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EXHIBIT 10.01
EXECUTION
COPY
Asset Purchase Agreement
This
ASSET PURCHASE AGREEMENT (the “Agreement”) is made
and entered into as of the 10 th day
of September, 2007, by and among S&A Purchasing
Corp., a New York corporation (the “Buyer”),
S&A Supply, Inc., a Massachusetts corporation (the
“Company”), S&A Realty, Inc.,
a Massachusetts corporation (“Realty”),
S&A Management, Inc., a Massachusetts corporation
(“Management,” and together with Realty and the
Company, the “Sellers,” and each individually
sometimes referred to herein as a “Seller”), Nancy
A. Mead (“Nancy”), Nancy A Mead and Thomas H.
Mead, Trustees of The Discretionary Trust
(“Trustees”), under The Rodney P. Mead Revocable
Trust (the “Trust”), dated January 12,1999, Sarah
Mead (“Sarah”), Brian Mead (“Brian”)
and Adam Mead (“Adam”). Nancy, the
Trustees, Sarah, Brian and Adam are the sole shareholders of
each of the Sellers and are collectively referred to herein as
the “Shareholders.” Nancy and the Trustees are
sometimes referred to herein as the “Majority
Shareholders” and Sarah, Brian and Adam are sometimes
referred to herein as the “Minority Shareholders.”
Colonial Commercial Corp., a New York corporation and the sole
shareholder of the Buyer (“Colonial”), is
countersigning this Agreement with regard to Section 2(e)
only.
Recitals
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1.
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The
Company operates a heating and plumbing supply business and an
electrical wholesale business (the electrical wholesale business
together with the heating and plumbing supply business, the
“Business”) in four locations, one of which also serves
as the Company’s corporate office and distribution
center.
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2.
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Buyer
desires to purchase the Business and selected assets of the
Company, and to assume selected liabilities of the
Company.
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3.
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The
Company desires to sell such assets and to cause Buyer to assume
such liabilities.
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4.
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Management
performs certain administrative services for the
Company.
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5.
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Buyer
desires to purchase selected assets from Management and to assume
selected liabilities of Management related to the operation of the
Company.
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6.
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Management
desires to sell such selected assets and to cause Buyer to assume
such liabilities.
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7.
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Buyer
desires to lease the three parcels of real property set forth on
Schedule 1(f), two of which are owned by Realty and one of which is
owned by the Company (the three parcels of real property are
defined herein as the "Owned Real Estate").
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8.
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The
Company and Realty desire to lease the Owned Real Estate to the
Buyer.
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Certain
definitions related to this Agreement are set forth in Section
27.
Agreement
NOW,
THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as
follows:
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1.
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Sale
and Purchase of Assets.
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(a)
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On
the terms and subject to the conditions of this Agreement, at the
Closing referred to in Section 5, the Sellers shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase,
acquire and accept delivery of the following assets and properties
(the “Assets”):
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(A)
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Merchandise
inventory as of the Valuation Date (which is the close of business
on the second business day prior to the Closing) that is new and
unused and in its original packaging (the “Merchandise
Inventory”); the Merchandise Inventory will be physically
counted by the Buyer and the Sellers jointly with each leaving with
a printed priced list of the inventory, some of which will be
hand-written. The term “Merchandise Inventory Value”
means the book value of the Merchandise Inventory as of the
Valuation Date. Book value of inventory shall be
calculated at Sellers’ average cost. Book value
shall include a provision for reserve for inventory that as of the
Closing has not been sold for a period of eighteen (18) months or
inventory in excess of a twelve (12) month supply (“Inventory
Reserve”). The Merchandise Inventory Value shall
not include the book value of defective or damaged
goods.
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(B)
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Trade
accounts receivable as of the Valuation Date (the “Trade
Receivables”). “Trade Receivables
Value” means the value of the Trade Receivables as of the
Valuation Date less the value of the Past Due Receivables as of the
Valuation Date. Past Due Receivables means any account
from any customer whose balance in the over 90 days old aging
category exceeds 25 percent of the total account balance of such
customer at the Closing (“Excluded Accounts”), plus,
for any account that is not an Excluded Account, amounts from any
customer that at the Closing is more than 90 days past due
(“90 Day Past Due Receivables”). The Trade Receivables
will be printed in detail and are subject to the provisions set
forth in Section 4.
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(C)
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Trade
Receivables service charges shall be excluded from Trade
Receivables, but will be paid to Sellers in accordance with Section
4(c).
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(D)
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The
prepaid and other assets of the Sellers (“Prepaid and other
Assets”) that are listed in Schedule 1(a)(D). The Buyer will
share excess rebate distributions that are included in Prepaid and
other Assets with the Sellers in proportion to when the purchases
took place. The “Prepaid and other Assets Value” means
the book value of the Prepaid and other Assets as set forth in such
Schedule, is subject to adjustment after the Closing as
provided in Section 3 to account for such events as expenses a
party may pay on account of the other party for bills that crossed
their respective periods of operation (e.g., telephone and other
utility bills).
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(E)
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The
fixed assets (the “Fixed Assets”) of the Sellers that
are as set forth on Schedule 8(v); provided, however,
that Buyer’s purchase of the auto and trucks included in
Fixed Assets is subject to the assignment of the Sellers’
auto and truck financing arrangement to Buyer)) at the depreciated
value of the Fixed Assets (the “Fixed Assets Value”),
as set forth on the books and records of the Sellers, as of the
Valuation Date;
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(F)
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The
Sellers’ rights from and after the Closing under the North
Adams, MA real estate lease that is set forth in Schedule 1(a)(F)
(the “Real Estate Lease”);
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(G)
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Credit
applications and customer guarantees in the form used by the
Sellers in its normal operations of business.
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(H)
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[Intentionally
Deleted].
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(I)
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All
proprietary knowledge, Trade Secrets, Confidential Information,
computer software and licenses, formulae, designs and drawings,
quality control data, processes (whether secret or not), methods,
inventions and other similar know-how or rights Used in the conduct
of the Sellers’ business, including, but not limited to, the
areas of manufacturing, marketing, advertising and personnel
training and recruitment, together with all other Intangible Rights
Used in connection with the Sellers’ business, including all
files, manuals, documentation and source and object codes related
thereto as well as all files, manuals, documentation relating to
Past-Due Receivables and inventory that is not Merchandise
Inventory (as defined above);
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(J)
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All
utility, security and other deposits and prepaid expenses which are
assignable;
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(K)
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the
Sellers’ business as a going concern and its franchises,
Permits and other authorizations of Governmental Authorities (to
the extent such Permits and other authorizations of Governmental
Authorities are transferable) and third parties, licenses,
telephone numbers for all locations, facsimile numbers, website
addresses, post office boxes, customer lists, vendor lists,
referral lists and contracts, advertising materials and data,
restrictive covenants, choses in action and similar obligations
owing to the Sellers from its present and former shareholders,
officers, employees, agents and others, together with all books,
databases, operating data and records (including financial,
accounting and credit records), files, papers, records and other
data of the Sellers relative to the operation of the Sellers’
business, i.e., inventory, customer records, vendor records,
etc. Notwithstanding the foregoing, the Sellers and
Buyer shall for a period of not less than three years make their
records
for transactions through the Closing available to the other on
request for review and copying (whether for the purpose of
facilitating the preparation of SEC reports for Buyer’s
affiliates or otherwise), and they shall not destroy their
respective records without first offering to deliver the same to
the other party.
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(L)
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all
rights of the Sellers in and to the name S&A Supply, Inc. and
any other name that incorporates the word S&A and all variants
thereof, and all other trade names, trademarks and slogans Used in
its business, all variants thereof and all goodwill associated
therewith;
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(M)
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to
the extent assignable under applicable law, all of Sellers’
rights under any insurance policy or contract of insurance or
indemnity (or similar agreement) under which Sellers’ are an
insured, named as an additional insured or is otherwise a
beneficiary, and all proceeds realized in connection
therewith;
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(N)
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certificates
and copies of all insurance policies, all as set forth on Schedule
8(a)(N);
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(O)
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all
other property and rights of every kind or nature Used by the
Sellers in the operation of its business;
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(P)
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all
other purchase orders, Customer orders, and other rights under
contracts in the ordinary course.
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(Q)
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the
verbal Kohler distribution agreement (“Kohler Distribution
Agreement”), provided, however, that it is expressly
understood among the parties that the Kohler Distribution Agreement
shall not be part of the Assets in the event the Sellers after
using their best efforts fail to obtain the necessary consents
required to assign such distribution agreement to the
Buyer.
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(b)
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Notwithstanding
the foregoing, the following assets and properties (“Excluded
Assets”) are not included in the Assets:
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(B)
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Loan
Receivable due from each of S&A Management,
Inc., S&A Realty, Inc. and the Shareholder, each
such Loan Receivable as defined in the Company’s audited
Balance Sheet for the year ended December 31, 2006 (“2006
Audited Balance Sheet”);
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(C)
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The
current and non-current portion of the Note Receivable due from
Shareholders set forth in the 2006 Audited Balance
Sheet;
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(D)
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The
life insurance policy, and the cash value of life insurance set
forth in the 2006 Audited Balance Sheet;
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(E)
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prepaid
insurance, it being understood that Buyer will obtain its own
policies, and prepaid taxes, due from employees or due from other
affiliates of the Sellers.
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(F)
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any
and all contracts or policies of insurance that are used to pay or
fund benefits under any employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974.
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(c)
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It
is specifically understood and agreed by the parties hereto that
the Buyer is acquiring, and each Seller is selling, all of the
tangible and intangible assets attributable to or Used by the
Company in its Business, except the Excluded Assets. Any cash
proceeds (inclusive of checks, money orders and credit card
transactions) of the Excluded Assets received by the Buyer
subsequent to the date of Closing shall be remitted by Buyer to the
Company (and Company shall receive such remittance on behalf of the
Sellers) within ten (10) days from receipt. Conversely, any cash
proceeds (inclusive of checks, money orders and credit card
transactions) of the Assets received by the Sellers subsequent to
the date of Closing shall be remitted by the Sellers to Buyer
within ten (10) days from receipt.
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(d)
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The
aforesaid assets and properties to be transferred to the Buyer
hereunder, but not including the Excluded Assets, are hereinafter
collectively referred to as the “ Assets
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(e)
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Method of Conveyance .
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(A)
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The
sale, transfer, conveyance, assignment and delivery by the Sellers
of the Assets to the Buyer in accordance with Section 1(a) hereof
shall be effected on the Closing Date by the Sellers’
execution and delivery to the Buyer of one or more Bills of Sale,
Assignments and other conveyance instruments with respect to the
Sellers’ transfer of Intangible Rights, real property
interests and other Assets in form and scope reasonably
satisfactory to Buyer (collectively the “ Conveyance
Documents ”). At the Closing, good, valid and
marketable title to all of the Assets shall be transferred,
conveyed, assigned and delivered by the Company to the Buyer
pursuant to the Conveyance Documents, free and clear of any and all
Liens, excepting Assumed Obligations (as defined
below).
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(f)
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Real Estate . It is specifically understood and agreed by the
parties hereto that concurrent with the Closing, Buyer shall
execute leases for the three parcels of real property included in
the Owned Real Estate . A copy of said leases
(“Owned Real Estate Leases”) to be delivered by
Sellers, fully executed by landlords at the Closing, are annexed
hereto and designated Exhibits (f)(A), 1(f)(B), and 1(f)(C) . In
addition thereto, except as otherwise disclosed on Schedule
1(f)(D), Sellers shall at the Closing deliver a certificate of
occupancy for each of the leased premises permitting Buyer to
utilize the premises for the business purposes being purchased
pursuant to the terms of this agreement.
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(g)
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Assumed Obligations . The Buyer hereby assumes,
effective as of the Closing, and the Buyer hereby agrees, effective
as of the Closing, to satisfy and discharge as the same shall
become due:
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(A)
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all
trade accounts payable and accrued expenses that have been incurred
in the ordinary course of the Company’s business consistent
with the representations and warranties set forth in this Agreement
(“Trade Accounts Payable”);
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(B)
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the
Sellers’ liabilities and other obligations arising subsequent
to the Closing under the Real Estate Lease set forth on Schedule
1(a)(F) and each of the Auto and Truck Leases and the Auto and
Truck Loans listed on 1(g)(B); and
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(C)
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the
expense accounts payable, customer deposits payable, payments for
unreconciled stock receipts (merchandise received but for which no
invoice has been received as of the Valuation Date) listed on
Schedule 1(g)(C) hereto (collectively the “Assumed
Obligations”).
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(h)
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[Intentionally Deleted].
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(i)
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Excluded Liabilities . Except as expressly set forth
in Section 1(g), the Buyer shall not assume or be responsible at
any time for any liability, obligation, debt or commitment of the
Sellers, whether absolute or contingent, accrued or unaccrued,
asserted or unasserted, or otherwise (the “Excluded
Liabilities”). Without limiting the generality of
the foregoing, Sellers and Shareholders expressly acknowledge and
agree that the Sellers shall retain, and that Buyer shall not
assume or otherwise be obligated to pay, perform, defend or
discharge, any liability or obligation:
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(A)
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incident
to, arising out of or incurred with respect to, this Agreement and
the transactions contemplated hereby (including any and legal or
other fees and expenses, all sales, income or other taxes arising
out of the transactions contemplated hereby; without limiting the
generality of the foregoing, the Sellers shall promptly file an
application for a Waiver of Tax Lien under the Massachusetts
General Law, Chapter 62C §§ 51 and 52, with the
Massachusetts Department of Revenue (“Waiver of Tax
Lien”) and shall remit any and all sales taxes due in respect
of the sale of assets contemplated in this transaction to be paid
by Sellers at Closing);
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(B)
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for
taxes whether measured by income or otherwise;
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(C)
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in
connection with any Plan or Benefit Program or Agreement (as
defined in Section8(k)), including, without limitation, any
liability of the Sellers under ERISA;
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(D)
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under
any foreign, federal, state or local law, rule, regulation,
ordinance, program, Permit, or other Legal Requirement relating to
health, safety, Hazardous Materials and environmental matters
applicable to the Sellers’ business and/or the facilities
Used by the Sellers (whether or not owned by the
Sellers);
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(E)
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pertaining
to products sold or manufactured or services performed or other
actions taken or omitted by the Sellers prior to the Closing
Date;
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(F)
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relating
to any default taking place before the Closing Date under any of
the Assumed Obligations to the extent such default created or
increased the liability or obligation; or
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(G)
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the
consulting agreement by and between Management and Richard J.
Aloisi, dated April 6, 2004.
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(H)
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Sellers
and the Majority Shareholders jointly and severally agree to
satisfy and discharge the Excluded Liabilities as the same shall
become due.
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(a)
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As
payment in full for the Assets being acquired by the Buyer
hereunder and the non-compete covenants set forth in Section 13(d)
hereof, Buyer shall pay to the Company (and Company shall receive
such payment on behalf of the Sellers) in the manner set forth in
this Section 2, (i) the Merchandise Inventory Value, plus the Trade
Receivables Value, plus the Prepaid Asset Value, plus the Fixed
Asset Value, plus $10,000 in respect of the non-compete covenants
set forth in Section 13(d), plus $315,000 in respect of goodwill,
less (ii) the face value of all trade accounts payable
and accrued expenses and other liabilities and obligations that are
assumed at the Closing by the Buyer under Section 1(g)(A) and
1(g)(C) less accrued vacation and sick pay through the Closing of
the business employees of the Sellers, but subject to further
adjustment as provided in Section 3 (such amount, as so adjusted
from time to time, is referred to herein as the “Purchase
Price"). It is expressly understood by the parties that the
Purchase Price will not be adjusted downward in the event Sellers,
after using their best efforts, fail to obtain the necessary
consents required to assign the Kohler Distribution
Agreement.
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(b)
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In
preparation for the Closing, the parties will prepare an estimate
(the “Estimated Purchase Price”) of the actual Purchase
Price by conducting the joint physical inventory and other
procedures that are set forth in Section 1(a)(A) with the
appropriate detailed listings and schedule. In order to plan for
and facilitate the Closing, the Sellers will also provide Buyer
with an estimated summary of the foregoing on the Valuation Date.
Attached hereto and made a part hereof as Schedule 2(b) is the June
30, 2007 unaudited internal Balance Sheet of the Company that shall
be delivered by Sellers pursuant to Section 6 and an example of the
purchase price calculation in connection therewith attached hereto
and made a part hereof.
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(c)
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On
the Closing Date, the Buyer shall make payment of the Estimated
Purchase Price as follows: Buyer shall deliver to the Company (and
Company shall receive on behalf of the Sellers) by wire transfer of
5% of the Estimated Purchase Price (the “Escrow
Amount”) to Martinelli
Discenza P.C. , as escrow agent (the “Escrow Agent"),
and by wire transfer of the balance thereof to the
Company. The Escrow Amount shall be held by the Escrow
Agent pursuant to the terms and conditions hereunder and pursuant
to the terms and conditions of the Escrow Agreement attached hereto
as Exhibit 2(c) (the “Escrow Agreement”).
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(A)
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In
the event Buyer fails to perform any of its obligations hereunder
or under the employment and consulting agreements entered into by
Buyer pursuant to this Agreement, Sellers’ shall provide
Buyer written notice (a “Failure Notice”) specifying
such failure and requiring such failure be remedied within 30 days,
provided, however, that if any such failure cannot with due
diligence be remedied by Buyer within a period of 30 days, if Buyer
commences to remedy such failure within such 30 day period and
thereafter prosecutes such remedy with reasonable diligence, the
period of time for remedy of such failure shall be extended so long
as Buyer prosecutes such remedy with reasonable
diligence. Colonial hereby agrees to perform such failed
obligation on behalf of the Buyer in the event Buyer shall have
failed to remedy such failure in accordance with the prior sentence
and Sellers provide Colonial with a written notice specifying the
obligation that Buyer failed to cure along with a copy of the
Failure Notice.
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(B)
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In
the event Buyer fails to perform any of its obligations in
accordance with the terms of any lease agreement entered into by
Buyer pursuant to this Agreement, Sellers’ shall provide
Buyer written notice (“Failure Notice”) specifying such
failure and requiring such failure be remedied within 30 days,
provided, however, that if any such failure cannot with due
diligence be remedied by Buyer within a period of 30 days, if Buyer
commences to remedy such failure within such 30 day period and
thereafter prosecutes such remedy with reasonable diligence, the
period of time for remedy of such failure shall be extended so long
as Buyer prosecutes such remedy with reasonable
diligence. Colonial hereby agrees to perform such failed
obligation on behalf of the Buyer in the event Buyer shall have
failed to remedy such failure in accordance with the prior sentence
and Sellers provide Colonial with a written notice specifying the
obligation that Buyer failed to cure along with a copy of the
Failure Notice.
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(C)
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In
the event Buyer contests any of the matters set forth in a Failure
Notice, Buyer and Seller shall resolve such dispute exclusively by
arbitration by the American Arbitration Association in Great
Barrington, Massachusetts. Notwithstanding anything set forth in
Section 2(e), in the event a Failure Notice is arbitrated in
accordance with this section, Colonial’s obligations under
Section 2(e) shall be subject to the finding of Buyer’s
failure to perform by such arbitration.
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3.
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Adjustment
of Purchase Price.
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(a)
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The
Sellers and the Buyer agree to meet on or about 130 days subsequent
to the Closing (“Adjustment Date”) to determine amounts
due among the parties in accordance with Section 4 and to resolve
any questions, errors or omissions that might have occurred in the
Purchase Price calculation and to reallocate responsibility for
certain expenses, (i.e., gas and electric, telephone, etc.) which
cover the period prior to and after the date of
Closing.
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(b)
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If
the Purchase Price is adjusted downward, Brian on behalf of the
Sellers, and the Buyer shall forthwith jointly direct the Escrow
Agent to release to Buyer from Escrow the amount by which the
Purchase Price is adjusted downward. To the extent that such
reduced amount exceeds the amounts then available for release from
escrow by the Escrow Agent, Sellers and the Majority Shareholders
shall jointly and severally pay the excess to Buyer
forthwith.
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(c)
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If
the Purchase Price is adjusted upward, Buyer shall forthwith pay to
the Company, and the Company shall receive on behalf of the
Sellers, the amount by which the Purchase Price is adjusted
upward.
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(d)
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In
the event that there is any dispute on whether any party is
required to sign any direction to the Escrow Agent hereunder, such
dispute shall be resolved exclusively by arbitration by the
American Arbitration Association in Great Barrington,
Massachusetts. In the event that the parties agree that a direction
to the Escrow Agent is required to a given extent but dispute
whether such direction is required for any excess amount, then the
parties shall execute such direction for to the given amount as to
which there is no dispute, and the dispute on the excess amount
shall be submitted to arbitration as aforesaid.
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4.
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Certain
Other Agreements:
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(a)
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Buyer
may on the Adjustment Date reassign to the Sellers any Trade
Receivable purchased by the Buyer and not paid by a customer in the
ordinary course (without resort to litigation) by the Adjustment
Date; Reassigned Trade Receivables actually reassigned by Buyer to
Sellers is termed “Uncollected Accounts”. Buyer agrees not to conduct
business with any customer who is the debtor on any Uncollected
Accounts within the earlier of (i) one year of such re-assignment;
(ii) the time Sellers shall have been paid in full on such
Uncollected Accounts, and (iii) the time Sellers in their sole
discretion shall consent and allow Buyer to conduct business with
such customer.
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(b)
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Sellers
and Buyer shall on the Adjustment Date calculate the total dollar
amount of the collected Past Due Receivables (the “Collected
Past Due Receivables Accounts”). If the dollar amount of the
Collected Past Due Receivables Accounts exceeds the dollar amount
of the Uncollected Accounts, then the Purchase Price shall be
adjusted upward by such excess amount. If the dollar amount of the
Uncollected Accounts exceeds the dollar amount of the Collected
Past Due Receivables Accounts, then the Purchase Price shall be
adjusted downward by such excess amount. Buyer agrees
not to conduct business with any customer who is the debtor
on any Uncollected Past Due Accounts until the earlier of
(i) one year after the Adjustment Date; (ii) the Seller
has been paid in full, or and (iii) the time Sellers in their
sole discretion shall consent and allow Buyer to conduct business
with such customer .
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(c)
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Service
charges accrued at the Closing shall be paid to Sellers within
sixty (60) days of date collected. Buyer has the option
of compromising accrued service charges in its sole discretion by
utilizing its best business judgment.
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(d)
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Should
Buyer fail to receive full credit for any purchased, but defective
inventory within 75 days after the Closing, Buyer will reassign
such defective inventory to the Sellers and the Purchase Price
shall be adjusted downward by the amount Buyer paid to the Sellers
for such inventory.
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(e)
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Purchase
Price adjustments shall be paid in accordance with Section
3.
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(f)
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The
Sellers will at the Closing pay in full, to the employees or other
persons entitled to receive the same, all accruals through the
Closing under all of its profit sharing plans and other employee
benefit payments.
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(a)
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The
Closing of this transaction will take place at the office of Oscar
Folger, 521 5 th Avenue, 24
th Floor, New
York, N.Y. 10175, or at the request of Buyer, at
the offices of counsel to any lender providing financing in
connection with the transactions contemplated hereby , at
10:00 a.m. on or before September 10, 2007 or, at the request of
either party on a later date but not later than October 1,
2007.
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(b)
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The
day on which the Closing actually takes place is herein sometimes
referred to as the Closing Date.
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6.
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Audited Financial Statements . Sellers have
delivered to Buyer copies of audited financial statements of the
Company for the years ended December 31, 2006, 2005, 2004 and 2003
(the “Audited Financial Statements”) prepared by the
Company’s certified public accountant. Sellers
have delivered to Buyer copies of interim unaudited financial
statements for the fiscal quarters ended March 31, 2006, June 30,
2006, and September 30, 2006 (the “Interim 2006
Statements”) and for the fiscal quarters ended March 31, 2007
and June 30, 2007 (the “Interim 2007
Statements”). Ninety days (90) subsequent to the
Closing, Sellers shall deliver to Buyer a copy of an interim
unaudited financial statement for the fiscal period ending on the
Closing Date. Additionally, the Sellers have provided
similar interim statements for 2003, 2004 and 2005. The
term “Balance Sheet” means the unaudited balance sheet
dated as of June 30, 2007 that is included in the Interim 2007
Statements. The Audited Financial Statements and the
Interim 2007 Statements shall be complete and correct, shall have
been prepared from the books and records of the Company in
accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods
indicated and shall fairly present the financial condition of the
Company as at their respective dates and the results of its
operations for the periods covered thereby, subject to normal
year-end adjustments and accruals.
|
|
7.
|
Other Transactions at Closing; Further Assurances.
|
|
(a)
|
At
the Closing, the Sellers will deliver to Buyer:
|
|
|
(A)
|
the
Conveyance Documents;
|
|
|
(B)
|
a
certificate executed by each of the Sellers to the effect that the
conditions set forth in Section 12 have been
satisfied;
|
|
|
(C)
|
possession
of all originals and copies of agreements, instruments, documents,
deeds, books, records, files and other data and information
included within the Assets;.
|
|
|
(D)
|
Releases
of all Liens on any of the Assets other than for Liens relating to
each of the Auto and Truck Leases and Auto and Truck Loans assumed
by Buyer;
|
|
|
(E)
|
copies
of the certificate of incorporation of each of the Sellers
certified as of a date within 10 days of the Closing Date by the
Secretary of State of the State
of Massachusetts;
|
|
|
(F)
|
a
certificate from the Secretary of State of the State
of Massachusetts as to the good standing of each of the
Sellers as of a date within 10 days of the Closing
Date;
|
|
|
(G)
|
[Intentionally
Deleted];
|
|
|
(H)
|
copies
of the bylaws of each of the Sellers, certified by its Secretary as
a true and correct copy thereof as of the Closing
Date;
|
|
|
(I)
|
all
consents from shareholders, lenders and other third parties as are
required to consummate the sale of the Assets, except that it is
expressly understood by the parties that consents for the Kohler
Distribution Agreement may not be obtained, notwithstanding
Sellers’ best efforts to obtain such consents;
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|
|
(J)
|
all
consents from shareholders, lenders and other third parties as are
required to enter into the leases of the Owned Real
Estate;
|
|
|
(K)
|
all
consents from shareholders, lenders and other third parties as are
required to execute the Owned Real Estate Leases, and,
|
|
|
(L)
|
With
respect to the Owned Real Estate Leases, the execution and delivery
of a landlord’s agreement by each
landlord in substantially the same form attached as
Exhibit (7)(a)(L) (the “Landlord’s Agreement”),
as well as all consents from shareholders, lenders, and other third
parties as are required for the Buyer to acquire Seller’s
rights under the Real Estate Lease;
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|
|
(M)
|
all
consents from shareholders, lenders and other third parties as are
required to consummate the assignment of all contracts, , except
that it is expressly understood by the parties that consents for
the Kohler Distribution Agreement may not be obtained,
notwithstanding Sellers’ best efforts to obtain such
consents;
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|
|
(N)
|
a
copy of the resolutions of the Board of Directors of each of the
Sellers, together with any and all required resolutions
or consents of the shareholders thereof, approving the execution
and delivery of this Agreement and the consummation of all of the
transactions contemplated hereby, duly certified by an officer of
each of the Sellers; and
|
|
|
(O)
|
all
documents required to be delivered to Buyer under the provisions of
this Agreement or as may reasonably by requested by Buyer and its
counsel.
|
|
(b)
|
On
the Closing Date, Buyer shall deliver or cause to be delivered to
the Company, and the Company shall receive on behalf of the
Sellers, the following:
|
|
|
(A)
|
payment
of the Estimated Purchase Price in accordance with Section
2(c);
|
|
|
(B)
|
a
copy of the resolutions of the Board of Directors of
Buyer, together with any and all required resolutions or
consents of the shareholders thereof, approving the execution and
delivery of this Agreement and the consummation of all of the
transactions contemplated hereby, duly certified by an officer of
Buyer;
|
|
|
(C)
|
a
copy of the resolutions of the Board of Directors of Colonial
approving Colonial’s obligations set forth in Section 2(e),
duly certified by an officer of Colonial.
|
|
|
(D)
|
a
certificate executed by an authorized officer of the Buyer, on
behalf of the Buyer, to the effect that the conditions set forth in
Section 12(a)(B) have been satisfied;
|
|
|
(E)
|
such
other documents as may be required pursuant to this Agreement or as
may reasonably be requested by the Company and their
counsel.
|
|
|
(A)
|
Buyer
and Brian shall execute and deliver an employment agreement in the
form of Exhibit 7(c)(A);
|
|
|
(B)
|
Buyer
and Adam shall execute and deliver an employment agreement in the
form of Exhibit 7(c)(B);
|
|
|
(C)
|
Sellers
shall deliver executed lease agreements and Landlord’s
Agreements and the landlord under the Real Estate Lease shall have
consented to the Buyer’s occupancy of the premises in the
same manner as held by Sellers;
|
|
|
(D)
|
Buyer
and Nancy shall execute and deliver a consulting agreement in the
form of Exhibit 7(c)(D).
|
|
8.
|
The
Sellers and the Majority Shareholders hereby jointly and severally
represent and warrant to Buyer (i.e. the liability of Sellers and
the Majority Shareholders for the breach of any representation or
warranty is joint and several, in the sense that Buyer may proceed
against any one or more Sellers and Majority Shareholders for all
or any part of such liability) and the Minority Shareholders hereby
severally represent and warrant (i.e. the liability of the Minority
Shareholders is several, in the sense that Buyer can proceed
against any Minority Shareholder for only that portion of the total
liability for such breach that is proportional to his pro rata
ownership interest in the Company) to Buyer
that:
|
|
(a)
|
Corporate
Existence, etc. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of
Massachusetts; it has all requisite corporate power and authority
and is entitled to carry on its business as now being conducted and
to own, lease or operate its properties as and in the places where
such business is now conducted and such properties are now owned,
leased or operated; and it is duly qualified, licensed or
domesticated and in good standing as a foreign corporation
authorized to do business in the states listed on Schedule 8
(a), which are the only states where the nature of the activities
conducted by it or the character of the properties owned, leased or
operated by it require such qualification, licensing or
domestication. Each Seller has delivered to Buyer true
and complete copies of its certificate of incorporation and all
amendments thereto, certified by the Secretary of State of the
State of Massachusetts, and the by laws of each Seller as presently
in effect, certified as true and correct by its
Secretary.
|
|
(b)
|
Authority,
Approval and Enforceability. This Agreement has been
duly executed and delivered by each Seller and each Shareholder,
and the Sellers and the Shareholders have all requisite power and
legal capacity to execute and deliver this Agreement and all
Collateral Agreements executed and delivered or to be executed and
delivered in connection with the transactions provided for hereby,
to consummate the transactions contemplated hereby and by the
Collateral Agreements, and to perform its obligations hereunder and
under the Collateral Agreements. This Agreement and each
Collateral Agreement to which each Seller and each Shareholder are
a party constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of such party,
enforceable in accordance with its terms, except as such
enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and
judicial decisions from time to time in effect which affect
creditors’ rights generally.
|
|
(c)
|
Capitalization
and Corporate Records.
|
|
|
(A)
|
All
issued and outstanding shares of the Sellers’ capital stock
are owned beneficially and of record by the
Shareholders.
|
|
|
(B)
|
The
copies of the Certificate of Incorporation and Bylaws of each
Seller provided to Buyer are true, accurate, and complete and
reflect all amendments made through the date of this
Agreement.
|
|
(d)
|
Taxes. All
taxes, including, without limitation, income, property, sales, use,
franchise, added value, employees' income withholding and social
security taxes, imposed by the United States or by any foreign
country or by any state, municipality, subdivision or
instrumentality of the United States or of any foreign country, or
by any other taxing authority, which are due or payable by the
Sellers and the Shareholders, and all interest and penalties
thereon, whether disputed or not, have been paid in full, all tax
returns required to be filed in connection therewith have been
accurately prepared and duly and timely filed and all deposits
required by law to be made by the Sellers with respect to
employees' withholding taxes have been duly made. The
Sellers and the Shareholders have not been delinquent in the
payment of any foreign or domestic tax, assessment or governmental
charge or deposit and have no tax deficiency or claim outstanding,
proposed or assessed against it, and there is no basis for any such
deficiency or claim. The Sellers’ federal income
tax returns have never been audited by the Internal Revenue Service
for all of its fiscal years through the year ended 2006, there is
not now in force any extension of time with respect to the date on
which any tax return was or is due to be filed by or with respect
to the Sellers, or any waiver or agreement by it for the extension
of time for the assessment of any tax. Sellers can receive upon
request from the Massachusetts Department of Revenue a certificate
that certifies the good standing of, and the payment of taxes by,
each of the Sellers as of the date of the signing of the
Agreement.
|
|
(e)
|
Bulk
Sales Tax. There are no bulk sales taxes due under this
Agreement.
|
|
(f)
|
The
Sellers’ capital stock issued and outstanding as of the date
hereof shall constitute all of the outstanding shares of capital
stock of Sellers as of the Closing Date. The
Shareholders are the sole shareholders of the Sellers as of the
date hereof and shall be the sole shareholders of the Sellers at
the Closing Date.
Other than the Sellers’ capital stock owned by the
Shareholders, the Sellers have not issued any other capital stock
or other security instruments and are not committed or obligated to
do so in the future. There are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments,
convertible securities or other agreements or arrangements of any
character or nature whatever under which the Sellers, or the
Shareholders, are or may become obligated to issue, assign or
transfer, and there are no rights of first refusal, preemptive
rights or similar rights with respect to any such
shares.
|
|
(g)
|
Primary
Beneficiary. Nancy is the primary beneficiary of the
Trust.
|
|
(h)
|
No
Shareholders Defaults or Consents. The execution and
delivery of this Agreement and the Collateral Agreements by the
Shareholders and the performance by each of the Shareholders of its
respective obligations hereunder and thereunder will not violate or
conflict with any provision of law or any judgment, award or decree
or any indenture, agreement or other instrument to which such
Shareholder is a party, or by which the properties or assets of
such Shareholder is bound or affected, or conflict with, result in
a breach of or constitute (with due notice or lapse of time or
both) a default under, any such indenture, agreement or other
instrument, in each case except to the extent that such violation,
default or breach could not reasonably be expected to delay or
otherwise significantly impair the ability of the parties to
consummate the transactions contemplated hereby.
|
|
(i)
|
No
Company Defaults or Consents
|
|
|
(A)
|
Neither
the execution and delivery of this Agreement nor the carrying out
of any of the transactions contemplated hereby will:
|
|
|
(1)
|
violate
or conflict with any of the terms, conditions or provisions of each
of the Sellers’ Certificate of Incorporation
or bylaws ;
|
|
|
(2)
|
violate
any Legal Requirements applicable to either the Sellers or the
Shareholders;
|
|
|
(3)
|
violate,
conflict with, result in a breach of, constitute a default under
(whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any Contract or
Permit binding upon or applicable to either the Sellers or the
Shareholders;
|
|
|
(4)
|
result
in the creation of any lien, charge or other encumbrance on any
Properties of the Sellers; or
|
|
|
(5)
|
require
the Shareholders or the Sellers to obtain or make any waiver,
consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental
third party or any Governmental Authority.
|
|
(j)
|
No
Proceedings. No suit, action or other proceeding is
pending or, to the Knowledge (as defined below) of the Sellers and
Shareholders, threatened before any Governmental Authority seeking
to restrain the either the Sellers or the Shareholders or prohibit
their entry into this Agreement or prohibit the Closing, or seeking
damages against either the Sellers or the Shareholders or the
Properties as a result of the consummation of this Agreement. The
term “Knowledge” shall mean, for purposes of this
Agreement, the actual knowledge of either the Sellers or the
Shareholders, or any of the other directors, officers or managerial
personnel of the Sellers with respect to the matter in question,
and such knowledge as Shareholders and Sellers or any of the other
directors, officers or managerial personnel of the Sellers
reasonably should have obtained (i) in the performance of their
duties to the Sellers and/or (ii) upon diligent investigation and
inquiry into the matter in question.
|
|
(k)
|
Employee
Benefit Matters
|
|
|
(A)
|
Schedule
8(k)(A) provides a description of each of the following, if any,
which is sponsored, maintained or contributed to by the Sellers for
the benefit of the employees or agents of the Sellers which has
been so sponsored, maintained or contributed to at any time during
the Sellers’ existence or with respect to which each of the
Sellers has or may have any actual or contingent
liability:
|
|
|
(1)
|
each
“employee benefit plan,” as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974
(“ERISA”) (including, but not limited to, employee
benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA) (“Plans”); and,
|
|
|
(2)
|
each
personnel policy, employee manual or other written statements of
rules or policies concerning employment, stock option plan,
collective bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation and sick leave
policy, severance pay policy or agreement, deferred compensation
agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement,
program, practice or understanding which is not described in
Section 8(k)(A)(1) (“Benefit Program or
Agreement”).
|
|
|
(B)
|
True,
correct and complete copies of each of the Plans (if any), and
related trusts, if applicable, including all amendments thereto,
have been furnished to Buyer. There has also been
furnished to Buyer, with respect to each Plan required to file such
report and description, the three most recent reports on Form 5500
and the summary plan description. True, correct and
complete copies or descriptions of all Benefit Programs or
Agreements have also been furnished to Buyer.
|
|
|
(C)
|
Except
as otherwise set forth in Schedule 8(k)(C),
|
|
|
(1)
|
Each
Seller does not contribute to or have an obligation to contribute
to, and each Seller has not at any time contributed to or had an
obligation to contribute to, and each Seller does not have any
actual or contingent liability under, a multiemployer plan within
the meaning of Section 3(37) of ERISA (“Multiemployer
Plan”) or a multiple employer plan within the meaning of
Section 413(b) and (c) of the Code.
|
|
|
(2)
|
Each
Seller has substantially performed all obligations, whether arising
by operation of law or by contract, required to be performed by it
in connection with the Plans and the Benefit Programs and
Agreements, and to the Knowledge of each Seller, there have been no
defaults or violations by any other party to the Plans or Benefit
Programs or Agreements;
|
|
|
(3)
|
All
reports and disclosures relating to the Plans required to be filed
with or furnished to governmental agencies, Plan participants or
Plan beneficiaries have been filed or furnished in accordance with
applicable law in a timely manner, and each Plan and each Benefit
Program or Agreement has been administered in substantial
compliance with its governing documents;
|
|
|
(4)
|
Each
of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a
favorable determination letter from the Internal Revenue Service
regarding such qualified status and has not, since receipt of the
most recent favorable determination letter, been amended or
operated in a way which could adversely affect such qualified
status;
|
|
|
(5)
|
There
are no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of each Seller, threatened
against, or with respect to, any of the Plans or Benefit Programs
or Agreements or their assets;
|
|
|
(6)
|
All
contributions required to be made to the Plans pursuant to their
terms and provisions and applicable law have been made
timely;
|
|
|
(7)
|
As
to any Plan subject to Title IV of ERISA, there has been no event
or condition which presents the material risk of Plan termination,
no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code has
been incurred, no reportable event within the meaning of Section
4043 of ERISA (for which the disclosure requirements of Regulation
Section 2615.3 promulgated by the Pension Benefit Guaranty
Corporation (“PBGC”) have not been waived) has
occurred, no notice of intent to terminate the Plan has been given
under Section 4041 of ERISA, no proceeding has been instituted
under Section 4042 of ERISA to terminate the Plan, there has been
no termination or partial termination of the Plan within the
meaning of Section 411(d)(3) of the Code, no liability to the PBGC
has been incurred, and the assets of the Plan equal or exceed the
aggregate present value of the benefit liabilities (within the
meaning of Section 4001(a)(16) of ERISA) under the Plan, computed
on a “plan termination basis” based upon reasonable
actuarial assumptions and the asset valuation principles
established by the PBGC;
|
|
|
(8)
|
None
of the Plans nor any trust created thereunder or with respect
thereto has engaged in any “prohibited transaction” or
“party-in-interest transaction” as such terms are
defined in Section 4975 of the Code and Section 406 of ERISA which
could subject any Plan, each Seller or any officer, director or
employee to a tax or penalty on prohibited transactions or
party-in-interest transactions pursuant to Section 4975 of the Code
or Section 502(i) of ERISA;
|
|
|
(9)
|
To
the Knowledge of each Seller, there is no matter pending (other
than routine qualification determination filings) with respect to
any of the Plans or Benefit Programs or Agreements before the
Internal Revenue Service, the Department of Labor or the
PBGC;
|
|
|
(10)
|
Each
trust funding a Plan, which trust is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code,
satisfies the requirements of such section and has received a
favorable determination letter from the Internal Revenue Service
regarding such exempt status and has not, since receipt of the most
recent favorable determination letter, been amended or operated in
a way which would adversely affect such exempt status.
|
|
|
(11)
|
Each
Seller has no obligation to provide health benefits or death
benefits to its former employees, except as specifically required
by law;
|
|
|
(12)
|
Neither
the execution and delivery of this Agreement nor the consummation
of any or all of the transactions contemplated hereby will: (A)
entitle any current or former employee of any Seller to severance
pay, unemployment compensation or any similar payment, (B)
accelerate the time of payment or vesting or increase the amount of
any compensation due to any such employee or former employee, or
(C) directly or indirectly result in any payment made to or on
behalf of any person to constitute a “parachute
payment” within the meaning of Section 280G of the
Code;
|
|
(13)
|
Each
Seller has not incurred any liability or taken any action, and no
action or event has occurred that could cause the Company to incur
any liability (A) under Section 412 of the Code or Title IV of
ERISA with respect to any “single-employer plan” within
the meaning of Section 4001(a)(15) of ERISA that is not a Plan, or
(B) to any Multiemployer Plan, including without limitation an
account of a partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA.
|
|
(14)
|
Since
January 1, 2000, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the Company and
any employee, (ii) labor union grievances or organizational
efforts, or (iii) unfair labor practice or labor arbitration
proceedings pending or threatened.
|
|
|
(D)
|
Except
as set forth in Schedule 8(k)(A), each Seller is not a party to any
agreement, and each has not established any policy or practice,
requiring such Seller to make a payment or provide any other form
or compensation or benefit to any person performing services for
such Seller upon termination of such services which would not be
payable or provided in the absence of the consummation of the
transactions contemplated by this Agreement.
|
|
|
(E)
|
Schedule
8(k)(E)(i) sets forth by number and employment classification the
approximate numbers of employees employed by each Seller as of the
date of this Agreement, and, except as set forth on Schedule
8(k)(E) (ii), none of said employees are subject to union or
collective bargaining agreements with such Seller.
|
|
|
(F)
|
Neither
the Buyer nor any of its Affiliates shall have any liability or
obligations under or with respect to the Workers Adjustment
Retraining Notification Act in connection with any of the
transactions contemplated in connection herewith.
|
|
(l)
|
Financial
Statements; Liabilities; Accounts Receivable;
Inventories
|
|
|
(A)
|
The
Audited Financial Statements and the Interim 2007 Statements that
the Sellers and the Shareholders provided in accordance with
Section 6 shall be complete and correct, shall have been prepared
from the books and records of the Company in accordance with
generally accepted accounting principles consistently applied and
maintained throughout the periods indicated and shall fairly
present the financial condition of the Company as at their
respective dates and the results of its operations for the periods
covered thereby, subject to normal year-end adjustments and
accruals.
|
|
|
(B)
|
Except
for (i) the liabilities reflected on the Company’s June 30,
2007 balance sheet included with the Interim 2007 Statements
attached as Schedule 8(l)(B)(a), (ii) trade payables and accrued
expenses incurred since June 30, 2007 in the ordinary course of
business, none of which are material, and (iii) executory contract
obligations under (x) Contracts listed on Schedule 8(s), and/or (y)
Contracts not required to be listed on Schedule 8(s), the Sellers
have no liabilities or obligations (whether accrued, absolute,
contingent, known, unknown or otherwise, and whether or not of a
nature required to be reflected or reserved against in a balance
sheet in accordance with GAAP).
|
|
|
(C)
|
The
accounts receivable reflected on the June 30, 2007 balance sheets
and all of the Trade Receivables arising since June 30, 2007 (the
“Balance Sheet Date”) arose from bona fide transactions
in the ordinary course of business, and the goods and services
involved have been sold, delivered and performed to the account
obligors, and no further filings (with Governmental Authorities,
insurers or others) are required to be made, no further goods are
required to be provided and no further services are required to be
rendered in order to complete the sales and fully render the
services and to entitle the Company to collect the accounts
receivable in full. No such accounts receivable has been
assigned or pledged to any other person, firm or corporation, and,
except only to the extent fully reserved against as set forth in
the June 30, 2007 balance sheets, no defense or set-off to any such
account has been asserted by the account obligor or
exists.
|
|
|
(D)
|
The
Merchandise Inventory as of the Closing Date shall consist of items
of a quality, condition and quantity consistent with normal
seasonally-adjusted Inventory levels of the Company and be usable
and saleable in the ordinary and usual course of business for the
purposes for which intended. The Merchandise Inventory
is valued on the Company’s books of account in accordance
with GAAP at the Company’s average cost.
|
|
(m)
|
Sellers
(i) have and will have as of the Closing Date legal and beneficial
ownership of the Properties and the Owned Real Estate; and (ii)
have not, and are not in default in performance of any covenant,
agreement, term, provision or condition contained in the Real
Estate Lease.
|
|
(n)
|
Absence
of Certain Changes
|
|
|
(A)
|
Except
as otherwise set forth in Schedule 8(n)(A) attached hereto, since
the Balance Sheet Date, there has not been:
|
|
|
(1)
|
any
event, circumstance or change that had or might have a material
adverse effect on the business, operations, prospects, Properties,
financial condition or working capital of the Sellers;
|
|
|
(2)
|
any
damage, destruction or loss (whether or not covered by insurance)
that had or might have a material adverse effect on the business,
operations, prospects, Properties or financial condition of the
Sellers; or
|
|
|
(3)
|
any
material adverse change in the Sellers’ vendor or supplier
relations or in Sellers’ sales patterns, pricing
policies, accounts receivable or accounts payable.
|
|
|
(B)
|
Except
as otherwise set forth in Schedule 8(n)(B) attached hereto, since
the Balance Sheet Date, each Seller has not done any of the
following:
|
|
|
(1)
|
merged
into or with or consolidated with, any other corporation or
acquired the business or assets of any Person;
|
|
|
(2)
|
purchased
any securities of any Person;
|
|
|
(3)
|
created,
incurred, assumed, guaranteed or otherwise become liable or
obligated with respect to any indebtedness, or made any loan or
advance to, or any investment in, any person, except in each case
in the ordinary course of business and as set forth on Schedule
8(n)(B)(3);
|
|
|
(4)
|
made
any change in any existing election, or made any new election, with
respect to any tax law in any jurisdiction which election could
have an effect on the tax treatment of the Seller or the
Seller’s business operations;
|
|
|
(5)
|
entered
into, amended or terminated, or waived any of the Company’s
rights under, any agreement specified in Schedule
8(s);
|
|
(6)
|
sold,
transferred, leased, mortgaged, encumbered or otherwise disposed
of, or agreed to sell, transfer, lease, mortgage, encumber or
otherwise dispose of, any Properties except (i) in the ordinary
course of business and as set forth on Schedule 8(n)(B)(6), or (ii)
pursuant to any agreement specified in Schedule 8(s);
|
|
|
(7)
|
settled
any claim or litigation, or filed any motions, orders, briefs or
settlement agreements in any proceeding before any Governmental
Authority or any arbitrator;
|
|
|
(8)
|
incurred,
approved or entered into any agreement or commitment to make, any
individual or a group of individually-related expenditures in
excess of $25,000 (other than those required pursuant to any
agreement specified in Schedule 8(s));
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(9)
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maintained
its books of account other than in the usual, regular and ordinary
manner in accordance with generally accepted accounting principles
and on a basis consistent with prior periods or made any change in
any of its accounting methods or practices that would be required
to be disclosed under GAAP;
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(10)
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adopted
any Plan or Benefit Program or Agreement, or granted any increase
in the compensation payable or to become payable to directors,
officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or
commitment), other than merit increases to non-officer employees in
the ordinary course of business and consistent with past
practice;
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(11)
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suffered
any extraordinary losses or waived any rights of material
value;
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(12)
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made
any payment to any Affiliate or forgiven any indebtedness due or
owing from any Affiliate to the Company;
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(13)
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(A)
liquidated Inventory or accepted product returns other than in the
ordinary course, (B) accelerated receivables, (C) delayed payables,
or (D) changed in any material respect the Company’s
practices in connection with the payment of payables or the
collection of receivables;
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(14)
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engaged
in any one or more activities or transactions with an Affiliate or
outside the ordinary course of business;
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(15)
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declared,
set aside or paid any dividends, or made any distributions or other
payments in respect of its equity securities, or repurchased,
redeemed or otherwise acquired any such securities;
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(16)
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amended
its Certificate of Incorporation or bylaws; or
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(17)
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committed
to do any of the foregoing.
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(A)
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Except
as otherwise set forth in Schedule 8(o), each Seller is and has
been in compliance in all respects with any and all Legal
Requirements applicable to such Seller, other than failures to so
comply that would not have an adverse effect on the business,
operations, prospects, Properties or financial condition of such
Seller. Except as otherwise set forth in Schedule 8(o),
each Seller (i) has not received or entered into any citations,
complaints, consent orders, compliance schedules, or other similar
enforcement orders or received any written notice from any
Governmental Authority or any other written notice that would
indicate that there is not currently compliance with all such Legal
Requirements, except for failures to so comply that would not have
an adverse effect on the business, operations, prospects,
Properties or financial condition of such Seller, and (ii) is not
in default under, and no condition exists (whether covered by
insurance or not) that with or without notice or lapse of time or
both would constitute a default under, or breach or violation of,
any Legal Requirement or Permit applicable to such
Seller.
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(B)
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Without
limiting the generality of Section 8(o), each Seller has not
received notice of and there is no basis for, any claim, action,
suit, investigation or proceeding that might result in a finding
that such Seller is not or has not been in compliance with Legal
Requirements relating to (a) the development, testing, manufacture,
packaging, distribution and marketing of products, (b) employment,
safety and health, (c) environmental protection, building, zoning
and land use and/or (d) the Foreign Corrupt Practices Act and the
rules and regulations promulgated thereunder.
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(A)
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Except
as otherwise set forth in Schedule 8(p), there are no claims,
actions, suits, investigations or proceedings against each Seller
pending or, to the Knowledge of such Seller or any Shareholder,
threatened in any court or before or by any Governmental Authority,
or before any arbitrator, that might have an adverse effect
(whether covered by insurance or not) on the business, operations,
prospects, Properties or financial condition of such Seller or on
their ability to consummate the transactions contemplated hereby,
and there is no basis for any such claim, action, suit,
investigation or proceeding. Schedule 8(p) also includes
a true and correct listing of all material actions, suits,
investigations, claims or proceedings that were pending, settled or
adjudicated since January 1, 2002.
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(q)
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Special
Provisions Regarding Asbestos Claims
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(A)
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The
Sellers and the Majority Shareholders hereby jointly and severally
represent and warrant to Buyer (i.e. the liability of Sellers and
the Majority Shareholders for the breach of any representation or
warranty is joint and several, in the sense that Buyer may proceed
against any one or more Sellers and Majority Shareholders for all
or any part of such liability) and the Minority Shareholders hereby
severally represent and warrant (i.e. the liability of the Minority
Shareholders is several, in the sense that Buyer can proceed
against any Minority Shareholder for only that portion of the total
liability for such breach that is proportional to his pro rata
ownership interest in the Company) to Buyer
that:
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(a)
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Each
Seller has not, since the time any Shareholder purchased equity in,
or was an Affiliate with, any one of the Sellers in April 16, 1993,
sold any asbestos or asbestos containing products and is not a
defendant in any lawsuit related to same.
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(b)
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To
its Knowledge, each Seller has not prior to April 16, 1993 sold any
asbestos or asbestos containing products and is not a defendant in
any lawsuit related to same.
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(2)
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Other
than as set forth in Schedule 8(q)(2), each Seller has maintained
asbestos related insurance since the time such Seller was
incorporated and that there are no gaps of coverage for asbestos
related insurance.
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(B)
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Sellers
and Majority Shareholders shall jointly and severally fully
indemnify, protect, reimburse, and hold harmless Buyer from and
against any and all damages, liabilities and claims for personal
injury due to, or alleged to be due to, exposure to asbestos in
connection with Sellers’ business, operations or premises at
any time prior to the Closing (an "asbestos claim").
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(C)
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In
any such action or proceeding, Buyer shall have the right to retain
its own counsel; but the fees and expenses of such counsel shall be
at its own expense unless (i) the Indemnifying Party and Buyer
shall have mutually agreed to the retention of such counsel or (ii)
the named parties to any suit, action or proceeding (including any
impleaded parties) include both the Indemnifying Party and the
Buyer and representation of all parties by the same counsel would
be inappropriate due to actual or potential conflict of interests
between them.
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(D)
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An
Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent of any claim, litigation or
proceeding in respect of which indemnity may be sought
hereunder.
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(E)
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The
Indemnifying Party may settle any claim without the consent of
Buyer, but only if the sole relief awarded is monetary damages that
are paid in full by the Indemnifying Party. Buyer shall, subject to
its reasonable business needs, use reasonable efforts to minimize
the indemnification sought from the Indemnifying Party under this
Agreement.
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(F)
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If
an asbestos claim is made against Buyer, Buyer shall, within ten
days after receiving written notice of such claim, give notice to
the Company in the manner provided elsewhere in this Agreement for
notices hereunder.
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(G)
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If
Sellers assume the defense of an asbestos claim at its own expense,
then (x) it shall within 20 days inform Buyer of such assumption in
writing, and (y) notwithstanding any contrary provision in this
Section, Seller shall not incur any expense for Buyer’s
counsel.
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(A)
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Schedule
8(r)(A) sets forth a list of all real property or any interest
therein (including without limitation any option or other right or
obligation to purchase any real property or any interest therein)
currently owned, or ever owned, by each Seller, in each case
setting forth the street address and legal description of each
property covered thereby (the "Owned Premises”)
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(B)
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Schedule
8(r)(B) sets forth a list of all leases, licenses or similar
agreements relating to the Sellers’ use or occupancy of real
estate owned by a third party (“Leases”), true and
correct copies of which have previously been furnished to Buyer, in
each case setting forth (i) the lessor and lessee thereof and the
commencement date, term and renewal rights under each of the
Leases, and (ii) the street address and legal description of each
property covered thereby (the “Leased
Premises”). The Leases and all guaranties with
respect thereto, are in full force and effect and have not been
amended in writing or otherwise, and no party thereto is in default
or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both,
would cause a material breach of or default under any of such
Leases. Neither the Sellers nor its agents or employees
have received written notice of any claimed abatements, offsets,
defenses or other bases for relief or adjustment.
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(C)
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With
respect to each Owned Premises and Leased Premises, as
applicable: (i) the Sellers have good, marketable and
insurable fee simple interest in the Owned Premises and a valid
leasehold interest pursuant to a verbal month-to-month lease, such
lease terminable by either party upon 90 days prior termination
notice, in the Leased Premises, free and clear of any Liens,
encumbrances, covenants and easements or title defects that have
had or could have an adverse effect on the Sellers’ use and
occupancy of the Owned Premises and the Leased Premises; (ii) the
portions of the buildings located on the Owned Premises and the
Leased Premises that are used in the business of the Sellers are
each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Sellers’
current and reasonably anticipated normal business activities as
conducted thereon and, to the Knowledge of each Seller, there is no
latent material defect in the improvements on any Owned Premises,
structural elements thereof, the mechanical systems (including,
without limitation, all heating, ventilating, air conditioning,
plumbing, electrical, utility and sprinkler systems) therein, the
utility system servicing each Owned Premises and the roofs which
have not been disclosed to Buyer in writing prior to the date of
this Agreement; and(iii) each Seller has not received notice of (A)
any condemnation, eminent domain or similar proceeding affecting
any portion of the Owned Premises or the Leased Premises or any
access thereto, and, to the Knowledge of each Seller, no such
proceedings are contemplated, (B) any special assessment or pending
improvement liens to be made by any governmental authority which
may affect any of the Owned Premises or the Leased Premises, or (C)
any violations of building codes and/or zoning ordinances or other
governmental regulations with respect to the Owned Premises or the
Leased Premises.
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(A)
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Except
as otherwise set forth in Schedule 8(s), each Seller is not a party
to or bound by any of the following, whether written or
oral:
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(1)
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any
Contract that cannot by its terms be terminated by such Seller with
30 days’ or less notice without penalty or whose term
continues beyond one year after the date of this
Agreement;
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(2)
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contract
or commitment for capital expenditures by such Seller in excess of
$25,000 per calendar quarter in the aggregate;
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(3)
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lease
or license with respect to any Properties, real or personal,
whether as landlord, tenant, licensor or licensee;
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(4)
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agreement,
contract, indenture or other instrument relating to the borrowing
of money or the guarantee of any obligation or the deferred payment
of the purchase price of any Properties;
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(5)
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partnership
agreement, joint venture agreement or limited liability company
operating agreement;
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(6)
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contract
with any Affiliate of such Seller (including the Shareholders)
relating to the provision of goods or services by or to such
Seller;
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(7)
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agreement
for the sale of any assets that in the aggregate have a net book
value on the such Seller’s books of greater than
$5,000;
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(8)
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agreement
that purports to limit such Seller’s freedom to compete
freely in any line of business or in any geographic
area;
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(9)
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preferential
purchase right, right of first refusal, or similar agreement;
or
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(10)
|
other
Contract that is material to the business of such
Seller.
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(B)
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All
of the Contracts listed or required to be listed in Schedule 8(s)
are valid, binding and in full force and effect, and the Sellers
have not been notified or advised by any party thereto of such
party’s intention or desire to terminate or modify any such
Contract in any respect, except as disclosed in Schedule
8(s). Neither the Sellers nor, to the Knowledge of each
Seller, any other party is in breach of any of the terms or
covenants of any Contract listed or required to be listed in
Schedule 8(s). Following the Closing, Buyer will
continue to be entitled to all of the benefits currently held by
the each Seller under each Contract listed or required to be listed
in Schedule 8(s).
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(C)
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Except
as otherwise set forth in Schedule 8(s), each Seller is not a party
to or bound by any Contract or Contracts the terms of which were
arrived at by or otherwise reflect less-than-arm’s-length
negotiations or bargaining.
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(A)
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Schedule
8(t) hereto is a complete and correct list of all insurance
policies (including, without limitation, fire, liability, product
liability, workers’ compensation and vehicular) presently in
effect that relate to each Seller, or its Properties, including the
amounts of such insurance and annual premiums with respect thereto,
all of which have been in full force and effect from and after the
date(s) set forth on Schedule 8(t).
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(A)
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Set
forth on Schedule 8(u) is a list and description of all material
foreign and domestic patents, patent rights, trademarks, service
marks, trade names, brands and copyrights (whether or not
registered and, if applicable, including pending applications for
registration) owned, Used, licensed or controlled by each Seller
and all goodwill associated therewith. Each Seller owns
or has the right to use and shall as of the Closing Date own or
have the right to use any and all information, know-how, trade
secrets, patents, copyrights, trademarks, tradenames, software,
formulae, methods, processes and other intangible properties that
are necessary or customarily Used by such Seller for the ownership,
management or operation of its Properties (“Intangible
Rights”) including, but not limited to, the Intangible Rights
listed on Schedule 8(u). Except as set forth on
Sche
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