Asset Purchase Agreement
EXHIBIT
10.01
EXECUTION
COPY
This
ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of the
10th day of
September, 2007, by and among S&A Purchasing Corp., a New York
corporation (the “Buyer”), S&A Supply, Inc., a Massachusetts corporation
(the “Company”), S&A Realty, Inc., a Massachusetts corporation
(“Realty”), S&A Management, Inc., a Massachusetts corporation (“Management,”
and together with Realty and the Company, the “Sellers,” and each individually
sometimes referred to herein as a “Seller”), Xxxxx X. Xxxx (“Xxxxx”), Xxxxx X
Xxxx and Xxxxxx X. Xxxx, Trustees of The Discretionary Trust (“Trustees”), under
The Xxxxxx X. Xxxx Revocable Trust (the “Trust”), dated January 12,1999, Xxxxx
Xxxx (“Xxxxx”), Xxxxx Xxxx (“Xxxxx”) and Xxxx Xxxx (“Xxxx”). Xxxxx,
the Trustees, Xxxxx, Xxxxx and Xxxx are the sole shareholders of each of the
Sellers and are collectively referred to herein as the “Shareholders.” Xxxxx and
the Trustees are sometimes referred to herein as the “Majority Shareholders” and
Xxxxx, Xxxxx and Xxxx are sometimes referred to herein as the “Minority
Shareholders.” Colonial Commercial Corp., a New York corporation and the sole
shareholder of the Buyer (“Colonial”), is countersigning this Agreement with
regard to Section 2(e) only.
Recitals
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1.
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The
Company operates a heating and plumbing supply business and an electrical
wholesale business (the electrical wholesale business together with
the
heating and plumbing supply business, the “Business”) in four locations,
one of which also serves as the Company’s corporate office and
distribution center.
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2.
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Buyer
desires to purchase the Business and selected assets of the Company,
and
to assume selected liabilities of the
Company.
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3.
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The
Company desires to sell such assets and to cause Buyer to assume
such
liabilities.
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4.
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Management
performs certain administrative services for the
Company.
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5.
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Buyer
desires to purchase selected assets from Management and to assume
selected
liabilities of Management related to the operation of the
Company.
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6.
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Management
desires to sell such selected assets and to cause Buyer to assume
such
liabilities.
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7.
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Buyer
desires to lease the three parcels of real property set forth on
Schedule
1(f), two of which are owned by Realty and one of which is owned
by the
Company (the three parcels of real property are defined herein as
the
"Owned Real Estate").
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8.
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The
Company and Realty desire to lease the Owned Real Estate to the
Buyer.
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Certain
definitions related to this Agreement are set forth in Section 27.
Agreement
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants
contained herein, the parties agree as follows:
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1.
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Sale
and Purchase of Assets.
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(a)
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On
the terms and subject to the conditions of this Agreement, at the
Closing
referred to in Section 5, the Sellers shall sell, convey, assign,
transfer
and deliver to Buyer, and Buyer shall purchase, acquire and accept
delivery of the following assets and properties (the
“Assets”):
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(A)
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Merchandise
inventory as of the Valuation Date (which is the close of business
on the
second business day prior to the Closing) that is new and unused
and in
its original packaging (the “Merchandise Inventory”); the Merchandise
Inventory will be physically counted by the Buyer and the Sellers
jointly
with each leaving with a printed priced list of the inventory, some
of
which will be hand-written. The term “Merchandise Inventory Value” means
the book value of the Merchandise Inventory as of the Valuation
Date. Book value of inventory shall be calculated at Sellers’
average cost. Book value shall include a provision for reserve
for inventory that as of the Closing has not been sold for a period
of
eighteen (18) months or inventory in excess of a twelve (12) month
supply
(“Inventory Reserve”). The Merchandise Inventory Value shall
not include the book value of defective or damaged
goods.
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(B)
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Trade
accounts receivable as of the Valuation Date (the “Trade
Receivables”). “Trade Receivables Value” means the value of the
Trade Receivables as of the Valuation Date less the value of the
Past Due
Receivables as of the Valuation Date. Past Due Receivables
means any account from any customer whose balance in the over 90
days old
aging category exceeds 25 percent of the total account balance of
such
customer at the Closing (“Excluded Accounts”), plus, for any account that
is not an Excluded Account, amounts from any customer that at the
Closing
is more than 90 days past due (“90 Day Past Due Receivables”). The Trade
Receivables will be printed in detail and are subject to the provisions
set forth in Section 4.
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(C)
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Trade
Receivables service charges shall be excluded from Trade Receivables,
but
will be paid to Sellers in accordance with Section
4(c).
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(D)
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The
prepaid and other assets of the Sellers (“Prepaid and other Assets”) that
are listed in Schedule 1(a)(D). The Buyer will share excess rebate
distributions that are included in Prepaid and other Assets with
the
Sellers in proportion to when the purchases took place. The “Prepaid and
other Assets Value” means the book value of the Prepaid and other Assets
as set forth in such Schedule, is subject to adjustment after
the Closing as provided in Section 3 to account for such events as
expenses a party may pay on account of the other party for bills
that
crossed their respective periods of operation (e.g., telephone and
other
utility bills).
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(E)
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The
fixed assets (the “Fixed Assets”) of the Sellers that are as set forth on
Schedule 8(v); provided, however, that Buyer’s purchase of the
auto and trucks included in Fixed Assets is subject to the assignment
of
the Sellers’ auto and truck financing arrangement to Buyer)) at the
depreciated value of the Fixed Assets (the “Fixed Assets Value”), as set
forth on the books and records of the Sellers, as of the Valuation
Date;
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(F)
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The
Sellers’ rights from and after the Closing under the North Adams, MA real
estate lease that is set forth in Schedule 1(a)(F) (the “Real Estate
Lease”);
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(G)
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Credit
applications and customer guarantees in the form used by the Sellers
in
its normal operations of business.
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(H)
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[Intentionally
Deleted].
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(I)
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All
proprietary knowledge, Trade Secrets, Confidential Information, computer
software and licenses, formulae, designs and drawings, quality control
data, processes (whether secret or not), methods, inventions and
other
similar know-how or rights Used in the conduct of the Sellers’ business,
including, but not limited to, the areas of manufacturing, marketing,
advertising and personnel training and recruitment, together with
all
other Intangible Rights Used in connection with the Sellers’ business,
including all files, manuals, documentation and source and object
codes
related thereto as well as all files, manuals, documentation relating
to
Past-Due Receivables and inventory that is not Merchandise Inventory
(as
defined above);
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(J)
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All
utility, security and other deposits and prepaid expenses which are
assignable;
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(K)
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the
Sellers’ business as a going concern and its franchises, Permits and other
authorizations of Governmental Authorities (to the extent such Permits
and
other authorizations of Governmental Authorities are transferable)
and
third parties, licenses, telephone numbers for all locations, facsimile
numbers, website addresses, post office boxes, customer lists, vendor
lists, referral lists and contracts, advertising materials and data,
restrictive covenants, choses in action and similar obligations owing
to
the Sellers from its present and former shareholders, officers, employees,
agents and others, together with all books, databases, operating
data and
records (including financial, accounting and credit records), files,
papers, records and other data of the Sellers relative to the operation of
the Sellers’ business, i.e., inventory, customer records, vendor records,
etc. Notwithstanding the foregoing, the Sellers and Buyer shall
for a period of not less than three years make their records for
transactions through the Closing available to the other on request
for
review and copying (whether for the purpose of facilitating the
preparation of SEC reports for Buyer’s affiliates or otherwise), and they
shall not destroy their respective records without first offering
to
deliver the same to the other
party.
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(L)
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all
rights of the Sellers in and to the name S&A Supply, Inc. and any
other name that incorporates the word S&A and all variants thereof,
and all other trade names, trademarks and slogans Used in its business,
all variants thereof and all goodwill associated
therewith;
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(M)
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to
the extent assignable under applicable law, all of Sellers’ rights under
any insurance policy or contract of insurance or indemnity (or similar
agreement) under which Sellers’ are an insured, named as an additional
insured or is otherwise a beneficiary, and all proceeds realized
in
connection therewith;
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(N)
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certificates
and copies of all insurance policies, all as set forth on Schedule
8(a)(N);
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(O)
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all
other property and rights of every kind or nature Used by the Sellers
in
the operation of its business;
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(P)
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all
other purchase orders, Customer orders, and other rights under contracts
in the ordinary course.
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(Q)
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the
verbal Kohler distribution agreement (“Kohler Distribution Agreement”),
provided, however, that it is expressly understood among the parties
that
the Kohler Distribution Agreement shall not be part of the Assets
in the
event the Sellers after using their best efforts fail to obtain the
necessary consents required to assign such distribution agreement
to the
Buyer.
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(b)
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Notwithstanding
the foregoing, the following assets and properties (“Excluded Assets”) are
not included in the Assets:
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(A)
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Cash
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(B)
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Loan
Receivable due from each of S&A Management, Inc., S&A
Realty, Inc. and the Shareholder, each such Loan Receivable as defined
in
the Company’s audited Balance Sheet for the year ended December 31, 2006
(“2006 Audited Balance Sheet”);
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(C)
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The
current and non-current portion of the Note Receivable due from
Shareholders set forth in the 2006 Audited Balance
Sheet;
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(D)
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The
life insurance policy, and the cash value of life insurance set forth
in
the 2006 Audited Balance Sheet;
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(E)
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prepaid
insurance, it being understood that Buyer will obtain its own policies,
and prepaid taxes, due from employees or due from other affiliates
of the
Sellers.
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(F)
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any
and all contracts or policies of insurance that are used to pay or
fund
benefits under any employee benefit plan, as such term is defined
in
Section 3(3) of the Employee Retirement Income Security Act of
1974.
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(c)
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It
is specifically understood and agreed by the parties hereto that
the Buyer
is acquiring, and each Seller is selling, all of the tangible and
intangible assets attributable to or Used by the Company in its Business,
except the Excluded Assets. Any cash proceeds (inclusive of checks,
money
orders and credit card transactions) of the Excluded Assets received
by
the Buyer subsequent to the date of Closing shall be remitted by
Buyer to
the Company (and Company shall receive such remittance on behalf
of the
Sellers) within ten (10) days from receipt. Conversely, any cash
proceeds
(inclusive of checks, money orders and credit card transactions)
of the
Assets received by the Sellers subsequent to the date of Closing
shall be
remitted by the Sellers to Buyer within ten (10) days from
receipt.
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(d)
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The
aforesaid assets and properties to be transferred to the Buyer hereunder,
but not including the Excluded Assets, are hereinafter collectively
referred to as the “Assets.”
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(e)
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Method
of Conveyance.
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(A)
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The
sale, transfer, conveyance, assignment and delivery by the Sellers
of the
Assets to the Buyer in accordance with Section 1(a) hereof shall
be
effected on the Closing Date by the Sellers’ execution and delivery to the
Buyer of one or more Bills of Sale, Assignments and other conveyance
instruments with respect to the Sellers’ transfer of Intangible Rights,
real property interests and other Assets in form and scope reasonably
satisfactory to Buyer (collectively the “Conveyance
Documents”). At the Closing, good, valid and marketable
title to all of the Assets shall be transferred, conveyed, assigned
and
delivered by the Company to the Buyer pursuant to the Conveyance
Documents, free and clear of any and all Liens, excepting Assumed
Obligations (as defined below).
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(f)
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Real
Estate. It is specifically understood and agreed by the parties hereto
that concurrent with the Closing, Buyer shall execute leases for
the three
parcels of real property included in the Owned Real Estate . A
copy of said leases (“Owned Real Estate Leases”) to be delivered by
Sellers, fully executed by landlords at the Closing, are annexed
hereto
and designated Exhibits (f)(A), 1(f)(B), and 1(f)(C) . In addition
thereto, except as otherwise disclosed on Schedule 1(f)(D), Sellers
shall
at the Closing deliver a certificate of occupancy for each of the
leased
premises permitting Buyer to utilize the premises for the business
purposes being purchased pursuant to the terms of this
agreement.
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(g)
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Assumed
Obligations. The Buyer hereby assumes, effective as of the
Closing, and the Buyer hereby agrees, effective as of the Closing,
to
satisfy and discharge as the same shall become
due:
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(A)
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all
trade accounts payable and accrued expenses that have been incurred
in the
ordinary course of the Company’s business consistent with the
representations and warranties set forth in this Agreement (“Trade
Accounts Payable”);
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(B)
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the
Sellers’ liabilities and other obligations arising subsequent to the
Closing under the Real Estate Lease set forth on Schedule 1(a)(F)
and each
of the Auto and Truck Leases and the Auto and Truck Loans listed
on
1(g)(B); and
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(C)
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the
expense accounts payable, customer deposits payable, payments for
unreconciled stock receipts (merchandise received but for which no
invoice
has been received as of the Valuation Date) listed on Schedule 1(g)(C)
hereto (collectively the “Assumed
Obligations”).
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(h)
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[Intentionally
Deleted].
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(i)
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Excluded
Liabilities. Except as expressly set forth in Section 1(g),
the Buyer shall not assume or be responsible at any time for any
liability, obligation, debt or commitment of the Sellers, whether
absolute
or contingent, accrued or unaccrued, asserted or unasserted, or otherwise
(the “Excluded Liabilities”). Without limiting the generality
of the foregoing, Sellers and Shareholders expressly acknowledge
and agree
that the Sellers shall retain, and that Buyer shall not assume or
otherwise be obligated to pay, perform, defend or discharge, any
liability
or obligation:
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(A)
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incident
to, arising out of or incurred with respect to, this Agreement and
the
transactions contemplated hereby (including any and legal or other
fees
and expenses, all sales, income or other taxes arising out of the
transactions contemplated hereby; without limiting the generality
of the
foregoing, the Sellers shall promptly file an application for a Waiver
of
Tax Lien under the Massachusetts General Law, Chapter 62C §§ 51 and 52,
with the Massachusetts Department of Revenue (“Waiver of Tax Lien”) and
shall remit any and all sales taxes due in respect of the sale of
assets
contemplated in this transaction to be paid by Sellers at
Closing);
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(B)
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for
taxes whether measured by income or
otherwise;
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(C)
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in
connection with any Plan or Benefit Program or Agreement (as defined
in
Section8(k)), including, without limitation, any liability of the
Sellers
under ERISA;
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(D)
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under
any foreign, federal, state or local law, rule, regulation, ordinance,
program, Permit, or other Legal Requirement relating to health, safety,
Hazardous Materials and environmental matters applicable to the Sellers’
business and/or the facilities Used by the Sellers (whether or not
owned
by the Sellers);
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(E)
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pertaining
to products sold or manufactured or services performed or other actions
taken or omitted by the Sellers prior to the Closing
Date;
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(F)
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relating
to any default taking place before the Closing Date under any of
the
Assumed Obligations to the extent such default created or increased
the
liability or obligation; or
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(G)
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the
consulting agreement by and between Management and Xxxxxxx X. Xxxxxx,
dated April 6, 2004.
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(H)
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Sellers
and the Majority Shareholders jointly and severally agree to satisfy
and
discharge the Excluded Liabilities as the same shall become
due.
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2.
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Payment
for Assets
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(a)
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As
payment in full for the Assets being acquired by the Buyer hereunder
and
the non-compete covenants set forth in Section 13(d) hereof, Buyer
shall
pay to the Company (and Company shall receive such payment on behalf
of
the Sellers) in the manner set forth in this Section 2, (i) the
Merchandise Inventory Value, plus the Trade Receivables Value, plus
the
Prepaid Asset Value, plus the Fixed Asset Value, plus $10,000 in
respect
of the non-compete covenants set forth in Section 13(d), plus $315,000
in
respect of goodwill, less (ii) the face value of all trade
accounts payable and accrued expenses and other liabilities and
obligations that are assumed at the Closing by the Buyer under Section
1(g)(A) and 1(g)(C) less accrued vacation and sick pay through the
Closing
of the business employees of the Sellers, but subject to further
adjustment as provided in Section 3 (such amount, as so adjusted
from time
to time, is referred to herein as the “Purchase Price"). It is expressly
understood by the parties that the Purchase Price will not be adjusted
downward in the event Sellers, after using their best efforts, fail
to
obtain the necessary consents required to assign the Kohler Distribution
Agreement.
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(b)
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In
preparation for the Closing, the parties will prepare an estimate
(the
“Estimated Purchase Price”) of the actual Purchase Price by conducting the
joint physical inventory and other procedures that are set forth
in
Section 1(a)(A) with the appropriate detailed listings and schedule.
In
order to plan for and facilitate the Closing, the Sellers will also
provide Buyer with an estimated summary of the foregoing on the Valuation
Date. Attached hereto and made a part hereof as Schedule 2(b) is
the June
30, 2007 unaudited internal Balance Sheet of the Company that shall
be
delivered by Sellers pursuant to Section 6 and an example of the
purchase
price calculation in connection therewith attached hereto and made
a part
hereof.
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(c)
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On
the Closing Date, the Buyer shall make payment of the Estimated Purchase
Price as follows: Buyer shall deliver to the Company (and Company
shall
receive on behalf of the Sellers) by wire transfer of 5% of the Estimated
Purchase Price (the “Escrow Amount”) to Xxxxxxxxxx
Xxxxxxxx P.C., as escrow agent (the “Escrow Agent"), and by wire
transfer of the balance thereof to the Company. The Escrow
Amount shall be held by the Escrow Agent pursuant to the terms and
conditions hereunder and pursuant to the terms and conditions of
the
Escrow Agreement attached hereto as Exhibit 2(c) (the “Escrow
Agreement”).
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(d)
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[Intentionally
Deleted].
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(e)
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(A)
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In
the event Buyer fails to perform any of its obligations hereunder
or under
the employment and consulting agreements entered into by Buyer pursuant
to
this Agreement, Sellers’ shall provide Buyer written notice (a “Failure
Notice”) specifying such failure and requiring such failure be remedied
within 30 days, provided, however, that if any such failure cannot
with
due diligence be remedied by Buyer within a period of 30 days, if
Buyer
commences to remedy such failure within such 30 day period and thereafter
prosecutes such remedy with reasonable diligence, the period of time
for
remedy of such failure shall be extended so long as Buyer prosecutes
such
remedy with reasonable diligence. Colonial hereby agrees to
perform such failed obligation on behalf of the Buyer in the event
Buyer
shall have failed to remedy such failure in accordance with the prior
sentence and Sellers provide Colonial with a written notice specifying
the
obligation that Buyer failed to cure along with a copy of the Failure
Notice.
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(B)
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In
the event Buyer fails to perform any of its obligations in accordance
with
the terms of any lease agreement entered into by Buyer pursuant to
this
Agreement, Sellers’ shall provide Buyer written notice (“Failure Notice”)
specifying such failure and requiring such failure be remedied within
30
days, provided, however, that if any such failure cannot with due
diligence be remedied by Buyer within a period of 30 days, if Buyer
commences to remedy such failure within such 30 day period and thereafter
prosecutes such remedy with reasonable diligence, the period of time
for
remedy of such failure shall be extended so long as Buyer prosecutes
such
remedy with reasonable diligence. Colonial hereby agrees to
perform such failed obligation on behalf of the Buyer in the event
Buyer
shall have failed to remedy such failure in accordance with the prior
sentence and Sellers provide Colonial with a written notice specifying
the
obligation that Buyer failed to cure along with a copy of the Failure
Notice.
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(C)
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In
the event Buyer contests any of the matters set forth in a Failure
Notice,
Buyer and Seller shall resolve such dispute exclusively by arbitration
by
the American Arbitration Association in Great Barrington, Massachusetts.
Notwithstanding anything set forth in Section 2(e), in the event
a Failure
Notice is arbitrated in accordance with this section, Colonial’s
obligations under Section 2(e) shall be subject to the finding of
Buyer’s
failure to perform by such
arbitration.
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3.
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Adjustment
of Purchase Price.
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(a)
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The
Sellers and the Buyer agree to meet on or about 130 days subsequent
to the
Closing (“Adjustment Date”) to determine amounts due among the parties in
accordance with Section 4 and to resolve any questions, errors or
omissions that might have occurred in the Purchase Price calculation
and
to reallocate responsibility for certain expenses, (i.e., gas and
electric, telephone, etc.) which cover the period prior to and after
the
date of Closing.
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(b)
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If
the Purchase Price is adjusted downward, Xxxxx on behalf of the Sellers,
and the Buyer shall forthwith jointly direct the Escrow Agent to
release
to Buyer from Escrow the amount by which the Purchase Price is adjusted
downward. To the extent that such reduced amount exceeds the amounts
then
available for release from escrow by the Escrow Agent, Sellers and
the
Majority Shareholders shall jointly and severally pay the excess
to Buyer
forthwith.
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(c)
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If
the Purchase Price is adjusted upward, Buyer shall forthwith pay
to the
Company, and the Company shall receive on behalf of the Sellers,
the
amount by which the Purchase Price is adjusted
upward.
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(d)
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In
the event that there is any dispute on whether any party is required
to
sign any direction to the Escrow Agent hereunder, such dispute shall
be
resolved exclusively by arbitration by the American Arbitration
Association in Great Barrington, Massachusetts. In the event that
the
parties agree that a direction to the Escrow Agent is required to
a given
extent but dispute whether such direction is required for any excess
amount, then the parties shall execute such direction for to the
given
amount as to which there is no dispute, and the dispute on the excess
amount shall be submitted to arbitration as
aforesaid.
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4.
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Certain
Other Agreements:
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(a)
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Buyer
may on the Adjustment Date reassign to the Sellers any Trade Receivable
purchased by the Buyer and not paid by a customer in the ordinary
course
(without resort to litigation) by the Adjustment Date; Reassigned
Trade
Receivables actually reassigned by Buyer to Sellers is termed “Uncollected
Accounts”. Buyer agrees not
to conduct business with any customer who is the debtor on any Uncollected
Accounts within the earlier of (i) one year of such re-assignment;
(ii)
the time Sellers shall have been paid in full on such Uncollected
Accounts, and (iii) the time Sellers in their sole discretion shall
consent and allow Buyer to conduct business with such
customer.
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(b)
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Sellers
and Buyer shall on the Adjustment Date calculate the total dollar
amount
of the collected Past Due Receivables (the “Collected Past Due Receivables
Accounts”). If the dollar amount of the Collected Past Due Receivables
Accounts exceeds the dollar amount of the Uncollected Accounts, then
the
Purchase Price shall be adjusted upward by such excess amount. If
the
dollar amount of the Uncollected Accounts exceeds the dollar amount
of the
Collected Past Due Receivables Accounts, then the Purchase Price
shall be
adjusted downward by such excess amount. Buyer agrees not to
conduct business with any
customer who is the debtor on any Uncollected Past Due Accounts
until the earlier of (i) one year after the Adjustment
Date; (ii) the Seller has been paid in full, or and (iii) the time Sellers
in their
sole discretion shall consent and allow Buyer to conduct business
with
such customer.
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(c)
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Service
charges accrued at the Closing shall be paid to Sellers within sixty
(60)
days of date collected. Buyer has the option of compromising
accrued service charges in its sole discretion by utilizing its best
business judgment.
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(d)
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Should
Buyer fail to receive full credit for any purchased, but defective
inventory within 75 days after the Closing, Buyer will reassign such
defective inventory to the Sellers and the Purchase Price shall be
adjusted downward by the amount Buyer paid to the Sellers for such
inventory.
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(e)
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Purchase
Price adjustments shall be paid in accordance with Section
3.
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(f)
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The
Sellers will at the Closing pay in full, to the employees or other
persons
entitled to receive the same, all accruals through the Closing under
all
of its profit sharing plans and other employee benefit
payments.
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5.
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Closing.
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(a)
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The
Closing of this transaction will take place at the office of Xxxxx
Xxxxxx,
000 0xx
Xxxxxx, 00xx
Xxxxx, Xxx
Xxxx, X.X. 00000, or at the
request of Buyer, at the offices of counsel to any lender providing
financing in connection with the transactions contemplated hereby,
at 10:00 a.m. on or before September 10, 2007 or, at the request
of either
party on a later date but not later than October 1,
2007.
|
|
(b)
|
The
day on which the Closing actually takes place is herein sometimes
referred
to as the Closing Date.
|
|
6.
|
Audited
Financial Statements. Sellers have delivered to Buyer
copies of audited financial statements of the Company for the years
ended
December 31, 2006, 2005, 2004 and 2003 (the “Audited Financial
Statements”) prepared by the Company’s certified public
accountant. Sellers have delivered to Buyer copies of interim
unaudited financial statements for the fiscal quarters ended March
31,
2006, June 30, 2006, and September 30, 2006 (the “Interim 2006
Statements”) and for the fiscal quarters ended March 31, 2007 and June 30,
2007 (the “Interim 2007 Statements”). Ninety days (90)
subsequent to the Closing, Sellers shall deliver to Buyer a copy
of an
interim unaudited financial statement for the fiscal period ending
on the
Closing Date. Additionally, the Sellers have provided similar
interim statements for 2003, 2004 and 2005. The term “Balance
Sheet” means the unaudited balance sheet dated as of June 30, 2007 that
is
included in the Interim 2007 Statements. The Audited Financial
Statements and the Interim 2007 Statements shall be complete and
correct,
shall have been prepared from the books and records of the Company
in
accordance with generally accepted accounting principles consistently
applied and maintained throughout the periods indicated and shall
fairly
present the financial condition of the Company as at their respective
dates and the results of its operations for the periods covered thereby,
subject to normal year-end adjustments and
accruals.
|
|
7.
|
Other
Transactions at Closing; Further
Assurances.
|
|
(a)
|
At
the Closing, the Sellers will deliver to
Buyer:
|
|
|
(A)
|
the
Conveyance Documents;
|
-10-
|
|
(B)
|
a
certificate executed by each of the Sellers to the effect that the
conditions set forth in Section 12 have been
satisfied;
|
|
|
(C)
|
possession
of all originals and copies of agreements, instruments, documents,
deeds,
books, records, files and other data and information included within
the
Assets;.
|
|
|
(D)
|
Releases
of all Liens on any of the Assets other than for Liens relating to
each of
the Auto and Truck Leases and Auto and Truck Loans assumed by
Buyer;
|
|
|
(E)
|
copies
of the certificate of incorporation of each of the Sellers certified
as of
a date within 10 days of the Closing Date by the Secretary of State
of the
State of Massachusetts;
|
|
|
(F)
|
a
certificate from the Secretary of State of the State
of Massachusetts as to the good standing of each of the Sellers
as of a date within 10 days of the Closing
Date;
|
|
|
(G)
|
[Intentionally
Deleted];
|
|
|
(H)
|
copies
of the bylaws of each of the Sellers, certified by its Secretary
as a true
and correct copy thereof as of the Closing
Date;
|
|
|
(I)
|
all
consents from shareholders, lenders and other third parties as are
required to consummate the sale of the Assets, except that it is
expressly
understood by the parties that consents for the Kohler Distribution
Agreement may not be obtained, notwithstanding Sellers’ best efforts to
obtain such consents;
|
|
|
(J)
|
all
consents from shareholders, lenders and other third parties as are
required to enter into the leases of the Owned Real
Estate;
|
|
|
(K)
|
all
consents from shareholders, lenders and other third parties as are
required to execute the Owned Real Estate Leases,
and,
|
|
|
(L)
|
With
respect to the Owned Real Estate Leases, the execution and delivery
of a landlord’s agreement by each landlord in
substantially the same form attached as Exhibit (7)(a)(L) (the “Landlord’s
Agreement”), as well as all consents from shareholders, lenders, and other
third parties as are required for the Buyer to acquire Seller’s rights
under the Real Estate Lease;
|
|
|
(M)
|
all
consents from shareholders, lenders and other third parties as are
required to consummate the assignment of all contracts, , except
that it
is expressly understood by the parties that consents for the Kohler
Distribution Agreement may not be obtained, notwithstanding Sellers’ best
efforts to obtain such consents;
|
|
|
(N)
|
a
copy of the resolutions of the Board of Directors of each of the
Sellers, together with any and all required resolutions or
consents of the shareholders thereof, approving the execution and
delivery
of this Agreement and the consummation of all of the transactions
contemplated hereby, duly certified by an officer of each of the
Sellers;
and
|
-11-
|
|
(O)
|
all
documents required to be delivered to Buyer under the provisions
of this
Agreement or as may reasonably by requested by Buyer and its
counsel.
|
|
(b)
|
On
the Closing Date, Buyer shall deliver or cause to be delivered to
the
Company, and the Company shall receive on behalf of the Sellers,
the
following:
|
|
|
(A)
|
payment
of the Estimated Purchase Price in accordance with Section
2(c);
|
|
|
(B)
|
a
copy of the resolutions of the Board of Directors of
Buyer, together with any and all required resolutions or
consents of the shareholders thereof, approving the execution and
delivery
of this Agreement and the consummation of all of the transactions
contemplated hereby, duly certified by an officer of
Buyer;
|
|
|
(C)
|
a
copy of the resolutions of the Board of Directors of Colonial approving
Colonial’s obligations set forth in Section 2(e), duly certified by an
officer of Colonial.
|
|
|
(D)
|
a
certificate executed by an authorized officer of the Buyer, on behalf
of
the Buyer, to the effect that the conditions set forth in Section
12(a)(B)
have been satisfied;
|
|
|
(E)
|
such
other documents as may be required pursuant to this Agreement or
as may
reasonably be requested by the Company and their
counsel.
|
|
(c)
|
At
the Closing:
|
|
|
(A)
|
Buyer
and Xxxxx shall execute and deliver an employment agreement in the
form of
Exhibit 7(c)(A);
|
|
|
(B)
|
Buyer
and Xxxx shall execute and deliver an employment agreement in the
form of
Exhibit 7(c)(B);
|
|
|
(C)
|
Sellers
shall deliver executed lease agreements and Landlord’s Agreements and the
landlord under the Real Estate Lease shall have consented to the
Buyer’s
occupancy of the premises in the same manner as held by
Sellers;
|
|
|
(D)
|
Buyer
and Xxxxx shall execute and deliver a consulting agreement in the
form of
Exhibit 7(c)(D).
|
|
8.
|
The
Sellers and the Majority Shareholders hereby jointly and severally
represent and warrant to Buyer (i.e. the liability of Sellers and
the
Majority Shareholders for the breach of any representation or warranty
is
joint and several, in the sense that Buyer may proceed against any
one or
more Sellers and Majority Shareholders for all or any part of such
liability) and the Minority Shareholders hereby severally represent
and
warrant (i.e. the liability of the Minority Shareholders is several,
in
the sense that Buyer can proceed against any Minority Shareholder
for only
that portion of the total liability for such breach that is proportional
to his pro rata ownership interest in the Company) to Buyer
that:
|
-12-
|
(a)
|
Corporate
Existence, etc. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of Massachusetts;
it
has all requisite corporate power and authority and is entitled to
carry
on its business as now being conducted and to own, lease or operate
its
properties as and in the places where such business is now conducted
and
such properties are now owned, leased or operated; and it is duly
qualified, licensed or domesticated and in good standing as a foreign
corporation authorized to do business in the states listed on Schedule
8(a),
which are the only states where the nature of the activities conducted
by
it or the character of the properties owned, leased or operated by
it
require such qualification, licensing or domestication. Each
Seller has delivered to Buyer true and complete copies of its certificate
of incorporation and all amendments thereto, certified by the Secretary
of
State of the State of Massachusetts, and the by laws of each Seller
as
presently in effect, certified as true and correct by its
Secretary.
|
|
(b)
|
Authority,
Approval and Enforceability. This Agreement has been duly
executed and delivered by each Seller and each Shareholder, and the
Sellers and the Shareholders have all requisite power and legal capacity
to execute and deliver this Agreement and all Collateral Agreements
executed and delivered or to be executed and delivered in connection
with
the transactions provided for hereby, to consummate the transactions
contemplated hereby and by the Collateral Agreements, and to perform
its
obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which each Seller and
each
Shareholder are a party constitutes, or upon execution and delivery
will
constitute, the legal, valid and binding obligation of such party,
enforceable in accordance with its terms, except as such enforcement
may
be limited by general equitable principles or by applicable bankruptcy,
insolvency, moratorium, or similar laws and judicial decisions from
time
to time in effect which affect creditors’ rights
generally.
|
|
(c)
|
Capitalization
and Corporate Records.
|
|
|
(A)
|
All
issued and outstanding shares of the Sellers’ capital stock are owned
beneficially and of record by the
Shareholders.
|
|
|
(B)
|
The
copies of the Certificate of Incorporation and Bylaws of each Seller
provided to Buyer are true, accurate, and complete and reflect all
amendments made through the date of this
Agreement.
|
-13-
|
(d)
|
Taxes. All
taxes, including, without limitation, income, property, sales, use,
franchise, added value, employees' income withholding and social
security
taxes, imposed by the United States or by any foreign country or
by any
state, municipality, subdivision or instrumentality of the United
States
or of any foreign country, or by any other taxing authority, which
are due
or payable by the Sellers and the Shareholders, and all interest
and
penalties thereon, whether disputed or not, have been paid in full,
all
tax returns required to be filed in connection therewith have been
accurately prepared and duly and timely filed and all deposits required
by
law to be made by the Sellers with respect to employees' withholding
taxes
have been duly made. The Sellers and the Shareholders have not
been delinquent in the payment of any foreign or domestic tax, assessment
or governmental charge or deposit and have no tax deficiency or claim
outstanding, proposed or assessed against it, and there is no basis
for
any such deficiency or claim. The Sellers’ federal income tax
returns have never been audited by the Internal Revenue Service for
all of
its fiscal years through the year ended 2006, there is not now in
force
any extension of time with respect to the date on which any tax return
was
or is due to be filed by or with respect to the Sellers, or any waiver
or
agreement by it for the extension of time for the assessment of any
tax.
Sellers can receive upon request from the Massachusetts Department
of
Revenue a certificate that certifies the good standing of, and the
payment
of taxes by, each of the Sellers as of the date of the signing of
the
Agreement.
|
|
(e)
|
Bulk
Sales Tax. There are no bulk sales taxes due under this
Agreement.
|
|
(f)
|
The
Sellers’ capital stock issued and outstanding as of the date hereof shall
constitute all of the outstanding shares of capital stock of Sellers
as of
the Closing Date. The Shareholders are the sole shareholders of
the Sellers as of the date hereof and shall be the sole shareholders
of
the Sellers at the Closing Date. Other
than the Sellers’ capital stock owned by the Shareholders, the Sellers
have not issued any other capital stock or other security instruments
and
are not committed or obligated to do so in the future. There are
no
outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities or other agreements or arrangements
of
any character or nature whatever under which the Sellers, or the
Shareholders, are or may become obligated to issue, assign or transfer,
and there are no rights of first refusal, preemptive rights or similar
rights with respect to any such
shares.
|
|
(g)
|
Primary
Beneficiary. Xxxxx is the primary beneficiary of the
Trust.
|
-14-
|
(h)
|
No
Shareholders Defaults or Consents. The execution and delivery
of this Agreement and the Collateral Agreements by the Shareholders
and
the performance by each of the Shareholders of its respective obligations
hereunder and thereunder will not violate or conflict with any provision
of law or any judgment, award or decree or any indenture, agreement
or
other instrument to which such Shareholder is a party, or by which
the
properties or assets of such Shareholder is bound or affected, or
conflict
with, result in a breach of or constitute (with due notice or lapse
of
time or both) a default under, any such indenture, agreement or other
instrument, in each case except to the extent that such violation,
default
or breach could not reasonably be expected to delay or otherwise
significantly impair the ability of the parties to consummate the
transactions contemplated hereby.
|
|
(i)
|
No
Company Defaults or Consents
|
|
|
(A)
|
Neither
the execution and delivery of this Agreement nor the carrying out
of any
of the transactions contemplated hereby
will:
|
|
|
(1)
|
violate
or conflict with any of the terms, conditions or provisions of each
of the
Sellers’ Certificate of Incorporation or bylaws
;
|
|
|
(2)
|
violate
any Legal Requirements applicable to either the Sellers or the
Shareholders;
|
|
|
(3)
|
violate,
conflict with, result in a breach of, constitute a default under
(whether
with or without notice or the lapse of time or both), or accelerate
or
permit the acceleration of the performance required by, or give any
other
party the right to terminate, any Contract or Permit binding upon
or
applicable to either the Sellers or the
Shareholders;
|
|
|
(4)
|
result
in the creation of any lien, charge or other encumbrance on any Properties
of the Sellers; or
|
|
|
(5)
|
require
the Shareholders or the Sellers to obtain or make any waiver, consent,
action, approval or authorization of, or registration, declaration,
notice
or filing with, any private non-governmental third party or any
Governmental Authority.
|
-15-
|
(j)
|
No
Proceedings. No suit, action or other proceeding is pending or,
to the Knowledge (as defined below) of the Sellers and Shareholders,
threatened before any Governmental Authority seeking to restrain
the
either the Sellers or the Shareholders or prohibit their entry into
this
Agreement or prohibit the Closing, or seeking damages against either
the
Sellers or the Shareholders or the Properties as a result of the
consummation of this Agreement. The term “Knowledge” shall mean, for
purposes of this Agreement, the actual knowledge of either the Sellers
or
the Shareholders, or any of the other directors, officers or managerial
personnel of the Sellers with respect to the matter in question,
and such
knowledge as Shareholders and Sellers or any of the other directors,
officers or managerial personnel of the Sellers reasonably should
have
obtained (i) in the performance of their duties to the Sellers and/or
(ii)
upon diligent investigation and inquiry into the matter in
question.
|
|
(k)
|
Employee
Benefit Matters
|
|
|
(A)
|
Schedule
8(k)(A) provides a description of each of the following, if any,
which is
sponsored, maintained or contributed to by the Sellers for the benefit
of
the employees or agents of the Sellers which has been so sponsored,
maintained or contributed to at any time during the Sellers’ existence or
with respect to which each of the Sellers has or may have any actual
or
contingent liability:
|
|
|
(1)
|
each
“employee benefit plan,” as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 (“ERISA”) (including, but
not limited to, employee benefit plans, such as foreign plans, which
are
not subject to the provisions of ERISA) (“Plans”);
and,
|
|
|
(2)
|
each
personnel policy, employee manual or other written statements of
rules or
policies concerning employment, stock option plan, collective bargaining
agreement, bonus plan or arrangement, incentive award plan or arrangement,
vacation and sick leave policy, severance pay policy or agreement,
deferred compensation agreement or arrangement, consulting agreement,
employment contract and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described
in
Section 8(k)(A)(1) (“Benefit Program or
Agreement”).
|
|
|
(B)
|
True,
correct and complete copies of each of the Plans (if any), and related
trusts, if applicable, including all amendments thereto, have been
furnished to Buyer. There has also been furnished to Buyer,
with respect to each Plan required to file such report and description,
the three most recent reports on Form 5500 and the summary plan
description. True, correct and complete copies or descriptions
of all Benefit Programs or Agreements have also been furnished to
Buyer.
|
-16-
|
|
(C)
|
Except
as otherwise set forth in Schedule
8(k)(C),
|
|
|
(1)
|
Each
Seller does not contribute to or have an obligation to contribute
to, and
each Seller has not at any time contributed to or had an obligation
to
contribute to, and each Seller does not have any actual or contingent
liability under, a multiemployer plan within the meaning of Section
3(37)
of ERISA (“Multiemployer Plan”) or a multiple employer plan within the
meaning of Section 413(b) and (c) of the
Code.
|
|
|
(2)
|
Each
Seller has substantially performed all obligations, whether arising
by
operation of law or by contract, required to be performed by it in
connection with the Plans and the Benefit Programs and Agreements,
and to
the Knowledge of each Seller, there have been no defaults or violations
by
any other party to the Plans or Benefit Programs or
Agreements;
|
|
|
(3)
|
All
reports and disclosures relating to the Plans required to be filed
with or
furnished to governmental agencies, Plan participants or Plan
beneficiaries have been filed or furnished in accordance with applicable
law in a timely manner, and each Plan and each Benefit Program or
Agreement has been administered in substantial compliance with its
governing documents;
|
|
|
(4)
|
Each
of the Plans intended to be qualified under Section 401 of the Code
satisfies the requirements of such Section and has received a favorable
determination letter from the Internal Revenue Service regarding
such
qualified status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which could
adversely affect such qualified
status;
|
|
|
(5)
|
There
are no actions, suits or claims pending (other than routine claims
for
benefits) or, to the Knowledge of each Seller, threatened against,
or with
respect to, any of the Plans or Benefit Programs or Agreements or
their
assets;
|
|
|
(6)
|
All
contributions required to be made to the Plans pursuant to their
terms and
provisions and applicable law have been made
timely;
|
-17-
|
|
(7)
|
As
to any Plan subject to Title IV of ERISA, there has been no event
or
condition which presents the material risk of Plan termination, no
accumulated funding deficiency, whether or not waived, within the
meaning
of Section 302 of ERISA or Section 412 of the Code has been incurred,
no
reportable event within the meaning of Section 4043 of ERISA (for
which
the disclosure requirements of Regulation Section 2615.3 promulgated
by
the Pension Benefit Guaranty Corporation (“PBGC”) have not been waived)
has occurred, no notice of intent to terminate the Plan has been
given
under Section 4041 of ERISA, no proceeding has been instituted under
Section 4042 of ERISA to terminate the Plan, there has been no termination
or partial termination of the Plan within the meaning of Section
411(d)(3)
of the Code, no liability to the PBGC has been incurred, and the
assets of
the Plan equal or exceed the aggregate present value of the benefit
liabilities (within the meaning of Section 4001(a)(16) of ERISA)
under the
Plan, computed on a “plan termination basis” based upon reasonable
actuarial assumptions and the asset valuation principles established
by
the PBGC;
|
|
|
(8)
|
None
of the Plans nor any trust created thereunder or with respect thereto
has
engaged in any “prohibited transaction” or “party-in-interest transaction”
as such terms are defined in Section 4975 of the Code and Section
406 of
ERISA which could subject any Plan, each Seller or any officer, director
or employee to a tax or penalty on prohibited transactions or
party-in-interest transactions pursuant to Section 4975 of the Code
or
Section 502(i) of ERISA;
|
|
|
(9)
|
To
the Knowledge of each Seller, there is no matter pending (other than
routine qualification determination filings) with respect to any
of the
Plans or Benefit Programs or Agreements before the Internal Revenue
Service, the Department of Labor or the
PBGC;
|
|
|
(10)
|
Each
trust funding a Plan, which trust is intended to be exempt from federal
income taxation pursuant to Section 501(c)(9) of the Code, satisfies
the
requirements of such section and has received a favorable determination
letter from the Internal Revenue Service regarding such exempt status and
has not, since receipt of the most recent favorable determination
letter,
been amended or operated in a way which would adversely affect such
exempt
status.
|
|
|
(11)
|
Each
Seller has no obligation to provide health benefits or death benefits
to
its former employees, except as specifically required by
law;
|
-18-
|
|
(12)
|
Neither
the execution and delivery of this Agreement nor the consummation
of any
or all of the transactions contemplated hereby will: (A) entitle
any
current or former employee of any Seller to severance pay, unemployment
compensation or any similar payment, (B) accelerate the time of payment
or
vesting or increase the amount of any compensation due to any such
employee or former employee, or (C) directly or indirectly result
in any
payment made to or on behalf of any person to constitute a “parachute
payment” within the meaning of Section 280G of the
Code;
|
|
(13)
|
Each
Seller has not incurred any liability or taken any action, and no
action
or event has occurred that could cause the Company to incur any liability
(A) under Section 412 of the Code or Title IV of ERISA with respect
to any
“single-employer plan” within the meaning of Section 4001(a)(15) of ERISA
that is not a Plan, or (B) to any Multiemployer Plan, including without
limitation an account of a partial or complete withdrawal within
the
meaning of Sections 4203 and 4205 of
ERISA.
|
|
(14)
|
Since
January 1, 2000, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the Company and
any
employee, (ii) labor union grievances or organizational efforts,
or (iii)
unfair labor practice or labor arbitration proceedings pending or
threatened.
|
|
|
(D)
|
Except
as set forth in Schedule 8(k)(A), each Seller is not a party to any
agreement, and each has not established any policy or practice, requiring
such Seller to make a payment or provide any other form or compensation
or
benefit to any person performing services for such Seller upon termination
of such services which would not be payable or provided in the absence
of
the consummation of the transactions contemplated by this
Agreement.
|
|
|
(E)
|
Schedule
8(k)(E)(i) sets forth by number and employment classification the
approximate numbers of employees employed by each Seller as of the
date of
this Agreement, and, except as set forth on Schedule 8(k)(E) (ii),
none of
said employees are subject to union or collective bargaining agreements
with such Seller.
|
|
|
(F)
|
Neither
the Buyer nor any of its Affiliates shall have any liability or
obligations under or with respect to the Workers Adjustment Retraining
Notification Act in connection with any of the transactions contemplated
in connection herewith.
|
-19-
|
(l)
|
Financial
Statements; Liabilities; Accounts Receivable;
Inventories
|
|
|
(A)
|
The
Audited Financial Statements and the Interim 2007 Statements that
the
Sellers and the Shareholders provided in accordance with Section
6 shall
be complete and correct, shall have been prepared from the books
and
records of the Company in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods
indicated and shall fairly present the financial condition of the
Company
as at their respective dates and the results of its operations for
the
periods covered thereby, subject to normal year-end adjustments and
accruals.
|
|
|
(B)
|
Except
for (i) the liabilities reflected on the Company’s June 30, 2007 balance
sheet included with the Interim 2007 Statements attached as Schedule
8(l)(B)(a), (ii) trade payables and accrued expenses incurred since
June
30, 2007 in the ordinary course of business, none of which are material,
and (iii) executory contract obligations under (x) Contracts listed
on
Schedule 8(s), and/or (y) Contracts not required to be listed on
Schedule
8(s), the Sellers have no liabilities or obligations (whether accrued,
absolute, contingent, known, unknown or otherwise, and whether or
not of a
nature required to be reflected or reserved against in a balance
sheet in
accordance with GAAP).
|
|
|
(C)
|
The
accounts receivable reflected on the June 30, 2007 balance sheets
and all
of the Trade Receivables arising since June 30, 2007 (the “Balance Sheet
Date”) arose from bona fide transactions in the ordinary course of
business, and the goods and services involved have been sold, delivered
and performed to the account obligors, and no further filings (with
Governmental Authorities, insurers or others) are required to be
made, no
further goods are required to be provided and no further services
are
required to be rendered in order to complete the sales and fully
render
the services and to entitle the Company to collect the accounts receivable
in full. No such accounts receivable has been assigned or
pledged to any other person, firm or corporation, and, except only
to the
extent fully reserved against as set forth in the June 30, 2007 balance
sheets, no defense or set-off to any such account has been asserted
by the
account obligor or exists.
|
|
|
(D)
|
The
Merchandise Inventory as of the Closing Date shall consist of items
of a
quality, condition and quantity consistent with normal seasonally-adjusted
Inventory levels of the Company and be usable and saleable in the
ordinary
and usual course of business for the purposes for which
intended. The Merchandise Inventory is valued on the Company’s
books of account in accordance with GAAP at the Company’s average
cost.
|
|
(m)
|
Sellers
(i) have and will have as of the Closing Date legal and beneficial
ownership of the Properties and the Owned Real Estate; and (ii) have
not,
and are not in default in performance of any covenant, agreement,
term,
provision or condition contained in the Real Estate
Lease.
|
-20-
|
(n)
|
Absence
of Certain Changes
|
|
|
(A)
|
Except
as otherwise set forth in Schedule 8(n)(A) attached hereto, since
the
Balance Sheet Date, there has not
been:
|
|
|
(1)
|
any
event, circumstance or change that had or might have a material adverse
effect on the business, operations, prospects, Properties, financial
condition or working capital of the
Sellers;
|
|
|
(2)
|
any
damage, destruction or loss (whether or not covered by insurance)
that had
or might have a material adverse effect on the business, operations,
prospects, Properties or financial condition of the Sellers;
or
|
|
|
(3)
|
any
material adverse change in the Sellers’ vendor or supplier relations or
in Sellers’ sales patterns, pricing policies, accounts
receivable or accounts payable.
|
|
|
(B)
|
Except
as otherwise set forth in Schedule 8(n)(B) attached hereto, since
the
Balance Sheet Date, each Seller has not done any of the
following:
|
|
|
(1)
|
merged
into or with or consolidated with, any other corporation or acquired
the
business or assets of any Person;
|
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(2)
|
purchased
any securities of any Person;
|
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|
(3)
|
created,
incurred, assumed, guaranteed or otherwise become liable or obligated
with
respect to any indebtedness, or made any loan or advance to, or any
investment in, any person, except in each case in the ordinary course
of
business and as set forth on Schedule
8(n)(B)(3);
|
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(4)
|
made
any change in any existing election, or made any new election, with
respect to any tax law in any jurisdiction which election could have
an
effect on the tax treatment of the Seller or the Seller’s business
operations;
|
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|
(5)
|
entered
into, amended or terminated, or waived any of the Company’s rights under,
any agreement specified in Schedule
8(s);
|
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(6)
|
sold,
transferred, leased, mortgaged, encumbered or otherwise disposed
of, or
agreed to sell, transfer, lease, mortgage, encumber or otherwise
dispose
of, any Properties except (i) in the ordinary course of business
and as
set forth on Schedule 8(n)(B)(6), or (ii) pursuant to any agreement
specified in Schedule 8(s);
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(7)
|
settled
any claim or litigation, or filed any motions, orders, briefs or
settlement agreements in any proceeding before any Governmental Authority
or any arbitrator;
|
-21-
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|
(8)
|
incurred,
approved or entered into any agreement or commitment to make, any
individual or a group of individually-related expenditures in excess
of
$25,000 (other than those required pursuant to any agreement specified
in
Schedule 8(s));
|
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(9)
|
maintained
its books of account other than in the usual, regular and ordinary
manner
in accordance with generally accepted accounting principles and on
a basis
consistent with prior periods or made any change in any of its accounting
methods or practices that would be required to be disclosed under
GAAP;
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(10)
|
adopted
any Plan or Benefit Program or Agreement, or granted any increase
in the
compensation payable or to become payable to directors, officers
or
employees (including, without limitation, any such increase pursuant
to
any bonus, profit-sharing or other plan or commitment), other than
merit
increases to non-officer employees in the ordinary course of business
and
consistent with past practice;
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(11)
|
suffered
any extraordinary losses or waived any rights of material
value;
|
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|
(12)
|
made
any payment to any Affiliate or forgiven any indebtedness due or
owing
from any Affiliate to the Company;
|
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|
(13)
|
(A)
liquidated Inventory or accepted product returns other than in the
ordinary course, (B) accelerated receivables, (C) delayed payables,
or (D)
changed in any material respect the Company’s practices in connection with
the payment of payables or the collection of
receivables;
|
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|
(14)
|
engaged
in any one or more activities or transactions with an Affiliate or
outside
the ordinary course of business;
|
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|
(15)
|
declared,
set aside or paid any dividends, or made any distributions or other
payments in respect of its equity securities, or repurchased, redeemed
or
otherwise acquired any such
securities;
|
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|
(16)
|
amended
its Certificate of Incorporation or bylaws;
or
|
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|
(17)
|
committed
to do any of the foregoing.
|
-22-
|
(o)
|
Compliance
with Laws
|
|
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(A)
|
Except
as otherwise set forth in Schedule 8(o), each Seller is and has been
in
compliance in all respects with any and all Legal Requirements applicable
to such Seller, other than failures to so comply that would not have
an
adverse effect on the business, operations, prospects, Properties
or
financial condition of such Seller. Except as otherwise set
forth in Schedule 8(o), each Seller (i) has not received or entered
into
any citations, complaints, consent orders, compliance schedules,
or other
similar enforcement orders or received any written notice from any
Governmental Authority or any other written notice that would indicate
that there is not currently compliance with all such Legal Requirements,
except for failures to so comply that would not have an adverse effect
on
the business, operations, prospects, Properties or financial condition
of
such Seller, and (ii) is not in default under, and no condition exists
(whether covered by insurance or not) that with or without notice
or lapse
of time or both would constitute a default under, or breach or violation
of, any Legal Requirement or Permit applicable to such
Seller.
|
|
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(B)
|
Without
limiting the generality of Section 8(o), each Seller has not received
notice of and there is no basis for, any claim, action, suit,
investigation or proceeding that might result in a finding that such
Seller is not or has not been in compliance with Legal Requirements
relating to (a) the development, testing, manufacture, packaging,
distribution and marketing of products, (b) employment, safety and
health,
(c) environmental protection, building, zoning and land use and/or
(d) the
Foreign Corrupt Practices Act and the rules and regulations promulgated
thereunder.
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(p)
|
Litigation
|
|
|
(A)
|
Except
as otherwise set forth in Schedule 8(p), there are no claims, actions,
suits, investigations or proceedings against each Seller pending
or, to
the Knowledge of such Seller or any Shareholder, threatened in any
court
or before or by any Governmental Authority, or before any arbitrator,
that
might have an adverse effect (whether covered by insurance or not)
on the
business, operations, prospects, Properties or financial condition
of such
Seller or on their ability to consummate the transactions contemplated
hereby, and there is no basis for any such claim, action, suit,
investigation or proceeding. Schedule 8(p) also includes a true
and correct listing of all material actions, suits, investigations,
claims
or proceedings that were pending, settled or adjudicated since January
1,
2002.
|
-23-
|
(q)
|
Special
Provisions Regarding Asbestos
Claims
|
|
|
(A)
|
The
Sellers and the Majority Shareholders hereby jointly and severally
represent and warrant to Buyer (i.e. the liability of Sellers and
the
Majority Shareholders for the breach of any representation or warranty
is
joint and several, in the sense that Buyer may proceed against any
one or
more Sellers and Majority Shareholders for all or any part of such
liability) and the Minority Shareholders hereby severally represent
and
warrant (i.e. the liability of the Minority Shareholders is several,
in
the sense that Buyer can proceed against any Minority Shareholder
for only
that portion of the total liability for such breach that is proportional
to his pro rata ownership interest in the Company) to Buyer
that:
|
|
|
(1)
|
|
|
(a)
|
Each
Seller has not, since the time any Shareholder purchased equity in,
or was
an Affiliate with, any one of the Sellers in April 16, 1993, sold
any
asbestos or asbestos containing products and is not a defendant in
any
lawsuit related to same.
|
|
|
(b)
|
To
its Knowledge, each Seller has not prior to April 16, 1993 sold any
asbestos or asbestos containing products and is not a defendant in
any
lawsuit related to same.
|
|
|
(2)
|
Other
than as set forth in Schedule 8(q)(2), each Seller has maintained
asbestos
related insurance since the time such Seller was incorporated and
that
there are no gaps of coverage for asbestos related
insurance.
|
|
|
(B)
|
Sellers
and Majority Shareholders shall jointly and severally fully indemnify,
protect, reimburse, and hold harmless Buyer from and against any
and all
damages, liabilities and claims for personal injury due to, or alleged
to
be due to, exposure to asbestos in connection with Sellers’ business,
operations or premises at any time prior to the Closing (an "asbestos
claim").
|
|
|
(C)
|
In
any such action or proceeding, Buyer shall have the right to retain
its
own counsel; but the fees and expenses of such counsel shall be at
its own
expense unless (i) the Indemnifying Party and Buyer shall have mutually
agreed to the retention of such counsel or (ii) the named parties
to any
suit, action or proceeding (including any impleaded parties) include
both
the Indemnifying Party and the Buyer and representation of all parties
by
the same counsel would be inappropriate due to actual or potential
conflict of interests between them.
|
|
|
(D)
|
An
Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent of any claim, litigation
or
proceeding in respect of which indemnity may be sought
hereunder.
|
-24-
|
|
(E)
|
The
Indemnifying Party may settle any claim without the consent of Buyer,
but
only if the sole relief awarded is monetary damages that are paid
in full
by the Indemnifying Party. Buyer shall, subject to its reasonable
business
needs, use reasonable efforts to minimize the indemnification sought
from
the Indemnifying Party under this
Agreement.
|
|
|
(F)
|
If
an asbestos claim is made against Buyer, Buyer shall, within ten
days
after receiving written notice of such claim, give notice to the
Company
in the manner provided elsewhere in this Agreement for notices
hereunder.
|
|
|
(G)
|
If
Sellers assume the defense of an asbestos claim at its own expense,
then
(x) it shall within 20 days inform Buyer of such assumption in writing,
and (y) notwithstanding any contrary provision in this Section, Seller
shall not incur any expense for Buyer’s
counsel.
|
|
(r)
|
Real
Property
|
|
|
(A)
|
Schedule
8(r)(A) sets forth a list of all real property or any interest therein
(including without limitation any option or other right or obligation
to
purchase any real property or any interest therein) currently owned,
or
ever owned, by each Seller, in each case setting forth the street
address
and legal description of each property covered thereby (the "Owned
Premises”)
|
|
|
(B)
|
Schedule
8(r)(B) sets forth a list of all leases, licenses or similar agreements
relating to the Sellers’ use or occupancy of real estate owned by a third
party (“Leases”), true and correct copies of which have previously been
furnished to Buyer, in each case setting forth (i) the lessor and
lessee
thereof and the commencement date, term and renewal rights under
each of
the Leases, and (ii) the street address and legal description of
each
property covered thereby (the “Leased Premises”). The Leases
and all guaranties with respect thereto, are in full force and effect
and
have not been amended in writing or otherwise, and no party thereto
is in
default or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both,
would
cause a material breach of or default under any of such
Leases. Neither the Sellers nor its agents or employees have
received written notice of any claimed abatements, offsets, defenses
or
other bases for relief or
adjustment.
|
-25-
|
|
(C)
|
With
respect to each Owned Premises and Leased Premises, as
applicable: (i) the Sellers have good, marketable and insurable
fee simple interest in the Owned Premises and a valid leasehold interest
pursuant to a verbal month-to-month lease, such lease terminable
by either
party upon 90 days prior termination notice, in the Leased Premises,
free
and clear of any Liens, encumbrances, covenants and easements or
title
defects that have had or could have an adverse effect on the Sellers’ use
and occupancy of the Owned Premises and the Leased Premises; (ii)
the
portions of the buildings located on the Owned Premises and the Leased
Premises that are used in the business of the Sellers are each in
good
repair and condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy the Sellers’ current and reasonably
anticipated normal business activities as conducted thereon and,
to the
Knowledge of each Seller, there is no latent material defect in the
improvements on any Owned Premises, structural elements thereof,
the
mechanical systems (including, without limitation, all heating,
ventilating, air conditioning, plumbing, electrical, utility and
sprinkler
systems) therein, the utility system servicing each Owned Premises
and the
roofs which have not been disclosed to Buyer in writing prior to
the date
of this Agreement; and(iii) each Seller has not received notice of
(A) any
condemnation, eminent domain or similar proceeding affecting any
portion
of the Owned Premises or the Leased Premises or any access thereto,
and,
to the Knowledge of each Seller, no such proceedings are contemplated,
(B)
any special assessment or pending improvement liens to be made by
any
governmental authority which may affect any of the Owned Premises
or the
Leased Premises, or (C) any violations of building codes and/or zoning
ordinances or other governmental regulations with respect to the
Owned
Premises or the Leased Premises.
|
|
(s)
|
Commitments
|
|
|
(A)
|
Except
as otherwise set forth in Schedule 8(s), each Seller is not a party
to or
bound by any of the following, whether written or
oral:
|
|
|
(1)
|
any
Contract that cannot by its terms be terminated by such Seller with
30
days’ or less notice without penalty or whose term continues beyond one
year after the date of this
Agreement;
|
|
|
(2)
|
contract
or commitment for capital expenditures by such Seller in excess of
$25,000
per calendar quarter in the
aggregate;
|
|
|
(3)
|
lease
or license with respect to any Properties, real or personal, whether
as
landlord, tenant, licensor or
licensee;
|
|
|
(4)
|
agreement,
contract, indenture or other instrument relating to the borrowing
of money
or the guarantee of any obligation or the deferred payment of the
purchase
price of any Properties;
|
|
|
(5)
|
partnership
agreement, joint venture agreement or limited liability company operating
agreement;
|
-26-
|
|
(6)
|
contract
with any Affiliate of such Seller (including the Shareholders) relating
to
the provision of goods or services by or to such
Seller;
|
|
|
(7)
|
agreement
for the sale of any assets that in the aggregate have a net book
value on
the such Seller’s books of greater than
$5,000;
|
|
|
(8)
|
agreement
that purports to limit such Seller’s freedom to compete freely in any line
of business or in any geographic
area;
|
|
|
(9)
|
preferential
purchase right, right of first refusal, or similar agreement;
or
|
|
|
(10)
|
other
Contract that is material to the business of such
Seller.
|
|
|
(B)
|
All
of the Contracts listed or required to be listed in Schedule 8(s)
are
valid, binding and in full force and effect, and the Sellers have
not been
notified or advised by any party thereto of such party’s intention or
desire to terminate or modify any such Contract in any respect, except
as
disclosed in Schedule 8(s). Neither the Sellers nor, to the
Knowledge of each Seller, any other party is in breach of any of
the terms
or covenants of any Contract listed or required to be listed in Schedule
8(s). Following the Closing, Buyer will continue to be entitled
to all of the benefits currently held by the each Seller under each
Contract listed or required to be listed in Schedule
8(s).
|
|
|
(C)
|
Except
as otherwise set forth in Schedule 8(s), each Seller is not a party
to or
bound by any Contract or Contracts the terms of which were arrived
at by
or otherwise reflect less-than-arm’s-length negotiations or
bargaining.
|
|
(t)
|
Insurance
|
|
|
(A)
|
Schedule
8(t) hereto is a complete and correct list of all insurance policies
(including, without limitation, fire, liability, product liability,
workers’ compensation and vehicular) presently in effect that relate to
each Seller, or its Properties, including the amounts of such insurance
and annual premiums with respect thereto, all of which have been
in full
force and effect from and after the date(s) set forth on Schedule
8(t).
|
-27-
|
(u)
|
Intangible
Rights
|
|
|
(A)
|
Set
forth on Schedule 8(u) is a list and description of all material
foreign
and domestic patents, patent rights, trademarks, service marks, trade
names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned,
Used,
licensed or controlled by each Seller and all goodwill associated
therewith. Each Seller owns or has the right to use and shall
as of the Closing Date own or have the right to use any and all
information, know-how, trade secrets, patents, copyrights, trademarks,
tradenames, software, formulae, methods, processes and other intangible
properties that are necessary or customarily Used by such Seller
for the
ownership, management or operation of its Properties (“Intangible Rights”)
including, but not limited to, the Intangible Rights listed on Schedule
8(u). Except as set forth on Schedule 8(u), (i) each Seller is
the sole and exclusive owner of all right, title and interest in
and to
all of the Intangible Rights, and has the exclusive right to use
and
license the same, free and clear of any claim or conflict with the
Intangible Rights of others; (ii) no royalties, honorariums or fees
are
payable by Sellers to any person by reason of the ownership or use
of any
of the Intangible Rights; (iii) there have been no claims made against
Sellers asserting the invalidity, abuse, misuse, or unenforceability
of
any of the Intangible Rights and no grounds for any such claims exist;
(iv) each Seller has not made any claim of any violation or infringement
by others of any of its Intangible Rights or interests therein and,
to the
Knowledge of such Seller, no grounds for any such claims exist; (v)
each
Seller has not received any notice that it is in conflict with or
infringing upon the asserted intellectual property rights of others
in
connection with the Intangible Rights, and neither the use of the
Intangible Rights nor the operation of such Seller’s business is
infringing or has infringed upon any intellectual property rights
of
others; (vi) no interest in any of the Intangible Rights has been
assigned, transferred, licensed or sublicensed by Sellers to any
person
other than the Buyer pursuant to this Agreement; (viii) to the extent
that
any item constituting part of the Intangible Rights has been registered
with, filed in or issued by, any Governmental Authority, such
registrations, filings or issuances are listed on Schedule 8(u) and
were
duly made and remain in full force and effect; (ix) to the Knowledge
of
each Seller, there has not been any act or failure to act by such
Seller
or any of their directors, officers, employees, attorneys or agents
during
the prosecution or registration of, or any other proceeding relating
to,
any of the Intangible Rights or of any other fact which could render
invalid or unenforceable, or negate the right to issuance of any
of the
Intangible Rights; (x) to the extent any of the Intangible Rights
constitutes proprietary or confidential information, each Seller
has
adequately safeguarded such information from disclosure; and (xi)
all of
the Sellers’ current Intangible Rights will remain in full force and
effect following the Closing without alteration or
impairment.
|
-28-
|
(v)
|
Equipment
and Other Tangible Property
|
|
|
(A)
|
Schedule
8(v) sets forth a true and compete list of the Fixed Assets, and
except as
set forth on such Schedule, the Fixed Assets are suitable for the
purposes
for which intended and in good operating condition and repair consistent
with normal industry standards, except for ordinary wear and
tear.
|
|
(w)
|
Permits;
Environmental Matters
|
|
|
(A)
|
Schedule
8(w)(A) contains a true and complete list of all Permits Used by
each
Seller in the conduct of the Business, setting forth the grantor,
grantee,
the function and the expiration and renewal date of each. Prior
to the execution of this Agreement, each Seller has delivered to
the Buyer
true and complete copies of all such Permits. Except as
otherwise set forth in Schedule 8(w)(A), each Seller has all Permits
necessary for such Seller to own, operate, use and maintain its Properties
and to conduct its business and operations as presently conducted
and as
expected to be conducted in the future. Except as otherwise set
forth in Schedule 8(w)(A), all such Permits are in effect, no proceeding
is pending or, to the Knowledge of either the Sellers or the Shareholders,
threatened to modify, suspend or revoke, withdraw, terminate, or
otherwise
limit any such Permits, and no administrative or governmental actions
have
been taken or, to the Knowledge of either each Seller or each Shareholder,
threatened in connection with the expiration or renewal of such Permits
which could adversely affect the ability of such Seller to own, operate,
use or maintain any of its Properties or to conduct its business
and
operations as presently conducted and as expected to be conducted
in the
future. Except as otherwise set forth in Schedule 8(w)(A), (i)
no violations have occurred that remain uncured, unwaived, or otherwise
unresolved, or are occurring in respect of any such Permits, other
than
inconsequential violations, and (ii) no circumstances exist that
would
prevent or delay the obtaining of any requisite consent, approval,
waiver
or other authorization of the transactions contemplated hereby with
respect to such Permits that by their terms or under applicable law
may be
obtained only after Closing. Except as otherwise set forth on
Schedule 8(w)(A), the execution, delivery and performance by the
Sellers
and Buyer of this Agreement and the consummation of the transactions
contemplated hereby shall not (A) result in or give to any Person
any
right of termination, cancellation, acceleration or modification
in or
with respect to, (B) result in or give to any Person any additional
rights
or entitlement to increased, additional, accelerated or guaranteed
payments under, or (C) result in the creation or imposition of any
Lien
upon each of the Sellers or any of its assets under any
Permits.
|
-29-
|
|
(B)
|
Except
as set forth on Schedule 8(w)(B), (i) each Seller has at all times
been
and is currently in compliance with all applicable Environmental
Laws,
including obtaining and maintaining in effect all Permits required
by
applicable Environmental Laws, and (ii), there are no claims, liabilities,
investigations, litigation, administrative proceedings, whether pending
or, to the Knowledge of either the Sellers or the Shareholders,
threatened, or judgments or orders relating to any Hazardous Materials
(collectively called “Environmental Claims”) asserted or threatened
against any Seller or relating to any real property currently or
formerly
owned, leased or otherwise Used by any Seller. Neither the
Sellers nor, to the Knowledge of either Sellers or the Shareholders,
any
prior owner, lessee or operator of said real property, has caused
or
permitted any Hazardous Material to be used, generated, reclaimed,
transported, released, treated, stored or disposed of in a manner
which
could form the basis for an Environmental Claim against such Sellers
or
the Buyer. Except as set forth on Schedule 8(w)(B), each Seller
has not assumed any liability of any Person for cleanup, compliance
or
required capital expenditures in connection with any Environmental
Claim.
|
|
|
(C)
|
Except
as set forth in Schedule 8(w)(C), to the Knowledge of either the
Sellers
or the Shareholders, the Owned Premises and the Leased
Premises, or, to the Knowledge of either the Sellers or the Shareholders,
on adjacent parcels of real property, do not presently contain and
never
have contained and are presently free from all chemical substances
or
pollutants known to be hazardous wastes, hazardous substances, hazardous
constituents, toxic substances or related materials, whether solid,
liquid
or gaseous, including but not limited to asbestos, radioactive materials,
oil, gasoline, diesel fuel and other hydrocarbons, and any other
substances defined as "hazardous wastes", "hazardous substances",
"toxic
substances", "pollutants", "contaminants", or other similar designations,
or any other material, the removal, storage or presence of which
is
regulated or required and/or the maintenance of which is regulated
or
penalized by Massachusetts General Laws Chapter 21E; The Massachusetts
Contingency Plan, 310 CMR 40.00 et seq.; the Resources Conservation
Recovery Act, 42 U.S.C. 6901, et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq.;
the
Toxic Substances Control Act, 15 U.S.C. 2601, et seq.; the Clean
Water
Act, 33 U.S.C. 1251, et seq.; the Safe Drinking Water Act, 42 U.S.C.
300(f)-300(j) – 10; the Clean Air Act, 42 U.S.C. 7401, et seq.; and rules
adopted under such statutes, as well as any permits or licenses issued
under such statutes and rules or any other local, state or federal
agency,
authority or governmental unit (collectively, "Hazardous Substances").
Sellers shall deliver to Buyer within ten days of the execution of
this
Agreement by all parties copies of any and all reports or other data
in
Sellers’ possession or reasonably accessible to Sellers with respect to
any of the matters referred to
herein.
|
-30-
|
|
(D)
|
To
the best Knowledge of either the Sellers or the Shareholders, the
Owned
Premises and the Leased Premises, and to the knowledge of the Sellers
or
the Shareholders without having made inquiry, any adjacent parcels
of real
property, do not presently contain and never have contained and are
presently free from any underground tanks or pipes ancillary to
underground or above-ground tanks (collectively “Tanks”) except as
disclosed on Schedule 8(w)(D). To the extend there are any
Tanks disclosed on Schedule 8(w)(D), such Tanks shall have been properly
removed or shall have been legally and property de-commissioned and
abandoned and Seller and Shareholders shall provide written verification
of such proper removal or de-commissioning and abandonment within
10 days
of the execution of this Agreement. Neither Seller, nor to the best
Knowledge of either the Sellers or the Shareholders, any third party
has
engaged in the generation, use, manufacture, treatment, storage or
disposal of any hazardous substance on the land in violation of any
applicable environmental law.
|
|
|
(E)
|
To
the best Knowledge of either the Sellers or the Shareholders, the
Owned
Premises and the Leased Premises are not and never have been listed
on the
National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System or any similar federal,
state or local list, schedule, log, inventory or
database.
|
|
(x)
|
Suppliers
and Customers
|
|
|
(A)
|
Schedule
8(x) sets forth (i) the 10 principal suppliers of the Sellers collectively
during each of the year ended December 31, 2006, and for the period
from
January 1, 2007 through August 31, 2007 and, in the event that the
Closing
is subsequent to September 30, 2007, for the period from January
1, 2007
through September 30, 2007, together with the dollar amount of
goods purchased by the Company from each such supplier during each
such
period, and (ii) the 10 principal customers of the Company during
each of
the fiscal years ended December 31, 2005 and December 31, 2006, together
with the dollar amount of goods and/or services sold by the Company
to
each such customer during each such period and for each of the fiscal
quarters ended March 31, 2007, June 30, 2007 and, in the event that
the
Closing is subsequent to September 30, 2007, fiscal quarter ended
September 30, 2007. Except as otherwise set forth in Schedule
8(x), each Seller maintains good relations with all suppliers and
customers listed or required to be listed in Schedule 8(x) as well
as with
governments, partners, financing sources and other parties with whom
such
Seller has significant relations, and no such party has canceled,
terminated or made any threat to the such Seller to cancel or otherwise
terminate its relationship with the such Seller or to materially
decrease
its services or supplies to such Seller or its direct or indirect
purchase
or usage of the products of such
Seller.
|
-31-
|
(y)
|
Absence
of Certain Business Practices
|
|
|
(A)
|
Except
as set forth on Schedule 8(y), neither the Shareholders, the Sellers,
nor
any other Affiliate or agent of the Sellers or the Shareholders,
or any
other person acting on behalf of or associated with the Sellers,
acting
alone or together, have (a) received, directly or indirectly, any
rebates,
payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer,
supplier,
employee or agent of any customer or supplier; or (b) directly or
indirectly given or agreed to give any money, gift or similar benefit
to
any customer, supplier, employee or agent of any customer or supplier,
any
official or employee of any government (domestic or foreign), or
any
political party or candidate for office (domestic or foreign), or
other
person who was, is or may be in a position to help or hinder the
business
of the Sellers (or assist the Sellers in connection with any actual
or
proposed transaction), in each case which (i) may subject the Sellers
to
any damage or penalty in any civil, criminal or governmental litigation
or
proceeding, (ii) if not given in the past, may have had an adverse
effect
on the assets, business, operations or prospects of the Sellers,
or (iii)
if not continued in the future, may adversely affect the assets,
business,
operations or prospects of the
Sellers.
|
|
(z)
|
Products,
Services and Authorizations
|
|
|
(A)
|
To
the Knowledge of either the Sellers or the Shareholders, each Product
repaired or distributed by each Seller has been designed, manufactured,
repaired or distributed in accordance with (i) the specifications
under
which the Product is normally and has normally been manufactured,
and (ii)
the provisions of all applicable laws, policies, guidelines and any
other
governmental requirements.
|
|
|
(B)
|
Schedule
8(z)(B) sets forth (i) a list of all Products which at any time have
been
recalled, withdrawn or suspended by each Seller, whether voluntarily
or
otherwise, including the date recalled, withdrawn or suspended and
a brief
description of all completed or pending proceedings seeking the recall,
withdrawal, suspension or seizure of any Product, (ii) a brief description
of all completed or pending proceedings seeking the recall, withdrawal,
suspension or seizure of any Product, and (iii) a list of all regulatory
letters received by each Seller or any of its agents relating to
such
Seller or any of the Products.
|
|
|
(C)
|
To
Sellers’ Knowledge, there exists no set of facts which could reasonably be
expected to furnish a basis for the recall, withdrawal or suspension
of
any product registration, product license, repair or overhaul license,
manufacturing license, wholesale dealers license, export or import
license
or other license, approval or consent of any governmental or regulatory
authority with respect to each Seller or any of its
Products.
|
-32-
|
|
(D)
|
There
are no claims existing or to Sellers’ Knowledge threatened under or
pursuant to any warranty, whether express or implied, on products
sold by
each Seller. There are no claims existing and to Sellers’
Knowledge, there is no basis for any claim against the Sellers for
injury
to persons, animals or property as a result of the sale, distribution
or
manufacture of any product by the Sellers, including, but not limited
to,
claims arising out of the defective or unsafe nature of its
products. Each Seller has full and adequate insurance coverage
for products liability claims against
it.
|
|
|
(E)
|
Set
forth on Schedule 8(z)(E) is a list of all authorizations, consents,
approvals, franchises, licenses and permits required by any Person
(other
than a Governmental Authority) for the operation of the business
of the
Sellers as presently operated (the “Other Person
Authorizations”). All of the Other Person Authorizations have
been duly issued or obtained and are in full force and effect, and
each
Seller is in compliance with the terms of all the Other Person
Authorizations. Neither the Sellers nor the Shareholders have
any knowledge of any facts which could be expected to cause them
to
believe that the Other Person Authorizations will not be renewed
by the
appropriate Person in the ordinary course. Each of the Other
Person Authorizations may be assigned and transferred to the Buyer
in
accordance with this Agreement and each will continue in full force
and
effect thereafter, in each case without (i) the occurrence of any
breach,
default or forfeiture of rights thereunder, or (ii) the consent,
approval,
or act of, or the making of any filings with, any
Person.
|
|
(aa)
|
Transactions
With Affiliates
|
|
|
(A)
|
Except
as set forth on Schedule 8(aa) and except for normal advances to
employees
consistent with past practices, payment of compensation for employment
to
employees consistent with past practices, and participation in scheduled
Plans or Benefit Programs and Agreements by employees, the Sellers
have
not purchased, acquired or leased any property or services from,
or sold,
transferred or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from, or entered into or been
subject
to any management, consulting or similar agreement with, or engaged
in any
other significant transaction with any Shareholders or any other
officer,
director or Shareholders of the Sellers or any
Affiliates. Except as set forth on Schedule 8(aa), none of the
Shareholders nor any other Affiliate of the Sellers is indebted to
the
Sellers for money borrowed or other loans or advances, and the Sellers
are
not indebted to any such Affiliate.
|
|
(bb)
|
Schedule
8 (bb) is a true and complete list of Sellers credit applications
and
guarantees provided by Sellers to the Sellers’
vendors.
|
-33-
|
(cc)
|
Other
Information
|
|
|
(A)
|
The
information furnished by the Shareholders and the Sellers to Buyer
pursuant to this Agreement (including, without limitation, information
contained in the exhibits hereto, the Schedules identified herein,
the
instruments referred to in such Schedules and the certificates and
other
documents to be executed or delivered pursuant hereto by the Shareholders
and/or the Sellers at or prior to the Closing) is not, nor at the
Closing
will be, false or misleading in any material respect, or contains,
or at
the Closing will contain, any misstatement of material fact, or omits,
or
at the Closing will omit, to state any material fact required to
be stated
in order to make the statements therein not
misleading.
|
|
(dd)
|
The
representations and warranties contained in this Section shall not
be
affected or deemed waived by reason of the fact that Buyer and/or
its
representatives knew or should have known that any such representation
or
warranty is or might be inaccurate in any
respect.
|
|
(ee)
|
Each
Party agrees and acknowledges that the only representations and warranties
that Sellers and Shareholders are making are those that are expressly
set
forth in this Agreement.
|
|
9.
|
REPRESENTATIONS
AND WARRANTIES OF BUYER. Buyer hereby represents and warrants to
the
Company that:
|
|
(a)
|
Existence
and Qualification
|
|
|
(A)
|
Buyer
is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York.
|
-34-
|
(b)
|
Authority,
Approval and Enforceability
|
|
|
(A)
|
This
Agreement has been duly executed and delivered by Buyer and Buyer
has all
requisite company power and legal capacity to execute and deliver
this
Agreement and all Collateral Agreements executed and delivered or
to be
executed and delivered by Buyer in connection with the transactions
provided for hereby, to consummate the transactions contemplated
hereby
and by the Collateral Agreements, and to perform its obligations
hereunder
and under the Collateral Agreements. Upon the approval of this
Agreement by the Board of Directors of Buyer, the execution and delivery
of this Agreement and the Collateral Agreements and the performance
of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all company action necessary on behalf
of
Buyer. Subject to such Board approval, this Agreement and each
Collateral Agreement to which Buyer is a party constitutes, or upon
execution and delivery will constitute, the legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms, except
as
such enforcement may be limited by general equitable principles or
by
applicable bankruptcy, insolvency, moratorium, or similar laws and
judicial decisions from time to time in effect which affect creditors’
rights generally.
|
|
|
(B)
|
No
Default or Consents
|
|
|
(1)
|
Neither
the execution and delivery of this Agreement nor the carrying out
of the
transactions contemplated hereby
will:
|
|
|
(a)
|
violate
or conflict with any of the terms, conditions or provisions of Buyer’s
Certificate of Incorporation or
by-laws;
|
|
|
(b)
|
violate
any Legal Requirements applicable to
Buyer;
|
|
|
(c)
|
violate,
conflict with, result in a breach of, constitute a default under
(whether
with or without notice or the lapse of time or both), or accelerate
or
permit the acceleration of the performance required by, or give any
other
party the right to terminate, any contract or Permit applicable to
Buyer;
|
|
|
(d)
|
result
in the creation of any lien, charge or other encumbrance on any property
of Buyer; or
|
|
|
(e)
|
require
Buyer to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing
with, any
private non-governmental third party or any Governmental
Authority.
|
-35-
|
(c)
|
No
Proceedings
|
|
|
(A)
|
No
suit, action or other proceeding is pending or, to Buyer’s knowledge,
threatened before any Governmental Authority seeking to restrain
Buyer or
prohibit its entry into this Agreement or prohibit the Closing, or
seeking
Damages against Buyer or its properties as a result of the consummation
of
this Agreement.
|
|
(d)
|
Each
Party agrees and acknowledges that the only representations and warranties
that the Buyer is making are those that are expressly set forth in
this
Agreement.
|
|
10.
|
OBLIGATIONS
PRIOR TO CLOSING. From the date of this Agreement through the
Closing:
|
|
(a)
|
Buyer’s
Access to Information and
Properties
|
|
|
(A)
|
The
Sellers shall permit Buyer and its authorized employees, agents,
accountants, legal counsel, financing sources and other representatives
to
have access to the books, records, employees, counsel, accountants,
engineers and other representatives of the Company at all times reasonably
requested by Buyer for the purpose of conducting an investigation
of the
Sellers’ financial condition, corporate status, operations, prospects,
business and Properties. Each Seller shall make available to
Buyer for examination and reproduction all documents and data of
every
kind and character relating to such Seller in possession or control
of, or
subject to reasonable access by, such Seller and/or the Shareholders,
including, without limitation, all files, records, data and information
relating to the Properties (whether stored in paper, magnetic or
other
storage media) and all agreements, instruments, contracts, assignments,
certificates, orders, and amendments thereto. Also, each
Seller shall allow Buyer access to, and the right to inspect,
its Properties, except to the extent that such Properties are operated
by
a third-party operator, in which case such Seller shall use its best
efforts to cause the operator of such Properties to allow Buyer access
to,
and the right to inspect, such Properties. Buyer shall conduct any
such
investigation in such a manner as not to interfere unreasonably with
the
normal operations of Sellers.
|
-36-
|
(b)
|
Company’s
Conduct of Business and Operations
|
|
|
(A)
|
Sellers
and the Shareholders shall keep Buyer advised as to all material
operations and proposed material operations relating to the
Sellers. Each Seller shall (a) conduct its business in the
ordinary course (b) maintain present employees, (c) maintain and
operate
its Properties in a good and workmanlike manner, (d) pay or cause
to be
paid all costs and expenses (including but not limited to insurance
premiums) incurred in connection therewith in a timely manner, (e)
use
reasonable efforts to keep all Contracts listed or required to be
listed
on Schedule 8(s) in full force and effect, (f) comply with all of
the
covenants contained in all such material Contracts, (g) maintain
in force
until the Closing Date insurance policies equivalent to those in
effect on
the date hereof, and (h) comply in all material respects with all
applicable Legal Requirements, and (i) use their best efforts to
preserve
the present relationships of such Seller with all persons having
significant business relations with such Seller.
|
|
(c)
|
General
Restrictions
|
|
|
(A)
|
Except
as otherwise expressly permitted in this Agreement, without the prior
written consent of Buyer, which consent shall not be unreasonably
withheld, each of the Sellers shall
not:
|
|
|
(1)
|
merge
into or with or consolidate with, any other corporation or acquire
the
business or assets of any person;
|
|
|
(2)
|
amend
its articles of incorporation or
bylaws;
|
|
|
(3)
|
create,
incur, assume, guarantee or otherwise become liable or obligated
with
respect to any indebtedness, or make any loan or advance to, or any
investment in, any person, except in each case in the ordinary course
of
business;
|
|
|
(4)
|
enter
into, amend or terminate any material
agreement;
|
|
|
(5)
|
sell,
transfer, lease, mortgage, encumber or otherwise dispose of, or agree
to
sell, transfer, lease, mortgage, encumber or otherwise dispose of,
any
Properties except (i) in the ordinary course of business, or (ii)
pursuant
to any agreement specified in Schedule
8(s);
|
|
|
(6)
|
settle
any material claim or litigation, or file any material motions, orders,
briefs or settlement agreements in any proceeding before any Governmental
Authority or any arbitrator;
|
|
|
(7)
|
incur
or approve, or enter into any agreement or commitment to make, any
capital
expenditures in excess of $10,000 (other than those required pursuant
to
any agreement specified in Schedule
8(s)));
|
-37-
|
(8)
|
maintain
its books of account other than in the usual, regular and ordinary
manner
in accordance with generally accepted accounting principles and on
a basis
consistent with prior periods or make any change in any of its accounting
methods or practices;
|
|
|
(9)
|
make
any change, whether written or oral, to any agreement or understanding
with any suppliers or customers;
|
|
|
(10)
|
accelerate
or delay collection of any notes or accounts receivable in advance
of or
beyond their regular due dates or the dates when they would have
been
collected in the ordinary course of business consistent with past
practices;
|
|
|
(11)
|
delay
or accelerate payment of any accrued expense, trade payable or other
liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business
consistent with past practices;
|
|
|
(12)
|
allow
its levels of inventory to vary in any material respect from the
levels
customarily maintained;
|
|
|
(13)
|
adopt
any Plan or Benefit Program or Agreement or increase the compensation
payable to any employee (including, without limitation, any increase
pursuant to any bonus, profit-sharing or other incentive plan or
commitment);
|
|
|
(14)
|
become
a party to or bound by any of the arrangements described in this
Agreement
or any Schedule, whether written or
oral;
|
|
|
(15)
|
engage
in any one or more activities or transactions outside the ordinary
course
of business;
|
|
|
(16)
|
enter
into any transaction or make any commitment which could result in
any of
the representations, warranties or covenants of the Company and/or
the
Shareholders contained in this Agreement not being true and correct
after
the occurrence of such transaction or event;
or
|
|
|
(17)
|
commit
to do any of the foregoing.
|
|
(d)
|
Notice
Regarding Changes
|
|
|
(A)
|
Sellers
and the Shareholders shall promptly inform the Buyer in writing of
any
change in facts and circumstances that could render any of the
representations and warranties made herein by the Sellers and the
Shareholders inaccurate or misleading. The Buyer shall promptly
inform the Company in writing of any change in facts and circumstances
that could render any of the representations and warranties made
herein by
it inaccurate or misleading.
|
-38-
|
(e)
|
Ensure
Conditions Met
|
|
|
(A)
|
Subject
to the terms and conditions of this Agreement, each party hereto
shall use
all reasonable commercial efforts to take or cause to be taken all
actions
and do or cause to be done all things required under applicable Legal
Requirements in order to consummate the transactions contemplated
hereby,
including, without limitation, (i) obtaining all Permits, authorizations,
consents and approvals of any Governmental Authority or other person
which
are required for or in connection with Buyer’s conduct of the Business (as
currently conducted by the Company) subsequent to (x) Closing or
(y) the
consummation of the transactions contemplated hereby and by the Collateral
Agreements or (z) both, (ii) taking any and all reasonable actions
necessary to satisfy all of the conditions to each party’s obligations
hereunder as set forth in Section 12, and (iii) executing and delivering
all agreements and documents required by the terms hereof to be executed
and delivered by such party on or prior to the Closing.
|
|
(f)
|
Casualty
Loss
|
|
(A)
|
If,
between the date of this Agreement and the Closing, any of the Properties
of the Sellers shall be destroyed or damaged in whole or in part
by fire,
earthquake, flood, other casualty or any other cause, then the Sellers
shall, at Buyer’s election, (i) cause such Properties to be repaired or
replaced prior to the Closing with Properties of substantially the
same
condition and function, (ii) assign the Sellers’ rights under applicable
insurance policies provided that the same are sufficient to cause
such
Properties to be repaired or replaced prior to the Closing with Properties
of substantially the same condition and function, or (iii) enter
into
contractual arrangements satisfactory to Buyer so that the Sellers
will
have at the Closing the same economic value as if such casualty had
not
occurred, provided that if there is substantial loss to any one of
the
Sellers’ Properties, Buyer may upon notice to the Company terminate this
Agreement without liability to any party.
|
|
(g)
|
Employee
Matters
|
|
|
(A)
|
The
parties acknowledge that the transactions provided for in this Agreement
may result in obligations on the part of the Sellers and one or more
of
the Plans that is a welfare benefit plan (within the meaning of Section
3(1) of ERISA) to comply with the health care continuation requirements
of
Part 6 of Title 1 of ERISA and Code Section 4980B, as
applicable. The parties expressly agree that Buyer and Buyer’s
benefit plans shall have no responsibility, and that Sellers shall
have
full responsibility, for compliance with such health care continuation
requirements (i) for qualified beneficiaries who previously elected
to
receive continued coverage under the Sellers’ ERISA benefit plans or who
between the date of this Agreement and the Closing Date elect to
receive
continued coverage, or (ii) with respect to those employees or former
employees of the Sellers who may become eligible to receive such
continued
coverage as a result of the transactions provided for in this
Agreement.
|
-39-
|
|
(B)
|
Except
as specifically set forth in this Agreement: (i) the Buyer shall
not be
obligated to assume, continue or maintain any of the Plans or Benefit
Programs or Agreements; (ii) no assets or liabilities of the Plans
shall
be transferred to, or assumed by, the Buyer or the Buyer’s benefit plans;
and (iii) the Sellers shall be solely responsible for funding and/or
paying any benefits under any of the Plans or Benefit Programs or
Agreements, including any termination benefits and other employee
entitlements accrued under such plans by or attributable to employees
of
the Sellers prior to the Closing
Date.
|
|
|
(C)
|
Nothing
in this Agreement, express or implied, shall confer upon any employee
of
the Sellers, or any representative of any such employee, any rights
or
remedies, including any right to employment or continued employment
for
any period, of any nature
whatsoever.
|
|
|
(D)
|
The
Sellers shall, after the execution by the parties of this Agreement,
permit Buyer to contact and make arrangements with the Sellers’ employees
for the purpose of assuring their continued employment by the Buyer
after
the Closing and for the purpose of ensuring the continuity of the
Sellers’
business, and the Sellers agree not to discourage any such employees
from
consulting with Buyer.
|
|
|
(E)
|
Each
Seller shall use its best efforts to keep available the services
of the
Sellers’ present employees.
|
|
(h)
|
Name
Change
|
|
|
(A)
|
Each
Seller hereby represents, warrants and covenants to the Buyer that
the
corporate name of each and every Seller is as set forth on the signature
page hereof and further agrees and acknowledges that such name is
included
with the Assets and that the exclusive right to use such name will
be
transferred to the Buyer on the Closing Date. Each Seller and
the Shareholders shall, at the Closing, cause the filing of an appropriate
amendment to such Seller’s Certificate of Incorporation changing its name
to a name which is in no way similar to the corporate name set forth
on
the signature page hereof and shall furnish such written consents
and
assignments as the Buyer shall hereafter reasonably request in connection
with such name change.
|
|
11.
|
The
Sellers and the Buyer shall have entered into the Owned Real Estate
Leases and Landlord’s Agreements and shall have caused the
landlord under the Real Estate Lease to consent to the Buyer’s occupancy
of the premises in the same manner as held by
Sellers.
|
|
12.
|
CONDITIONS
TO SELLERS’ AND BUYER’S OBLIGATIONS
|
|
(a)
|
Conditions
to Obligations of the Sellers. The obligations of the Sellers
to carry out the transactions contemplated by this Agreement are
subject,
at the option of the Sellers to the commercially reasonable satisfaction,
or waiver by the Sellers, of the following
conditions:
|
-40-
|
|
(A)
|
Buyer
shall have furnished the Sellers with a certified copy of all necessary
company action on its behalf to approve its execution, delivery and
performance of this Agreement.
|
|
|
(B)
|
All
representations and warranties of Buyer contained in this Agreement
shall
be true and correct in all material respects at and as of the Closing,
and
Buyer shall have performed and satisfied in all material respects
all
covenants and agreements required by this Agreement to be performed
and
satisfied by Buyer at or prior to the
Closing.
|
|
|
(C)
|
As
of the Closing Date, no suit, action or other proceeding (excluding
any
such matter initiated by or on behalf of the Sellers or any Shareholder)
shall be pending or threatened before any Governmental Authority
seeking
prohibit the Closing as a result of the consummation of this Agreement.
|
|
|
(D)
|
Buyer
shall have executed an employment agreement with Xxxx in the same
form as
set forth in
Schedule 7(c)(A).
|
|
|
(E)
|
Buyer
shall have executed an employment agreement with Xxxxx in the same
form as
set forth in Schedule 7(c)(B).
|
|
|
(F)
|
Buyer
shall have executed a consulting agreement with Xxxxx in the same
form as
set forth in Schedule 7(c)(D).
|
|
(b)
|
Conditions
to Obligations of Buyer. The obligations of Buyer to carry out
the transactions contemplated by this Agreement are subject, at the
option
of Buyer, to the commercially reasonable satisfaction, or waiver
by Buyer,
of the following conditions:
|
|
|
(A)
|
All
representations and warranties of the Sellers and the Shareholders
contained in this Agreement shall be true and correct in all material
respects at and as of the Closing, and the Sellers and the Shareholders
shall have performed and satisfied in all material respects all agreements
and covenants required by this Agreement to be performed and satisfied
by
them at or prior to the Closing.
|
|
|
(B)
|
As
of the Closing Date, no suit, action or other proceeding (excluding
any
such matter initiated by or on behalf of Buyer) shall be pending
or
threatened before any court or governmental agency seeking to prohibit
the
Closing as a result of the consummation of this
Agreement.
|
|
|
(C)
|
Except
for matters disclosed in Schedule 8(n)(A) or 8(n)(B), since the Balance
Sheet Date and up to and including the Closing, there shall not have
been
any event, circumstance, change or effect that, individually or in
the
aggregate, had or might have a material adverse effect on the Sellers’
business, operations, prospects, Properties or financial
condition.
|
-41-
|
|
(D)
|
The
Buyer shall have received the opinion of Xxxxxxxxxx Xxxxxxxx P.C.,
counsel
to the Sellers (“Company Counsel”), dated as of the Closing Date,
addressed to the Buyer and in form and substance reasonably satisfactory
to the Buyer, to the effect set forth on Exhibit 12(b)(D)
hereto.
|
|
|
(E)
|
The
Sellers shall have furnished Buyer with a certified copy of all necessary
corporate action on its behalf approving the Sellers’ execution, delivery
and performance of this Agreement.
|
|
|
(F)
|
Buyer
shall have received written evidence, in form and substance satisfactory
to Buyer, of the consent to the transactions contemplated by this
Agreement of all governmental, quasi-governmental and private third
parties (including, without limitation, persons or other entities
leasing
real or personal property to the Company) where the absence of any
such
consent would result in a violation of law or a breach or default
under
any agreement to which the Company is
subject.
|
|
|
(G)
|
No
proceeding in which any of the Shareholders or the Sellers shall
be a
debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against
such
person under any United States, state or foreign bankruptcy or insolvency
law.
|
|
|
(H)
|
Satisfactory
completion of business, legal and accounting due diligence by each
of the
Buyer and Buyer’s lender providing financing in connection with the
transactions contemplated hereby, within thirty (30) days of the
signing
of this Agreement.
|
|
|
(I)
|
[Intentionally
Deleted].
|
|
|
(J)
|
Xxxxx
and Xxxx shall have executed and delivered their respective Employment
Agreements.
|
|
|
(K)
|
Sellers
shall have executed an appropriate notice of sale and request of
continuance of the Kohler distribution agreement to Kohler in
substantially the same form attached as Exhibit
12(b)(K).
|
|
|
(L)
|
Sellers
shall have filed a request for the Waiver of Tax Lien and shall deliver
such Waiver of Tax Lien promptly to the Buyer upon
receipt.
|
|
|
(M)
|
Sellers
shall have filed on the date of the signing of this Agreement a request
for a certificate from the Massachusetts Department of Revenue as
to the
good standing of, and the payment of taxes by, each of the Sellers
as of
the date of the signing of the Agreement and shall promptly deliver
such
certificate to the Buyer upon
receipt.
|
|
|
(N)
|
The
Sellers shall have simultaneously with the Closing of this Agreement
executed the Owned Real Estate Leases and Landlord’s
Agreements.
|
-42-
|
13.
|
POST-CLOSING
OBLIGATIONS. Further Assurances
|
|
(a)
|
Following
the Closing, the Sellers, the Shareholders and the Buyer shall execute
and
deliver such documents, and take such other action, as shall be reasonably
requested by any other party hereto to carry out the transactions
contemplated by this Agreement.
|
|
(b)
|
Sellers
shall give proper notice to all vendors that Sellers agreed to sell
the
Business to the Buyer in accordance with the terms and conditions
of this
Agreement. .
|
|
(c)
|
Post-Closing
Indemnity
|
|
(A)
|
The
Sellers and the Majority Shareholders shall jointly and severally
indemnify and hold harmless Buyer from and against any and all damages
arising out of, resulting from or in any way related to (i) a breach
of or
the failure to perform or satisfy any of the representations, warranties,
covenants and agreements made by each Seller and each Shareholder
in this
Agreement or in any document or certificate delivered by the Sellers
at
the Closing pursuant hereto, (ii) the occurrence of any event on
or prior
to the date of Closing that is (or would be, but for any deductible
thereunder) covered by individual policies of insurance, blanket
insurance
policies or self insurance programs maintained by the Sellers, (iii)
the
Excluded Assets, (iv) the existence of any liabilities or obligations
of
the Sellers (whether accrued, absolute, contingent, known or unknown,
or
otherwise, and whether or not of a nature appropriate for inclusion
in a
balance sheet in accordance with GAAP) other than the Assumed Obligations
or (v) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing
or
incurred in investigating or attempting to avoid the same or to oppose
the
imposition thereof, or in enforcing this
indemnity. Notwithstanding the above, the Buyer shall be
entitled to indemnification only in the event that the aggregate
amount
for which the Buyer is entitled to indemnification (excluding the
limitation of this sentence) exceeds $ 25,000. It is expressly understood
that in the event the aggregate amount of indemnification exceeds
$25,000,
Buyer shall be entitled to receive the total amount of indemnification
amount from the first dollar.
|
|
|
(B)
|
In
the event that Buyer is entitled to indemnification hereunder in
any
amount and any amounts are then held in escrow by the Escrow Agent
under
the Escrow Agreement, Xxxxx (on behalf of the Sellers) shall forthwith
join with Buyer in a written direction to the Escrow Agent to release
such
amount to Buyer. To the extent that the amount of the required
indemnification exceeds the amounts then available for release from
escrow
by the Escrow Agent, Sellers and the Majority Shareholders shall
jointly
and severally pay the excess to Buyer
forthwith.
|
|
(C)
|
On
the first anniversary of the Closing, Xxxxx (on behalf of the Sellers)
shall join with Buyer in a written direction to the Escrow Agent
to
release to the Company (on behalf of the Sellers) all amounts then
held in
escrow (together with any earnings thereon) which Escrow Agent is
not then
required to release to Buyer and which are not then subject to any
dispute
under this Agreement.
|
-43-
|
|
(D)
|
In
the event that there is any dispute on whether any party is required
to
sign any direction to the Escrow Agent hereunder, such dispute shall
be
resolved exclusively by arbitration by the American Arbitration
Association in Great Barrington, Massachusetts. In the event that
the
parties agree that a direction to the Escrow Agent is required to
a given
extent but dispute whether such direction is required for any excess
amount, then the parties shall execute such direction for to the
given
amount as to which there is no dispute, and the dispute on the excess
amount shall be submitted to arbitration as
aforesaid.
|
|
|
(E)
|
Buyer
shall indemnify and hold harmless Sellers from and against any and
all
damages arising out of, resulting from or in any way related to Buyer’s
failure to make payments under the Assumed
Obligations.
|
|
|
(F)
|
If
any claim or demand for which an Indemnifying Party would be liable
to an
Indemnified Party is asserted against or sought to be collected from
the
Indemnified Party by a third party, Indemnified Party shall with
reasonable promptness notify in writing the Indemnifying Party of
such
claim or demand stating with reasonable specificity the circumstances
of
the Indemnified Party’s claim for indemnification; provided, however, that
any failure to give such notice will not waive any rights of the
Indemnified Party except to the extent the rights of the Indemnifying
Party are actually prejudiced. After receipt by the
Indemnifying Party of such notice, then upon reasonable notice from
the
Indemnifying Party to the Indemnified Party, or upon the request
of the
Indemnified Party, the Indemnifying Party shall defend, manage and
conduct
any proceedings, negotiations or communications involving any claimant
whose claim is the subject of the Indemnified Party’s notice to the
Indemnifying Party as set forth above, and shall take all actions
necessary, including, but not limited to, the posting of such bond
or
other security as may be required by any Governmental Authority,
so as to
enable the claim to be defended against or resolved without expense
or
other action by the Indemnified Party. Upon request of the
Indemnifying Party, the Indemnified Party shall, to the extent it
may
legally do so and to the extent that it is compensated in advance
by the
Indemnifying Party for any costs and expenses thereby
incurred,
|
|
|
(1)
|
take
such action as the Indemnifying Party may reasonably request in connection
with such action,
|
|
|
(2)
|
allow
the Indemnifying Party to dispute such action in the name of the
Indemnified Party and to conduct a defense to such action on behalf
of the
Indemnified Party, and
|
|
|
(3)
|
render
to the Indemnifying Party all such assistance as the Indemnifying
Party
may reasonably request in connection with such dispute and
defense.
|
-44-
|
|
(G)
|
In
any action or proceeding, the Indemnified Party shall have the right
to
retain its own counsel, but, in the event the Sellers are the Indemnified
Party, Sellers shall have the right to retain only one counsel on
behalf
of all the Sellers; but the fees and expenses of such counsel shall
be at
its own expense unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel
or (ii)
the named parties to any suit, action or proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party and representation of all parties by the same counsel would
be
inappropriate due to actual or potential conflict of interests between
them.
|
|
|
(H)
|
An
Indemnifying Party shall not be liable under this Agreement for any
settlement effected without its consent of any claim, litigation
or
proceeding in respect of which indemnity may be sought
hereunder.
|
|
|
(I)
|
The
Indemnifying Party may settle any claim without the consent of the
Indemnified Party, but only if the sole relief awarded is monetary
damages
that are paid in full by the Indemnifying Party. The Indemnified
Party
shall, subject to its reasonable business needs, use reasonable efforts
to
minimize the indemnification sought from the Indemnifying Party under
this
Agreement.
|
|
(d)
|
Non-Competition,
Non-Solicitation and Non-Disclosure
|
|
|
(A)
|
General. In
consideration of the payment of the Purchase Price, and in order
to induce
the Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, each Seller and each Shareholder (other than
for
Xxxxx and Xxxx, who shall each be subject to the terms and conditions
of
the Non-Compete, Non-Solicitation and Non-Disclosure set forth in
their
individual employment agreements) hereby covenants and agrees as
follows:
|
|
|
(1)
|
Without
the prior written consent of the Buyer, neither any Seller (nor
any Affiliate of Seller) nor any Shareholder (nor any Affiliate of
any
Shareholder) shall for a period of three (3) years from and after
the
Closing Date (A) directly or indirectly acquire or own in any manner
any
interest (whether through a debt or equity instrument) in any person
,
firm, partnership, corporation, association or other entity (including
the
Company) which engages or plans to engage in any facet of the Business
or
which competes or plans to compete in any way with the Buyer or any
of its
subsidiaries or Affiliates anywhere within a 50 mile radius of any
of the
Owned Premises, Owned Real Estate, Real Property and/or Leased Premises
(the “Territory”), (B) be employed by or serve as an employee, agent,
officer, director of, or as a consultant to, any person, firm,
partnership, corporation, association or other entity which engages
or
plans to engage in any facet of the Business or which competes
or plans to compete in any way with the Buyer or any of its subsidiaries
or Affiliates within the Territory, or (C) utilize its or his special
knowledge of the business of each Seller and his or its relationships
with
customers, suppliers and others to compete with Buyer and/or its
Affiliates in any business which engages or plans to engage in any
facet
of the Business; provided, however, that nothing herein shall be
deemed to
prevent either Seller or either Shareholder from (x) acquiring through
market purchases and owning, solely as a passive investment, less
than one
percent in the aggregate of the equity securities of any class of
any
issuer whose shares are registered under §12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, and are listed or admitted for
trading
on any United States national securities exchange or are quoted on
the
National Association of Securities Dealers Automated Quotation System,
or
any similar system of automated dissemination of quotations of securities
prices in common use, so long as such Seller or such Shareholder
is not a
member of any “control group” (within the meaning of the rules and
regulations of the United States Securities and Exchange Commission)
of
any such issuer. Each Seller and each Shareholder acknowledges
and agrees that the covenants provided for in this Section are reasonable
and necessary in terms of time, area and line of business to protect
the
Sellers’ Trade Secrets. Each Seller and each Shareholder
further acknowledges and agrees that such covenants are reasonable
and
necessary in terms of time, area and line of business to protect
the
Buyer’s legitimate business interests, which include its interests in
protecting the Buyer’s (i) valuable confidential business information,
(ii) substantial relationships with customers, and (iii) customer
goodwill
associated with the ongoing Business. Each Seller and each
Shareholder hereby expressly authorizes the enforcement of the covenants
provided for in this Section by (A) the Buyer and its subsidiaries,
(B)
the Buyer’s permitted assigns, and (C) any successors to the Buyer’s
business. To the extent that the covenants provided for in this
Section may later be deemed by a court to be too broad to be enforced
with
respect to its duration or with respect to any particular activity
or
geographic area, the court making such determination shall have the
power
to reduce the duration or scope of the provision, and to add or delete
specific words or phrases to or from the provision. The
provision as modified shall then be
enforced.
|
-45-
|
|
(2)
|
Without
the prior consent of Buyer, neither any Seller (nor any Affiliate
of any
Seller) nor any Shareholder (nor any Affiliate of any Shareholder),
shall
for a period of three (3) years from the Closing Date, directly or
indirectly, for itself or himself or for any other person, firm,
corporation, partnership, association or other entity (including
the
Company), (A) solicit any of the Sellers’ employees employed in the
Business, (B) call on or solicit any of the actual customers or clients
of
the Business, nor shall any Seller (or any Affiliate of Seller)
or any Shareholder (or any Affiliate of any Shareholder), make known
the
names and addresses of such customers or any information relating
in any
manner to the Sellers’ trade or business relationships with such
customers, (C) in any manner, directly or indirectly, attempt to
seek to
cause any entity to refrain from dealing or doing business with the
Buyer
or assist any entity in doing so or attempting to do so or (D) employ
any
employees of Buyer.
|
-46-
|
|
(3)
|
Neither
any Seller (nor any Affiliate of any Seller) nor any
Shareholder (nor any Affiliate of any Shareholder), shall at
any time divulge, communicate, use to the detriment of the Buyer
or for
the benefit of any other person or persons, or misuse in any way,
any
Confidential Information pertaining to the Business. Any
confidential information or data now known or hereafter acquired
by the
either any Seller or any Shareholder, with respect to the
Business shall be deemed a valuable, special and unique asset of
the Buyer
that is received by the either any Seller or any Shareholder,
in confidence and as a fiduciary, and each Seller and each Shareholder,
shall remain a fiduciary to the Buyer with respect to all of such
information.
|
|
|
(4)
|
Injunction. It
is recognized and hereby acknowledged by the parties hereto that
a breach
or violation by either any Seller or any Shareholder of any or
all of the covenants and agreements contained in this Section may
cause
irreparable harm and damage to Buyer in a monetary amount which may
be
virtually impossible to ascertain. As a result, each Seller and
each Shareholder recognizes and hereby acknowledges that Buyer shall
be
entitled (without the requirement of posting a bond) to an injunction
from
any court of competent jurisdiction enjoining and restraining any
breach
or violation of any or all of the covenants and agreements contained
in
this Section by the each of the Sellers and each of the Shareholders,
and/or its associates, Affiliates, partners or agents, either directly
or
indirectly, and that such right to injunction shall be cumulative
and in
addition to whatever other rights or remedies the Buyer may possess
hereunder, at law or in equity. Nothing contained in this
Section shall be construed to prevent Buyer from seeking and recovering
from the either any Seller or any Shareholder, or both, jointly and
severally, damages sustained by it as a result of any breach or violation
by either any Seller or any Shareholder, or both, of any of the
covenants or agreements contained
herein.
|
|
(e)
|
Delivery
of Property Received by the Company After
Closing
|
|
|
(A)
|
From
and after the Closing, Buyer shall have the right and authority to
collect, for the account of Buyer, all receivables and other items
which
shall be transferred or are intended to be transferred to Buyer as
part of
the Assets as provided in this Agreement, and to endorse with the
name of
the Sellers any checks or drafts received on account of any such
receivables or other Assets. Each Seller agrees that it will
transfer or deliver to Buyer, promptly after the receipt thereof,
any cash
or other property which such Seller receives after the Closing Date
in
respect of any claims, contracts, licenses, leases, commitments,
sales
orders, purchase orders, receivables of any character or any other
items
transferred or intended to be transferred to Buyer as part of the
Assets
under this Agreement.
|
-47-
|
(f)
|
Assignment
of Contracts
|
|
|
(A)
|
At
the option of Buyer, and notwithstanding anything in this Agreement
to the
contrary, this Agreement shall not constitute an assignment of any
claim,
contract, license, franchise, lease, commitment, sales order, sales
contract, supply contract, service agreement, purchase order or purchase
commitment if an attempted assignment thereof without the consent
of a
third party thereto would constitute a breach thereof or in any way
adversely affect the rights of Buyer thereunder. If such
consent is not obtained, or if any attempt at an assignment thereof
would
be ineffective or would affect the rights of the Sellers thereunder
so
that Buyer would not in fact receive all such rights, the Sellers
shall
cooperate at its own expense with Buyer to the extent necessary to
provide
for Buyer the benefits under such claim, contract, license, franchise,
lease, commitment, sales order, sales contract, supply contract,
service
agreement, purchase order or purchase commitment, including enforcement
for the benefit of Buyer of any and all rights of the Sellers against
a
third party thereto arising out of the breach or cancellation by
such
third party or otherwise.
|
|
(g)
|
Corporate
Existence. Each Seller shall maintain its corporate existence
unchanged and in full force and effect for at least six months
following the Closing Date.
|
MISCELLANEOUS
|
14.
|
Limitation
on Liability.
|
|
(a)
|
Representations
and Warranties. Each of the representations and warranties of
each of the parties to this Agreement shall be deemed to have been
made,
and the certificates delivered pursuant to Section 7(a)(B) and Section
7(b)(D) by a party are agreed to and shall be deemed to constitute
the
making of such representations and warranties, again at and as of
the
Closing by and on behalf of the party on behalf of whom such certificates
are delivered.
|
|
(b)
|
Survival.
|
|
|
(A)
|
The
representations and warranties of each party shall survive the execution
and delivery of this Agreement and the Closing hereunder and shall
thereafter continue in full force for 12 full calendar months after
the
Closing Date. However, the representations and warranties contained
in
Section 8(d) (Taxes) and Section 10(g)(i) (health care continuation
requirements under ERISA and section 4980B of the Code) shall continue
until 30 days after all liability relating thereto is barred by all
applicable statutes of limitation; and the representations and warranties
contained in Sections 8(q)(A) (Asbestos) and Section 8(w)(B) and
8(w)
(Environmental) shall survive forever. If any claim for indemnification
hereunder that has been previously asserted by a party to this Agreement
in accordance with this Agreement
is still pending at the expiration of the applicable survival period,
such
claim shall continue to be subject to the indemnification provisions
of
this Agreement until resolved.
|
-48-
|
|
(B)
|
The
covenants, agreements and indemnification and other obligations of
the
parties shall survive the execution and delivery of this Agreement
and the
Closing hereunder and shall thereafter continue in full
force.
|
|
15.
|
Confidentiality.
|
|
(a)
|
The
existing Non-Disclosure Agreement by Buyer or its affiliates in favor
of
the Company shall continue in full force and effect until the
Closing.
|
|
(b)
|
The
Sellers and Shareholders shall, and shall cause their respective
Affiliates, employees, agents, accountants, legal counsel and other
representatives and advisers to, hold in strict confidence all, and
not
divulge or disclose any, information of any kind concerning the
transactions contemplated by this Agreement, the Sellers, Buyer or
their
respective businesses; provided, however, that the foregoing obligation
of
confidence shall not apply to (i) information that is or becomes
generally
available to the public other than as a result of a disclosure by
the
Sellers or Shareholders, or any of its Affiliates, employees, agents,
accountants, legal counsel or other representatives or advisers,
(ii)
information that is or becomes available to the Sellers or Shareholders
or
any of Sellers and Shareholders Affiliates, employees, agents,
accountants, legal counsel or other representatives or advisers after
the
Closing on a nonconfidential basis prior to its disclosure by the
Sellers
or Shareholders, or any Affiliates of the Sellers or the Shareholders,
employees, agents, accountants, legal counsel or other representatives
or
advisers and (iii) information that is required to be disclosed by
the
Sellers or any of its Affiliates, or the Shareholders and their
Affiliates, employees, agents, accountants, legal counsel or other
representatives or advisers as a result of any applicable law, rule
or
regulation of any Governmental Authority; and provided further that
the
Sellers and Shareholders shall promptly shall notify Buyer of any
disclosure pursuant to clause (ii) of this
Section.
|
|
(c)
|
Notwithstanding
anything herein to the contrary, any party to this agreement (and
each
employee, representative, or other agent of such party) may disclose
to
any and all persons, without limitation of any kind, the tax treatment
and
tax structure of any transaction contemplated by this Agreement and
all
materials of any kind (including opinions and other tax analyses)
that are
provided to the party relating to such tax treatment and tax
structure.
|
|
(d)
|
So
long as this Agreement is in effect neither the Sellers nor either
Shareholder shall entertain, negotiate or deal with, or provide any
Confidential Information to, any person or entity who or which proposes
to
purchase all or any substantial part of the assets of any Seller
other
than in the ordinary course of business, or to purchase from any
Seller or
any Shareholder any equity interest in any
Seller.
|
-49-
|
16.
|
Brokers.
Regardless of whether the Closing shall occur, (i) the Sellers and
the
Majority Shareholders shall jointly and severally indemnify and hold
harmless Buyer from and against any and all liability for any brokers
or
finders’ fees arising with respect to brokers or finders retained or
engaged by the Sellers or any of the Shareholders in respect of the
transactions contemplated by this Agreement, and (ii) Buyer shall
indemnify and hold harmless the Sellers from and against any and
all
liability for any brokers’ or finders’ fees arising with respect to
brokers or finders retained or engaged by Buyer in respect of the
transactions contemplated by this
Agreement.
|
|
17.
|
Costs
and Expenses. Each of the parties to this Agreement shall bear
his or its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement and the transactions
contemplated hereby, except that Sellers shall pay all sales and
excise
and similar taxes, in connection with this
transaction.
|
|
18.
|
Notices.
|
Any
notice, request, instruction, correspondence or other document to be given
hereunder by any party hereto to another (herein collectively called “Notice”)
shall be in writing and delivered personally or mailed by registered or
certified mail, postage prepaid and return receipt requested, as
follows:
|
IF
TO BUYER:
|
Xxxxxxx
Xxxxxx
|
c/o
Universal Supply Group, Inc.
000
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
With
a
copy to:
Xxxxx
X.
Xxxxxx, Esq.
000
Xxxxx
Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Fax
No.
(000) 000-0000
Tel
No.
(000) 000-0000
-50-
|
IF
TO THE COMPANY AND/OR THE
|
Xxxxx
Xxxx, President
|
|
Shareholder:
|
0
Xxxxxxxx Xxxxxx
|
|
|
Xxxxx
Xxxxxxxxxx, 00000
|
|
|
With
a copy to:
|
|
|
Xxxx
X. Xxxxxxxxxx
|
Xxxxxxxxxx
Xxxxxxxx P.C.
000
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Each
of
the above addresses for notice purposes may be changed by providing appropriate
notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by
telecopier shall be effective upon actual receipt if received during the
recipient’s normal business hours, or at the beginning of the recipient’s next
normal business day after receipt if not received during the recipient’s normal
business hours. All Notices by telecopier shall be confirmed by the
sender thereof promptly after transmission in writing by registered mail or
personal delivery. Anything to the contrary contained herein
notwithstanding, notices to any party hereto shall not be deemed effective
with
respect to such party until such Notice would, but for this sentence, be
effective both as to such party and as to all other persons to whom copies
are
provided above to be given.
|
19.
|
Governing
Law. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance
with the laws of the State of Massachusetts (excluding any conflict
of law
rule or principle that would refer to the laws of another
jurisdiction).
|
|
20.
|
Dispute
Resolution.
|
|
(a)
|
THE
PARTIES AGREE THAT, EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
AGREEMENT, THE FEDERAL COURTS IN SPRINGFIELD MASSACHUSETTS AND
STATE COURTS IN BERKSHIRE COUNTY, MASSACHUSETTS SHALL HAVE EXCLUSIVE
JURISDICTION ON ALL MATTERS ARISING OUT OF OR CONNECTED IN ANY WAY
WITH
THIS AGREEMENT, AND SELLERS AND BUYER FURTHER AGREE THAT THE SERVICE
OF
PROCESS OR OF ANY OTHER PAPERS UPON THEM OR ANY OF THEM IN THE MANNER
PROVIDED FOR NOTICES HEREUNDER SHALL BE DEEMED GOOD, PROPER AND EFFECTIVE
SERVICE UPON THEM.
|
-51-
|
(b)
|
EACH
OF THE SELLERS, SHAREHOLDERS AND BUYER HEREBY WAIVES ITS RIGHT TO
A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN
CONNECTION WITH THIS AGREEMENT, THE COLLATERAL AGREEMENTS OR ANY
OF THE
OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR
THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
|
|
21.
|
Entire
Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the
entire
agreement between and among the parties hereto pertaining to the
subject
matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties,
and
there are no warranties, representations or other agreements between
the
parties in connection with the subject matter hereof except as set
forth
specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless
executed
in writing by the party to be bound thereby. No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute
a
waiver of any other provision hereof (regardless of whether similar),
nor
shall any such waiver constitute a continuing waiver unless otherwise
expressly provided.
|
|
22.
|
Binding
Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns; but neither this Agreement nor any of the
rights,
benefits or obligations hereunder shall be assigned, by operation
of law
or otherwise, by any party hereto without the prior written consent
of the
other party, provided, however, that nothing herein shall prohibit
the
assignment of Buyer’s rights and obligations to any direct or indirect
subsidiary or prohibit the assignment of Buyer’s rights (but not
obligations) to any lender. Nothing in this Agreement, express
or implied, is intended to confer upon any person or entity other
than the
parties hereto and their respective permitted successors and assigns,
any
rights, benefits or obligations
hereunder.
|
|
23.
|
Remedies. The
rights and remedies provided by this Agreement are cumulative, and
the use
of any one right or remedy by any party hereto shall not preclude
or
constitute a waiver of its right to use any or all other
remedies. Such rights and remedies are given in addition to any
other rights and remedies a party may have by law, statute or
otherwise.
|
|
24.
|
Multiple
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which
together shall constitute one and the same
instrument.
|
-52-
|
25.
|
References
and Construction.
|
|
(a)
|
Whenever
required by the context, and is used in this Agreement, the singular
number shall include the plural and pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular
or
plural, as the identification the person may require. The
provisions of this Agreement shall be construed according to their
fair
meaning and neither for nor against any party hereto irrespective
of which
party caused such provisions to be drafted. Each of the parties
acknowledge that it has been represented by an attorney in connection
with
the preparation and execution of this Agreement. References to monetary
amounts, specific named statutes and generally accepted accounting
principles are intended to be and shall be construed as references
to
United States dollars, statutes of the United States of the stated
name
and United States generally accepted accounting principles, respectively,
unless the context otherwise
requires.
|
|
(b)
|
The
provisions of this Agreement shall be construed according to their
fair
meaning and neither for nor against any party hereto irrespective
of which
party caused such provisions to be drafted. Each of the parties
acknowledge that it has been represented by an attorney in connection
with
the preparation and execution of this
Agreement.
|
|
26.
|
Risk
of Loss. Prior to the Closing, the risk of loss of damage to,
or destruction of, any and all of the Sellers’, including without
limitation the Properties, shall remain with the Seller, and the
legal
doctrine known as the “Doctrine of Equitable Conversion” shall not be
applicable to this Agreement or to any of the transactions contemplated
hereby.
|
|
27.
|
Each
party hereto shall cooperate, shall take such further action and
shall
execute and deliver and further document as may be reasonably requested
by
the other party in order to carry out the provisions and purposes
of this
Agreement.
|
|
28.
|
DEFINITIONS Capitalized
terms used in this Agreement are used as defined in this Section
or
elsewhere in this Agreement.
|
|
(a)
|
Affiliate. The
term “Affiliate” shall mean, with respect to any person, any other person
controlling, controlled by or under common control with such
person. The term “Control” as used in the preceding sentence
means, with respect to a corporation, the right to exercise, directly
or
indirectly, more than 50% of the voting rights attributable to the
shares
of the controlled corporation and, with respect to any person other
than a
corporation, the possession, directly or indirectly, of the power
to
direct or cause the direction of the management or policies of such
person.
|
|
(b)
|
Collateral
Agreements. The term “Collateral Agreements” shall mean the any
or all of the exhibits to this Agreement and any and all other agreements,
instruments or documents required or expressly provided under this
Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement.
|
-53-
|
(c)
|
Confidential
Information. Any information not generally known in the
relevant field or industry about the Sellers’ processes, activities,
services or products, including software, patents, Inventions, know-how,
trade secrets and information relating to research, development,
purchase,
accounting, marketing, merchandising, pricing, vendors, selling and
customer lists. “Inventions” shall mean and include
discoveries, concepts and ideas, whether patentable or not, including
but
not limited to processes, methods, designs, formulas, and techniques,
as
well as improvements thereof or know-how related thereto, which have
been
reduced to written form in some
manner.
|
|
(d)
|
Contracts. The
term “Contracts,” when described as being those of or applicable to any
Person, shall mean any and all contracts, agreements, franchises,
understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages,
bonds,
notes, guaranties, liens, indebtedness, approvals or other instruments
or
undertakings to which such person is a party or to which or by which
such
person or the property of such person is subject or bound, excluding
any
Permits.
|
|
(e)
|
Damages. The
term “Damages” shall mean any and all damages, liabilities, obligations,
penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses
and assessments (including without limitation income and other taxes,
interest, penalties and attorneys’ and accountants’ fees and
disbursements).
|
|
(f)
|
Financial
Statements. The term “Financial Statements” shall mean any or
all of the financial statements, including balance sheets and related
statements of income and cash flows and the accompanying notes thereto,
of
the Company prepared in accordance with generally accepted accounting
principles consistently applied, except as may be otherwise provided
herein.
|
|
(g)
|
GAAP. “GAAP”
means U.S. generally accepted accounting principles, consistently
applied
with the Sellers’ past practices.
|
|
(h)
|
Governmental
Authorities. The term “Governmental Authorities” shall mean any
nation or country (including but not limited to the United States)
and any
commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to
courts,
departments, commissions, boards, bureaus, agencies, ministries or
other
instrumentalities.
|
-54-
|
(i)
|
Hazardous
Material. The term “Hazardous Material” shall mean all or any
of the following: (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations
as
“hazardous substances,” “hazardous materials,” “Hazardous wastes,” “toxic
substances” or any other formulation intended to define, list or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity or
“EP
toxicity”; (b) oil, petroleum or petroleum derived substances, natural
gas, natural gas liquids or synthetic gas and drilling fluids, produced
waters and other wastes associated with the exploration, development
or
production of crude oil, natural gas or geothermal resources; (c)
any
flammable substances or explosives or any radioactive materials;
and (d)
asbestos in any form or electrical equipment which contains any oil
or
dielectric fluid containing levels of polychlorinated biphenyls in
excess
of fifty parts per million.
|
|
(j)
|
Inventory. The
term “Inventory” shall mean all goods, merchandise and other personal
property owned and held for sale, and all raw materials, works-in-process,
materials and supplies of every nature which contribute to the finished
products of the Sellers in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise
unsaleable items.
|
|
(k)
|
Legal
Requirements. The term “Legal Requirements,” when described as
being applicable to any person, shall mean any and all laws (statutory,
judicial or otherwise), ordinances, regulations, judgments, orders,
directives, injunctions, writs, decrees or awards of, and any Contracts
with, any Governmental Authority, in each case as and to the extent
applicable to such person or such person’s business, operations or
properties.
|
|
(l)
|
Liens:
The term “Liens” shall mean any and all liens, encumbrances, mortgages,
security interests, pledges, claims, equities, charges and other
restrictions or limitations of any kind or nature
whatsoever.
|
|
(m)
|
Permits. The
term “Permits” shall mean any and all permits, rights, approvals,
licenses, authorizations, legal status, orders or Contracts under
any
Legal Requirement or otherwise granted by any Governmental
Authority.
|
|
(n)
|
Person. The
term “Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, limited liability
partnership, trust or other enterprise or any governmental or political
subdivision or any agency, department or instrumentality
thereof.
|
|
(o)
|
Product. The
term “Product” shall mean each product under development, developed,
manufactured, licensed, distributed or sold by the Sellers and any
other
products in which the Sellers have any proprietary rights or beneficial
interest.
|
|
(p)
|
Properties. The
term “Properties” shall mean any and all properties and assets (real,
personal or mixed, tangible or intangible) owned or Used by the Sellers,
including all Assets to be conveyed to Buyer pursuant to this
Agreement.
|
-55-
|
(q)
|
Real
Property. The term “Real Property” shall mean the real property
Used by the Company in the conduct of its
business.
|
|
(r)
|
Subsidiary. The
term “Subsidiary” shall mean any Person of which a majority of the
outstanding voting securities or other voting equity interests are
owned,
directly or indirectly, by any
Seller.
|
|
(s)
|
Trade
Secrets. The term “Trade Secrets” shall mean information of the
Sellers including, but not limited to, technical or nontechnical
data,
formulas, patterns, compilations, programs, financial data, financial
plans, product or service plans or lists of actual or potential customers
or suppliers which (i) derives economic value, actual or potential,
from
not being generally known to, and not being readily ascertainable
by
proper means by, other persons who can obtain economic value from
its
disclosure or use, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its
secrecy.
|
|
(t)
|
Used. The
term “Used” shall mean, with respect to the Properties, Contracts or
Permits of the Sellers, those owned, leased, licensed or otherwise
held by
the Sellers which were acquired for use or held for use by the Sellers
in
connection with the Sellers’ business and operations, whether or not
reflected on the Sellers’ books of
account.
|
[Signature
Page Follows]
-56-
EXECUTED
as of the date first written above.
|
S&A
Purchasing Corp.:
|
Colonial
Commercial Corp., with regard to Section 2(e) only
|
|||
|
By:
|
/s/
Xxxxxxx Xxxxxx
|
By:
|
/s/
Xxxxxxx Xxxxxx
|
|
|
Name:
|
Xxxxxxx
Xxxxxx
|
Name:
|
Xxxxxxx
Xxxxxx
|
|
|
Title:
|
President
|
Title:
|
Chief
Executive Officer
|
|
SELLERS:
|
S&A
Supply, Inc.
|
S&A
Realty, Inc.
|
S&A
Management, Inc.
|
|||||
|
By:
|
/s/
Xxxxx Xxxx
|
By:
|
/s/
Xxxxx Xxxx
|
By:
|
/s/
Xxxxx Xxxx
|
||
|
Name:
|
Xxxxx
Xxxx
|
Name:
|
Xxxxx
Xxxx
|
Name:
|
Xxxxx
Xxxx
|
||
|
Title:
|
President
|
Title:
|
President
|
Title:
|
President
|
||
SHAREHOLDERS:
|
/s/
Xxxxx Xxxx
|
The
Discretionary Trust under The Xxxxxx X. Xxxx Revocable Trust,
dated
|
/s/
Xxxx Xxxx
|
|||
|
Xxxxx
Xxxx
|
January
12, 1999
|
Xxxx
Xxxx
|
|||
|
By:
|
/s/
Xxxxx X. Xxxx
|
||||
|
Xxxxx
X. Xxxx, Trustee
|
|||||
|
By:
|
/s/
Xxxxxx X. Xxxx
|
||||
|
Xxxxxx
X. Xxxx, Trustee
|
|||||
| Escrow Agent | |||||
|
/s/
Xxxxx Xxxx
|
/s/
Xxxxx Xxxx
|
||||
|
Xxxxx
Xxxx
|
Xxxxx
Xxxx
|
Xxxxxxxxxx Xxxxxxxx P.C. | |||
|
By:
|
/s/
Xxxx X. Xxxxxxxxxx
|
||||
|
Xxxx
X. Xxxxxxxxxx
|
|||||
-1-
SCHEDULES
Schedule
1(a)(D)
Prepaid
Expenses, other assets, and excess rebates
|
Xxxxx
X. Xxxxxxx, Xx., Inc.
|
Gt.
Barrington Warehouse
|
$2,587.20
|
|
Xxxx
X. Xxxx Inc.
|
Gt.
Xxxx. Counter & Office
|
$5,565.00
|
|
Oil
Estimate of possible 990 gallons at 5/8 600 gallons
|
Pittsfield
Warehouse
|
$1,532.84
|
|
Total
|
$9,685.04
|
Health
Insurance
|
Insurance
|
Total
September Premium
|
2/3
USG Portion
|
|
BlueCross
Health
|
$20,952.35
|
$13,968.23
|
|
Guardian
Life, Dental, Disability
|
$
3,230.06
|
$
2,153.38
|
|
Prepaid
Insurance
|
Total
annual $17,234.00
|
$
2,393.61 (1.66/12)
|
|
Total
|
$18,515.22
|
Data
Processing
|
Company
|
Total
September Premium
|
2/3
USG Portion
|
|
Prophet
21/Activant
|
$2,178.18
|
$1,452.09
|
|
BSI
(printers)
|
$410.97
|
$ 273.98
|
|
Total
|
$1,726.07
|
Other
|
Service
/ company
|
Total
Amount
|
USG
Portion
|
|
Yellow
Pages
|
$4,290.00 paid
through
April
2008
|
7
2/3 months
$2740.83
|
|
Vendor
Rebates (detail attached)
|
$94,138.60
|
$94,
138.60
|
|
Prepaid
Vehicle Excise Tax
|
$5178.25
|
$3,020.65
Sept 07 – March 08 (7/12)
|
|
Total
|
$99,900.08
|
TOTAL
PREPAID $129,826.41
End
of Schedule
Schedule
1(a)(D) attachment
|
2007
Vender Rebate Estimates
|
||||||||||||||||
|
Plumbing
& Heating
|
||||||||||||||||
|
Vender
|
2006
total Sales
|
2006
Rebate
|
2007
YTD Purchases
|
2007
YTD Anticipated Rebate
|
||||||||||||
|
Xxxxxx
Manf
|
$ |
12,594.99
|
$ |
305.98
|
$ |
13,745.20
|
$ |
333.92
|
||||||||
|
Ridgid
|
$ |
88,549.36
|
$ |
1,758.29
|
$ |
37,959.07
|
$ |
753.74
|
||||||||
|
X.X.
Xxxxx
|
$ |
188,987.69
|
$ |
5,653.47
|
$ |
157,768.85
|
$ |
4,719.57
|
||||||||
|
Unico
|
$ |
158,466.15
|
$ |
7,303.68
|
$ |
59,551.27
|
$ |
2,744.71
|
||||||||
|
Charlotte
|
$ |
165,124.42
|
$ |
15,698.11
|
$ |
56,907.90
|
$ |
5,410.14
|
||||||||
|
Xxxxxxx
|
$ |
851,515.26
|
$ |
9,201.23
|
$ |
365,093.38
|
$ |
3,945.09
|
||||||||
|
Symmons
|
$ |
48,653.77
|
$ |
1,226.40
|
$ |
55,152.29
|
$ |
1,390.21
|
||||||||
|
Xxxxx
|
$ |
81,649.86
|
$ |
2,116.00
|
$ |
85,756.73
|
$ |
2,572.68
|
||||||||
|
Grohe
|
$ |
68,540.91
|
$ |
1,778.00
|
$ |
55,266.19
|
$ |
1,657.98
|
||||||||
|
American
Saw
|
$ |
35,060.33
|
$ |
1,020.32
|
$ |
26,586.08
|
$ |
797.58
|
||||||||
|
Kohler
|
$ |
17,742.00
|
||||||||||||||
|
Totals
|
$ |
46,061.48
|
$ |
42,067.63
|
||||||||||||
|
Electrical
|
||||||||||||||||
|
Vender
|
2006
total Sales
|
2006
Rebate
|
2007
YTD Purchases
|
2007
YTD Anticipated Rebate
|
||||||||||||
|
Wiremold
|
$ |
21,777.78
|
$ |
1,543.87
|
$ |
24,916.55
|
$ |
1,766.38
|
||||||||
|
Genisis
Cable
|
$ |
22,942.73
|
$ |
688.28
|
$ |
16,878.93
|
$ |
506.37
|
||||||||
|
Leviton
|
$ |
170,559.59
|
$ |
337.16
|
$ |
110,907.37
|
$ |
219.24
|
||||||||
|
United
Cop
|
$ |
367,687.58
|
$ |
10,500.00
|
$ |
252,433.15
|
$ |
10,500.00
|
||||||||
|
Dimplex
|
$ |
31,929.17
|
$ |
207.52
|
$ |
27,420.00
|
$ |
178.21
|
||||||||
|
Highland
|
$ |
73,847.96
|
$ |
3,146.79
|
$ |
78,040.49
|
$ |
5,462.00
|
||||||||
|
Siemens
|
$ |
212,688.29
|
$ |
2,364.08
|
$ |
152,379.36
|
$ |
1,523.00
|
||||||||
|
Equity
|
$ |
0.00
|
$ |
41,312.90
|
$ |
0.00
|
$ |
31,915.77
|
||||||||
|
Totals
|
$ |
52,070.97
|
||||||||||||||
|
Grand
Total
|
$ |
94,138.60
|
||||||||||||||
Schedule
1(a)(F)
Real
Estate Leases
S&A
Supply, Inc. Occupies premises at 000 Xxxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, XX
under a verbal month-to-month occupancy agreement with Xxxxx Xxxxx, the owner.
Xx. Xxxxx has agreed (per the attached letter) to continue the relationship
with
the Buyer.
 |
Schedule
1(a)(F) Attachment
|
September
6, 2007
|
To
Whom
It May Concern:
Please
consider this letter as my
acceptance of allowing S & A Purchasing Group to continue leasing property
from me at 000 Xxxxxxxxxxxxx Xxxxxx in North Xxxxx under the same terms and
conditions as S & A Supply, Inc currently does.
|
/s/
Xxxxx Xxxxx
|
9/6/2007
|
||
|
Xxxxx
Xxxxx
|
Date
|
00
Xxxxx
Xxx, Xxxxx Xxxxxxxxxx, XX 00000 (413) 528-3470
0000
Xxxx
Xxxxxx, Xxxxxxxxxx, XX 00000 (413) 443-9681
000
Xxxxxxxxxxxxx Xxx, Xxxxx Xxxxx, XX 00000 (413) 664-4454
Schedule
1(f)(D)
Certificates
of Occupancy
|
a)
|
00
Xxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, XX
|
-Town
Building Inspector is looking for
the C/O in Town archives
|
b)
|
00
Xxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, XX
|
-S&A
Supply, Inc. Must complete Handicapped Entrance to comply with Americans
with Disabilities Act before Town issues C/O on new construction. S&A
Realty, Inc. undertakes to complete this.
|
c)
|
0000
Xxxx Xxxxxx, Xxxxxxxxxx, XX
|
-C/O
attached
|
d)
|
000
Xxxxxxxxxxxxx xxxxxx, Xxxxx Xxxxx,
XX
|
–
Landlord has been requested to supply a copy
Attachment(s)
on file at the Company’ s corporate office
S&A
SUPPLY, INC.
VEHICLE
LOANS PAYABLE (Per 7/31/07 TB)
7/31/07
|
G/L
|
Bank
|
Vehicle
|
CI
|
LT
|
T
|
Proj.
Bal.
9/10/07
|
|||||||||||||||
|
242003
260603
|
Legacy
|
Ford
F-650 Box Truck
|
9,934
|
21,841
|
31,775
|
30,823
|
|||||||||||||||
|
|
|||||||||||||||||||||
|
242901
260901
|
Greylock
|
'05
Toyota Tundra
|
3,862
|
5,492
|
9,354
|
8,974
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
243001
267501
|
GMAC
|
'04
GMC Rack Body
|
6,470
|
4,461
|
10,931
|
10,391
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
243201
269001
|
GMAC
|
'04
Chevy Colorado
|
4,975
|
3,732
|
8,707
|
7,878
|
|||||||||||||||
|
|
|||||||||||||||||||||
|
243203
267503
|
Greylock
|
'07
Toyota Tundra
|
7,111
|
17,182
|
24,293
|
23,817
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
243401
261501
|
GMAC
|
'04
Chev. PU/w/plow (Silverado)
|
6,754
|
2,030
|
8,784
|
8,216
|
|||||||||||||||
|
|
|||||||||||||||||||||
|
244501
267801
|
Greylock
|
'05
Chev. 3/4
ton
(Silverado)
|
5,583
|
4,713
|
10,296
|
9,293
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
245005
267905
|
Greylock
|
'06
Ford F350 Rack
|
2,973
|
18,134
|
21,107
|
20,509
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
248603
|
Berkshire
|
'03
Chev.
|
000
|
000
|
-0-
|
||||||||||||||||
|
|
|
||||||||||||||||||||
|
248703
262003
|
Greylock
|
'05
Chev. 1/2 ton (Silverado)
|
5,401
|
4,543
|
9,944
|
8,954
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
249003
270003
|
Greylock
|
'06
Ford F250 WH/RE
|
3,538
|
11,552
|
15,090
|
14,421
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
249203
|
Ford
Credit
|
'03
Xxxx XX Van (E-150)
|
3,799
|
(1,891 | ) |
1,908
|
772
|
||||||||||||||
|
|
|
||||||||||||||||||||
|
250103
267303
|
Berkshire
|
’06
GMC ExCab (K-25)
|
4,794
|
11,414
|
16,208
|
15,022
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
251001
268101
|
Ford
Credit
|
’03
Ford F-250
|
-
|
(753 | ) | (753 | ) |
-0-
|
|||||||||||||
|
|
|
||||||||||||||||||||
|
######
260503
|
Berkshire
|
’07
GMC 3500 Rack
|
-
|
24,442
|
24,442
|
25,119
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
######
267403
|
Berkshire
|
’07
GMC 2500 P/UP
|
-
|
23,563
|
23,563
|
24,003
|
|||||||||||||||
|
|
|
||||||||||||||||||||
|
Total
|
247,917
|
239,015
|
|||||||||||||||||||
Schedule
1(g)(B) page 2 of 2
Auto
& Truck Leases
|
Vehicle,
make, model, year
|
Lessor
|
Pay
Off Date
|
Monthly
Amount
|
Mnths
Remng
|
Total
amount left on loan
|
Primary
Driver
|
Branch
|
Use
|
|
|
||||||||
|
Toyota
7FGU25 forklift
|
Xxxxxxxx
& Xxxxxxx
|
7/31/09
|
489.00
|
23
|
N/A
|
Great
Barrington
|
Yard
|
|
End
of Schedule
SCHEDULE
1(g)(C)
ASSUMED
OBLIGATIONS
|
· Expense
Accounts Payable
|
None
|
|||
|
· Customer
Deposits
|
$ |
10,699
|
||
|
· Unreconciled
Stock Receipts
|
||||
|
(Amount
to be provided at conclusion of physical inventory)
|
$ |
-
|
||
|
· Unused
Vacation and Sick Pay
|
$ |
58,313
|
||
Schedule
2(b)
|
RESTATED
08/20/2007
|
S
& A SUPPLY, INC
|
PAGE 1
|
|
AUTOS/SHOWROOM
ENTRIES
|
BALANCE
SHEET
|
|
|
JUNE
2007
|
|
2007
|
2006
|
CHANGE
|
CHANGE
|
|||||||||||||
|
ASSETS
|
||||||||||||||||
|
CURRENT
ASSETS
|
||||||||||||||||
|
CASH
IN BANK
|
675
|
675
|
0
|
0.0 | % | |||||||||||
|
CASH
IN BANK OPERATING
|
(441,990 | ) | (609,038 | ) |
167,048
|
-27.4 | % | |||||||||
|
PAYROLL
CHECKING
|
785
|
716
|
69
|
9.6 | % | |||||||||||
|
CASH
IN BANK OPERATING
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
ACCOUNTS
RECEIVABLE-TRADE
|
1,831,197
|
1,973,736
|
(142,539 | ) | -7.2 | % | ||||||||||
|
ACCOUNTS
RECEIVABLE- OTHER
|
(6,213 | ) |
0
|
(6,213 | ) |
#DIV/0!
|
||||||||||
|
RESERVE
FOR BAD DEBTS
|
(119,600 | ) | (144,600 | ) |
25,000
|
-17.3 | % | |||||||||
|
LOAN
REC - S & A MANAGEMENT
|
365,232
|
315,534
|
49,698
|
15.8 | % | |||||||||||
|
NOTES
RECEIVABLE
|
314
|
314
|
0
|
0.0 | % | |||||||||||
|
INVENTORIES
|
4,219,960
|
4,435,643
|
(215,683 | ) | -4.9 | % | ||||||||||
|
UNEXPIRED
INSURANCE
|
20,234
|
23,943
|
(3,709 | ) | -15.5 | % | ||||||||||
|
LOAN
RECEIVABLE J CURE
|
0
|
72
|
(72 | ) | -100.0 | % | ||||||||||
|
PREPAID
EXPENSES
|
31,559
|
22,453
|
9,106
|
40.6 | % | |||||||||||
|
NOTE
RECEIVABLE RPM
|
315,803
|
326,978
|
(11,175 | ) | -3.4 | % | ||||||||||
|
LOAN
RECEIVABLE X.X. ALOISIRJA
& XXXX XXXX
|
7,804
|
2,543
|
5,261
|
206.9 | % | |||||||||||
|
TOTAL
CURRENT ASSETS
|
6,225,760
|
6,348,969
|
(123,209 | ) | -1.9 | % | ||||||||||
|
PROPERTY.
PLANT AND EQUIPMENT
|
||||||||||||||||
|
LAND
|
23,132
|
23,132
|
0
|
0.0 | % | |||||||||||
|
LAND
IMPROVEMENTS
|
41,076
|
39,418
|
1658
|
4.2 | % | |||||||||||
|
BUILDING
& INPROVEMENTS
|
480,506
|
480,506
|
0
|
0.0 | % | |||||||||||
|
IMPROVEMENTS-ELECTRICAL
DEPT.
|
78,059
|
78,059
|
0
|
0.0 | % | |||||||||||
|
FURNITURE
AND FIXTURES
|
200,569
|
200,569
|
0
|
0.0 | % | |||||||||||
|
MACHINERY
AND EQUIPMENT
|
172,894
|
163,120
|
9774
|
6.0 | % | |||||||||||
|
DATA
PROCESSING EQUIPMENT
|
448,854
|
442,885
|
5969
|
1.3 | % | |||||||||||
|
AUTOMOTIVE
EQUIPMENT
|
585,613
|
610,480
|
(24,867 | ) | -4.1 | % | ||||||||||
|
SHOWROOM
DISPLAY
|
119,950
|
79,348
|
40,602
|
51.2 | % | |||||||||||
|
TOTAL
PROP, PLANT & EQUIPMENT
|
2,150,653
|
2,117,517
|
33,136
|
1.6 | % | |||||||||||
|
LESS
ACCUMULATED DEPRECIATION
|
(1,564,304 | ) | (1,597,227 | ) | (32,923 | ) | 2.1 | % | ||||||||
|
TOTAL
PROP, PLANT & EQUIPMENT
|
586,349
|
520,290
|
66,059
|
12.7 | % | |||||||||||
|
OTHER
ASSETS
|
||||||||||||||||
|
UNAMORTIZED
MORTGAGE EXP
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
DEPOSITS
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
EXCHANGE
|
(2,710 | ) |
1,304
|
(4,014 | ) | -307.8 | % | |||||||||
|
CASH
SURR. VALUE OF LIFE INS
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
TOTAL
OTHER ASSETS
|
(2,710 | ) |
1,304
|
(4,014 | ) | -307.8 | % | |||||||||
|
TOTAL
ASSETS
|
6,809,399
|
6,870,563
|
(61,164 | ) | -0.9 | % | ||||||||||
|
S
& A SUPPLY, INC
|
PAGE 2
|
|
|
BALANCE
SHEET
|
||
|
JUNE
2007
|
|
$
|
%
|
|||||||||||||||
|
2007
|
2006
|
CHANGE
|
CHANGE
|
|||||||||||||
|
LIABILITIES
AND STOCKHOLDERS EQUITY
|
||||||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||||||
|
ACCOUNT
PAYABLE-TRADE
|
613,853
|
716,086
|
(102,233 | ) | -14.3 | % | ||||||||||
|
LIABILITY
TO PENSION FUND
|
1,954
|
1,450
|
504
|
34.8 | % | |||||||||||
|
LIFE
INSURANCE EMPLOYEES
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
L/T
DISABILITY EMPLOYEES
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
FEDERAL
& FICA TAXES PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
SWT
PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
FED
UC PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
DEPOSIT
CLEARING
|
(6,625 | ) | (366 | ) | (6,259 | ) | 1710.1 | % | ||||||||
|
PAYROLL
CLEARING
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
PAYMENT
CLEARING
|
(1,687 | ) |
16,365
|
(18,052 | ) | -110.3 | % | |||||||||
|
SALES/USE
TAX PAYABLE
|
36,801
|
37,239
|
(438 | ) | -1.2 | % | ||||||||||
|
ACCRUED
EXPENSES
|
122,880
|
152,908
|
(30,028 | ) | -19.6 | % | ||||||||||
|
CORP
TAX PAYABLE
|
(33,996 | ) |
49
|
(34,045 | ) | -69479.6 | % | |||||||||
|
N/P
XXX XX LOC
|
2,703,454
|
2,671,999
|
31,455
|
1.2 | % | |||||||||||
|
N/P
S & A REALTY
|
7,200
|
0
|
7,200
|
#DIV/0!
|
||||||||||||
|
N/P
LEGACY A&B PLUS AUTOS
|
60,802
|
58,634
|
2,168
|
3.7 | % | |||||||||||
|
NOTE
PAYABLE AUTOS
|
18,465
|
16,208
|
0
|
0.0 | % | |||||||||||
|
NOTE
PAYABLE NAM
|
(536 | ) |
181
|
0
|
0.0 | % | ||||||||||
|
NOTE
PAYABLE (1) FORD 650
|
9,933
|
9,358
|
0
|
0.0 | % | |||||||||||
|
TOTAL
CURRENT LIABILITIES
|
3,532,498
|
3,680,111
|
(147,613 | ) | -4.0 | % | ||||||||||
|
LONG
TERM LIABILITIES
|
||||||||||||||||
|
NOTES
PAYABLE - OTHER
|
537,441
|
520,230
|
17,211
|
3.3 | % | |||||||||||
|
NOTES
PAYABLE - OTHER
|
37,111
|
58,686
|
(21,575 | ) | -36.8 | % | ||||||||||
|
MORTGAGE
PAYABLE
|
101,355
|
104,779
|
(3,424 | ) | -3.3 | % | ||||||||||
|
TOTAL
LONG TERM LIABILITIES
|
675,907
|
683,695
|
(7,788 | ) | -1.1 | % | ||||||||||
|
STOCKHOLDERS
EQUITY
|
||||||||||||||||
|
COMMON
STOCK
|
49,000
|
49,000
|
0
|
0.0 | % | |||||||||||
|
PAID
IN SURPLUS
|
40,403
|
40,403
|
0
|
0.0 | % | |||||||||||
|
UNDISTR.
S CORP INCOME RVS
|
6,174
|
74,811
|
(68,637 | ) | -91.7 | % | ||||||||||
|
RETAINED
EARNINGS
|
2,779,515
|
2,592,075
|
187,440
|
7.2 | % | |||||||||||
|
CURRENT
PERIOD NET INCOME/LOSS
|
(274,098 | ) | (249,532 | ) | (24,566 | ) | 9.8 | % | ||||||||
|
TOTAL
STOCKHOLDERS EQUITY
|
2,600,994
|
2,506,757
|
94,237
|
3.8 | % | |||||||||||
|
|
6,809,399
|
6,870,563
|
(61,164 | ) | -0.9 | % | ||||||||||
|
End
of Schedule
|
Schedule
8(a)
States
in which authorized to do Business
|
(1)
|
Massachusetts
|
End
of Schedule
Schedule
8(k)(A)
Employee
Benefit Plan
|
|
1.
|
The
Sellers maintain the S&A Group of Companies Profit Sharing Plan and
Trust. A copy of the plan document along with Form 5500s for the
most
recent three years has been previously e-mailed to the
Buyer.
|
|
|
2.
|
A
copy of the Seller’s Employee Handbook (20 pages) is attached as Exhibit
8(k)(A)(2).
|
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(k)(C)
Exceptions
to Section 8(k)(C)
Attached
is a Schedule listing accrued vacation and sick pay benefits for Seller’s
employees.
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(k)(E)(i)
Number
of employees by position
|
Management
/ Administrative
|
5
|
|
Office
Sales / Purchasing
|
7
|
|
Outside
Sales
|
8
|
|
Secretarial
|
6
|
|
Counter
/ Warehouse
|
14
|
|
Delivery
|
5
|
|
Showroom
Sales
|
4
|
|
Consulting
|
1
|
|
Cleaning
(part time)
|
1
|
|
|
|
|
Total
|
51
|
End
of
Schedule
Schedule
8(k)(E)(ii)
Union
employees
None
End
of
Schedule
|
Schedule
8(l)(B)(a)
|
||
|
RESTATED
08/20/2007
|
S
& A SUPPLY, INC
|
PAGE 1
|
|
AUTOS/SHOWROOM
ENTRIES
|
BALANCE
SHEET
|
|
|
JUNE
2007
|
||||||||||||||||
|
2007
|
2006
|
CHANGE
|
CHANGE
|
|||||||||||||
|
ASSETS
|
||||||||||||||||
|
CURRENT
ASSETS
|
||||||||||||||||
|
CASH
IN BANK
|
675
|
675
|
0
|
0.0 | % | |||||||||||
|
CASH
IN BANK OPERATING
|
(441,990 | ) | (609,038 | ) |
167,048
|
-27.4 | % | |||||||||
|
PAYROLL
CHECKING
|
785
|
716
|
69
|
9.6 | % | |||||||||||
|
CASH
IN BANK OPERATING
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
ACCOUNTS
RECEIVABLE-TRADE
|
1,831,197
|
1,973,736
|
(142,539 | ) | -7.2 | % | ||||||||||
|
ACCOUNTS
RECEIVABLE- OTHER
|
(6,213 | ) |
0
|
(6,213 | ) |
#DIV/0!
|
||||||||||
|
RESERVE
FOR BAD DEBTS
|
(119,600 | ) | (144,600 | ) |
25,000
|
-17.3 | % | |||||||||
|
LOAN
REC - S & A MANAGEMENT
|
365,232
|
315,534
|
49,698
|
15.8 | % | |||||||||||
|
NOTES
RECEIVABLE
|
314
|
314
|
0
|
0.0 | % | |||||||||||
|
INVENTORIES
|
4,219,960
|
4,435,643
|
(215,683 | ) | -4.9 | % | ||||||||||
|
UNEXPIRED
INSURANCE
|
20,234
|
23,943
|
(3,709 | ) | -15.5 | % | ||||||||||
|
LOAN
RECEIVABLE J CURE
|
0
|
72
|
(72 | ) | -100.0 | % | ||||||||||
|
PREPAID
EXPENSES
|
31,559
|
22,453
|
9,106
|
40.6 | % | |||||||||||
|
NOTE
RECEIVABLE RPM
|
315,803
|
326,978
|
(11,175 | ) | -3.4 | % | ||||||||||
|
LOAN
RECEIVABLE X.X. ALOISIRJA
& XXXX XXXX
|
7,804
|
2,543
|
5,261
|
206.9 | % | |||||||||||
|
TOTAL
CURRENT ASSETS
|
6,225,760
|
6,348,969
|
(123,209 | ) | -1.9 | % | ||||||||||
|
PROPERTY.
PLANT AND EQUIPMENT
|
||||||||||||||||
|
LAND
|
23,132
|
23,132
|
0
|
0.0 | % | |||||||||||
|
LAND
IMPROVEMENTS
|
41,076
|
39,418
|
1658
|
4.2 | % | |||||||||||
|
BUILDING
& INPROVEMENTS
|
480,506
|
480,506
|
0
|
0.0 | % | |||||||||||
|
IMPROVEMENTS-ELECTRICAL
DEPT.
|
78,059
|
78,059
|
0
|
0.0 | % | |||||||||||
|
FURNITURE
AND FIXTURES
|
200,569
|
200,569
|
0
|
0.0 | % | |||||||||||
|
MACHINERY
AND EQUIPMENT
|
172,894
|
163,120
|
9774
|
6.0 | % | |||||||||||
|
DATA
PROCESSING EQUIPMENT
|
448,854
|
442,885
|
5969
|
1.3 | % | |||||||||||
|
AUTOMOTIVE
EQUIPMENT
|
585,613
|
610,480
|
(24,867 | ) | -4.1 | % | ||||||||||
|
SHOWROOM
DISPLAY
|
119,950
|
79,348
|
40,602
|
51.2 | % | |||||||||||
|
TOTAL
PROP, PLANT & EQUIPMENT
|
2,150,653
|
2,117,517
|
33,136
|
1.6 | % | |||||||||||
|
LESS
ACCUMULATED DEPRECIATION
|
(1,564,304 | ) | (1,597,227 | ) | (32,923 | ) | 2.1 | % | ||||||||
|
TOTAL
PROP, PLANT & EQUIPMENT
|
586,349
|
520,290
|
66,059
|
12.7 | % | |||||||||||
|
OTHER
ASSETS
|
||||||||||||||||
|
UNAMORTIZED
MORTGAGE EXP
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
DEPOSITS
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
EXCHANGE
|
(2,710 | ) |
1,304
|
(4,014 | ) | -307.8 | % | |||||||||
|
CASH
SURR. VALUE OF LIFE INS
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
TOTAL
OTHER ASSETS
|
(2,710 | ) |
1,304
|
(4,014 | ) | -307.8 | % | |||||||||
|
TOTAL
ASSETS
|
6,809,399
|
6,870,563
|
(61,164 | ) | -0.9 | % | ||||||||||
|
S
& A SUPPLY, INC
|
PAGE 2
|
|
|
BALANCE
SHEET
|
||
|
JUNE
2007
|
|
$
|
%
|
|||||||||||||||
|
2007
|
2006
|
CHANGE
|
CHANGE
|
|||||||||||||
|
LIABILITIES
AND STOCKHOLDERS EQUITY
|
||||||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||||||
|
ACCOUNT
PAYABLE-TRADE
|
613,853
|
716,086
|
(102,233 | ) | -14.3 | % | ||||||||||
|
LIABILITY
TO PENSION FUND
|
1,954
|
1,450
|
504
|
34.8 | % | |||||||||||
|
LIFE
INSURANCE EMPLOYEES
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
L/T
DISABILITY EMPLOYEES
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
FEDERAL
& FICA TAXES PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
SWT
PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
FED
UC PAYABLE
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
DEPOSIT
CLEARING
|
(6,625 | ) | (366 | ) | (6,259 | ) | 1710.1 | % | ||||||||
|
PAYROLL
CLEARING
|
0
|
0
|
0
|
#DIV/0!
|
||||||||||||
|
PAYMENT
CLEARING
|
(1,687 | ) |
16,365
|
(18,052 | ) | -110.3 | % | |||||||||
|
SALES/USE
TAX PAYABLE
|
36,801
|
37,239
|
(438 | ) | -1.2 | % | ||||||||||
|
ACCRUED
EXPENSES
|
122,880
|
152,908
|
(30,028 | ) | -19.6 | % | ||||||||||
|
CORP
TAX PAYABLE
|
(33,996 | ) |
49
|
(34,045 | ) | -69479.6 | % | |||||||||
|
N/P
XXX XX LOC
|
2,703,454
|
2,671,999
|
31,455
|
1.2 | % | |||||||||||
|
N/P
S & A REALTY
|
7,200
|
0
|
7,200
|
#DIV/0!
|
||||||||||||
|
N/P
LEGACY A&B PLUS AUTOS
|
60,802
|
58,634
|
2,168
|
3.7 | % | |||||||||||
|
NOTE
PAYABLE AUTOS
|
18,465
|
16,208
|
0
|
0.0 | % | |||||||||||
|
NOTE
PAYABLE NAM
|
(536 | ) |
181
|
0
|
0.0 | % | ||||||||||
|
NOTE
PAYABLE (1) FORD 650
|
9,933
|
9,358
|
0
|
0.0 | % | |||||||||||
|
TOTAL
CURRENT LIABILITIES
|
3,532,498
|
3,680,111
|
(147,613 | ) | -4.0 | % | ||||||||||
|
LONG
TERM LIABILITIES
|
||||||||||||||||
|
NOTES
PAYABLE - OTHER
|
537,441
|
520,230
|
17,211
|
3.3 | % | |||||||||||
|
NOTES
PAYABLE - OTHER
|
37,111
|
58,686
|
(21,575 | ) | -36.8 | % | ||||||||||
|
MORTGAGE
PAYABLE
|
101,355
|
104,779
|
(3,424 | ) | -3.3 | % | ||||||||||
|
TOTAL
LONG TERM LIABILITIES
|
675,907
|
683,695
|
(7,788 | ) | -1.1 | % | ||||||||||
|
STOCKHOLDERS
EQUITY
|
||||||||||||||||
|
COMMON
STOCK
|
49,000
|
49,000
|
0
|
0.0 | % | |||||||||||
|
PAID
IN SURPLUS
|
40,403
|
40,403
|
0
|
0.0 | % | |||||||||||
|
UNDISTR.
S CORP INCOME RVS
|
6,174
|
74,811
|
(68,637 | ) | -91.7 | % | ||||||||||
|
RETAINED
EARNINGS
|
2,779,515
|
2,592,075
|
187,440
|
7.2 | % | |||||||||||
|
CURRENT
PERIOD NET INCOME/LOSS
|
(274,098 | ) | (249,532 | ) | (24,566 | ) | 9.8 | % | ||||||||
|
TOTAL
STOCKHOLDERS EQUITY
|
2,600,994
|
2,506,757
|
94,237
|
3.8 | % | |||||||||||
|
TOTAL
LIABILITIES & EQUITY
|
6,809,399
|
6,870,563
|
(61,164 | ) | -0.9 | % | ||||||||||
|
End
of Schedule
|
Schedule
8(n)(A)
None
End
of
Schedule
Schedule
8(n)(B)
None,
except S&A Supply, Inc. has made monthly payments of rent in the amount of
$7,500 to S&A Realty, Inc. and management fees of $49,200 to S&A
Management, Inc. in the ordinary course of business and consistent with prior
practices.
Schedule
8(n)(B)(3)
None
End
of
Schedule
Schedule
8(n)(B)(6)
None
End
of
Schedule
Schedule
8(o)
None
End
of
Schedule
Schedule
8(p)
Dek
Tillet Vs Xxxxxxx Xxxx & S & A Supply Inc. S &
A Insurance Company Settled Without further cost to S
& A
End
of
Schedule
Schedule
8(q)(2)
Asbestos
Insurance
From
the
time of the Xxxx family’s first involvement with the Sellers in 1993 to date,
none of the Sellers has carried asbestos-liability insurance. Current management
of the Sellers is not aware of the Sellers ever having carried such
insurance.
Schedule
8(r)(A)
Real
Estate Owned
00
Xxxxx
Xxx Xxxxx Xxxxxxxxxx, Xxxxxxxxxxxxx, 00000
Warehouses
and corporate offices of S & A Supply Inc, a plumbing, heating, and
electrical wholesale distributor
00
Xxxxx
Xxx Xxxxx Xxxxxxxxxx, Xxxxxxxxxxxxx, 00000
Showroom
displaying fixtures sold by S & A Supply Inc, a plumbing, heating, and
electrical wholesale distributor
0000
Xxxx
Xxxxxx Xxxxxxxxxx, Xxxxxxxxxxxxx, 00000
Warehouse
and Showroom of S & A Supply Inc, a plumbing, heating, and electrical
wholesale distributor
End
of
Schedule
Schedule
8(r)(B)
Real
Estate Leased
000
Xxxxxxxxxxxxx Xxx Xxxxx Xxxxx, Xxxxxxxxxxxxx 00000
Warehouse
of S & A Supply Inc, a plumbing, heating, and electrical wholesale
distributor
Xxxxx
at
will
Leased
from Xxxxx Xxxxx (DBA Xxxxxx Xxxxx & Sons Plumbing &
Heating)
End
of
Schedule
Schedule
8(s)
Commitments
|
Company
|
Service
|
|
Verizon
Wireless
|
Cell
Phone Service
|
|
Pitney
Xxxxx
|
Postage
Meter
|
|
Berkshire
Graphics
|
Gt.
Barrington Copier
|
|
Profit
21
|
Computer
Operating System
|
|
BSI
|
Printer
maintenance Service
|
|
On
Hold Marketing
|
Telephone
Hold Advertising
|
|
Unifirst
|
Uniform
Service
|
|
Ikon
|
Gt.
Barrington Showroom Copier
|
|
Xxx
Bank
|
Line
of Credit
|
|
Legacy
Bank
|
Mortgages
|
End
of Schedule
Schedule
8(t)
Insurance
See
Attached Certificate of Insurance dated September 7, 2007 issued by BIG-Xxxxxxx
Insurance Agency for information covering insurance coverage.
Copies
of
policies of insurance carried by the Sellers are attached.
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(u)
Intangible
Rights
None
End
of Schedule
Schedule
8(v)
FIXED
ASSETS
Detailed
listing attached – 9 pages
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(w)(A)
None
End
of Schedule
Schedule
8(w)(B)
Permits
None
End
of Schedule
Schedule
8(w)(C)
Hazardous
Substances
Incorporated
by reference herein are the Environmental Site Investigation-Remediation reports
dated August 20, 2007 prepared by Xxxxxxx X. Going Associates, Inc. with respect
to:
|
a)
|
00-00
Xxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, XX;
|
|
b)
|
0000
Xxxx Xxxxxx, Xxxxxxxxxx, XX; and
|
|
c)
|
000
Xxxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx,
XX.
|
Xxxxxxx
X. Going & Associates, Inc.
ENVIRONMENTAL
SITE INVESTIGATION-REMEDIATION
00
Xxxxxx Xxxxx
Xxxx
Xxxx, Xxx Xxxx 00000
Tel.
000-000-0000
Fax.
000-000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxx.xxx
August
20, 2007
Xx.
Xxxxxxx Xxxxxx, President
Universal
Supply Group Inc.
000
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
|
RE:
|
Summary
of Findings for Phase I Environmental Site
Assessment
|
Commercial
Property At 0000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx
Dear
Xx.
Xxxxxx:
At
your
request, Xxxxxxx X. Going & Associates, Inc. is conducting a Phase I ESA of
commercial property situated at 0000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx.
We
have determined that there are “recognized environmental conditions”
onsite and that there should be some additional investigation in
order to
determine whether or not these conditions have caused any significant
impact to subject property.
Specifically,
historical sources indicate that subject may have been used as a trolley yard.
In addition, documented historical use of subject property includes “paper
manufacturing, research and development” and we have determined that two (2)
aboveground storage tanks (ASTs) were utilized in the manufacturing process.
The
present owner cannot tell us and we have not yet been able to determine if
these
ASTs contain chemicals or chemical residual. We also find that a 10,000 gal.
underground fuel oil storage tank (UST) was removed from subject property in
1989 without any documentation of soil conditions before or after removal.
Furthermore, there are currently three (3) 275 gal. fuel oil ASTs in service
at
the subject (without any means of secondary containment). Also, and finally,
subject is surrounded to the north, south, and west by a hazardous waste site
[“General Electric”] identified by both the Massachusetts Department of
Environmental Protection and the U.S. Environmental Protection Agency, and
considerable soil and groundwater contamination has been
discovered.
These
“recognized environmental conditions” represent significant potential
environmental liability until they have been thoroughly investigated. We
recommend the installation of strategic test pits and soil borings and
subsequent soil and groundwater analysis.
We
will
issue the complete Phase I ESA (with attachments) in about two
weeks.
Meanwhile,
if there are any technical questions for us, or if further elaboration is
required, please do not hesitate to contact us at (000) 000-0000.
Thanks
for the opportunity to be of service.
Sincerely,
/s/
Xxxxxxx X. Going
Xxxxxxx
X. Going, Principal
Xxxxxxx
X. Going & Associates, Inc.
ENVIRONMENTAL
SITE INVESTIGATION-REMEDIATION
00
Xxxxxx Xxxxx
Xxxx
Xxxx, Xxx Xxxx 00000
Tel.
000-000-0000
Fax.
000-000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxx.xxx
August
20, 2007
Xx.
Xxxxxxx Xxxxxx, President
Universal
Supply Group Inc.
000
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
|
RE:
|
Summary
of Findings for Phase I Environmental Site
Assessment
|
Commercial
Property 20 and 00, Xxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, Xxxxxxxxxxxxx
Dear
Xx.
Xxxxxx:
At
your
request, Xxxxxxx X. Going & Associates, Inc. is conducting a Phase I ESA of
commercial property situated at 20 and 00, Xxxxx Xxxxxx, Xxxxx Xxxxxxxxxx,
Xxxxxxxxxxxxx. We have determined that there are “recognized environmental
conditions” onsite and that there should be some additional investigation
in order to determine whether or not these conditions have caused any
significant impact to subject property.
Specifically,
historical sources indicate that a 6,000 gal. underground fuel oil storage
tank
(UST) and a 2,000 gal. fuel oil UST were reportly closed in place in 1992
without any documentation of soil conditions before or after UST removal. We
also find one (1) 275 gal. aboveground fuel oil storage tank (AST) and one
(1)
330 gal. fuel oil AST in service at subject property (without any means of
secondary containment).
These
“recognized environmental conditions” represent potential environmental
liability until they have been thoroughly investigated. We recommend the
installation of strategic test pits and/or soil borings and subsequent soil
and/or groundwater analysis.
We
will
issue the complete Phase I ESA (with attachments) in about two weeks. Meanwhile,
if there are any technical questions for us, or if further elaboration is
required, please do not hesitate to contact us at (000) 000-0000. Thanks for
the
opportunity to be of service.
Sincerely,
/s/
Xxxxxxx X. Going
Xxxxxxx
X. Going, Principal
Xxxxxxx
X. Going & Associates, Inc.
ENVIRONMENTAL
SITE INVESTIGATION-REMEDIATION
00 Xxxxxx Xxxxx
Xxxx
Xxxx, Xxx Xxxx 00000
Tel.
000-000-0000
Fax.
000-000-0000
E-mail:
xxxxxxxx@xxxxxxxxxxx.xxx
August
20, 2007
Xx.
Xxxxxxx Xxxxxx, President
Universal
Supply Group Inc.
000
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxx Xxxxxx 00000
E-mail:
xxxxxxx@xxxxxx.xxx
|
RE:
|
Summary
of Findings for Phase I Environmental Site
Assessment
|
Commercial
Property At 000 Xxxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxxxxx
Dear
Xx.
Xxxxxx:
At
your
request, Xxxxxxx X. Going & Associates, Inc. is conducting a Phase I ESA of
commercial property situated at 000 Xxxxxxxxxxxxx Xxxxxx, Xxxxx Xxxxx,
Xxxxxxxxxxxxx. We have not discovered any “recognized environmental
conditions” or significant environmental issues associated with this
commercial property.
We
will
issue the complete Phase I ESA (with attachments) in about two
weeks.
Meanwhile,
if there are any technical questions for us, or if further elaboration is
required, please do not hesitate to contact us at (000) 000-0000.
Thanks
for the opportunity to be of service.
Sincerely,
/s/
Xxxxxxx X. Going
Xxxxxxx
X. Going, Principal
Schedule
8(w)(D)
Tanks
|
-
|
00
Xxxxx Xxx Xxxxx Xxxxxxxxxx (1) 2000 gallon Tank & (1) 6000
gallon tank – Both have been de-commissioned and
abandoned
|
|
-
|
0000
Xxxx Xxxxxx Xxxxxxxxxx (1) 10,000 Gallon Tank removed September 19,
1989
|
Both
above items are referred to in the Going Phase One reports attached to Schedule
8(w)(C) hereto.
Attached
are:
|
a)
|
Copy
of permit dated September 1, 1989;
|
|
b)
|
Copy
of historic site assessment re: 0000 Xxxx Xxxxxx, Xxxxxxxxxx;
and
|
|
c)
|
Copy
of Department of Public Safety Application dated July 8,
1992
|
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(x)
Customers/Vendors
Attachment(s)
on file at the Company’ s corporate office
Schedule
8(y)
None
End
of Schedule
Schedule
8(z)(B)
Recalled
Products
No
record
of, none in recent memory
End
of Schedule
Schedule
8(z)(E)
None
End
of Schedule
Schedule
8(aa)
Affiliate
Transactions
As
set
forth in Sellers’ annual financial statements
|
|
1.
|
S
& A Managements, Inc.
|
|
|
2.
|
S
& A Realty, Inc.
|
See
also
Schedule 8(n)(B) with respect to rent and management fees paid since June 30,
2007
Schedule
8(bb)
Sellers
Credit Applications and Personal Guarantee
The
Sellers have not kept records of credit applications and guarantees to
vendors.
