ASSET PURCHASE AGREEMENT
Between
DXP ENTERPRISES, INC.
(“Buyer”)
and
ROCKY MTN. SUPPLY, INC.
(“Seller”)
and
THE SHAREHOLDERS
JANUARY __, 2008
ASSET
PURCHASE AGREEMENT
THIS ASSET PURCHASE
AGREEMENT (this “Agreement”) is made and entered
into this __ day of January, 2008 (“the Effective
Date”), by and among ROCKY MTN. SUPPLY, INC., a
Colorado corporation (the “Seller”), the
SHAREHOLDERS and DXP ENTERPRISES, INC., a Texas corporation
(the “Buyer”).
W I T N E S S E T H
:
WHEREAS, the Seller desires
to transfer to the Buyer the Business and all of the
Transferred Assets and the Assumed Liabilities and the Buyer
desires to acquire such Business, Transferred Assets and
Assumed Liabilities, all upon the terms and subject to the
conditions set forth herein; and
WHEREAS, the parties hereto
desire to set forth certain representations, warranties,
covenants and agreements, all as more fully set forth
below;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto agree as
follows:
ARTICLE
1
PURCHASE AND SALE OF ASSETS
1.01
Transferred Assets .
(a)
Subject
to the terms and conditions of this Agreement and in consideration
of the obligations of the Buyer as provided herein, and except for
the Excluded Assets as provided in Section 1.02
hereof, at the Closing, the Seller shall sell, assign, transfer,
grant, bargain, deliver and convey to the Buyer, free and clear of
all Liens, other than Permitted Liens, all of Seller’s right,
title and interest in, to and under the Business, as a going
concern, and all assets owned or leased and used by the Seller in
connection with or arising out of the Business of every type and
description, real or personal, tangible and intangible, wherever
located and whether or not reflected on the books and records of
the Seller (hereinafter sometimes collectively referred to as the
“Transferred Assets”), including, but not limited
to:
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(i)
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all
tangible personal property, including but not limited to the
Equipment, furniture and vehicles set forth in Schedule
1.01(a)(i) to the Disclosure Schedule;
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(ii)
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all
Inventories, including the Inventories set forth in Schedule
1.01(a)(ii) to the Disclosure Schedule;
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(iii)
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all
cash, accounts receivable and other rights to payment from
customers of Seller, including the accounts receivable set forth in
Schedule
1.01(a)(iii) to the Disclosure Schedule;
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(iv)
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the
Proprietary Information, including but not limited to the name
“Rocky Mtn. Supply” or any derivative thereof, and the
names of the customers and suppliers of the Business;
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(v)
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all
Contracts and Other Agreements, including but not limited to (A)
all rights of Seller under non-disclosure or confidentiality
agreements, non-compete or non-solicitation agreements with former
employees, Transferred Employees and agents of Seller or with third
Persons to the extent relating to the Business or the Transferred
Assets and (B) all rights of Seller under or pursuant to all
warranties, representations and guarantees made by suppliers,
manufacturers and contractors to the extent relating to products
sold and services provided to Seller or to the extent affecting any
Transferred Assets or the Business (but specifically excluding
warranties, representations and guaranties specifically and solely
relating to any Excluded Assets or Retained
Liabilities);
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(vi)
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[intentionally
omitted];
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(vii)
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to
the to the extent assignable, all prepaid expenses, deposits and
similar assets of Seller, including but not limited to customer
deposits, security for rent, electricity, telephone or other
utilities and prepaid charges and expenses including prepaid rent
and any prepaid items shown on Seller’s November 30, 2007
Financial Statements relating to the Transferred Assets and the
Business;
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(viii)
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all
documents that are related to the Business, including but not
limited to documents relating to products, services, marketing,
advertising, promotional materials, Proprietary Information,
personnel files of the Transferred Employees and all files,
customer files and related documents (including credit
information), supplier lists, records, literature and
correspondence, to the extent permitted by law to be assigned and
transferred;
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(ix)
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to
the extent assignable, all permits, including but not limited to
environmental permits used by Seller in the Business and all
permits necessary to conduct the Business as currently conducted,
and all rights, and incidents of interests therein;
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(x)
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all
supplies and computer equipment owned by Seller and used or held
for use in connection with the Transferred Assets and the
Business;
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(xi)
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to
the extent not used to repair or replace any Transferred Assets,
all rights to third-party property and casualty insurance proceeds
to the extent receivable in respect of property or assets that
would otherwise be Transferred Assets; and
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(xii)
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all
other intangible assets of Seller, if any, associated with the
Transferred Assets and the Business.
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(b)
The
Seller shall use its reasonable efforts to obtain, or as the case
may be assist the Buyer in obtaining, such consents of third
parties as are necessary for the assignment of the Transferred
Assets; provided ,
however ,
that Seller shall not be required to pay any amounts in respect of
obtaining such consents. To the extent that any of the
Transferred Assets are not assignable or consents to the assignment
thereof cannot be obtained as herein provided, such Transferred
Assets shall be held by the Seller in trust for the Buyer and any
obligations with respect thereto shall be performed by the Buyer in
the name of the Seller and all benefits and obligations derived
thereunder shall be for the action of the Buyer. The
Seller shall, at the request of the Buyer, enforce in a reasonable
manner, at the cost of and for the account of the Buyer, any and
all rights of the Seller against such third party relating to any
such Transferred Assets. Seller shall promptly pay over
to the Buyer all money or other consideration received by it in
respect of such entitlement.
(c)
The
Seller shall also notify each Person which may have possession of
the Transferred Assets on the Closing Date of the transfer of such
Transferred Assets to the Buyer.
1.02
Excluded Assets . There shall be excluded from
the Transferred Assets (the “Excluded Assets”): (i) the
life insurance policies insuring the lives of the Shareholders in
the amounts of $915,000, in the aggregate, for Edward Rutt and
$652,000 for Dennis Hinchley, (ii) the minute books, organizational
documents, stock registers and such other books and records of
Seller pertaining to ownership, organization or existence of Seller
as a corporation, provided ,
however ,
duplicate copies of such records shall be provided to Buyer as are
reasonably necessary to enable Buyer to file tax returns and file
information with the Securities and Exchange Commission, and (iii)
those assets of listed or described on Schedule 1.02
of the Disclosure Schedule.
1.03
Consideration .
(a)
The
consideration for Buyer’s purchase of the Transferred Assets
and the Business shall be: (i) subject to adjustment as
otherwise provided under this Section 1.03 ,
$4,050,000.00 (the “Seller Cash Payment”), (ii) a
promissory note in the form of Exhibit
“A” in an original principal amount of
$400,000.00 (the “Seller Note”, which along with the
Seller Cash Payment, subject to adjustment as otherwise provided in
this Section 1.03 ,
shall be the “Seller Purchase Price”), and (iii) the
assumption of the Assumed Liabilities (together with the Seller
Purchase Price, shall be the “Seller
Consideration”). On the Closing Date, Buyer shall
(x) pay the Seller Cash Payment to Seller (i) by wire transfer of
$3,425,500.00 of same day funds into an account(s) designated by
Seller and (ii) by wire transfer of $624,500.00 (the “Escrow
Amount”) to the escrow account as specified in the Escrow
Agreement and (y) deliver to Seller the duly executed Seller
Note.
(b) In
consideration of the Shareholders covenants and agreements as
set forth in Section
7.07 and 7.10
hereof, on the Closing Date Buyer shall execute and deliver to
each of the Shareholders the Shareholder Note in the amount of
$150,000.00. In the event Buyer were to seek
damages for any breach of Section
7.07 or 7.10 ,
the amount specified in the immediately preceding sentence or
otherwise allocated by the parties to the covenants set forth
in Sections
7.07 and 7.10
shall not be considered a measure of or limit on such
damages. On the Closing Date, Buyer shall enter
into and consummate with the Shareholders a separate purchase
of the goodwill and intangible assets of the Shareholders
associated with the Business, and in consideration therefor
shall pay each of the Shareholders the amount of $225,000 (for
an aggregate payment in respect thereof to the Shareholders of
$450,000, the “Personal Goodwill Consideration”)
by wire transfer of same day funds into an accounts designated
by the Shareholders.
(c) Not
later than sixty (60) days after the Closing Date, Buyer shall
cause to be prepared and delivered to Seller and the
Shareholders a statement setting forth Buyer’s
calculation of Net Working Capital as of the end of business
on January 31, 2008 (the "Closing Statement"), which shall be
prepared by Buyer in accordance with Schedule
14.42 .
(d) If
Seller disagrees with Buyer’s calculations in the
Closing Statement, Seller may, within fifteen (15) days after
delivery of the Closing Statement, deliver a notice to Buyer
disagreeing with such calculation and setting forth
Seller’s calculation of such amounts (a "Dispute
Notice"). Any such Dispute Notice shall specify
those items or amounts as to which Seller disagrees, and
Seller shall be deemed to have agreed with all other
calculations and amounts contained in the Closing
Statement. If a Dispute Notice shall be duly
delivered by Seller to Buyer, Buyer and Seller shall, during
the fifteen (15) days following such delivery, use their good
faith efforts to reach agreement on the disputed items or
amounts in order to determine, as may be required, the Net
Working Capital as of the Closing Date, as applicable, which
amount shall not be less than the amount thereof shown in the
Closing Statement nor more than the amount thereof shown in
Seller’s Dispute Notice. If the parties so
resolve all disputes, the computation of the Net Working
Capital as of the Closing Date, as amended to the extent
necessary to reflect the resolution of the dispute, shall be
conclusive and binding on all parties. If during
such period, Buyer and Seller are unable to reach an
agreement, they shall within five (5) days thereafter cause
Hein & Associates, LLP (the “Firm”) to review
this Agreement and the disputed items or amounts for the
purpose of calculating the Net Working Capital as of the
Closing Date (it being understood that in making such disputed
calculation, the Firm shall be functioning as an expert and
not as an arbitrator). In making such disputed
calculation, the Firm shall consider only those items or
amounts in the Closing Statement and the Dispute Notice to
which Seller has disagreed. The Firm shall deliver
to Buyer and Seller, as promptly as practicable (but in any
case no later than thirty (30) days from the date of
engagement of the Firm), a report setting forth the
calculations of the Net Working Capital as of the Closing
Date. Such report shall be final and binding upon
Buyer, Seller and the Shareholders and judgment may be entered
to enforce such report in any court of competent
jurisdiction. The fees, costs and expenses of the
Firm (“the Expenses”) shall be paid as
follows: (i) if the event the Firm agrees with Buyer’s
calculation of the Net Working Capital, then Seller shall pay
the Expenses, (ii) if the Firm agrees with Seller’s
calculation of the Net Working Capital, then Buyer will pay
the Expenses, or (iii) if the Firm does not agree with
Buyer’s or Seller’s calculation of Net Working
Capital, then the Expenses shall be prorated between Buyer and
Seller based on the percentage of adjustment for each
parties’ Net Working Capital calculation.
(f) Buyer
and Seller shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of
the Closing Statement and the calculation of the Net Working
Capital and in the conduct of the review thereof, including
the making available to the extent necessary books, records,
work papers and personnel.
(g) If
the Final Net Working Capital is less than Four Million Two
Hundred Seventy and No/100 Dollars ($4,270,000.00), Seller and
Buyer shall set-off and apply such difference to the Seller
Note in the direct order of maturity of the
payments.
(h) The
Escrow Amount shall be held and disbursed pursuant to the
terms and conditions of the Escrow
Agreement. Seller shall take all requisite action
to provide notices and consummate the payment and redemption
of all preferred stock issued by the Seller, with such payment
and redemption to finally occur no later than the sixty-first
(61 st
) day following the Closing Date. Upon such final
payment and redemption of the Seller’s preferred stock,
any remaining amounts held in the escrow account under the
terms of the Escrow Agreement (and not otherwise required for
the payment of fees and expenses thereunder) shall be
distributed to Seller, and Buyer agrees to consent to such
final distribution.
1.04
Assumed Liabilities . On the terms and subject to
the conditions set forth in this Agreement, at the Closing the
Buyer will assume, effective as of the Closing Date, the following
liabilities of Seller (collectively, the “Assumed
Liabilities”):
(a) all
liabilities of Seller under the Contracts and Other Agreements
that arise out of or relate to the performance thereof for the
period from and after the Closing Date and the other
obligations and liabilities associated with the operation of
the Business from and after the Closing Date;
(b) all
Trade Payables of the Seller as of the Closing Date arising
out of the ordinary course of the Business prior to the
Closing Date;
(c) all
obligations of Seller with respect to unpaid payroll and sales
taxes as of the Closing Date arising in the ordinary course of
Business prior to the Closing Date;
(d) the
liabilities set forth in Article 6 assumed by
Buyer;
(e) the
four (4) promissory notes payable to GMAC and secured by four
(4) vehicles as described in the January 31, 2007 Financial
Statements (and set forth therein in an aggregate amount of
indebtedness of $40,258) provided to Buyer;
(f) federal
and state income taxes related to the Business from February
1, 2007 to the Closing Date (and for which Seller may be
entitled to obtain reimbursement from Buyer in accordance with
Section
1.07(c) hereof); and
(g) those
liabilities listed on Schedule
1.04(g) .
1.05
Liabilities Not Assumed by the Buyer . Except for
the Assumed Liabilities and the warranty claims as provided in
Section
7.09 hereof, the Seller shall pay and discharge in due
course all of its liabilities, debts and obligations, whether known
or unknown, now existing or hereafter arising, contingent or
liquidated, including, without limitation, those listed in
Schedule
1.05 of the Disclosure Schedule (the “Retained
Liabilities”), and the Buyer shall not assume, or in any way
be liable or responsible for, any of such Retained
Liabilities. Without limiting the generality of the
foregoing, the Retained Liabilities shall include the
following:
(a)
any
liability or obligation of the Seller arising out of or in
connection with this Agreement and the consummation and performance
of the transactions contemplated hereby, whether or not such
transactions are consummated, including but not limited to, and
except as otherwise provided herein, any liability for Taxes so
arising;
(b)
except
as set out in Section
1.04(f) , any liability or obligation for any and all Taxes
of, or pertaining or attributable to, (i) the Seller for any period
that ends on or before, or includes, the Closing Date, or (ii) the
Business and/or the Transferred Assets for any period or portion
thereof that ends on or before the Closing Date (including, but in
no way limited to, any and all Taxes described in clauses (i) and
(ii) of this Section
1.05(b) for which liability is or may be sought to be
imposed on the Buyer under any successor liability, transferee
liability or similar provision of any applicable foreign, federal,
state or local law);
(c)
except
for the warranty claims as provided in Section 7.09
hereof, all other liabilities and obligations to any Person arising
prior to the Closing or related to the conduct or operation of the
Transferred Assets or the Business prior to the Closing Date,
including, but not limited to, the Pre-Closing Obligations and the
specific liabilities, obligations or litigation listed on
Schedule
1.05(c) of the Disclosure Schedule; and
(d)
all
environmental costs and liabilities, to the extent arising out of
or otherwise related to: (i) the ownership or operation
by Seller of the Transferred Assets or the Business prior to the
Closing Date, and (ii) the Excluded Assets or any other real
property formerly owned, operated, leased or otherwise used by
Seller;
(e)
except
as set forth in Article 6
, all liabilities arising out of, relating to or with respect to
(i) the employment or performance of services, or termination of
employment or services by Seller of any individual (including any
Transferred Employee) on or before the Closing Date, (ii)
worker’s compensation claims against Seller that relate to
the conduct of the Business or the operation of the Transferred
Assets on or before the Closing Date, irrespective of whether such
claims are made prior to or after the Closing or (iii) any employee
benefit plan of the Seller;
(f)
all
liabilities arising out of, under or in connection with any
indebtedness of Seller, not specifically assumed by Buyer in this
Agreement, including but not limited to notes payable to the
Shareholders or to notes payable to any employee or employees of
the Seller;
(g)
all
liabilities in respect of: (i) any pending or threatened
legal proceeding or any claim arising out of, relating to or
otherwise in respect of the operation of the Business prior to the
Closing Date or (ii) any Excluded Asset;
(h)
except
as provided in Section 7.09 ,
all liabilities relating to any dispute with any client or customer
of the Business existing as of the Closing Date or based upon,
relating to or arising out of events, actions, or failures to act
prior to the Closing Date; provided, however, the Buyer agrees to
reasonably assist Seller in satisfying such dispute at Seller's
cost, including by providing services of Buyer and the Transferred
Employees and Transferred Assets; and
(i)
all
liabilities related to the preferred stock issued by the Seller,
including but not limited to accumulated undeclared dividends,
liquidation preferences or any other provisions of said preferred
stock.
1.06
Prorations of Expenses and Certain Property Taxes
.
(a)
Any
general property Tax assessed against or pertaining to the
Transferred Assets, including pursuant to the Leases being entered
per Section 7.08 ,
for the taxable period that includes the Closing Date shall be
prorated between the Buyer (after the Closing Date) and the Seller
(prior to and including the Closing Date) as of the Closing
Date. In the event the amount of any such general
property Tax cannot be ascertained as of the Closing Date,
proration shall be made on the basis of the preceding year and to
the extent that such proration may be inaccurate the Seller and the
Buyer agree to make such payment to the other after the tax
statements have been received as are necessary to allocate such
general property Tax properly between the Seller and the Buyer as
of the Closing Date.
(b)
Except
as otherwise provided in this Agreement, the Seller and the Buyer
agree that amounts payable with respect to utility charges and
other items of expense attributable to the conduct of the Business
shall be prorated as of the Closing Date (with Seller responsible
for the period up to and including the Closing Date and Buyer
responsible for the period after the Closing Date) to the extent
the charges and expenses cannot be identified as to the party who
received the benefits to which such charges and expenses
relate.
1.07
Transfer Taxes; Recording Fees; Tax Reimbursement
.
(a)
The
Buyer and the Seller acknowledge and agree that the Purchase Price
does not include any sales tax imposed as a result of the transfer
of equipment and motor vehicles. The Buyer hereby agrees
to indemnify the Seller and the Shareholders against, and agrees to
protect, save and hold the Seller and Shareholders harmless from,
any loss, liability, obligation or claim (whether or not ultimately
successful) for sales, transfer or other similar Taxes (and any
interest, penalties, additions to tax and fines thereon or related
thereto) imposed as a result of the consummation of the
transactions contemplated by this Agreement.
(b)
The
Buyer shall pay any and all recording, filing or other fees
relating to the conveyance or transfer of the Transferred Assets
from the Seller to the Buyer.
(c)
Seller
shall timely file all Tax Returns relating to the operation of the
Transferred Assets and conduct of the Business prior to the Closing
Date. If Seller remits any income taxes that are Assumed
Liabilities of Buyer pursuant to Section
1.04(f) hereof, then Buyer shall promptly reimburse Seller
for such payment upon provision by Seller of reasonable written
evidence of such remittance.
1.08
Allocation of Purchase Price .
(a)
Seller,
the Shareholders and Buyer have prepared an initial written
statement setting forth the allocation of the consideration
(including, without limitation, the Seller Purchase Price and any
adjustments thereto) deemed to have been paid for federal income
tax purposes by the Buyer to the Seller and the Shareholders
pursuant to this Agreement (the “Tax Consideration”)
among the Transferred Assets and the other covenants and rights
arising hereunder (the “Allocation”) and a copy of such
written statement is attached hereto as Exhibit
“H” .
(b)
For
federal income tax purposes (including, without limitation,
Buyer’s, each Shareholder’s and the Seller’s
compliance with the reporting requirements of Section 1060 of the
Code), each of the Seller, Shareholders and the Buyer hereby agree
to use the Allocation and to cooperate in good faith with each
other in connection with the preparation and filing of any
information required to be furnished to the Internal Revenue
Service under Section 1060 of the Code (including, without
limitation, Section 1060(b) and (e) of the Code) and any applicable
regulations thereunder. Without limiting the generality
of the preceding sentence, the Buyer, Shareholders and the Seller
agree to (i) report the Allocation to the Internal Revenue Service
on Form 8594 and, if required, supplemental Forms 8594, in
accordance with the instructions to Form 8594 and the provisions of
Section 1060 of the Code and the applicable regulations thereunder,
and (ii) coordinate their respective preparation and filing of each
such Form 8594 and any other forms or information statements or
schedules required to be filed under Section 1060 of the Code and
the applicable regulations thereunder so that the Allocation and
information reflected on such forms, statements and schedules shall
be consistent.
(c)
Notwithstanding
the foregoing provisions of this Section 1.08 ,
Buyer shall prepare and deliver to Seller and Shareholders from
time to time revised statements of any Allocation to the extent
that any matters need updating (including, without limitation, in
respect of any adjustments under Section 1.03
hereof), which such revised statements shall be substantially
consistent with the manner of allocation previously agreed by the
Seller, Shareholders and the Buyer.
1.09
Right to Control Payment . Buyer shall have the
right, but not the obligation, to make any payment due from Seller
with respect to any Retained Liabilities which are not paid by
Seller within five (5) Business Days following written request for
payment from Buyer; provided ,
however ,
that if Seller advises Buyer in writing during such five (5)
Business Day-period that a good faith payment dispute exists or
Seller has valid defenses to non-payment with respect to such
Retained Liability, then Buyer shall not have the right to pay such
Retained Liability. Seller agrees to reimburse Buyer
promptly and in any event within five (5) Business Days following
written notice of such payment by Buyer for the amount of any
payment made by Buyer pursuant to this Section 1.09
.
1.10
Accounts Receivable . Following the Closing Date,
Seller and Shareholders shall provide reasonable assistance to
Buyer in the collection of the accounts receivable. If
Seller shall receive payment in respect of the accounts receivable,
then Seller shall promptly forward such payment to
Buyer.
ARTICLE
2
CLOSING
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Subject
to the conditions set forth in this Agreement, the Closing shall
take place at the offices of Brownstein Hyatt Farber Schreck, LLP,
located in Denver, Denver County, Colorado, at 10:00 a.m. on or
before January 31, 2008 or at such other time, date and place as
the parties hereto shall mutually agree upon in writing (the
“Closing Date”). Except as set forth in
Article
13 , failure to consummate the transactions contemplated
hereby on such date shall not result in a termination of this
Agreement or relieve any party hereto of any obligation
hereunder. Title to, ownership of, control over and risk
of loss of the Transferred Assets shall pass to the Buyer at the
Closing.
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ARTICLE
3
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER AND THE SHAREHOLDERS
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The
Seller and the Shareholders, as applicable, hereby represent and
warrant to the Buyer and covenant and agree as
follows:
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3.01
Corporate Matters .
(a)
The
Seller is a corporation organized, validly existing and in good
standing under the laws of the State of Colorado. The
Seller is duly authorized, qualified and licensed and has all
requisite power and authority under all applicable laws, ordinances
and orders of public authorities to own, operate and lease its
properties and assets and to carry on its business in the places
and in the manner currently conducted. There is no other
jurisdiction in which the nature and extent of the Seller’s
business or the character of its assets makes qualification to
transact business as a foreign corporation necessary, except where
failure to be so qualified would not be reasonably expected to
result in a Material Adverse Effect. The Seller has all
requisite corporate power and authority to enter into this
Agreement and to perform its obligations under this
Agreement.
(b)
The
Seller has no Subsidiaries.
(c)
The
Seller does not do business in any state or commonwealth under any
name other than the corporate name set forth in the first paragraph
of this Agreement.
(d)
The
Seller and the Shareholders represent and warrant to the Buyer that
(i) the Shareholders hold of record and own beneficially 24,920
shares of the common stock which is all of the issued and
outstanding common stock of the Seller free and clear of any Liens,
except encumbrances on transfer generally imposed under applicable
securities law; (ii) 61,144.5 shares of non-voting preferred stock
of Seller are issued and outstanding, with some shares providing
for an 8% cumulative dividend and other shares providing for a 12%
cumulative dividend both payable semi-annually and all such shares
are callable at $10 per share plus accumulated and unpaid dividends
(the “Preferred Shares”); and (iii) no other form of
stock of the Seller has been issued by the Seller. Set
out in Schedule
3.01(d) are the names of the parties that hold of record and
own beneficially all of the preferred stock and common stock of the
Company and the number of shares of non-voting preferred stock and
common stock owned by each party. Neither the
Shareholders nor, to the Seller’s knowledge, any other
Persons owning common stock and preferred stock of the Company are
party to an option, warrant, purchase right, or other contract or
commitment that could require the Shareholders or such other owners
of the common or preferred stock to sell, transfer, or otherwise
dispose of any preferred stock or common stock of the Seller (other
than in this Agreement). The Shareholders or the other
owners of the preferred stock are not a party to any voting trust,
proxy, or other agreement or understanding with respect to the
voting of any shares of the preferred or the common stock of the
Seller. All of the preferred and common stock of the
Seller has been duly authorized and validly issued. Set
out in Schedule
3.01(d) are copies of the Articles of Incorporation and
Bylaws of the Seller and all amendments thereto.
3.02
Validity of Agreement and Conflict with Other Instruments
.
(a)
This
Agreement has been duly authorized by the Shareholders of the
Seller. No further corporate action is necessary on the
part of the Seller to execute and deliver this Agreement or to
consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Seller and
the Shareholders and is a legal, valid and binding obligation of
the Seller and the Shareholders enforceable against the Seller and
the Shareholders in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in
effect that affect creditors’ rights generally and by legal
and equitable limitations on the availability of specific
remedies.
(b)
The
covenants set out in Sections 7.07
and 7.10 hereof
have been approved by all necessary corporate action on the part of
Seller and, when executed and delivered at the Closing as
contemplated by this Agreement, shall be legal, valid and binding
obligations of the Seller and the Shareholders, enforceable against
the Seller and the Shareholders in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect that affect creditors’ rights generally and by
legal and equitable limitations on the availability of specific
remedies.
(c)
The
execution, delivery and performance of this Agreement and the other
agreements and documents to be delivered by the Seller to the
Buyer, the consummation of the transactions contemplated hereby or
thereby, and the compliance with the provisions hereof or thereof,
by the Seller will not, with or without the passage of time or the
giving of notice or both:
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(i)
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conflict
with, constitute a breach, violation or termination of any
provision of, or give rise to any right of termination,
cancellation or acceleration, or loss of any right or benefit or
both, under, any of the Contracts and Other Agreements to which the
Seller is a party or by which any of them is bound, other than, in
each case, such that would not materially and adversely affect the
ability of the Seller to consummate the transactions contemplated
hereby or thereby;
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(ii)
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result
in an acceleration or increase of any amounts due with respect to
the Trade Payables;
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(iii)
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conflict
with or violate the Articles of Incorporation or Bylaws of the
Seller;
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(iv)
|
result
in the creation or imposition of any Lien on any of the Transferred
Assets; or
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(v)
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violate
any law, statute, ordinance, regulation, judgment, writ,
injunction, rule, decree, order or any other restriction of any
kind or character applicable to the Seller or any of their
respective properties or assets.
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(d)
The
execution, delivery and performance of this Agreement and the other
agreements and documents to be delivered by the Shareholders, the
consummation of the transactions contemplated hereby and thereby,
and the compliance with the provisions hereof and thereof, by the
Shareholders will not, with or without the passage of time or the
giving of notice or both:
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(i)
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conflict
with, constitute a breach, violation or termination of any
provision of, or give rise to any right of termination,
cancellation or acceleration, or loss of any right or benefit or
both under any contract or other agreement to which the
Shareholders are a party or by which any of them is bound, other
than, in each case, such that would not materially and adversely
affect the ability of each Shareholder to consummate the
transactions contemplated hereby or thereby; or
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(ii)
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violate
any law, statute, ordinance, regulation, judgment, writ,
injunction, rule, decree, order or any other restriction of any
kind or character applicable to the Shareholders or any of their
respective properties or assets.
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(e)
Attached
as Schedule
3.02(e) of the Disclosure Schedule are true, correct and
complete copies of all resolutions adopted by the directors and
shareholders of Seller with respect to the Seller approving this
Agreement and the transactions contemplated hereby. Such
resolutions were adopted at meetings duly called and convened at
which a quorum was present and acting throughout or by unanimous
written consents. Such resolutions are in full force and
effect without amendment or modification.
3.03
Approvals, Licenses and Authorizations .
(a)
Except
as set forth on Schedule
3.03(a) , no order, license, consent, waiver, authorization
or approval of, or exemption by, or the giving of notice to, or the
registration with, or the taking of any other action in respect of,
any Person not a party to this Agreement, including any
Governmental Entity, and no filing, recording, publication or
registration in any public office or any other place is now, or
under existing law in the future will be, necessary on behalf of
the Seller to authorize the execution, delivery and performance of
this Agreement or any other agreement contemplated hereby to be
executed and delivered by them and the consummation of the
transactions contemplated hereby or thereby (including, but not
limited to, assignment of the Transferred Assets), or to effect the
legality, validity, binding effect or enforceability
thereof.
(b)
Schedule 3.03(b) contains a list of all material licenses,
permits, concessions, warrants, franchises and other governmental
authorizations and approvals of all Governmental Entities required
or necessary to carry on the Business in the places and in the
manner currently conducted have been duly obtained, are in full
force and effect. Except as set forth on Schedule
3.03(b) , no violations are in existence or have been
recorded since January 1, 2007 with respect to such licenses,
permits or other authorizations and no proceeding is pending or, to
the best knowledge of the Seller, threatened with respect to the
revocation or limitation of any of such licenses, permits or other
authorizations. The Seller has complied with all laws,
rules, regulations and orders applicable to the Business, and all
rules, regulations and orders respecting the provision of services
by the Seller, except for violations that would not have a Material
Adverse Effect.
3.04
Title to and Condition of Transferred Assets
. Seller represents and warrants to Buyer as
follows:
(a)
The
Seller leases the Facilities. All of the Transferred
Assets are located at one of the Facilities.
(b)
The
Seller has good and marketable title to all Equipment free and
clear of all Liens other than those Liens set forth on Schedule
3.04(b) of the Disclosure Schedule and Permitted
Liens. All of the Equipment is in the Seller’s
possession and control and in good condition and repair, ordinary
wear and tear accepted, and is suitable for the purposes
used.
(c)
All
Inventories are set forth on Schedule
1.01(a)(ii) of the Disclosure Schedule. The
Seller has valid title to all Inventories free and clear of all
Liens other than those Liens set forth on Schedule
3.04(c) of the Disclosure Schedule and Permitted Liens,
which Liens shall be released on or prior to the
Closing. The Inventories are in good and marketable
condition and are saleable in the ordinary course of
business. The Inventories constitute sufficient
quantities for the normal operation of the Business and the
Inventories will be in such sufficient quantities on the Closing
Date.
(d)
The
accounts receivable comprising part of the Transferred Assets are
owned by the Seller free and clear of all Liens (other than those
Liens set forth in Schedule
3.04(d) of the Disclosure Schedule, which Liens shall be
released on or prior to the Closing and Permitted Liens) and relate
to receivables owed to the Seller. All accounts
receivable were generated in the ordinary course of business
pursuant to bona fide transactions and are payable on ordinary
trade terms. The Seller is unaware of any existing facts
or circumstances that could reasonably be expected to increase
uncollectible accounts receivable beyond the allowance for bad debt
reflected in the December 31, 2007 Financial
Statements.
(e)
The
Seller owns or possesses licenses or other rights to use, and will
at the Closing transfer to the Buyer, all rights to all Proprietary
Information necessary for the conduct of the Business as currently
conducted, except for standard "shrink wrapped, off the shelf" or
"click-wrap" software. Set forth in Schedule
3.04(e) of the Disclosure Schedule is a complete and
accurate list of all patents, trademarks, copyrights and licenses
that Seller owns or possesses or otherwise has rights to use
pertaining to the Business, except for standard "shrink wrapped,
off the shelf" or "click-wrap" software including the jurisdictions
in which each such item has been issued or registered and the
registration date. No licenses, sublicenses, covenants
or agreements have been granted or entered into by the Seller in
respect of the items listed in Schedule
3.04(e) of the Disclosure Schedule except as noted
thereon. The Seller has not received any notice of
infringement, misappropriation or conflict from any other Person
with respect to such Proprietary Information except as noted in
Schedule
3.04(e) of the Disclosure Schedule, and, to Seller's
knowledge, the conduct of the Business has not infringed,
misappropriated or otherwise conflicted with any Proprietary Rights
of any such Person. The Seller has not given
indemnification for patent, trademark, service mark or copyright
infringements except to licensees or customers in the ordinary
course of business. All of the Proprietary Information
that is owned by the Seller is owned free and clear of all Liens
except as set forth in Schedule
3.04(e) of the Disclosure Schedule and Permitted
Liens. All Proprietary Rights that are licensed by the
Seller to third parties are licensed pursuant to valid and existing
license agreements and such interests are not subject to any Liens
other than those under the applicable license
agreements. The consummation of the transactions
contemplated by this Agreement will not result in the loss of any
Proprietary Information. To Seller's knowledge, the
present business practices, methods and operations of Seller
regarding the Proprietary Information does not infringe, constitute
an unauthorized use of, misappropriation or violate any copyright,
mark, patent, trade secret or other similar right of any
Person. Except with respect to licenses of commercial
off-the-shelf software Seller is not obligated, required or under
any liability whatsoever to make any payments by way of royalties,
fees or otherwise regarding the Proprietary
Information.
(f)
Other
than the Facilities, there is no real property or interest in real
property owned by Seller for use in the Business or in connection
with the Transferred Assets. Schedule 14.24
of the Disclosure Schedule sets forth a complete list of the six
(6) Facilities leased by Seller, including a legal description of
each such Facility (including the name of the third party lessor
and the date of the lease and all amendments
thereto). There is not any events of default regarding
said six Facility leases. To Seller's knowledge, said
leased real property is not subject to any rights of first refusal,
options to purchase except as set out in the leases.
(g)
Except
for the current leases for the Facilities, the Seller owns or has
rights to use, and is transferring to the Buyer hereunder, all
tangible assets necessary for the conduct of the Business in the
ordinary course consistent with past practices. The
conduct of the Business in the ordinary course is not dependent
upon the right to use the property of others, except such property
as is leased or licensed by Seller and assignable to Buyer pursuant
to and included in the Transferred Assets.
3.05
Contracts and Commitments . Seller represents and
warrants to Buyer as follows:
(a)
Other
than leases for the Facilities and as otherwise set forth in
Schedule
3.05(a) of the Disclosure Schedule, none of the Transferred
Assets are subject to, and the Seller is not a party to or bound
by:
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(i)
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any
agreement, contract or commitment requiring the expenditure or
series of related expenditures of funds in excess of $10,000 in any
fiscal year (other than purchase orders in the ordinary course of
business for goods necessary for the Seller to complete then
existing contracts or purchase orders);
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(ii)
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any
agreement, contract or commitment requiring the payment for goods
or services whether or not such goods or services are actually
provided or the provision of goods or services at a price less than
the Seller’s cost of producing or supplying such goods or
providing such services;
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(iii)
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any
loan or advance to, or investment in, any Person or any agreement,
contract, commitment or understanding relating to the making of any
such loan, advance or investment;
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(iv)
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any
contract, agreement, indenture, note or other instrument relating
to the borrowing of money or any guarantee or other contingent
liability in respect of any indebtedness or obligation of any
Person (other than the endorsement of negotiable instruments for
deposit or collection in the ordinary course of
business);
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(v)
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any
management service, employment, consulting or other similar type
contract or agreement;
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(vi)
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any
agreement, contract or commitment that would limit the freedom of
the Buyer or any affiliate thereof following the Closing Date to
engage in any line of business, to own, operate, sell, transfer,
pledge or otherwise dispose of or encumber any of the Transferred
Assets or to compete with any Person or to engage in any business
or activity in any geographic area;
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(vii)
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any
agreement, lease, contract or commitment or series of related
agreements, leases, contracts or commitments not entered into in
the ordinary course of business or, except for agreements to
purchase or sell goods and services entered into in the ordinary
course of business of the Seller, not cancelable by the Seller
without penalty to the Seller within 30 calendar days;
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(viii)
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other
than in respect of the Seller’s customary general warranty
for goods sold as described on Schedule 3.13(a) to
the Disclosure Schedule , any agreement or contract
obligating the Seller or that would obligate or require any
subsequent owner of the Business or any of the Transferred Assets
to provide for indemnification or contribution with respect to any
matter;
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(ix)
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any
sales, distributorship or similar agreement relating to the
products sold or services provided by the Seller;
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(x)
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any
license, royalty or similar agreement;
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(xi)
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any
contract requiring performance by Seller for a period of one year
or more or requiring Seller to purchase or sell a stated portion of
its requirements or outputs;
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(xii)
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any
contract regarding the acquisition by Seller of any operating
business or material assets or the capital stock of any Person;
or
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(xiii)
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any
other agreement, contract or commitment that might reasonably be
expected to have a Material Adverse Effect.
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(b)
Seller
is not in material breach of any provision of, or is in material
default (or knows of any event or circumstance that with notice, or
lapse of time or both, would constitute an event of default) under
the terms of any of the Contracts and Other Agreements that
constitute a part of the Transferred Assets. All of the
Contracts and Other Agreements that constitute a part of the
Transferred Assets are in full force and effect. To
Seller's knowledge, there are no pending or threatened disputes
with respect to any of the Contracts and Other
Agreements.
(c)
The
enforceability of the Contracts and Other Agreements that
constitute a part of the Transferred Assets will not be affected in
any manner by the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby and none of
the Contracts and Other Agreements that constitute a part of the
Transferred Assets require the receipt of the consent or waiver of
any Person or Governmental Entity prior to the sale, assignment,
transfer, conveyance or delivery thereof pursuant to this
Agreement.
3.06
Financial Statements . Seller represents and
warrants to Buyer as follows:
(a)
Attached
as Schedule 3.06
to the Disclosure Schedule are true, correct and complete copies of
(i) the reviewed balance sheets of the Business as of January 31,
2006 and January 31, 2007 and the compiled balance sheet of
Business as of May 31, 2007, August 31, 2007, September
30, 2007, October 31, 2007 and November 30, 2007, and (ii) the
reviewed statements of income of the Business for the annual
periods ended January 31, 2006 and January 31, 2007, and the
compiled monthly and year-to-date statements of income of the
Business for the applicable periods ended May 31,
2007, August 31, 2007, September 30, 2007, October 31,
2007 and November 30, 2007. No later than three (3) days
prior to the Closing Date, Seller shall deliver to Buyer the
compiled balance sheet and statement of income for the Business for
the period ended December 31, 2007 (such balance sheet and
statement of income, collectively with each of the balance sheets
and statements of income described in clauses (i) and (ii) of this
Section
3.06(a) , referred to herein as the “Financial
Statements”).
The
Financial Statements:
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(i)
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fairly
present the financial position of the Business as of their
respective dates and the results of operations of the Business for
the periods indicated therein (except, with respect to interim
monthly reports, for normal recurring year-end adjustments that,
individually or in the aggregate, would not be
material);
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(ii)
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have
been reviewed or compiled, as applicable, by Siebert &
Associates, P.C. in accordance with the Statements and Standards
for Accounting and Review Services issued by the American Institute
of Certified Public Accountants based on generally accepted
accounting principles applied on a consistent basis throughout the
periods covered by the Financial Statements (“GAAP”);
and
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(iii)
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reflect
all liabilities or obligations, whether accrued, absolute,
contingent or otherwise, of the Seller that are Assumed Liabilities
as required under GAAP consistently applied other than those
liabilities incurred since January 31 2007, in the ordinary course
of business consistent with past practice.
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(b)
The
values at which the Inventories and accounts receivable are carried
on the Financial Statements are in accordance with GAAP and reflect
normal and consistent inventory valuation policies of the
Seller. The amounts shown for the accounts receivable on
the Financial Statements are collectible or are net of adequate
reserves reflected in the Financial Statements.
3.07
Taxes . Seller represents and warrants as
follows:
(a)
All
Tax Returns that are required to be filed (taking into account all
extensions) on or before the Closing Date for, by, on behalf of or
with respect to the Seller, including, but not limited to, those
relating to the Business, the Transferred Assets and the Assumed
Liabilities, and those which include or should include the Seller,
the Business, the Transferred Assets or the Assumed Liabilities,
have been or will be timely filed with the appropriate foreign,
federal, state and local authorities on or before the Closing Date,
and all Taxes shown to be due and payable on such Tax Returns or
related to such Tax Returns have been or will be timely paid in
full on or before the Closing Date;
(b)
All
such Tax Returns and the information and data contained therein
have been or will be properly and accurately compiled and completed
in all material respects, fairly present or will fairly present the
information purported to be shown therein, and reflect or will
reflect all liabilities for Taxes for the periods covered by such
Tax Returns;
(c)
None
of such Tax Returns are now under audit or, to the Seller’s
knowledge, examination by any foreign, federal, state or local
authority and there are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment or collection of any Tax or deficiency of any nature
against the Seller, the Business or the Transferred Assets, or with
respect to any such Tax Return, or any suits or other actions,
proceedings, investigations or claims now pending or threatened
against the Seller, the Business or the Transferred Assets with
respect to any Tax, or any matters under discussion with any
foreign, federal, state or local authority relating to any Tax, or
any claims for any additional Tax asserted by any such
authority;
(d)
All
Taxes due and owing from the Seller or assessed and due and owing
against the Business or the Transferred Assets on or before the
Closing Date have been or will be timely paid in full on or before
the Closing Date;
(e)
The
Transferred Assets are not, and on the Closing Date will not be,
subject to or liable for any special assessments or similar types
of impositions;
(f)
All
withholding Tax and Tax deposit requirements imposed on the Seller
and applicable to the Business for any and all periods prior to and
including the Closing Date have been or will be timely satisfied in
full; and
(g)
The
Financial Statements reflect adequate provision by the Seller for
the payment in full of any and all unpaid Taxes which in any way
may affect the Transferred Assets or the Business for any and all
periods or portions thereof ending on or before the respective
dates thereof.
3.08
No Violations or Litigation . Seller represents
and warrants to Buyer as follows:
(a)
Seller
is currently not in material violation of, and the consummation of
the transactions contemplated hereby will not cause any violation
of, any order of any Governmental Entity or any law, ordinance,
regulation, order, requirement, statute, rule, permit, concession,
grant, franchise, license or other governmental authorization
relating or applicable to the Seller, the Business or to any of the
Seller’s properties, assets or operations, including without
limitation, the Transferred Assets. A
(b)
There
is no action, suit, claim, investigation or legal, administrative,
arbitration or other proceeding, or governmental investigation or
examination, or any change in any zoning or building ordinance
pending or, to the Seller’s knowledge, threatened against or
affecting the Seller, the Business or any of the Transferred
Assets, at law or in equity, before or by any Governmental Entity
and, to Seller's knowledge, no basis exists for any such action,
suit, claim, investigation or proceeding.
3.09
No Adverse Changes or Events . Other than as set
forth on Schedule 3.09
to the Disclosure Schedule, since January 31, 2007, the Business
has been consistently operated only in the ordinary course and
there has not been:
(a)
any
adverse change or any occurrence, circumstance or combination
thereof that might reasonably be expected to have an adverse change
in the financial condition, assets, liabilities (contingent or
otherwise), results of operations, business or prospects of the
Seller before or after the Closing Date;
(b)
any
damage, destruction or loss, whether or not covered by insurance,
adversely affecting the Transferred Assets or the Business having a
replacement cost of more than $5,000 for any single loss or $25,000
for all such losses;
(c)
except
for ordinary salary increases and year end bonuses that have been
disclosed in writing to the Buyer at least fifteen (15) days prior
to the Closing, any increase in the compensation or rate of
compensation or commissions or bonuses payable or to become payable
by the Seller to any Transferred Employee on or after December 31,
2007, agent or representative that is not consistent with past
practice, any payment or accrual of, or commitment with respect to,
any bonus plan, vacation pay, sick leave, deferred compensation,
insurance, pension, salary continuation for disability or severance
or termination arrangement that is not consistent with past
practice or any change or modification to any severance arrangement
or any agreement to increase the coverage or benefits available
under any employee benefit plan or arrangement;
(d)
any
debt, obligation, mortgage, security interest or liability incurred
by the Seller, any assumption, guarantee, endorsement or other
responsibility by the Seller for the liability or obligation of any
other Person (whether absolute, accrued, contingent or otherwise),
or any engagement in any other transaction by the Seller other than
in the ordinary course of business;
(e)
any
mortgage, pledge or creation of any Lien with respect to any of the
Transferred Assets other than Permitted Liens;
(f)
any
sale, assignment, transfer or other disposition or lapse of any
Proprietary Rights or disclosure to any Person (other than
employees of the Seller in the scope of their employment) of any
Proprietary Rights material to the Business;
(g)
any
write up or write down in the value of any Equipment or
Inventories;
(h)
any
cancellation or compromise of any material claims, or any waiver of
any other material rights relating to the Business, or any sale,
transfer or other disposition of any material properties or assets,
real, personal or mixed, tangible or intangible, of the Business
(other than sales of Inventories in the ordinary course of
business);
(i)
any
change in the Seller’s method of accounting for financial,
Tax or other purposes;
(j)
any
material change in the customary methods used in operating the
Business (including the pricing practices) or any material change
in the sales operations, including but not limited to promptly
paying or discharging current liabilities;
(k)
any
commitment to make any capital expenditures in respect to the
Business;
(l)
instituted
or settled any legal proceeding;
(m)
any
grant of a license or sublicense of any rights under or with
respect to any Proprietary Information; or
(n)
any
settlement or compromise of any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy
relating to Taxes.
3.10
Environmental Matters . Seller represents and
warrants to Buyer as follows:
(a)
Seller
has not caused or allowed the generation, use, treatment, storage,
or disposal of Hazardous Materials at any site or facility owned,
leased or operated by the Seller including but not limited to the
Facilities or used in the Business except in accordance with all
applicable Environmental Laws and would not result in any
liability, contingent or otherwise, to the Buyer or its
affiliates;
(b)
the
Seller does not own or lease any real property, improvements or
related assets that form a part of the Transferred Assets or the
Business that have been subject to the release of any Hazardous
Materials;
(c)
the
Seller has secured all Environmental Permits necessary to the
conduct of the Business and the operations and the Seller is in
compliance with such permits;
(d)
the
Seller has not received any notice concerning any proposal to
amend, revoke or replace any Environmental Permit, or requiring the
issuance of any additional Environmental Permit, and to the
Seller’s knowledge no such proposal exists;
(e)
the
Seller has not received inquiry or notice and, to its knowledge,
has no reason to suspect or believe it will receive inquiry or
notice of any actual or potential proceedings, claims, lawsuits or
losses related to or arising under any Environmental
Law;
(f)
the
Seller is not currently operating or required to be operating under
any compliance order, schedule, decree or agreement, any consent
decree, order or agreement, and/or corrective action decree, order
or agreement issued or entered into under any federal, state or
local statute, regulation or ordinance regarding the environment
and/or health or safety in the work place;
(g)
the
Seller has not transported, arranged for the transportation of or
disposed of any substance in a manner that may lead to claims
against the Buyer for clean-up costs, remedial work, damages to
natural resources or for personal injury claims; and
(h)
Seller
has provided to Buyer all environmentally related audits, studies,
reports, analyses and results of investigations that have been
performed with respect to any currently or previously owned, leased
or operated properties of Seller or of the Business.
3.11
Related Party Transactions . Except as
specifically set out in this Agreement or on Schedules 1.02 or
3.11 to the Disclosure Schedule, no employee, officer,
director, partner, member or shareholder of Seller, any member of
his or her immediate family or any of their respective Affiliates
(i) owes any amount to Seller nor does Seller owe any amount to or
has Seller committed to make any loan or extend or guarantee credit
to or for the benefit of such persons, (ii) is involved in any
business arrangement or other relationship with Seller, (iii) owns
any property or right, tangible or intangible, that is used by
Seller, (iv) has any claim or cause of action against Seller or the
Business, or (v) owns any direct or indirect interest of any kind
in, or controls or is a director, officer, employee or partner of,
or consultant to, or lender to or borrower from or has the right to
participate in the profits of, any Person which is a competitor,
supplier, customer, creditor or debtor of Seller or the
Business.
3.12
Undisclosed Liabilities . The Seller does not
have any liabilities or obligations of any nature, whether accrued,
absolute, contingent, unliquidated, civil, criminal or otherwise,
and whether due or to become due, other than liabilities that (a)
are reflected or reserved against in the January 31, 2007 Balance
Sheet, (b) are disclosed in any Schedule (or in any plan,
instrument, lease or agreement referred to therein) or Exhibit
hereto, (c) are liabilities incurred since January 31, 2007 in the
ordinary course of business.
3.13
Warranties, Product Liability and Insurance
. Seller represents and warrants to Buyer as
follows:
(a)
Except
for warranties implied by law and the Seller’s customary
general warranty for goods sold as described on Schedule
3.13(a) , the Seller has not given or made any warranties in
connection with the sale or rental of goods or services, including,
without limitation, warranties covering the customer’s
consequential damages. To Seller's knowledge, there are
no facts or the occurrence of any event forming the basis of any
present claim against the Seller with respect to warranties
relating to products manufactured, sold or distributed by the
Seller or services performed by or on behalf of the Seller except
any claim that would not individually or in the aggregate exceed
$10,000. Seller has not sold any products or delivered
any services that included a warranty for a period longer than one
year. To Seller's knowledge, Seller has not committed
any act or failed to commit any act which would result in, and
there has been no occurrence which would give rise to or form the
basis of, any product liability or liability for breach of warranty
on the part of Buyer with respect to the products designed,
manufactured, assembled, repaired maintained, delivered sold or
installed or services rendered by or on behalf of Seller or the
Business.
(b)
To
Seller's knowledge, there is no state of facts or any event forming
the basis of any present claim against the Seller not fully covered
by insurance, except for deductibles and self-insurance retentions,
for personal injury or property damage alleged to be caused by
products shipped or services rendered by or on behalf of the
Seller.
(c)
Seller
has insurance policies in full force and effect (i) for such
amounts as are sufficient for all legal requirements to which
Seller is a party or by which it’s bound and (b) which are in
such amounts, with such deductibles and against such risks and
losses, as is reasonable for the Business, assets and properties of
Seller. Set out in Schedule
3.13.(c) to the Disclosure Schedule is a list of all
insurance policies held by or applicable to Seller.
3.14
Employee Matters .
(a)
There
are no collective bargaining or other labor union agreements to
which the Seller is a party or by which it is bound. To
Seller’s knowledge, neither Seller nor the Business has
encountered any labor union organizing activity or had any actual
or threatened employee strikes, work stoppages, slowdowns or
walkouts.
(b)
The
Seller does not contribute to or have
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