STOCK PURCHASE AGREEMENT
This Agreement is entered into as of June 27, 1999, by and among Pallet
Management Systems, Inc., a Florida corporation (the "Buyer"), The Xxxxxx
Company, a Maryland corporation ("Xxxxxx") and Xxxxxx Xxxxxx Xxxxxxxxx, being
the holder of all of the outstanding shares of capital stock of Xxxxxx (the
"Seller"). The Buyer, Xxxxxx and the Seller are collectively referred to herein
as the "Parties."
Xxxxxx is engaged in the pallet manufacturing and reverse distribution
logistics business (the "Business"). The Buyer desires to acquire from Seller,
all the outstanding shares of capital stock of Xxxxxx.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"Adverse Consequences" means all charges, complaints, notices, actions,
suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, dues, penalties, fines,
costs, amounts paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including all attorneys' fees and court costs in any
court or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before an arbitrator.
"Affiliate" has the meaning set forth in the regulations promulgated
under the Securities Exchange Act.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Business" means the pallet manufacturing and reverse distribution
logistics business.
"Buyer" has the meaning set forth in the preface above.
"Buyer Shares" has the meaning set forth in Section 2(b) below.
"Cash" means cash and cash equivalents/marketable securities/short term
investments calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
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"Employee Benefit Plan" means any (a) Employee Pension Benefit Plan as
defined in ERISA Section 3(2) or any Employee Welfare Benefit Plan as defined in
ERISA Section 3(1).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Financial Statements" has the meaning set forth in Section 3(f) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Highest Statutory Rate" shall mean the highest federal individual
income tax rate applicable to ordinary income or capital gains, as the case may
be, and the highest state individual income tax rate of the individual's rate of
residency applicable to ordinary income or capital gains, as the case may be.
"Intellectual Property" means all (a) trademarks, service marks, trade
dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, underwriting
processes and techniques, research and development information, plans,
proposals, copyrightable works, financial, marketing, and business data, pricing
and cost information, business and marketing plans, and customer and supplier
lists and information), (e) other proprietary rights, and (f) copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
"Law(s)" shall mean any statute, regulation, rule, judgment, ordinance,
order, decree, stipulation, injunction, charge, or other restrictions of any
federal, state, or local government, governmental agency, or court.
"Liability" means any liability, obligation, debt or commitment of
Xxxxxx or the Seller (whether known or unknown, whether absolute or contingent,
accrued or unaccrued, asserted or unasserted, liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet as of June 26,
1999.
"Most Recent Fiscal Year End" means June 26, 1999.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Highest Statutory Rate" shall mean the highest federal individual
income tax rate applicable to ordinary income or capital gains, as the case may
be, and the highest state individual income tax rate of the individual's state
of residency applicable to ordinary income or capital gains, as the case may be.
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"Party" has the meaning set forth in the preface above.
"Pro Rata Share" means the Seller's pro rata share of S corporation
income as determined under Section 1377(c) of the Code and as reported on
Seller's Schedule K-1.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Real Property" means all lots, units or parcels of real estate.
"Xxxxxx" has the meaning set forth in the preface above and shall
include Xxxxxx'x Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, or other lien, other than (a) construction, mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (e) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Shares" has the meaning set forth in Section 2(a) below.
"Subsidiary" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, Real Property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, alternative minimum, estimated,
or other tax, including any interest, penalty, or addition thereto, whether
disputed or not.
"Year 2000 Problem" means the risk that the computer applications used
by the Seller (or suppliers, vendors and customers) may be unable to recognize
and properly perform date-sensitive functions involving certain dates prior to
and after December 31, 1999.
2. Basic Transaction.
a. Purchase and Sale. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell all of the issued and outstanding shares of capital stock of
Xxxxxx (the "Shares").
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b. Purchase Price. The Buyer agrees to pay at the Closing (the
"Purchase Price") by delivery of (i) cash paid to Seller in the amount of
$1,000,000 payable by wire transfer or delivery of other immediately available
funds (the "Cash Payment"); (ii) a note in the amount of $1,000,000 in the form
set forth in Exhibit A hereto (the "Purchase Note"), which shall be secured by a
first lien on the Shares; and (iii) certificates issued to seller evidencing
145,000 shares of Common Stock, par value $.001 per share, of the Buyer (the
"Buyer Shares").
c. The Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall take place at the offices of Seller in
Baltimore, Maryland, commencing at 10:00 a.m. local time on August 17, 1999 (the
"Closing Date").
d. Closing Deliveries. At the Closing the Seller and Xxxxxx will
deliver or cause to be delivered to the Buyer: (i) a certificate or certificates
evidencing the Shares duly endorsed for transfer with all necessary transfer
stamps; and (ii) a security agreement in the form of Exhibit B hereto securing
payment of the Note: (iii) an employment agreement for Seller in the form
attached hereto as Exhibit C; and (iii) certified copies of all corporate action
necessary to authorize the execution, delivery and performance of this
Agreement.
e. Section 338 Election. If requested by Buyer, Seller shall join with
Buyer in making the election pursuant to Section 338(h)(10) of the Code, and
corresponding state law, as applicable. In such event, Seller shall reasonably
cooperate with Buyer to assure that the transaction meets the definition of a
"qualified stock purchase" pursuant to Section 338(d)(3) of the Code or
otherwise results in a stepped-up basis in Xxxxxx'x assets for income tax
purposes. If this election results in additional tax liability for Seller, then
Buyer shall reimburse Seller in an amount equal to such additional tax liability
on or before December 17, 1999. In addition, to the extent that any
reimbursement from Buyer pursuant to the preceding sentence results in an
increased federal or state income tax liability to Seller, the Buyer shall
reimburse Seller on a grossed up basis for such increased tax liability on or
before December 17, 1999. In determining the amount of all reimbursements made
pursuant to this Section 2.3., it shall be conclusively presumed that Seller is
subject to taxation at the Highest Statutory Rate.
f. Allocation of Purchase Price for Section 338 Election. Buyer and
Seller agree that the Purchase Price and the liabilities of Xxxxxx will be
allocated to the assets of Xxxxxx in a manner consistent with the fair market
values of those assets. Buyer and Seller will file all income tax returns
(including all amended returns and claims for refund) and information reports in
a manner consistent with such allocations. Buyer agrees that the Buyer Shares
shall be valued at 65% of the mean average of the mean average of the closing
bid and asked price of Buyer's Common Stock on each of the ten trading days
preceding the Closing Date.
g. Withdrawal of Seller's 1999 Pro Rata Share. Buyer agrees that, in
addition to the Purchase Price, Seller may fully withdraw his Pro Rata Share of
Xxxxxx'x S corporation income for 1999. To the extent that Seller has not fully
withdrawn his Pro Rata Share of Xxxxxx'x S corporation income by the Closing
Date, Buyer shall make a payment to Seller, on or before December 17, 1999, of
an amount equal to the difference between the (i) Seller's Pro Rata Share of
Xxxxxx'x S corporation income for 1999 and (ii) the distributions previously
received by Seller with respect to his Pro Rata Share of such income plus
interest thereon at the rate of 10% per annum from June 27, 1999.
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3. Representations and Warranties of the Seller and Xxxxxx. The Seller
and Xxxxxx, jointly and severally, represent and warrant to the Buyer that the
statements contained in this Section 3 are correct and complete as of the date
of this Agreement except as set forth in the disclosure schedule accompanying
this Agreement (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
a. Organization of the Seller. Xxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and is in good standing and qualified to do business under the
laws of each jurisdiction in which the nature of its business or the ownership
or leasing of its properties requires such qualification. Xxxxxx has full
corporate power and authority to carry on the business in which it is engaged
and, other than Michigan and Georgia where qualification is being pursued, to
own and use the properties owned, leased and used by it. True, complete and
correct copies of Xxxxxx'x Articles of Incorporation and bylaws as presently in
effect have been delivered to the Buyer. The corporate minute books of Xxxxxx
has been made available to the Buyer, are complete and correct and contain all
of the proceedings of the shareholders and directors of Xxxxxx.
b. Subsidiaries. Xxxxxx does not control directly or indirectly or have
any direct or indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary.
c. Authorization of Transaction. The Seller and Xxxxxx have full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform their respective obligations hereunder.
Without limiting the generality of the foregoing, the Board of Directors of
Seller has duly authorized the execution, delivery, and performance of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of Xxxxxx and/or the Seller, enforceable in accordance with its terms and
conditions.
d. Capitalization. The authorized capital stock of Xxxxxx consists of
99,860 shares of Common Stock, of which 1,260 shares are currently issued and
outstanding and will be issued and outstanding as of the Closing Date. All of
such issued and outstanding shares of Common Stock are duly authorized, validly
issued, fully paid and nonassessable, are free of all Security Interests and are
owned of record and beneficially by the Seller. There are no subscriptions,
options, warrants, rights or calls or other commitments or agreements to which
Xxxxxx or the Seller is a party or by which it is bound, calling for the
issuance, transfer, sale or other disposition of any class of securities of
Xxxxxx, and there are no outstanding securities of Xxxxxx convertible or
exchangeable, actually or contingently, into shares of Common Stock or any other
securities of Xxxxxx. All transfer taxes, if any, with respect to transfers of
capital stock of Xxxxxx made prior to the date hereof have been paid. Upon
payment of the Purchase Price to Xxxxxx at the Closing, the Seller will convey
good and marketable title to the Shares free and clear of all Security Interest
or contractual restrictions or limitations whatsoever.
e. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby will (i)
violate any Law to which Xxxxxx is subject or any provision of Xxxxxx'x Articles
of Incorporation or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
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the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument or indebtedness,
Security Interest, or other arrangement to which the Seller or Xxxxxx is a party
or by which they are bound or to which any of their capital stock or assets,
respectively, is subject, or result in the imposition of any Security Interest
upon the capital stock or assets of Xxxxxx.
f. Financial Statements. Attached hereto as Exhibit B is a copy of
unaudited financial statements for Xxxxxx (the "Financial Statements") as of and
for the two fiscal years ended January 3, 1999 (the "Most Recent Fiscal Year
End") and December 28, 1997; and as of and for the six months ended June 26,
1999 (the "Most Recent Fiscal Month End"). The Financial Statements fairly
present the financial condition of Xxxxxx at the Most Recent Fiscal Month End
and the Most Recent Fiscal Year End.
g. Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any adverse change in the assets,
liabilities, business, financial condition, operations, results of operations,
or future prospects of Xxxxxx taken as a whole. Without limiting the generality
of the foregoing since that date:
(i) Xxxxxx has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
Ordinary Course of Business;
(ii) Other than as set forth in Section 3(e) of the Disclosure
Schedule, Xxxxxx has not entered into any contract, lease, sublease, license, or
sublicense (or series of related contracts, leases, subleases, licenses, and
sublicenses) either involving more than $25,000 or outside the Ordinary Course
of Business (other than purchases of inventory and sales to customers in the
Ordinary Course of Business);
(iii) Xxxxxx has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(iv) Other than as referenced in Section 3(a)(iv) of the Disclosure
Schedule, Xxxxxx has not made any capital expenditure (or series of related
capital expenditures) of assets with a useful life of more than 12 months either
involving more than $25,000 or outside the Ordinary Course of Business;
(v) Xxxxxx has not made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other person (or series of
related capital investments, loans, and acquisitions) either involving more than
$25,000 or outside the Ordinary Course of Business;
(vi) Other than as referenced in Section 3(o) of the Disclosure
Schedule, Xxxxxx has not created, incurred, assumed, or guaranteed any
indebtedness (including capitalized lease obligations) either involving more
than $25,000 in the aggregate or outside the Ordinary Course of Business;
(vii) Xxxxxx has not delayed or postponed (beyond its normal practice)
the payment of accounts payable and other liabilities;
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(viii) Xxxxxx has not cancelled, compromised, waived, or released any
right or claim (of series of related rights and claims) either involving more
than $25,000 or outside the Ordinary Course of Business;
(ix) Xxxxxx has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(x) There has been no change made or authorized in Xxxxxx'x Articles of
Incorporation or bylaws;
(xi) Xxxxxx has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion or exercise) any of its capital stock;
(xii) Xxxxxx has not declared, set aside, or paid any dividend or
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock other than the declaration of a
dividend estimated to be $375,000, equal to Xxxxxx'x estimated income for the
period from January 1, 1999 through June 27, 1999, paid to Seller in the form of
a promissory note which shall be secured by a first lien on the Shares (the
"Dividend Note"), and to be adjusted post-closing to the amount as confirmed by
PricewaterhouseCoopers in connection with an audit of Xxxxxx;
(xiii) Xxxxxx has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property;
(xiv) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Xxxxxx has not made any loan to, or entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xv) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Xxxxxx has not granted any increase outside the Ordinary Course of
Business in the base compensation of any of its directors, officers, and
employees;
(xvi) Other than as referenced in Section 3(f) of the Disclosure
Schedule, Xxxxxx has not adopted any bonus, profit-sharing, incentive
compensation, pension, retirement, medical, hospitalization, life, or other
insurance, severance or other plan, contract, or commitment for any of its
directors, officers, and employees, or modified or terminated any existing such
plan, contract, or commitment;
(xvii) Xxxxxx has not made any other change in employment terms for any
of its directors, officers, and employees outside the Ordinary Course of
Business;
(xviii) Xxxxxx has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business;
(xix) Xxxxxx has not paid any amount to any third party with respect to
any Liability or obligation (including any costs and expenses Xxxxxx has
incurred or may incur in connection with this Agreement or any of the
transactions contemplated hereby);
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(xx) There has been no other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business involving
Xxxxxx; and
(xxi) Xxxxxx has not committed to any of the foregoing.
h. Undisclosed Liabilities. Xxxxxx has no Liability (and there is no
Basis for any present or future Adverse Consequence against Xxxxxx giving rise
to any Liability), except for (i) Liabilities set forth on the face of the
Financial Statements for the Most Recent Fiscal Month End (rather than in any
notes thereto) and (ii) Liabilities which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course of Business (none of which relates to
any breach of contract, breach of warranty, tort, infringement, or violation of
law or arose out of any Adverse Consequence).
i. Tax Matters.
(i) Xxxxxx has filed all Tax reports and returns that it is required to
file. All such reports and returns were correct and complete in all respects.
All Taxes owed by Xxxxxx (whether or not shown on any report or return) have
been paid. Xxxxxx is currently the beneficiary of extensions to September 15,
1999 to file federal, Maryland and Pennsylvania income tax returns for the
fiscal year ending January 3, 1999. No claim has ever been made by an authority
in a jurisdiction where Xxxxxx does not file reports and returns that it is or
may be subject to taxation by that jurisdiction. There are no Security Interests
on any of the assets of Xxxxxx that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii) Xxxxxx has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third party.
(iii) Neither the Seller nor any director or officer (or employee
responsible for Tax matters) of Xxxxxx expects any authority to assess any
additional Taxes for any period for which returns have been filed. There is no
dispute or claim concerning any Tax Liability of Xxxxxx either (A) claimed or
raised by any authority in writing or (B) as to which any of the directors and
officers (and employees responsible for Tax matters) of Xxxxxx has Knowledge
based upon personal contact with any agent of such authority. Section 3(i) of
the Disclosure Schedule lists all taxable periods ended on or after December 31,
1995, indicates those returns that have been audited, and indicates those
returns that currently are the subject of audit. Xxxxxx has delivered to the
Buyer correct and complete copies of all income Tax returns, examination
reports, and statements of deficiencies assessed against or agreed to by Xxxxxx
since December 31, 1995.
(iv) Neither the Seller nor Xxxxxx has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) The unpaid Taxes of Xxxxxx does not exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
balance sheet as of the Most Recent Fiscal Month End as adjusted for the passage
of time in accordance with the past custom and practice of Xxxxxx in filing its
Tax returns.
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(vi) Seller shall prepare or cause to be prepared and file or cause to
be filed all tax returns for Xxxxxx for all periods ending on or prior to the
Closing Date which are filed after the Closing Date. Seller shall permit Buyer
to review and comment on each such return described in the preceding sentence
prior to filing. To the extent permitted by applicable law, Seller shall include
any income, gain, loss, deduction or other tax items for such periods on his tax
returns in a manner consistent with the Schedule K-1 prepared by Seller for such
periods.
(vii) Cooperation on Tax Matters.
(a) Buyer and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of any
tax return and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding to provide additional
information and explanation of any material provided hereunder. Xxxxxx and
Seller agree (A) to retain all books and records with respect to tax matters
pertinent to Xxxxxx related to any taxable period beginning before the Closing
Date until the expiration of the statute of limitation (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so request, Xxxxxx or Seller, as the case may be, shall allow
the other party to take possession such books and records.
(b) Buyer and Seller further agree, upon request, to use their best
efforts to obtain any certificate or other document from any governmental
authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby).
j. Tangible Assets. Xxxxxx owns or leases all tangible assets used by
it in the conduct of the Business as presently conducted and as presently
proposed to be conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used. Seller has not
directly or indirectly acquired any right, title or interest in any of Xxxxxx'x
tangible assets. Xxxxxx has valid and marketable title to each and every one of
the tangible assets, free and clear of any Security Interests, other than the
Security Interest of Allfirst Bank, N.A. securing the debt disclosed in the
Disclosure Schedule. Forklifts owned rather than leased are set forth in Section
3(j) of the Disclosure Schedule.
k. Owned Real Property. Xxxxxx does not own any Real Property.
l. Real Property Leases. Section 3(l) of the Disclosure Schedule lists
and describes briefly all Real Property leased or subleased to Xxxxxx and which
Xxxxxx has a leasehold interest. Xxxxxx has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 3(l) of the
Disclosure Schedule. With respect to each lease and sublease listed in Section
3(l) of the Disclosure Schedule:
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(i) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(ii) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing;
(iii) no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(iv) no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(vi) with respect to each sublease, the representations and warranties
set forth in subsections (i) through (v) above are true and correct with respect
to the underlying lease;
(vii) Xxxxxx has not assigned, transferred, conveyed, mortgage, deeded
in trust, or encumbered any interest in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable Laws;
(ix) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said facilities;
(x) the owner of the facility leased or subleased has good and
marketable title to the parcel of Real Property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for (A) installments
of special easements not yet delinquent and (B) recorded easements, covenants,
and other restrictions which do not impair the current use, occupancy, or value,
or the marketability of title, of the property subject thereto;
(xi) all rents and additional rents due to date on each lease have been
paid; and
(xii) any leasehold interest is valid, free and clear of any Security
Interest, covenants and easements or title defects of any nature whatsoever.
m. Inventory. All inventory of Xxxxxx, whether or not reflected in the
Financial Statements, consists of a quality and quantity usable and salable in
the Ordinary Course of Business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Financial Statements or on the accounting records of
Xxxxxx as of the Closing Date, as the case may be.
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n. Intellectual Property.
(i) Section 3(n) of the Disclosure Schedule sets forth a true, correct
and complete list of the Intellectual Property. The Intellectual Property
constitutes all of the Intellectual Property used by Xxxxxx in the Business.
(ii) Xxxxxx owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the Business as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by Xxxxxx
immediately prior to the Closing hereunder will be owned or available for use by
the Buyer on identical terms and conditions immediately subsequent to the
Closing hereunder. Xxxxxx has taken all necessary or desirable action to protect
each item of Intellectual Property that it owns or uses.
(iii) Xxxxxx has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of third
parties, and neither of the Seller nor any director or officer (and employees
with responsibility for Intellectual Property matters) of Xxxxxx has ever
received any Adverse Consequence alleging any such interference, infringement,
misappropriation, or violation. To the Knowledge of the Seller and the directors
and officers (and employees with responsibility for Intellectual Property
matters) of Xxxxxx, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of Xxxxxx.
(iv) Neither the Seller nor the directors and officers (and employees
with responsibility for Intellectual Property matters) of Xxxxxx has directly or
indirectly acquired, any right, title or interest in or to the Intellectual
Property.
o. Contracts. Section 3(o) of the Disclosure Schedule lists the
following contracts, agreements, and other written arrangements to which Xxxxxx
is a party:
(i) any written arrangement (or group of related written arrangements)
for the lease of personal property from or to third parties providing for lease
payments in excess of $25,000 per annum;
(ii) any written arrangement (or group of related written arrangements)
for the purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services which either calls for performance
over a period of more than one year or involves more than the sum of $50,000;
(iii) any written arrangement concerning a partnership or joint
venture;
(iv) any written arrangement (or group of related written arrangements)
under which it has created, incurred, assumed, or guaranteed (or may create,
incur, assume, or guarantee) indebtedness (including capitalized lease
obligations) involving more than $50,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;
(v) any written arrangement concerning confidentiality or
non-competition;
11
(vi) any written arrangement involving the Seller and his Affiliates;
(vii) any written arrangement with any of its directors, officers, and
employees in the nature of a collective bargaining agreement, employment
agreement, or severance agreement;
(viii) any written arrangement under which the consequences of a
default or termination could have an adverse effect on the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of Xxxxxx taken as a whole; or
(ix) any other written arrangement (or group of related arrangements)
either involving more than $50,000 or not entered into in the Ordinary Course of
Business.
Xxxxxx has delivered to the Buyer a correct and complete copy of each written
arrangement listed in Section 3(o) of the Disclosure Schedule (as amended to
date). With respect to each written arrangement so listed: (A) the written
arrangement is legal, valid, binding, enforceable, and in full force and effect
and were entered into in the Ordinary Course of Business; (B) the written
arrangement will continue to be legal, valid, binding, and enforceable and in
full force and effect on identical terms following the Closing; (C) no party is
in breach or default, and no event has occurred which with notice or lapse of
time, or both, would constitute a breach or default or permit termination,
modification, or acceleration, under the written arrangement; and (D) no party
has repudiated any provision of the written arrangement. Xxxxxx is not a party
to any verbal contract, agreement, or other arrangement which, if reduced to
written form, would be required to be listed in Section 3(o) of the Disclosure
Schedule under the terms of this Section 3(o). No unfilled customer order or
commitment obligating Xxxxxx to deliver products or perform services will result
in a loss to Xxxxxx upon completion of performance. No order or commitment, sold
or produced for Xxxxxx is in excess of normal requirements, nor are prices
provided therein in excess of current market prices for the products or services
to be provided thereunder.
p. Notes and Accounts Receivable. All notes and accounts receivable of
Xxxxxx are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims, are presently current and collectible,
and will be collected in accordance with their terms at their recorded amounts,
subject only to the reserve for bad debts set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of Xxxxxx and subject further to the uncollectibility of the Joy of
Mining, Franklin P.A. account ($3,614.00) and the CSS Power account ($799.00).
q. Accounts Payable. Section 3(q) of the Disclosure Schedule sets forth
all of the accounts payable of Xxxxxx as of June 27, 1999 arising out if its
operation of the Business identifying each such account by title, nature of
expenditure, total amount due thereunder and payment terms. All such payables
represent accounts for bona fide purchases of goods or services by Xxxxxx in
connection with the Business and Xxxxxx is in full compliance of any claim,
dispute or disagreement regarding the same.
r. Insurance. Each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and bond and
12
surety arrangements) to which Xxxxxx has been a party, a named insured, or
otherwise the beneficiary of coverage at any time within the past five years has
issued by Travelers Insurance Company and a copy thereof has been furnished to
Buyer.
With respect to each insurance policy, to Seller's knowledge: (A) the policy is
legal, valid, binding, and enforceable and in full force and effect; (B) the
policy will continue to be legal, valid, binding, and enforceable and in full
force and effect on identical terms following the Closing Date; (C) Xxxxxx or
any other party is not in breach or default (including with respect to the
payment of premiums or the giving of notices), and no event has occurred which,
with notice or the lapse of time, would constitute such a breach or default or
permit termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. Xxxxxx has been
covered during the past five years by insurance in scope and amount customary
and reasonable for the businesses in which it has engaged during the
aforementioned period. There are no formal self-insurance arrangements affecting
Xxxxxx.
s. Litigation. Section 3(s) of the Disclosure Schedule sets forth each
instance in which Xxxxxx (i) is, to Seller's knowledge, subject to any Adverse
Consequence or (ii) is a party or, to the Knowledge of the Seller and the
directors and officers (and employees with responsibility for litigation
matters) of Xxxxxx, is threatened to be made a party to any Adverse Consequence.
None of the Adverse Consequences set forth in Section 3(s) of the Disclosure
Schedule could result in any adverse change in the assets, Liabilities,
business, financial condition, operations, results of operations, or future
prospects of Xxxxxx taken as a whole. Neither the Seller nor the directors and
officers (and employees with responsibility for litigation matters) of Xxxxxx
has any reason to believe that any other Adverse Consequence may be brought or
threatened against Xxxxxx.
t. Employees and Employee Benefits. Except as set forth on Section 3(t)
of the Disclosure Schedule, Xxxxxx does not have, or is bound by, any oral or
written employment, bonus, performance, compensation, commission, management,
pension, retirement, stock purchase, savings, profit-sharing, retainer, group
insurance, termination, severance, consulting, sales representative, distributor
or similar incentive or benefit agreements, contracts, understandings or
arrangements with any of its personnel.
(i) Xxxxxx has paid in full all wages, salaries, commissions, bonuses,
vacation pay, sick pay and other direct and indirect compensation and benefits
earned by all employees, representatives, contractors and agents through the
Closing Date, as well as all payroll and withholding taxes and all payroll
overheads. Other than as set forth on the Most Recent Balance Sheet, there are
no bonuses or commissions accrued or payable by Xxxxxx with respect to any
fiscal periods ending on or before June 26, 1999 that remain unpaid in whole or
in part, or which are in dispute or the subject of any claim.
(ii) Section 3(t) of the Disclosure Schedule contains a true and
complete list of all current employees, consultants, representatives, agents,
and contractors of Xxxxxx together with job title and description and current
compensation rates (salary, bonus, commission and otherwise).
(iii) Except as set forth in Section 3(t) of the Disclosure Schedule,
there are no collective bargaining agreements or union or labor agreements to
which Xxxxxx is a party or is bound or affecting the business thereof. Except as
13
set forth in Section 3(t) of the Disclosure Schedule, there are no pending, and
during the twelve (12) months preceding the date of this Agreement there have
been no, disputes, strikes, work slow-downs, walkouts, disturbances, slowdowns,
grievances, arbitrations, or filings of any actions, claims, litigation,
proceedings, investigations or complaints of unfair labor practices, harassment,
discrimination, wrongful termination, wage or back pay demands or other
employment-related difficulties with respect to any Xxxxxx employees of, and
Xxxxxx knows of no basis for any of the foregoing. Each collective bargaining
agreement or other union contract set forth in Section 3(t) of the Disclosure
Schedule (each a "Xxxxxx Union Contract") is in full force and effect; provided
that it has not been fully signed by all union representatives; Xxxxxx has made
all payments and contributions due under such Xxxxxx Union Contract and is
otherwise in full compliance with the terms and conditions of such Xxxxxx Union
Contract, and there are no defaults under the Xxxxxx Union Contract or claims
thereof by the union, any employees or any governmental or labor relations
agency. There are no disputes or grievances pending or Threatened with respect
to any Xxxxxx Union Contract or any employees covered thereby, and Xxxxxx knows
of no basis for any of the foregoing.
(iv) Except as set forth on Section 3(t) of the Disclosure Schedule,
Xxxxxx and its Subsidiaries are not covered by and do not maintain, participate
in, contribute to, or operate any pension, retirement, profit-sharing, 401(k) or
other employee benefit plan, do not maintain or contribute to and are not
required to contribute to any employee benefit plan (within the meaning of
Section 3(2) of ERISA), which is intended to qualify under paragraph 401(a) of
the IRC, and Xxxxxx and its Subsidiaries have not been required to contribute to
any employee benefit plan which is a multi-employer plan (within the meaning of
Section 3(37) of ERISA) in the five (5) years immediately preceding the date
hereof. Xxxxxx and its Subsidiaries have no responsibility for and have not
assumed any pension-related or employee benefit plan-related liabilities
(including, without limitation, withdrawal liability) of any other predecessor
business or person. With respect to each and every employee benefit plan of
Xxxxxx and its Subsidiaries identified on Section 3(t) of the Disclosure
Schedule (each, a "Xxxxxx Benefit Plan"), each Xxxxxx Benefit Plan conforms to,
and its administration is in compliance with, applicable federal laws,
including, but not limited to, ERISA and the Code. There are no pending, or
threatened or anticipated, audits, assessments, disputes or claims by, on behalf
of, or against, any Xxxxxx Benefit Plan, or Xxxxxx by any participant or
beneficiary thereunder or any governmental agency.
(v) Xxxxxx has fully paid and performed all liabilities and obligations
whatsoever relating to their participation in the multi-employer pension plans
set forth in Section 3(t) of the Disclosure Schedule, including, without
limitation, payment of all contributions and assessments, whether imposed by
such plan or the trustees thereof or ERISA, as amended by the Multi-Employers
Pension Plan Amendment Act of 1980, or otherwise. There are no pending, or
Threatened or anticipated, audits, assessments, disputes or claims by, on behalf
of, or against, Xxxxxx by any such plan, the trustees thereof, any related
union, any participant or beneficiary thereunder or any governmental agency.
u. Guaranties. Xxxxxx is not a guarantor or otherwise is liable for any
Liability or obligation (including indebtedness) of any other person.
v. Environment, Health, and Safety.
14
(i) Xxxxxx has complied with all Laws concerning the environment,
public health and safety, and employee health and safety, and no Adverse
Consequence has been filed or commenced against any of the alleging any failure
to comply with any such Law.
(ii) Xxxxxx has no Liability (and there is no Basis related to the past
or present operations, properties, or facilities of Xxxxxx for any Adverse
Consequence against Xxxxxx giving rise to any Liability) under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control Act
of 1972, the Clear Air Act of 1970, the Safe Drinking Water Act of 1974, the
Toxic Substances Control Act of 1976, the Refuse Act of 1899, or the Emergency
Planning and Community Right-to-Know Act of 1986 (each as amended), or any other
Law concerning release or threatened release of hazardous substances, public
health and safety, or pollution or protection of the environment.
(iii) Other than as set forth in the Disclosure Schedule, Xxxxxx has no
Liability and has not handled or disposed of any substance, arranged for the
disposal of any substance, or owned or operated any property or facility in any
manner that could form the Basis for any Adverse Consequence for damage to any
site, location, or body of water (surface or subsurface) or for illness or
personal injury.
(iv) Xxxxxx has no Liability (and there is no Basis for any Adverse
Consequence) under the Occupational Safety and Health Act, as amended, or any
other Law concerning employee health and safety.
(v) Xxxxxx has no Liability (and Xxxxxx has not exposed any employee to
any substance or condition that could form the Basis for any Adverse
Consequence) for any illness of or personal injury to any employee.
(vi) Xxxxxx has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, local, and foreign laws
(including rules, regulations, codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health and
safety, worker health and safety, and pollution or protection of the
environment, including Laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes.
(vii) All properties and equipment used in the Business have been free
of asbestos, PCB's, methylene chloride, trichloroethylene, 1,
2-xxxx-dichloroethylene, dioxins, dibenzofurans, and Extremely Hazardous
Substances.
(viii) No pollutant, contaminant, or chemical, industrial, hazardous,
or toxic material or waste ever has been buried, stored, spilled, leaked,
15
discharged, emitted, or released on any Real Property that Xxxxxx owns or ever
has owned or that Xxxxxx leases or ever has leased.
w. Compliance with Applicable Laws. The Business is being conducted in
compliance with all applicable laws, including, without limitation, all
insurance laws, ordinances, rules and regulations, decrees and orders of any
governmental entity, and all notices, reports, documents and other information
required to be filed thereunder within the last three years were properly filed
and were in compliance in all respects with such laws. Xxxxxx has complied with
all Laws in all material respects, and no Adverse Consequence has been filed or
commenced against Xxxxxx alleging any failure to comply with any such Law.
x. Licenses. Section 3(x) of the Disclosure Schedule sets forth a
complete list of all licenses, franchises, permits, approvals, authorizations,
exemptions, classifications, registrations, rights and similar documents. Xxxxxx
own or validly holds all licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, registrations, rights and similar
documents which are necessary for it to own, lease or operate its properties and
assets and to conduct its business as now conducted. The Business has been and
is being conducted in compliance in all material respects with all such
licenses. All such licenses are in full force and effect, and there is no
proceeding or investigation pending or, threatened which would reasonable be
expected to lead the revocation, amendment, failure to renew, limitation,
suspension or restriction of any such license.
y. Certain Business Relationships with the Seller . The Seller has not
been involved in any business arrangement or relationship with Xxxxxx within the
past 12 months, and the Seller and his Affiliates do not own any property or
right, tangible or intangible, which is used in the Business.
z. Brokers' Fees. Neither the Seller nor Xxxxxx has Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
aa. Consents. Section 3(aa) of the Disclosure Schedule sets forth a
complete list of consents of governmental and other regulatory agencies, and of
other parties required to be received by or on the part of the Seller and Xxxxxx
to enable the Seller or Xxxxxx to enter into and carry out this Agreement in all
material respects. All such requisite consents have been obtained.
bb. Year 2000 Compliance. Xxxxxx has (a) initiated a review and
assessment of all areas within its business and operations that could be
adversely affected by the Year 2000 Problem, (b) developed a plan and timeline
for addressing the Year 2000 Problem on a timely basis, and (c) to date,
implemented that plan in accordance with that timetable. Based on the foregoing,
Xxxxxx believes that all computer applications are reasonably expected on a
timely basis to be able to perform properly date-sensitive functions for all
dates before and after January 1, 2000.
cc. Investments. Xxxxxx has no outstanding agreements and commitments
for investments in securities.
16
dd. Dealings with Affiliates. Section 3(dd) of the Disclosure Schedule
hereto sets forth a complete list, including the Parties, of all oral or written
agreements and arrangements to which Xxxxxx is, will be or has been a party, at
any time from January 1, 1998 to the Closing Date, and to which any one or more
Affiliates is also a party.
ee. Banking Arrangements. Section 3(ee) of the Disclosure Schedule sets
forth the name of each bank in or with which Xxxxxx has an account, credit line
or safety deposit box, and a brief description of each such account, credit line
or safety deposit box, including the names of all persons currently authorized
to draw thereon or having access thereto.
ff. Investment Representations.
(i) The Seller has been given access to all publicly available
information relating to the business and assets of Buyer which the Seller has
requested. On the basis of the foregoing, Seller is familiar with the
operations, business plans and financial condition of Buyer.
(ii) Seller understands that Buyer proposes to issue and deliver the
Shares for the Buyer without compliance with the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), that for such
purpose Buyer will rely upon the representations, warranties, covenants and
agreements contained herein; and that such noncompliance with registration is
not permissible unless such representations and warranties are correct and such
covenants and agreements performed.
(iii) Seller understands that, under existing rules of the Securities
and Exchange Commission (the "SEC"), there are substantial restrictions in the
transferability of the Buyer Stock; the Buyer Shares may be transferred only if
registered under the Securities Act or if an exemption from such registration is
available; Seller may not be able to avail himself of the provisions of Rule 144
promulgated by the SEC under the Securities Act with respect to the transfer of
such shares; and the Seller may have to hold the Buyer Shares indefinitely.
Notwithstanding the foregoing, the Company will use its reasonable efforts to
cause Rule 144 to be available to the Seller for resale of the Buyer Shares.
(iv) Seller is a sophisticated investor familiar with the type of risks
inherent in the acquisition of securities such as the Buyer Shares and such
Seller's financial position is such that such Seller can afford to retain the
Buyer Shares for an indefinite period of time without realizing any direct or
indirect cash return on such Seller's investment.
(v) The Seller is acquiring the Buyer Shares for his own account and
not with a view to, or for sale in connection with, the distribution thereof
within the meaning of the Securities Act.
(vi) Seller understands that the certificates evidencing the Buyer
Shares will bear appropriate restrictive legends.
gg. Receipt of Corporate Information. All requested publicly available
documents, records and books pertaining to the Buyer, including, without
limitation, Buyer's Annual Report on Form 10-KSB for the Year Ended June 27,
1998 (the "Form 10-KSB") and Quarterly Report on Form 10-QSB for the Quarter
17
Ended March 26, 1999 (the "Form 10-QSB" and together with the Form 10-KSB, the
"SEC Documents"), have been delivered to the Seller, and all of the Seller's
questions and requests for information have been answered to the Seller's
satisfaction.
hh. Disclosure. Neither this Agreement nor any of the schedules,
exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Buyer by or on behalf of the Seller or
Xxxxxx with respect to the transactions contemplated hereby contains any untrue
statement of a material fact or omits a material fact necessary to make each
statement contained herein or therein not misleading. There is no fact which the
Seller or Xxxxxx has not disclosed to the Buyer in writing and of which any of
Xxxxxx'x respective officers, directors or executive employees or the Seller is
aware and which could reasonably be anticipated to have Adverse Consequences on
Xxxxxx or the ability of the Buyer to continue the Business in the same manner
as Xxxxxx has conducted its business prior to the Closing Date.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to Seller and Xxxxxx that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
a. Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
b. Authorization of Transaction. The Buyer has corporate power and
authority to execute and deliver this Agreement and the Notes and to perform its
obligations hereunder and thereunder. This Agreement and the Notes each
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer Shares have been duly
authorized, and when issued in accordance with this Agreement, will be validly
issued, fully paid and nonassessable.
c. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any Law to which the Buyer is subject or any provision of its
charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, Security
Interest, or other arrangement to which the Buyer is a party or by which it is
bound or to which any of its assets is subject. The Buyer does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency for the Parties to consummate
the transactions contemplated by this Agreement.
d. Compliance with Applicable Laws. The Buyer's business is being
conducted in compliance with all applicable laws, including, without limitation,
all insurance laws, ordinances, rules and regulations, decrees and orders of any
18
governmental entity, and all notices, reports, documents and other information
required to be filed thereunder within the last three years were properly filed
and were in compliance in all respects with such laws. Buyer has complied with
all Laws, and no Adverse Consequence has been filed or commenced against Buyer
alleging any failure to comply with any such Law.
e. Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
f. Undisclosed Liabilities. Buyer has no Liability (and there is no
Basis for any present or future Adverse Consequence against Buyer giving rise to
any Liability), except for (i) Liabilities set forth in the financial statements
contained in the SEC Documents and (ii) Liabilities which have arisen since the
SEC Documents were filed in the Ordinary Course of Business (none of which
relates to any breach of contract, breach of warranty, tort, infringement, or
violation of law or arose out of any Adverse Consequence).
g. SEC Documents. The SEC Documents at the time they were filed with
the Securities and Exchange Commission, complied in all material respects with
the requirements of the Securities Exchange Act of 1934, and do not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
h. Disclosure. Neither this Agreement nor any written statements,
documents, certificates or other items prepared for or supplied to Seller by or
on behalf of Buyer with respect to the transactions contemplated hereby or the
SEC Documents contains any untrue statement of material fact or omits a material
fact necessary to make each statement contained herein or therein not
misleading. There is no fact which Buyer has not disclosed to Seller in writing
and of which any of Buyer's respective officers, directors or executive
employees is aware and which could reasonably be anticipated to have Adverse
Consequences on Buyer.
5. Covenants Of The Parties. Xxxxxx and Seller hereby covenant and
agree with Buyer:
a. Consents. Xxxxxx will obtain, prior to the Closing, all consents
necessary, in the opinion of Buyer's counsel, to the consummation of the
transactions contemplated hereby. All such consents will be in writing and
executed counterparts thereof will be delivered to Buyer prior to the Closing.
b. Supplements to Schedules. From time to time prior to the Closing,
Seller and Xxxxxx will promptly supplement or amend any Schedule hereto with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
any such Schedule. No supplement or amendment of any such Schedule made pursuant
to this Section shall be deemed to cure any breach of any representation of or
warranty made in this Agreement; provided, that if Buyer elects to close the
transaction, the Schedules shall be deemed to include any amendments and
supplements. If Buyer expressly agrees in writing to any supplement or amendment
to any such Schedule, then, the sole existence of any such express amendment or
supplement will not be a basis for the Buyer's refusing to close the transaction
contemplated by this Agreement.
19
c. Other Transactions. Neither Xxxxxx nor Seller shall enter into any
discussions concerning, or approve or recommend any merger, consolidation,
disposition of all or substantially all of its business, properties or assets
(other than pursuant to this Agreement), acquisition or other business
combination, or proposal therefor, or furnish or cause to be furnished any
information concerning the business, properties or assets of Xxxxxx to any party
in connection with any Xxxxxx transaction involving the acquisition of Xxxxxx or
all or any substantial part of its assets by any person other than Buyer unless
the Closing does not occur prior to September 1, 1999.
d. Remedies. That in the event of the breach or threatened breach by
Xxxxxx or Seller of any of the terms and conditions of this Agreement, then
Buyer shall be entitled, if it so elects, to institute and prosecute any
proceedings in any court of competent jurisdiction either in law or equity, for
such relief as it deems appropriate including, without limiting the generality
of the foregoing proceedings, to obtain damages for any breach of this Agreement
or to enforce the specific performance thereof by Xxxxxx or Seller or to enjoin
them from performing services for any other person, firm or corporation; in any
such action, Buyer is successful in whole or in part, Buyer shall further, as an
element of Buyer's damages, be liable for the attorney's fees of Buyer in the
prosecution of such action or proceeding.
e. Employee Benefits. Buyer agrees that for the duration of the life of
Seller and Seller's spouse, Seller and Seller's spouse will continue to be
eligible to participate in Xxxxxx'x health plans and that Buyer will not modify
or discontinue the existing plans for the Baltimore location without the consent
of Seller and his spouse. To the extent required by existing law and to
integrate Xxxxxx'x employees into Buyer's benefit plans, Buyer and Seller agree
to mutually negotiate or develop any modifications to Xxxxxx'x existing pension
plans so that Xxxxxx'x employees will have substantially similar benefits and as
to not violate any provisions of ERISA.
f. Buyer agrees that it will continue Xxxxxx'x policy of providing the
post retirement supplemental Medicare insurance referred to on Schedule
(o)(vii)(bb) of the Disclosure Schedule for the duration of the lives of Xxxx
Xxxxxxxx and Xxxxxx Xxxxxxxxx and their respective spouses.
g. Buyer agrees that if it has knowledge of any breach of any
representation or warranty by Seller or Xxxxxx prior to Closing, it will inform
Seller promptly, and in any event, prior to Closing.
6. Conditions To Xxxxxx'x And Seller' Obligations. Each and every
obligation of Xxxxxx and Seller under this Agreement to be performed on or
before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by Xxxxxx
and Seller:
a. Representations and Warranties True. The representations and
warranties of Buyer contained herein shall be in all material respects true and
accurate as of the date when made and at and as of the Closing as though such
representations and warranties were made at and as of such date, except for
changes expressly permitted or contemplated by the terms of this Agreement.
20
b. Performance. Buyer shall have performed and complied with all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing.
c. No Governmental Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
d. Items to be Delivered at Closing by Buyer. At the Closing, Buyer
shall deliver to Seller the Cash Payment and a certificate representing the
Buyer Shares.
e. Agreements. On or before the Closing Date, Buyer shall enter into an
employment agreements with Seller, Xxxx Xxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxx
Xxxxxxxxx and Xxxx X. Xxxxxxxx on the terms previously agreed between Xxxxxx and
Buyer.
7. Conditions To Purchaser's Obligations. Each and every obligation of
Buyer under this Agreement to be performed on or before the Closing shall be
subject to the satisfaction, on or before the Closing, of each of the following
conditions, unless waived in writing by Buyer:
a. Representations and Warranties True. The representations and
warranties contained in Article II hereof, the Schedules and in all certificates
and other documents delivered and to be delivered by Xxxxxx and Seller or its
representatives pursuant hereto or in connection with the transactions
contemplated hereby shall be true, complete and accurate as of the date when
made and at and as of the Closing Date as though such representations and
warranties were made at and as of such date, except for changes expressly
permitted or contemplated by the terms of this Agreement or changes which are
not material in the aggregate.
b. Performance. Xxxxxx and Seller shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to be
performed or complied with by them on or prior to the Closing.
c. Investigations; Etc. No investigation of Xxxxxx and Seller by Buyer,
nor the Schedules or any supplement thereto nor any other document delivered to
Buyer as contemplated by this Agreement, shall have revealed any facts or
circumstances which, in the sole and exclusive judgment of Buyer, reflect in a
material adverse way on the financial condition, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, business, operations or prospects
of Xxxxxx.
d. Consents. The consents from third parties and government agencies
required to consummate the transactions contemplated hereby shall have been
obtained.
e. No Government Proceeding or Litigation. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
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f. No Injunction. On the Closing Date there shall be no injunction,
writ, preliminary restraining order or any order of any nature issued by a court
of competent jurisdiction directing that the transactions provided for herein or
any of them not be consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which the Buyer deems
unacceptable in its sole discretion.
g. Material Change. From the date of the Financial Statements to the
Closing Date, Xxxxxx shall not have suffered any unanticipated material adverse
change (whether or not such change is referred to or described in any supplement
to the Schedules) in its business, prospects, financial condition, working
capital, assets, liabilities (absolute, accrued, contingent or otherwise),
reserves or operations.
h. Miscellaneous Closing Documents. At the Closing, Xxxxxx and Seller
shall deliver to the Buyer:
(i) Certificates representing the Shares with a duly endorsed stock
power;
(ii) Certificate of Xxxxxx and Seller that the representations and
warranties contained in Article 2 of this Agreement are true and correct in all
material respects at and as of the Closing Date, except for representations and
warranties specifically relating to a time or times other than the Closing Date,
which shall be true and correct in all material respects at such time or times,
8. Conduct Of Xxxxxx'x Business Pending The Closing. Pending the
Closing and except as otherwise expressly consented to or approved by Buyer in
writing:
a. Conduct of Business. Xxxxxx will carry on its business diligently
and substantially in the same manner as heretofore conducted, so that at the
Closing no representation or warranty of Xxxxxx will be inaccurate, and no
covenant or agreement of Xxxxxx will be breached. Except as otherwise required
by the Buyer in writing, until the Closing, Xxxxxx will use its best efforts to
preserve its business, to keep available the services of its present personnel,
to preserve in full force and effect the contracts, agreements, instruments,
leases, licenses, arrangements, and understandings of Xxxxxx, and to preserve
the good will of their suppliers, customers, and others having business
relations with any of them.
b. Amendments. No change or amendment shall be made in the charter
documents of Nelson.
c. Capital Changes; Dividends Redemptions. Nelson will not issue or
sell any additional shares of its capital stock or other securities, acquire
directly or indirectly, by redemption or otherwise, any such shares or split-up
any such capital stock, declare or pay any dividends thereon in cash, securities
or other property or make any other distribution with respect thereto, or grant
or enter into any options, warrants, calls or commitments of any kind with
respect thereto.
d. Subsidiaries. Xxxxxx will not organize any new subsidiary, acquire
any capital stock or other equity securities of any corporation, partnership, or
other entity or acquire any equity or ownership interest in any business.
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e. Access to Information. Xxxxxx shall give to Buyer's officers,
employees, counsel, accountants and other representatives free and full access
to and the right to inspect, during normal business hours, all of the premises,
properties, assets, records, contracts and other documents relating to its
business and shall permit them to consult with the officers, employees,
accountants, counsel and agents of Xxxxxx for the purpose of making such
investigation of Xxxxxx as Buyer shall desire to make, provided that such
investigation shall not unreasonably interfere with Xxxxxx'x business
operations. Furthermore, Nelson shall furnish to Buyer all such documents and
copies of documents and records and information with respect to the affairs of
the Business and copies of any working papers relating thereto as Buyer shall
from time to time reasonably request and shall permit Buyer and its agents to
make such physical inventories and inspections of Xxxxxx as Buyer may request
from time to time.
f. Certain Changes. Xxxxxx will not:
(i) Borrow or agree to borrow any funds or incur, or assume or become
subject to, whether directly or by way of guarantee or otherwise, any obligation
or liability (absolute or contingent), except obligations and liabilities
incurred in the ordinary course of business and consistent with past practice;
(ii) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities or obligations reflected or reserved against in the
Financial Statements or incurred in the ordinary course of business and
consistent with past practice since the date of the Financial Statements;
(iii) Prepay any obligation having a fixed maturity of more than 90
days from the date such obligation was issued or incurred;
(iv) Permit or allow any of its property or assets (real, personal or
mixed, tangible or intangible) to be subjected to any mortgage, pledge, lien or
encumbrance;
(v) Write off as uncollectible any accounts receivable except in the
ordinary course of business;
(vi) Cancel any debts or waive any claims or rights of substantial
value or sell, transfer, or otherwise dispose of any of its properties or
assets, except in the ordinary course of business and consistent with past
practice;
(vii) Grant any general increase in the compensation of its officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officer or employees;
(viii) Pay, loan or advance any amount to, or sell transfer or lease
any properties or assets to, or enter into any agreement or arrangement with,
Seller, officers or any affiliates;
(ix) Agree, whether in writing or otherwise, to do any of the
foregoing.
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g. Contracts. No contract or commitment will be entered into, and no
purchase of raw material or supplies and no sale of assets will be made, by or
on behalf of Xxxxxx, except (i) normal contracts or commitments for the purchase
of, and normal purchases of, inventory or supplies, made in the ordinary course
of business an consistent with past practice, and (ii) other contracts,
commitments, purchases or sales in the ordinary course of business and
consistent with past practice not in excess of $50,000 in the aggregate.
h. Insurance; Property. Xxxxxx shall adequately insure all property,
real, personal and mixed, owned or leased by Xxxxxx, against all ordinary and
insurable risks; and all such property shall be used, operated, maintained and
repaired in a careful and reasonably efficient manner.
i. No Default. Xxxxxx shall not do any act or omit to do any act, or
permit any action or omission to act, which will cause a breach of any material
contract or commitment of Xxxxxx or which would cause the breach of any warranty
made hereunder.
j. Compliance With Laws. Xxxxxx shall duly comply with all laws
applicable to it and its properties, operations, business and employees.
k. Material Developments. Xxxxxx shall promptly notify Buyer of the
occurrence of any and all events which have, or may have, a material effect upon
the business, or financial condition of Xxxxxx.
9. Survival of Terms; Indemnification.
a. Survival. The indemnities contained herein shall survive the Closing
and any investigation made with respect thereto for a period commencing on the
date hereof and ending on the first anniversary of the Closing Date; provided,
however, that such indemnities shall survive as to any claim or demand made
prior to first anniversary until such claim or demand is fully paid or otherwise
resolved by the parties hereto in writing or by a court of competent
jurisdiction; and provided, further, however, that such indemnities shall
survive to the expiration of the applicable statute of limitations for any Tax
or environmental liability of Xxxxxx for the operation of its business prior to
the Closing Date.
b. Indemnification by the Seller and Xxxxxx. The Seller and Xxxxxx,
jointly and severally, hereby indemnifies and holds harmless Buyer in respect of
any and all Adverse Consequences incurred by Buyer in connection with each and
all of the following:
(i) Any misrepresentation or breach of any warranty made by the Seller
or Xxxxxx in this Agreement or in any Schedule, Exhibit, or other document
attached hereto or delivered to Buyer by the Seller or Xxxxxx in connection with
the transactions contemplated hereby.
(ii) The breach of any covenant, agreement, or obligation of the Seller
or Xxxxxx contained in this Agreement or any Schedule or Exhibit hereto or any
other instrument specifically contemplated by this Agreement.
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(iii) Any misrepresentation contained in any statement in writing or
certificate furnished by Seller or Xxxxxx pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement.
(iv) Any liability or obligation of any kind or nature that arises out
of, or relates to, any pension, retirement, profit sharing, deferred
compensation, bonus or other incentive plan, or any collective bargaining
agreement or other labor agreement, including single or multi-employer plans or
agreements, to which Xxxxxx or any of its affiliates is a party or by which any
of them is bound, except as specifically set forth in the Disclosure Statement
hereof.
(v) Any liability, obligation or claim for Taxes owed by the Seller or
Xxxxxx which could affect or constitute a lien or claim with respect to Xxxxxx'x
assets of Seller and with respect to any period ending on or before the Closing
Date.
(vi) Any misrepresentation in or omission from any list, Schedule,
Exhibit, certificate or other instrument required to be furnished or
specifically contemplated to have been furnished pursuant to this Agreement to
Buyer or its authorized representatives.
(vii) Except as may otherwise be provided in the Disclosure Schedule,
any and all payments due and owing by Xxxxxx to its employees who leave its
employ and become employees of Buyer with respect to periods of employment up to
the Closing insofar as such payments relate to salary, bonuses, compensation,
vacation pay, sick leave, retirement benefits and/or fringe benefits as shown on
the various employee benefit plans which Xxxxxx currently maintains and any
other forms of remuneration owed by Xxxxxx to its employees.
(viii) Any material variance between the Financial Statements taken as
a whole attached hereto as Exhibits and the financial statements for such
periods arising from adjusting entries required in the written opinion of
PricewaterhouseCoopers LLC to cause the Financial Statements to satisfy
generally acceptable accounting principles.
c. Indemnification by the Seller and Xxxxxx Regarding Environmental
Condition. The Seller and Xxxxxx hereby and herewith acknowledges the effect and
operation of all Laws concerning the environmental condition of Xxxxxx'x assets
existing and applicable as of the Closing Date. Subject to the provisions of the
Disclosure Schedule, the Seller and Xxxxxx hereby indemnifies and holds Buyer
harmless in respect of any and all Adverse Consequences incurred by Buyer in
connection with the matters set forth herein to the extent that the Seller would
have had liability or responsibility had the Seller not sold Xxxxxx; provided,
however, it is understood and agreed that Buyer shall be liable and responsible
for new environmental conditions independently occurring or caused by Buyer
after the Closing Date and that, in fact, Buyer will and hereby does agree to
indemnify and hold harmless the Seller from any such previously disclosed and
new and independently caused condition or occurrence.
d. Indemnification by Buyer. Buyer hereby indemnifies and holds
harmless the Seller and Xxxxxx in respect of any and all Adverse Consequences
incurred by Seller in connection with each and all of the following:
(i) Any misrepresentation or breach of any warranty made by Buyer in
this Agreement or in any Schedule, Exhibit, or other document attached hereto or
delivered to the Seller or Xxxxxx by Buyer or any officer of Buyer in connection
with the transactions contemplated hereby.
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(ii) The breach of any covenant, agreement, or obligation of Buyer
contained in this Agreement or any Schedule or Exhibit hereto or any other
instrument specifically contemplated by this Agreement.
(iii) Any misrepresentation contained in any statement in writing or
certificate furnished by an officer of Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement.
e. Indemnification Procedures. Whenever any claims shall arise for
indemnification hereunder, the party seeking indemnification ("Indemnitee")
shall promptly notify the other party ("Indemnitor") of the claim and, when
known, the facts constituting the basis for such claim. If any claim for
indemnification hereunder results from or is in connection with any claim or
Adverse Consequence by a person who is not a party to this Agreement ("Third
Party Claim"), such notice shall also specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The Indemnitee shall
give the other party prompt notice of any such claim and the Indemnitor shall
undertake the defense thereof by representatives of its own choosing, reasonably
satisfactory to the Indemnitee, at the expense of the Indemnitor. The Indemnitee
shall have the right to participate in any such defense of a Third Party Claim
with advisory counsel of its own choosing, at its own expense. If Indemnitor,
within a reasonable time after notice of any such Third Party Claim, fails to
defend, the Indemnitee or any subsidiary or affiliate of the Indemnitee shall
have the right to undertake the defense, compromise or settlement of such Third
Party Claim on behalf of, and for the account of, Indemnitor, at the expense and
risk of Indemnitor. Indemnitor shall not, without the Indemnitee's written
consent, settle or compromise any such Third Party Claim or consent to entry of
any judgment that does not include, as an unconditional term thereof, the giving
by the claimant or the plaintiff to Indemnitee and/or Indemnitee's subsidiary or
subsidiaries, or Affiliate or Affiliates, as the case may be, an unconditional
release from all liability in respect of such Third Party Claim. Notwithstanding
any provision herein to the contrary, failure of Indemnitee to give any notice
required by this Section shall not constitute a waiver of Indemnitee's right to
indemnification or a defense to any claim by Indemnitee hereunder. All
indemnification hereunder shall be effected upon demand by delivery by Seller at
Seller's option of (i) cash or (ii) Buyer's shares valued at the average of the
bid and asked price during the 10 business days preceding delivery or (iii) a
certified or cashier's check in the amount of the indemnification liability, or
any combination thereof.
f. Indemnification Limitations. Neither party will have liability for
indemnification or otherwise with respect to any Adverse Consequence, unless the
amount of such Adverse Consequence exceeds $25,000. Neither party will have any
liability or indemnification or otherwise with respect to Adverse Consequences
until the total amount of all such Adverse Consequences exceeds $200,000 and
then only for the amount by which such Adverse Consequences exceed $200,000.
The calculation of the amount any Adverse Consequence shall in
all instances be net of any amounts recovered by the indemnitee under insurance
policies with respect to such matter and net of the tax benefit realized by the
indemnitee with respect to such matter.
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In the event that indemnification is sought with respect to any account
receivable which proves to be uncollectible, Buyer shall assign to Seller the
unpaid balance of such account receivable.
10. Post Closing Covenants.
a. Post Closing Covenants of Buyer. Buyer shall cause Seller to be
released from all guarantees of Xxxxxx'x indebtedness to Allfirst Bank, N.A. on
or before August 31, 1999. Buyer shall cause Xxxxxx to pay as soon as
practicable but in any event on or before December 17, 1999 the Promissory Note
referred to in Section 3.g(xii) above.
11. Miscellaneous.
a. Press Releases and Announcements. No Party shall issue any press
release or announcement relating to the subject matter of this Agreement prior
to the Closing without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by law or regulation (in which case the disclosing Party will advise
the other Party prior to making the disclosure).
b. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
c. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefits of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
d. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
e. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
f. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Xxxxxx: Attn. : Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
27
Copy to: Xxxxxx X. Xxxxxxx, III, Esq.
Venable Xxxxxxx Xxxxxx LLP
1800 Mercantile Bank & Trust Building
0 Xxxxxxx Xxxxx
Xxxxxxxxx,Xxxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
If to the Buyer: Pallet Management Systems Inc.
Attn.: Xxxxxxx Xxxxxxxxxx, President
Xxx Xxxxx Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
Copy to: Xxxxxxx X. Xxxxxx, Esq.
Broad and Xxxxxx
0000 Xxxxxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, confirmed telecopy, telex, ordinary mail, or electronic
mail), but no such notice, request, demand, claim, or other communication shall
be deemed to have been duly given unless and until it actually is received by
the individual for whom it is intended. Any Party may change the address to
which notices, requests, demands, claims, and other communications hereunder are
to be delivered by giving the other Party notice in the manner herein set forth.
g. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the law of conflicts) of the State of
Delaware.
h. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Parties. The Seller may consent to any such amendment at any time prior to the
Closing with the prior authorization of their respective board of directors. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach or warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
i. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phases,
28
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
j. Expenses. Except as otherwise specified, each of the Buyer, the
Seller will bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions contemplated
hereby.
k. Construction. The language used in this Agreement will be deemed to
be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. Any reference to
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. Nothing in the Disclosure Schedule shall be deemed adequate
to disclose an exception to a representation or warranty made herein unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
l. Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
m. Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably if any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter (subject to the provisions set forth in Section 7(n) below, in addition
to any other remedy to which it may be entitled, at law or in equity).
n. Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Maryland in any action or
proceeding arising out of or relating to this Agreement, agrees that all claims
in respect of the action or proceeding may be heard and determined in any such
court, and agrees not to bring action or proceeding arising out of or relating
to this Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto. Any Party may make service on the other Party by
sending or delivering a copy of the process to the Party to be served at the
address and in the manner provided for the giving of notices in Section 7(f).
29
Nothing in this Section 7(n), however, shall affect the rights of any Party to
serve legal process in any manner permitted by law. Each Party agrees that a
final judgment in any action or proceeding so brought shall be conclusive and
may be enforced by suit on the judgment or in any other manner provided by law.
o. Entire Agreement. This Agreement (including the documents, referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, that may have related in any way to the subject matter hereof.
SIGNATURES ON NEXT PAGE
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PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
as of the date first above written.
BUYER:
PALLET MANAGEMENT SYSTEMS, INC.,
a Florida corporation
By: /s/ Xxxx X. Xxxx, III
------------------------------
Xxxx X. Lucy III, Chairman and
Chief Executive Officer
SELLER:
/s/ Xxxxxx X.Xxxxxxxxx
-------------------------------
XXXXXX X. XXXXXXXXX
THE XXXXXX COMPANY,
a Maryland corporation
By: /s/ Xxxxxx X.Xxxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxxx, President
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