Exhibit 10.1
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ASSET PURCHASE AGREEMENT
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BY AND BETWEEN
LYNCH SYSTEMS, INC.
(AS THE "SELLER)
AND
OLIVOTTO GLASS TECHNOLOGIES S.P.A.
(AS THE "BUYER")
MAY 17, 2007
ARTICLE I. ASSETS TO BE
PURCHASED.........................................................1
Section 1.1. Description of
Assets.......................................................1
Section 1.2. Non-Assignment of Certain
Property..........................................2
ARTICLE II. ASSUMPTION OF LIABILITIES AND
OBLIGATIONS......................................3
ARTICLE III. PURCHASE
PRICE.................................................................3
Section 3.1. Purchase
Price..............................................................3
Section 3.2.
Deposit.....................................................................4
Section 3.3. Closing
Payment.............................................................4
Section 3.4. Calculation of Estimated Closing Date Net Asset
Value.......................4
Section 3.5. Allocation of Purchase
Price................................................6
Section 3.6. Consignment of Certain
Items................................................6
ARTICLE IV.
CLOSING........................................................................6
ARTICLE V. REPRESENTATIONS AND
WARRANTIES.................................................6
Section 5.1. Representations and Warranties of
Buyer.....................................6
Section 5.2. Representations and Warranties of
Seller....................................8
Section 5.3. Effect of Disclosures on
Schedules.........................................17
Section 5.4. Disclaimer of Other
Warranties.............................................17
Section 5.5. Closing Date
Effect........................................................17
ARTICLE VI.
COVENANTS.....................................................................17
Section 6.1. Covenant Against
Disclosure................................................17
Section 6.2. Covenant Against
Competition...............................................17
Section 6.3. Injunctive
Relief..........................................................17
Section 6.4. Access to
Records..........................................................17
Section 6.5. Transition of
Customers....................................................18
Section 6.6. Operate Business in the Ordinary
Course....................................18
Section 6.7. Certain Negative
Covenants.................................................18
Section 6.8. Update
Disclosure..........................................................18
Section 6.9.
Severability...............................................................18
Section 6.10. Further
Assurances........................................................19
Section 6.11.
Announcements.............................................................19
Section 6.12. Employees of
Seller.......................................................19
ARTICLE VII. CLOSING
DELIVERIES............................................................19
Section 7.1. Deliveries by
Seller.......................................................19
Section 7.2. Deliveries by
Buyer........................................................20
ARTICLE VIII. CONDITIONS PRECEDENT TO
CLOSING...............................................21
Section 8.1. Conditions to Obligation of Each Party to Effect
the Transaction...........21
Section 8.2. Additional Conditions to Obligations of
Buyer..............................21
Section 8.3. Additional Conditions to Obligations of
Seller.............................22
ARTICLE IX. TERMINATION, AMENDMENT AND
WAIVER..............................................22
Section 9.1.
Termination................................................................22
Section 9.2. Effect of
Termination......................................................23
Section 9.3.
Waiver.....................................................................23
ARTICLE X.
INDEMNIFICATION...............................................................23
Section 10.1. Survival of Representations, Warranties and
Agreements....................23
Section 10.2.
Indemnification...........................................................24
Section 10.3. Limitations on
Indemnification............................................25
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Section 10.4. Procedure for Indemnification with Respect to
Third-Party Claims..........26
Section 10.5. Procedure for Indemnification with Respect to
Non-Third-Party Claims......27
Section 10.6. Cooperation in the Defense of
Claims......................................27
ARTICLE XI. MISCELLANEOUS
PROVISIONS......................................................27
Section 11.1.
Notices...................................................................27
Section 11.2. Entire
Agreement..........................................................28
Section 11.3. Binding Effect;
Assignment................................................28
Section 11.4.
Captions..................................................................28
Section 11.5. Expenses of
Transaction...................................................28
Section 11.6. Waiver;
Consent...........................................................28
Section 11.7. No Third Party
Beneficiaries..............................................29
Section 11.8.
Counterparts..............................................................29
Section 11.9. Remedies of
Buyer.........................................................29
Section 11.10. Bulk Sales
Laws..........................................................29
Section 11.11. Governing Law; Consent to
Jurisdiction...................................29
Section 11.12. Exhibits and
Schedules...................................................30
Section 11.13.
Knowledge................................................................30
TABLE OF DEFINED TERMS
Term
Section
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Accounts
Payable........................................................................2.1(a)
Accrued
Liabilities.....................................................................2.1(b)
Actual Closing Date Net Asset
Value.....................................................3.4(b)
Adjusted Carrying
Value.................................................................3.4(a)
Adjustment
Report.......................................................................3.4(b)
Allocation
Certificate.....................................................................3.5
Arbiter.................................................................................3.4(d)
Assignments and
Assumptions.............................................................7.1(b)
Assumed
Liabilities..........................................................................2
Business...............................................................Introductory
Paragraphs
Business
Day............................................................................3.4(a)
Buyer..................................................................Introductory
Paragraphs
Certificate of Assumed
Liabilities......................................................7.1(f)
Closing......................................................................................4
Closing
Date.................................................................................4
Closing
Payment............................................................................3.3
Code...............................................................................5.2(n)(iii)
Consigned
Items............................................................................3.6
Contest
Notice............................................................................10.5
Contracts...............................................................................1.1(f)
Contracts
Liabilities...................................................................2.1(c)
Damages................................................................................10.2(a)
Deposit....................................................................................3.2
Employee Benefit
Plans...............................................................5.2(n)(i)
ii
Employee Severance
Payments.............................................................5.2(t)
Encumbrances...............................................................................1.1
Environmental
Laws..................................................................5.2(l)(ii)
Environmental
Permits..............................................................5.2(l)(iii)
ERISA................................................................................5.2(n)(i)
Escrow
Agent...............................................................................3.2
Escrow
Agreement...........................................................................3.2
Estimated Closing Date Net Asset
Value..................................................3.4(a)
Excluded
Liabilities.........................................................................2
Execution
Date.........................................................Introductory
Paragraphs
Financial
Statements....................................................................5.2(e)
GAAP....................................................................................3.4(a)
Governmental
Authority..................................................................5.1(c)
Hazardous
Material..................................................................5.2(l)(ii)
Indemnifiable
Claim....................................................................10.2(a)
Indemnification
Notice....................................................................10.4
Indemnified
Party......................................................................10.3(d)
Indemnifying
Party.....................................................................10.3(d)
Inventory...............................................................................1.1(g)
Knowledge................................................................................11.13
Lease...................................................................................7.1(i)
Losing
Party............................................................................3.4(e)
Material Adverse
Effect.................................................................5.2(a)
Miscellaneous
Assets....................................................................1.1(i)
Non-Third Party Claim Indemnification
Notice..............................................10.5
Objection
Notice........................................................................3.4(c)
Permits.................................................................................1.1(c)
Personal
Property.......................................................................1.1(a)
Preliminary
Statement...................................................................3.4(a)
Prevailing
Party........................................................................3.4(e)
Property...................................................................................1.1
Personal
Property.......................................................................1.1(b)
Personal Property
Leases................................................................1.1(e)
Premises................................................................................7.1(h)
Proprietary
Rights......................................................................1.1(d)
Purchase
Price.............................................................................3.1
Real
Property..............................................................................1.1
Receivables.............................................................................1.1(b)
Seller.................................................................Introductory
Paragraphs
Severance
Contribution.....................................................................3.1
Warranty
Liabilities....................................................................2.1(d)
SCHEDULES
Schedule 1.1(a) - Personal Property
Schedule 1.1(b) - Receivables
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Schedule 1.1(c) - Permits
Schedule 1.1(d) - Proprietary Rights
Schedule 1.1(e) - Personal Property Leases
Schedule 1.1(f) - Contracts
Schedule 1.1(g) - Inventory
Schedule 1.1(h) - Miscellaneous Assets
Schedule 1.1(l) - Excluded Assets
Schedule 1.1(m) - Real Property
Schedule 2.1(a) - Accounts Payable
Schedule 2.1(b) - Accrued Liabilities
Schedule 3.4(a) - Adjusted Carrying Value
Schedule 5.2(b) - Authorization
Schedule 5.2(c) - Conflicts
Schedule 5.2(f) - Changes
Schedule 5.2(g) - Liabilities
Schedule 5.2(h) - Taxes
Schedule 5.2(i) - Liens
Schedule 5.2(j) - Insurance
Schedule 5.2(k) - Litigation
Schedule 5.2(l) - Compliance with Laws
Schedule 5.2(n) - Employee Benefit Plans
Schedule 5.2(o) - Labor Matters
Schedule 5.2(p) - Encumbrances
Schedule 5.2(q) - Contracts and Commitments
Schedule 5.2(r) - Receivables
Schedule 5.2(s) - Non-GAAP Inventory
Schedule 5.2(t) - Employees
EXHIBITS
Exhibit A...Escrow Agreement
Exhibit B...Bill of Sale
Exhibit C...Assignments and Assumptions
Exhibit D...Assignment of Proprietary Rights
Exhibit E...Certificate of Assumed Liabilities
Exhibit F...Lease
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated May 17, 2007 (the "Execution
Date"), is by and
between OLIVOTTO GLASS TECHNOLOGIES S.P.A., an Italian
corporation ("Buyer"),
and LYNCH SYSTEMS, INC., a South Dakota corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller, INTER ALIA, designs, develops,
manufactures and
markets a broad range of manufacturing equipment for the
electronic display and
consumer glass industries (the "Business"); and
WHEREAS, Buyer desires to purchase, and Seller
desires to sell,
certain of Seller's operating assets relating to the Business,
upon the terms
and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises
and the mutual
promises herein contained, Buyer and Seller hereby agree as
follows:
ARTICLE I. ASSETS TO BE PURCHASED
SECTION 1.1. DESCRIPTION OF ASSETS. Upon the terms
and subject to
the conditions set forth in this Agreement, Seller hereby
agrees to convey,
sell, transfer, assign and deliver to Buyer, and Buyer hereby
agrees to purchase
from Seller, on the Closing Date (as defined below), free and
clear of all
liens, security interests, claims, pledges, charges,
encumbrances, equities,
rights of use, levies, taxes, imposts and restrictions (the
"Encumbrances"), all
right, title and interest of Seller in and to the assets,
properties and rights
(contractual or otherwise) of Seller that are used in
connection with the
Business set forth below:
(a) All machinery, equipment, tooling, parts,
furniture, supplies,
and other tangible personal property used in conducting
the Business
listed on Schedule 1.1(a) (the "Personal Property");
(b) All accounts receivable relating to or
arising out of the
operation of the Business listed on Schedule 1.1(b) (the
"Receivables");
(c) All franchises, licenses, permits, consents,
authorizations,
approvals and certificates of any Governmental Authority
(as hereinafter
defined) used in conducting the Business listed on Schedule
l.l(c) (the
"Permits");
(d) Subject to clause (xi) of the final paragraph of
this Section
1.1, all patents, inventions, trade secrets, processes,
proprietary
rights, proprietary knowledge, know-how, design
archives, computer
software, URLs, web sites including content and coding,
trademarks, names,
service marks, trade names, copyrights, symbols, logos,
franchises and
permits owned by Seller and used in conducting the
Business and all
applications therefor, registrations thereof and licenses,
sublicenses or
agreements in respect thereof, that Seller owns or has the
right to use or
to which Seller is a party and all filings, registrations or
issuances of
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any of the foregoing with or by any federal, state,
local or foreign
Governmental Authority and all related goodwill as set
forth on Schedule
1.1(d) (collectively, the "Proprietary Rights");
(e) All leases of equipment or other tangible personal
property used
in conducting the Business listed on Schedule 1.1(e)
(the "Personal
Property Leases");
(f) All contracts, agreements, contract rights,
license agreements,
third party guaranties, indemnifications,
arrangements, and
understandings, whether oral or written, to which Seller is
a party which
relate to the License Agreements listed on Schedule
1.1(f) (the
"Contracts");
(g) All inventories of materials, work-in-process,
finished goods
and supplies listed on Schedule 1.1(g) (the "Inventory");
(h) All security deposits, prepaid expenses and other
miscellaneous
assets of the Business listed on Schedule 1.1(h) (the
"Miscellaneous
Assets");
(i) All books of account, customer lists, client
lists, files,
papers, records and telephone numbers used in conducting the
Business;
(j) All rights of Seller in, to and under express
or implied
warranties from suppliers of the Business with respect to the
Property (as
hereinafter defined); and
(k) All goodwill relating to the Business.
All of the assets, properties and rights (contractual
and otherwise)
being conveyed, sold, transferred, assigned and delivered to
Buyer pursuant to
subsections (a) through (k) of this Section 1.1 are hereinafter
collectively
referred to as the "Property."
Notwithstanding the foregoing, there shall be
excluded from the
Property the following assets and properties of Seller related
to or used in
connection with the Business: (i) all cash and cash equivalents;
(ii) all tax
refunds of any kind paid or payable to Seller; (iii) all
assets listed on
Schedule 1.1(l), (iv) the PT Kedaung accounts receivable, the
gearless tablewear
shear and the show machine; (v) the real property of Seller
identified on
Schedule 1.1(m) (the "Real Property"); (vi) all corporate minute
books, stock
records, tax returns, checkbooks, books of original entry and
bank statements
and supporting materials of Seller for all periods, all of
which shall be
subject to Buyer's right to inspect and copy; (vii) all
insurance policies;
(viii) all claims, causes of and choses in action of any sort
that Seller may
have, including, without limitation, under any of Seller's
insurance policies,
against any of the officers, directors and/or shareholders of
Seller and/or the
parents, spouses and lineal descendants of any such persons;
(ix) rights of
set-off, counterclaim and/or recoupment respecting any
liabilities or
obligations of Seller not included within the Assumed
Liabilities (as
hereinafter defined); and (x) the Closing Payment (as hereinafter
defined); and
(xi) all rights in and to the name "Lynch" for all uses other than
in connection
with the products manufactured in the Business on the Closing Date.
SECTION 1.2. NON-ASSIGNMENT OF CERTAIN PROPERTY. To
the extent that
the assignment hereunder of any of the Permits, Personal
Property Leases or
Contracts would require the consent of any other party (or in the
event that any
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of the same shall be nonassignable), neither this Agreement nor any
action taken
pursuant to its provisions shall constitute an assignment or an
agreement to
assign if such assignment or attempted assignment would
constitute a breach
thereof or result in the loss or diminution thereof; provided,
however, that in
each such case, Seller shall use its best efforts to obtain the
consents of any
such other party to an assignment to Buyer. If such consent is
not obtained,
subject to the provisions of Section 7.1(b), Seller shall
cooperate with Buyer
in any reasonable arrangement designed to provide for Buyer the
full benefits of
any such Permit, Personal Property Lease or Contract
including, without
limitation, enforcement, for the account and benefit of Buyer,
of any and all
rights of Seller against any other person with respect to any
such Permit,
Personal Property Lease or Contract.
ARTICLE II. ASSUMPTION OF LIABILITIES AND OBLIGATIONS
Buyer hereby agrees, on the terms and conditions
contained herein to
assume the following liabilities and obligations of Seller:
(a) All liabilities with respect to the accounts
payable of the
Business listed on Schedule 2.1(a) (the "Accounts Payable");
(b) All liabilities with respect to the accrued
liabilities of the
Business listed on Schedule 2.1(b) (the "Accrued
Liabilities");
(c) All liabilities with respect to post-Closing
obligations arising
under the Contracts (the "Contracts Liabilities");
(d) All liabilities with respect to post-Closing
obligations arising
under the Seller's warranty policies with respect to items
sold by Seller
prior to the Closing Date to customers other than PT
Kedaung and
Owens-Illinois do Brasil (Cisper); and
(e) All liabilities with respect to post-Closing
obligations arising
under the Personal Property Leases.
All of the liabilities being assumed by Buyer
pursuant to
subsections (a) through (e) of this Section 2.1 are hereinafter
referred to as
the "Assumed Liabilities."
Notwithstanding the foregoing, Buyer is not assuming
any liability
for any Excluded Liability (as hereinafter defined) and it is
understood and
agreed that, as between Seller and Buyer, Seller shall remain
solely responsible
for the payment, discharge and satisfaction of all Excluded
Liabilities. As used
herein, "Excluded Liabilities" means all liabilities of Seller and
the Business
of any kind, liquidated or contingent, asserted or unasserted,
known or unknown,
other than the Assumed Liabilities, including but not
limited to, all
liabilities to PT Kedaung or Owens-Illinois do Brasil (Cisper)
arising out of
transactions between Seller and such party which occurred prior
to the Closing
Date.
ARTICLE III. PURCHASE PRICE
SECTION 3.1. PURCHASE PRICE. Upon the terms and
subject to the
conditions set forth in this Agreement, in consideration for the
Property and in
full payment therefor (the "Purchase Price"):
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(i) Buyer is assuming the Assumed Liabilities;
(ii) Buyer is making the Closing Payment
reflected in the
Preliminary Statement (as hereinafter defined), which
is subject to
adjustment as provided in Sections 3.4 and 3.5; and
(iii) Buyer is making a payment to Seller with
respect to a
portion of the Employee Severance Payment (as
hereinafter defined)
in the amount of $117,637.15 (the "Severance
Contribution").
Buyer is paying the cash portion of the Purchase
Price as provided
below.
SECTION 3.2. DEPOSIT. Concurrently herewith Buyer is
delivering by
wire transfer of immediately available funds the sum of $500,000
(the "Deposit")
to Olshan Grundman Frome Rosenzweig & Wolosky LLP (the
"Escrow Agent") to be
held in escrow and disbursed in accordance with the provisions
of the escrow
agreement in the form of Exhibit A hereto (the "Escrow Agreement")
executed and
delivered by Buyer, Seller and the Escrow Agent concurrently
herewith.
SECTION 3.3. CLOSING PAYMENT. On the Closing Date,
Buyer shall pay
the Closing Payment to Seller by wire transfer of immediately
available funds to
an account designated by Seller not later than two (2) Business
Days prior to
the Closing Date. As used herein, the "Closing Payment" means
the difference
between (a) the Estimated Closing Date Net Asset Value (as
hereinafter defined)
and (b) the Deposit.
SECTION 3.4. CALCULATION OF ESTIMATED CLOSING DATE NET
ASSET VALUE.
(a) Not later than three (3) Business Days prior to
the Closing
Date, Seller and Buyer shall execute a certificate (the
"Preliminary
Statement") setting forth the Estimated Closing Date Net
Asset Value. As
used herein, the "Estimated Closing Date Net Asset Value"
means the good
faith estimate of the positive difference as of the Closing
Date between
(i) the aggregate carrying value of the Property as reflected
on the books
and records of Seller determined in accordance with
United States
generally accepted accounting principles consistently
applied ("GAAP"),
adjusted consistent with the methodology set forth on
Schedule 3.4(a)
hereto (the "Adjusted Carrying Value") and (ii) the
aggregate amount of
the Assumed Liabilities as reflected on the books and
records of Seller
determined in accordance with GAAP. As used herein,
"Business Day" means
any day that is not a Saturday, Sunday or legal
holiday on which
federally-chartered banks are required or authorized to be
closed.
(b) As soon as reasonably practical after the
Closing, but in no
event more than forty five (45) calendar days thereafter,
Seller shall
prepare and deliver to Buyer a schedule (the "Adjustment
Report") showing
the computation of the Actual Closing Date Net Asset Value
(as hereinafter
defined). As used herein, "Actual Closing Date Net Asset
Value" means the
positive difference as of the Closing Date between (i)
the Adjusted
Carrying Value of the Property and (ii) the aggregate
amount of the
Assumed Liabilities as reflected on the books and
records of Seller
determined in accordance with GAAP.
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(c) Within thirty (30) calendar days after receipt of
the Adjustment
Report, Buyer may, by written notice to Seller, object
thereto. If Buyer
shall not object thereto in writing within such thirty (30)
calendar day
period, the calculations on the Adjustment Report shall
become final and
shall not be subject to further review, challenge or
adjustment absent
fraud or manifest error. Buyer may in good faith object to
the Adjustment
Report within such thirty (30) calendar day period by
delivering a written
notice of its objection (the "Objection Notice") to Seller:
(i) setting
forth the items being disputed and the reasons
therefor, and (ii)
specifying Buyer's calculation of the figures on the
Adjustment Report. In
connection with the preparation of the Objection
Notice (and any
subsequent submissions to the Arbiter (as defined
below)), each party
shall grant the other party and its accountants and other
representatives'
reasonable access to all of the books and records of such
party. Any delay
in granting access to all such books and records shall
correspondingly
extend such thirty (30) calendar day period for delivery of
the Objection
Notice.
(d) For thirty (30) calendar days after delivery of
the Objection
Notice, Buyer and Seller shall attempt to resolve all
disputes between
them regarding the Adjustment Report. If Buyer and Seller
cannot resolve
all such disputes within such thirty (30) day period,
the matters in
dispute shall be determined by an accounting firm
selected by them to
resolve the remaining objections (the "Arbiter"). If Buyer
and Seller are
unable to jointly select an accounting firm, they
will select a
nationally-recognized accounting firm by lot after
excluding their
respective regular outside accounting firms. Any advance
retainer and any
periodic payments to the Arbiter shall be advanced equally
by Buyer and
Seller. Promptly, but not later than forty-five (45)
days after the
acceptance of its appointment, the Arbiter shall determine
(based solely
on presentations by Buyer and Seller to the Arbiter and not
by independent
review) only those items in dispute and shall render a
report as to its
resolution of such items and the resulting calculation of
the Adjustment
Report. For purposes of the Arbiter's determination, the
amounts to be
included shall be the amounts from the Adjustment Report as
to items that
are not in dispute, and the amounts determined by the
Arbiter, as to items
that are submitted for resolution by the Arbiter. In
resolving any
disputed item, the Arbiter must select the amount of the
disputed item
proffered by Buyer or the amount of the disputed item
proffered by Seller
(and cannot substitute the Arbiter's own judgment) based upon
the position
the Arbiter determines to be closest to the correct
amount. Buyer and
Seller shall cooperate with the Arbiter in making its
determination and
such determination shall be conclusive and binding upon Buyer
and Seller.
(e) The fees and expenses of the Arbiter shall be paid
by the party
(the "Losing Party") whose calculation of Actual Closing
Date Net Asset
Value is further from the Actual Closing Date Net
Asset Value as
determined by the Arbiter. If the other party (the
"Prevailing Party") has
advanced or provided a portion of the Arbiter's fees and
costs as provided
above in Section 3.2(d), the Losing Party shall reimburse
the Prevailing
Party for such fees and costs within ten (10) Business
Days after the
Arbiter's final decision.
(f) Within five (5) Business Days after the
determination of the
Actual Closing Date Net Asset Value:
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(i) If the Actual Closing Date Net Asset Value is
greater than
the Estimated Closing Date Net Asset Value, then Buyer
shall pay to
Seller the amount by which the Actual Closing Date
Net Asset Value
exceeds the Estimated Closing Date Net Asset Value.
(ii) If the Estimated Closing Date Net Asset
Value is greater
than the Actual Closing Date Net Asset Value, then
Seller shall pay
to Buyer the amount by which the Estimated Closing
Date Net Asset
Value exceeds the Actual Closing Date Net Asset Value.
SECTION 3.5. ALLOCATION OF PURCHASE PRICE. The
aggregate purchase
price of the Property shall be allocated for purposes of this
Agreement and for
federal, state and local tax purposes as set forth on an
allocation certificate
("Allocation Certificate") to be agreed upon by Seller and Buyer at
such time as
they execute the Preliminary Statement. The allocation shall
reflect the
respective book value of the assets sold to liabilities assumed
by the Buyer,
and shall be adjusted if necessary, in accordance with Section 3.2
hereof. Buyer
and Seller shall file all federal, state, local and foreign
tax returns,
including Internal Revenue Form 8594, in accordance with the
allocation set
forth in such Allocation Certificate.
SECTION 3.6. CONSIGNMENT OF CERTAIN ITEMS. For a
period of eighteen
(18) months following the Closing Date the gearless tablewear shear
and the show
machine (the "Consigned Items") shall be held on consignment by
Buyer. If Buyer
receives any offers to purchase any of the Consigned Items from
a third party
during such eighteen-month period Buyer shall promptly notify
Seller and if
Seller accepts such offered terms the proceeds of such sale
shall be shared
equally between Seller and Buyer. If the Consigned Items have not
been so sold
by the end of such eighteen-month period Buyer shall deliver
possession of the
Consigned Items to Seller.
ARTICLE IV. CLOSING
The closing of the transactions contemplated by this
Agreement (the
"Closing") shall take place at 10:00 a.m. at the offices of
Olshan Grundman
Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East
55th Street, New
York, New York, on the later of: (i) the day on which all of
the conditions
precedent set forth in Article VIII have been satisfied or waived,
or (ii) June
1, 2007. Such time and date are herein referred to as the
"Closing Date."
Subject to the provisions of Article IX hereof, failure to
consummate such
transactions on the date and the time determined pursuant to
this Article IV
shall not result in the termination of this Agreement and shall
not relieve any
party of any obligation under this Agreement.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
SECTION 5.1. REPRESENTATIONS AND WARRANTIES OF
BUYER. Buyer
represents and warrants to Seller that:
(a) CORPORATE EXISTENCE. Buyer is a corporation
duly organized,
validly existing and in good standing under the laws of
Italy.
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(b) AUTHORIZATION; VALIDITY. Buyer has all
requisite power and
authority to enter into this Agreement, to perform its
obligations
hereunder and to consummate the transactions contemplated
hereby. All
necessary action has been taken by Buyer with respect to
the execution,
delivery and performance by it of this Agreement and the
consummation of
the transactions contemplated hereby. Assuming the due
execution and
delivery of this Agreement by Seller, this Agreement is a
legal, valid and
binding obligation of Buyer, enforceable against Buyer in
accordance with
its terms, subject to applicable bankruptcy, insolvency,
reorganization
and moratorium laws and other laws of general application
affecting the
enforcement of creditors' rights generally, and the fact
that equitable
remedies or relief (including, but not limited to, the
remedy of specific
performance) are subject to the discretion of the court
from which such
relief may be sought.
(c) LITIGATION. There is no claim, litigation,
action, suit,
proceeding, investigation or inquiry, administrative or
judicial, pending
or, to the knowledge of Buyer, threatened against Buyer,
at law or in
equity, before any foreign, federal, state or local
agency, authority,
board, bureau, court, instrumentality or other
entity exercising
executive, legislative, judicial, taxing, regulatory or
administrative
powers (each, a "Governmental Authority"), that might
have an adverse
effect on Buyer's ability to perform any of its
obligations under this
Agreement or to consummate the transactions contemplated
hereby.
(d) NO BREACH OF STATUTE OR CONTRACT. Neither the
execution and
delivery of this Agreement by Buyer, nor the consummation by
Buyer of the
transactions contemplated hereby, nor compliance by Buyer
with any of the
provisions hereof, will violate or cause a default under
any statute
(domestic or foreign), judgment, order, writ, decree, rule
or regulation
of any Governmental Authority applicable to Buyer or any of
its material
properties; breach or conflict with any of the terms,
provisions or
conditions of the organization documents of Buyer; or
violate, conflict
with or breach any agreement, contract, mortgage, instrument,
indenture or
license to which Buyer is party or by which Buyer is or may
be bound, or
constitute a default (in and of itself or with the
giving of notice,
passage of time or both) thereunder, or result in the
creation or
imposition of any Encumbrance upon, or give to any other
party or parties,
any claim, interest or right, including rights of
termination or
cancellation in, or with respect to any of Buyer's
properties.
(e) BROKERS. Buyer has not entered into any agreement,
arrangement
or understanding with any party as to which Seller may have
any liability
for a finder's fee, brokerage commission, advisory fee or
other similar
payment.
(f) SUFFICIENT FUNDS. Buyer has sufficient funds
available to it,
without requiring the prior consent, approval or other
discretionary
action of any third party, to make the payments required
under Article
III, to pay all fees and expenses to be paid by Buyer in
connection with
the transactions contemplated by this Agreement and to
satisfy any other
payment obligations that may arise in connection with the
transactions
contemplated by this Agreement.
7
(g) CLOSING DATE EFFECT. All of the representations
and warranties
of Buyer are true and correct as of the Execution Date and
shall be true
and correct on and as of the Closing Date with the same
force and effect
as if such representations and warranties were made by
Buyer on the
Closing Date.
SECTION 5.2. REPRESENTATIONS AND WARRANTIES OF
SELLER. Seller
represents and warrants to Buyer that:
(a) CORPORATE EXISTENCE. Seller is a corporation
duly organized,
validly existing and in good standing under the laws of the
State of South
Dakota and has the corporate power to own, operate or lease
the Property
and to carry on the Business as now being conducted.
Complete and correct
copies of the Articles of Incorporation of Seller and
all amendments
thereto, certified by the Secretary of State of the State of
South Dakota,
and of the By-Laws of Seller, and all amendments thereto,
previously have
been delivered to Buyer. Seller is duly qualified to do
business as a
foreign corporation, and is in good standing in each
jurisdiction where
the character of the properties owned, leased or operated
by it or the
nature of its activities makes such qualification necessary,
except where
the failure to be so duly qualified and in good
standing would not
reasonably be expected to have a Material Adverse Effect. For
the purposes
of this Agreement, "Material Adverse Effect" means any
effect or change
that would be materially adverse to the Business or Property
of Seller on
one hand or Buyer on the other hand, or on the ability of
either party to
consummate timely the transactions contemplated hereby.
(b) AUTHORIZATION; VALIDITY. Seller has all
requisite corporate
power and authority to enter into this Agreement, to
perform its
obligations hereunder and to consummate the transactions
contemplated
hereby without the approval of any third party, except
as listed on
Schedule 5.2(b). All necessary corporate action has been
taken by Seller
with respect to the execution, delivery and performance by
Seller of this
Agreement and the consummation by Seller of the transactions
contemplated
hereby. Assuming the due execution and delivery of this
Agreement by
Buyer, this Agreement is a legal, valid and binding
obligation of Seller,
enforceable against Seller in accordance with its terms,
subject to
applicable bankruptcy, insolvency, reorganization and
moratorium laws and
other laws of general application affecting the enforcement
of creditors'
rights generally, and the fact that equitable
remedies or relief
(including, but not limited to, the remedy of specific
performance) are
subject to the discretion of the court from which such
relief may be
sought.
(c) NO BREACH OF STATUTE OR CONTRACT. Except as
set forth on
Schedule 5.2(c), neither the execution and delivery of this
Agreement nor
the consummation by Seller of the transactions contemplated
hereby, nor
compliance by Seller with any of the provisions hereof
will violate or
cause a default under any statute (domestic or foreign),
judgment, order,
writ, decree, rule or regulation of any Governmental
Authority applicable
to Seller or any of its properties; breach or conflict
with any of the
terms, provisions or conditions of the Articles of
Incorporation or
By-Laws of Seller; or violate, conflict with or breach
any agreement,
contract, mortgage, instrument, indenture or license to
which Seller is a
party or by which Seller is or may be bound with respect to
the Property
8
or the Business, or constitute a default (in and of
itself or with the
giving of notice, passage of time or both) thereunder, or
result in the
creation or imposition of any Encumbrance upon, or give to
any other party
or parties any claim, interest or right, including rights
of termination
or cancellation in, or with respect to, the Property.
(d) SUBSIDIARIES. Seller has no subsidiaries or equity
investments
in any other corporation, association, partnership, joint
venture or other
entity that carries on the Business.
(e) FINANCIAL STATEMENTS. The following financial
statements of
Seller (collectively, the "Financial Statements"),
which have been
furnished previously to Buyer by Seller, have been prepared
from and are
in accordance with the books and records of Seller in
conformity with GAAP
applied on a consistent basis throughout the periods
involved, and fairly
present the financial condition of Seller as at the dates
stated and the
results of operations of Seller for the periods then ended:
balance sheet
of Seller at December 31, 2005 and the income statement for
the year then
ended, including footnotes (audited); balance sheet of
Seller at December
31, 2006 and income statement for the period then
ended, including
footnotes (audited); balance sheet of Seller at March 31,
2007 and income
statement for the period then ended (unaudited).
(f) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as
set forth on
Schedule 5.2(f), since December 31, 2006 there has not been
with respect
to the Business:
(i) Any material adverse change in its
operations (as now
conducted or as presently proposed to be
conducted), assets,
properties or rights, prospects or condition
(financial or
otherwise);
(ii) Other than in the ordinary and usual course
of business,
any material increase in amounts payable by Seller
to or for the
benefit of or committed to be paid by Seller to or
for the benefit
of any officer, consultant, agent or employee of
Seller engaged in
the Business, in any capacity, or in any benefits
granted under any
bonus, stock option, profit sharing, pension,
retirement, deferred
compensation, insurance, or other direct or indirect
benefit plan
with respect to any such person;
(iii) Any material transaction entered into
or carried out
other than in the ordinary and usual course of
its business
including, without limitation, any transaction
resulting in the
incurrence of liabilities or obligations;
(iv) Any material change made in the methods of
doing business
or in the accounting principles or practices or
the method of
application of such principles or practices;
(v) Any Encumbrance imposed or agreed to be
imposed on or with
respect to the Property that will not be discharged
prior to the
Closing;
(vi) Any modification, waiver, change,
amendment, release,
rescission or termination of, or accord and
satisfaction with
respect to any term, condition or provision of any
Contract, other
9
than any satisfaction by performance in accordance
with the terms
thereof in the ordinary and usual course of its
business; or
(vii) Any damage, destruction or similar loss,
whether or not
covered by insurance, adversely affecting the Business.
(g) LIABILITIES. Except as set forth on Schedule
5.2(g), Seller has
no liability or obligation of any nature (whether
liquidated,
unliquidated, accrued, absolute, contingent or otherwise
and whether due
or to become due) in respect of the Business except:
(i) those set forth or reflected in the
Financial Statements
that have not been paid or discharged since the date
thereof;
(ii) those arising under agreements or other
commitments
listed on any Schedule hereto including, but not
limited to, the
Permits, Personal Property Leases and Contracts;
(iii) current liabilities arising in the
ordinary and usual
course of the Business subsequent to December 31,
2006 that are
accurately reflected on its books and records in a
manner consistent
with past practice; and
(iv) ordinary course warranty and
product liability
obligations and liabilities for product returns and
allowances.
(h) TAXES. Except as set forth on Schedule 5.2(h):
(i) Seller has duly filed all feder
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