible Subordinated Promissory Note (and any securities acquired
upon
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conversion or exchange therefor) are "restricted securities" as that
term is defined in Rule 144 of the General Rules and Regulations under
the 1933 Act;
(b) Shareholder understands that the Convertible Subordinated
Promissory Note (and any securities acquired upon conversion or
exchange therefor) has not been registered under the 1933 Act and must
be held indefinitely unless they are subsequently registered under the
1933 Act or an exemption from such registration is available.
(c) Shareholder acknowledges that he has had an opportunity to
ask questions of and receive answers from duly designated
representatives of Purchaser and Waterlink concerning the terms and
conditions pursuant to which the Convertible Subordinated Promissory
Note (and any securities acquired upon conversion or exchange therefor)
will be acquired. Shareholder further acknowledges that he has been
afforded an opportunity to examine such documents and other information
which he has requested for the purpose of evaluating the investment in
the Convertible Subordinated Promissory Note (and any securities
acquired upon conversion or exchange therefor).
(d) By reason of his knowledge and experience in financial and
business matters in general, and investments in particular, Shareholder
is capable of evaluating the merits and risks of its acquisition of the
Convertible Subordinated Promissory Note (and any securities acquired
upon conversion or exchange therefor).
(e) Shareholder acknowledges that the Convertible Subordinated
Promissory Note (and any securities acquired upon conversion or
exchange therefor) and any and all securities issued in replacement or
exchange therefor will bear the following legend:
This [name of security] has not been registered under the
Securities Act of 1933 (the "Act") and is a restricted
security as that term is defined in Rule 144 under the Act.
The [name of security] may not be offered for sale, sold or
otherwise transferred except pursuant to an effective
registration statement under the Act or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of [name of
issuer].
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND WATERLINK
---------------------------------------------------------
Purchaser and Waterlink, jointly and severally, warrant and represent
to, and agree with, Sellers and the Shareholder as follows:
4.1 ORGANIZATION AND GOOD STANDING OF PURCHASER AND WATERLINK. Each of
Purchaser and Waterlink is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Purchaser and
Waterlink has full power and authority to carry
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on its business as and where now conducted and to own or lease and operate its
properties at and where now owned or leased and operated by it, and is duly
qualified to do business and is in good standing in every jurisdiction in which
the property owned, leased or operated by it, or the nature of the business
conducted by it, makes such qualification necessary, except where the failure to
qualify would not have a material adverse effect on the business or financial
condition of Purchaser or Waterlink, as the case may be. Other than actions
taken in connection with its organization, Purchaser has conducted no business
since its organization.
4.2 AUTHORITY OF PURCHASER AND WATERLINK. The execution, delivery and
consummation of this Agreement by Purchaser and Waterlink has been or will be
duly authorized by their respective boards of directors of Purchaser in
accordance with all applicable laws and the Certificates of Incorporation and
By-laws of Purchaser and Waterlink, as the case may be, and at the Closing Date
no further corporate action will be necessary on the part of Purchaser or
Waterlink to make this Agreement valid and binding on Purchaser and Waterlink
and enforceable against Purchaser and Waterlink in accordance with its terms.
Except as has been or will be obtained from Purchaser's secured lender, no
approval or consent of any person, firm or other entity or governmental body is
or was required to be obtained by Purchaser or Waterlink for the authorization
of this Agreement or the consummation by Purchaser or Waterlink of the
transactions contemplated in this Agreement.
4.3 CERTIFICATE OF INCORPORATION AND BY-LAWS. True, accurate and
complete copies of the Certificate of Incorporation and the By-laws of Purchaser
and Waterlink, together with all amendments thereto, have been delivered to
Seller or its counsel.
4.4 WATERLINK FINANCIAL STATEMENTS. Prior to the date of this
Agreement, Waterlink provided Sellers with the following financial statements of
Waterlink (the "Waterlink Financial Statements"), to wit: the audited balance
sheet and statement of income at and for the shortened fiscal year ended
September 30, 1995, the unaudited balance sheet and statement of income at and
for the six (6) month period ended March 31, 1995 and the unaudited balance
sheet and statement of income at and for the interim five (5) month period ended
February 29, 1996.
The Waterlink Financial Statements (i) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods, (ii) present fairly, in all material respects, Waterlink's
financial position, results of operations and cash flows at and for the periods
therein specified, (iii) are true and complete, (iv) are consistent with the
books and records of Waterlink, and (v) with respect to all of the unaudited
Waterlink Financial Statements, include all adjustments, consisting only of
normal recurring adjustments, required for a fair presentation. The Waterlink
Financial Statements will be deemed to include any accompanying notes and
schedules.
4.5 WATERLINK AUTHORIZED CAPITALIZATION. The authorized, issued and
outstanding and reserved capital stock of Waterlink is as set forth on the
attached SCHEDULE 4.5. The outstanding shares of capital stock of Waterlink are
duly and validly issued, fully paid and nonassessable. Except as listed on
SCHEDULE 4.5 and except for the common stock underlying the Convertible
Subordinated Promissory Note, there is no subscription right, option, warrant,
convertible security
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or other right (contingent or otherwise) presently outstanding, for the
purchase, acquisition or sale of any common stock or any securities convertible
into or exchangeable for common stock or other securities of Waterlink.
4.6 ABSENCE OF CERTAIN CHANGES. Since February 29, 1996, Waterlink has
actively conducted its business in the ordinary and regular course consistent
with past practice. Except as set forth on SCHEDULE 4.6, without limiting the
generality of the foregoing, since such date, there has been no material adverse
change in the condition (financial or otherwise), or business of Waterlink.
ARTICLE V
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND WATERLINK
--------------------------------------------------------------
The obligations of Purchaser and Waterlink under this Agreement are, at
their option, subject to satisfaction of the following conditions at or prior to
the Closing Date:
5.1 REPRESENTATIONS TRUE. The representations and warranties of each of
Sellers and Shareholder contained in this Agreement are true, complete and
accurate in all material respects on and as of the Closing Date to the same
extent and with the same force and effect as if made on such date, except as
affected by the transactions contemplated under this Agreement.
5.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Purchaser and Waterlink have been obtained from all local,
state and federal departments and agencies, from all other commissions, boards,
agencies and from any other person or entity whose approval or consent is
necessary to consummate the transactions contemplated under this Agreement
including, without limitation, such consents as may be listed or required to be
listed on SCHEDULE 3.2.
5.3 PERFORMANCE AND OBLIGATIONS. Sellers and Shareholder have duly
performed all obligations, covenants and agreements undertaken by Sellers or
Shareholder in this Agreement and have complied with all terms and conditions
applicable to them under this Agreement to be performed and complied with on or
before the Closing Date.
5.4 RECEIPT OF DOCUMENTS BY PURCHASER. Purchaser has received:
(a) a certificate executed by the President and Secretary of
each Seller certifying as to the fulfillment of the matters contained
in Sections 5.1, 5.2, 5.3 and 5.5.
(b) a true and correct copy of each Seller's Articles of
Incorporation, certified by the Secretary of State of Kansas as of a
date not more than five (5) days prior to the Closing Date, and a true
and correct copy of each Seller's By-Laws certified by the Secretary of
each Seller as of the Closing Date.
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(c) a written opinion from counsel for Sellers and
Shareholder, dated as of the Closing Date, addressed to Purchaser,
satisfactory to Purchaser and its counsel in form and substance, to the
effect that:
(i) Each Seller is duly incorporated, validly existing
and is in good standing under the laws of its state of
incorporation, has full corporate power and authority to carry
on its business as and where now conducted, and to own or
lease and operate its properties at and where now owned or
leased and operated by it, and is qualified to do business as
a foreign corporation and is in good standing in every
jurisdiction in which the property owned, leased or operated
by it, or the nature of the business conducted by it, makes
such qualification necessary;
(ii) Each Seller has full right and lawful authority to
convey, transfer and assign the Acquired Assets to Purchaser
as provided in this Agreement, Shareholder has full right and
authority to convey, transfer and assign the Patents to
Purchaser as provided in this Agreement, and the instruments
of transfer delivered by Sellers or Shareholder, as the case
may be, to Purchaser at the Closing are sufficient to transfer
to Purchaser all right, title and interest of Sellers and
Shareholder in and to the Subject Assets;
(iii) Each Seller has all requisite corporate power to
execute, deliver and carry out its obligations under this
Agreement and the execution, delivery and performance of this
Agreement and the other agreements to be executed, delivered
and performed pursuant to this Agreement by each Seller have
been duly authorized by all requisite corporate action,
including, without limitation, the requisite authorization by
the shareholders of each Seller;
(iv) This Agreement and the other agreements to be
executed, delivered and performed pursuant to this Agreement
constitute the legal, valid and binding obligation of each
Seller that is a party thereto, and are enforceable against
each Seller that is a party thereto in accordance with their
respective terms with appropriate bankruptcy exceptions;
(v) This Agreement and the other agreements to be
executed, delivered and performed pursuant to this Agreement
to which Shareholder is a party constitute the legal, valid
and binding obligation of Shareholder, and are enforceable
against Shareholder in accordance with their respective terms
with appropriate bankruptcy exceptions;
(vi) Except as set forth in this Agreement or in any
Schedule, the execution and delivery of this Agreement and the
consummation of the transactions contemplated under this
Agreement by each Seller or Shareholder, as applicable (a) are
not in conflict with the Articles of Incorporation or By-Laws
of such Seller, (b) do not (with or without notice or the
passage of time or both) constitute a default under, and are
not in conflict with, any Contract listed on SCHEDULE 3.19 to
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this Agreement, (c) do not violate any order, judgment or
decree or any rule, regulation or law, or any other
restriction known to such counsel to which any Seller or
Shareholder is a party or to which any of its or his assets
are subject and (d) will not (with or without notice or the
passage of time or both) result in the creation of any lien or
any charge on or any loss of any assets of any Seller,
Shareholder or in the acceleration or termination of any loan,
security interest or other agreement known to such counsel to
which any Seller is a party or to which any of its or his
assets are subject;
(vi) Except with respect to those matters as may be
disclosed in any Schedule, such counsel has no knowledge of
any action, suit, claim, demand, arbitration or other
proceeding or investigation, administrative or judicial,
pending or threatened against or affecting any Seller,
Shareholder or any of its or his assets at law or in equity,
or before or by any federal, state, municipal or other
governmental department or by any other commission, board,
agency or instrumentality, domestic or foreign, that can
reasonably be expected to have any adverse effect on the
business, assets, condition (financial or otherwise), results
of operations or prospects of any Seller;
(vii) Such other material matters which Purchaser or
its counsel reasonably requests;
(d) certified copies of resolutions duly adopted by the
shareholders and board of directors of each Seller approving this
Agreement and the transactions contemplated under it.
5.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain material damages or relief in
connection with this Agreement or the consummation of this Agreement, or which
is likely to materially and adversely affect the value of the business or assets
of Sellers or of the Patents.
5.6 EMPLOYMENT AGREEMENT. Shareholder has entered into an Employment
Agreement with Purchaser in the form of EXHIBIT F to this Agreement containing
the non-competition and confidentiality provisions set forth therein (the
"Employment Agreement").
5.7 DELIVERY OF BOOKS AND RECORDS. Each Seller has delivered or made
available to Purchaser all books and records of such Seller relating to or
reasonably required for the operation of the business of such Seller, including,
without limitation, copies of all Contracts, financial and accounting records,
files and records relating to employees, and all related correspondence.
5.8 INSTRUMENTS OF TRANSFER. Each Seller and Shareholder have executed
and delivered to Purchaser good and sufficient instruments of transfer
transferring to Purchaser title to all of the Subject Assets as required
pursuant to Section 1.4. The instruments of transfer must be in form and
substance reasonably satisfactory to Purchaser and its counsel, which form is
usual and
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customary for transferring the type of property involved under the laws of the
jurisdictions applicable to such transfer. All of such instruments must contain
general warranties of title and good right to convey.
5.9 CONFIDENTIALITY AND NON-COMPETE AGREEMENTS. Shareholder and Sellers
have (i) assigned to Purchaser any and all rights of Sellers under any
confidentiality agreement covering confidential information concerning Sellers'
business or the Subject Assets and under any non-compete or similar agreement in
favor of any Seller restricting activities competitive with those of Sellers'
business, (ii) provided Purchaser with a list of such agreements and (iii)
delivered copies of such agreements of Purchaser.
5.10 ABSENCE OF CHANGES. There has been no material adverse change in
the business (financial or otherwise), assets, liabilities, results of
operations or prospects of Sellers since the date of this Agreement.
5.11 AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT. Shareholder has
entered into an Amended and Restated Exclusive License Agreement (the "Exclusive
License") with Teknofanghi [Inc.] in connection with the Draimad product line
which is, in form and substance, satisfactory to Purchaser.
5.12 LEASE FOR LEASED PROPERTY. Shareholder shall have entered into a
Lease for the Leased Property (the "Lease") substantially in the form of EXHIBIT
A to this Agreement.
5.13 ENVIRONMENTAL INVESTIGATION. Purchaser has completed an
environmental investigation of the Leased Property (at its own expense) to the
satisfaction of Purchaser.
5.14 TITLE COMMITMENT. Purchaser shall have received (at Sellers'
expense) and approved a so-called "title commitment" for the Leased Property
reflecting the status of the title thereto and all liens and other encumbrances
affecting the Leased Property.
5.15 NON-DISTURBANCE AGREEMENT. Purchaser shall have received the
Non-Disturbance Agreement.
5.16 BLUE WATER TRANSACTION. Blue Water Services, Inc ("Blue Water")
and Shareholder shall have entered into that certain Asset Purchase Agreement
among B-W Acquisition Corp., a Delaware corporation and wholly owned subsidiary
of Waterlink ("BW Acquisition Corp.") Waterlink, Blue Water and Shareholder (the
"Blue Water Purchase Agreement") and all agreements in connection therewith and
the transactions contemplated thereby shall have been consummated.
5.17 SBA LOANS. Shareholder shall cause to have released those certain
liens (the "Release") on the inventory, equipment, accounts receivables,
machinery, furniture and equipment securing obligations owed to the First
National Bank of Wamego. Shareholder shall provide evidence of the Release in
form and substance satisfactory to Purchaser and Waterlink.
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5.18 TERMINATION OF SIMPLIFIED EMPLOYEE PENSION PLAN. Sellers and
Shareholder shall have discontinued and terminated the Aero-Mod simplified
employee pension plan effective immediately upon consummation of the
transactions contemplated hereby and shall provide evidence of such
discontinuance or termination in form and substance satisfactory to Purchaser
and Waterlink.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS AND SHAREHOLDER
--------------------------------------------------------------
The obligations of Sellers and Shareholder under this Agreement are, at
their option, subject to satisfaction of the following conditions at or prior to
the Closing Date:
6.1 REPRESENTATIONS TRUE. The representations and warranties of
Purchaser and Waterlink contained in this Agreement are true, complete and
accurate in all material respects on and as of the Closing Date to the same
extent and with the same force and effect as if made on such date, except as
affected by the transactions contemplated under this Agreement.
6.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Sellers and Shareholder have been obtained from all local,
state and federal departments and agencies, from all other commissions, boards,
agencies and from any other person or entity whose approval or consent is
necessary to consummate the transactions contemplated by this Agreement.
6.3 PERFORMANCE OF OBLIGATIONS. Purchaser and Waterlink have duly
performed all obligations, covenants and agreements undertaken by Purchaser or
Waterlink in this Agreement and have complied with all the terms and conditions
applicable to them under this Agreement to be performed or complied with on or
before the Closing Date.
6.4 RECEIPT OF DOCUMENTS BY SELLERS AND SHAREHOLDER. Sellers and
Shareholder have received:
(a) the purchase price for the Subject Assets as provided in
Section 2.1(a);
(b) a certificate executed by the President or CFO of
Purchaser certifying as to the fulfillment of the matters contained in
Sections 6.1, 6.2 and 6.3 of this Article;
(c) a written opinion from counsel for Purchaser and
Waterlink, dated as of the Closing Date, addressed to Sellers and
Shareholder, satisfactory to Sellers and Shareholder and their counsel
in form and substance, to the effect that:
(i) Each of Purchaser and Waterlink is duly
incorporated, validly existing and is in good standing under
the laws of the State of Delaware. Each of Purchaser and
Waterlink has full corporate power and authority to carry on
its
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business as and where now conducted, and to own or lease and
operate its properties at and where now owned or leased and
operated by it;
(ii) Each of Purchaser and Waterlink has all
requisite corporate power to execute, deliver and carry out
its obligations under this Agreement and the execution,
delivery and performance of this Agreement by Purchaser and
Waterlink have been duly authorized by all requisite corporate
action;
(iii) The execution and delivery of this Agreement
and the consummation of the transactions contemplated under
this Agreement by Purchaser and Waterlink are not in conflict
with the Certificate of Incorporation or By-laws of Purchaser
and Waterlink; and
(iv) This Agreement constitutes the legal, valid, and
binding obligation of Purchaser and Waterlink, and is
enforceable against Purchaser and Waterlink in accordance with
its terms;
(d) certified copies of resolutions duly adopted by the Board
of Directors of Purchaser and Waterlink approving this Agreement and
the transactions contemplated under it.
6.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to obtain material damages from Seller in connection with this Agreement
or the consummation of this Agreement.
6.6 EMPLOYMENT AGREEMENT. Purchaser has entered into the Employment
Agreement with Shareholder.
6.7 REGISTRATION RIGHTS AGREEMENT. Waterlink shall have entered into a
Registration Rights Agreement with Shareholder substantially in the form
attached hereto as EXHIBIT G.
6.8 ASSUMPTION OF LIABILITY. Purchaser shall have entered into an
Assumption Agreement, more particularly described in Section 1.4 of this
Agreement.
6.9 EXECUTIVE COMMITTEE. Shareholder shall have been appointed to serve
on the Executive Committee of Waterlink.
6.10 LEASE FOR LEASED PROPERTY. Purchaser shall have entered into the
Lease.
6.11 BLUE WATER TRANSACTION. B-W Acquisition Corp. and Waterlink shall
have entered into the Blue Water Purchase Agreement and all agreements in
connection therewith and the transactions contemplated thereby shall have been
consummated.
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ARTICLE VII
-----------
CLOSING
-------
The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Benesch, Friedlander, Xxxxxx &
Aronoff P.L.L., 000 Xxxxxx Xxxxxx, 0000 XX Xxxxxxx Xxxxxxxx, Xxxxxxxxx, Xxxx
00000 on April 26, 1996, at 10:00 A.M. Cleveland, Ohio Time or such other date
mutually agreeable to the parties (the "Closing Date"). If the Closing has not
taken place by such date by reason of failure of fulfillment of any condition or
conditions contained in this Agreement, then the non-breaching party may, by
written notice to the other party, extend the Closing Date for a period of
thirty (30) days to permit fulfillment of such condition or conditions. Unless
the parties otherwise agree in writing, if the Closing has not occurred by May
31, 1996, then this Agreement will be deemed to have been terminated and
abandoned, subject to the legal rights and remedies of either party arising out
of the other party's breach of any of the provisions of this Agreement. The
parties will in good faith use all reasonable efforts to achieve the Closing.
ARTICLE VIII
------------
TERMINATION OF AGREEMENT
------------------------
This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing Date:
(a) by mutual consent in writing of Purchaser, Sellers and
Shareholder;
(b) by Purchaser if there has been a material
misrepresentation or breach of warranty in the representation and
warranties of Sellers and Shareholder made under this Agreement or by
Sellers and Shareholder if there has been a material misrepresentation
or breach of warranty in the representations and warranties of
Purchaser made under this Agreement;
(c) by Purchaser if all or a material portion of the Subject
Assets have been materially damaged or destroyed before the Closing;
(d) by Purchaser, if any of the conditions contained in
Article V, or by Sellers and Shareholder, if any of the conditions
contained in Article VI, respectively, have not been fulfilled in all
material respects.
Any termination pursuant to this Article VIII will not affect the obligations of
the parties under Article XII or Section 16.5, and will be without prejudice to
the terminating party's legal rights and remedies by reason of any breach of
this Agreement occurring prior to such termination. Notwithstanding anything in
this Agreement to the contrary, if, on the Closing Date, Purchaser (i) has
complied with all of the conditions to Closing contained in Article VI, (ii) has
notified
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Sellers and Shareholder of its intention to consummate the transactions
contemplated under this Agreement, and (iii) is ready and able to pay Sellers
and Shareholder the purchase price and furnishes evidence to that effect to
Sellers and Shareholder, and if the Closing does not then occur due to the
refusal of Sellers and Shareholder to so consummate the transactions
contemplated under this Agreement, Purchaser will be entitled to specifically
enforce the terms of this Agreement in a court of competent jurisdiction, it
being acknowledged that monetary damages due Purchaser in such case cannot be
adequately determined at law.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES; INDEMNIFICATION; DISPUTES
-----------------------------------------
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding the
Closing of the transactions contemplated under this Agreement, or any
investigation made by or on behalf of any party to this Agreement, the
representations and warranties of Sellers, Shareholder, Purchaser and Waterlink
contained in this Agreement or in any certificate, Schedule, chart, list,
letter, compilation or other document furnished or to be furnished pursuant to
this Agreement, will survive the Closing for a period of three (3) years, except
that the representations and warranties of Seller and Shareholder contained in
Sections 3.10, 3.27 and 3.28 will survive for so long as any applicable statute
of limitations has not expired, been suspended or been waived or extended, and
for thirty (30) days after. However, as to any breach of, or misstatement in,
any such representation or warranty as to which the non-breaching party as given
notice to the breaching party on or prior to the expiration of the applicable
period, as above set forth, the same will continue to survive beyond said
period, but only as to the matters contained in such notice.
9.2 SELLERS' AND SHAREHOLDER'S INDEMNIFICATION. Sellers and
Shareholder, jointly and severally, will indemnify and save harmless Purchaser
and Waterlink and their respective subsidiaries, shareholders, directors,
officers, employees and agents from any and all costs, expenses, losses, damages
and liabilities incurred or suffered, directly or indirectly, by any of them
(including, without limitation, reasonable legal fees and expenses)
(collectively, the "damages") resulting from or attributable to (a) the breach
of, or misstatement in, any one or more of the representations or warranties of
Sellers or Shareholder made in or pursuant to this Agreement, (b) any claims,
demands, suits, investigations, proceedings or actions by any third party
containing or relating to allegations that, if true, would constitute a breach
of, or misstatement in, any one or more of the representations or warranties of
Sellers or Shareholder made in or pursuant to this Agreement, (c) Sellers'
treatment, transport, recycling, storage or disposal, or any arrangement for any
of same, done or made prior to the Closing, of any Contaminant generated and
transported off-site from any facility owned or operated by any Seller or any of
its predecessors, (d) any and all obligations, debts or other liabilities of
Sellers not expressly assumed by Purchaser pursuant to this Agreement, or (e)
any and all obligations of Purchaser to withhold a portion of the purchase price
to satisfy the requirements of any applicable laws of any jurisdiction, federal,
state or local. Purchaser will be entitled to set off against any payments due
under the Promissory Notes the
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amount of such costs, expenses, losses, damages and liabilities, and, to the
extent not in a liquidated amount, then in an amount reasonably and in good
faith estimated by Purchaser.
9.3 DEFENSE OF CLAIM. In case Purchaser or Waterlink has received
actual notice of any claim asserted or any action or administrative or other
proceeding commenced in respect of which claim, action or proceeding indemnity
properly may be sought against Sellers and/or Shareholder pursuant to this
Agreement, Purchaser will give notice in writing to Sellers and Shareholder.
Within ten (10) days after the earlier of (i) receipt of such notice or (ii)
receipt of actual notice by Sellers or Shareholder from sources other than
Purchaser, Sellers and Shareholder may give Purchaser written notice of their
election to conduct the defense of such claim, action or proceeding at its own
expense. If Sellers or Shareholder have given Purchaser such notice of election
to conduct the defense, Sellers and Shareholder may conduct the defense at its
expense, but Purchaser will nevertheless have the right to participate in the
defense, but such participation will be solely at the expense of Purchaser,
without a right of further reimbursement. If Sellers and Shareholder have not so
notified Purchaser in writing (within the time above provided) of their election
to conduct the defense of such claim, action or proceeding, Purchaser may (but
need not) conduct (at Sellers' and Shareholder's expense) the defense of such
claim, action or proceeding. Purchaser may at any time notify Sellers or
Shareholder of Purchaser's intention to settle, compromise or satisfy any such
claim, action or proceeding (the defense of which Sellers or Shareholder have
not previously elected to conduct) and may make such settlement, compromise or
satisfaction (at Sellers' and Shareholder's expense) unless Sellers and
Shareholder notify Purchaser in writing (within five (5) days after receipt of
such notice of intention to settle, compromise or satisfy) of their election to
assume (at its sole expense) the defense of any such claim, action or proceeding
and promptly take appropriate action to implement such defense. Any settlement,
compromise or satisfaction made by Purchaser, or any such final judgment or
decree entered in, any claim, action or proceeding defended only by Purchaser,
regardless of the amount or terms, will be deemed to have been consented to by,
and will be binding on, Sellers and Shareholder as fully as though they alone
had assumed the defense and a final judgment or decree had been entered in such
proceeding or action by a court of competent jurisdiction in the amount of such
settlement, compromise, satisfaction, judgment or decree. If Sellers and
Shareholder have elected under this Section 9.3 to conduct the defense of any
claim, action or proceeding, then Sellers and Shareholder will be obligated to
pay the amount of any adverse final judgment or decree rendered with respect to
such claim, action or proceeding. If Sellers and Shareholder elect to settle,
compromise or satisfy any claim, action or proceeding defended by them, the cost
of any such settlement, compromise or satisfaction will be borne entirely by
Sellers and Shareholder and may be made only with the consent of Purchaser,
which consent will not be unreasonably withheld. Purchaser, Sellers and
Shareholder will use all reasonable efforts to cooperate fully with respect to
the defense of any claim, action or proceeding covered by this Section 9.3.
9.4 PURCHASER'S AND WATERLINK'S INDEMNIFICATION. Purchaser and
Waterlink covenant and agree to indemnify and save harmless Sellers and
Shareholder from any and all costs, expenses, losses, damages and liabilities
incurred or suffered by Sellers or Shareholder (including reasonable legal fees
and costs) (collectively, the "damages") resulting from or attributable to the
breach of, or misstatement in, any one or more of the representations or
warranties of Purchaser or Waterlink
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made in or pursuant to this Agreement to the same extent as provided in Clauses
(a) and (b) of Section 9.2, and in the same manner as provided in Section 9.3,
of this Article IX.
9.5 LIMITATIONS ON INDEMNIFICATION. Any of the foregoing
notwithstanding, no party will have any right to indemnification under Section
9.2(a) or (b) or Section 9.4 hereof unless and until the aggregate damages
indemnifiable by the indemnifying party exceed Twenty Thousand Dollars ($20,000)
and thereafter, will be entitled to the full extent of the damages and in no
event will the aggregate liability of Sellers and Shareholder, on the one hand,
or Purchaser and Waterlink, on the other hand, exceed Two Million Dollars
($2,000,000).
ARTICLE X
---------
CONDUCT PRIOR TO CLOSING DATE
-----------------------------
10.1 CONTINUATION OF BUSINESS. Until the Closing Date, each Seller will
continue to conduct its business in the ordinary and usual course consistent
with past practice, and, without limiting the generality of this undertaking,
Sellers will not do or suffer to be done any of the following, whether or not in
the ordinary and usual course, without the prior written consent of Purchaser:
(a) Dispose or contract to dispose of, or acquire or contract
to acquire, any Real Property or other assets, or any interest in any
Real Property or other capital assets;
(b) Borrow any money;
(c) Enter into any lease;
(d) Encumber any assets;
(e) Enter into any contract, commitment or arrangement of the
type required by Section 3.19 above to be listed on SCHEDULE 3.19;
(f) Declare or pay any dividend or declare or make any other
distribution to shareholders;
(g) Purchase or redeem any shares, notes or other securities;
(h) Increase the rate or amount of compensation or the amount
or type of other remuneration to any of its directors, officers,
employees, agents or other representatives, or agree to do so;
(i) Form or cause to be formed, or dispose or contract to
dispose of, any Subsidiary, or any interest in any Subsidiary;
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(j) Reclassify, split or combine its shares, or issue, sell,
distribute or dispose of any shares, notes or other securities, or
commit itself to do so;
(k) Make any new commitments or agree to make commitments for
capital improvements or significantly alter standing commitments for
capital improvements;
(l) Make any single expenditure or agree to make any single
expenditure, or series of expenditures in excess of Five Thousand
Dollars ($5,000) in the aggregate;
(m) Negotiate with anyone other than Purchaser for, or
participate with anyone other than Purchaser in, the acquisition of all
or any part of the Acquired Assets;
(n) Amend, or permit to be amended, in any way, its Articles
or By-Laws; or
(o) Make any material change in accounting methods.
(p) Award any bonus compensation or enter into other bonus
arrangements with any employees or shareholders.
10.2 PRESERVATION OF BUSINESS. Sellers will each (i) preserve intact
its present business organization and personnel, (ii) preserve its business,
actual and potential, and its advantageous relationships with all persons having
business dealings with it, and (iii) preserve and maintain in force all its
licenses, certificates, leases, contracts, permits, registrations, franchises,
confidential information, patents, trademarks, trade names, service marks and
copyrights, and applications for any of the same, and other similar rights.
Sellers will maintain in force all property, casualty, crime, life, directors,
officers and other forms of insurance and bonds which it presently carries.
10.3 CONSENTS AND APPROVALS. Sellers and Shareholder will use all
reasonable efforts to obtain all necessary consents and approvals of all
persons, firms, entities and governmental authorities to the consummation of the
transactions contemplated by this Agreement.
ARTICLE XI
----------
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
-----------------------------------------
The rights under this Agreement are not assignable nor are the duties
delegable by a party without the written consent of the other party first having
been obtained, and any attempted assignment or delegation without such consent
will be null and void; provided, however, that Purchaser and Waterlink may
assign their respective rights hereunder to their principal lenders, subject to
any defenses that Sellers and Shareholder may have hereunder against Purchaser
and Waterlink and provided further that each of Aero-Mod and Resi-Tech may
assign their interest in the Subordinated Promissory Note and the Second
Subordinated Promissory Note, as the case may be, as provided therein. Nothing
contained in this Agreement is intended to convey upon any person or entity,
other than the parties and their successors in interest and permitted assigns,
any
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rights or remedies under or by reason of this Agreement unless expressly stated.
All covenants, agreements, representations and warranties of the parties
contained in this Agreement are binding on and will inure to the benefit of
Purchaser, Waterlink, Sellers and Shareholder, respectively, and their
respective successors and permitted assigns.
ARTICLE XII
-----------
EXPENSES
--------
Purchaser and Waterlink will bear their own expenses, and Shareholder
will bear his and Sellers' expenses, including, without limitation, counsel and
accountants' fees, in connection with the preparation and negotiation of, and
transactions contemplated under, this Agreement.
ARTICLE XIII
------------
NOTICES
-------
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary in this Agreement, (i) when personally
delivered, (ii) upon receipt of a telephonic facsimile transmission with a
confirmed telephonic transmission answer back, (iii) three (3) days after having
been deposited in the United States mail, certified or registered, return
receipt requested, postage prepaid, or (iv) one (1) business day after having
been dispatched by a nationally recognized overnight courier service, addressed
to the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
TO PURCHASER OR WATERLINK : Waterlink, Inc.
-------------------------- 000 Xxxxxx Xxx., X.X.
Xxxxxx, Xxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxxxxx,
Chairman
With a copy to: Benesch, Friedlander,
Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Facsimile No.: 000-000-0000
Attention: Xxx X. Xxxxxx
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To Sellers or the Shareholder: Aero-Mod Incorporated/Resi-Tech Inc.
0000 X.X. Xxxxxxx 00
Xxxxxxxxx, Xxxxxx 00000
Facsimile No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxx,
President
With a copy to: Arthur, Green, Arthur, Conderman,
Xxxxxxxx & Xxxxxxxx
Commerce Bank Tower
Manhattan, Kansas 66502
Facsimile No.: 000-000-0000
Attention: Xxxxx Xxxxxxxx
ARTICLE XIV
-----------
REMEDIES NOT EXCLUSIVE
----------------------
No remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy will
be cumulative and will be in addition to every remedy given under this Agreement
or now or subsequently existing, at law or in equity, by statute or otherwise.
The election of any one or more remedies by Purchaser, Sellers or Shareholder
will not constitute a waiver of the right to pursue other available remedies.
ARTICLE XV
----------
NON-COMPETITION
---------------
15.1 NON-COMPETITION AGREEMENT.
(a) For a period of five (5) years from and after the Closing
Date, but as to clauses (iv) and (v) at any time after the Closing
Date, Sellers and Shareholder will not, directly or indirectly (and
Sellers will cause all Subsidiaries, now or subsequently existing,
other than Subsidiaries that constitute part of the Acquired Assets,
not to, directly or indirectly):
(i) engage in, carry on or have any interest in a
business substantially similar to the business as carried on
by Sellers on the Closing Date and being acquired by
Purchaser,
(ii) enter into, engage in, or be employed by or
consult with any business in, competition with Purchaser on
matters substantially similar to the business as carried on by
Sellers on the Closing Date and being acquired by Purchaser,
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(iii) employ, assist in employing or otherwise
associate in business with any present, former or future
employee of Purchaser or any of its Subsidiaries now or
subsequently existing until a period of at least two (2) years
has expired since such employee was employed by Purchaser or
any Subsidiary,
(iv) induce any person who is a present or future
employee, officer, agent, affiliate or customer of Purchaser
or any of its Subsidiaries now or subsequently existing to
terminate the relationship, and
(v) induce any customer or supplier of either Seller to
refuse to do business with Purchaser on as favorable terms as
previously done with either Seller.
The prohibitions in clauses (i) and (ii) will apply to any place or
location in the world in any state in the United States or any
countries outside the United States where Purchaser or Waterlink has
done business or is actively contemplating doing business. Sellers and
Shareholder acknowledge that the length of time and geographic
restriction pertaining to all prohibitions in this Subsection (a) both
are reasonable and necessary for the legitimate protection of
Purchaser's business and interests.
(b) Sellers and Shareholder expressly agree and understand
that the remedy at law for any breach by Sellers of this Article XV
will be inadequate and that the damages flowing from such breach are
not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that upon adequate proof of Sellers' or
Shareholder's violation of this Article XV, Purchaser will be entitled,
among other remedies, to immediate injunctive relief and may obtain a
temporary restraining order restraining any threatened or further
breach. Nothing in this subsection (b) will be deemed to limit
Purchaser's remedies at law or in equity for any breach by Sellers or
Shareholder of any of the provisions of this Agreement which may be
pursued or availed of by Purchaser.
(c) In the event any court of competent jurisdiction
determines that the specified time period or geographical area set
forth in this Section 15.1 is unreasonable, arbitrary or against public
policy, then a lesser time period or geographical area that is
determined by the court to be reasonable, non-arbitrary and not against
public policy may be enforced.
(d) In the event either Seller or Shareholder violates any
legally enforceable provision of this Section 15.1 as to which there is
a specific time period during which Sellers or Shareholder are
prohibited from taking certain actions or engaging in certain
activities, then, in such event the violation will toll the running of
the time period from the date of the violation until the violation
ceases.
(e) The prohibitions set forth in this Section 15.1 shall
automatically terminate upon expiration of the applicable grace period
(as set forth in the Notes) in the event of non-payment of or any
material non-performance by Purchaser under the Notes, or any one of
them.
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15.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required
by law or necessary in connection with any dealings with any public agency or
authority, from and after the Closing Date, Sellers and Shareholder will not
(and Sellers will cause all Subsidiaries, now or subsequently existing, not to),
disclose, disseminate, divulge, discuss, copy or otherwise use or suffer to be
used, in competition with, or harmful to the interests of, Purchaser or
Waterlink, any information (written or oral), documents, lists or other data of
or respecting any aspect of the Acquired Assets or the business being acquired
by Purchaser from Sellers or Shareholder under this Agreement.
ARTICLE XVI
-----------
MISCELLANEOUS
-------------
16.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same document.
16.2 CAPTIONS AND SECTION HEADINGS. Captions and section headings are
for convenience only, are not a part of this Agreement and may not be used in
construing it.
16.3 POSSESSION OF ACQUIRED ASSETS. Possession of the Subject Assets
will be given to Purchaser on the Closing Date. Purchaser will not acquire any
title to the Subject Assets until possession has been given to it in accordance
with this Section 16.3, and, accordingly, all risk and loss with respect to the
Acquired Assets will be borne by Sellers and Shareholder until possession has
been given to Purchaser. For purposes of this Section 16.3, possession will be
deemed to have been given to Purchaser when Sellers or Shareholder, as the case
may be, deliver or cause to be delivered to Purchaser good and sufficient
instruments of transfer and conveyance as provided in this Agreement.
16.4 WAIVERS. Any failure by any of the parties to comply with any of
the obligations, agreements or conditions set forth in this Agreement may be
waived by the other party or parties, but any such waiver will not be deemed a
waiver of any other obligation, agreement or condition contained herein.
16.5 RIGHT OF INSPECTION. From and after the date of this Agreement to
the Closing Date, Sellers will give to Purchaser and its counsel, accountants
and other representatives, full access during normal business hours to its
offices, properties, agreements, records and affairs, and will furnish copies of
all Contracts and other instruments as Purchaser or its counsel may reasonably
request. Such investigation will not affect the warranties and representations
of Seller under this Agreement. All such information will be treated
confidentially and will be used only for the purposes intended. If the
transactions contemplated under this Agreement do not take place, all documents
and other property of Sellers will be returned and all disclosures and
information given to Purchaser as contemplated under this Agreement will be
treated as confidential and not
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disclosed to others unless disclosed publicly by Sellers or other third parties
without fault on the part of Purchaser, or unless otherwise required by law.
16.6 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS. Each of the parties
agrees to cooperate in the effectuation of the transactions contemplated under
this Agreement and to execute any and all additional documents to take such
additional action as is reasonably necessary or appropriate for such purposes.
16.7 ENTIRE AGREEMENT. This Agreement, including any certificate,
schedule, exhibit or other document delivered pursuant to its terms, constitutes
the entire agreement between the parties. There are no verbal agreements,
representations, warranties, undertakings or agreements between the parties, and
this Agreement may not be amended or modified in any respect, except by a
written instrument signed by the parties to this Agreement.
16.8 GOVERNING LAWS. This Agreement is to governed by and construed in
accordance with the internal laws of the State of Ohio.
16.9 KNOWLEDGE. All references to "knowledge" or "best knowledge" of a
party means the actual knowledge of a party after reasonable investigation and
due diligence. Failure to so investigate or exercise due diligence may result in
the imputation of knowledge to a party if the circumstances, in the opinion of a
trier of the facts, so warrants. Actual knowledge of any officer, director or
supervisory employee of a party will be imputed to, and deemed to be actual
knowledge of, that party.
16.10 PRESS RELEASES. Prior to the Closing, no party will issue or
cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated under this Agreement
without the prior consent of the other party first obtained; provided, however,
that nothing in this Agreement will prohibit any party from issuing or causing
publication of any press release or public announcement to the extent that such
party determines, on advice on counsel, that such action is required by law, in
which case the party making such
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determination will, if practicable under the circumstances, use reasonable
efforts to allow the other parties reasonable time to comment on such release or
announcement in advance of its issuance.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
WATERLINK, INC
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Its: Vice President & Chief Financial
Officer
A-M ACQUISITIONS CORP.
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------------
Its: Secretary
AERO-MOD INCORPORATED
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------
Its: President
RESI-TECH, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------
Its: President
/s/ Xxxxxxxx X. Xxxxxx
--------------------------------------
XXXXXXXX X. XXXXXX
39
