ASSET PURCHASE AGREEMENT
AGREEMENT made and entered into this 29th day of March, 2000, by and
between: MORO ACQUISITION CORP., a Delaware corporation ("MORO"); XXXXX X.
XXXXXX and XXXXXXXXXX X. XXXXXX (hereinafter, "Guarantors"); X.X. XXXX CO.,
INC., a New Jersey corporation ("AHLE"); each of XXXXX X. XXXX, XXXXXXX X.
XXXXXXX, and XXXXXX X. XXXXXXXXX, as trustee of the Xxxxxx X. Xxxxxxxxx Living
Trust u/t/a/d June 21, 1991 (hereinafter, "Shareholder" or "Shareholders"); and
XXXXXX X. XXXXXXXXX, individually ("Xxxxxxxxx").
BACKGROUND
AHLE is a distributor of reinforcing steel to contractors and
subcontractors for use in the construction of highways, airports, bridges,
treatment facilities, schools, public facilities, industrial and commercial
buildings, and other structures. AHLE desires to sell to MORO and MORO desires
to purchase substantially all of the operating assets and inventories of AHLE,
and to assume substantially all of the known operating liabilities of AHLE, all
as more fully set forth herein.
AGREEMENT
NOW THEREFORE, intending to be legally bound hereby, and in consideration
of the mutual agreements, covenants, warranties,
representations and undertakings of the parties hereto, the undersigned mutually
agree as follows:
I. Sale of Assets. Subject to the terms and conditions hereof, MORO hereby
agrees to purchase, and AHLE hereby agrees to sell, assign, transfer, set over,
confirm, convey and deliver to MORO at the closing herein described in Article
IX ("Closing"), title to and possession of, or, where applicable, right of AHLE
to, all of the assets of AHLE, whether tangible, intangible, personal or
otherwise, and wherever located, other than Excluded Assets (as defined in
Article II) (the "Assets"). The Assets shall be conveyed and delivered to MORO
at the Closing free and clear of all liens, security interests, claims, pledges,
charges, agreements, encumbrances, options, or any other adverse claims
whatsoever, whether known or unknown, whether arising before or after the date
hereof or by reason of the consummation of the transactions herein described or
by reason of operation of law, or otherwise.
Other than Excluded Assets, the Assets shall include all of AHLE's
inventories, receivables, fixed assets, supplies, deposits, contract rights,
warranties, indemnities, guaranties, purchase orders, computers, corporate
names, trade names, permits, licenses, books, leasehold improvements, real
property and fixed asset
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leases, computer software, furniture, fixtures, machinery, equipment, and
records, and shall, without limitation, include:
A. Trade names. All trade names or trademarks including, without
limitation, X.X. Xxxx & Co., Inc. At the time of Closing, AHLE shall have
changed its corporate name to something other than X.X. Xxxx Co., Inc., or any
name containing the word "Ahle".
B. Inventory. All of the inventory of AHLE which MORO and AHLE mutually
determine to be saleable, usable, and of good quality, or for which there is,
based on historical usage, not more than a nine month supply existing as of the
date of Closing ("Inventory"). The Inventory shall be valued in the manner
described in Article VIII.A. Any dispute with respect to what should be included
in Inventory shall be resolved by arbitration pursuant to Article IV.B.
C. Fixed Asset Leases. All of AHLE's right, title and interest in and to
the lease agreements for equipment or machinery leased from others by AHLE and
the security deposits paid to lessors by AHLE, set forth in Schedule I.C.
hereto.
D. Contracts, Purchase Orders. All of AHLE's right, title and interest in
and to any and all written contracts with suppliers and purchase orders with
customers entered into in the
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ordinary course of business, and the agreements set forth in Schedule I.D.
hereto.
E. Receivables. All of AHLE's notes or accounts receivable which are not
more than ninety (90) days old from invoice date as of the date of Closing
("Included Receivables").
F. Prepaid Expenses; Deposits. The prepaid expenses and deposits of AHLE,
of the type set forth in Schedule I.F. hereto.
G. Fixed Assets. All fixed assets owned by AHLE, including but not limited
to, the machinery and equipment set forth in Schedule I.G. hereto.
H. Real Estate Lease. All of AHLE's right, title and interest in and to the
existing lease agreement for the real estate premises (the "Premises") currently
occupied by AHLE at South River, New Jersey (the "Real Estate Lease"), together
with the consent of the landlord.
II. Excluded Assets. The Assets which are not to be acquired by MORO
hereunder ("Excluded Assets") are: (i) all cash, securities, and cash
equivalents of AHLE on hand or existing at Closing; (ii) all notes receivable
and accounts receivable of AHLE which are more than ninety (90) days old as of
the date of Closing ("Excluded Receivables"); (iii) all prepaid expenses and
deposits of AHLE that are not described in Schedule I.F. hereto; (iv) all
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lease agreements for equipment or machinery leased from others by AHLE and the
security deposits paid to lessors by AHLE which are not described in Schedule
I.C. hereto; and (v) any Inventory which is determined not to be usable,
saleable, or of good quality (the "Unacceptable Inventory"), or that portion of
any Inventory to the extent for which there is, based on historical usage, more
than a nine month supply existing as of the date of Closing ("Excess Inventory",
and together with the Unacceptable Inventory, the "Excluded Inventory").
III. Liabilities of AHLE.
A. Except for the Assumed Liabilities (as defined in Article III.B.
hereof), MORO is not assuming and shall not pay or be liable for any claims,
demands, obligations, debts, liability, judgments, causes of action, or damages
whatsoever, of whatever nature, and whether known or unknown, against or of
AHLE, arising or incurred by AHLE, prior to or after the Closing or arising in
whole or in part by reason of the performance of the terms of this Agreement by
AHLE, or by reason of the sale of the Assets by AHLE, as herein set forth.
Specifically, but without limiting the foregoing, and except for the Assumed
Liabilities, MORO shall not assume or be liable for the following debts,
liabilities and obligations of AHLE:
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1. Violation of Representations. Debts, obligations or liabilities which
arise or exist in violation of any of the representations, warranties, covenants
or agreements of AHLE or a Shareholder contained in this Agreement, or in any
statement or certificate delivered to MORO by or on behalf of AHLE or a
Shareholder on or before the Closing pursuant to this Agreement, or in
connection with the transactions contemplated hereby.
2. Taxes. Liabilities for federal, state, county, local, or other income,
sales, use, real estate, excise, employee payroll or other taxes or assessments
(including interest and penalties) of any kind whatsoever for periods prior to
the Closing.
3. Taxes Due On Sale. Liabilities for federal, state, county, local, or
other income, use or other taxes or assessments (including interest and
penalties) of any kind whatsoever arising from, based upon, or related to, the
sale, transfer, or delivery of the Assets, or the execution and delivery of the
assignment of the Real Estate Lease pursuant to this Agreement.
4. Pension and Other Employee Plans. Unless specifically included as an
Assumed Liability, debts, obligations or liabilities under any pension, profit
sharing, savings, retirement, vacation pay, health, medical, life, disability,
dental, deferred compensation, bonus, incentive, severance pay,
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group insurance or other similar or dissimilar employee plans or arrangements of
AHLE, or under or pursuant to any policies, handbooks, or custom or practices,
or under or pursuant to any collective bargaining agreement, or union agreement
or arrangement, or any employment agreements of AHLE, whether express or
implied, written or oral, applicable to any employee of AHLE at any time prior
to the Closing.
5. Personal Injury and Other Claims. Debts, obligations or liabilities
arising out of any claim for personal injury or property damage arising prior to
the Closing (whether or not then asserted) or any pending or threatened
litigation or actions.
6. Infringements. Any liability or obligation arising out of any wrongful
or unlawful violation or infringement of any trademark or trade name right of
any person or entity occurring on or prior to the Closing.
B. Assumed Liabilities. The liabilities and obligations of AHLE which are
to be assumed by MORO hereunder ("Assumed Liabilities") shall be limited to and
are solely the following: (i) all current liabilities of AHLE which MORO has
agreed to assume following the Closing, including all accounts payable and
accrued expenses; and (ii) all obligations of AHLE accruing with respect to
periods after Closing under the lease agreements for equipment and
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machinery leased from others by AHLE and under the Real Estate Lease; and (iii)
any and all liabilities or obligations relating to any contracts, purchase
orders or agreements entered into in the ordinary course of business or which
MORO has elected to assume. At Closing, and as a condition thereof, MORO shall
execute and deliver to AHLE an assumption agreement with indemnification
provisions in the form attached hereto as Exhibit "A".
IV. Purchase Price.
A. The purchase price for the Assets shall be equal to the Net Book Value
of the Assets of AHLE as reflected on the Closing Balance Sheet plus the sum of
One Hundred Thousand Dollars ($100,000) (the "Purchase Price").
The term "Net Book Value of the Assets" as used herein shall mean the
excess of (i) the aggregate net book value of the Assets as reflected on the
Closing Balance Sheet, over (ii) the aggregate amount of all Assumed Liabilities
reflected on the Closing Balance Sheet.
The "Closing Balance Sheet" shall mean a balance sheet of AHLE to be
prepared by AHLE as of the close of business on the business day immediately
preceding the date of Closing. The Closing Balance Sheet shall be prepared from
the books and records of AHLE in accordance with generally accepted accounting
principles, consistently applied, and shall be accompanied by the
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compilation report of AHLE's accountants. AHLE and its representatives shall be
afforded complete and unfettered access to the books and records of AHLE which
remain on the Premises after Closing to enable AHLE to prepare the Closing
Balance Sheet. For purposes thereof, the Inventory shall include only items
which MORO and AHLE mutually determine to be saleable, usable, and of good
quality, or for which there is, based on historical usage, not more than a nine
month supply existing as of the date of Closing. The Inventory shall be valued
at an amount equal to the lower of cost or market. The Closing Balance Sheet
shall not reflect any intangible assets, goodwill, or capitalized assets.
B. Within ninety days following the Closing, AHLE will deliver to MORO the
Closing Balance Sheet as well as a computation of the Purchase Price based
thereon. AHLE shall also furnish to MORO such financial schedules and
information as MORO and its accountants shall reasonably require for the
purposes of reviewing the calculations. If the accountants for MORO and the
accountants for AHLE can not agree upon the Purchase Price, then either MORO or
AHLE may request that the Purchase Price be determined by arbitration to be held
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The hearing shall be held at the American Arbitration Association
office closest to AHLE's place of business, and shall be conducted
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by a single arbitrator. The decision and award of the arbitrator shall be final,
conclusive and binding upon the parties. If upon the determination of the
Purchase Price, any amount is due to AHLE, the amount shall be paid to AHLE by
MORO within five days thereafter. If upon the determination of the Purchase
Price, any amount is to be returned to MORO, then such amount shall be paid by
AHLE to MORO within five days thereafter. Any such amounts shall bear interest
from and after the Closing until paid at the rate of eight percent (8%) per
annum.
1. Any such amounts due from MORO to AHLE shall be paid in immediately
available funds. MORO's obligation to make such payments shall be guaranteed,
jointly and severally, by the Guarantors pursuant to the Guaranty Agreement
attached hereto as Exhibit "C".
2. Any such amounts to be returned to MORO shall first be satisfied by
delivery by the escrow agent of the appropriate portion of the $100,000 escrow
amount referred to in Article IV.C.3. below. If such escrow amount is not
sufficient, the balance shall be delivered in immediately available funds by
AHLE to MORO.
C. The Purchase Price shall be payable by MORO to AHLE, as follows:
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1. MORO shall execute and deliver to AHLE at the time of and as a condition
of Closing the interest bearing promissory note of MORO in the principal amount
of $150,000, in the form attached hereto as Exhibit "B". The note shall be
guaranteed jointly and severally by the Guarantors pursuant to the Guarantee
Agreement attached hereto as Exhibit "C".
2. MORO shall execute and deliver to AHLE at the time of and as a condition
of Closing the non-interest bearing promissory note of MORO in the principal
amount of $100,000, in the form attached hereto as Exhibit "D". The note shall
be guaranteed jointly and severally by the Guarantors pursuant to the Guarantee
Agreement attached hereto as Exhibit "E".
3. Subject to the post-Closing adjustment pursuant to Article IV.B., the
balance of the Purchase Price shall be paid to AHLE by MORO at the Closing in
immediately available funds; provided, however, that $100,000 thereof shall be
held in escrow as described in Article V.B. hereof.
D. The Purchase Price shall be allocated among the Assets as set forth in
the Closing Balance Sheet and the imputed value of the $100,000 non-interest
bearing promissory note referred to in Article IV.C.2. above shall be allocated
to the fixed assets being purchased by MORO. MORO, AHLE and the Shareholders
shall take all steps required to report the results of the transactions
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contemplated hereby for tax purposes in a manner consistent with and utilizing
such allocations.
V. Estimated Purchase Price.
A. Because the Closing Balance Sheet will not be available until after the
Closing, MORO shall deliver to AHLE at Closing an amount equal to the Purchase
Price as calculated by and agreed to by MORO and AHLE based upon the most
recently available balance sheet of AHLE ("Estimated Purchase Price"), currently
contemplated to be the balance sheet dated February 29, 2000; provided, however,
that such balance sheet shall reflect the preliminary inventory amount referred
to in Article VIII.A. and shall be updated on an estimated basis by MORO and
AHLE as close as is possible to March 31, 2000. MORO and AHLE agree that, if
based upon the December 31, 1999 balance sheet of AHLE, a copy of which is
attached as Schedule V.A., the Estimated Purchase Price would be $100,000 plus
$1,157,288. In this regard, it has been assumed that none of the accounts
receivable are Excluded Receivables, there is no Excess Inventory or
Unacceptable Inventory, MORO has not utilized the prepaid insurance or prepaid
taxes, MORO has assumed the deposit reflected thereon, and MORO has not assumed
any sales taxes payable.
B. As provided in Article IV.C.3., the sum of $100,000 otherwise payable by
MORO to AHLE in immediately available funds
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shall not be delivered to AHLE at the time of Closing but shall be placed in an
interest bearing escrow account with MORO's legal counsel acting as escrow
agent. As a condition of Closing and at the time thereof, MORO, AHLE, and such
legal counsel shall execute and deliver the Escrow Agreement in the form
attached hereto as Exhibit "F". Pursuant thereto, the escrow funds shall be held
in such escrow account pending the preparation of the Closing Balance Sheet and
shall be disbursed promptly following the final determination of the Purchase
Price pursuant to Article IV.B. The escrowed funds shall be applied first
towards any amounts and accrued interest thereon due from AHLE to MORO, if any,
upon final determination of the Purchase Price and then the balance (if there is
any) or the entire amount of the escrowed funds (if no amounts are due from AHLE
to MORO) shall be paid over to AHLE by the escrow agent.
VI. Xxxxx X. Xxxx Consulting Xxxxxxxxx.Xx the time of Closing, and as a
condition thereof, Xxxxx X. Xxxx and MORO shall execute and deliver a consulting
agreement in the form attached hereto as Exhibit "G".
VII. Other Employment or Non-Compete Agreements.
A. At the time of Closing, and as a condition thereof, Xxxx Xxxx and MORO
shall execute and deliver an employment and
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non-compete agreement in mutually satisfactory form to be negotiated and agreed
to between them prior to Closing.
B. At the time of Closing, and as a condition thereof, Xxxxxx Xxxxxxx and
MORO shall execute and deliver an employment and non-compete agreement in
mutually satisfactory form to be negotiated and agreed to between them prior to
Closing.
C. At the time of Closing, and as a condition thereof, Xxxxxxx Xxxx and
MORO shall execute and deliver an employment and non-compete agreement in
mutually satisfactory form to be negotiated and agreed to between them prior to
Closing.
D. At the time of Closing, and as a condition thereof, each of Xxxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxxxxx shall execute and deliver a non-compete
agreement with MORO in the form attached hereto as Exhibit "H".
VIII. Accounts Receivable; Inventory.
A. Method of Valuation. A preliminary itemized physical count of the
Inventory shall be taken by AHLE with representatives of MORO present to check
and verify such count prior to the Closing. MORO shall purchase all of the
Inventory (other than Excluded Inventory) for an amount equal to the lower of
cost or market as shown by the results of such physical count. The results of
such physical count and valuation thereof, indicating the Inventory, the
Unacceptable Inventory and the Excess Inventory,
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will be delivered at Closing, and shall be used to determine the Estimated
Purchase Price.
B. Excess Inventory. The Excluded Inventory may remain at the Premises rent
free, and representatives of AHLE shall have access thereto after the Closing.
Following the Closing, MORO shall have the obligation to purchase from AHLE any
Excess Inventory on an as needed basis at the lower of cost or market. MORO
shall make payment to AHLE therefore within thirty days of purchase. AHLE may
sell or otherwise dispose of any of the Unacceptable Inventory and the Excess
Inventory at any time to anyone.
C. Accounts Receivable. MORO shall have the right to and authority to
collect for its own account all Included Receivables and other items which shall
be transferred to MORO as part of the Assets and to endorse with the name of
AHLE any checks received on account of any such receivable or other items. AHLE
shall promptly transfer and deliver to MORO any cash or other property which
AHLE may receive following Closing in respect of such Included Receivables or
other items. MORO shall use its best efforts following Closing to collect for
the account of AHLE any Excluded Receivables, and shall promptly transfer and
deliver to AHLE any cash or other property which MORO may receive in respect of
such receivables. All sums collected by MORO from customers who
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owe Excluded Receivables and Included Receivables shall be applied first in
payment of the Excluded Receivables on a "FIFO" basis.
IX. Closing. The Closing of all of the transactions under this Agreement
(the "Closing") will commence at 9:00 A.M., Philadelphia, Pennsylvania time, on
March 31, 2000, unless MORO and AHLE shall have agreed on another date and time
in writing. In the event that either MORO or AHLE is entitled not to close on
the scheduled date because a condition to the Closing set forth in Articles XIV
or XV hereof has not been met (or waived by the party or parties entitled to
waive it), such party may postpone the Closing from time to time, by giving at
least five days notice to the other party, until the condition has been met
(which all parties will use their best efforts to cause to happen), but in no
event to a date later than April 30, 2000. The place of Closing will be at the
offices of Lurio & Associates, P.C., Xxxxx 0000, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxxxx, XX 00000, or such other place as MORO and AHLE shall mutually
agree upon in writing. The sale of assets hereunder shall be effective as of the
close of AHLE's business on the date of Closing.
X. Representations and Warranties of AHLE. AHLE, each of the Shareholders
and Xxxxxxxxx, jointly and severally, hereby represent and warrant to MORO, as
follows:
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A. Corporate Organization. AHLE is a corporation duly organized, validly
existing and in good standing under the laws of the state of New Jersey, with
all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now being conducted. AHLE is not
required to be qualified to do business in any other jurisdictions. AHLE has
previously delivered to MORO complete and correct copies of the Certificate of
Incorporation and By-laws, including all amendments to the date hereof, of AHLE.
The Shareholders are the sole record and beneficial owners of all of the issued
and outstanding stock of AHLE.
B. Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of AHLE and by each of the Shareholders of AHLE and no
other corporate proceedings on the part of AHLE are necessary to authorize this
Agreement or to carry out the transactions contemplated hereby. AHLE and each
Shareholder has the right, power and authority to enter into and perform this
Agreement. This Agreement constitutes the valid and binding agreement of AHLE
and each Shareholder enforceable in accordance with its terms, except that such
enforceability may be limited by bankruptcy, insolvency or similar
17
laws affecting creditors' rights generally and subject to the discretion of a
court in granting equitable remedies.
C. Conflicts with Instruments. Neither the execution or delivery of this
Agreement by AHLE, or the consummation of the transactions contemplated by this
Agreement by AHLE, nor the compliance with the terms of this Agreement by AHLE
will: (i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-laws, as amended, of AHLE; (ii) except for
consents or waivers required under certain agreements, leases, or other
instruments or documents with respect to which the failure to so obtain will not
have a material adverse effect, and except for the consents which are
specifically set forth in Schedule X.C attached hereto, violate, conflict with
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
or result in the termination, give others a right of termination, acceleration
or cancellation of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties of AHLE, or result in being declared void, voidable or without
further binding effect any of the terms, conditions or provisions of any lease,
agreement or other material instrument or commitment or obligation to which AHLE
is a party, or by which its properties
18
may be bound or affected; or (iii) violate any order, writ, injunction, decree,
judgment or ruling of any court or administrative or governmental body or agency
or arbitration tribunal, or violate any material provision of any permit,
license, certificate or registration to which AHLE is subject or pursuant to
which it conducts business, or any law, rule or regulation.
D. No Violation. AHLE has not been charged with or given notice of, nor
does there exist, to the best of their knowledge, any outstanding violation of
any applicable law, statute, order, rule, regulation, policy or guideline
promulgated, or judgment entered by any federal, state or local court or
administrative or governmental authority or arbitration tribunal which would
materially adversely affect AHLE or its business, or any of its properties.
E. Financial Statements. AHLE has delivered to MORO its financial
statements together with its accountant's compilation report thereon for the
fiscal years ended December 31, 1995, December 31, 1996, December 31, 1997 and
December 31, 1998, all of which are attached hereto as Schedule X.E (the
"Financial Statements"). The Financial Statements have been prepared from and
are in accordance with the books and records of AHLE and present fairly the
financial position of AHLE as of the dates indicated, and the results of
operations for the periods indicated, and are
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true and correct in all material respects. The Financial Statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied.
F. Legal Proceedings. AHLE has not received written notice of any claim or
proceeding (including any arbitration proceeding) pending against, relating to
or affecting AHLE (or any of its officers or directors in connection with the
business or affairs of AHLE). To the best of their knowledge, there are no such
claims or proceedings pending challenging the validity or propriety of the
transactions contemplated by this Agreement. AHLE is not subject to any
judgment, order, decree, administrative ruling or other judicial or
administrative mandate or arbitration proceeding specifically directed against
AHLE. AHLE has not received written notice from any governmental or
administrative authority contending that AHLE has not conducted, and, to the
best of their knowledge, AHLE has conducted, its business in all material
respects, in accordance with all applicable material federal, state and local
laws and regulations including any Environmental Laws (as defined in
Article X.P).
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G. Licenses and Trademarks. AHLE (i) has all permits, approvals,
authorizations, consents, licenses, certificates and registrations which are
material to the conduct of its business, all of which are valid and in full
force and effect in accordance with their terms and all of which are set forth
in Schedule X.G, and (ii) owns or possesses adequate rights to use all
tradenames, trademarks, and copyrights and all technology, processes, computer
programs, know-how and formulae which are material to the conduct of its
business and the use thereof does not violate or infringe upon the rights of any
other party.
H. Title to Properties and Related Matters. AHLE has title, leasehold and
license rights, as applicable, to each and every Asset. Except as set forth in
Schedule X.H, all such Assets are held free and clear of liens, pledges, claims,
charges, security interests or other encumbrances and are not subject to any
rights of way, building or use restrictions, exceptions, variances, reservations
or limitations of any nature whatsoever. All of the Included Receivables and the
Excluded Receivables, have been incurred in the ordinary course of business. The
Assets, including the leasehold improvements, equipment, fixtures, machinery,
and personal property, together with the Real Estate Lease, comprise all the
assets used in the conduct of the business as currently conducted.
I. Taxes and Tax Returns. AHLE has duly filed, or obtained extensions to
file, all federal, state, county, and local tax returns required to be filed by
it (the "Tax Returns") and has duly paid all taxes (including required estimated
taxes),
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assessments and other governmental charges or impositions (including any
interest or penalties) which are due and payable (the "Taxes"). There are no
claims asserted for Taxes, nor are there outstanding agreements or waivers
extending the statutory period of limitation applicable to any Tax Return for
any period. AHLE has withheld proper and accurate amounts from its employees'
compensation in substantial compliance with all withholding and similar
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and
any and all other applicable laws, statutes, codes, ordinances, rules and
regulations. AHLE has not received any notice of assessment or proposed
assessment by the Internal Revenue Service or any other taxing authority in
connection with any Tax Returns and there are no pending tax examinations of or
tax claims asserted against AHLE.
J. Agreements. Except as listed in Schedule X.J or any other Schedule
attached hereto, AHLE is not a party to any written or oral: (a) contract with
any labor union; (b) contract for the future purchase of fixed assets; (c)
contracts for the future purchase of materials, supplies or equipment other than
in the ordinary course of business; (d) contract for the employment of any
officer, individual employee or other person on a full-time basis or any
contract with any person on a consulting basis; (e) bonus, pension,
profit-sharing, retirement, stock purchase, stock option,
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hospitalization, medical insurance or similar plan, contract or understanding in
effect with respect to employees or any of them or the employees of others; (f)
agreement or indenture relating to the borrowing of money or to the mortgaging,
pledging or otherwise placing of a lien on any Assets; (g) guaranty of any
obligation for borrowed money or otherwise; (h) lease or agreement under which
AHLE is lessee of or holds or operates any property, real or personal, owned by
any other party; (i) lease, license or other agreement under which AHLE is
lessor of, or permits any third party to hold or operate any property, real or
personal, owned or controlled by it; (j) agreement or other commitment for
capital expenditures in excess of normal operating requirements; (k) contract,
agreement or commitment under which AHLE is obligated to pay any broker's fees,
finder's fees or any such similar fees, to any third party; (l) contract,
agreement, or commitment under which AHLE is required to supply goods or
products to any customer or other person other than in the ordinary course of
business; or (m) any other contract, agreement, arrangement or understanding
which is material to the business of AHLE (each of the foregoing being referred
to collectively herein as "Contracts"). AHLE has furnished to MORO true and
correct copies of all such written Contracts. To the best of their knowledge,
all Contracts are valid and in full force and effect on the date hereof, and
AHLE has not
23
breached any material provision of, or is in default under any material
provisions of, any Contract.
K. Absence of Changes. Since December 31, 1999, there has not been: (a) any
material adverse change in the financial condition, results of operations,
assets, liabilities or business of AHLE; (b) any material liability or
obligation of any nature whatsoever (contingent or otherwise) incurred by AHLE,
other than current liabilities or obligations incurred in the ordinary course of
business; (c) any Asset made subject to a lien of any kind; (d) any waiver of
any valuable right of AHLE, or the cancellation of any material debt or claim
held by AHLE; (e) any mortgage, pledge, sale, assignment or transfer of Assets
except in the ordinary course of business; (f) any damage, destruction or loss
(whether or not covered by insurance) which adversely affects or may adversely
affect the Assets; (g) any change in the accounting methods or practices
followed by AHLE; or (h) any other event, development or condition, of any
character, or threat of the same (excluding macro economic conditions generally
effecting the business), which materially adversely affects the business or
business prospects of AHLE.
L. Disclosure. No representation or warranty in this Agreement or in any
exhibit, schedule, certificate, statement or other document required to be
delivered by AHLE or a Shareholder
24
hereunder contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein or
herein not misleading.
M. No Defaults. AHLE is not in default in any material respect beyond
applicable grace, notice and cure periods under any lease agreement, contract,
purchase order or other instrument or agreement to which it is a party or by
which it or any of its property is bound or affected. To the best of their
knowledge, there exists no condition, event or act which constitutes, or which
after notice, lapse of time or both could constitute, a default by AHLE under
any of the foregoing.
N. Compensation Arrangements. Schedule X.N contains a correct list setting
forth, or a true and correct copy of, the names of all persons who are employed
by AHLE, together with (i) a statement of the full amount paid or payable (to
the extent ascertainable) to or in respect of each such person for services
rendered or to be rendered in the current year and the basis therefor, (ii) an
indication of the method by which each is compensated (e.g. salary plus
commission, straight commission, draw against commission), (iii) their job
descriptions, and a copy of any employment or other agreement pursuant to which
such compensation was or is to be paid, and (iv) the names and titles of all
directors and officers of AHLE.
25
O. Consents, etc. Except as described in Schedule X.C, no consent,
authorization, order or approval of, or filing or registration with, any
governmental commission, board or other regulatory body or any other person or
entity is required for or in connection with the execution or delivery of this
Agreement by AHLE or the consummation by AHLE of the transactions contemplated
hereby, and if so required, such consent, authorization, or approval shall have
been obtained or filing shall have been effected at or prior to Closing.
P. Environmental Laws. Any and all permits, licenses and other
authorizations which are required under federal, state, local, or other laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into ambient air,
surface water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Laws") have been obtained by AHLE in respect of the business
currently conducted by it. AHLE is in compliance, in all material respects, with
all terms and conditions of the required permits, licenses and authorizations in
connection with the business conducted by it, and
26
is also complying, in all material respects, with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those laws or contained in any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder. In respect of the business conducted by
AHLE, and to the best of their knowledge during AHLE's period of ownership of
the Assets, there have been no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans of AHLE which
would interfere with or prevent continued compliance, or which may give rise to
any common law or statutory legal liability or obligation, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation, based on
or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any pollutant, contaminant, or
hazardous or toxic material or waste material.
Q. Insurance. Schedule X.Q contains a true, complete and correct list of
all insurance policies in force in which AHLE is named as an insured, and for
which AHLE has paid any premium, and which insure any of the Assets or the real
property covered by the Real Estate Lease, or cover any liabilities of the
business,
27
and states for each such policy the name of the insurer, type and amount of
coverage, deductible amounts, if any, expiration date and the annual premium
amount. Such policies are in full force and effect and all premiums with respect
to such policies are currently paid.
XI. Covenants of AHLE.
X. XXXX and each Shareholder covenants and agrees that from the date of the
execution and delivery of this Agreement, to the date of the Closing:
1. AHLE shall continue to conduct its business in the ordinary course and
in the same manner as heretofore, and will use reasonable, diligent commercial
efforts to preserve its business organization intact and keep available to MORO
the services of its present employees and preserve the good will of customers
and suppliers and others having business relations with AHLE. AHLE shall
maintain the Assets in their condition as of the date hereof, subject to
ordinary wear and tear. It is the intent of MORO and MORO agrees to extend
employment offers, such that after Closing all of the present employees of AHLE
(other than Xxxxx X. Xxxx) would continue to be employees of MORO at their
present pay scales and employee benefits.
2. AHLE shall give to MORO and its representatives full access during
normal business hours, and on reasonable prior
28
notice, to all of the Assets, books, records, employees and payroll lists and
records, agreements, and documents of AHLE, including, without limitation, all
of the books of account and business records or other writings, computer data
and information, computer programs, sales invoices and credit memos, ledgers,
journals, bank statements, canceled checks, deposit slips, tax returns, tax
assessments and notices, claims by or against AHLE, judgments, financing
statements, security agreements, liens, computer runs, marketing and promotional
plans, promotional or pricing allowances, price lists, credits, rebates, and/or
discounts, payment and credit terms with suppliers and customers, customer
complaints and claims, and insurance claims, wherever located (collectively
hereinafter the "Books and Records"). AHLE will furnish to MORO all information
with respect to the affairs of AHLE which MORO may from time to time reasonably
request, and MORO and its representatives may, prior to the Closing, make such
examination and investigation of said Books and Records and of its properties,
assets, and business, as MORO deems necessary or advisable, and examining the
real estate covered by the Real Estate Lease, and may examine any financial
statements, including without limitation, internally prepared financial
statements or management reports, and the work papers of the accountant or
accountants employed by or servicing the Books and Records and business of AHLE
for all periods prior to the
29
Closing. The mere fact of such examination or investigation by MORO or its
representatives, however, shall not, of itself, affect the representations,
warranties or covenants hereunder of either AHLE, a Shareholder, or Xxxxxxxxx,
unless MORO has obtained actual knowledge as a result of such investigation or
examination which is contrary to any such representation, warranty, or covenant.
From and after the date hereof, MORO shall have the right, on reasonable prior
notice, to have one or more of its representatives present on the business
premises of AHLE during normal business hours.
3. AHLE shall not, without first obtaining the written consent of MORO: (1)
make any commitment, or enter into any transaction, which materially and
adversely affects the Assets; (2) enter into any agreement with respect to or
affecting the Assets, other than in the ordinary and usual course of its
business, which does not terminate or is not terminable without penalty by AHLE
prior to the Closing; (3) further encumber, lien or grant a security interest in
any of the Assets; (4) make any loans or advances or assume, guarantee, endorse
or otherwise become responsible for the obligations of any other person or
entity which would affect in any manner the Assets; (5) cancel, amend or
terminate any existing agreement relating in any manner to the business, except
in the ordinary and usual course of its business or as otherwise required by
this Agreement; (6) enter into or
30
terminate any contract, agreement, plan, or lease, or make any change in any of
its contracts, agreements, plans or leases, other than in the ordinary and usual
course of its business; (7) make any changes in its authorized, issued or
outstanding capital stock, and make no amendment to or change its Certificate of
Incorporation or By-laws; (8) not dispose of or agree to dispose of, any assets,
real, personal, or intangible, except in the ordinary course of business; and
(9) make no change to any of its contracts with, nor enter into any agreements
granting any additional benefits to, any director, employee, shareholder, or
consultant.
4. AHLE will, through the date of Closing, keep in force and undiminished
its existing insurance in connection with the Assets and in connection with the
Premises. Prior to Closing, all risk of loss, damage or destruction to all or
part of the Assets or such Premises shall be borne exclusively by AHLE.
5. AHLE shall carry on its business substantially in the same manner as
heretofore and will make or institute no unusual or novel methods of
distribution, purchase, sale, management or operation of its business, including
but not limited to the payment or non-payment of its debts or liabilities.
6. The Shareholders shall not transfer, assign, encumber, hypothecate,
sell, or transfer any interest whatsoever in any of the securities of AHLE.
31
B. From and after the Closing, AHLE shall, at no cost or expense to AHLE,
furnish all financial information reasonably necessary for, and shall cooperate
with MORO with respect to, the preparation after the date of Closing of such
financial statements relating to the Assets as MORO is required to prepare.
C. Immediately after the execution of this Agreement, AHLE shall, at its
sole cost and expense, cause a reputable search company to issue and deliver to
MORO within twenty days of the date hereof, a certificate of such search company
or other evidence reasonably satisfactory to MORO that a central and local
search has been made of the records wherein financing statements and security
agreements, or the local equivalents thereof, are filed under the applicable
Uniform Commercial Code or comparable local law, as well as for judgments,
judgment liens and all tax liens. Such certificate shall identify all security
interests and liens of any kind or nature whatsoever and wherever located that
are claimed by any person against any of the Assets.
D. Phase One Audit. Promptly after the execution and delivery hereof, AHLE
shall, at its sole cost and expense, obtain a current phase one environmental
audit ("Phase One Audit") of the Premises. The results of such Phase One Audit,
including a copy of any and all reports, letters, or other documents produced in
connection therewith, shall be delivered to MORO. If MORO, its
32
bank, or its legal advisors, are not completely satisfied with the results of
such Phase One Audit, MORO may terminate this Agreement in accordance with
Article XVI (iv).
XII. Representations and Warranties of MORO and the Guarantors to AHLE.
MORO and the Guarantors hereby jointly and severally represent and warrant to
AHLE, as follows:
A. Corporate Organization. MORO is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with all
requisite corporate power and authority to own, operate and lease its properties
and carry on its business as now being conducted. MORO is qualified to do
business in New Jersey.
B. Authority. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of MORO and no other corporate proceedings on the part
of MORO are necessary to authorize this Agreement or to carry out the
transactions contemplated hereby. MORO and each Guarantor has the right, power
and authority to enter into and perform this Agreement. This Agreement
constitutes the valid and binding agreement of MORO and each Guarantor
enforceable in accordance with its terms, except that such enforceability may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
33
generally and subject to the discretion of a court in granting equitable
remedies.
C. Conflicts with Instruments. Neither the execution or delivery of this
Agreement by MORO, or the consummation of the transactions contemplated by this
Agreement by MORO, nor the compliance with the terms of this Agreement by MORO
will: (i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-laws, as amended, of MORO; or (ii) violate
any order, writ, injunction, decree, judgment or ruling of any court or
administrative or governmental body or agency or arbitration tribunal, or
violate any material provision of any permit, license, certificate or
registration to which MORO is subject or pursuant to which it conducts business,
or any law, rule or regulation.
D. No Violation. MORO has not been charged with or given notice of, nor
does there exist, to the best of their knowledge, any outstanding violation of
any applicable law, statute, order, rule, regulation, policy or guideline
promulgated, or judgment entered by any federal, state or local court or
administrative or governmental authority or arbitration tribunal which would
materially adversely affect MORO or its business, or any of its properties.
34
E. Legal Proceedings. MORO has not received written notice of any claim or
proceeding (including any arbitration proceeding) pending against, relating to
or affecting MORO (or any of its officers or directors in connection with the
business or affairs of MORO). To the best of their knowledge, there are no such
claims or proceedings pending challenging the validity or propriety of the
transactions contemplated by this Agreement. MORO is not subject to any
judgment, order, decree, administrative ruling or other judicial or
administrative mandate or arbitration proceeding specifically directed against
MORO. MORO has not received written notice from any governmental or
administrative authority contending that MORO has not conducted, and, to the
best of their knowledge, MORO has conducted, its business in all material
respects, in accordance with all applicable material federal, state and local
laws and regulations including any Environmental Laws (as defined in
Article X.P).
F. Consents, etc. No consent, authorization, order or approval of, or
filing or registration with, any governmental commission, board or other
regulatory body or any other person or entity is required for or in connection
with the execution or delivery of this Agreement by MORO or the consummation by
MORO of the transactions contemplated hereby.
XIII. Non-Competition.
35
A. From and after the date of Closing, AHLE shall not act as a stockholder,
agent, lessor, sublessor, partner or consultant of, or otherwise participate in
or assist, any enterprise or organization which is or which becomes engaged in
the business, or similar type business, presently carried on or engaged in by
AHLE.
B. From and after the date of Closing, except for the sale or other
disposition of any of the Excluded Inventory, AHLE shall not solicit, interfere
with or endeavor to entice away from MORO, any customer, supplier, or any
person, firm or corporation dealing with MORO, or interfere with or employ or
induce to leave the employment of MORO, any employee of MORO.
C. In the event of a breach of any of the terms of this Article, MORO shall
be entitled to apply for and obtain injunctive relief in any court of competent
jurisdiction, without limitation as to any other or further remedies which may
be available to MORO.
XIV. Conditions to Closing by MORO. The obligation of MORO to close under
this Agreement is subject to the satisfaction of the following conditions
precedent (all or any of which may be waived, in whole or in part, in writing by
MORO in its sole discretion) on or prior to the date of Closing:
A. Covenants, Agreements. AHLE and the Shareholders shall have performed
all covenants and agreements to be performed
36
by each of them on or before Closing pursuant to the terms of this Agreement.
B. Authorizations. AHLE shall have delivered to MORO: (1) a certified copy
of a resolution or resolutions unanimously adopted by the Board of Directors and
Shareholders of AHLE authorizing AHLE to execute, deliver and fully perform this
Agreement and approving same; and (2) such other instruments, documents and
certificates as MORO or its counsel may reasonably request for the purpose of
consummating the transactions contemplated herein; and (3) a certificate signed
by the President and Secretary of AHLE, dated the date of Closing, to which the
corporate seal is affixed, to the effect that all representations and warranties
of AHLE and the Shareholders are true and correct on and as of the Closing, with
the same effect as though such representations and warranties had been made on
and as of such date and time and that the agreements, covenants and obligations
to be performed by AHLE and the Shareholders pursuant to this Agreement shall
have been so performed in all material respects.
C. Representations, Warranties. The representations and warranties of AHLE,
the Shareholders, and Xxxxxxxxx contained in this Agreement shall be true and
correct, in all material respects, on and as of the Closing, with the same
effect as though such
37
representations and warranties had been made on and as of such date and time.
D. Destruction of Assets. There shall have been no fire or other damage to
any material portion of the Assets or a substantial portion of the Premises.
E. Phase One Audit. AHLE shall have delivered to MORO, at no cost or
expense to MORO, the Phase One Audit which is satisfactory to MORO, its bank,
and its legal advisors.
F. Financing Commitment. MORO shall have received a financing commitment
from its bank in an amount, form, and substance acceptable to MORO and the bank
shall have funded thereunder.
G. Real Estate Lease. AHLE shall have executed and delivered to MORO an
assignment and assumption of the Real Estate Lease in form and substance
reasonably satisfactory to MORO, and the landlord shall have executed and
delivered to MORO the landlord's consent to such assignment and assumption, and
shall have delivered to MORO any waivers, non-disturbance and attornment
agreements which have been requested by MORO's bank.
H. Xxxxx X. Xxxx Agreement. MORO and Xxxxx X. Xxxx shall have executed and
delivered the consulting and non-competition agreement.
38
I. Employment Agreements. MORO and each of Xxxx Xxxx, Xxxxxxx Xxxx, and
Xxxxxx Xxxxxxx shall have executed and delivered an employment and
non-competition agreement.
J. Non-Compete Agreements. MORO and each of Xxxxxxx X. Xxxxxxx and Xxxxxx
X. Xxxxxxxxx shall have executed and delivered a non-compete agreement.
K. Opinion of Counsel. MORO shall have received the written opinion, dated
the date of Closing, and as of such date, of Orloff, Lowenbach, Xxxxxxxxx &
Xxxxxx, special counsel to AHLE, the Shareholders and Xxxxxxxxx, in form and
substance reasonably satisfactory to MORO, substantially to the effect that:
1. AHLE is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey and has corporate power and
authority to own all of its respective properties and assets and to carry on its
business as they understand it is now being conducted.
2. AHLE has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated on its part hereby;
AHLE has taken all necessary corporate proceedings to authorize the execution
and delivery by it of this Agreement and the consummation by it of the
transactions contemplated on its part hereby; and this Agreement, the consulting
agreement, non-compete agreements, and other closing
39
documents to which each is a party, has been duly executed and delivered by
AHLE, each Shareholder, and Xxxxxxxxx, and is the valid and binding agreement of
each of them enforceable against each of them in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws and equitable principles relating to or
affecting the rights or remedies of creditors.
3. The execution and delivery by AHLE of this Agreement and the
consummation by it of the transactions contemplated on their part hereby does
not violate any provision of the Certificate of Incorporation or By-Laws, as
amended, of AHLE.
4. The execution and delivery by AHLE of this Agreement and the
consummation by AHLE of the transactions contemplated on its part hereby, (A)
does not violate, or with the giving of notice or the lapse of time or both
result in a violation of, any law, rule, or regulation, or, to their knowledge,
any provision of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time of both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon the property of AHLE
pursuant to any provision of, any material lien, lease, agreement, license,
instrument, law, ordinance, regulation, order, arbitration award, judgment or
decree
40
to which AHLE is a party or by which it is bound, and (B) to their knowledge,
does not and will not constitute an event permitting termination of any material
lease, agreement, license or instrument to which AHLE is a party or by which it
is bound.
5. To their knowledge, there is no claim, action, suit, arbitration or
proceeding pending, contemplated or threatened against AHLE or any of its
properties which seeks to prohibit, restrict or delay consummation of the
transactions contemplated hereby or any of the conditions to consummation of the
transactions contemplated hereby or to limit in any manner any material aspect
of the business of AHLE or the use of the Assets after the Closing, nor is there
any judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality or arbitrator outstanding
against AHLE which has or may in the future have any such effect.
L. Transfer of Title. AHLE shall deliver to MORO bills of sales,
assignments and other appropriate instruments of transfer effective to vest in
MORO title (and all of AHLE's right, title and interest) in and to the Assets
(free and clear of liens, security interests, claims or other encumbrances of
every nature), in each case in form and substance reasonably satisfactory to
MORO and counsel for MORO.
41
M. Consents, Authorizations. AHLE shall deliver to MORO the consents set
forth in Schedule X.C. hereto. AHLE shall have obtained all permits, consents,
waivers from and approvals of, and made filings and registrations with any
federal, state and local governmental board, commission, authority or any other
regulatory body, which are required for the consummation by AHLE of the
transactions contemplated on its part hereby.
XV. Conditions to Closing by AHLE. The obligation of AHLE to close under
this Agreement is subject to the satisfaction of the following conditions
precedent (all or any of which may be waived, in whole or in part, in writing by
AHLE), on or prior to the date of Closing:
A. Covenants. MORO shall have performed all covenants and agreements to be
performed by MORO on or before the Closing pursuant to the terms of this
Agreement.
B. Authorizations. MORO shall have delivered to AHLE: (1) a certified copy
of a resolution or resolutions unanimously adopted by its Board of Directors
authorizing MORO to make, deliver and perform this Agreement and approving same;
(2) such other instruments, documents and certificates as AHLE or its counsel
may reasonably request for the purpose of consummating the transactions
contemplated herein; and (3) a certificate signed by the President and Secretary
of MORO, to which the corporate seal is affixed,
42
dated the date of Closing, to the effect that all representations and warranties
of MORO are true and correct on and as of the Closing, with the same effect as
though such representations and warranties had been made on and as of such date
and time and that the agreements, covenants and obligations to be performed by
MORO pursuant to this Agreement shall have been so performed in all material
respects.
C. Representations, Warranties. The representations and warranties of MORO
and the Guarantors contained in this Agreement shall be true and correct in all
material respects on and as of the date of Closing, with the same effect as
though such representations and warranties had been made on and as of the time
and date of the Closing.
D. Xxxxx X. Xxxx Agreement. MORO and Xxxxx X. Xxxx shall have executed and
delivered the consulting and non-competition agreement.
E. Employment Agreements. MORO and each of Xxxx Xxxx, Xxxxxxx Xxxx, and
Xxxxxx Xxxxxxx shall have executed and delivered an employment and
non-competition agreement.
F. Opinion of Counsel. AHLE shall have received the written opinion, dated
the date of Closing, and as of such date, of Lurio & Associates, P.C., counsel
to MORO and the Guarantors, in
43
form and substance reasonably satisfactory to AHLE, substantially to the effect
that:
1. MORO is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has corporate power and
authority to own all of its respective properties and assets and to carry on its
business as they understand it is now being conducted. MORO is qualified to do
business in New Jersey.
2. MORO has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated on its part hereby;
MORO has taken all necessary corporate proceedings to authorize the execution
and delivery by it of this Agreement and the consummation by it of the
transactions contemplated on its part hereby; and this Agreement, the notes,
guarantees and other closing documents to which each is a party, has been duly
executed and delivered by MORO and each Guarantor, and is the valid and binding
agreement of each of them enforceable against each of them in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws and equitable principles
relating to or affecting the rights or remedies of creditors.
44
3. The execution and delivery by MORO of this Agreement and the
consummation by it of the transactions contemplated on their part hereby does
not violate any provision of the Certificate of Incorporation or By-Laws, as
amended, of MORO.
4. To their knowledge, there is no claim, action, suit, arbitration or
proceeding pending, contemplated or threatened against MORO or any of its
properties which seeks to prohibit, restrict or delay consummation of the
transactions contemplated hereby or any of the conditions to consummation of the
transactions contemplated hereby.
G. Closing Documents. MORO and the Guarantors shall execute and deliver to
AHLE, as appropriate, the Assumption Agreement in the form attached hereto as
Exhibit "A", the cash purchase price referred to in Article IV.C.3., the
$150,000 Note in the form of Exhibit "B", the Guaranty thereof in the form of
Exhibit "C", the $100,000 Note in the form of Exhibit "D", the Guaranty thereof
in the form of Exhibit "E", the Escrow Agreement in the form of Exhibit "F", and
shall deliver to AHLE such other appropriate instruments and documents as
otherwise shall be required in this Agreement.
XVI. Termination.
Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated (i) by either
45
MORO or AHLE by notice to all the other parties hereto if Closing shall not have
been consummated prior to 5:30 p.m., Philadelphia, Pennsylvania time on April
30, 2000; or (ii) by MORO if any time prior to the consummation of Closing it is
not completely satisfied with its due diligence investigation of the Assets, or
the business of AHLE, or the Premises; or (iii) by MORO if a material adverse
change shall have occurred to the business of AHLE, or to the Assets, or to the
Premises, at any time after the date hereof; or (iv) by MORO if it, its bank, or
its legal advisors, is not satisfied with the Phase One Audit. It is understood
and agreed that (i) any such termination shall not in and of itself be a breach
of this Agreement, and (ii) any such termination shall not limit, extinguish or
modify any claim or cause of action which may otherwise exist for a breach of
any covenant, warranty, representation or obligation contained herein.
XVII. Indemnification of MORO.
A. From and after the date hereof, and subject to the limitations set forth
in Article XVII.C. below, AHLE, each Shareholder, and Xxxxxxxxx, jointly and
severally, agrees to indemnify against, and to protect, save and keep MORO, its
officers, directors, shareholders, agents, employees, and affiliates (jointly
and severally, "Indemnified Party") harmless from, and to assume liability for,
payment of all liabilities,
46
obligations, losses, damages, penalties, interest, claims, actions, suits,
judgments, settlements, charges, out-of-pocket costs, expenses and disbursements
(including reasonable costs of investigation, and reasonable fees of attorneys,
accountants and expert witnesses) of whatsoever kind and nature (collectively
referred to as "Damages") that may be imposed on or incurred by an Indemnified
Party as a consequence of or in connection with any claims, suits, demands,
threats, causes of actions, obligations, debts, liability, or damages
whatsoever, (i) arising or incurred by AHLE prior to or after the Closing unless
MORO has assumed such obligation or liability in this Agreement, or (ii) arising
in whole or in part by reason of the performance of the terms of this Agreement
or any breach of any representation, warranty, or covenant in this Agreement by
AHLE, a Shareholder, or Xxxxxxxxx, or (iii) by reason of or the result of the
operation by any person or entity of the business of AHLE prior to the Closing
unless assumed by MORO, or (iv) by reason of or the result of any asserted or
actual violation by any person or entity whatsoever of any Environmental Law
with respect to facts or circumstances existing as of Closing in connection with
the business of AHLE or the Assets, or in connection with the Premises(but only
if based upon facts or circumstances which first existed during AHLE's period of
possession of the Premises).
47
B. Any claim for indemnity hereunder shall be made by written notice to
AHLE and the Shareholders specifying in reasonable detail the basis of the
claim. MORO agrees to give prompt written notice to AHLE and the Shareholders of
any claim by a third party against an Indemnified Party which might give rise to
a claim against AHLE or a Shareholder hereunder, stating the nature and basis of
such claim and, if ascertainable, the amount thereof; provided, that any failure
to give prompt notice shall not negate or impair this indemnity, but shall only
entitle the indemnitors to offset any damages caused to them by such failure. In
connection with any such third party claim, AHLE may, at its election and
expense, have the right to participate in the defense of such third party claim.
If AHLE and each Shareholder shall have acknowledged in writing its obligation
to indemnify in respect of any third party claim which might give rise to a
claim for indemnity hereunder and the provision of security therefor reasonably
satisfactory to MORO, MORO agrees not to settle such third party claim without
the consent of AHLE, which shall not be unreasonably withheld, and MORO further
agrees upon the written request of AHLE, to assign all rights and liabilities
with respect to such third party claim to AHLE and to cooperate in the
prosecution and defense thereof; provided,however, AHLE agrees not to settle any
third party claim without the consent of MORO if any relief, other than
48
the payment of money damages, would be granted by such settlement that might
affect the business operations or reputation of MORO.
C. Notwithstanding anything contained herein to the contrary, no
Indemnified Party shall be entitled to indemnification for any Damages, nor
shall MORO be entitled to offset any amount against the notes referred to in
Article IV.C. as a result of a breach of a representation, warranty, or covenant
(a "Note Offset"), until the amount of such Damages or Note Offset exceeds
$10,000. The amount of any Damages for which indemnification is provided under
this Article XVII and the amount of any Note Offset shall: (i) be net of any
amounts recovered by such Indemnified Party or MORO under insurance policies,
(ii) be limited to the amount by which all such Damages or Note Offsets, in the
aggregate, exceed $10,000; and (iii) shall not exceed the Purchase Price under
this Agreement under any circumstances.
XVIII. Brokers and Finders. AHLE and the Shareholders, and MORO and the
Guarantors hereby severally represent to each other that other than Maple
Business Consultants, no broker or finder has been employed or engaged by any of
them in connection with the transactions contemplated in this Agreement and that
all negotiations relative to this Agreement have been carried on directly
between the parties hereto without the intervention of any other person;
provided, however, that MORO shall be responsible
49
for, and shall indemnify and hold harmless AHLE and the Shareholders from, the
brokerage fees due to Maple Business Consultants.
XIX. No Shop Provision. From and after the date hereof and until the
termination of this Agreement, other than with MORO, neither AHLE nor the
Shareholders, shall solicit, encourage, or initiate any discussions,
negotiations, or agreements for the purpose of disposing of or transferring all
or any portion of its assets, or the merger, consolidation, liquidation, sale of
stock, or any similar transactions involving AHLE. From and after the date
hereof and until the termination of this Agreement, AHLE, and the Shareholders
shall negotiate exclusively with MORO and shall not discuss with any third
parties in any manner whatsoever any of the matters referred to in the prior
sentence. From and after the date hereof, AHLE shall promptly communicate to
MORO the terms of any acquisition proposal or offer that AHLE or a Shareholder
receives from any person or entity other than MORO.
XX. Survival of Representations, Warranties, Covenants, Agreements and
Remedies.
All representations, warranties, covenants, agreements and remedies of the
parties hereto shall survive the Closing for a period of eighteen (18) months,
and shall be effective regardless of the mere fact of (as opposed to any actual
knowledge obtained as
50
a result of) any investigation that may have been made or which may be made at
any time by or on behalf of any party hereto. The foregoing shall not apply,
however, to Article XIII hereof, and the terms and conditions of such Article
shall survive such eighteen (18) month period in accordance with their terms.
XXI. Entire Agreement. This Agreement constitutes the entire understanding
and agreement between the parties hereto with respect to the transactions
contemplated herein, supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, including but not limited to the letter of intent between MORO and AHLE
dated January 12, 2000, as amended, and there have been no warranties,
representations or promises, written or oral, made by any of the parties hereto
except as herein expressly set forth herein.
XXII. Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto, as well as their respective heirs, personal
representatives, successors and assigns but no party may assign its obligations
hereunder.
XXIII. Waiver, Modification, etc.. Any party to this Agreement may waive
any of the terms or conditions of this Agreement or agree to an amendment or
modification to this Agreement by an agreement in writing executed in the same
manner (but not necessarily by the same persons) as this Agreement. No
51
amendment or modification of this Agreement shall be binding unless in writing
executed by all of the parties to this Agreement. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision hereof (whether or not similar), nor shall any waiver constitute
a continuing waiver unless otherwise expressly provided.
XXIV. Notice. Any notice or other communications required or permitted
hereunder shall be sufficiently given: (i) three (3) business days after if sent
by certified mail, return receipt requested, postage prepaid, or (ii) one (1)
business day after sent by Federal Express or other overnight courier providing
delivery confirmation for next business day delivery, or (ii) when delivered by
personal delivery, in any event delivered to or addressed as follows:
If to AHLE, the Shareholders or Xxxxxxxxx:
X.X. Xxxx Co., Inc.
Foot of Xxxxxx Xxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxx, President
With copy to:
Xxxxxxx X. Xxxxxxx, Esquire
Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000-0000
If to MORO:
52
MORO Acquisition Corp.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
With copy to:
Xxxxxxx X. Xxxxx, Esquire
Lurio & Associates, P.C.
0000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
XXV. New Jersey Law Controls. This Agreement shall be construed in
accordance with and shall be governed by the laws of the State of New Jersey
without regard to its conflicts of law rules.
XXVI. Consent to Jurisdiction. Except as specifically provided otherwise in
Article IV.B. hereof, each of the parties hereto irrevocably consents and agrees
that any legal action or proceeding whatsoever arising out of or in any way
connected with this Agreement or the transactions contemplated hereby may be
commenced, filed, instituted or brought in the state or federal courts of the
State of New Jersey, and each of the parties hereto irrevocably submits and
accepts with regard to any such legal action or proceeding to the jurisdiction
of such courts. Each of the parties irrevocably consents to service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
53
postage prepaid, to the parties hereto, such service to become effective upon
mailing. Each of the parties hereto hereby irrevocably waive, to the fullest
extent permitted by law, any objection which any of them may now or hereafter
have to the laying of the venue of any suit, action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, brought
in such New Jersey courts, and hereby further irrevocably waives any claim, that
any such suit, action or proceeding brought in such courts, has been brought in
an inconvenient forum.
XXVII. Counterparts. This agreement may be signed in two or more
counterparts which counterparts shall constitute a single, integrated agreement
binding upon all the signatories to such counterparts.
XXVIII. Expenses. Except as specifically provided otherwise herein, each
party hereto shall pay its own expenses arising from this Agreement and the
transactions contemplated hereby, including, without limitation, all legal and
accounting fees and disbursements; provided, however, that nothing herein shall
limit or otherwise modify any right of the parties to recover such expenses from
the other in the event any party hereto breaches this Agreement.
XXIX. Further Assurances. Each of the parties hereto shall hereafter
execute and deliver such further documents and
54
instruments and do such further acts and things as may be required or useful to
carry out the intent and purpose of this Agreement and as are not inconsistent
with the terms hereof. In the event any consent required for the transfer of all
or any part of the Assets to MORO is waived by MORO, then AHLE and the
Shareholders, shall use each of their best efforts to see that MORO receives the
benefit of all or part of the Assets to which MORO has waived the obtaining of
such consents.
XXXI. Consents. AHLE and the Shareholders, shall use their reasonable
commercial best efforts to obtain, at the earliest possible date and prior to
the Closing, and at their sole cost and expense, the consents described in
Schedule X.C. hereof, which includes the letter of nonapplicability with respect
to the Industrial Site Recovery Act. The parties expressly waive compliance with
any applicable bulk sales clearance requirements.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
executed as of the day and year first above written.
55
MORO ACQUISITION CORP.
Attest: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
------------------------------- ------------------------------------
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxx, President
Secretary
(Corporate Seal)
Witness: /s/ Xxxxx X. Xxxxxx
------------------------------ ------------------------------------
XXXXX X. XXXXXX
Witness: /s/ Xxxxxxxxxx X. Xxxxxx
------------------------------ ------------------------------------
XXXXXXXXXX X. XXXXXX
X.X. XXXX CO., INC.
Attest: By: /s/ Xxxxx X. Xxxx
------------------------------ ------------------------------------
(Corporate Seal)
Witness: /s/ Xxxxx X. Xxxx
------------------------------ ------------------------------------
XXXXX X. XXXX
Witness: /s/ Xxxxxxx X. Xxxxxxx
------------------------------ ------------------------------------
XXXXXXX X. XXXXXXX
Witness:
------------------------------ /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
XXXXXX X. XXXXXXXXX, individually
and as trustee of the Xxxxxx X.
Xxxxxxxxx Living Trust u/t/a/d
June 21, 1991
EXHIBITS TO ASSET PURCHASE AGREEMENT
Exhibit "A" - Assumption of Liabilities Agreement between Moro and AHLE
Exhibit "B" - $150,000 Promissory Note from Moro to AHLE
Exhibit "C" - Xxxxxx Guaranty Agreement of $150,000 Promissory Note
Exhibit "D" - $100,000 Promissory Note from Moro to AHLE
Exhibit "E" - Xxxxxx Guaranty Agreement of $100,000 Promissory Note
Exhibit "F" - Escrow Agreement between Lurio & Associates, P.C., Moro and AHLE
Exhibit "G" - Consulting Agreement between Xxxxx X. Xxxx and Xxxx
Exhibit "H" - Non-Compete Agreement between each of Xxxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxxxxxxx and Xxxx
SCHEDULES TO ASSET PURCHASE AGREEMENT
Schedule I.C. - Fixed Asset Leases of AHLE Assumed by MORO
Schedule I.D. - Contracts Assumed by MORO Which Are Not in the Ordinary Course
of AHLE's Business
Schedule I.F. - Prepaid Expenses and Deposits of AHLE Assumed by MORO
Schedule I.G. - Fixed Asset List of AHLE
Schedule V.A. - December 31, 1999 Balance Sheet of AHLE
Schedule X.C. - Required Third Party Waivers or Consents of AHLE
Schedule X.E. - Financial Statements of AHLE
Schedule X.G. - Permits and Approvals of AHLE
Schedule X.H. - Liens and Encumbrances on AHLE Assets
Schedule X.J. - List of AHLE Contracts
Schedule X.N. - List of AHLE Employees and Compensation Arrangements
Schedule X.Q. - List of AHLE Insurance Policies
