EXHIBIT 10.1
------------
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
NAGALV - OHIO, INC.
AND
GREGORY INDUSTRIES, INC.
DATED AS OF FEBRUARY 28, 2005
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TABLE OF
CONTENTS
Page
----
ARTICLE I
DEFINITIONS.........................................................
9
Section 1.1.
Definitions............................................... 9
Section 1.2. Other
Definitions.........................................12
ARTICLE II PURCHASE AND
SALE..................................................14
Section 2.1. Agreement to
Purchase and Sell............................14
Section 2.2.
Assets....................................................14
Section 2.3. Excluded
Assets...........................................15
Section 2.4. Assumed
Liabilities.......................................16
Section 2.5. Excluded
Liabilities......................................17
ARTICLE III PURCHASE PRICE; ADJUSTMENTS;
ALLOCATIONS..........................18
Section 3.1. Purchase
Price............................................18
Section 3.2. Payment of
Purchase Price.................................18
Section 3.3. Allocation of
Purchase Price..............................18
Section 3.4. Allocation of
Certain Items...............................18
Section 3.5. Adjustment of
Purchase Price for Accounts Receivable......19
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF COMPANY..........................19
Section 4.1.
Organization..............................................19
Section 4.2.
Authorization.............................................19
Section 4.3. Absence of
Restrictions and Conflicts.....................20
Section 4.4. Real
Property.............................................20
Section 4.5. Title to Assets;
Related Matters..........................21
Section 4.6. Financial
Statements......................................22
Section 4.7. Inventory and
Products....................................22
Section 4.8. No Undisclosed
Liabilities................................23
Section 4.9. Absence of
Certain Changes................................23
Section 4.10. Legal
Proceedings.........................................23
Section 4.11. Compliance with
Law.......................................23
Section 4.12. Company
Contracts.........................................24
Section 4.13. Insurance
Policies........................................25
Section 4.14. Environmental, Health
and Safety Matters..................26
Section 4.15. Intellectual Property;
Software...........................27
Section 4.16. Transactions with
Affiliates..............................28
Section 4.17. Nondisclosed
Payments.....................................29
Section 4.18. Customer and Supplier
Relations...........................29
Section 4.19. Notes and Accounts
Receivable.............................30
Section 4.20. Licenses and
Permits......................................30
Section 4.21. Brokers, Finders and
Investment Bankers...................31
Section 4.22. Product and Service
Warranties............................31
Section 4.23. Ethical
Practices.........................................31
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Section 4.24.
Disclosure................................................31
Section 4.25.
Solvency..................................................32
Section 4.26.
Representations...........................................32
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PURCHASER.........................32
Section 5.1.
Organization..............................................32
Section 5.2.
Authorization.............................................33
Section 5.3. Absence of
Restrictions and Conflicts.....................33
Section 5.4. Brokers, Finders
and Investment Bankers...................33
Section 5.5. Additional
Representations and Warranties.................34
ARTICLE VI CERTAIN COVENANTS AND
AGREEMENTS...................................34
Section 6.1. Conduct of
Business by the Company........................34
Section 6.2. Inspection and
Access to Information......................36
Section 6.3. Notices of
Certain Events.................................37
Section 6.4. Interim
Financials........................................38
Section 6.5. No Solicitation
of Transactions...........................38
Section 6.6. Reasonable
Efforts; Further Assurances; Cooperation.......38
Section 6.7.
Consents..................................................39
Section 6.8. Public
Announcements......................................40
Section 6.9. Supplements to
Schedules..................................40
Section 6.10.
Insurance.................................................41
Section 6.11.
Non-Competition...........................................41
Section 6.12. Trademarks;
Tradenames....................................43
Section 6.13. Risk of
Loss..............................................43
Section 6.14. Customer
Visits...........................................43
Section 6.15. Payment of Retained
Liabilities...........................43
Section 6.16. Removing Excluded
Assets..................................44
Section 6.17. Customer and Other
Business Relationships.................44
ARTICLE VII TAX
MATTERS.......................................................44
Section 7.1.
Definitions...............................................44
Section 7.2. Tax
Matters...............................................45
Section 7.3. Tax Cooperation;
Allocation of Taxes......................45
ARTICLE VIII EMPLOYEE
BENEFITS................................................46
Section 8.1. Representations
Regarding Officers and Employees..........46
Section 8.2. Representations
Regarding Company and Employee
Benefit Plans.............................................47
Section 8.3. Representations
Regarding Labor Relations.................48
Section 8.4.
Employees.................................................50
Section 8.5. Company's
Employee Benefit Plans..........................51
Section 8.6. Purchaser
Benefit Plans...................................52
Section 8.7. Continuation of
Administrative Services and
Insurance Coverage........................................53
Section 8.8. No Third Party
Beneficiaries..............................53
ARTICLE IX CONDITIONS TO
CLOSING..............................................53
Section 9.1. Conditions to
Each Party's Obligations....................53
6
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Section 9.2. Conditions to
Obligations of the Purchaser................54
Section 9.3. Conditions to
Obligations of the Company..................56
ARTICLE X CLOSING
............................................................56
ARTICLE XI
TERMINATION........................................................57
Section 11.1.
Termination...............................................57
Section 11.2. Specific Performance
and Other Remedies...................58
Section 11.3. Effect of
Termination.....................................58
ARTICLE XII
INDEMNIFICATION...................................................58
Section 12.1. Indemnification
Obligations of the Company................58
Section 12.2. Indemnification
Obligations of the Purchaser..............59
Section 12.3. Indemnification
Procedure.................................60
Section 12.4. Claims
Period.............................................62
Section 12.5.
Limitations...............................................64
Section 12.6.
Investigations............................................65
Section 12.7. Acknowledgement of the
Parties............................65
Section 12.8. Post-Closing
Remediation Plan on Outstanding
Environmental Orders......................................65
Section 12.9. Letter of
Credit..........................................67
Section 12.10. Insurance
Proceeds........................................67
ARTICLE XIII MISCELLANEOUS
PROVISIONS.........................................67
Section 13.1.
Notices...................................................67
Section 13.2. Schedules and
Exhibits....................................68
Section 13.3. Assignment; Successors
in Interest........................68
Section 13.4. Number;
Gender............................................69
Section 13.5.
Captions..................................................69
Section 13.6. Controlling Law;
Amendment................................69
Section 13.7. Consent to
Jurisdiction, Etc..............................69
Section 13.8. Waiver of Jury
Trial......................................69
Section 13.9.
Severability..............................................70
Section 13.10.
Counterparts..............................................70
Section 13.11. Enforcement of Certain
Rights.............................70
Section 13.12. Waiver; Remedies
Cumulative...............................70
Section 13.13.
Integration...............................................70
Section 13.14. Cooperation Following the
Closing.........................71
Section 13.15. Transaction Costs;
Expenses...............................71
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LIST OF EXHIBITS
Exhibit 9.1(c)
Form of Transition Services Agreement
Exhibit 9.1(d)
Form of Galvanizing and Fabrication Agreement
Exhibit 9.1(e)
Form of Lease Agreement
Exhibit 9.2(d)
Form of Company Certificate
Exhibit 9.2(h)
Form of Company's Counsel Opinion
Exhibit 9.2(j)(i)
Form of Bill of Sale
Exhibit 9.2(j)(ii)
Form of Assignment and Assumption Agreement
LIST OF SCHEDULES
Schedule 2.4(b)(ii)
Current Liabilities
Schedule 3.3
Allocation of Purchase Price
Schedule 4.3
Restrictions and Conflicts
Schedule 4.4(a)
Owned Real Property
Schedule 4.4(b)
Leased Real Property
Schedule 4.5
Title Exceptions
Schedule 4.6
Financial Statement Exceptions
Schedule 4.8
No Undisclosed Liabilities
Schedule 4.9
Absence of Certain Changes
Schedule 4.10
Legal Proceedings
Schedule 4.11
Compliance with Law
Schedule 4.12
Company Contracts
Schedule 4.13
Insurance Policies
Schedule 4.14
Environmental, Health and Safety Matters
Schedule 4.15(a)
Intellectual Property
Schedule 4.15(b)
Company Software
Schedule 4.16
Transactions with Affiliates
Schedule 4.18(a)
Major Suppliers
Schedule 4.18(b)
Major Customers
Schedule 4.19(a)
Accounts Receivable
Schedule 4.20
Licenses and Permits
Schedule 4.21
Brokers
Schedule 4.22
Product and Service Warranties
Schedule 6.12
Company Trademarks and Tradenames
Schedule 8.1
All Officers and Employees
Schedule 8.2
Company Benefit Plans
Schedule 8.3
Labor Relations
Schedule 8.4(a)
Employees
8
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET
PURCHASE AGREEMENT (this "Agreement"), dated as of February 28,
2005, is made and entered into by and
between NAGalv - Ohio, Inc., a Delaware
corporation ("Purchaser"), and Gregory
Industries, Inc., an Ohio corporation
(the "Company"). The Purchaser and the
Company are sometimes individually
referred to herein as a "Party" and
collectively as the "Parties." The term
"Company" as used in this Agreement
includes Gregory Industries, Inc. and its
subsidiaries.
WHEREAS, the
Company conducts an after-fabrication hot-dip galvanizing
business (the "Business");
WHEREAS, the
Parties desire to enter into this Agreement pursuant to which
the Company proposes to sell to the
Purchaser, and the Purchaser proposes to
purchase from the Company, all of the
assets used or held for use by the Company
in the conduct of the Business as a going
concern, and the Purchaser proposes to
assume certain of the liabilities and
obligations of the Company (the
"Acquisition"); and
WHEREAS, the
Parties desire to make certain representations, warranties and
agreements in connection with the
Acquisition.
NOW, THEREFORE,
in consideration of the foregoing and the respective
representations, warranties, covenants,
agreements and conditions hereinafter
set forth, and intending to be legally
bound hereby, the Parties agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1.
DEFINITIONS.
(a) The following Terms, as used
herein, have the following meanings:
"Accounts Receivable" means (i) all trade accounts receivable
and
other rights to
payment from customers of the Company and the full benefit
of all security
for such accounts or rights to payment, including all trade
accounts
receivable representing amounts receivable in respect of goods
shipped or
products sold or services rendered to customers of the Company
and the full
benefit of all security for such accounts and (ii) any claim,
remedy or other
right related to any of the foregoing.
"Affiliate" means, with respect to any Person, any other Person
directly or
indirectly controlling, controlled by, or under common control
with such other
Person. For purposes of this definition, "control," when
used with
respect to any specified Person, means the power to direct the
management and
policies of such Person, directly or indirectly, whether
through the
ownership of voting securities, by contract or otherwise; and
the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
9
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"Associate" means, with respect to any Person, (i) any corporation
or
organization
(other than a majority-owned subsidiary) of which such Person
is an officer or
partner or is, directly or indirectly, the beneficial
owner of 10% or
more of any class of equity securities, (ii) any trust or
other estate in
which such Person has a substantial beneficial interest or
as to which such
Person serves as trustee or in a similar fiduciary
capacity, and
(iii) any relative or spouse of such Person, or any relative
of such spouse,
who has the same home as such Person or who is a director
of officer of an
entity or any of its parents or subsidiaries.
"Business Day" means any day except Saturday, Sunday or any day
on
which banks are
generally not open for business in the United States.
"CERCLA" means the Comprehensive Environmental Response,
Compensation
and Liability
Act of 1980, as amended, and any rules or regulations
promulgated
thereunder.
"Commercially Reasonable Efforts" means the efforts necessary
to
complete the
task at hand that would have been undertaken by a reasonable
business entity
under similar circumstances, giving due consideration to
cost, timing,
and other factors that would reasonably be expected to be
considered by a
reasonable business entity.
"Environmental Laws" means any federal, state, local or foreign
law
(including,
without limitation, common law), treaty, judicial decision,
regulation,
rule, judgment, order, decree, injunction, permit or
governmental
restriction or any agreement with any governmental authority
or other third
party, whether now or hereafter in effect, relating to the
environment,
human health and safety or to pollutants, contaminants, wastes
or chemicals or
any toxic, radioactive, ignitable, corrosive, reactive or
otherwise
hazardous substances, wastes or materials.
"Environmental Permits" mean all permits, licenses, franchises,
certificates,
approvals and other similar authorizations of governmental
authorities
relating to or required by Environmental Laws and affecting, or
relating in any
way to, the Business.
"Hazardous Materials" mean any waste, pollutant, contaminant,
hazardous
substance, toxic, ignitable, reactive or corrosive substance,
hazardous waste,
special waste, industrial substance, by-product, process
intermediate
product or waste, petroleum or petroleum-derived substance or
waste, chemical
liquids or solids, liquid or gaseous products, or any
constituent of
any such substance or waste, the use, handling or disposal
of which by the
Company is in any way governed by or subject to any
applicable
Environmental Laws.
"Intellectual Property Right" means any trademark, service mark,
trade
name, mask work,
invention, patent, trade secret, copyright, know-how
(including any
registrations or applications for registration of any of the
foregoing) or
any other similar type of proprietary intellectual property
right.
"IRS" means the United States Internal Revenue Service and, to
the
extent relevant,
the United States Department of the Treasury.
10
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"Knowledge of the Company" or similar terms shall mean the
knowledge
of officers and
directors of the Company. Knowledge shall be both actual
knowledge, as
well as the knowledge a reasonable business person would have
obtained after
making reasonable inquiry and after exercising reasonable
diligence with
respect thereto. The parties agree that with respect to the
representations
and warranties contained in Section 4.14 below, the
Company's
decision not to perform Phase I or Phase II environmental
assessments
shall not be construed as a failure by Company to make
reasonable
inquiry or to exercise reasonable diligence as set forth in the
definition
above.
"Lien" means, with respect to any property or asset, any
mortgage,
lien, pledge,
charge, security interest, encumbrance or other adverse claim
of any kind in
respect of such property or asset. For the purposes of this
Agreement, a
Person shall be deemed to own subject to a Lien any property
or asset which
it has acquired or holds subject to the interest of a vendor
or lessor under
any conditional sale agreement, capital lease or other
title retention
agreement relating to such property or asset.
"Material Adverse Effect" means any change, event, effect or
occurrence that
is or may be reasonably likely to be materially adverse to
the financial
condition of the Business, results of operations, properties,
assets or
liabilities (including, without limitation, contingent
liabilities) of
the Business or the Assets taken as a whole. A Material
Adverse Effect
shall also include any change, event or occurrence that
shall have
occurred or been threatened that (when taken together with all
other adverse
changes, events, effects or occurrences that have occurred or
been threatened)
is or would be reasonably likely to prevent or materially
delay the
performance by the Company of any of its obligations under this
Agreement or the
consummation of the transactions contemplated hereby.
"1934 Act" means the Securities Exchange Act of 1934, as amended,
and
the rules and
regulations promulgated thereunder.
"Permitted Exceptions" means (i) Liens for taxes not yet due
and
payable, (ii)
zoning, building, or other governmental restrictions now in
effect relating
to the Real Property, (iii) all matters shown on Schedule B
of Purchaser's
title commitment, which is attached hereto as a portion of
Schedule 4.4(a),
and (iv) such Liens, claims, encumbrances, or other
restrictions
accepted by Purchaser in writing.
"Person" means an individual, corporation, partnership, limited
liability
company, association, trust or other entity or organization,
including a
government or political subdivision or an agency or
instrumentality
thereof.
"Proceeding" means any action, arbitration, audit, hearing,
investigation,
litigation or suit (whether civil, criminal, administrative,
judicial or
investigative, whether formal or informal, whether public or
private)
commenced, brought, conducted or heard by or before, or
otherwise
involving, any
Governmental Entity or arbitrator.
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SECTION 1.2.
OTHER DEFINITIONS.
Each of the
following terms is defined in the Section set forth opposite
such term:
Terms
Section
-----
-------
Acquisition...................................................Recitals
ADA...........................................................8.3(i)
ADEA..........................................................8.3(i)
Agreement
....................................................Preamble
Applicable
Benefit Laws.......................................8.2(d)(iv)
Arbitrator....................................................3.3(c)
Assets........................................................2.1
Assignment and
Assumption Agreement...........................9.2(j)(ii)
Assumed
Contracts.............................................2.2(c)
Assumed
Liabilities...........................................2.4(b)
Apportioned
Obligations.......................................7.3(b)
Bill of
Sale..................................................9.2(j)(i)
Business......................................................Recitals
Business
Activities...........................................6.11(a)(i)
Claims
Period.................................................12.4
Closing.......................................................Article
X
Closing
Date..................................................Article X
Closing Date
Indebtedness.....................................2.5(c)
COBRA
Coverage................................................8.4(b)
Code..........................................................7.1(a)
Company
......................................................Preamble
Company
Ancillary Documents...................................4.2
Company Benefit
Plan..........................................8.2(a)
Company
Financial Statements..................................4.6
Company
Indemnified Parties...................................12.2
Company Licensed
Software.....................................4.15(b)
Company
Losses................................................12.2
Company
Proprietary Software..................................4.15(b)
Company
Software..............................................4.15(b)
Confidential
Information......................................6.11(a)(ii)
Employee Benefit
Plan.........................................8.2(b)
Environmental
Indemnification Obligations.....................12.9
ERISA.........................................................8.2(b)
ERISA
Affiliate...............................................8.2(c)
ERISA Affiliate
Plan..........................................8.2(c)
Excluded
Assets...............................................2.3
Excluded
Liabilities..........................................2.5
Financial
Statements..........................................4.6
FLSA..........................................................8.3(i)
FMLA..........................................................8.3(i)
GAAP..........................................................4.6
Governmental
Entity...........................................4.10
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Indemnified
Party.............................................12.3(a)
Indemnifying
Party............................................12.3(a)
Intellectual
Property.........................................4.15(a)
Interim Balance
Sheet.........................................4.6
Interim
Financial Statements..................................4.6
Inventory.....................................................2.2(a)
Irrevocable
Letter of Credit..................................12.9
Labor
Laws....................................................8.3(q)
Leased Real
Property..........................................4.4(b)
Licenses......................................................4.20
Major
Customer................................................4.18(b)
Major
Supplier................................................4.18(a)
NLRB..........................................................8.3(a)
Non-Assignable
Contracts......................................6.7
Noncompete
Period.............................................6.11(a)(iii)
Orders........................................................12.8(a)
OSHA..........................................................8.3(k)
Owned Real
Property...........................................4.4(a)
Parties.......................................................Preamble
Party.........................................................Preamble
Post-Closing Tax
Period.......................................7.3(b)
Pre-Closing Tax
Period........................................7.1(b)
Purchase
Price................................................3.1
Purchaser.....................................................Preamble
Purchaser
Ancillary Documents.................................5.2
Purchaser
Indemnified Parties.................................12.1
Purchaser
Losses..............................................12.1
Real
Property.................................................4.4(b)
Surviving
Representations.....................................12.4(a)
Taxes.........................................................7.1(c)
Tax
Return....................................................7.1(d)
Termination
Date..............................................11.1
Territory.....................................................6.11(a)(iv)
Trade
Secrets.................................................6.11(a)(v)
Transferred
Employees.........................................8.4(a)
Transfer
Taxes................................................7.3(c)
Unaudited
Financial Statements................................4.6
WARN..........................................................8.3(n)
Work..........................................................12.8(a)
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ARTICLE II
PURCHASE AND SALE
SECTION 2.1.
AGREEMENT TO PURCHASE
AND SELL.
Subject to the
terms and conditions of this Agreement, at the Closing and
except as otherwise specifically provided
in this Article II, the Company will
grant, sell, assign, transfer and deliver
to the Purchaser, and the Purchaser
will purchase and acquire from the Company,
all right, title and interest of the
Company in, to and under the assets,
properties and business, of every kind and
description, wherever located, real,
personal or mixed, tangible or intangible,
owned or held or used in the conduct of the
Business by the Company as the same
shall exist on the Closing Date and not
disposed of in the ordinary course of
business as permitted by this Agreement,
and all of the assets of the Business
thereafter acquired by the Company (which
assets, properties and rights are
collectively referred to in this Agreement
as the "Assets"), free and clear of
all Liens, other than Permitted Exceptions,
and the Purchaser will assume the
Assumed Liabilities (as hereinafter
defined).
SECTION 2.2.
ASSETS.
Except as
otherwise expressly set forth in Section 2.3, the Assets shall
include, without limitation, the following
assets, properties and rights of the
Company that relate to the Business,
including the design, manufacture and sale
of its products, as of the close of
business on the Closing Date:
(a) all inventory, including without
limitation, office and other
supplies, raw materials, spare, replacement
and component parts, works-in-
process, finished goods and other inventory
property located at, stored on
behalf of or in transit to the Company with
respect to the Business
(collectively, "Inventory");
(b) all fixed assets, equipment,
furnishings, computer hardware, vehicles,
machinery, fixtures and other tangible
personal property;
(c) all rights of the Company under
those contracts listed on Schedule
4.12 (unless indicated to the contrary
thereon) or that are of a type that would
have been listed thereon except that they
involve payments in an amount less
than the applicable amount set forth in
Section 4.12 (collectively, the "Assumed
Contracts");
(d) all Real Property and all
licenses, permits, approvals,
qualifications, easements and other rights
relating thereto;
(e) all goodwill, methods, know-how,
technical documentation, processes,
procedures, inventions, technology,
research records, data, designs, plans,
drawings, manufacturing know-how and
formulas, whether patentable or
unpatentable, and other intellectual or
proprietary rights or property of the
Business (and all rights thereto and
applications therefor), including, without
limitation, the Intellectual Property and
the Company Software;
(f) all Accounts Receivable;
14
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(g) all rights
to causes of action, lawsuits, judgments, claims and demands
of any nature available to or being pursued
by the Company and relating to the
Business, the Assets or the Assumed
Liabilities, whether arising by way of
counterclaim or otherwise;
(h) to the
extent they are assignable, all rights in and under all express
or implied guarantees, warranties,
representations, covenants, indemnities and
similar rights in favor of the Company and
relating to the Business, the Assets
or the Assumed Liabilities;
(i) all permits,
approvals, licenses, qualifications, product
registrations, safety certifications,
authorizations or similar rights to the
extent that they are assignable, including
those set forth on Schedule 4.20
(unless otherwise indicated thereon);
(j) all
information, files, correspondence, records, data, plans,
reports,
contracts and recorded knowledge, including
customer, supplier, price and
mailing lists, and all accounting or other
books and records of the Business,
excluding any books and records of the
Company not related to the Business, in
whatever media retained or stored,
including, without limitation, computer
programs and disks; and
(k) all other
tangible and intangible assets of any kind or description,
wherever located, that are carried on the
books of the Business or which are
owned by the Company that relate to the
Business, but excluding the Excluded
Assets.
SECTION 2.3.
EXCLUDED ASSETS.
Notwithstanding
anything to the contrary set forth in this Agreement, the
Assets will not include the following
assets, properties and rights of the
Company (collectively, the "Excluded
Assets"):
(a) any cash, cash equivalents or
marketable securities and all rights to
any bank accounts of the Company;
(b) all ownership and other rights
with respect to the Company Employee
Benefit Plans (as hereinafter defined);
(c) all rights of the Company under
those contracts identified on Schedule
4.12 as not being Assumed Contracts;
(d) any permit, approval, license,
qualification, registration,
certification, authorization or similar
right that by its terms is not
transferable to the Purchaser, including
those indicated on Schedule 4.20 as not
being transferable;
(e) any Accounts Receivable from an
Affiliate or any Accounts Receivable
that have been written off in full prior to
the Closing and any collateral
associated therewith;
(f) the charter documents of the
Company, minute books, stock ledgers, tax
returns, books of account and other
constituent records relating to the
corporate organization of the Company;
15
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(g) any Assets sold or otherwise
disposed of in the ordinary course of
business and not in violation of any
provision of this Agreement during the
period from the date hereof until the
Closing Date;
(h) the rights that accrue to the
Company under this Agreement;
(i) all manufacturing equipment used
to produce guard rail posts and the
equipment used in the MZR zinc reprocessing
furnace;
(j) any labor contract or collective
bargaining agreement;
(k) all trademarks, service marks and
trade names identified on Schedule
6.12;
(l) prepaid expenses;
(m) two (2) cars currently leased and
described as a Buick Regal and a
Ford Taurus;
(n) any raw materials, supplies, or
inventory at the facility of the
Company utilized by, or in processing for,
other divisions of the Company,
including without limitation, all 6-inch
I-beams and H-post fences, strut
inventory;
(o) Q-Net software program; and
(p) the Accounts Receivable of Shane
Felter Industries, Inc. which are
represented by each of those certain
promissory notes, dated November 16, 2004,
in the original face amounts of $38,905.65
and $161,949.00.
SECTION 2.4.
ASSUMED
LIABILITIES.
(a) Except as provided in Section
2.4(b), the Purchaser will not assume,
in connection with the transactions
contemplated by this Agreement, any
liability or obligation of the Company
whatsoever, and the Company will retain
responsibility for all liabilities and
obligations accrued as of or on the
Closing Date and all liabilities and
obligations arising from the Company's
operations prior to or on the Closing Date,
whether or not accrued and whether
or not disclosed.
(b) As the sole exception to the
provisions in Section 2.4(a), effective
as of the close of business on the Closing
Date, the Purchaser will assume and
agree to pay, discharge or perform, as
appropriate, the following liabilities
and obligations of the Company existing as
of such time and arising out of the
conduct of the Business prior to or on the
Closing Date (collectively, the
"Assumed Liabilities"):
(i) obligations of the Company under the Assumed Contracts to
the
extent such
obligations are not required to be performed prior to the
Closing Date,
are disclosed on the face of such Assumed Contracts (or are
implied
warranties or obligations under any law, including without
limitation, the
Uniform Commercial Code) and accrue and relate to the
operations of
the Business subsequent to the Closing Date; and
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(ii) those current liabilities of the Company of the types listed
on
Schedule
2.4(b)(ii).
SECTION 2.5.
EXCLUDED
LIABILITIES.
Specifically,
and without in any way limiting the generality of Section
2.4(a), the Assumed Liabilities will not
include, and in no event will the
Purchaser assume, agree to pay, discharge
or satisfy, or otherwise have any
responsibility for, any liability or
obligation (together with all other
liabilities of the Company that are not
Assumed Liabilities, the "Excluded
Liabilities"):
(a) relating to
any liability or obligation (including, without limitation,
accounts payable) owed to any shareholder
or any Affiliate of the Company;
(b) for Taxes with respect to any
period;
(c) for any indebtedness with respect
to borrowed money and notes payable,
including any interest or penalties accrued
thereon, (collectively, the "Closing
Date Indebtedness");
(d) relating to, resulting from or
arising out of (i) claims made in
pending or future Proceedings or (ii)
claims based on violations of law as in
effect on or prior to the Closing, breach
of contract, employment practices, or
environmental, health and safety matters or
any other actual or alleged failure
of the Company to perform any obligation,
in each case arising out of or
relating to events which shall have
occurred, or services performed, or the
operation of the Business, prior to the
Closing;
(e) pertaining to any Excluded
Asset;
(f) relating to, resulting from or
arising out of any former operations of
the Company that have been discontinued or
disposed of prior to the Closing;
(g) under or relating to any Company
Benefit Plan, whether or not such
liability or obligation arises prior to or
after the Closing Date;
(h) of the Company arising or incurred
in connection with the negotiation,
preparation and execution of this Agreement
and the transactions contemplated
hereby and any fees and expenses of
counsel, accountants, brokers, financial
advisors or other experts of the Company;
and
(i) relating to the Environmental
Indemnification Obligations.
Such Excluded Liabilities shall include all
Proceedings relating to any or all
of the foregoing and all costs and expenses
in connection therewith.
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ARTICLE III
PURCHASE PRICE; ADJUSTMENTS; ALLOCATIONS
SECTION 3.1.
PURCHASE PRICE.
Subject to
adjustment pursuant to Section 3.5, the aggregate amount to be
paid for the Assets (the "Purchase Price")
shall be $3,641,090.60. In addition
to the foregoing payment, as consideration
for the grant, sale, assignment,
transfer and delivery of the Assets, the
Purchaser shall assume and discharge
the Assumed Liabilities.
SECTION 3.2.
PAYMENT OF PURCHASE
PRICE.
(a) On the Closing Date, the Purchaser
shall pay or cause to be paid to
the Company or to such third parties as the
Company may designate in accordance
with subsection (b) of this Section an
amount equal to the Purchase Price.
(b) All payments required under this
Section 3.2 shall be made in cash by
the wire transfer of immediately available
funds to such bank account(s) as
shall be designated in writing by the
recipient(s) at least three (3) Business
Days prior to the applicable payment
date.
SECTION 3.3.
ALLOCATION OF PURCHASE
PRICE.
Attached as
Schedule 3.3 is an allocation of the Purchase Price for the
Assets, the Assumed Liabilities and the
covenant not to compete contained in
Section 6.11. The Purchaser and the Company
agree to file all Tax Returns on the
basis of such allocation. In any Proceeding
related to the determination of any
Tax, neither the Purchaser nor the Company
shall contend or represent that such
allocation is not a correct allocation. The
Purchaser shall prepare and deliver
IRS Form 8594 to the Company within
forty-five (45) days after the Closing Date
to be filed with the IRS.
SECTION 3.4.
ALLOCATION OF CERTAIN
ITEMS.
With respect to
certain expenses incurred with respect to the Assets in the
operation of the Business, the following
allocations will be made between the
Purchaser and the Company:
(a) Taxes. Real and ad valorem
property taxes will be apportioned at the
Closing based upon the number of days in
the taxable period before and after the
Closing Date and the amounts set forth in
the most recent tax bills.
(b) Utilities. Utilities, water and
sewer charges will be apportioned
based upon the number of Business Days
occurring before and after the Closing
Date during the billing period for each
such charge.
(c) Personal Property Taxes. Any
personal property taxes of the Company
relating to the Business shall be
apportioned at the Closing based upon the
number of days in the tax period before and
after the Closing Date in the amount
set forth in the current tax bills.
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Appropriate cash
payments by the Purchaser or the Company, as the case may
require, shall be made hereunder from time
to time as soon as practicable after
the facts given rise to the obligation for
such payments are known in the
amounts necessary to give effect to the
allocations provided for in this
SECTION 3.4.
ADJUSTMENT OF PURCHASE
PRICE FOR ACCOUNTS RECEIVABLE.
The Purchase
Price shall be subject to adjustment with respect to the
Accounts Receivable set forth on Schedule
4.19(a). Purchaser agrees that it will
attempt to collect the Accounts Receivable.
Furthermore, Purchaser agrees that
any and all payments received by the
Purchaser from any customer under any
Accounts Receivable shall first be applied
to the oldest amount due by customer,
unless a customer gives written
instructions to do otherwise by noting the
invoice number on the check or in some
other manner; provided, however,
Purchaser shall not suggest or direct a
customer to do so unless there is a
valid business reason, such as a disputed
invoice or other legitimate business
reason. Purchaser shall provide Company
with monthly reports detailing the
collection efforts on the Accounts
Receivable. On or about the date ninety (90)
days after the Closing Date, the parties
agree that they shall review and
discuss the collection efforts on the
Accounts Receivable up to said date. In
the event that as of the date one hundred
fifty (150) days after the Closing
Date any Accounts Receivable remain
uncollected after Purchaser has attempted to
collect such Accounts Receivable in
accordance with the obligations herein, then
in such event, all uncollected Accounts
Receivable as of such date shall be
assigned to Company, who shall thereafter
be free to collect or otherwise deal
with all such uncollected Accounts
Receivable. Upon assignment, the Company
shall make immediate payment in the
full-face amount of any uncollected Accounts
Receivables to the Purchaser.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company
hereby represents and warrants to the Purchaser as follows:
SECTION 4.1.
ORGANIZATION.
The Company is a
corporation duly formed and validly existing under the
laws of Ohio and has all requisite power
and authority to own, lease and operate
its properties and to carry on its business
as now being conducted. The Company
is duly qualified or registered as a
foreign corporation to transact business
under the laws of each jurisdiction where
the character of its activities or the
location of the properties owned or leased
by it requires such qualification or
registration, except where the failure to
be so qualified would not,
individually or in the aggregate, have a
Material Adverse Effect on the Business
or the Assets. The Company has heretofore
made available to the Purchaser true,
correct and complete copies of its charter
documents as currently in effect and
its corporate record books with respect to
actions taken by its shareholders and
directors.
SECTION 4.2.
AUTHORIZATION.
The Company has
full power and authority to execute and deliver this
Agreement and any other certificate,
agreement, document or other instrument to
be executed and delivered by it
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in connection with the transactions
contemplated by this Agreement
(collectively, the "Company Ancillary
Documents") and to perform its obligations
under this Agreement and the Company
Ancillary Documents and to consummate the
transactions contemplated hereby and
thereby. The execution and delivery of this
Agreement and the Company Ancillary
Documents by the Company and the performance
by the Company of its obligations hereunder
and thereunder and the consummation
of the transactions provided for herein and
therein have been duly and validly
authorized by all necessary board and
shareholder action on the part of the
Company. The shareholders and directors of
the Company have approved the
execution, delivery and performance of this
Agreement and the Company Ancillary
Documents and the consummation of the
transactions contemplated by this
Agreement and by the Company Ancillary
Documents. This Agreement has been, and
the Company Ancillary Documents will be as
of the Closing Date, duly executed
and delivered by the Company and do or
will, as the case may be, constitute the
valid and binding agreements of the
Company, enforceable against the Company in
accordance with their respective terms.
SECTION 4.3.
ABSENCE OF
RESTRICTIONS AND CONFLICTS.
The execution,
delivery and performance of this Agreement and the Company
Ancillary Documents, the consummation of
the transactions contemplated by this
Agreement and the Company Ancillary
Documents and the fulfillment of and
compliance with the terms and conditions of
this Agreement and the Company
Ancillary Documents do not or will not (as
the case may be), with the passing of
time or the giving of notice or both,
violate or conflict with, constitute a
breach of or default under, result in the
loss of any benefit under, permit the
acceleration of any obligation under or
create in any party the right to
terminate, modify or cancel, or otherwise
require any action, consent, approval,
order, authorization, registration,
declaration or filing with respect to (a)
any term or provision of the charter
documents of the Company or any resolution
adopted by the board of directors or
shareholders of the Company, (b) except as
indicated on Schedule 4.12, any Assumed
Contract or any other contract,
agreement, permit, franchise, license or
other instrument applicable to the
Business or any of the Assets, (c) any
judgment, decree or order of any court or
governmental authority or agency to which
the Company is a party or by which the
Business or any of the Assets are bound or
(d) except as set forth on Schedule
4.3, any permit, statute, law, rule,
regulation or arbitration award of any
governmental agency or public or regulatory
unit, agency or authority applicable
to the Company or the Business.
SECTION 4.4.
REAL PROPERTY.
(a) Schedule
4.4(a) sets forth a complete and accurate list and description
of the parcels of real property used in
connection with the Business and owned
by the Company (together with all fixtures
and improvements thereon, the "Owned
Real Property"). Except as set forth on
Schedule 4.4(a), the Company has good
and marketable, indefeasible, fee simple
title to each parcel of the Owned Real
Property free and clear of all Liens, other
than Permitted Exceptions.
(b) Schedule
4.4(b) sets forth a complete and accurate list and description
of the parcels of real property used in
connection with the Business and leased
by the Company, if any, (together with all
fixtures and improvements thereon,
the "Leased Real Property" and
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<PAGE>
collectively with the Owned Real Property,
the "Real Property"). The Company has
a valid leasehold interest in its Leased
Real Property, free and clear of any
Liens, except for Permitted Exceptions. The
leases of the Leased Real Property
are in full force and effect. All leases of
Leased Real Property are in good
standing and are valid, binding and
enforceable in accordance with their
respective terms and there does not exist
under any such lease any default or
any event which, with notice or lapse of
time or both, would constitute a
default.
(c) To the
Company's Knowledge, no portion of the Real Property, or any of
the buildings and improvements located
thereon, violates any law, rule,
regulation, ordinance or statute, including
those relating to zoning, building,
land use, environmental, health and safety,
fire, air, sanitation and noise
control. Except as set forth on Schedule
4.4(a), all of the Real Property is in
the possession or control of the Company,
and except for common driveway
easements, no other person is entitled to
possession of any such properties and
assets.
(d) Except as
set forth on Schedule 4.4(a), the plants, buildings and
structures included in the Assets currently
have, and immediately following the
Closing will have access to (i) public
roads or valid easements over private
streets or private property for such
ingress to and egress from all such plants,
buildings and structures and (ii) water
supply, storm and sanitary sewer
facilities, telephone, gas and electrical
connections, fire protection, drainage
and other public utilities, in each case as
is necessary for the conduct of the
Business as it has heretofore been
conducted. None of the structures on the Real
Property encroaches upon real property of
another Person, and no structure of
any other Person encroaches upon any Real
Property.
(e) Except as
set forth on Schedule 4.5, the improvements on the Real
Property are in operating condition and are
adequate and suitable for the
purposes for which they are presently being
used. There are no condemnation or
appropriation or similar proceedings
pending or, to the Knowledge of the
Company, threatened against any of the Real
Property or the improvements
thereon.
SECTION 4.5.
TITLE TO ASSETS;
RELATED MATTERS.
The Assets
constitute all of the assets necessary and sufficient to
conduct
the operations of the Business in
accordance with the Company's past practices.
Except as set forth in Schedule 4.4(a) or
Schedule 4.5, the Company has (and
will convey to the Purchaser at the
Closing) good and marketable title to the
Assets, free and clear of all Liens except
for Permitted Exceptions. Except as
set forth in Schedule 4.5, all plants,
buildings, structures, equipment and
other items of tangible personal property
and assets included in the Assets (a)
are in operating condition and are adequate
and suitable for the purposes for
which they are presently being used,
consistent with standards generally
followed in the industry, (b) to the
Company's Knowledge, conform to all
applicable laws, ordinances, codes, rules
and regulations applicable thereto,
and the Company has no Knowledge of any
defects or problems with any of the
Assets except as set forth on Schedule 4.5.
No Person other than the Company
owns any equipment or other tangible
personal property or assets situated on the
premises of the Company which are necessary
to the operation of the Business,
except for the leased items that are
subject to personal property leases. Since
May 31, 2004, the Company has not sold,
transferred or disposed of any assets,
other than sales of inventory in the
ordinary course of business. Schedule 4.5
sets forth a true, correct and complete
list and general description of each
item of tangible personal property of the
Company
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<PAGE>
having a book value of more than
$10,000.00. Purchaser agrees that it has had an
opportunity to inspect all of the Assets
being transferred hereunder, to perform
its own inspection of the maintenance
records, and to discuss the condition of
the Assets with the personnel of the
Company, and agrees and acknowledges that
the Company makes only the representations
and warranties contained in this
Section 4.5 regarding the Assets or
condition thereof, and such Assets are
otherwise being transferred in "As Is"
condition.
SECTION 4.6.
FINANCIAL
STATEMENTS.
Schedule 4.6
contains true, correct and complete copies of (i) unaudited
internal balance sheets of the Business as
of December 31, 2003, and the related
unaudited internal statements of income and
cash flows for the same time period,
and the related notes thereto (the "Company
Financial Statements"); (ii) an
unaudited balance sheet of the Business as
of May 28, 2004, and the related
unaudited statements of income and cash
flows for the twelve (12) month period
then ended, including the notes thereto
(the "Unaudited Financial Statements"),
and (iii) the unaudited interim balance
sheet of the Business for the five (5)
months ended October 31, 2004, and the
related unaudited statements of income
and cash flows for the period then ended
(the "Interim Financial Statements"
and, collectively with the Unaudited
Financial Statements, the "Financial
Statements"). The unaudited balance sheet
as of October 31, 2004, included in
the Interim Financial Statements is
referred to herein as the "Interim Balance
Sheet." The Interim Financial Statements
are true, correct and complete and
present fairly the financial position of
the Business as of October 31, 2004,
and the related results of the Business'
operations and cash flows for the five
(5) month period then ended. The Financial
Statements are based on the books and
records of the Business which have been
kept, and such Financial Statements have
been prepared, in accordance with generally
accepted accounting principles
("GAAP") applied on a consistent basis.
Since May 31, 2003, there has been no
material change in any of the accounting
(and tax accounting) policies,
practices or procedures of the Company.
SECTION 4.7.
INVENTORY AND
PRODUCTS.
(a) The Business' Inventories set
forth in the Interim Balance Sheet were
properly stated therein at the lesser of
cost or fair market value determined in
accordance with GAAP consistently
maintained and applied by the Company,
utilizing the LIFO method. Since the date
of the Unaudited Financial Statements,
Inventories related to the Business have
been maintained in the ordinary course
of business. All such Inventories are owned
free and clear of all Liens, other
than Permitted Exceptions. All of the
Inventories recorded on the Interim
Balance Sheet consist of, and all
inventories related to the Business on the
Closing Date will be usable or saleable in
the normal course of the Business in
accordance with past practices and that the
zinc inventory will meet ASTM B6-00
and A 123/A specifications. No previously
sold Inventory is subject to returns
in excess of those historically experienced
by the Company.
(b) To the Company's Knowledge, each
of the products produced or sold by
the Company in connection with the Business
is, and at all times up to and
including the sale thereof has been, (i) in
compliance in all material respects
with all applicable federal, state, local
and foreign laws and regulations and
(ii) fit for the ordinary purposes for
which it is intended to be used and
conforms in all material respects to any
promises or affirmations of fact made
on the container or label for such product
or in connection with its sale. There
is no design defect with
22
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respect to any of such products and each of
such products contains adequate
warnings, presented in a reasonably
prominent manner, in accordance with
applicable laws, rules and regulations and
current industry practice with
respect to its contents and use.
SECTION 4.8.
NO UNDISCLOSED
LIABILITIES.
Except as
disclosed in Schedule 4.8, to the Company's Knowledge, the
Company does not have any liabilities or
obligations (whether accrued, absolute,
contingent, determined, determinable or
otherwise), in connection with the
Business which are not adequately reflected
or provided for in the Company
Financial Statements, except liabilities
and obligations that are not (singly or
in the aggregate) material to the Business
and have been incurred since the date
of such balance sheet in the ordinary
course of business.
SECTION 4.9.
ABSENCE OF CERTAIN
CHANGES.
Since May 31,
2004, and except as set forth in Schedule 4.9, there has not
been (i) any event, occurrence, development
or state of circumstances or facts
which, individually or in the aggregate,
has had or could reasonably be expected
to have a Material Adverse Effect on the
Business or the Assets, (ii) any
damage, destruction, loss or casualty to
property or assets of the Business with
a value in excess of $10,000.00, whether or
not covered by insurance, or (iii)
any action taken of the type described in
Section 6.1, which, had such action
occurred after the date hereof, would be in
violation of such Section.
SECTION 4.10.
LEGAL PROCEEDINGS.
Except as set
forth in Schedule 4.10, there are no Proceedings (or any
basis therefor) pending or, to the
Knowledge of the Company, threatened against,
relating to or involving the Business, the
Assets or the Assumed Liabilities
before any federal, state or local or
foreign government or any court,
administrative or regulatory agency or
commission or other governmental
authority or agency, domestic or foreign (a
"Governmental Entity"), or any
arbitrator.
SECTION 4.11.
COMPLIANCE WITH LAW.
To the Company's
Knowledge, the Company is (and has been at all times
during the past five (5) years) in
compliance with all applicable laws
(including, without limitation, applicable
laws relating to zoning,
environmental matters and the safety and
health of employees), ordinances,
regulations and orders of all Governmental
Entities applicable to the Assets or
the conduct of the Business. Except as set
forth in Schedule 4.11, with respect
to the Business, the Assets or the Assumed
Liabilities, (i) the Company has not
been charged with and, to the Knowledge of
the Company, is not now under
investigation with respect to, a violation
of any applicable law, regulation,
ordinance, order or other requirement of a
Governmental Entity, (ii) the Company
is not a party to or bound by any order,
judgment, decree or award of any
Governmental Entity and (iii) the Company
has filed all reports and has all
licenses and permits required to be filed
with any Governmental Entity on or
before the date hereof.
23
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SECTION 4.12.
COMPANY CONTRACTS.
(a) Schedule 4.12 sets forth a true,
correct and complete list of the
following contracts related to the
Business:
(i) all bonds, debentures, notes, loans, credit or loan agreements
or
loan
commitments, mortgages, indentures, guarantees or other
contracts
relating to the
borrowing of money or binding upon any of the Assets, or
the Leased Real
Property that is subject to the lease to the Purchaser
referenced
herein;
(ii) all leases relating to the Leased Real Property or other
leases
or licenses
involving any properties or assets used in the Business
(whether real,
personal or mixed, tangible or intangible) involving an
annual
commitment or payment of more than $10,000.00 individually by
the
Company;
(iii) all contracts or agreements which limit or restrict the
Company
or any of the
employees of the Company whose names are set forth on
Schedule 8.4(a)
from engaging in the Business in any jurisdiction;
(iv) all franchising and licensing agreements;
(v) any contract that provides for an increased payment or benefit,
or
accelerated
vesting, upon the execution of this Agreement or in connection
with the
transactions contemplated hereby;
(vi) any contract or
agreement granting any Person a Lien on all or
any part of any
of the Assets;
(vii) any contract or agreement for the cleanup, abatement or
other
actions in
connection with any Hazardous Materials, the remediation of any
existing
environmental condition or relating to the performance of any
environmental
audit or study;
(viii) any contract or agreement granting to any Person an option
or a
first refusal,
first-offer or similar preferential right to purchase or
acquire any of
the Assets;
(ix) any contract or agreement with any agent, distributor or
representative
which is not terminable without penalty on thirty (30)
calendar days'
or less notice;
(x) any contract or agreement for the granting or receiving of
a
license or
sublicense or under which any Person is obligated to pay or has
the right to
receive a royalty, license fee or similar payment;
(xi) any contract providing for the indemnification or holding
harmless of any
officer, director, employee or other Person;
(xii) any joint venture or partnership contract;
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<PAGE>
(xiii) any customer contract for the provision of goods or services
by
the Company and
any supplier contract for the provision of goods or
services to the
Company; and
(xiv) all existing contracts and commitments (other than those
described in
subparagraphs (i) through (xiv) of this Section 4.12(a)) to
which the
Company is a party or by which any of the Assets are bound
involving an
annual commitment or annual payment to or from the Company of
more than
$10,000.00 individually or which is otherwise material to the
Business.
True, correct and complete copies of all
Assumed Contracts have been made
available to the Purchaser. All of the
contracts identified on Schedule 4.12
shall be Assumed Contracts unless otherwise
indicted on Schedule 4.12.
(b) The Assumed Contracts are legal,
valid, binding and enforceable in
accordance with their respective terms with
respect to the Company and, to the
Knowledge of the Company, with respect to
each other party to such Assumed
Contracts. To the Company's Knowledge,
there are no existing defaults or
breaches of the Company under any Assumed
Contract (or events or conditions
which, with notice or lapse of time or both
would constitute a default or
breach) and, to the Knowledge of the
Company, there are no such defaults (or
events or conditions which, with notice or
lapse of time or both, would
constitute a default or breach) with
respect to any third party to any Assumed
Contract. The Company has no Knowledge of
any pending or threatened bankruptcy,
insolvency or similar proceeding with
respect to any party to such agreements.
The Company is not participating in any
discussions or negotiations regarding
modification of or amendment to any Assumed
Contract or entry in any new
material contract applicable to the
Business or the Assets. Schedule 4.12
identifies each Assumed Contract set forth
therein that requires the consent of
or notice to the other party thereto to
avoid any breach, default or violation
of such contract, agreement or other
instrument in connection with the
transactions contemplated hereby, including
the assignment of such Assumed
Contract to the Purchaser.
SECTION 4.13.
INSURANCE POLICIES.
Schedule 4.13
contains a complete and correct list of all insurance
policies relating to the Business, the
Assets or the Assumed Liabilities carried
by or for the benefit of the Company,
specifying the insurer, amount of and
nature of coverage, the risk insured
against, the deductible amount (if any) and
the date through which coverage will
continue by virtue of premiums already
paid. The Company maintains insurance with
reputable insurers for the Business
and Assets against all risks normally
insured against, and in amounts normally
carried, by corporations of similar size
engaged in similar lines of business
and such coverage is sufficient. All
insurance policies and bonds with respect
to the Business and Assets are in full
force and effect and will be maintained
by the Company in full force and effect as
they apply to any matter, action or
event relating to the Company occurring
through the Closing Date and the Company
has not reached or exceeded its policy
limits for any insurance policies in
effect at any time during the past five (5)
years. There is no claim by the
Company pending under any of such policies
or bonds as to which coverage has
been questioned, denied or disputed by the
underwriters of such policies or
bonds or in respect of which such
underwriters have reserved
25
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their rights. All premiums payable under
all such policies and bonds have been
timely paid and the Company has otherwise
complied fully with the terms and
conditions of all such policies and bonds.
The Company does not know of any
threatened termination of, premium increase
with respect to, or material
alteration of coverage under, any of such
policies or bonds.
SECTION 4.14.
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS.
Except as set
forth in Schedule 4.14, with respect to the Business, the
Real Property and the Assets:
(a) to the Company's Knowledge, (i)
the Company possesses, and is in
material compliance with, all permits,
licenses and government authorizations
and has filed all notices that are required
under Environmental Laws, and (ii)
the Company is in compliance with all
applicable limitations, restrictions,
conditions, standards, prohibitions,
requirements, obligations, schedules and
timetables contained in those laws or
contained in any law, regulation, code,
plan, order, decree, judgment, notice,
permit or demand letter issued, entered,
promulgated or approved thereunder, which
are specifically applicable to the
Business;
(b) to the Company's Knowledge, (i)
there are no liabilities arising in
connection with or in any way relating to
the Assets, the Business or the Real
Property of any kind whatsoever, whether
accrued, contingent, absolute,
determined, determinable or otherwise,
arising under or relating to any
Environmental Laws, and (ii) there are no
facts, events, conditions, situations
or set of circumstances which could
reasonably be expected to result in or be
the basis for any such liability;
(c) except as disclosed to Purchaser,
the Company has not received notice
of actual or threatened liability under
CERCLA or any similar foreign, state or
local statute or ordinance from any
governmental agency or any third party and
to the Company's Knowledge there are no
facts or circumstances which could form
the basis for the assertion of any claim
against the Company under any
Environmental Laws including, without
limitation, CERCLA or any similar local,
state or foreign law with respect to any
on-site or off-site location;
(d) except as disclosed to Purchaser,
the Company has not entered into or
agreed to enter into and the Company does
not contemplate entering into, any
consent decree or order, and except as
disclosed to Purchaser the Company is not
subject to any judgment, decree or judicial
or administrative order relating to
compliance with, or the cleanup of
Hazardous Materials under, any applicable
Environmental Laws, pending or, to the
Company's Knowledge, threatened against
the Company;
(e) except as disclosed to Purchaser,
no notice, notification, demand,
request for information, citation, summons
or order or administrative or
judicial proceeding has been received, no
complaint has been filed, no penalty
has been assessed and no investigation,
action, claim, suite, proceeding or
review is pending or, to the Company's
Knowledge, threatened by any governmental
entity or other Person with respect to any
matters relating to the Company and
relating to or arising out of any
Environmental Laws;
(f) except as
disclosed to Purchaser, to the Company's Knowledge, it is not
subject to any claim, obligation,
liability, loss, damage or expense of whatever
kind or nature, contingent or
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otherwise, incurred or imposed or based
upon any provision of any Environmental
Laws or arising out of any act or omission
of the Company, or the Company's
employees, agents or representatives or
arising out of the ownership, use,
control or operation by the Company of any
plant, facility, site, area or
property (including, without limitation,
any plant, facility, site, area or
property currently or previously owned or
leased by the Company) from which any
Hazardous Materials were released into the
environment (the term "release"
meaning any spilling, leaking, pumping,
pouring, emitting, emptying,
discharging, injecting, escaping, leaching,
dumping or disposing into the
environment, and the term "environment"
meaning any surface or ground water,
drinking water supply, soil, surface or
subsurface strata or medium, or the
ambient air);
(g) the Company has heretofore made
available to the Purchaser true,
correct and complete copies of all files
relating to environmental matters, and
the Company has not paid any fines,
penalties or assessments within the last ten
(10) years with respect to environmental
matters except as disclosed to
Purchaser;
(h) to the Company's Knowledge, except
as disclosed to Purchaser, no
polychlorinated biphenyls, radioactive
material, lead, asbestos-containing
material, incinerator, sump, surface
impoundment, lagoon, landfill, septic,
wastewater treatment or other disposal
system or underground storage tank
(active or inactive) is or has been present
at, on or under any Real Property or
in any Asset;
(i) to the Company's Knowledge, except
as disclosed to Purchaser, no
Hazardous Material has been discharged,
disposed of, dumped, injected, pumped,
deposited, spilled, leaked, emitted or
released at, on or under any Real
Property;
(j) to the Company's Knowledge, except
as disclosed to Purchaser, the
Company has not imported, manufactured,
stored, used, operated, transported,
treated or disposed of any Hazardous
Materials other than in compliance with all
Environmental Laws;
(k) There has been no environmental
investigation, study, audit, test,
review or other analysis in Company's
possession conducted of which the Company
has Knowledge in relation to any Asset or
Real Property which has not been
delivered to the Purchaser prior to the
date hereof; and
(l) For purposes of this Section, the
term "Company" shall include any
entity which is, in whole or in part, an
affiliated predecessor of the Company.
SECTION 4.15.
INTELLECTUAL PROPERTY; SOFTWARE.
(a) Schedule 4.15(a) sets forth a true
and correct list of all copyrights,
trade names, trademarks, trade secrets,
service marks or patents (or
applications therefor) which are used in
the Business or relate to the Assets or
Assumed Liabilities (the "Intellectual
Property") and the jurisdictions where
each is registered (if any), with the
exception of those trade marks, service
marks and trade names indicated on Schedule
6.12. The Company has good and
marketable title to or possesses adequate
licenses or other valid rights to use
such Intellectual Property, free and clear
of all Liens and has paid all
maintenance fees, renewals or expenses
related to such Intellectual Property.
Neither the use of such Intellectual
Property nor the conduct of the Business in
accordance with the Company's past
practices, misappropriates, infringes upon or
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conflicts with any patent, copyright, trade
name, trade secret, trademark or
other intellectual property rights of any
third party. No party has filed a
claim (or, to the Knowledge of the Company,
threatened to file a claim) against
the Company alleging that it has violated,
infringed on or otherwise improperly
used the intellectual property rights of
such party and, to the Knowledge of the
Company, the Company has not violated or
infringed any patent, trademark, trade
name, service mark, service name, copyright
or trade secret held by others.
(b) Schedule 4.15(b) sets forth a true
and complete list of: (i) all
software owned by the Company used in
connection with the Business (the "Company
Proprietary Software"); (ii) all other
software (other than Company Proprietary
Software), used in connection with the
Business (the "Company Licensed Software"
and, together with the Company Proprietary
Software, the "Company Software");
and (iii) all technical and restricted
materials relating to the acquisition,
design, development, use or maintenance of
computer code program documentation
and materials used in connection with the
Business.
(c) The Company has all right, title
and interest in and to all
intellectual property rights in the Company
Proprietary Software. The Company
has developed the Company Proprietary
Software through its own efforts, as
described in Section 4.15(e), and for its
own account, and the Company
Proprietary Software is free and clear of
all Liens. The use of the Company
Software does not breach any terms of any
license or other contract between the
Company and any third party. To the
Company's Knowledge, the Company is in
compliance with the terms and conditions of
all license agreements in favor of
the Company relating to the Company
Licensed Software.
(d) To the Company's Knowledge, the
Company Proprietary Software does not
infringe any patent, copyright or trade
secret or any other intellectual
property right of any third party. The
source code for the Company Proprietary
Software has been maintained in
confidence.
(e) The Company Proprietary Software
was: (i) developed by the Company's
employees working within the scope of their
employment at the time of such
development; (ii) developed by agents,
consultants, contractors or others who
have executed appropriate instruments of
assignment in favor of the Company as
assignee that have conveyed to the Company
ownership of all of its intellectual
property rights in the Company Proprietary
Software; or (iii) acquired by the
Company in connection with acquisitions in
which the Company obtained
appropriate representations, warranties and
indemnities from the transferring
party relating to the title to the Company
Proprietary Software. The Company has
not received notice from any third party
claiming any right, title or interest
in the Company Proprietary Software.
(f) The Company has not granted rights
in the Company Software to any
third party.
SECTION 4.16.
TRANSACTIONS WITH AFFILIATES.
Except as set
forth in Schedule 4.16, no officer or director of the
Company, or any person with whom any such
officer or director has any direct or
indirect relation by blood, marriage or
adoption, or any entity in which any
such person, owns any beneficial interest
(other than a
28
<PAGE>
publicly held corporation whose stock is
traded on a national securities
exchange or in the over-the-counter market
and less than five percent (5%) of
the stock of which is beneficially owned by
all such Persons in the aggregate)
or any Affiliate of any of the foregoing or
any current or former Affiliate of
the Company has any interest in: (a) any
contract, arrangement or understanding
with, or relating to, the Business, the
Assets or the Assumed Liabilities; (b)
any loan, arrangement, understanding,
agreement or contract for or relating to
the Business, the Assets or the Assumed
Liabilities; or (c) any property (real,
personal or mixed), tangible or intangible,
used or currently intended to be
used by the Company relating to the
Business, the Assets or the Assumed
Liabilities. Schedule 4.16 also sets forth
a complete list of all accounts
receivable, notes receivable and other
receivables and accounts payable owed to
or due from any Affiliate to the Company
relating to the Business, the Assets or
the Assumed Liabilities.
SECTION 4.17.
NONDISCLOSED PAYMENTS.
Neither the
Company nor the officers or directors of the Company, nor
anyone acting on behalf of any of them, has
made or received any payments not
correctly categorized and fully disclosed
to the Purchaser and in the Company's
books and records in connection with or in
any way relating to or affecting the
Business, the Assets or the Assumed
Liabilities.
SECTION 4.18.
CUSTOMER AND SUPPLIER RELATIONS.
(a) Schedule 4.18(a) sets forth a list
of each supplier of goods or
services to the Business to whom the
Company paid in the aggregate more than
$10,000.00 during the twelve (12) month
period ended May 31, 2004 (each a "Major
Supplier" and collectively, "Major
Suppliers"), together with, in each case, the
amount paid during such period. The Company
is not engaged in any material
dispute with any Major Supplier and, to the
Knowledge of the Company, no Major
Supplier intends to terminate, limit or
reduce its business relations with the
Company. As of the date hereof, the Company
has no reason to believe that the
consummation of the transactions
contemplated by this Agreement will have a
Material Adverse Effect on the business
relationship of the Business with any
Major Supplier. Except as set forth in
Schedule 4.18(a), to the Knowledge of the
Company, none of the officers or directors
of the Company or any Affiliate or
Associate of any officer or director of the
Company (or any company or other
organization in which any officer or
director of the Company or any Affiliate or
Associate of any officer or director of the
Company has a direct or indirect
financial interest), has any financial
interest in any supplier of the Business
(other than a publicly held corporation
whose stock is traded on a national
securities exchange or in the
over-the-counter market and less than 1% of the
stock of which is beneficially owned by any
such Persons).
(b) Schedule 4.18(b) sets forth a list
of each customer of the Business
which accounted for net revenue to the
Business in the aggregate of more than
$10,000.00 during the twelve (12) month
period ended May 31, 2004 (each a "Major
Customer" and collectively, "Major
Customers"), together with in each case the
amount net revenue produced during such
period. The Company is not engaged in
any material dispute with any Major
Customer and, to the Knowledge of the
Company, no Major Customer intends to
terminate, limit or reduce its business
relations with the Company. Except as set
forth on Schedule 4.18(b), as of the
date hereof, the Company has no reason to
believe that the consummation of the
transactions contemplated by this Agreement
will have an adverse effect on the
business relationship of
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<PAGE>
the Business with any Major Customer.
Except as set forth in Schedule 4.18(b),
to the Knowledge of the Company, none of
the officers or directors of the
Company or any Affiliate or Associate of
any officer or director of the Company
(or any company or other organization in
which any officer or director of the
Company or any Affiliate or Associate of
any officer or director of the Company
has a direct or indirect financial
interest), has any financial interest in any
customer of the Business (other than a
publicly held corporation whose stock is
traded on a national securities exchange or
in the over-the-counter market and
less than 1% of the stock of which is
beneficially owned by any such Persons).
SECTION 4.19.
NOTES AND ACCOUNTS RECEIVABLE.
Accounts
Receivable. Schedule 4.19(a) contains a schedule of the
Business'
Accounts Receivable as of May 31, 2004,
showing the amount of each Account
Receivable and an aging of amounts due
thereunder, which schedule is true and
complete as of that date. Except as set
forth in Schedule 4.19(a), to the
Knowledge of the Company, the debtors to
which the Accounts Receivable relates
are not in or subject to a bankruptcy or
insolvency proceeding, and none of the
Accounts Receivable has been made subject
to an assignment for the benefit of
creditors. Except as set forth in Schedule
4.19(a), and to the Company's
Knowledge, all Accounts Receivable which
are reflected on the Unaudited Balance
Sheet and the Interim Balance Sheet (net of
any reserves shown thereon) (i) are
valid, existing and fully collectible in a
manner consistent with the Company's
past practice, (ii) represent monies due
for goods sold and delivered or
services rendered in the ordinary course of
business and (iii) are not subject
to any refunds or adjustments or any
defenses, rights of set-off, assignment,
restrictions, security interests or other
encumbrances. Except as set forth in
Schedule 4.19(a), all such Accounts
Receivable are current, and to the Company's
Knowledge, there are no disputes regarding
the collectibility of any such
Accounts Receivable. The Company has not
factored any of the Business's Accounts
Receivable. The parties hereby agree there
shall be an adjustment to the
Purchase Price based on the Accounts
Receivable under Section 3.5 above. As
such, Purchaser's sole remedy for breach of
this representation and warranty
shall be an adjustment to the Purchase
Price as provided under Section 3.5, and
no breach of this provision shall result in
an indemnification claim by
Purchaser against the Company under Section
12.1 below.
SECTION 4.20.
LICENSES AND PERMITS.
Schedule 4.20 is
a true and complete list of all notifications, licenses,
permits (including, without limitation,
environmental, construction and
operation permits), franchises,
certificates, approvals, exemptions,
classifications, registrations and other
similar documents and authorizations,
and applications therefor (collectively,
the "Licenses") held by the Company and
issued by, or submitted by the Company to,
any Governmental Entity or other
Person or entity relating to the Business
or the Assets. To the Company's
Knowledge, the Company owns or possesses
all of the Licenses that are necessary
to enable it to carry on the Business as
presently conducted. All Licenses are
valid, binding, and in full force and
effect. Except as set forth on Schedule
4.20, the execution, delivery, and
performance of this Agreement and the
consummation of the transactions
contemplated hereby will not have a Material
Adverse Affect on any License. The Company
has taken all necessary action to
maintain each License, except where the
failure to so act is not likely to have
an adverse effect on the Company, the
Business or the Assets. To the Company's
Knowledge, the Company is not in default
and no condition exists
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<PAGE>
that with notice or lapse of time or both
could constitute default under the
Licenses. To the Company's Knowledge, no
loss or expiration of any License is
threatened, pending, or reasonably
foreseeable (other than expiration upon the
end of any term).
SECTION 4.21.
BROKERS, FINDERS AND INVESTMENT BANKERS.
Except as set
forth on Schedule 4.21, neither the Company, nor any
officers, directors or employees of the
Company nor any Affiliate of the
Company, has employed any broker, finder or
investment banker or incurred any
liability for any investment banking fees,
financial advisory fees, brokerage
fees or finders' fees in connection with
the transactions contemplated by this
Agreement.
SECTION 4.22.
PRODUCT AND SERVICE WARRANTIES.
Except as set
forth in Schedule 4.22, the Company does not make any express
warranties or guaranties on its own behalf
as to goods sold, or services
provided by, the Business, and there is no
pending or, to the Knowledge of the
Company, threatened claim alleging any
breach of any such warranty or guaranty.
To the Company's Knowledge, and except as
set forth in Schedule 4.22, attached
to which are copies of all such warranties,
the Company has no exposure to
liability under any such warranty beyond
that which is typically assumed in the
ordinary course of business by companies or
firms engaged in businesses
comparable to the Business or which would
have an adverse effect on the Business
or the Assets.
SECTION 4.23.
ETHICAL PRACTICES.
To the Company's
Knowledge, neither the Company nor any representative
thereof has offered or given, and the
Company has no Knowledge of any Person
that has offered or given on its behalf,
anything of value to: (i)any official
of a Governmental Entity, any political
party or official thereof, or any
candidate for political office; (ii) any
customer or member of the government;
or (iii) any other Person, in any such case
while knowing or having reason to
know that all or a portion of such money or
thing of value may be offered, given
or promised, directly or indirectly, to any
customer, member of the government
or candidate for political office for the
purpose of the following: (x)
influencing any action or decision of such
Person, in such Person's official
capacity, including a decision to fail to
perform such Person's official
function; (y) inducing such Person to use
such Person's influence with any
government or instrumentality thereof to
affect or influence any act or decision
of such government or instrumentality to
assist the Company in obtaining or
retaining business for, or with, or
directing business to, any Person; or (z)
where such payment would constitute a
bribe, kickback or illegal or improper
payment to assist the Company in obtaining
or retaining business for, or with,
or directing business to, any Person.
SECTION 4.24.
DISCLOSURE.
(a) To the
Company's Knowledge, no representation, warranty or covenant
made by the Company in this Agreement, the
Schedules or the Exhibits attached to
this Agreement, or any of the Company
Ancillary Documents contains an untrue
statement of a material fact or omits to
state a material fact required to be
stated herein or therein or necessary to
make the statements contained herein or
therein not misleading.
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<PAGE>
(b) Prior to the execution of this
Agreement, the Company has delivered to the
Purchaser true and complete copies of the
Assumed Contracts, documents
evidencing any of the Intellectual
Property, and all security agreements and
other instruments creating or imposing any
security interest encumbrance or
adverse claim on the Assets, and any other
documents or instruments identified
or referred to in this Agreement or the
Schedules hereto. Such delivery will not
alone constitute adequate disclosure of
those facts required to be disclosed on
any Schedule to this Agreement, and notice
of their contents (other than by
express reference on a Schedule) will in no
way limit the Company's other
obligations or the Purchaser's other rights
under this Agreement.
SECTION 4.25.
SOLVENCY.
(a) The Company is not now insolvent
and will not be rendered insolvent
by the transactions contemplated by this
Agreement and the Company Ancillary
Documents. As used in this Section,
"insolvent" means that the sum of the debts
and other probable liabilities of the
Company exceeds the present fair saleable
value of the Company's assets.
(b) Immediately
after giving effect to the consummation of the transactions
contemplated by this Agreement and the
Company Ancillary Documents: (i) the
Company will be able to pay its liabilities
as they become due in the usual
course of its business; (ii) the Company
will not have unreasonably small
capital with which to conduct its present
or proposed business; (iii) the
Company will have assets (calculated at
fair market value) that exceed its
liabilities; and (iv) taking into account
all pending
