EXHIBIT No. 10.42
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXXX JDM LTD.
("BUYER")
AND
NIEMAND INDUSTRIES, INC.
("SELLER")
FEBRUARY 25, 1999
TABLE OF CONTENTS
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Page
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1. Sale and Purchase of Assets and Liabilities................................1
1.1 Sale and Purchase of Assets.......................................1
1.2 Liabilities.......................................................3
2. The Interim Period; Delivery of the Assets; Etc............................4
3. Purchase Price4
3.1 Purchase Price....................................................4
3.2 Payment of the Purchase Price.....................................5
3.3 Allocation of the Purchase Price..................................7
4. Preliminary Closing and Closing; Time and Place............................7
5. Representations and Warranties by Seller...................................8
5.1 Organization and Standing.........................................8
5.2 Authorization by Seller...........................................8
5.3 Approvals, Consents, Etc..........................................8
5.4 Compliance With Other Instruments.................................9
5.5 Title to Assets; Absence of Liens and Encumbrances................9
5.6 Inventory.........................................................9
5.7 Tangible Property................................................10
5.8 Contracts........................................................10
5.9 Brokers..........................................................10
5.10 No Suit, Etc.....................................................11
5.11 Compliance With Laws.............................................11
5.12 Ordinary Course..................................................11
5.13 Representations and Warranties on Closing Date...................11
6. Representations and Warranties by Buyer...................................11
6.1 Organization and Standing of Buyer...............................11
6.2 Authorization by Buyer...........................................12
6.3 Approvals, Consents, Etc.........................................12
6.4 Compliance With Other Instruments................................12
6.5 Brokers..........................................................13
7. Additional Covenants......................................................13
7.1 Access 13
7.2 Collection of Accounts Receivable................................13
7.3 Further Assurances...............................................13
7.4 Lien Releases....................................................14
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7.5 Warranty Service.................................................14
7.6 Cooperation With Customers.......................................15
7.7 Non-Competition..................................................15
7.8 New Contracts....................................................15
8. Conditions Precedent to the Obligations of Buyer..........................15
8.1 Accuracy of Representations and Warranties.......................16
8.2 Performance of Agreements........................................16
8.3 Legal Proceedings................................................16
8.4 Transfer Documents...............................................16
8.5 No Liens.........................................................17
9. Conditions Precedent to the Obligations of Seller.........................17
9.1 Accuracy of Representations and Warranties.......................17
9.2 Performance of Agreements........................................17
9.3 Legal Proceedings................................................17
10. Termination...............................................................17
10.1 Termination......................................................17
10.2 Effect of Termination............................................18
11. General...................................................................18
11.1 Survival of Representations, Warranties, Etc.....................18
11.2 Expenses.........................................................19
11.3 Waivers..........................................................19
11.4 Notices..........................................................19
11.5 Binding Effect; Benefits.........................................20
11.6 Bulk Transfers...................................................20
11.7 Assignment.......................................................20
11.8 Headings.........................................................20
11.9 Counterparts.....................................................20
11.10 Construction.....................................................20
11.11 Governing Law and Jurisdiction...................................21
11.12 Arbitration......................................................21
11.13 Separability.....................................................23
11.14 Entire Agreement; Amendments.....................................23
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LIST OF SCHEDULES
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Exhibit A Container Business Definition
Preliminary Schedule 1.1(a) Raw Material Inventory
Schedule 1.1(a) Raw Material Inventory
Preliminary Schedule 1.1(b) Finished Goods
Schedule 1.1(b) Finished Goods
Schedule 1.1(c) Machinery and Equipment
Schedule 1.1(d) Molds
Preliminary Schedule 1.1(e) Contracts
Schedule 1.1(e) Contracts
Schedule 1.1(f) Customer List
Schedule 3.3 Allocation of the Purchase Price
Schedule 11.4 Notices
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ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT ("Agreement") dated as of February 25,
1999, by and between XXXXXXXX JDM LTD., an Ontario corporation ("Buyer") and
NIEMAND INDUSTRIES, INC., a Delaware corporation ("Seller").
RECITALS:
WHEREAS, Seller and Buyer desire to enter into this Agreement pursuant
to which Seller will sell to Buyer and Buyer will buy from Seller certain assets
of Seller which Seller has used exclusively in connection with a particular
segment of the business of Seller which is referred to hereinafter as the
"Container Business". The Container Business is defined on Exhibit A hereto.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants, agreements and conditions contained herein, Seller and
Buyer agree as follows:
1. Sale and Purchase of Assets and Liabilities.
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1.1 Sale and Purchase of Assets. At the "Preliminary Closing",
during the AInterim Period@ and at the "Closing" (as such terms are hereinafter
defined), on the terms and subject to the conditions set forth in this
Agreement, Seller shall sell to Buyer and Buyer shall purchase from Seller all
of Seller's right, title and interest in and to the following assets of the
Container Business (each, an "Asset", and, collectively, the "Assets"):
(a) The raw material inventory (including, without limitation,
container closures, split paper stock and punched disks) of the Container
Business at the time of the Closing (the "RM"); as soon as practicable after the
date of this Agreement, Seller shall deliver a listing of the raw material
inventory which is on hand as of the date hereof to Buyer; at the Preliminary
Closing, Seller shall deliver Preliminary Schedule 1.1(a) to Buyer, which will
show the raw material inventory of the Container Business at the time of the
Preliminary Closing, and as to which Buyer and Seller shall have reached
agreement, acting in good faith and reasonably,
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prior to the Preliminary Closing; the parties will cooperate in conducting a
physical review of the inventory of the RM as late as practicable prior to the
Closing, and a listing of the RM resulting therefrom, showing the value thereof,
will be delivered at the Closing and will be labeled Schedule 1.1(a). RM shall
be valued at Seller's actual original purchase cost (excluding any storage and
transport costs and any taxes paid or payable thereon); provided, however, that
container closures shall be valued at the lesser of actual original purchase
cost and selling price.
(b) The finished goods inventory of the Container Business at the
time of the Closing which relate to "Contracts" (as hereinafter defined) (the
"FG"); the RM and the FG are sometimes referred to collectively hereinafter as
the "Inventory"; as soon as practicable after the date of this Agreement, Seller
shall deliver a listing of the finished goods inventory which is on hand as of
the date hereof to Buyer; at the Preliminary Closing, Seller shall deliver
Preliminary Schedule 1.1(a) to Buyer, which will show the finished goods
inventory of the Container Business at the time of the Preliminary Closing; the
parties will cooperate in conducting a physical review of the FG as late as
practicable prior to the Closing, and a listing of the FG resulting therefrom,
valued at Seller's price to its customer pursuant to the pending purchase order
therefor (excluding any separately delivered enclosures) reduced by fifteen
percent (15%), will be delivered at the Closing and will be labeled Schedule
1.1(b).
(c) The machinery and equipment of the Container Business at the
Preliminary Closing (the "M&E"); the M&E is listed, and the price of each item
of M&E is set forth, on Schedule 1.1(c); and, in connection therewith, any
related tools and accessories, and any spare parts which relate uniquely to the
M&E, engineering, product, manufacturing and assembly specifications, warranties
from the manufacturer, drawings, blueprints and related data and materials used
in the Container Business.
(d) The molds used in the Container Business at the Preliminary
Closing (the "Molds"); the Molds are listed on Schedule 1.1(d).
(e) The rights of the Container Business under the existing
purchase orders
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from customers of Seller (the "Contracts") which are in effect as of the
Closing. The Buyer will deliver as soon as possible following the execution
hereof Preliminary Schedule 1.1(e) being a list of all of the currently
outstanding Contracts together with a good faith estimate by the Buyer of those
Contracts which will no longer be outstanding at the time of Closing. At the
time of the Closing, the Buyer will deliver the definitive Schedule 1.1(e) which
will list all of the Contracts to be assigned at the Closing. Each of the
Contracts shall be duly assigned to Buyer, provided, however, that to the extent
that the assignment of any of the foregoing requires the consent of the other
party thereto, this Agreement shall not constitute an agreement to assign the
same if an attempted assignment would constitute a breach thereof, but Seller
agrees that it will use its best efforts to obtain the written consent of the
other parties to the assignment thereof to Buyer, and if such consent is not
obtained, Seller will cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such agreement, contract,
commitment and purchase or sales order.
(f) The goodwill, the customer lists, a list of current suppliers,
and the patents, copyrights, research and development records, technical
drawings and registered designs related exclusively to the Container Business,
if any; the customer list and current suppliers list will be attached at the
Closing as Schedule 1.1(f).
1.2 Liabilities. Buyer does not assume or agree to be responsible
for any debts, obligations, liabilities or expenses of Seller whatsoever other
than liabilities arising out of the Contracts, but only as to which shipments or
deliveries shall not have been made or as to which services shall not have been
rendered as of the Closing, all of which were transferred to Buyer pursuant to
Section 1.1(e) above.
2. The Interim Period; Delivery of the Assets; Etc.. The parties
intend that, during a transition period of approximately thirty days beginning
on the date of the Preliminary Closing and extending through the Closing (the
"Interim Period"), Seller will continue to produce finished goods in order to
satisfy its customer demand, and Seller will continue to sell to its
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customers, thereby reducing the amount of raw materials and finished goods to be
included in the Inventory and generating additional accounts receivable for the
Seller. Seller will also continue the collection of its receivables during the
Interim Period. From time to time during the Interim Period, Seller will
determine that certain of the M&E and Molds are no longer needed by Seller for
Interim Period production. Seller shall so notify Buyer, and Buyer will promptly
arrange to take delivery of those items of the M&E and Molds from Seller, as
hereinafter provided. The Closing will take place at the end of the Interim
Period. At the Closing, Buyer will take title to and possession of any Assets
which then remain in the possession of Seller.
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3. Purchase Price.
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3.1 Purchase Price. Subject to the terms and conditions of this
Agreement, Buyer will pay the following amounts to Seller, the aggregate of
which shall be referred to hereinafter as the "Purchase Price":
(a) The value of the RM, as shown on Schedule 1.1(a); plus
(b) The value of the FG, as shown on Schedule 1.1(b); plus
(c) Four Hundred and Eighty One Thousand Three Hundred Dollars
($481,300.00) for the M&E; plus
(d) Two Hundred Thousand Dollars ($200,000.00) for the Molds; plus
(e) One Hundred Dollars ($100.00) for the goodwill and customer
lists.
3.2 Payment of the Purchase Price. The Purchase Price shall be
paid in the manner set forth below. All payments shall be in U.S. Dollars, and
in cash, by certified or bank check, or by wire transfer of immediately
available funds.
(a) At the Preliminary Closing, Buyer shall deliver to Chicago
Title Company in Cleveland, Ohio or such other escrow agent as the parties may
agree upon (the "Escrow Agent"), (i) the amount shown on Preliminary Schedule
1.1(a) as the value of the raw material inventory at the Preliminary Closing,
plus (ii) the amount shown on Preliminary Schedule 1.1(b) as the value of the
finished goods inventory at the Preliminary Closing, plus (iii) the $681,400
price for the M&E, Molds, goodwill and customer list, as described in
subsections (c), (d) and (e) of Section 3.1. Such amounts shall be distributed
by the Escrow Agent in accordance with the terms set forth below and an escrow
agreement effectuating such terms and such additional terms as the parties may
require, acting reasonably and in good faith. The parties will negotiate the
escrow agreement in good faith and will cause it to be executed and delivered by
the parties hereto and the Escrow Agent on or before the Preliminary Closing
("Escrow Agreement").
(b) The parties contemplate that (i) during the Interim Period,
Seller will use RM in its production, will purchase additional RM in fulfilling
the Contracts, will produce FG
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and will sell FG to its customers, (ii) from time to time during the Interim
Period, Seller will complete production of certain products and will fill all
orders of certain products, and, as a result, will have no further need for
particular items of M&E, Molds, RM and/or FG, (iii) as a result of the
foregoing, the composition of the Inventory at Closing, and the value thereof,
will vary from the composition and value shown on Preliminary Schedules 1.1(a)
and (b), and (iv) Seller shall purchase all of the Inventory, the amount of
which shall not have increased between the Preliminary Closing and Closing,
unless such increase is directly related to a firm customer order or is in
accordance with the prior agreement of Buyer. To address these expectations, the
parties have established the procedure set forth hereinafter for the use and
delivery of, and payment for, the Inventory.
(c) The Escrow Agent shall hold the funds delivered to it in a
readily accessible, interest bearing account. In the event that Seller
determines that it no longer requires particular items of M&E, Molds, RM or FG
during the Interim Period, it shall so notify Buyer and the Escrow Agent of the
items in question and their value as set out in the Schedules to this Agreement.
Within seven business days thereafter, but in no event more than once in any
calendar week during the Interim Period, (i) Buyer shall remove such items from
Seller's premises, and (ii) the Escrow Agent shall remit the value of such items
to Seller. The Escrow
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Agreement shall provide that such transfers shall be subject to the prior or
contemporaneous release of any liens on such Assets.
(d) At the Closing, (i) the Purchase Price shall be computed, (ii)
possession and title to any of the Assets which had not been delivered and paid
for pursuant to subsection (c) above shall be delivered to Buyer, (iii) the
Escrow Agent shall pay to Seller from the escrow funds the amount by which the
Purchase Price exceeds the amount it had delivered to Seller during the Interim
Period pursuant to subsection (c) above; if the amount in the escrow account is
insufficient, Buyer shall pay the balance of the Purchase Price to Seller; if
the amount in the escrow account exceeds the balance of the Purchase Price, the
Escrow Agent shall deliver the balance of the escrow account to Buyer.
(e) The parties shall each be responsible for fifty percent (50%)
of the fees and expenses of the Escrow Agent.
3.3 Allocation of the Purchase Price. The parties agree that the
Purchase Price is allocated among the Assets in the manner reflected on Schedule
3.3. Such allocation of the Purchase Price to each of the Assets was arrived at
by arms-length negotiations, and the judgment of the parties properly reflects
the fair market value of the items transferred pursuant to this Agreement. It is
further agreed that the allocations set forth on Schedule 3.3 hereto shall be
binding on the parties for federal and state income tax purposes in connection
with this purchase and sale of the Assets, and that each party will cause its
federal and state income tax returns to be completed and filed in a manner
consistent with the allocations and valuations contained in or reflected on
Schedule 3.3 hereto.
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4. Preliminary Closing and Closing; Time and Place. On the terms and
subject to the conditions set forth in this Agreement, a preliminary closing of
he transactions contemplated hereby (the "Preliminary Closing") shall take
place at the offices of Xxxxxxx Xxxxxxx & Xxxxxx P.L.L., One Cleveland Center,
0000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxx 00000, on March 29, 1999,
commencing at 10:00 A.M., local time, or as soon as practicable thereafter, and
a final closing of such transactions (the "Closing") shall take place at the
same time and location on April 29, 1999 or at such other place, time and/or
date as the parties hereto may agree (the date of the Closing being hereinafter
referred to as the "Closing Date"). The Closing shall be deemed to have occurred
at the close of business on the Closing Date.
5. Representations and Warranties by Seller. As a material inducement
to Buyer to execute this Agreement and perform its obligations hereunder, Seller
represents and warrants to Buyer as follows:
5.1 Organization and Standing. Seller is a corporation duly
incorporated, organized, validly existing and in good standing under the laws of
the State of Delaware and has the requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to carry out
the transactions contemplated hereby. Seller is duly qualified to do business
and is in good standing in each jurisdiction in which it is presently conducting
business and has the requisite corporate power and authority to own, lease and
utilize its assets, properties and business and to carry on the Container
Business as such business is presently being conducted.
5.2 Authorization by Seller. The execution, delivery and
performance by Seller of this Agreement, and the consummation by Seller of the
transactions contemplated hereby, has been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except insofar as
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the
8
enforceability of creditors' rights, or by limitations in the availability of
the remedy of specific performance or injunctive relief, or by general equity
principles.
5.3 Approvals, Consents, Etc. Except for the consent of Seller's
lender(s), which consent will be in writing and will be obtained by Seller prior
to its delivery of any of the Assets, no consent, authorization or approval of,
or waiver or exemption by, or filing with, any other person is required in
connection with the execution, delivery or performance by Seller of this
Agreement or the consummation by Seller of the transactions contemplated hereby.
5.4 Compliance With Other Instruments. The execution, delivery and
performance by Seller of this Agreement will not violate any provision of
Seller's Certificate of Incorporation or Bylaws, or any amendment thereof or any
resolution of Seller, or the provisions of any applicable law, order or
regulation of any governmental authority having jurisdiction over Seller and
will not conflict with or result in a breach of the terms, conditions or
provisions of any agreement or instrument to which Seller is now a party or by
which Seller is now bound or constitute a default thereunder or result in the
imposition of any lien, charge or encumbrance of any nature whatsoever on the
Assets.
5.5 Title to Assets; Absence of Liens and Encumbrances. Except for
the lien(s) in favor of Seller's lenders, which liens will be released in
accordance with Section 7.4
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below, Seller owns outright and has good and marketable title to all of the
Assets, free and clear of all liens, charges and encumbrances.
5.6 Inventory. All of the Inventory is suitable and usable or
salable in the ordinary course of the Container Business to its current
customers. None of the Inventory is held on consignment and, without limiting
the generality of any representation and warranty contained in this Agreement,
Seller owns the Inventory free and clear of all liens, charges and encumbrances
except for the liens contemplated in Section 7.4. The Inventory is labeled and
stored in the manner that it has been historically stored and labeled. At the
time of their transfer to Buyer, the finished goods will have been completed in
a good and workmanlike manner, free from any material defects and made in
compliance with the requirements of the customer for whom such finished goods
have been manufactured. There will have been no increase in the raw materials
forming the Inventory between the date hereof and the Closing save and except in
connection with a firm order placed by a customer of the Container Business or
pursuant to the written agreement of Buyer.
5.7 Tangible Property. Buyer has had an opportunity to inspect the
M&E, molds and any other tangible personal property which is being sold to Buyer
hereunder (the "Tangible Property"). Buyer acknowledges that Seller makes no
representation or warranty as to the condition of the Tangible Property, and
that such Tangible Property is being transferred on an "as is where is" basis.
At the time of the M&E and Molds delivery they will be materially in the same
condition as when they were inspected by Buyer prior to the execution of this
Agreement, subject to reasonable wear and tear.
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5.8 Contracts. The selling price under each Contract is such that,
had Seller completed the Contract, its variable costs (being all labour and
benefit costs (where benefit costs are 27% of the labour costs) plus all
material costs) for completing each such Contract would not have exceed the
selling price thereunder. The Buyer has not received and is not entitled to
receive any deposits, prepayments or staged payments under any of the Contracts.
None of the Contracts has any manufacturing specifications or requirements which
require the use of machinery, equipment or molds other than those included among
the M&E and Molds being transferred pursuant to this Agreement, with the
exception of tubes requiring a seamed on metal end. The schedule for completion
and delivery under each of the Contracts is consistent with the past practice of
the Container Business and had the Seller completed the Contract in the ordinary
course of business, the Contract would have been fulfilled on time by the Seller
using the M&E and the Molds and a seamer.
5.9 Brokers. Except for Xxxx Associates, Inc., no broker, finder
or other person hired, retained or contacted by Seller is entitled to receive
any brokerage fee, finder's fee or the like by reason of the consummation of the
transactions contemplated by this Agreement. Seller confirms that it is solely
responsible for the payment of any obligations to Xxxx Associates, Inc. in
connection with the transactions contemplated in this Agreement and Seller
hereby indemnifies and saves harmless the Buyer, its officers, directors,
shareholders, employees and agents in connection with any payment that Xxxx
Associates, Inc. may claim from any of them in connection with the transactions
contemplated herein.
5.10 No Suit, Etc. There is no suit, action, dispute, civil or
criminal litigation, arbitration, legal, administrative or other proceeding or
governmental investigation, including appeals and applications for review, in
progress, pending or, to the knowledge of Seller, threatened against the Seller
and relating to the Container Business.
5.11 Compliance With Laws. Seller has carried on the container
Business in compliance with all applicable laws.
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5.12 Ordinary Course. The Seller has carried on the Container
Business in the ordinary course for the past 12 months.
5.13 Representations and Warranties on Closing Date. The
representations and warranties contained in this Article 5 shall be true in all
material respects on and as of date of any transfer of any of the Assets to
Buyer, and on and as of the Closing Date, with the same force and effect as
though such representations and warranties had been made on and as of such date
of transfer and on and as of the Closing Date.
6. Representations and Warranties by Buyer. Buyer, to induce Seller to
sell the Assets as set forth herein, represents and warrants as follows:
6.1 Organization and Standing of Buyer. Buyer is a corporation
duly incorporated, organized, validly existing and in good standing under the
laws of the Province of Ontario, and has the requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to carry out the transactions contemplated hereby.
6.2 Authorization by Buyer. The execution, delivery and
performance by Buyer of this Agreement, and the consummation by Buyer of the
transactions contemplated hereby, has been duly authorized by all requisite
corporate action. This Agreement has been duly and validly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except insofar as
enforceability thereof may be limited by bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights, or by limitations in the
availability of the remedy of specific performance or injunctive relief, or by
general equity principles.
6.3 Approvals, Consents, Etc. No consent, authorization or
approval of, or waiver or exemption by, or filing with, any other person is
required in connection with the execution, delivery or performance by Buyer of
this Agreement or the consummation by Buyer of the transactions contemplated
hereby.
6.4 Compliance With Other Instruments. The execution, delivery and
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performance by Buyer of this Agreement will not violate any provision of Buyer's
Articles of Incorporation or Bylaws, or any amendment thereof or any resolution
of Buyer, or the provisions of any applicable law, order or regulation of any
governmental authority having jurisdiction over Buyer and will not conflict with
or result in a breach of the terms, conditions or provisions of any agreement or
instrument to which Buyer is now a party or by which Buyer is now bound or
constitute a default thereunder.
6.5 Brokers. No broker, finder or other person hired, retained or
contracted by Buyer is entitled to receive any brokerage fee, finder's fee or
the like by reason of the consummation of the transactions contemplated by this
Agreement.
7. Additional Covenants.
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7.1 Access. Seller shall give to Buyer and to its counsel,
accountants and other representatives full access to its premises, to the Assets
and to the personnel of Seller related thereto during normal business hours upon
reasonable notice, and shall furnish to Buyer and such representatives such
additional documents, financial information and information with respect to any
of the Assets as Buyer may from time to time reasonably request; provided,
however, that neither the furnishing of copies of contracts, agreements and
other documents or information to such persons nor any investigation by such
persons or otherwise on behalf of Buyer shall affect Buyer's right to rely on
the representations and warranties of Seller contained in this Agreement.
7.2 Collection of Accounts Receivable. The parties acknowledge
that accounts receivable from customers (i) for goods purchased prior to the
Closing belong to Seller, and (ii) for goods purchased on or after the Closing
belong to Buyer. Each party agrees to deliver to the other party without delay
any payments of accounts receivable which belong to such other party and which
the customer delivers to it.
7.3 Further Assurances. At or after the transfer of any Assets
hereunder, Seller, at the request of Buyer, shall promptly execute and deliver,
or cause to be executed and
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delivered, to Buyer all such assignments, bills of sale, endorsements, powers of
attorney and other documents, in addition to those otherwise required by this
Agreement, in form and substance satisfactory to Buyer, as Buyer may reasonably
request in order to (a) vest at the time of transfer or confirm after transfer
good and marketable title of the Assets with the Buyer and, (b) perfect and
record, if necessary, the sale, transfer, assignment, conveyance and delivery to
Buyer of the Assets and (c) otherwise carry out or evidence the terms of this
Agreement.
7.4 Lien Releases. In connection with each transfer of an Asset to
Buyer hereunder, Seller shall obtain releases of the liens of Seller's lenders
which encumber such Asset, effective at the time of transfer. Seller shall
deliver to Buyer at the time of the transfer and the
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payment of the Purchase Price for the Asset, the appropriate UCC termination
statement, in form suitable for filing. Buyer shall be entitled to file such
termination statement, at its own expense.
7.5 Warranty Service. Seller represents and warrants that the
products sold by Seller prior to the Closing were warranted by Seller against
defects in material and workmanship, and that warranty claims do not, on an
annual basis, represent a material cost to Seller. In recognition of the fact
that after the Closing Seller will no longer be in the business of manufacturing
and assembling the products, Buyer agrees to attend to the repair or replacement
of such products as Seller identifies to Buyer as being subject to a valid
warranty claim, in an amount in the aggregate under all warranty claims not to
exceed $5,000, as a one time deductible (the "Warranty Deductible"). Buyer shall
not assume any of Seller's warranty obligations, but shall be responsible for
providing warranty service up to the amount of the Warranty Deductible. Once
Buyer's cost of resolving warranty claims has exceeded the amount of the
Warranty Deductible, Seller agrees to pay to Buyer an amount equal to Buyer's
cost of providing warranty service; provided, however, that Buyer shall not
undertake the provision of warranty service if the cost thereof exceeds the
customer's purchase price of the item without first obtaining written approval
of Seller. Buyer shall have no obligation to perform any warranty services work
in excess of the Warranty Deductible unless it is assured of full reimbursement
of the cost therefor by the Seller. Seller shall, in its sole discretion, (i)
determine the validity of any warranty claim, and (ii) decide whether the
defective product should be repaired or replaced. Seller shall indemnify Buyer
in respect of any warranty claims which are outside of the scope of this
provision.
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7.6 Cooperation With Customers. During the Interim Period, Seller
will, and will cause its salespeople to, cooperate with Buyer in their dealings
with the customers of the Container Business.
7.7 Non-Competition. At the Closing, Seller and Gibraltar
Packaging Group, Inc. ("Gibraltar") will execute non-competition and
non-solicitation agreements, to the effect that neither Seller nor Gibraltar or
its affiliates will compete with Buyer, directly or indirectly, in the Container
Business within North America for a period of two (2) years after the Closing.
7.8 New Contracts. Seller agrees that, during the period from the
date hereof through the Closing, Seller will not enter into any new agreements
with customers which would fall within the definition of Contracts without first
obtaining Buyer's consent, which consent will not be unreasonably withheld.
8. Conditions Precedent to the Obligations of Buyer. The obligations of
Buyer under this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the conditions set forth in this Article 8. Each such
condition is inserted herein solely for the benefit of Buyer, and Buyer may
waive any such condition at any time.
8.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement shall be
true on and as of the Closing Date with the same effect as if they were made on
and as of the Closing Date.
8.2 Performance of Agreements. Seller shall have performed all
obligations and agreements and complied with all covenants contained in this
Agreement to be performed and with which it must comply on or before the Closing
Date.
8.3 Legal Proceedings. There shall be no law, and no order shall
have been entered and not vacated by a court or administrative agency of
competent jurisdiction in any litigation, which (a) enjoins, restrains, makes
illegal or prohibits consummation of the transactions contemplated hereby; (b)
requires separation of more than five percent (5%) of the
16
Assets after the Closing; or (c) restricts or interferes with, in any material
way, the Assets after the Closing or materially or adversely affects the
financial condition, results of operations, properties, business or prospects of
Seller's business, or restricts Buyer's ability to remove the Assets from
Seller's premises and transport them to Ontario; and there shall be no
litigation pending before a court or administrative agency of competent
jurisdiction, or threatened, seeking to do, or which, if successful, would have
the effect of, any of the foregoing.
8.4 Transfer Documents. Seller shall have executed and
delivered to Buyer such bills of sale, assignments, endorsements, UCC releases
(to the extent then required pursuant to Section 7.4) and other instruments of
conveyance and transfer, satisfactory in form and substance to Buyer and its
counsel, as shall be effective to vest title to the Assets in Buyer, in
accordance with the terms of this Agreement.
8.5 No Liens. There shall be no liens on any of the Assets at
the time that they are transferred to Buyer and Seller shall provide proof
(including UCC termination statements) satisfactory to Buyer, acting reasonably,
that any liens have been released at the time of the transfer. The filing of UCC
termination statements shall be the responsibility of Buyer.
9. Conditions Precedent to the Obligations of Seller. The obligations
of Seller under this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the
17
conditions set forth in this Article 9. Each such condition is inserted herein
solely for the benefit of Seller, and Seller may waive any such condition at any
time.
9.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall be
true on and as of the Closing Date with the same effect as if they were made on
and as of the Closing Date.
9.2 Performance of Agreements. Buyer shall have performed all
obligations and agreements and complied with all covenants contained in this
Agreement to be performed and with which it must comply on or before the Closing
Date.
9.3 Legal Proceedings. There shall be no law, and no order shall
have been entered and not vacated by a court or administrative agency of
competent jurisdiction in any litigation, which enjoins, restrains, makes
illegal or prohibits consummation of the transactions contemplated hereby.
10. Termination.
------------
10.1 Termination. This Agreement may be terminated prior to the
Closing in accordance with subsections (a) through (c) below.
(a) At the election of Seller, if Buyer has breached any material
representation, warranty, covenant or agreement contained in this Agreement,
which breach cannot be or is not cured by the Closing Date, or if any of the
conditions precedent set forth in Article 8 has not been satisfied by the
Closing Date.
(b) At the election of Buyer, if Seller has breached any material
representation, warranty, covenant or agreement contained in this Agreement,
which breach
18
cannot be or is not cured by the Closing Date, or if any of the conditions
precedent set forth in Article 7 has not been satisfied by the Closing Date.
(c) At any time on or prior to the Closing Date, by mutual written
consent of Seller and Buyer.
10.2 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 10.1 hereof, the parties shall use all reasonable
efforts to return to STATUS QUO ANTE, and, upon achieving such status, all other
obligations of the parties hereunder shall terminate.
11. General.
--------
11.1 Survival of Representations, Warranties, Etc. (a) The
representations and warranties contained in this Agreement shall survive the
Closing until the one hundred eightieth (180th) day after the Closing Date (and
shall thereafter terminate), except for those relative to title of the Assets,
or any of them, which representations and warranties shall survive without
limitation as to time.
(b) The agreements and covenants set forth in this Agreement shall
survive the Closing and shall continue until all obligations set forth therein
shall have been performed and satisfied or until such agreements and covenants
shall have terminated in accordance with their terms.
11.2 Expenses. Except as otherwise provided herein, whether the
transactions contemplated by this Agreement are consummated or fail to be
consummated for any reason whatsoever, each of the parties hereto shall pay its
own expenses and the fees and expenses of its counsel and accountants and other
experts.
19
11.3 Waivers. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party hereby, shall be deemed
to constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party hereto of any condition or of a breach of any other provision of this
Agreement shall not operate or be construed as a waiver of any other condition
or subsequent breach. The waiver by any party of any of the conditions precedent
to its obligations under this Agreement shall not preclude it from seeking
redress for breach of this Agreement other than with respect to the condition so
waived.
11.4 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be either (i) delivered
personally, (ii) sent by telegraph or telex, (iii) sent by facsimile
transmission, (iv) delivered by nationally recognized overnight courier service
against a receipt therefor, or (v) sent by certified, registered or express
mail, postage prepaid. Any such notice shall be deemed given (A) when so
delivered personally, telegraphed, telexed or sent by facsimile transmission if
applicable; (B) when delivered by courier if applicable; or (C) if mailed,
fifteen days after the date of deposit in the mail if applicable, to the parties
identified on Schedule 11.4 hereto. Any party may, by notice given in accordance
with this Section to the other parties, designate another address or person for
receipt of notices hereunder.
11.5 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and shall be binding upon the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.
20
11.6 Bulk Transfers. The parties hereto waive compliance with the
requirements of the Bulk Transfer and/or Bulk Sales Laws of any jurisdiction in
connection with the sale of the Assets to Buyer hereunder.
11.7 Assignment. This Agreement shall not be assignable without
the prior written consent of each non-assigning party. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
11.8 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
11.9 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument. The execution of counterparts shall not be deemed to constitute
delivery of this Agreement by a party until the other party has also executed
and delivered his/its counterparts.
11.10 Construction. In this Agreement, unless the context
otherwise requires, words in the singular or in the plural shall each include
the singular and the plural, and words of the masculine gender shall include the
feminine and the neuter, and, when the sense so indicates, words of the neuter
gender may refer to any gender.
11.11 Governing Law and Jurisdiction.
-------------------------------
(a) The validity, performance and enforcement of this Agreement
shall be governed by the laws of the State of Delaware, U.S.A.
21
(b) Any legal action, suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby may be
instituted in a court of proper jurisdiction in Delaware, and each party agrees
not to assert, by way of motion, as a defense, or otherwise, in any such action,
suit or proceeding, any claim that he or it is not subject personally to the
jurisdiction of such court, that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Agreement or the subject matter hereof may not be enforced in or by
such court. Each party further irrevocably submits to the jurisdiction of such
ourt in any such action, suit, or proceeding. Any and all service of process
and any other notice in any such action, suit or proceeding shall be effective
against any party if served or delivered as provided by the rules of the court
in which such legal action, suit or proceeding has been instituted. Nothing
herein contained shall be deemed to affect the right of any party to serve
process in any manner permitted by law or, subject to the provisions of Section
11.12 below, to commence legal proceedings or otherwise proceed against any
other party in any other jurisdiction.
11.12 Arbitration.
------------
(a) Any dispute or controversy arising out of or related to this
Agreement, or the breach thereof, shall be submitted to binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") and this provision. In the event of a conflict between the
AAA rules and this provision, the terms of this provision shall govern.
(b) Either party may invoke this arbitration procedure by giving
written notice to that effect by certified mail to the other party. The parties
will attempt to agree upon a single arbitrator. If agreement regarding selection
of a single arbitrator is not reached within thirty (30) days after the initial
demand for arbitration, each party shall, within thirty (30) days thereafter,
name an arbitrator. Those two arbitrators shall, within thirty (30) days after
they both have been named, select a third arbitrator, who shall serve as the
Chair of the arbitration panel. If the two
22
party-selected arbitrators are unable to agree upon a third arbitrator, then the
AAA shall appoint a person who is neutral to the parties to act as the Chair of
the arbitration panel. None of the arbitrators may be former or current partner,
principal, director, officer, shareholder, employee or agent of either of the
parties.
(c) Each of the parties shall file a written submission with
supporting documents to the single arbitrator or, if applicable, to the
arbitration panel (hereinafter, references to "arbitration panel" shall include
a single arbitrator agreed upon by the parties or the three member panel
selected in accordance herewith, as applicable) within ninety (90) days after
appointment of the last member of the arbitration panel, which period may be
extended by the arbitration panel. At the same time, each party shall also serve
a copy of such submission on the other party.
(d) The arbitration hearing shall be held in Cleveland, Ohio, USA,
at a site and at a time designated by the arbitration panel.
(e) The parties shall have at their disposal the same pre-trial
discovery rights available under the Federal Rules of Civil Procedure and the
Local Rules of the United States District Court for the Northern District of
Ohio; provided, that the arbitration panel may shorten the time permitted by
those Rules for any discovery procedure in light of the ninety (90) day
23
timetable for the parties' submissions specified above, and provided further
that any dispute regarding discovery shall be submitted for decision to the
arbitration panel.
(f) At the arbitration hearing, each party shall have the
opportunity to present witnesses and to cross-examine the witnesses presented by
the other party. The arbitration panel shall be relieved of judicial formality
and need not adhere to formal rules of evidence.
(g) The majority of the arbitration panel shall issue a written
decision resolving the controversy within thirty (30) days after the close of
the hearing, which decision will state the facts reviewed, conclusions reached
and reasons for the conclusions. The decision will be binding upon the parties
in any court of competent jurisdiction and will not be subject to appeal. The
arbitration panel also shall allocate the fees and expenses of the arbitration
panel between the parties.
11.13 Separability. Any term or provision of this Agreement which
is invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement.
11.14 Entire Agreement; Amendments. This Agreement embodies the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect thereof. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party or parties against whom any waiver,
change, amendment, modification or discharge may be sought.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
NIEMAND INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxx
24
Its: Secretary
XXXXXXXX JDM LTD.
By: /s/ Xxx Xxxxxx
Its: President
25
EXHIBIT A
THE CONTAINER BUSINESS
----------------------
The "Container Business" is the manufacture and sale of the following products:
Any spiral wound paper container, except (i) those currently produced and filled
at the Niemand facility, (ii) the vaginal applicator tube (Applicade), and (iii)
the patented Entherm tube.
26
SCHEDULE 3.3
ALLOCATION OF THE PURCHASE PRICE
--------------------------------
The Purchase Price Shall be allocated among the Assets as follows:
Asset Price
---------------------------------------------------
Machinery and Equipment $481,300
Molds $200,000
Inventory [To be inserted at Closing]
Goodwill and Customer Lists $100.00
SCHEDULE 11.4
NOTICES
-------
To Buyer: Xxxxxxxx JDM Ltd.
Xxxxxxxxxxxx X00 0XX
Xxxxxx Xxxxxxx
Attn: President
Fax: 000-00-0000-000-000
With copy to: Xxxx Xxxxxxxx, Esquire
Xxxxxxxx, Xxxxxxx
00 Xxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
Fax: 000-000-0000
To Seller: Niemand Industries, Inc.
c/o Xxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Fax: 000-000-0000
With copy to: Gibraltar Packaging Group, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attn: President
Fax: 000-000-0000
and
Xxxx X. Xxxxx, Esquire
Xxxxxxx Xxxxxxx & Xxxxxx P.L.L.
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Fax: 000-000-0000
