Back to top

ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

ASSET PURCHASE AGREEMENT | Document Parties: MAGNETEK, INC. | ENRANGE LLC | Magnetek, Inc You are currently viewing:
This Asset Purchase Agreement involves

MAGNETEK, INC. | ENRANGE LLC | Magnetek, Inc

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: ASSET PURCHASE AGREEMENT
Governing Law: Wisconsin     Date: 2/5/2008
Industry: Electronic Instr. and Controls     Law Firm: Snell Wilmer     Sector: Technology

ASSET PURCHASE AGREEMENT, Parties: magnetek  inc. , enrange llc , magnetek  inc
50 of the Top 250 law firms use our Products every day

Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

 

by and between

 

ENRANGE LLC

W. CHRISTOPHER DULIN

WILLIAM GIBSON

DAVID ASHBURN

 

and

 

MAGNETEK, INC.

 

 

dated as of

 

February 4, 2008

 



 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

Article 1

DEFINITIONS

1

 

 

 

 

1.1

Definitions

1

 

 

 

 

 

1.2

Terms Defined in Agreement

7

 

 

 

Article 2

SALE AND PURCHASE OF ASSETS

9

 

 

 

 

2.1

Sale and Purchase of Assets

9

 

 

 

 

 

2.2

Excluded Assets

10

 

 

 

 

 

2.3

Liabilities

10

 

 

 

 

 

2.4

Purchase Price

12

 

 

 

 

 

2.5

Net Working Capital Adjustment

13

 

 

 

 

 

2.6

Closing

14

 

 

 

 

 

2.7

Closing Deliveries by Seller

14

 

 

 

 

 

2.8

Closing Deliveries by Buyer

15

 

 

 

 

 

2.9

Payoff of Creditors

15

 

 

 

Article 3

REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER MEMBERS

16

 

 

 

 

3.1

Organization and Authority of Seller

16

 

 

 

 

 

3.2

Authorization of Agreement

16

 

 

 

 

 

3.3

No Conflicts

17

 

 

 

 

 

3.4

Notices and Consents

17

 

 

 

 

 

3.5

Seller and Seller Members

17

 

 

 

 

 

3.6

Financial Statements

17

 

 

 

 

 

3.7

Books and Records

18

 

 

 

 

 

3.8

No Undisclosed Liabilities

18

 

 

 

 

 

3.9

Title to Purchased Assets; Encumbrances

18

 

 

 

 

 

3.10

Sufficiency of Assets

18

 

 

 

 

 

3.11

Condition of Equipment

18

 

 

 

 

 

3.12

Inventories

18

 

 

 

 

 

3.13

Real Property

19

 

 

 

 

 

3.14

Accounts Receivable

20

 

 

 

 

 

3.15

Accounts Payable

20

 

i



 

 

 

 

Page

 

 

 

 

 

3.16

Intellectual Property

20

 

 

 

 

 

3.17

Agreements, Contracts and Commitments

22

 

 

 

 

 

3.18

Material Customers and Suppliers

23

 

 

 

 

 

3.19

Insurance

23

 

 

 

 

 

3.20

Proceedings

24

 

 

 

 

 

3.21

Employees

24

 

 

 

 

 

3.22

Labor Disputes; Compliance

25

 

 

 

 

 

3.23

Employee Benefit Matters

25

 

 

 

 

 

3.24

Taxes

26

 

 

 

 

 

3.25

Compliance with Laws

27

 

 

 

 

 

3.26

Environmental Matters

28

 

 

 

 

 

3.27

No Material Adverse Effect

28

 

 

 

 

 

3.28

Absence of Certain Changes or Events

29

 

 

 

 

 

3.29

Brokers or Finders

29

 

 

 

 

 

3.30

Information Furnished

29

 

 

 

 

 

3.31

Accuracy of Representations and Warranties

29

 

 

 

 

Article 4

REPRESENTATIONS AND WARRANTIES OF BUYER

30

 

 

 

 

 

4.1

Organization and Good Standing

30

 

 

 

 

 

4.2

Authorization of Agreement

30

 

 

 

 

 

4.3

No Conflicts

30

 

 

 

 

 

4.4

Notices and Consents

31

 

 

 

 

 

4.5

Proceedings

31

 

 

 

 

 

4.6

Brokers

31

 

 

 

 

Article 5

COVENANTS OF THE PARTIES

31

 

 

 

 

 

5.1

Transfer of Permits and Agreements

31

 

 

 

 

 

5.2

Further Assurances

31

 

 

 

 

 

5.3

Announcements

32

 

 

 

 

 

5.4

Confidentiality

32

 

 

 

 

 

5.5

Non-Competition; Non-Solicitation

34

 

ii



 

 

 

 

Page

 

 

 

 

 

5.6

Protected Term and Protected Territory Defined

34

 

 

 

 

 

5.7

Amendment of Provisions to Comply with Law

35

 

 

 

 

 

5.8

Injunctive Relief

35

 

 

 

 

 

5.9

Employees

35

 

 

 

 

 

5.10

Change of Seller’s Name

37

 

 

 

 

 

5.11

Seller’s Handling of Accounts Receivable

37

 

 

 

Article 6

TAX MATTERS

37

 

 

 

 

6.1

Allocation of Purchase Price

37

 

 

 

 

 

6.2

Cooperation With Tax Returns

37

 

 

 

 

 

6.3

Straddle Period Taxes

38

 

 

 

Article 7

SURVIVAL AND INDEMNIFICATION

38

 

 

 

 

7.1

Survival

38

 

 

 

 

 

7.2

Indemnification By Seller and the Seller Members

38

 

 

 

 

 

7.3

Indemnification by Buyer

39

 

 

 

 

 

7.4

Timing of Indemnification Claims

39

 

 

 

 

 

7.5

Third Party Claim Procedures

40

 

 

 

 

 

7.6

Other Claims

42

 

 

 

 

 

7.7

Limitation on Indemnity Obligations

42

 

 

 

 

 

7.8

Insurance Policies

43

 

 

 

 

 

7.9

Right of Set-Off

43

 

 

 

 

 

7.10

Exclusive Remedy

43

 

 

 

Article 8

MISCELLANEOUS

43

 

 

 

 

8.1

Expenses

43

 

 

 

 

 

8.2

Entire Agreement; Modification

43

 

 

 

 

 

8.3

Severability

44

 

 

 

 

 

8.4

Notices

44

 

 

 

 

 

8.5

Governing Law

45

 

 

 

 

 

8.6

Forum for Disputes

45

 

 

 

 

 

8.7

Headings; Interpretation

46

 

 

 

 

 

8.8

Assignments; Successors; No Third-Party Rights

46

 

iii



 

 

 

 

Page

 

 

 

 

 

8.9

Waiver; Remedies Cumulative

46

 

 

 

 

 

8.10

Joint Preparation

47

 

 

 

 

 

8.11

Dates and Times

47

 

 

 

 

 

8.12

Execution of Agreement

47

 

iv



 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT, dated as of February 4, 2008, is made by and between Enrange LLC, a Pennsylvania limited liability company (“ Seller ”), W. Christopher Dulin, an individual residing in the State of Pennsylvania, William Gibson, an individual residing in the State of West Virginia, and David Ashburn, an individual residing in the State of West Virginia (collectively, the “ Seller Members ”), and Magnetek, Inc., a Delaware corporation (“ Buyer ”).  Seller, the Seller Members and Buyer are sometimes referred to herein collectively as the “ Parties ” and each individually as a “ Party ”.

 

RECITALS

 

A.             Seller is in the business of developing, designing, manufacturing, marketing and selling wireless radio remote controls for the material handling, industrial, hydraulic, and rock mining industries (the “ Business ”).

 

B.             Seller wishes to sell, and Buyer wishes to purchase, the Business and the assets of Seller used in the conduct of the Business, and Buyer is prepared to assume certain specified operating liabilities with respect to the Business, in each case for the consideration and on the terms and conditions set forth in this Agreement.

 

C.             The Seller Members are the holders of all of the outstanding equity interests in Seller and will benefit from the sale of the Business and substantially all of Seller’s assets.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

 

ARTICLE 1
DEFINITIONS

 

1.1            Definitions .  Except as otherwise expressly provided in this Agreement, or unless the context otherwise requires, whenever used in this Agreement (including in the Schedules attached hereto), the following terms shall have the respective meanings indicated below.

 

Accounts Receivable ” means all trade and other accounts receivable and other rights to payment from past or present customers and other account debtors of Seller arising or accruing exclusively in connection with the Business, and the full benefit of all security for such accounts or rights to payment, including all trade, vendor and other accounts receivable representing amounts receivable in respect of goods sold or services rendered to customers of the Business or in respect of amounts refundable or otherwise due to Seller from vendors, suppliers or other Persons exclusively in connection with the Business.

 

Advanced Radiotech Corporation Marketing and Sales Agreement ” means the Marketing and Sales Agreement by and between Seller and Advanced Radiotech Corporation, dated as of June 20, 2007.

 

1



 

Affiliate ” of a Person means a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first Person.  For purposes of this definition, “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by Contract or credit arrangement, as trustee or executor, or otherwise.

 

Agreement ” means this Asset Purchase Agreement, including the Schedules and Exhibits attached hereto, as may be amended from time to time in accordance with the provisions hereof.

 

Applicable Law ” means, with respect to any Person, any constitution, treaty, statute, law (including common law), rule, regulation, ordinance, code, or any Permit, order, decision, injunction, judgment, award, decree or agreement of or with any Governmental Authority, in any such case to the extent applicable to such Person or any of its Affiliates or any of their respective assets and/or businesses.

 

Benefit Plan ” means any employee benefit plan within the meaning of Section 3(3) of ERISA, and each other bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation right or other equity-based incentive, severance, termination, change in control, retention, employment, hospitalization or other medical, life or other insurance, disability, sick leave, salary continuation, workers’ compensation, welfare, supplemental unemployment, profit-sharing, pension or retirement plan, program, agreement or arrangement that is sponsored, maintained or contributed to by Seller or an ERISA Affiliate or under which Seller or an ERISA Affiliate has any liability.  For the purposes of this definition, an “ ERISA Affiliate ” means an incorporated or unincorporated trade or business that together with Seller is treated as a single employer under Section 414 of the Code.

 

Business Day ” means any day other than a Saturday, Sunday or other day on which banks in Menomonee Falls, Wisconsin or Canonsburg, Pennsylvania are permitted or required by Applicable Law to close.

 

Centra Line of Credit ” means the Line of Credit by and between Seller and Centra Bank, dated July 25, 2007.

 

Code ” means the Internal Revenue Code of 1986, as amended.

 

Copyrights ” the meaning given in the definition of Intellectual Property.

 

Consent ” means any consent, approval, authorization, waiver, Permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with any Person.

 

Contemplated Transactions ” means the transactions contemplated under this Agreement to occur at Closing.

 

2



 

Contract ” means any contract, agreement, purchase or sale order, invoice, indenture, note, bond, loan, instrument, lease, commitment or other arrangement or agreement, whether written or oral.

 

Effective Time ” means 11:59 p.m. on the date immediately preceding the Closing Date.

 

Employee ” means any full-time or part-time employee of Seller (including any member of management) who is employed primarily in connection with the conduct of the Business.

 

Encumbrance ” means any mortgage, pledge, lien, charge, hypothecation, security interest, encumbrance, adverse right, interest or claim, lease, sublease, license, easement, covenant, encroachment, title defect, option, right of first refusal or other restriction or limitation of any nature whatsoever.

 

Environment ” means soil, land surface or subsurface strata, surface waters, groundwaters, drinking water supply, stream sediments, ambient air (including indoor air), plant and animal life and any other environmental medium or natural resource.

 

Environmental, Health and Safety Liabilities ” means any and all claims, costs, damages, expenses, Liabilities and/or other responsibility or potential responsibility arising from or under any Environmental Law or Occupational Safety and Health Law (including compliance therewith).

 

Environmental Laws ” mean all Applicable Laws, regulations, standards, requirements, ordinances, policies, guidelines, orders, approvals, notices, permits or directives, or parts thereof, pertaining to environmental or occupational health and safety matters, in effect as at the date hereof, including laws and regulations relating to releases or threatened releases of Hazardous Substances, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Substances Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be amended and the regulations promulgated pursuant thereto.

 

Equipment ” means all vehicles, machinery, equipment, tools, furniture, office equipment, computer hardware (including peripherals), fixtures, leasehold improvements, dies, tooling, appliances, spare parts, supplies, materials and other items of tangible personal property (other than Inventories) of every kind owned or leased by Seller for use in the conduct of the Business.

 

ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

 

3



 

GAAP ” means generally accepted accounting principles as in effect in the United States of America as determined by the Financial Accounting Standards Board from time to time applied on a consistent basis as of the date of any application thereof.

 

Governmental Authority ” means any nation or government, any state, county, municipality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States or any political subdivision thereof, or of any foreign country, or any court, tribunal or arbitrator(s) of competent jurisdiction, any self-regulatory organization or any Indian tribal authority.

 

Hazardous Activity ” means the distribution, generation, handling, importing, management, manufacturing, processing, production, refinement, Release, storage, transfer, transportation, treatment or use (including any withdrawal or other use of groundwater) of any Hazardous Substance in, on, under, about or from any facility (including any Leased Real Property) or other real property owned, leased, operated or otherwise used by Seller, whether or not in connection with the conduct of the Business, or from any other asset of Seller, into the Environment, beyond what is authorized by applicable Environmental Laws.

 

Hazardous Substance ” means any substance that: (i) is or contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or related materials, (ii) requires investigation, removal or remediation or for which there are restrictions pursuant to any Environmental Law regarding its use or disposal, under any Environmental Law, or is defined, listed or identified as a “hazardous waste,” “toxic substance,” “toxic material,” “pollutant,” or “hazardous substance” thereunder, or (iii) is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is regulated by any Governmental Authority or Environmental Law.

 

Intellectual Property means all intellectual property owned, licensed (as licensee) or otherwise used by Seller arising from or in respect of the following, whether protected, created or arising under the laws of the United States or any other jurisdiction:  (i) all patents and applications therefor, including continuations, divisionals, continuations-in-part, or reissues of patent applications and patents issuing thereon (collectively, “ Patents ”), (ii) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, Internet URL addresses, corporate names and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof (collectively, “ Marks ”), (iii) all copyrights and registrations and applications therefor, works of authorship and mask work rights (collectively, “ Copyrights ”), (iv) all discoveries, concepts, ideas, research and development, know-how, formulae, inventions, compositions, manufacturing and production processes and techniques, technical data, procedures, designs, drawings, specifications, databases, and other proprietary and confidential information, including customer lists, supplier lists, pricing and cost information, and

 

4



 

business and marketing plans and proposals of Seller, in each case excluding any rights in respect of any of the foregoing that comprise or are protected by Copyrights or Patents (collectively, “ Trade Secrets ”), (v) all Software; and (vi) all other Technology.

 

Inventories ” means all product inventories of Seller, including finished goods, supplies, scrap, work in process and raw materials to be used or consumed by Seller in the production of finished goods.

 

IRS ” means the Internal Revenue Service.

 

Knowledge ” means:

 

(a)            when used to qualify a representation, warranty or other statement of Seller or the Seller Members in this Agreement, (i) the knowledge that any Seller Member actually has with respect to the particular fact or matter that is the subject of such representation, warranty or other statement, and (ii) the knowledge that any Seller Member could reasonably be expected to have as a prudent and responsible manager of Seller and the Business after having conducted a reasonably comprehensive inquiry or investigation with respect to the fact or matter that is the subject of such representation, warranty or other statement; and

 

(b)            when used to qualify a representation, warranty or other statement of Buyer in this Agreement, (i) the knowledge that any of David P. Reiland, Marty Schwenner or Jolene Shellman actually has with respect to the particular fact or matter that is the subject of such representation, warranty or other statement, and (ii) the knowledge that any David P. Reiland, Marty Schwenner or Jolene Shellman could reasonably be expected to have as a prudent and responsible manager of Buyer after having conducted a reasonably comprehensive inquiry or investigation with respect to the fact or matter that is the subject of such representation, warranty or other statement.

 

Liability ” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

 

Marks ” has the meaning given in the definition of Intellectual Property.

 

Material Adverse Effect ” means a material adverse effect on the Business and assets of Seller, taken as a whole, that is so substantial and adverse as to fundamentally impair the value to Buyer of the Business and the Purchased Assets (taken as a whole); provided, however, that the following shall not be considered when determining whether a Material Adverse Effect has occurred:  (i) any general social, political or economic condition or event, the effects of which are not specific or unique to the Business or the industry in which it operates, including stock market fluctuations, acts of war or terrorism or the consequences of any of the foregoing; (ii) the general conditions of the industry in

 

5



 

which the Business operates, including any change in such conditions; (iii) any change in currency exchange rates or interest rates; or (iv)  any change in any Applicable Law.

 

Net Working Capital ” means, as of the Effective Time, the amount by which the current assets of Seller included in the Purchased Assets exceeds the current liabilities of Seller included in the Assumed Liabilities (as the terms “current assets” and “current liabilities” are defined under GAAP).

 

Occupational Safety and Health Law ” means any Applicable Law designed to provide safe and healthful working conditions and to reduce occupational safety and health hazards, including the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and any Applicable Law designed to provide safe and healthful working conditions.

 

Order ” means any order, injunction, judgment, decision, finding, decree, ruling, assessment or arbitration award of any Governmental Authority or arbitrator.

 

Patents ” has the meaning given in the definition of Intellectual Property.

 

Permit ” means, with respect to any Person, any license, permit, registration, Consent, certificate, order, approval or other authorization required by any Governmental Authority for such Person to lawfully (i) own, lease or use a particular asset, (ii) occupy, access or use particular real property, or (iii) conduct a particular business or other activity.

 

Permitted Encumbrance ” means (i) any statutory Encumbrance for Taxes not yet due or delinquent or being contested in good faith by appropriate proceedings; (ii) any zoning, planning or other similar limitation or restriction, including rights of any Governmental Authority, to regulate any property or asset owned, leased or otherwise used by Seller, or (iii) any matter of public record or matter disclosed or disclosable by a survey.

 

Person ” means any natural person, firm, partnership, association, corporation, company, limited liability company, trust, business trust, Governmental Authority, or other unincorporated entity or organization.

 

Proceeding ” means any action, arbitration, audit, hearing, investigation, litigation or lawsuit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, and whether public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority, mediator or arbitrator.

 

Release ” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching or migration on or into the Environment or into or out of any property.

 

Representative ” means with respect to a particular Person, any director, officer, member, manager, employee, agent, consultant, advisor, accountant, financial advisor, legal counsel or other representative of that Person.

 

6



 

Target Net Working Capital ” means $768,136.

 

Tax ” means any federal, state, county, local, foreign or other income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, privilege, sales, use, goods and services, excise, customs duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental (including taxes under Section 59A of the Code), real property, personal property, transfer, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers’ compensation, payroll, health care, registration, withholding, estimated or other similar tax, duty or other governmental charge or assessment or deficiencies thereof (including all interest and penalties thereon and additions thereto whether disputed or not).

 

Tax Return ” means any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

Technology means, collectively, all designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, improvements, works of authorship and other similar materials, and all recordings, graphs, drawings, reports, analyses, and other writings, and other tangible embodiments of the foregoing, in any form whether or not specifically listed herein, and all related technology, that are used in, incorporated in, embodied in, displayed by or relate to, or are used by Seller or any Seller Member in connection with the Business.

 

Third Party ” means a Person that is not a Party or an Affiliate of a Party, and is not acting in the capacity as agent for a Party or any of its Affiliates.

 

Third Party Claim ” means any claim against any Indemnitee by a Third Party, whether or not involving a Proceeding.

 

Trade Secrets ” the meaning given in the definition of Intellectual Property.

 

Treasury Regulations ” means the Treasury Regulations promulgated under the Code, and the term “Treasury Regulation” followed by a particular § number reference means that particular section or subsection of the Treasury Regulations.

 

1.2            Terms Defined in Agreement .  For purposes of this Agreement, the following terms have meanings set forth in the Sections or paragraphs of this Agreement indicated alongside such terms:

 

Term

 

Section

 

 

 

Assigned Contracts

 

2.1(e)

Assignment and Assumption Agreement

 

2.7(d)

 

7



 

Term

 

Section

 

 

 

Assumed Liabilities

 

2.3(a)

Assumed Payables

 

2.3(a)(i)

Bill of Sale

 

2.7(c)

Buyer

 

Introductory Paragraph of Agreement

Buyer Closing Documents

 

4.2

Buyer Indemnitees

 

7.2

Claims Cap

 

7.7(a)

Claims Period

 

7.4

Closing

 

2.6

Closing Date

 

2.6

Closing Payment

 

2.4(a)

Closing Statement

 

2.5(b)

Confidential Information

 

5.4(a)

Earnout Payments

 

2.4(c)

Employment Agreement

 

5.9(a)

Encumbered Assets

 

2.9

Excluded Assets

 

2.2

Financial Statements

 

3.6

Indemnitee

 

7.5(a)

Indemnitor

 

7.5(a)

IRS

 

3.23(b)(ii)

Lease Assignment

 

2.7(g)

Leased Real Property

 

3.13(b)

Losses

 

7.2

Independent Accountants

 

2.5(c)

Paying Party

 

6.3

Party and Parties

 

Introductory Paragraph of Agreement

Promissory Note

 

2.4(b)

Protected Term

 

5.6(a)

Protected Territory

 

5.6(b)

Purchased Assets

 

2.1

Purchase Price

 

2.4

Non-Paying Party

 

6.3

Real Property Lease

 

3.13(c)

Retained Liabilities

 

2.3(b)

Seller

 

Introductory Paragraph of Agreement

Seller Indemnitees

 

7.3

Seller Closing Documents

 

3.2

Straddle Period Tax

 

6.3

Transferred Employees

 

5.9(b)

 

8



 

ARTICLE 2
SALE AND PURCHASE OF ASSETS

 

2.1            Sale and Purchase of Assets .  Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, but effective as of the Effective Time, Seller shall sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of any Encumbrance other than the Permitted Encumbrances, all legal and beneficial right, title and interest in and to the real and personal property and assets owned by Seller and used or otherwise arising in connection with the conduct of the Business (collectively, the “ Purchased Assets ”), including the following, but excluding in all cases the Excluded Assets:

 

(a)            all Equipment, including the Equipment described on Schedule 2.1(a) ;

 

(b)            all Inventories;

 

(c)            all Accounts Receivable;

 

(d)            all prepaid expenses, deposits, credits with, and refunds due from, vendors or suppliers to the Business, to the extent relating to any Assigned Contract;

 

(e)            all of Seller’s rights under the Contracts listed on Schedule 2.1(e) (collectively, the “Assigned Contracts”);

 

(f)             all Permits of Seller exclusively relating to the Business or any of the Purchased Assets, in each case to the extent transferable to Buyer by their terms or otherwise under Applicable Law;

 

(g)            the telephone and facsimile numbers of Seller listed on Schedule 2.1(g) ;

 

(h)            all guarantees, warranties, warranty rights, indemnities, claims and similar rights of Seller relating to the Purchased Assets or the Business, whether choate or inchoate, known or unknown, contingent or non-contingent, and all related claims, credits, rights of recovery and set off;

 

(i)             all Intellectual Property, including the items listed on Schedule 2.1(i) ;

 

(j)             all other intangible rights and property of Seller relating to the Business, including going concern value and goodwill; and

 

(k)            originals or copies of all data and records related to the operation of the Business or the ownership or use of the Purchased Assets, including applicable customer records, research and development reports and records, production reports and records, service and warranty records, equipment logs, operating guides and manuals, accounting records, promotional materials, correspondence and other similar documents and records and, subject to Applicable Law, copies of all personnel records for the Employees hired by Buyer pursuant to Section 5.9(a) , but excluding the corporate records of Seller specified in Section 2.2(g) .

 

9



 

2.2            Excluded Assets .  Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, the following property and assets of Seller (collectively, the “ Excluded Assets ”) are not part of the sale and purchase contemplated hereunder, are excluded from the Purchased Assets and shall remain the property of Seller after the Closing:

 

(a)            all cash and cash equivalents, investments, securities, rights to offset and other similar financial assets of Seller, whether or not relating to the Business;

 

(b)            any claim by Seller for any refund of Taxes in connection with the Business or any of the Purchased Assets with respect to any period ending on or before the Closing Date, and the proceeds of any such claim;

 

(c)            Seller’s rights under this Agreement and any ancillary document or agreement contemplated hereby to which Seller is a party or under which Seller has any right;

 

(d)            Seller’s rights under any Contract that is not an Assigned Contract;

 

(e)            all insurance policies of Seller and the rights thereunder, whether or not maintained for the Business or the Purchased Assets;

 

(f)             any Benefit Plan of Seller, and any assets underlying, payable or distributable under any such Benefit Plan;

 

(g)            the Certificate of Incorporation, Bylaws, minute books and other corporate records of Seller; and

 

(h)            the other specified property and assets (if any) listed on Schedule 2.2(h) .

 

2.3            Liabilities .

 

(a)            Assumed Liabilities .  At the Closing, but effective as of the Effective Time, Buyer shall assume and take exclusive responsibility for, and hereby agrees to satisfy and discharge in accordance with their respective terms, the following Liabilities of Seller that exclusively relate to the Purchased Assets or the Business (such Liabilities being the “ Assumed Liabilities ”):

 

(i)             Seller’s trade and vendor accounts payable incurred in the ordinary course of the Business and unpaid as of the Effective Time (the “ Assumed Payables ”), it being understood and agreed that such Assumed Payables shall not include any of Seller’s or any Seller Member’s costs incurred in connection with the negotiation of this Agreement or with the consummation of the Contemplated Transactions, including fees and expenses of legal and other professional advisors;

 

(ii)            Seller’s ongoing payment and performance obligations under the Assigned Contracts, but only to the extent that such obligations first accrue, arise or exist after the Effective Time and are not based on or do not relate to any

 

10



 

breach by or outstanding obligation of Seller arising, occurring or existing before the Effective Time ; and

 

(iii)           to the extent Seller makes payment towards or pays off the Centra Line of Credit on the Business Day immediately preceding the Closing Date, Buyer shall reimburse Seller for such amount at the Closing.

 

(b)            Retained Liabilities .  The Retained Liabilities shall remain the exclusive responsibility of, and shall be retained, paid, performed and discharged exclusively by, Seller in accordance with their respective terms.  Notwithstanding anything to the contrary contained in Section 2.3(a) or elsewhere in this Agreement, “ Retained Liabilities ” shall mean, collectively, every Liability of Seller other than the Assumed Liabilities.  Without limiting the generality of the foregoing, the Retained Liabilities shall include:

 

(i)             any Liability under any Assigned Contract that arises, accrues or exists after the Effective Time out of or relating to (A) any breach of Seller that occurred before the Effective Time, or (B) any outstanding obligation of Seller that was required to have been satisfied or performed by Seller before the Effective Time (except for accounts payable obligations assumed by Buyer pursuant to Section 2.3(a)(i) );

 

(ii)            any Liability under any contract or agreement not included in the Assigned Contracts;

 

(iii)           except as provided in Section 2.3(a)(iii) , any Liability of Seller under any note, loan, borrowing arrangement, debt financing, credit facility, capital lease (except as included in the Assigned Contracts), financial or performance guaranty, surety, indemnity or bond, or any security interest related to any of the foregoing;

 

(iv)           any Liability of Seller for any Tax relating to or arising in connection with the operation of the Business or ownership of the Purchased Assets by Seller before the Effective Time;

 

(v)            any Environmental, Health and Safety Liability arising out of or relating to the operation of the Business prior to the Effective Time or the leasing, ownership or operation of any asset (including any real property) by Seller, whether or not included in the Purchased Assets;

 

(vi)           any Liability arising out of or relating to any Employee grievance or claim against Seller (including any director, officer or other Employee thereof), any Seller Member or any prior member of Seller, whether or not the Employee involved with such grievance or claim is hired by Buyer;

 

(vii)          any Liability relating to any Benefit Plan of Seller or any payroll, sick leave or pay, workers’ compensation, unemployment benefits, or other

 

11



 

benefits or compensation of any kind for Seller’s directors, former directors, officers, managers, Employees or former Employees;

 

(viii)         any Liability under any employment, severance, retention or termination agreement with any present or past director, officer, manager, member or Employee of Seller;

 

(ix)            any Liability of Seller to defend, indemnify, hold harmless or reimburse any Person, including any present or former director, officer, manager, member, Employee or agent of Seller, except to the extent such Liability is expressly included in an Assigned Contract (and then only to the extent that such Liability arises in connection with acts, omissions, facts, events or circumstances first existing, accruing or arising after the Effective Time);

 

(x)             any Liability of Seller to any Affiliate or to any Seller Member or any prior member of Seller, including any and all debt amounts payable by Seller to any Affiliate or any Seller Member;

 

(xi)            any Liability of Seller to distribute to any Person (including any Seller Member or any prior member of Seller) or otherwise apply all or any part of the Purchase Price received by Seller hereunder;

 

(xii)           any Liability of Seller arising out of (A) any past Proceeding or any Proceeding underway or pending as of the Effective Time by or against Seller, any Seller Member or any prior member of Seller, or any Affiliate thereof, or (B) any Proceeding commenced after the Effective Time that relates to any act, omission, occurrence or event happening, or any fact or circumstance existing, before the Effective Time;

 

(xiii)          any Liability of Seller arising out of or resulting from non-compliance with any Applicable Law or Order by Seller, any Seller Member or any prior member of Seller;

 

(xiv)         any Liability of Seller under this Agreement or under any Seller Closing Document, Buyer Closing Document or other document or agreement contemplated thereby; and

 

(xv)          any Liability of Seller based upon or arising from the acts or omissions of Seller or any Seller Member occurring after the Effective Time.

 

2.4            Purchase Price .  In consideration for the Purchased Assets and Seller’s and the Seller Members’ covenants under Section 5.3 , in addition to Buyer’s assumption of the Assumed Liabilities, Buyer shall pay to Seller the sum of $2,500,000, plus the aggregate amount of Earnout Payments (as defined below), minus the amount, if any, by which the Net Working Capital as determined pursuant to Section 2.5 is less than the Target Net Working Capital (collectively, the “ Purchase Price ”).  Buyer shall pay the Purchase Price to Seller in the following manner:

 

12



 

(a)            At the Closing, Buyer shall pay to or for the account of Seller by wire transfer of immediately available funds $1,750,000.00 (the “ Closing Payment ”).

 

(b)            At the Closing, Buyer shall deliver to Seller a Promissory Note, in the form attached hereto as Exhibit A (the “ Promissory Note ”), for the principal amount of $750,000, which shall be payable in full by Buyer on the first anniversary of the Closing Date, subject to   Section 7.9.

 

(c)            Subject to Section 7.9 , Buyer shall pay to or for the account of Seller, within ninety (90) days after the end of each Fiscal Year (as defined below), through and including the Fiscal Year ending June 28, 2010, in immediately available funds (by wire transfer to a bank account designated by the Seller), the amount determined in accordance with the Earnout Schedule attached hereto as Exhibit B (each, an “ Earnout Payment ”).  “ Fiscal Year ” shall mean the fifty-two (52) or fifty-three (53) week period commencing on the Monday following the Sunday that is nearest to June 30 th and ending on the Sunday that is nearest June 30 th of each year.  The first Fiscal Year is the 2008 Fiscal Year, ending June 29, 2008.

 

2.5            Net Working Capital Adjustment .  For purposes of Section 2.4 , the Target Net Working Capital and Net Working Capital shall be determined as follows:

 

(a)            Exhibit C attached hereto sets forth pro forma balance sheets of Seller as of the Effective Time and the methodology for calculating the Net Working Capital based thereon.

 

(b)            Within ninety (90) days following the Closing Date, Buyer shall deliver to Seller a statement (the “ Closing Statement ”) setting forth Buyer’s determination of the Net Working Capital based on the financial and other records of the Business, which determination shall be made in a manner consistent with the calculation set forth on Exhibit C .  Seller shall have thirty (30) days from the date of its receipt of the Closing Statement to review Buyer’s determination of the Net Working Capital set forth in the Closing Statement.  Buyer shall provide Seller with reasonable access to Buyer’s books and records to the extent relevant to verifying Buyer’s determination of the Net Working Capital.  Upon completion of its review (and in any event within the required thirty (30)-day period), Seller shall deliver to Buyer written notice of Seller’s acceptance or rejection of Buyer’s determination of the Net Working Capital, including, in the case of any such rejection, an explanation of the reason for such rejection.  If Seller fails to deliver any such written notice to Buyer within such thirty (30)-day period, Seller shall be deemed to have accepted Buyer’s determination of the Net Working Capital, in which event Buyer’s determination of the Net Working Capital shall be final, binding and conclusive on the Parties.

 

(c)            If Seller delivers written notice to Buyer under Section 2.5(b) of Seller’s rejection of Buyer’s determination of the Net Working Capital as set forth in the Closing Statement (which notice of rejection must contain reasonable details as to the basis of such rejection), Seller and Buyer shall promptly (and in any event within ten (10) Business Days) cause their respective Representatives to confer with each other with a view to resolving such matter.  If such Representatives are unable to resolve such matter

 

13



 

within thirty (30) days after the date of delivery of Seller’s notice of rejection to Buyer, Seller and Buyer shall refer the dispute to a mutually acceptable firm of independent public accountants (the “ Independent Accountants ”) for review and final determination of the Net Working Capital.  The Independent Accountants may request of Seller and Buyer such documents and information as may be necessary or appropriate for proper determination of the matter, and Seller and Buyer shall cooperate reasonably to promptly satisfy any such request.  The determination by the Independent Accountants of the Net Working Capital, shall be final, binding and conclusive on Seller and Buyer.  The costs of the Independent Accountants in undertaking such review and determination shall be shared equally by Seller and Buyer.

 

(d)            Within five (5) Business Days after the Net Working Capital is finally determined:

 

(i)             if the Net Working Capital is less than the Target Net Working Capital, the Purchase Price shall be deemed to be adjusted downwards on a dollar-for-dollar basis by the amount of such shortfall, and Seller shall (and the Seller Members shall cause Seller to) forthwith pay the amount of such shortfall to Buyer by wire transfer of immediately available funds; and

 

(ii)            if the Net Working Capital exceeds the Target Net Working Capital, the Purchase Price shall not be adjusted.

 

2.6            Closing .  The consummation of the Contemplated Transactions (the “ Closing ”) shall take place at the offices of Buyer at N49 W 13650 Campbell Drive, Menomonee Falls, Wisconsin 53051, commencing at 10:00 a.m. (local time) on February 4, 2008 (the “ Closing Date ”), or at such other time and place as Seller and Buyer may agree.

 

2.7            Closing Deliveries by Seller .  At the Closing, Seller shall deliver or cause to be delivered to Buyer the following:

 

(a)            a certificate of good standing of Seller dated not more than ninety (90) days before the Closing Date issued by the Secretary of State of Pennsylvania;

 

(b)            a copy, certified by an executive officer of Seller, of the resolutions of the Seller Members authorizing and approving (i) Seller’s execution and delivery of this Agreement and the other agreements contemplated hereby and the consummation of the Contemplated Transactions, and (ii) the change of Seller’s name in accordance with the provisions of Section 5.10 ;

 

(c)            a general bill of sale for all of the Equipment, Inventories and other tangible personal property included in the Purchased Assets, in form and substance reasonably acceptable to Buyer (the “ Bill of Sale ”), duly executed by Seller;

 

(d)            an assignment of the Accounts Receivable, Assigned Contracts, Permits (to the extent transferable to Buyer by their terms or under Applicable Law), Intellectual Property and other intangible personal property included in the Purchased Assets, in form and substance reasonably acceptable to Buyer, which assignment shall also contain

 

14



 

Buyer’s assumption of the Assumed Liabilities (the “ Assignment and Assumption Agreement ”), duly executed by Seller;

 

(e)            intentionally left blank;

 

(f)             intentionally left blank;

 

(g)            an assignment of Seller’s rights under the Real Property Lease, in form and substance reasonably acceptable to Buyer, which assignment shall also contain Buyer’s assumption of Seller’s obligations under the Real Property Lease (the “ Lease Assignment ”), duly executed by Seller and the landlord under the Real Property Lease;

 

(h)            written consents of all Third Parties necessary for the assignment and assumption of the agreements listed on Schedule 2.7(h) ;

 

(i)             the Employment Agreement, duly executed by W. Christopher Dulin;

 

(j)             the documents and records related to the Business and the Purchased Assets referred to in Section 2.1(k) ; and

 

(k)            such other documents and instruments as Buyer may reasonably require to further and give effect to the Contemplated Transactions.

 

2.8            Closing Deliveries by Buyer .  At the Closing, Buyer shall deliver or cause to be delivered to Seller the following:

 

(a)            a copy, certified by an officer of Buyer, of resolutions of the directors of Buyer authorizing and approving the execution and delivery of this Agreement and the consummation of the Contemplated Transactions;

 

(b)            the Assignment and Assumption Agreement, duly executed by Buyer;

 

(c)            the Lease Assignment, duly executed by Buyer;

 

(d)            the Closing Payment, subject to the provisions of Section 2.9 ;

 

(e)            the Employment Agreement, duly executed by Buyer; and

 

(f)             such other documents and instruments as Seller may reasonably require to further and give effect to the Contemplated Transactions.

 

2.9            Payoff of Creditors .  Except for the Assumed Liabilities, including but not limited to any equipment leases included in the Assigned Contracts, and except for any other Permitted Encumbrance, Seller shall be required, at or before the Closing, at its sole cost, to buy out, settle and discharge any equipment lease, lease purchase contract, installment sale contract, loan agreement or other agreement or arrangement that creates, provides for or gives rise to any Encumbrance on any of the Purchased Assets (the “ Encumbered Assets ”) so that Seller is able to convey clear title to the Encumbered Assets to Buyer at the Closing, free and clear of any further

 

15



 

payment obligations or other Encumbrances.  At least three (3) Business Days before the Closing Date, Seller shall obtain from all applicable lessors or creditors, and deliver to Buyer, payout statements for all amounts owing by Seller in respect of the Encumbered Assets as of the Closing Date.  At the Closing, Buyer shall be entitled, and Seller hereby authorizes and directs Buyer, to pay applicable portions of the Closing Payment directly to such lessors or creditors on Seller’s behalf so as to fully buy out, settle and discharge all amounts owing to such lessors or creditors in respect of the Encumbered Assets .  Any payments by Buyer to such lessors or creditors of Seller shall be deemed to constitute payments by Buyer to Seller for purposes of satisfaction of Buyer’s payment obligations under Section 2.4(a) .

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER MEMBERS

 

Seller and the Seller Members acknowledge that Buyer is relying on the accuracy of the representations and warranties contained in this Article 3 and that such representations and warranties are given in order to induce Buyer to enter into this Agreement and consummate the Contemplated Transactions.  Accordingly, as between Seller and the Seller Members, collectively, both jointly and severally represent and warrant to Buyer, and, as among the Seller Members, each severally represents and warrants to Buyer, as follows:

 

3.1            Organization and Authority of Seller .  Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Pennsylvania, with full limited liability company power and authority to own its properties and to carry on its business as now being conducted and as presently intended to be conducted.  Seller is not registered to do business as a foreign limited liability company in any state or other jurisdiction, as neither the ownership or use of the properties owned or used by it, nor the nature of the activities conducted by it, requires such registration.

 

3.2            Authorization of Agreement .  The execution and delivery by Seller of this Agreement and each other agreement or instrument to be executed and delivered by Seller at Closing and the performance of the Contemplated Transactions by Seller have been duly authorized by all necessary limited liability company action by Seller, and no other action on the part of Seller is necessary to authorize this Agreement or any such other agreement or instrument or to consummate the Contemplated Transactions.  This Agreement has been duly and validly executed and delivered by Seller and the Seller Members and constitutes a valid and binding obligation of Seller and the Seller Members, enforceable against Seller and the Seller Members in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.  Upon their execution and delivery at Closing by Seller, the Bill of Sale, Assignment and Assumption Agreement, Lease Assignment and other agreements and instruments to be executed and delivered by Seller at Closing pursuant to this Agreement (collectively, the “ Seller Closing Documents ”) shall constitute valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.

 

16



 

3.3            No Conflicts .  Neither the execution and delivery by Seller of this Agreement or any of the Seller Closing Documents nor the consummation or performance of any of the Contemplated Transactions does or shall, directly or indirectly (with or without notice or lapse of time):

 

(a)            violate any provision of the certificate of organization, operating agreement or other governing documents of Seller, or contravene any resolution adopted by the members of Seller;

 

(b)            breach any Applicable Law or Order to which Seller, any Seller Member, the Business or any of the Purchased Assets is subject or give any Governmental Authority or other Person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Applicable Law or any Order to which Seller, any Seller Member, the Business or any of the Purchased Assets is subject;

 

(c)            contravene, conflict with or result in a breach of any of the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any Permit that is held by or on behalf of Seller and that relates to the Business or any of the Purchased Assets;

 

(d)            cause Buyer (or any Affiliate thereof) to become subject to, or to become liable for the payment of, any Tax that is not contemplated by this Agreement or that would not be the reasonably contemplated result of the Contemplated Transactions;

 

(e)            breach any provision of, or give any Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, any Contract to which Seller or any Seller Member is a party or by which Seller or any Seller Member is bound (including any Assigned Contract); or

 

(f)             result in the imposition or creation of any Encumbrance (other than a Permitted Encumbrance) on any of the Purchased Assets.

 

3.4            Notices and Consents .  Except as set forth under on Schedule 3.4 , Seller is not required to give any notice to, or obtain any consent from, any Person in connection with the execution and delivery of this Agreement or the consummation of the Contemplated Transactions.

 

3.5            Seller and Seller Members .  The Seller Members are the only members of Seller.  Seller has delivered to Buyer a complete copy of the certificate of organization and there is no operating agreement of Seller.

 

3.6            Financial Statements .  Seller has provided to Buyer correct and complete copies of the unaudited financial statements of Seller as of and for the fiscal years ended December 31, 2006 and 2005 and copies of the unaudited, monthly consolidated financial statements of Seller as of and for each completed monthly period ended after December 31, 2006, including in each case a balance sheet, a statement of income and retained earnings, a statement of changes in shareholders’ equity and a statement of cash flows (the “ Financial Statements ”).  The Financial

 

17



 

Statements have been prepared from and are in accordance in all material respects with the accounting records of Seller, and fairly present in all material respects the financial condition and results of operations of Seller and the Business as of the respective dates of and for the periods referred to therein .

 

3.7            Books and Records .  The financial, business and other records of Seller, all of which have been made available to Buyer, are complete and correct in all material respects and have been maintained in accordance with sound business practices.

 

3.8            No Undisclosed Liabilities .  Except for the Assumed Liabilities and the Retained Liabilities, Seller does not have any obligation or liability (whether accrued, absolute, contingent, liquidated, unliquidated, or otherwise, whether due or to become due and regardless of when asserted) except for (i) liabilities reflected in the Financial Statements or Seller’s current financial records (copies of all of which have been made available to Buyer), (ii) ongoing performance obligations under Contracts that are not required by GAAP to be reflected in the Financial Statements, (iii) current liabilities incurred in the ordinary course of business of Seller since the date of the most recent balance sheet included in the Financial Statements, and (iv) Liabilities set forth on Schedule 3.8 .

 

3.9            Title to Purchased Assets; Encumbrances .  Except for (i) the Encumbrances listed under Part 1 of Schedule 3.9 , all of which shall be discharged by Seller before or in connection with the Closing, and (ii) any other Permitted Encumbrance, Seller has good and marketable title (or a valid leasehold interest with respect to leased assets) to all of its assets and properties free and clear of any Encumbrance.  Except for assets or property leased by Seller under written lease agreements, Seller is not in possession of any property or asset that is owned by any other Person, and no such property or asset is included in the Purchased Assets.  Except as listed under Part 2 of Schedule 3.9 , and except for Inventories in transit to or from customers or suppliers, no Third Party is in possession of any asset or property of the Seller.

 

3.10          Sufficiency of Assets .  Except for the Excluded Assets, the Purchased Assets constitute all of the property and assets, tangible and intangible, of any nature whatsoever, necessary to operate the Business in the manner presently operated by Seller.

 

3.11          Condition of Equipment .  Each item of Equipment owned or leased by Seller is in good repair and good operating condition, ordinary wear and tear excepted, is suitable for immediate use in the ordinary course of business, is free from apparent defects and is being operated and maintained in all material respects in accordance with prescribed operating instructions necessary to ensure the effectiveness of Equipment warranties and/or service plans, and (ii) no item of Equipment owned or leased by Seller is in need of repair or replacement other than as part of routine maintenance in the ordinary course of business.  All Equipment owned or leased by Seller is, and immediately before the Closing shall be, in the possession or under the control of Seller.

 

3.12          Inventories .  Except as set forth on Schedule 3.12 , all items included in the Inventories consist of a quality and quantity usable or saleable in the ordinary course of business of Seller, except for obsolete items and items of below-standard quality, all of which have been written off or written down to net realizable value in the Financial Statements.  All of the

 

18



 

Inventories have been valued at the lower of cost or net realizable value.  Inventories now on hand that were purchased after the date of the most recent balance sheet included in the Financial Statements were purchased in the ordinary course of business of Seller at a cost not exceeding market prices prevailing at the time of purchase.  Seller has provided Buyer with a complete and accurate list of Inventories current to within five (5) days of the date of this Agreement.

 

3.13          Real Property .

 

(a)            Seller does not own any interest in real property.

 

(b)            The real property described on Schedule 3.13(b) (the “ Leased Real Property ”) constitutes the only real property leased by Seller as tenant or otherwise occupied or used by Seller in the conduct of the Business.  The Leased Real Property, including buildings, fixtures and other improvements thereon, are in good operating condition and repair, ordinary wear and tear excepted, and is not in need of repair other than as part of routine maintenance in the ordinary course of business.  To the Knowledge of Seller and the Seller Members, all buildings, structures, improvements and fixtures on the Leased Real Property are in material compliance with all Applicable Laws, including Occupational Safety and Health Laws.

 

(c)            Seller has provided Buyer with a complete copy of the real property lease for the Leased Real Property, including all amendments and supplements thereto (the “ Real Property Lease ”).  Seller has not entered into any agreement, arrangement or understanding with any landlord (including any predecessor landlord) under the Real Property Lease, written or oral, that in any way alters or affects the express terms and conditions of such Real Property Lease.  The legal and other descriptions of Leased Real Property contained in each Real Property Lease are accurate and complete.

 

(d)            Seller has a valid and enforceable leasehold interest under the Real Property Lease, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a Proceeding at law or in equity).  Seller has not granted to any Person any sublease, license, easement or other right to use or access any part of the Leased Real Property, nor has Seller suffered to exist any unauthorized use or occupancy of any part of the Leased Real Property by any Person.  The Real Property Lease is in full force and effect, and Seller is not in default thereunder, and no condition exists that with notice or lapse of time, or both, would constitute a default by Seller under the Real Property Lease.  To the Knowledge of Seller and the Seller Members, no other party to the Real Property Lease is in default thereunder or has exercised any termination right with respect thereto.  No notice of default or notice of termination has been received by Seller with respect to the Real Property Lease that has not been withdrawn or canceled.

 

(e)            To the Knowledge of Seller and the Seller Members, there does not exist any actual, threatened or contemplated condemnation or eminent domain Proceeding that affects or could be reasonably expected to affect the Leased Real Property or any part

 

19



 

thereof, and Seller has not received any written notice of the intention of any Governmental Authority to undertake any such Proceeding.

 

(f)             Seller has not made any alteration or caused any damage to the Leased Real Property, ordinary wear and tear excepted, that was not consented to by the applicable landlord and that has resulted in or could reasonably be expected to result in any claim by such landlord against Seller or, following the Closing, Buyer for repair, replacement, remediation, reimbursement or other remedies available to such landlord under the Real Property Lease or under Applicable Law.  Seller does not currently have, nor has it had within the past twelve (12) months, any ongoing dispute or disagreement with any landlord in respect of any obligation of Seller, or such landlord under the Real Property Lease where such dispute has not been fully resolved and settled as of the date hereof.

 

3.14          Accounts Receivable .  All Accounts Receivable that are reflected in the Financial Statements or in the accounting records of Seller as of the date hereof represent valid obligations arising from sales actually made or services actually performed by Seller in the ordinary course of business.  Except to the extent paid before the Closing Date, and except as set forth on Schedule 3.14 , such Accounts Receivable are or shall be as of the Closing Date current and collectible net of the respective reserves shown o






























 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more