EXECUTION COPY
ASSET PURCHASE AGREEMENT
between
PORTEC RAIL PRODUCTS, INC.
and
VULCAN CHAIN CORPORATION
Dated as of October 10, 2006
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE OF
ASSETS........................................1
-------------------------------------
1.1 PURCHASE AND SALE OF
THE ASSETS....................................1
1.2
INVENTORY..........................................................2
1.3 EXCLUDED
ASSETS....................................................3
1.4 ASSUMPTION OF
LIABILITIES..........................................4
1.5 PAYMENT OF PURCHASE
PRICE..........................................4
ARTICLE 2 PROCEDURE FOR
CLOSING..............................................5
-------------------------------
2.1 TIME AND PLACE OF
CLOSING..........................................5
2.2 TRANSACTIONS AT THE
CLOSING........................................5
2.3 PROPERTY TAX
PRORATION.............................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER AND
SILBERMAN.............6
----------------------------------------------------------------
3.1 ORGANIZATION AND GOOD
STANDING; AUTHORITY..........................6
3.2 GOVERNMENTAL FILINGS
AND CONSENTS..................................6
3.3 NO
VIOLATIONS......................................................6
3.4 ACQUIRED
EQUIPMENT.................................................7
3.5 LITIGATION; ORDERS;
ETC............................................7
3.6
TAXES..............................................................8
3.7 COMPLIANCE WITH LAWS;
GOVERNMENTAL LICENSES; ETC...................8
3.8 CONTRACTS; NO
DEFAULT..............................................8
3.9 INTELLECTUAL
PROPERTY..............................................9
3.10
NO MATERIAL
ADVERSE EFFECT.........................................9
3.11
RELIANCE...........................................................9
3.12
STATEMENTS NOT
MISLEADING..........................................9
3.13
BROKERS OR
FINDERS.................................................9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
PURCHASER.......................10
-----------------------------------------------------
4.1 ORGANIZATION AND GOOD
STANDING; AUTHORITY.........................10
4.2 GOVERNMENTAL FILINGS
AND CONSENTS.................................10
4.3 NO
VIOLATIONS.....................................................10
4.4
LITIGATION........................................................11
4.5
FINANCING.........................................................11
4.6 GOVERNMENT LICENSES
AND PERMITS...................................11
4.7 NO ADVERSE OCCURRENCE
OR DEFAULT..................................12
4.8 INSPECTION OF ACQUIRED
ASSETS.....................................12
4.9
RELIANCE..........................................................12
4.10
STATEMENTS NOT
MISLEADING.........................................12
4.11
BROKERS OR
FINDERS................................................12
4.12
SOLVENCY..........................................................13
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ARTICLE 5 COVENANTS PRIOR TO
CLOSING........................................13
------------------------------------
5.1 ACCESS AND
INFORMATION............................................13
5.2 CONDUCT OF BUSINESS
PRIOR TO CLOSING..............................13
5.3 NOTIFICATION OF
CHANGES; SUPPLEMENTAL DISCLOSURE..................14
5.4
CONSENTS..........................................................14
5.5 EMPLOYMENT
AGREEMENT..............................................15
5.6 TRANSFER OF ACQUIRED
ASSETS; TRAINING OF PURCHASER PERSONNEL......15
ARTICLE 6 MUTUAL COVENANTS; ADDITIONAL
AGREEMENTS...........................15
-------------------------------------------------
6.1 MUTUAL
COVENANTS..................................................15
6.2 REASONABLE
EFFORTS................................................15
6.3 USE OF SELLER
FACILITIES..........................................15
6.4
CONFIDENTIALITY...................................................16
6.5 RISK OF
LOSS......................................................16
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF
PURCHASER..................17
----------------------------------------------------------
7.1 CERTIFICATE REGARDING
REPRESENTATIONS AND WARRANTIES..............17
7.2 COMPLIANCE BY
SELLER..............................................17
7.3 NO INJUNCTION;
ETC................................................17
7.4 CONSENTS;
AUTHORIZATIONS..........................................17
7.5 NO MATERIAL ADVERSE
CHANGE........................................18
7.6 INSTRUMENTS OF
TRANSFER...........................................18
7.7 AGREEMENT TO NOT
COMPETE..........................................18
7.8 PATENT PURCHASE
AGREEMENT.........................................18
7.9 TRANSITION
AGREEMENT..............................................18
7.10
SUPPLY OF GOODS
AGREEMENT.........................................18
7.11
ASSIGNMENT
AGREEMENT..............................................18
7.12
RESOLUTIONS
AUTHORIZING TRANSACTIONS..............................18
7.13
CERTIFICATE OF
INCUMBENCY.........................................19
7.14
BLANKET
ORDER.....................................................19
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND
SILBERMAN.......19
---------------------------------------------------------------------
8.1 PAYMENT TO
SELLER.................................................19
8.2 PAYMENT TO SCOTT,
INC.............................................19
8.3 PAYMENT TO
SILBERMAN..............................................19
8.4 CERTIFICATE REGARDING
REPRESENTATIONS AND WARRANTIES..............19
8.5 COMPLIANCE BY
PURCHASER...........................................20
8.6 NO INJUNCTION;
ETC................................................20
8.7 NO MATERIAL ADVERSE
CHANGE........................................20
8.8 AGREEMENT TO NOT
COMPETE..........................................20
8.9 EXECUTION OF OTHER
AGREEMENTS.....................................20
8.10
RESOLUTIONS
AUTHORIZING TRANSACTIONS..............................20
8.11
CERTIFICATE OF
INCUMBENCY.........................................20
8.12
GENERAL RELEASE,
NON-SOLICITATION AND SEPARATION AGREEMENT........21
ARTICLE 9 POST CLOSING
MATTERS..............................................21
------------------------------
9.1
COOPERATION.......................................................21
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9.2 RECEIVABLES AND OTHER
FUNDS DUE SELLER............................21
9.3 LIABILITIES AFTER THE
CLOSING.....................................22
9.4 NOTIFICATION OF THIRD
PARTIES.....................................23
ARTICLE 10
TERMINATION......................................................23
----------------------
10.1
TERMINATION.......................................................23
10.2
EFFECT OF
TERMINATION.............................................23
ARTICLE 11
INDEMNIFICATION..................................................23
--------------------------
11.1
AGREEMENT OF
SELLER TO INDEMNIFY..................................23
11.2
AGREEMENT OF
PURCHASER TO INDEMNIFY...............................24
11.3
PROCEDURES FOR
INDEMNIFICATION....................................25
11.4
DEFENSE OF THIRD
PARTY CLAIMS.....................................26
11.5
SETTLEMENT OF
THIRD PARTY CLAIMS..................................26
11.6
DURATION..........................................................27
11.7
SUBROGATION
RIGHTS................................................27
11.8
REMEDIES
EXCLUSIVE................................................27
ARTICLE 12 GENERAL
PROVISIONS...............................................28
-----------------------------
12.1
DEFINITIONS.......................................................28
12.2
ARBITRATION.......................................................33
12.3
FEES AND
EXPENSES.................................................34
12.4
NOTICES...........................................................34
12.5
ASSIGNMENT........................................................35
12.6
BINDING EFFECT;
NO BENEFIT TO OTHERS..............................35
12.7
HEADINGS AND
GENDER; CONSTRUCTION; INTERPRETATION.................35
12.8
COUNTERPARTS......................................................36
12.9
INTEGRATION OF
AGREEMENT..........................................36
12.10
TIME OF
ESSENCE...................................................36
12.11
GOVERNING
LAW.....................................................37
12.12
PARTIAL
INVALIDITY................................................37
12.13
SURVIVAL..........................................................37
12.14
LIMITATION ON
LIABILITY...........................................38
iii
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SCHEDULES
Schedule 1.1(a)(1).........Equipment acquired from Vulcan Chain
Corporation
Schedule 1.1(a)(2).........Equipment acquired from Scott, Inc.
Schedule 1.1(b)
Acquired Contracts
iv
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EXHIBITS
Exhibit A
Patent Purchase Agreement
Exhibit B
Employment Agreement
Exhibit C
Non Competition Agreement
Exhibit D
Transition Agreement
Exhibit E
Supply of Goods Agreement
Exhibit F
Assignment Agreement
v
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ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE
AGREEMENT (this "Agreement" ) is made and entered into
as of October 10,
2006, among Portec Rail Products, Inc, a West Virginia
Corporation ("Purchaser" ) and Vulcan Chain Corporation,
a Michigan
corporation
("Seller" ).
WHEREAS, Seller is
engaged in the
business of manufacturing chain and
webbing products
that are used in the
rail transportation
of products (the
"Business");
WHEREAS, Seller
desires to sell or cause the sale of and Purchaser desires
to purchase
certain of the assets
comprised of Seller's complete railroad
product line, as described herein, for the consideration and on the terms
set
forth in this Agreement; and
WHEREAS, Scott A.
Silberman ("Silberman") has been active in marketing
products in the
Railroad Product
Line "and owns
customer based intangibles
relating to
it, which the Purchaser acknowledges is important to it in
connection with the purchase of the railroad product line; and
WHEREAS, certain
capitalized
terms used in this
Agreement are defined in
Section 12.1 of this Agreement;
NOW
THEREFORE, in consideration of the mutual representations,
warranties,
covenants and
agreements contained
in this Agreement,
and for other good
and
valuable
consideration, the
receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as
follows:
ARTICLE 1 PURCHASE AND SALE OF ASSETS
1.1 Purchase
and Sale of the Assets.
On
and subject
to the terms and conditions of this Agreement, at the
Closing, the Seller shall sell, assign, transfer, convey, and deliver or cause
to be sold, assigned, transferred, conveyed and delivered to
Purchaser, free and
clear of all Liens other than Permitted Encumbrances, all of the right, title,
and interest
of Seller, Scott, Inc. and Silberman in and to the assets,
properties, goodwill and rights of Seller, Scott, Inc. and
Silberman relating to
Seller's railroad product line ("Railroad Product Line") as of the Closing
Date
listed below (the "Acquired Assets" ), and the Purchaser shall
purchase, acquire
and accept the Acquired Assets:
(a)
the Equipment set forth on Schedule 1.1(a)(1) and Schedule
1.1(a)(2) of
the disclosure schedules delivered by Seller and Scott, Inc.,
respectively,
to
purchaser at or prior to the execution hereof (the "Disclosure Schedules" ) as
such Schedule shall be
updated as of the close of business on the last Business
Day prior to the Closing Date, the Equipment shall generally consist of the
following;
Railroad
Product Line includes the following product lines ("Products"):
---------------------
a. Auto Tie Down
(Chocks)
b. G-Van
Project
1
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c. Heavy Duty
Tie Downs
d. Brake
Chain
e. Miscellaneous
parts supply held for sale to the railroad industry
The
Purchaser acknowledges there are some miscellaneous product supply
sold
to both the railroad industry and the trucking industry and that
the Seller will
continue to supply those parts to the trucking industry.
Assets: All assets
associated with the
production and refurbishing of the
products set forth in this section above, including but not limited
to the items
set forth at Schedules 1.1(a)(1) and 1.1(a)(2).
(a)
all of the Contracts of the Business (the "Acquired Contracts" ) as
set
forth on Schedule
1.1(b) of the
Disclosure Schedules,
to the extent any
such
contracts are assignable, but excluding any right of the
Seller to any payments
under them existing prior to the Closing Date;
(b)
all of the Information related to the Acquired Assets; and
(c)
transfer of the Patent Interests pursuant to the Patent Purchase
Agreement set forth at Exhibit A.
(d)
all property (other than real property) associated exclusively with
the
production and
refurbishing of the
Products set forth in Section 1.1(a) above,
including but not limited to the items set forth at Schedules
1.1(a) and 1.1(b).
(e)
the customer based
intangibles
owned by Silberman, pursuant to the
Assignment Agreement set forth in Exhibit F.
(f)
goodwill of the Business to the extent owned by the Seller and
Silberman.
1.2
Inventory
The
Seller will sell, assign, transfer, convey, and deliver or will
cause
to be sold, assigned,
transferred,
conveyed, and delivered to the
Purchaser,
free and clear of all Liens other than Permitted Encumbrances, and
the Purchaser
will purchase,
acquire, and accept from the Seller and any other seller, all
of
the right, title,
and interest in the net usable inventory of Products as
mutually agreed upon. All inventory will be current (non-obsolete)
and usable as
mutually agreed upon.
Inventory of Products
does not include any
inventory of
products held for sale to the trucking industry. The purchase price, terms of
payment, and the time of transfer and delivery from the Seller or
Scott, Inc. of
inventory to be purchased by the Purchaser will be as provided in
the Transition
Agreement, attached as
Exhibit D. The Purchaser will assume all responsibility
and liability with respect to all outstanding orders for Products
which have not
been shipped prior to the Closing Date. The responsibilities of the Seller
with
respect to the
manufacture and shipping of inventory will be as provided in
the
Transition Agreement.
To the extent any terms of this Section differ from terms
of the Transition
Agreement or to the extent there is an ambiguity between the
terms of this Section and the terms of the Transition Agreement, the terms of
the Transition Agreement will control.
2
<Page>
1.3 Excluded
Assets.
Despite anything otherwise in this Agreement, the Acquired Assets will not
include the following excluded assets ("Excluded Assets"):
a.
All receivables of every kind and nature;
b.
Any amounts held in connection with the Acquired Contracts or otherwise
owed to the Seller;
c.
Cash and cash equivalents (including but not limited to,
investment and
bank accounts, petty cash and cash on hand);
d.
Corporate minute books, stock ledgers, stock transfer records,
records
or books relating to any receivables, and any other corporate
records that are
not related solely to the Acquired Assets;
e.
Any rights or claims of or refunds due the Seller;
f.
Any federal, state, local and foreign Tax refunds, credits or
income Tax
attributes of the Seller;
g.
Any overpayments made with regard to any workers' compensation policies
maintained by the Seller;
h.
All prepayments made with regard to insurance policies or other
prepayments, prepaid expenses, and deposits;
i.
All assets owned by vendors or lessors;
j.
The Seller's name
"Vulcan Chain
Corporation"
and the name
"Vulcan",
except that the name Vulcan may be used for providing information to customers
and suppliers that the Seller's Railroad Product Line has been
purchased by the
Purchaser and may be
used only to the
extent either of the above names is
embossed or otherwise appears on inventory on hand on the Closing
Date until the
inventory is sold or disposed of;
k.
All trade names and
trade marks of the
Seller or that the Seller has a
right to use, with respect to which the Purchaser will have no right to use or
otherwise, regardless
of whether used alone
or in conjunction
with any other
name or words;
l.
All inventory of products held for sale to the trucking
industry;
m.
Any vehicles owned by the Seller;
n.
All equipment and furniture used for administrative purposes or for or
in connection with manufacture of products for sale to the trucking
industry or
otherwise not set forth on Schedule 1.1(a);
o.
All property held by the Seller as property improvements;
3
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p.
All intangible assets
pertaining to the business of the Seller with the
trucking industry or otherwise not transferred and sold by this
Agreement;
q.
any computer software; and
r.
Any rights that accrue or will accrue to Seller under this
Agreement.
1.4 Assumption
of liabilities.
The
obligations assumed by
the Purchaser will be assumed commencing on the
Closing Date. The Purchaser will assume any liabilities that arise on or after
the Closing Date with respect to the Business, any Purchase Documents,
and any
Acquired Contracts except to the extent specifically identified as the Seller's
liability or obligation pursuant to this Agreement or the
Transition
Agreement
attached as Exhibit D.
On the Closing
Date, the Purchaser will assume the
Seller's obligations
to deliver Products
ordered from the
Seller by any third
party and all related costs and obligations except to the extent specifically
identified as the Seller's liability or obligation
pursuant to the
Transition
Agreement attached as
Exhibit D. With respect to any liability or obligation of
the Seller which is assumed by the Purchaser pursuant to this Agreement, the
Seller will have no further liability on or after the Closing Date
except to the
extent specifically
provided by this
Agreement or the Transition Agreement
attached as Exhibit D. No other liabilities of the Seller are or
will be assumed
by the Purchaser.
1.5 Payment of
Purchase Price
The
consideration to be paid by the Purchaser for the Acquired Assets
shall
consist of the following:
(a)
Equipment and assets
owned by Seller. a
cash payment to Seller in the
amount of $787,626 for
the Acquired Assets
owned by Seller listed
in Schedule
1.1(a)(1) and the goodwill referred to at Section 1.1 of this
Agreement.
(b)
Equipment and assets owned by Scott, Inc. a cash payment to Scott,
Inc.
in the amount of $8,000 for the Acquired Assets owned by Scott,
Inc. listed in
Schedule 1.1(a)(2) .
(c)
Patent Interests owned by Silberman. a cash payment to Silberman in
the
amount of One Million Five Hundred Thousand Dollars ($1,500,000)
with respect to
the purchase
of Patent Interests pursuant to the Patent
Purchase Agreement
attached as Exhibit A.
(d)
Customer based intangibles owned by Silberman.
(1) an initial cash
payment to Silberman in the amount of $1,434,000
for
the purchase of customer based intangibles owned by him with
respect to
the
railroad product line, pursuant to the Assignment Agreement
attached as
Exhibit F, and
(2) additional
payments as provided in the Assignment Agreement
attached as Exhibit F
based on the continued
success of the value
of the
customer based intangibles owned by Silberman as reflected in the
continued
success of the Seller's Railroad Product Line.
4
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(e)
Non-competition
agreement by John Male. a cash payment to John Male in
the amount of Three Hundred Thousand Dollars ($300,000) for his
agreement to not
compete, as evidenced by Mr. Male's Acknowledgement to be bound by
the Agreement
to Not Compete filed as Exhibit C.
(f)
Non-competition agreement by Ronald Silberman. a cash payment to
Ronald
Silberman in the amount of Three Hundred Thousand Dollars ($300,000) for his
agreement to not compete, as evidenced by Mr. Silberman's
Acknowledgement to
be
bound by the Agreement to Not Compete filed as Exhibit C.
ARTICLE 2 PROCEDURE FOR CLOSING
2.1 Time and
Place of Closing.
The
consummation
of the purchase and
sale contemplated by
this Agreement
(the "Closing")
shall be held at the
offices of Bassey and Selesko PLC, 1400
American Center, 27777 Franklin Road, Suite 1400, Southfield,
Michigan 48034, or
at such other place as mutually agreed upon by the Purchaser and
Seller as soon
as possible,
but in no event later than three (3) Business Days after
satisfaction or waiver
of the conditions set
forth in Article 7 and Article 8,
commencing at 9:00
A.M., local time (the date on which the
Closing actually
occurs is hereinafter
referred to as the "Closing Date"). The Closing shall be
effective as of the beginning of business on the Closing Date.
2.2 Transactions at
the Closing.
At
the Closing, each of the following shall be delivered:
(a)
Seller shall deliver to Purchaser the items set forth in Article 7.
The
documents and
certificates to be delivered hereunder by or on behalf of
Seller
on the Closing Date shall be in form and substance reasonably satisfactory to
Purchaser and its counsel.
(b)
Purchaser shall deliver to Seller and the other
sellers set forth in
this Agreement
and the Purchase
Documents (i) wire transfers in the amounts
equal to the payments
called for by Section
1.5(a) in immediately available
funds to accounts designated by Seller and the other sellers, and
(ii) the items
set forth in Article 8. The documents and certificates to be
delivered hereunder
by or on behalf
of the Purchaser on the Closing Date shall be in form and
substance reasonably satisfactory to the Seller and its
counsel.
2.3 Property
Tax Proration
All
current taxes on tangible personal property will be prorated and
adjusted as of the
Closing Date in accordance with "due date" basis of the
municipality or taxing unit in which the tangible personal property is located
and prorated as paid in advance.
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER AND
SILBERMAN
Seller and Silberman,
each hereby represents and warrants to Purchaser (to
the extent that such
representation
and warranty is being made by Seller or
Silberman) that:
3.1
Organization and Good Standing; Authority.
(a)
Seller is duly organized, validly existing and in good standing
under
the laws of the State of Michigan, with full power and authority to
conduct its
business as it is now being conducted, to own or use its properties and
assets,
and to perform all of its obligations under the Acquired Contracts, except as
enforceability may
be limited by applicable equitable principles or by
bankruptcy,
insolvency,
reorganization,
moratorium, or similar Laws affecting
creditors' rights
generally,
and by the
exercise of judicial
discretion
in
accordance with equitable principles.
(b)
Seller has the full corporate power and authority to execute,
deliver
and perform fully, its
obligations under this
Agreement to which it is a party
and to consummate the transactions contemplated hereby and thereby. The
execution and
delivery by Seller of
this Agreement to
which it is a party and
the consummation by Seller of the transactions contemplated hereby and thereby
have been duly authorized and approved by the Board of Directors of
Seller. This
Agreement has been
duly executed
and delivered by Seller and constitutes,
subject to the receipt of any necessary Consents, a valid and binding agreement
of Seller, enforceable
against Seller in
accordance with its respective terms
except to the extent
that the enforceability may be limited by applicable
bankruptcy,
insolvency,
moratorium or
other similar laws affecting the
enforcement of creditors' rights generally and subject to general
principles of
equity and except that
the availability
of the equitable remedy of specific
performance or
injunctive
relief is subject to the discretion of the court
before which any proceeding may be brought.
3.2
Governmental Filings and Consents.
No
notices, reports, submissions or other filings (collectively,
"Filings"") are
required to be made by Seller with, nor are any Consents
required to be obtained by Seller from, any Governmental
Authority or any
other
third party,
in connection with the execution or delivery by Seller of
this
Agreement to which it is party, the performance by Seller of its obligations
hereunder or
thereunder
or the consummation by Seller of the transactions
contemplated hereby or
thereby. Seller shall cause the owner of the
Patent
Interests to take such
actions to sell, and assign the rights to the
Patent
Interests to the Purchaser as contemplated in the Patent Purchase
Agreement.
3.3 No
Violations.
The
execution and delivery by Seller of this
Agreement to which it
is a
party does not, and the performance and consummation by Seller of any of the
transactions
contemplated hereby or
thereby will not, with respect to the
Acquired Assets, directly or indirectly (with or without the giving
of notice or
the lapse of time or both) or to the best knowledge of
Silberman:
6
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(a)
constitute
or result in a Default
under (i) any provision of Seller's
Organizational
Documents, or (ii)
any resolution adopted by the Board of
Directors (or similar
governing body) or the
shareholders of Seller that would
have a Material
Adverse Effect on the
Purchaser or on the Seller's ability to
execute this Agreement or consummate the transactions contemplated
by it;
(b)
constitute or result in a Default under, or the creation of a Lien on,
any of the Acquired
Assets, or require the
Seller to make any Filing or obtain
any Consent under,
any provision of any
material agreement,
license, lease,
understanding,
contract, loan, note, mortgage, indenture, promise,
undertaking
or other commitment or
obligation (whether
written or oral) that
is a legally
binding obligation,
under which the Business is bound or is subject to any
obligation or
Liability or by which
any of the Acquired
Assets are bound
(it
being understood
that LaSalle Bank has
agreed in writing to the removal of its
lien on the Equipment set forth on Schedules 1.1(a)(1) and (2) and
has indicated
that it will, promptly after the closing, file a UCC-3 indicating
the same); or
(c)
result in a violation of any Law or Order.
3.4 Acquired
Equipment
(a)
The Equipment set forth on Schedule 1.1(a)(1) and (2) of the
Disclosure
Schedules is
individually and in
the aggregate in good
condition and state of
repair, reasonable
wear and tear and normal depreciation excepted. All of the
Equipment will be supplied in operational condition, "AS IS".
(b)
Seller has good and
marketable
title to the
Equipment set forth on
Schedule 1.1(a)(1) of the Disclosure Schedules, and Seller has the right to
use
any Equipment held
under leases.
Scott has good and
marketable
title to the
Equipment set forth on Schedule 1.1(a)(2) of the Disclosure
Schedules.
3.5
Litigation; Orders; etc.
(a)
Except as set forth in
Schedule 3.5(a) of the
Disclosure
Schedules,
there are no civil, criminal, administrative, or investigative
actions, audits,
demands, suits,
claims, arbitrations, hearings, litigations, disputes,
investigations or
other proceedings
of any kind or nature
or Orders issued,
pending or, to the Knowledge of Seller, threatened, against Seller
or any of the
Acquired Assets, at
law, in equity or otherwise, in, before, by, or otherwise
involving, any Governmental Authority or other Person that question
or challenge
the validity or
legality of, or have
the effect of
prohibiting,
restraining,
restricting, or making
illegal or otherwise interfering with or affecting, this
Agreement, the consummation of the transactions contemplated hereby or
thereby,
or the Acquired
Assets, and which is reasonably likely to have a Material
Adverse Effect on the Business.
(b)
Except as set forth in Schedule 3.5(b) of the Disclosure
Schedules:
(i) there is no Order to which the Business, or any of the Acquired
Assets, is subject;
7
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(ii) Seller
is, and at all times has been, in compliance in all
material respects with
the terms and
requirements of each
Order to which
any
of the Acquired Assets is or has been subject;
(iii) no event has
occurred, or to the
best knowledge of
Silberman,
does
any circumstance
exists that has constituted or resulted in, or could
reasonably be
expected to constitute or result in (with or without
the
giving of notice or the lapse of time or both) a Default
under any term or
requirement of any Order to which the Acquired Assets are subject;
and
(iv) Neither
Seller or Silberman has received any notice or other
communication (whether
oral or written) from
any Governmental
Authority
regarding any
Default under any Order to which the
Acquired Assets are
subject.
3.6 Taxes.
To
Seller's and Silberman's best knowledge there are no Liens on any
of the
Acquired Assets.
3.7 Compliance
with Laws; Governmental Licenses; etc.
(a)
Except as set forth in Schedule 3.7(a) of the Disclosure Schedules,
the
Business is in material compliance with each Law in all
material respects
that
is or was applicable to it or to the conduct or operation of the
Business or the
Acquired Assets,
and has not received
any notice of any
violation of such Law
that is reasonably
likely to have a Material Adverse Effect, or on the ability
of the Seller to complete the transactions contemplated by this
Agreement.
(b)
Except as set forth in
Schedule 3.7(b) of the
Disclosure
Schedules,
Seller holds
and maintains in full force and effect all Licenses from
Governmental
Authorities required
to conduct the Business in the manner and in
all such jurisdictions as it is currently conducted and to permit Seller to
own
and use the Acquired
Assets in the manner in which it currently owns and uses
such assets, and neither Seller or Silberman has any Knowledge of
any threatened
revocation of any such License, except in such circumstances
where the absence
of such Licenses would not have a Material Adverse Effect,
or on the ability
of
the Seller to complete the transactions contemplated by this
Agreement.
3.8 Contracts;
No Default.
Seller has made
available to Purchaser as complete a copy as Seller has of
each Contract identified by name on Schedule 1.1(b) of the
Disclosure
Schedules
and, except with respect to any Acquired Contract identified on Schedule 1.1(b)
of the Disclosure
Schedules which is not material in amount or to the operation
of the Business, (i) each such Acquired Contract is in full force
and effect and
is valid and enforceable in accordance with its terms, (ii) the Business is not
in Default in any material respect under any such Acquired
Contract, except to
the extent that the
execution of this
Agreement or the consummation of the
transactions shall
trigger a Default under such Acquired Contract, (iii) the
Business has not
repudiated
or waived any material provision of any such
Acquired Contract,
and (iv) to
Seller's Knowledge, no other party to such
Acquired Contract is
in Default in any
material respect
under such
Acquired
Contract nor,
to Seller's Knowledge, has any other party to such Acquired
Contract repudiated
or waived any provision thereunder, that would have a
Material Adverse
Effect on Seller's ability to complete the transactions
contemplated by this Agreement, Purchaser or the Business.
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3.9
Intellectual Property.
Seller and Silberman
each has no reason to
believe that the owner
of the
Patent Interests does not own or have a valid, binding, enforceable
and adequate
right to own and use, the Patent Interests without any conflict with the
rights
of others. Neither
Seller or Silberman
has received any
notice from any other
Person or any
other source pertaining to or challenging the right of the
Business to use the Patent Interests. No claims have been made or, to
Seller's
Knowledge, threatened against Seller with respect to the Patent
Interests.
3.10
No Material Adverse Effect.
Since December 31, 2005, there has not occurred a Material
Adverse Effect
with respect to the Seller's or Silberman's ability to sell or
cause the sale of
the Acquired Assets or with respect to the Acquired Assets.
3.11
Reliance.
The
Seller is not relying upon any verbal or written representation,
warranty, agreement,
promise, or statement of the Purchaser or any other person
or entity in making this purchase, except those representations and warranties
expressly stated in this Agreement.
3.12
Statements not misleading.
No
representation
or warranty by the Seller in this Agreement or any
schedule or exhibit,
or any statement or
certificate
furnished by the
Seller
pursuant to this Agreement, or in connection with these
transactions,
contains
or will contain any untrue statement of a material
fact, or omits or will
omit
to state a material
fact required to be stated to make the statements not
misleading or required to be stated in order to provide a
prospective
purchaser
of the Acquired Assets with accurate relevant information. To the knowledge of
Silberman, all of the
information that the Seller has delivered or will deliver
in connection with these transactions is true, correct and
complete.
3.13
Brokers or Finders.
The
Seller and its agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or
agents'
commissions
or other similar
payment in connection
with this Agreement
and will indemnify
and hold the Purchaser
harmless from any such
payment alleged to be
due by or
through the Seller as
a result of the action of the Seller or its officers or
agents.
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ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
4.1
Organization and Good Standing; Authority.
(a)
Purchaser is a corporation validly existing, and in good standing
under
the Laws of the State of West Virginia and has all necessary power
and authority
to conduct its
business and to own,
lease, or operate its
properties
in the
places where such business is conducted and such properties are owned, leased,
or operated and to perform all of its obligations under the
acquired Contracts.
(b)
Purchaser has full
corporate power and
authority to execute,
deliver
and perform fully its obligations under this Agreement and each of
the Purchase
Documents to which it is a party and to consummate the transactions
contemplated
hereby and thereby. The execution, delivery and performance by
Purchaser of this
Agreement to which it is a Party and the consummation by the Purchaser of the
transactions
contemplated hereby
and thereby have been duly and validly
authorized and
approved by the Board of Directors of Purchaser. This Agreement
and each Purchase
Document to which Purchaser is a Party has been duly executed
and delivered by the
Purchaser and, subject to the receipt of any
necessary
consents, is a legal,
valid, and binding
obligation of
Purchaser
enforceable
against it in accordance with its terms, except as enforceability
may be limited
by applicable equitable principles or by bankruptcy, insolvency,
reorganization,
moratorium, or similar
Laws affecting
creditors' rights generally, and by the
exercise of judicial discretion in accordance with equitable
principles.
4.2
Governmental filings and Consents.
No
Filings are
required to be made by the Purchaser with, nor are any
Consents required
to be obtained by the Purchaser from, any Governmental
Authority or any other third party, in connection with the
execution or delivery
by the Purchaser of this Agreement to which it is a party,
the performance by
the Purchaser of its obligations under it or the consummation by the Purchaser
of the transactions contemplated by it.
4.3 No
violations.
Assuming the making of
any necessary
Filings and the obtaining of any
necessary Consents,
and except as may be consented to in writing by the Seller,
the execution and
delivery by the Purchaser of this Agreement and the Purchase
Documents to which it is a party does not, and the performance and
consummation
by the Purchaser of the transactions contemplated by them thereby
will not, with
respect to the
Acquired Assets,
or the interest of the Seller or any seller
pursuant to a Purchase
Document, directly or
indirectly
(with or without
the
giving of notice or the lapse of time or both):
i. constitute
or result in a Default
under (i) any
provision of the
Purchasers'
Organizational Documents or (ii) any resolution adopted by the
Board of Directors (or similar governing body) or the
shareholders of
the
Purchaser; or
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ii. constitute or result in a Default, or the creation of a Lien that
would or might affect
the right of the Seller or any seller pursuant to a
Purchase Document
to receive
any payment pursuant to the terms of this
Agreement or any Purchase Document; or
iii. result in a violation of any Law or Order.
4.4
Litigation.
There are no civil,
criminal,
administrative, or
investigative
actions,
audits, demands, suits, claims, arbitrations, hearings, litigations,
disputes,
investigations or
other proceedings
of any kind or nature
or Orders issued,
pending or, to the Knowledge of Purchaser, threatened, against
Purchaser at law,
in equity or otherwise, in, before, by, or otherwise involving, any
Governmental
Authority or other
Person that question
or challenge the
validity or legality
of, or have the
effect of prohibiting, restraining, restricting, or making
illegal or otherwise
interfering
with or affecting, this Agreement or any
Purchase Document, the consummation of the transactions
contemplated by them, or
which is reasonably
likely to have a Material Adverse Effect on the interest of
the Seller or any other party to a Purchase Document in this Agreement, any
Purchase Document,
or the transactions contemplated by them. Insofar as the
following may affect the Seller or any other party to a Purchase
Document, there
is no Order to which the Purchaser is subject, the Purchaser is, and at all
times has been,
in compliance in all material respects with the terms and
requirements of each
Order to which the
Purchaser is or has been subject, no
event has occurred or
circumstance exists
that has constituted or resulted in,
or could reasonably be
expected to constitute or result in (with or without the
giving of notice or the lapse of time or both) a
Default under any term or
requirement of any
Order to which the
Purchaser is subject,
and the Purchaser
has not received any
notice or other
communication (whether
oral or written)
from any Governmental
Authority regarding
any Default under any Order to which
the Purchaser is subject.
4.5
Financing.
On
the Closing
Date, Purchaser will have available sufficient funds,
available lines of
credit or other sources of immediately available funds to
enable it to
consummate
the transactions contemplated by this Agreement.
Purchaser's
obligations hereunder
are not subject to any conditions regarding
Purchaser's ability to obtain financing for the consummation of the
transactions
contemplated hereby.
4.6 Government
Licenses and Permits.
The
Purchaser and its
employees have or will have by the Closing
or will
acquire promptly
after the Closing
where not permitted
before the Closing all
governmental licenses
and permits (federal,
state and local) necessary for the
conduct of the Business, if any, and the permits and
licenses are or will be in
full force and effect.
No violations are or
have been recorded with respect to
any such licenses
or permits and no proceeding is pending or threatened
concerning the revocation or limitation of any such license or
permit.
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4.7 No Adverse
Occurrence or Default.
No
event has occurred,
nor does there exist any fact or circumstances to
the knowledge of the Purchaser, nor is the Purchaser in default,
or alleged to
be in default,
under any agreement, license or obligation relating to the
operation of its business or otherwise which may adversely affect
the ability of
the Purchaser to execute and deliver this Agreement, the Purchase Documents, or
consummate the
transactions
contemplated by them pursuant to the terms of this
Agreement or the Purchase Documents or otherwise adversely affect the rights or
interest of the
Seller or any other party to a Purchase Document in this
Agreement or the transactions contemplated by it, and there
exists no condition
or event which, after
notice or lapse of time or both, would constitute such an
event or default by any Party to any such agreement, license or
obligation.
4.8 Inspection
of Acquired Assets.
The
Purchaser has had an opportunity to inspect and has inspected the
Acquired Assets, Books and Records, and Information, is familiar with them, is
satisfied with the
condition of them and agrees to accept them "AS IS," subject
to the representations and warranties of the Seller set forth in
this Agreement.
4.9
Reliance.
The
Purchaser is not relying upon any verbal or written
representation,
warranty, agreement,
promise, or statement of the Seller or any other person or
entity in making this
purchase, except those
representations
and warranties
expressly stated in this Agreement.
4.10
Statements not misleading.
No
representation
or warranty by the
Purchaser in this
Agreement or any
schedule or exhibit, or any statement or certificate furnished by the Purchaser
pursuant to this Agreement, or in connection with these
transactions,
contains
or will contain any untrue statement of a material
fact, or omits or will
omit
to state a material
fact required to be stated to make the statements not
misleading or required to be stated in order to provide a
prospective seller
of
the Acquired Assets with accurate relevant information.
To the knowledge of
the
Purchaser, all of the
information
that the Purchaser has delivered or will
deliver in connection with these transactions is true, correct and
complete.
4.11
Brokers or Finders.
The
Purchaser and its agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or
agents'
commissions
or other similar
payment in connection
with this Agreement
and will indemnify
and hold the Seller or the seller pursuant to any Purchase Document harmless
from any such payment
alleged to be due by or through the Purchaser as a result
of the action of the Purchaser or its officers or agents.
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4.12
Solvency.
Both
as of the date of this
Agreement and on the
Closing Date, (a) the
Purchaser, either
as the result of the transactions contemplated by this
Agreement or
otherwise,
is not insolvent as that term is defined in the
bankruptcy laws
of the United States or any similar federal, state, or
provincial statute; (b) the sum of the Purchaser's debts is not
greater than the
fair market
value of its
assets, either as the result of the transactions
contemplated by this
Agreement or
otherwise; and (c) the
Purchaser is able to
pay its debts as they mature.
ARTICLE 5 COVENANTS PRIOR TO CLOSING
Seller covenants and agrees with Purchaser as follows:
5.1 Access and
Information.
Seller shall afford to
Purchaser,
and shall cause its
lenders, counsel,
accountants, and
other representatives, reasonable access to the offices,
properties, and officials of Seller of the Business during normal
business hours
to conduct such review
of the Acquired
Assets, as is
reasonable,
and Seller
shall furnish such persons with information (including financial and operating
data) concerning the
Acquired Assets as they reasonably may request.
Requests
for such information shall be coordinated with Seller's designated
representatives,
and Seller
shall use its reasonable efforts to assist
Purchaser, its lenders, counsel, accountants, and other
representatives in their
examination.
5.2 Conduct of
Business Prior to Closing.
From
the date hereof to the Closing Date, and except as contemplated or
provided hereby as
well as under the
Transition Agreement
(Exhibit D) or the
Supply of Goods
Agreement (Exhibit
E) or to the extent
that Purchaser
shall
otherwise consent in writing, Seller shall:
(a) operate the Business, as it relates to the Acquired Assets,
substantially as
previously operated
and in the regular and Ordinary Course of
Business consistent with past practices;
(b)
maintain the Acquired Assets in good working order and condition,
reasonable wear and use excepted, and deliver such Acquired Assets
to Purchaser
on the Closing Date
(or as required under
the Transition
Agreement)
in such
condition, and
maintain all policies of insurance covering the Acquired Assets
in amounts and on terms substantially equivalent to those in effect on
the date
hereof;
(c)
take all steps reasonably necessary to maintain Seller's
rights in and
to the Intellectual
Property and other
intangible assets of
Seller related to
the Acquired Assets;
(d)
comply with all Laws
applicable to the
conduct of the Business where
the failure to so comply would have a Material Adverse Effect on
the Business or
the Acquired Assets;
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(e)
use commercially
reasonable
efforts to
preserve the goodwill and
patronage of the
customers, Employees
and suppliers of the Business, as it
relates to the Acquired Assets and others having a
business relationship
with
Seller;
(f)
maintain all licenses and approvals necessary to conduct the
Business,
as it relates to the manufacture and sale of the Acquired Assets,
in accordance
with applicable Law;
(g)
not fail to maintain
substantially the same insurance coverage as that
currently maintained
by Seller with respect to the Acquired Assets and, in any
event, not
less than that required by applicable legal and regulatory
requirements;
(h)
not sell, pledge or encumber, nor cause a Lien or security
interest to
be imposed against,
and not cause to become pledged, secured or encumbered any
Acquired Asset,
except in the
Ordinary Course of Business or pursuant to
existing Contracts and Liens; and
(i)
not agree to do any of the things prohibited by Sections 5.2(a)
through
5.2(h).
5.3
Notification of Changes; Supplemental Disclosure.
Seller shall have the continuing obligation up to and including the
Closing
Date to supplement or amend the Disclosure Schedules with respect to any
matter
hereafter arising or
discovered which, if ex
