ASSET PURCHASE AGREEMENT
EXHIBIT 10.15
AGREEMENT
dated as of July 18th, 2005, (herein, together with the
Exhibits
attached hereto and the Lists to be
delivered pursuant hereto referred to as the
"Agreement") by and among Lakeland Industries, Inc, a Delaware corporation
("Parent"), Mifflin Valley, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Buyer"),
Mifflin Valley Inc, a
Pennsylvania
corporation
("Seller") and Michael Gallen
("Shareholder").
In
reliance upon the
representations and
warranties
made herein and in
consideration of the mutual agreements
herein contained, Buyer and Parent, on
the one hand, and Seller and the
Shareholder, on the other hand, hereby agree as
follows:
1.
Transfer of Business, Properties and Assets of Seller and
Certain
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Related Matters.
(a) Sale and Transfer of Business, Properties and Assets.
Subject to
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the terms and conditions of this Agreement, and in reliance on the
representations, warranties, undertakings (including the Undertaking, as
hereinafter defined) and agreements of Buyer and Parent made or deemed
to be
made hereunder, and in consideration of the purchase by Buyer described
below
and the Undertaking by Buyer, Seller hereby agrees to sell,
transfer, convey,
assign and deliver to Buyer at the Closing
all of its then
existing business,
properties and assets, as a going concern,
including,
without limitation,
the
properties, assets and other rights
referred to in the
bill of sale (the "Bill
of Sale") in the form of Exhibit A hereto,
but excluding the Excluded Assets
(such business, properties, assets and other rights of Seller
to be purchased
and sold hereunder being hereinafter
referred to as the "Purchased Assets"). As
used in this Agreement, the term Excluded Assets shall
mean those assets listed
on Exhibit B hereto.
(b) Purchase
Price. Subject to the terms and conditions of this
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Agreement, and in reliance on the
representations,
warranties, undertakings and
agreements of Seller made or deemed to be
made hereunder, and in
consideration
of such sale, conveyance, transfer,
assignment and delivery, Buyer agrees:
(i) To pay to Seller an amount equal to $1,580,000.00 (being
hereinafter referred to as the "Initial
Purchase Price").
(ii) Except as expressly provided for herein, to undertake, assume
and
agree to perform and otherwise pay, satisfy and discharge in accordance
with
their respective terms, and to indemnify and hold
Seller harmless with respect
to, all of the debts, liabilities and obligations of Seller specified in the
undertaking to be executed by Buyer and delivered to Seller at the closing
provided for in Section 2 hereof
(herein called the "Closing" and the date of
which is herein called the "Closing
Date") substantially in the form attached
hereto as Exhibit C (the "Undertaking"). As used herein, the term "Accounts
Receivable" shall mean the aggregate
amount of accounts
receivable of
Seller,
determined in accordance with generally accepted accounting principles
consistently applied throughout the period
involved.
(iii) June 30, 2005,
is hereinafter referred to as the "Effective
Date". A Balance Sheet as of June 30, 2005
(the "Audited
Effective Date Balance
Sheet") and the Profit & Loss
Statement for the
period from January 1, 2005, to
the Effective Date of the Seller (the "2005 Interim P&L") are both to be
prepared pursuant to Generally Accepted
Accounting Principles
(GAAP) as applied
in the United States. The Audited Effective Date Balance
Sheet shall be audited
by Holtz Rubenstein Reminick, LLP, the cost of which shall be
borne by Buyer.
Based on the Audited Effective Date Balance Sheet,
the Initial
Purchase Price
shall be adjusted to determine a Final Purchase Price, the ("Final Purchase
Price") as set forth herein, the cost of
which shall be borne by Buyer.
(iv) The Final
Purchase Price shall be determined by the amount
reflected as Shareholder Equity on the Audited Effective
Date Balance Sheet. An
adjustment to the Initial
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Purchase Price shall be made should such
Shareholder
Equity be greater or
less
than $600,000 (the "Adjustment"), which Adjustment shall be paid within 10
business days of receipt of the Audited
Effective Date Balance Sheet, except as
provided for in Section 1(b)(vi) herein. The Adjustment shall be computed as
follows: should the Shareholder Equity as reflected on the Audited
Effective
Date Balance Sheet be less than $600,000,
the Seller shall pay the difference to
the Buyer; Should the Shareholder Equity be greater than $600,000,
the Buyer
shall pay the difference to the Seller.
(v) An amount of $75,000 shall be reserved (the "Reserve") at Closing
in an escrow account that shall be applied
towards indemnifying Buyer against
any breach by Seller of its representations and warranties set forth in this
Agreement. The escrow shall be set up by
Buyer and Seller. The Reserve shall be
liquidated and paid to Seller as follows:
50% six months after
the date of the
Closing and the balance one year
following the closing. In the case any item
shall be charged to this Reserve, Seller shall be given notice and the
opportunity to contest and correct or
resolve the item.
(vi) In the event either Buyer or Seller in good faith,
believes that
the Audited Effective Date Balance Sheet has not been prepared in accordance
with GAAP or is otherwise erroneous, such
party shall have 10 business days from
the receipt of the Audited Effective Date Balance Sheet in
which to appeal.
In
such case, the parties shall engage a
second independent CPA firm, acceptable to
both sides, to opine on the item or items
in dispute. Both parties will be bound
by the opinion of such second CPA firm,
with the fees of such firm to be paid by
the side ruled unsuccessful in the
appeal.
(vii) Seller's
accounts receivable
and inventory.
The net value of
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Seller's Account Receivable and Inventory shall be reflected on the
Audited
Effective Date Balance Sheet after deduction for appropriate reserves as
mutually agreed to reflect uncollectible and aged accounts receivable and to
reflect obsolete and slow-moving
inventory,
it being agreed that
inventories
will be stated on Seller's books at the
lower of cost
(determined in accordance
with customary inventory pricing practices and procedures
for Seller utilizing
Seller's standard cost system but also in
compliance with GAAP as applied in the
United States) or market.
(c) Allocation of
Purchase Price.
The Purchase
Price described in
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Section 1(b) above will be initially allocated pursuant to the assets and
liabilities as reflected on the Audited
Effective Date Balance Sheet; $61,000.00
then shall be allocated to Seller's and the Shareholder' agreement not to
compete with the business transferred to Buyer as set forth in Section 13
hereof. Buyer and Parent, on the one hand, and Seller, on the other hand,
represent, warrant, and agree that such
allocation was determined through arm's
length negotiations. Buyer and Parent, on
the one hand, and Seller, on the other
hand, each agrees that it will adopt and
utilize the amounts
allocated to each
asset or class of assets described in the immediately preceding sentence for
purposes of all federal, state and other
income tax returns filed by it and that
it will not voluntarily take any position inconsistent therewith upon
examination of any such tax return, in any
claim, in any litigation or otherwise
with respect to such income tax returns.
Notwithstanding any
other provision of
this Agreement, the foregoing representation, warranty and agreement shall
survive the Closing Date without
limitation.
(d) Payment of Purchase Price. At the Closing, Buyer will deliver to
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Seller a check drawn against immediately available funds in an amount equal
to
$1,505,000.00, pursuant to the amount determined under Section 1(b). The
remainder of the Initial Purchase Price, $75,000, shall be paid by Buyer at
Closing but held in escrow pursuant to
Section 1(b)(v). The Adjustment, pursuant
to the Audited Effective Date Balance Sheet,
subject to adjustment
as provided
in Section 1(b)(vi), shall be paid after the Closing pursuant to Section
1(b)(vi). The Reserve shall be liquidated
pursuant to Section 1(b)(v).
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(e) Instruments of Conveyance, Transfer, Assumption, Etc. Seller
shall
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properly execute and deliver to Buyer at
the Closing: (i) the Bill of Sale; (ii)
assignments and consents to assignments, in form reasonably satisfactory to
Buyer with respect to each of the contracts
and other agreements
and rights to
be assigned to Buyer hereunder which require for such
assignment the consent or
waiver of any third party [and as to which Buyer shall have requested the
obtaining of such consent or waiver]; and (iii) a lease otherwise reasonably
satisfactory in form and substance to counsel for Buyer and
Parent to the real
property being leased hereunder in
accordance with Section 4(i).
Simultaneously with the Closing, Seller shall take all steps
requisite
to put Buyer in actual possession and
operating control of the Purchased Assets,
including, without limitation, disclosure to such persons as
Buyer and Parent
may designate of Seller's trade secrets, formulae and other proprietary
information pertaining to the business of
Seller.
Buyer shall properly
execute and deliver the Undertaking to Seller at
the Closing.
Seller and Buyer shall each properly execute and deliver to the
other
at the Closing the following additional
documents,
each dated the Closing
Date
(all of which, together with this Agreement, the Bill of Sale, and the
Undertaking, are hereinafter sometimes
referred to as the "Agreements"):
(f) Further Assurances. At the Closing and from time to time after
the
------------------
Closing, (i) at the request of Buyer and
without further
consideration,
Seller
shall promptly execute and deliver to Buyer such certificates and other
instruments of sale, conveyance, assignment and transfer,
and take such
other
action, as may reasonably be required by
Buyer more effectively
to confirm any
obligation assumed by Buyer pursuant to the
Undertaking
and to sell,
convey,
assign and transfer to and vest in Buyer or
to put Buyer in
possession of the
Purchased Assets and (ii) at the request of Seller and without further
consideration, Buyer shall promptly execute and deliver to Seller such
certificates and other instruments,
of assumption,
and take such other
action,
as may reasonably be required by Seller
more effectively
to confirm and
carry
out the assumption by Buyer of the obligations of Seller assumed by Buyer
pursuant to the Undertaking.
2.
Closing. The Closing of the transactions provided for in Section 1
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hereof will take place at the offices of
Kozloff Stoudt or at
such other place,
time as may be agreed upon by Buyer, Parent and Seller, on August 1, 2005,
unless extended by mutual agreement of both
Buyer and Seller.
3.
Termination.
Anything contained in this Agreement other
than in this
-----------
Section 3 to the contrary notwithstanding, this Agreement may be terminated
prior to the Closing Date
(a) by mutual consent in writing of Buyer and Parent, on the one
hand,
and Seller, on the other hand, or
(b) by Buyer, Parent or Seller if, due to causes beyond the control
of
any of the parties to this Agreement, the Closing does not occur on August 1,
2005, or on or before such later date as may be agreed
upon in writing by
the
parties hereto.
Termination pursuant
to this Section 3 shall be without liability of
any kind on the part of either party
hereto, and in such
event each party shall
bear and pay all costs and expenses incurred by it in connection with this
Agreement and the transactions contemplated
hereby.
4.
Representations
and Warranties by
Seller and the Shareholder. Seller
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and the Shareholder represent and warrant
jointly and not severally that:
3
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(a) To the best
knowledge of
Seller and Shareholder, Seller is a
corporation duly organized, validly
existing and in good standing under the laws
of the State of Pennsylvania and has all power and authority to carry on its
business as now being conducted and to own its
properties and is duly
licensed
or qualified and in good standing as a
foreign corporation in
each jurisdiction
in which its failure to qualify
would have a
materially adverse
effect on the
business, financial condition, operations
or prospects of Seller.
(b) Seller has full
corporate power and
authority to enter into each
of the Agreements to the extent it is a party
thereto and to
consummate
the
transactions contemplated hereby. The execution, delivery and performance by
Seller of each of the Agreements to which Seller is a party have been duly
authorized by all requisite corporate action; each of the Agreements to
which
Seller is a party has been duly
executed and
delivered by Seller
and (assuming
due execution and delivery by the other
party thereto)
constitutes a valid
and
binding obligation of Seller, enforceable in accordance with
their respective
terms, subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium, and other laws affecting creditors'
rights generally from time to time in
effect.
(c) The instruments
of conveyance and transfer to be executed by
Seller and delivered to Buyer at the Closing
will be valid in
accordance with
their terms and effective to assign,
transfer and convey to Buyer at the Closing
all of the then existing business of Seller and
properties,
assets and other
rights of Seller used in its business,
including such title as is specified in
Sections 4(h) and 4(i), but excluding the
Excluded Assets.
(d) Seller is not a party to, subject to or bound by any
agreement or
any judgment, award, order, writ, injunction or decree of any court,
governmental body or arbitrator which would
conflict with or be breached by the
execution, delivery or performance by Seller of this Agreement or
which could
prevent the carrying out of this
Agreement.
(e) Except as disclosed on Lists 10 and 11, neither Seller nor any of
the properties, assets and other rights referred to in the Bill of Sale is
a
party to, subject to or bound by any
agreement or any judgment, award, order,
writ, injunction or decree of any court
or of any governmental
body or of any
arbitrator which could prevent the use by
Buyer of the
properties, assets
and
other rights referred to in the Bill of
Sale or materially
adversely affect the
conduct by Buyer of the business of Seller, in each case in accordance with
present practices, after the Closing Date or which, by operation of law, or
pursuant to its terms, would be breached, terminate, lapse, or be subject to
termination upon the consummation of the
transactions contemplated herein absent
the consent or other action of any third
party or agency.
(f) Except
as disclosed on List 10, there is no action, suit or
governmental, administrative, arbitration or regulatory proceeding or
investigation pending or, to the best of
Seller's knowledge,
threatened against
or relating to Seller which could have a materially adverse effect on its
business, financial condition, operations or prospects, the
Purchased Assets or
the transactions contemplated by this
Agreement.
(g) To the best
knowledge of Seller and Shareholder, Seller (A) has
delivered to Buyer complete, correct and detailed lists, in
form and substance
reasonably acceptable to Buyer, as of the date of this
Agreement,
specifying
with respect to the business, properties, assets and obligations of the
Seller
each and every material item in the
following categories
referred to below, and
(B) has delivered, or shall deliver as part of the
due diligence process,
to
Buyer true and complete copies of the documents and other materials that
underlie such lists:
(i) List 1 - presently
outstanding
written contracts, agreements,
------
commitments and bids (other than those included in List 4); written and oral
------
leases (other than leases disclosed in List
8); security deposits
under leases;
------
licenses; franchises; dealership, service,
agency and other agreements which, in
each case, involve the receipt or payment
of more than $2,500; and, with
4
<PAGE>
respect to each item in each category
referred to above, a
specification as
to
whether the consent of any third person or
agency is required for the effective
assignment thereof;
(ii) List 2 - machinery, equipment, tools, dies, furniture,
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furnishings, leasehold improvements, vehicles, buildings and other tangible
physical assets and fixtures and the location of such
(other than items in any
of the foregoing categories having a value of not more than $500 in the
aggregate);
(iii) List 3 - (A) the policies of insurance presently in force
(other
------
than those required to be set forth in List 4) and,
without restricting the
------
generality of the foregoing, those covering Seller's public and product
liability and its personnel, properties, buildings, machinery, equipment,
furniture, fixtures and operations,
specifying with respect to each such policy,
the name of the insurer, type of coverage, term of policy, limits of
liability
and annual premium, (B) Seller's premiums and losses, by year, by type of
coverage, for the past five years based on
information
received from
Seller's
insurance carrier(s), (C) all outstanding insurance
claims by Seller for damage
to or loss of its property or income which have been referred to insurers or
which Seller believes to be covered by commercial insurance, (D) general
comprehensive liability policies carried by Seller for the past five years,
including excess liability policies, and (E) any agreements,
arrangements or
commitments under which Seller indemnifies any other person (with
the exception
of any obligation arising in connection with lease, purchase or sale
transactions arising in the ordinary course of
Seller's business) in
which the
maximum exposure exceeds $1,000 or pursuant
to which Seller is required to carry
insurance for the benefit of any other
person;
(iv) List 4 - names,
current annual
compensation
rates (including
------
bonuses and commissions), accrued bonus, accrued sick leave and accrued
severance pay of all present salaried employees of Seller; aggregate accrued
vacation pay; the current base salary rate of each of such individuals;
employment, managerial, advisory or
consulting agreements and confidentiality or
other agreements protecting proprietary processes, formulae or information;
copies of all pension, profit-sharing, thrift, or other retirement plans,
employee stock ownership plans, deferred
compensation,
stock ownership,
stock
purchase, performance share, individual or group bonus or other
deferred or
incentive plans, severance plans,
hospitalization,
insurance,
vacation, death
benefit, collective bargaining,
union or other
employee association agreements,
or other similar plans in each case
covering employees of
Seller and as amended
to date, and all amendments thereto prior to the Closing Date, agreements,
arrangements, commitments or understandings
providing for any employee benefit,
the latest annual report (on Form 5500, if
applicable)
for each plan, the
most
recent actuarial valuations with respect to
all defined benefit plans, copies of
all Internal Revenue Service determination letters regarding such plans, all
such reports, actuarial valuations and determination letters as may be made,
received or issued prior to the Closing
Date, the annual cost
of each such plan
or arrangement and a summary description with respect to the funding of
each
such welfare benefit plan or arrangement;
all other contracts
and relationships
with or with respect to, and all other obligations or liabilities with any
employee (or other individual with whom Seller has a
business relationship)
of
Seller; and all disclosures required by
Section 4(m) hereof;
(v) List 5 - individual refundable deposits, prepaid expenses,
-------
deferred charges and "other assets" in
excess of $200;
(vi) List 6 - all loans or advances made by Seller to any person in
------
excess of $100 except (A) normal
travel advances or other reasonable expense
advances to an officer or employee of
Seller, or (B) pursuant to normal business
dealings with the customers of Seller;
(vii) List 7 - liens, encumbrances, charges, restrictions, claims
and
------
security interests with respect to the business, assets and property to be
transferred hereunder which do not constitute
real property;
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<PAGE>
(viii) List 8 - each
and every parcel of
real property
or interest
------
therein owned in whole or in part by
Seller or held for the
benefit of Seller
under a title-holding agreement or held under a lease;
and complete and correct
copies of each and every of the
following,
if any, in the
possession of Seller
will be made available for review by Buyer:
(A) title reports, title binders,
survey documents and data affording information or opinions with respect to,
certifying to, or evidencing the extent,
current title, title history, title
marketability, use, possession,
restriction or
regulation, if any (governmental
or otherwise), and compliance with applicable
laws, of (x) the real property or
(y) any estate or interest in (or in the nature of) real
property or in a
land
or building lease or chattel real; (B) deed or title-holding or trust
agreements, if any, under which any of the
parcels may have been
conveyed to
Seller or under which the same may be held for the
benefit of Seller;
and (C)
leases; except as noted in such list, all
such buildings,
structures, leasehold
improvements and the equipment therein
currently are used by or useful to Seller
in the ordinary course of business and,
except as so noted and except for normal
wear and tear, there are no material defects with respect thereto which would
impair the day-to-day use by Buyer of any
such buildings,
structures, leasehold
improvements or equipment or which would
subject Buyer to material liability
under applicable law;
(ix) List 9 - except
for any Excluded
Assets listed on Exhibit B,
------
trademark registrations and applications and
notices of infringement therefor,
service mark registrations (which list shall include but not be limited to
indications of length of use of each trade and service mark as well as
identification of product(s) on which each trade
and service mark is used, and
registration numbers, registration and
renewal dates, affidavit of use filings),
patents and patent applications, copyrights, and applications therefor
(including information as to expiration dates of all the foregoing where
applicable) presently owned, in whole or in part, by
Seller and used or useful
in Seller's business; and all trademark licenses, service mark licenses,
copyright licenses, royalty agreements,
patent licenses, assignments, grants and
contracts with employees or others relating in whole or in part to
disclosure,
assignment, registering or patenting of any trademarks, service marks,
copyrights, inventions, discoveries, improvements, processes, formulae, trade
secrets or other know-how and used or
useful in Seller's
business. To the
best
of Seller's knowledge, except as noted in such list: (i) the foregoing
trademarks, service marks, copyrights,
licenses, assignments, grants, agreements
and contracts are valid; (ii) the foregoing trademark registrations, service
mark registrations, copyright registrations and patents have
been duly issued
and have not been cancelled, abandoned or otherwise terminated; (iii) the
foregoing trademark applications, service mark applications, copyright
applications and patent applications have
been duly filed; (iv) Seller is not in
default under any of the foregoing
licenses or agreements
other than
defaults,
if any, which will not result in any
material loss or
liability;
and (v) all
such licenses and agreements are binding in
accordance with their terms;
(x) List 10 - all litigation, governmental or regulatory
proceedings,
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investigations or labor disputes pending or to
the best of Seller's
knowledge,
threatened against Seller, the officers or
directors of Seller as such officers
or directors, or any of the business, assets or properties of Seller to be
transferred pursuant hereto or to which Seller or its
officers or directors as
such officers or directors, is a party, as plaintiff, defendant or otherwise;
and
(xi) List 11 - all
federal, state,
local and foreign governmental
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licenses and permits necessary in the conduct of Seller's business; each
jurisdiction in which the nature of the
business of Seller
requires Seller to
qualify to do business as a foreign
corporation; all
federal, state, local
and
foreign governmental or judicial consents,
orders, decrees and
other compliance
agreements under which Seller is operating or
bound; all reports of
inspection
of Seller's businesses and properties from January 1, 2002 to the date
hereof
under all applicable federal, state and local health and safety laws and
regulations; and copies of all of the
foregoing and correspondence relating
thereto.
(xii) List 12 - Seller will provide a schedule to Buyer listing all
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distributions of cash to Seller or Shareholder of Seller other than
payment of
wages and salary made from
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January 1, 2005 until the Closing Date;
such schedule shall be provided to Buyer
no later than the day prior to closing.
(xiii)
List 13 - Seller will
provide a schedule
listing all items of
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the machinery, tools, equipment and other tangible physical assets to be
transferred by Seller hereunder (other than
items of inventory) which are NOT in
good working order, normal wear and tear
excepted, are NOT being used or are NOT
useful in the business of Seller at its
present level of activity and are NOT in
an operating condition sufficient to conduct the business of Seller
substantially as now being conducted.
(h) Except as disclosed on List 7, Seller has title to the
properties,
assets and other rights referred to in the Bill of Sale and that do not
constitute real property, free and clear of all liens and
encumbrances
other
than a security interest in favor of Sovereign Bank which will be released or
discharged at Closing.
(i) Except
for, (A) such imperfections of title which do not
materially affect the use or value thereof,
(B) liens of current
taxes not yet
delinquent or being contested in good
faith, and (C) except
as may be described
in List 8 hereto, Seller has good and marketable title to the properties
constituting real property to be
transferred to Buyer hereunder.
(j) Seller has heretofore furnished Buyer with copies of (i)
unaudited
balance sheets as at, and statements of earnings for each of Seller's three
prior fiscal years ended, respectively, December 31, 2004, December 31, 2003,
and December 31, 2002; (ii) an unaudited
balance sheet and statement of earnings
for Seller's fiscal quarter ended March 31,
2005; and (iii) an unaudited balance
sheet as of April 30, 2005 and an
unaudited statement of earnings for
Seller's
four fiscal months ended April 30, 2005. To the best knowledge of Seller and
Shareholder, the foregoing financial statements present fairly the financial
condition of Seller at such dates and the results of its operations for the
periods then ended.
(k) To the best knowledge of Seller and Shareholder, Seller has made
and will make available for inspection by Buyer all books of account with
respect to the conduct of its business.
Seller has heretofore
furnished Buyer
with copies of its Federal and state tax returns for the
years ended
December
31, 2004, 2003 and 2002.
(1) Seller has filed (or has obtained extensions of the time by
which
it is required to file) all United States federal income tax returns and all
other federal, state and local tax returns
required to be filed
by it and has
paid all taxes shown due on the returns so filed as well as all other
taxes,
assessments and governmental charges which have become due,
except such taxes,
if any, as are being contested in good faith and as to
which adequate
reserves
have been provided.
(m) with regard to
those plans
listed on List 4 which
are employee
pension benefit plans within the meaning of Section 3(2) of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA")
("Pension Plans")
and employee welfare benefit plans within the meaning
of Section 3(1) of ERISA
("Welfare Plans") and except as set forth
in List 4:
(i) Seller has in all respects performed all obligations
required to
be performed by it under, is not in default under,
is not in violation
of, and
has no knowledge of any default or
violations by any
other party to, any of the
Pension Plans and Welfare Plans (hereinafter, collectively, the "Seller's
Employee Plans") which obligations, defaults or violations are
material to the
financial condition, results of operations,
business or prospects of Seller.
(ii) None of the
Seller's Employee Plans which cover or covered
employees of Seller, nor any trust created thereunder, nor any trustee or
administrator thereof, nor any "party in
interest" nor any "disqualified person"
with respect thereto, has engaged in one or more
"prohibited
transactions" as
such term is defined in Section 4975 of the
Code or Section 406 of ERISA, which
could subject such Seller's Employee Plans, or any of them, or Seller or
any
such
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<PAGE>
trust or any trustee or administrator thereof, or any party dealing with such
Seller's Employee Plans or any such trust,
or any of the employees of Seller to
a tax or penalty on prohibited transactions imposed by said
Section 4975 of the
Code or Section 502(i) of ERISA which,
singly or in the aggregate, are material
to the financial condition, results of operations, business or prospects of
Seller.
(iii) No judicial
proceedings have been
initiated to terminate
any
Pension Plans subject to Title IV of ERISA which
cover or covered
employees of
Seller or any of the trusts related
thereto; nor have there been any "Reportable
Events", as that term is defined in Section
4043 of ERISA and the
regulations
thereunder, with respect to such plans. (The
foregoing
representation is to be
made as of a date five days prior to the Closing Date with regard to the
existence of a "Reportable Event" described
in Section 4043(b)(3) of ERISA.)
(iv) Seller
has not incurred, nor has it any reason to expect to
incur, any liability to the Pension Benefit
Guaranty Corporation
which would be
material to the financial condition, results of operations, business or
prospects of Seller.
(v) There are no actions, suits or claims pending (other
than routine
claims for benefits in the ordinary course), or, to the knowledge of Seller,
threatened and Seller has no reason to
expect any such actions, suits or claims
(other than routine claims for benefits in
the ordinary course) to arise against
any of Seller's Employee Plans or against the assets of any such Plan
which
actions, suits or claims might, singly or in the aggregate, materially and
adversely affect the financial condition, results of operations,
business or
prospects of Seller.
(vi) There are not and
will not as of the
Closing Date be any
liens
encumbrances, charges, claims or security interests with respect to the
Purchased Assets, and any additions thereto
or improvements thereon, arising out
of any liabilities in connection with any
of Seller's Employee Plans.
(vii) As of the Closing Date, all participants in the Pension Plans
who become employees of Buyer shall be 100
percent vested in their full accrued
benefits through the Closing Date under such plans and either (A) annuity
contracts shall be purchased on behalf of
and distributed to each participant in
such Pension Plans which will provide for
the payment of such accrued benefit or
(B) to the extent permitted by law and such Pension
Plans, cash in an amount
equal to such accrued benefit shall be
distributed to each such participant.
(viii) Since
September 1, 1974, Seller has not contributed to a
multi-employer plan within the meaning of Section 3(37) of ERISA covering
employees of the Seller.
(n) To the best of Seller's knowledge and except as disclosed
on List
9, none of the processes currently used by Seller with
respect to the business,
properties and assets to be transferred hereunder or any of its properties
or
products contracted or sold by Seller with
respect thereto, or trademarks, trade
names, labels or other marks or
copyrights used by Seller with respect thereto,
materially infringe the patent, industrial property, trademark, trade name,
label, other mark, right or copyright of
any other person or entity, and Seller
has not received any notice of adverse claim by any third party with
respect
thereto. Seller has license agreements in force to the extent
necessary to
permit its full use of all of the
processes used by it with respect to the
business, properties and assets to be
transferred hereunder
and to permit such
operations and sales in accordance with its
present and planned practices.
(o) Except as specifically disclosed in writing by Seller to
Buyer or
Buyer's independent certified public accountants and reflected in the
calculation of the Inventory Amount, Seller's inventories of raw materials,
in-process and finished products being transferred hereunder conform in all
respects with Seller's applicable specifications and warranties and are not
obsolete; all in-process and finished
products in such
inventories
have been
produced in compliance with
8
<PAGE>
Seller's applicable quality control
procedures and all finished products in such
inventories are merchantable and are fit for the purpose intended; and all
information furnished to the independent
certified public accountants and other
representatives of Buyer for the purpose of
determining
the Inventory
Amount
under Section 15 is complete and
correct.
(p) Except as disclosed in List 13 as described in Section
4(g)(xiii)
above, the machinery, tools, equipment and other
tangible physical assets to be
transferred by Seller hereunder (other than items of inventory) are in good
working order, norm
