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EXHIBIT 99(c)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated as of July 30,
1998, by and among AWARDS & GIFTS, INC., a Wisconsin corporation (the "Seller"
or "Company"), XXXXXXX X. XXXXXX, XX., a citizen and resident of Wisconsin, (the
"Stockholder"), and CASCO INTERNATIONAL, INC., a Delaware corporation (the
"Buyer").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of administration and
fulfillment of associate recognition programs (the "Business"); and
WHEREAS, the Seller desires to sell, assign, transfer, convey and
deliver to the Buyer and the Buyer desires to purchase all of the Seller's
right, title and interest in and to certain of the Seller's assets related to
the Business, as more particularly set forth herein; and
WHEREAS, the Stockholder has concurred in the Seller's decision to
sell the Assets (as hereinafter defined) and, in order to induce the Buyer to
enter into this Agreement, has elected to join in this Agreement for the
purposes of making certain representations, warranties and covenants;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Purchase of Assets. At the Closing (as defined in Section 12
herein), the Seller shall bargain, sell, assign, convey and transfer to the
Buyer and the Buyer shall purchase and acquire from the Seller all of the
Seller's right, title and interest in and to all of the assets of the Seller
except the Excluded Assets (as defined below) on the Closing Date (as defined in
Section 12 herein). The assets of the Seller to be purchased hereunder are
referred to as the "Assets" and shall include, without limitation:
(a) All of the Seller's (i) equipment, machinery,
furniture, fixtures and other fixed assets (ii) computer hardware and
all associated manuals, and (iii) computer software, as set forth on
Schedule 1(a) attached hereto (the "Fixed Assets");
(b) All of the Seller's inventory, whether or not reflected
on the books and records of the Seller, consisting of all finished
goods, supplies and other property held for sale, lease or
consumption in the Business, as set forth on Schedule 1(b) attached
hereto (the "Inventory");
(c) All of the Seller's customers, customer relationships
and customer lists, as set forth on Schedule 1(c) attached hereto,
and all records with respect to such lists and customer files owned
and maintained by the Seller (the "Customers");
(d) Whether or not reflected on the Seller's books and
records (i) all of the Seller's rights in the name "Awards & Gifts"
which the Seller will change in accordance with Section 3 below, and
in any trademarks or service marks used in connection with the
Business, all of which are listed on Schedule 1(d) attached hereto
(the "Trademarks"), and the goodwill of the Business in connection
therewith (the
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"Goodwill"), (ii) the going concern value of the Business (the "Going
Concern Value") and (iii) all of the Seller's rights in the patents,
patent registrations and applications, inventions, trade secrets,
secret processes, formulae, know-how and other proprietary data and
information and licenses thereof relating to the Business (the
"Rights");
(e) Except as set forth in Section 2 below, all of the
Seller's business records relating to the Business, including, but
not limited to, the accounts receivable, all personnel files with
respect to the Employees (as hereinafter defined) employed by the
Seller, supplier lists and files, sales listings, advertising and
promotional materials, labels, files and records and inventory
records (the "Records");
(f) All of the Seller's rights under all contracts, leases,
licenses and other similar agreements relating to the Business of the
Seller being acquired by the Buyer and of which a reasonable buyer
would desire to be informed in a purchase of assets similar to the
purchase of assets contemplated hereby, as set forth on Schedule 1(f)
attached hereto (the "Contracts");
(g) All of the Seller's unemployment tax reserves and
ratings relating to the Business to the extent assignment thereof to
the Buyer is permitted by applicable law and the Buyer requests that
they be assigned (the "Tax Reserves");
(h) All of the Seller's Federal, state and local licenses
required for the conduct of the Business (including, but not limited
to, environmental discharge permits) to the extent assignment thereof
to the Buyer is permitted by applicable law, all of which are listed
on Schedule 1(h) attached hereto (the "Licenses");
(i) The Buyer shall have the right to employ the Seller's
assembled work force and employees on an individual basis in Buyer's
sole discretion after the Closing from the list of the Seller's
employees appearing in Schedule 1(i) attached hereto (the
"Employees"). The parties acknowledge and agree that it is not the
intention of the parties that the contracts of employment of any of
Seller's employees shall be transferred to or assumed by Buyer as a
result of the transactions described herein;
(j) All of the Seller's rights to the telephone numbers,
facsimile numbers, and the post office boxes set forth on Schedule
1(j) attached hereto (the "Telephone Numbers, Etc."); and
(k) All other assets of the Seller other than the Excluded
Assets, used or useful in the Business.
2. Excluded Assets. The assets to be purchased and sold hereunder,
and the term "Assets" as used herein, shall not include (i) the Seller's cash on
hand or cash in Seller's bank accounts (except to the extent any such cash
represents amounts paid by or on behalf of a customer as an advance, a deposit
or any other type of payment for services or products to be rendered or
delivered in part or in whole after the Closing) and marketable securities, (ii)
the Seller's bona fide accounts receivables which have been entered on its
financial statements as of the most recent fiscal month ending July 31, 1998 and
listed by customer name, amount owing and date of creation on Schedule 2
attached hereto, (iii) the corporate seal, certificates of incorporation, minute
books, stock books, tax returns, books of account or other general corporate
records of the Seller, (iv) the Seller's pension, profit sharing and
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deferred compensation plan and any related or retirement plan assets, (v) the
Seller's rights in or under any contracts of insurance, including refunds for
premiums paid by the Seller; (vi) the Seller's interest in any tax refunds for
tax years ending on or before the Closing Date (except refunds of personal
property taxes, assessments, and levies imposed on the Assets to the extent such
taxes, assessments and levies were allocated to the Buyer as a proration
pursuant to this Agreement); (vii) all record and documents solely relating to
assets or properties not constituting the Assets; (viii) all records and
documents solely relating to any obligations of the Seller not constituting the
Assumed Liabilities (as defined herein); (ix) any medical and/or personnel
records of employees and applicants for employment who have not accepted
employment with the Buyer (except such medical and/or personnel records as to
which the Seller has been authorized or directed in writing by the employees or
applicants to deliver to the Buyers; and (x) all inventory owned by Seller's
customers that Seller is storing at Seller's facility as set forth on Schedule 2
attached hereto (collectively the "Excluded Assets").
3. Absence of Liens; Additional Instruments of Conveyance and
Transfer; Change of Seller's Name. All of the Assets will be conveyed to the
Buyer free and clear of all liens, encumbrances, security interests, charges and
liabilities. After the date hereof, the Seller shall deliver to the Buyer such
additional certificates, bills of sale, documents of title and other instruments
of conveyance and transfer, in a form satisfactory to the Buyer, as shall be
reasonably necessary and effective to vest in the Buyer good and marketable
title in and to any property sold, transferred, conveyed or delivered under this
Agreement.
The Seller agrees that within five (5) days after the Closing, it
will change its corporate name to RWT Holdings, Inc., or, if such name is not
available, such other name that is not confusingly similar to and does not
otherwise incorporate, the name "Awards and Gifts".
4. Assumption of Lease; Taxes.
(a) The Buyer will assume liability for the Seller's
obligations under the lease agreement with respect to the Seller's
facilities located at X000 X000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx.
On or before the Closing Date, the Buyer will deliver to the Seller
an assignment and assumption of lease (the "Assignment and Assumption
of Lease") substantially in the form of Exhibit A attached hereto.
(b) The Buyer will assume liability for those certain
equipment leases, as set forth on Schedule 4(b) attached hereto.
(c) Except as otherwise provided in subsections (a) and (b)
above, (the "Assumed Liabilities"), the Buyer assumes none of the
liabilities of the Seller or the Stockholder of any kind whatsoever,
including any account or note payable incurred by the Seller to any
party, whether known or unknown, contingent or realized, and the
Seller and the Stockholder will indemnify and hold the Buyer harmless
with respect to any such items.
(d) The 1998 ad valorem taxes levied on the Assets shall be
paid pro rata by the Seller and the Buyer based on the relative
number of days during 1998 in which each party owned the Assets. The
Seller shall pay all sales and other transfer taxes arising as a
result of the transfer of Assets, assessed on the Assets or their
transfer hereunder.
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5. Purchase Price.
(a) Amount. The aggregate purchase price to be paid by the
Buyer for the Assets (the "Purchase Price") in addition to the
Assumed Liabilities, shall be $1,500,000.00. The purchase price shall
be payable by the Buyer to the Seller as follows: (i) at Closing, the
amount of $1,300,000.00 shall be payable by the Buyer to the Seller
in immediately available funds; (ii) $100,000.00 payable by the Buyer
to the Seller on June 30, 1999; and (iii) $100,000.00 payable by the
Buyer to the Seller on June 30, 2000.
The additional payments required by (a)(ii) and (a)(iii)
above shall: (i) accrue interest at the rate of 8 percent (8%) per
annum beginning as of the date following the Closing Date which
interest shall be payable with the payment required under (a)(ii) and
(iii) above, and (ii) be secured by a letter of credit in form and
substance reasonably agreeable to the Stockholder and the Buyer and
issued by a bank or other financial institution of national standing
mutually agreeable to Buyer and Stockholder (the "Letter of Credit").
At the Closing, the Buyer shall execute a non-negotiable
Promissory Note, in the form attached as Exhibit E hereto (the
"Buyer's Note"), to evidence the Buyer's obligation to pay the
deferred portion of the Purchase Price.
(b) Allocation. Within ten business days after the Closing,
the Buyer and the Seller shall mutually agree on the allocation of
the Purchase Price among the Assets that reflects the reasonable fair
market value of the Assets. The Buyer and the Seller agree to use
such allocation for all Federal income tax purposes, including
without limitation on Internal Revenue Service Form 8954 (Asset
Acquisition Statement under Section 1060) which form each of the
Buyer and the Seller is required to file in connection with the
transactions contemplated hereby and which form each of the Buyer and
the Seller hereby covenants and agrees to timely and properly prepare
with its Federal income tax return.
(c) At the Closing, the Purchase Price to be paid hereunder
shall be adjusted by prorating all items customarily prorated between
a buyer and a seller in transactions of the type and nature
contemplated hereunder, including, but not limited to, personal
property taxes, insurance premiums applicable to insurance policies
assumed by the Buyer, rent and other charges due under the lease of
the Seller's facility, and other prepaid expenses. All such prorated
items shall be set forth on the Closing Statement to be executed by
the parties concurrent with this Agreement.
6. Customer Contracts. If any Contract requires the consent of a
third party to its assignment and such required consent is not obtained but
nevertheless Buyer elects to consummate the purchase of the Assets absent such
consent, the Seller and the Stockholder shall cooperate with the Buyer to obtain
the third party's consent following the Closing and, to the extent such consent
is not obtained, to provide the Buyer with the benefits under any such Contract
including the enforcement of any and all rights of Seller against the other
party or parties thereto arising out of the breach or cancellation of such
Contract by such party or parties.
7. Representations and Warranties of the Seller and the Stockholder.
The Seller and the Stockholder jointly and severally represent and warrant to
the Buyer:
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(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Wisconsin. For the purposes of this Section 7(a), "good standing"
shall mean that the Seller has filed with the Wisconsin Department of
Financial Institutions ("DFI") all reports required to be filed by
the Seller with the DFI, and Articles of Dissolution with respect to
the Seller have not been filed with the DFI. The Seller is qualified
and authorized to do business in, and is in good standing as a
foreign corporation in all other states in which such qualification
or authorization is necessary for the conduct of the business in
which the Company is now engaged and in which the failure to qualify
would have an adverse effect on the operations and financial
condition of the Company. The Seller has legal authority to enter
into and perform this Agreement, and has duly authorized the
execution, delivery and performance of this Agreement and the
transactions described herein. Seller does not presently own,
directly or indirectly, any shares of capital stock of or other
equity interest in any corporation, partnership or other entity.
(b) The Stockholder owns 100% of the issued and
outstanding shares of stock of the Seller.
(c) This Agreement, the Xxxx of Sale (as hereinafter
defined), the Employment Agreement (as hereinafter defined) and the
Assignment and Assumption of Lease (collectively, the "Related
Documents") have been validly executed and delivered by the Seller
and the Stockholder and are the valid and binding agreements and
obligations of the Seller and the Stockholder, enforceable in
accordance with their terms.
(d) The execution and delivery of this Agreement and the
Related Documents, the consummation of the transactions contemplated
hereby and thereby and the fulfillment and compliance with the terms
and provisions hereof by the Seller do not and will not violate,
conflict with or constitute a breach of, or default under or require
any consent pursuant to any law or regulation presently applicable to
the Seller, its articles of incorporation or bylaws or any order of
any court, regulatory body or arbitral tribunal or any agreement or
instrument to which the Seller is a party or by which it or any of
its property is bound.
(e) The Seller has good marketable title to, or a valid
leasehold interest in, all the Assets free and clear of all claims,
charges, liens, security interests, conditional sales agreements or
other encumbrances. The Assets are in the possession of the Seller
and are located at the Seller's facilities in Waukesha, Wisconsin.
(f) The Seller has maintained and, to the best of the
Seller's knowledge, currently maintains, good working relationships
with all of its customers (the "Customers"). The Seller is not in
default of the terms of any contract for the delivery of any
merchandise to any Customer and, except as otherwise disclosed in the
schedules hereto, no Customer has given the Seller notice
terminating, canceling or threatening to terminate or cancel any
business relationship with the Seller or, to the best of Seller's
knowledge, would terminate such relationship upon the sale of the
Assets of the Seller. The Seller has not entered into any contract
relating to the Assets or its Customers other than contracts in the
normal course of business. The Seller's relationships with its
suppliers is satisfactory and, to the best of Seller's knowledge, no
supplier would refuse to do business with the Buyer.
(g) Schedule 7(g) sets forth the following financial
statements (collectively the "Financial Statements") (i) unaudited
balance sheets and statement of income, changes in stockholders'
equity, and
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cash flow as of and for the fiscal years ended December 31, 1996 and
December 31, 1997 for the Seller; and (ii) unaudited balance sheets
and statements of income, changes in stockholders' equity, and cash
flow as of and for the months ended June 30, 1998 for the Seller. The
Financial Statements present fairly the financial condition of the
Seller as of such dates and the results of operation of the Seller
for such periods, represent actual bona fide transactions, are
correct and complete, and are consistent with the books and records
of the Seller (which books and records are correct and complete)
utilizing the accrual method of accounting for income tax reporting
purposes.
(h) Except as set forth on Schedule 7(h) attached hereto,
neither the Seller nor the Stockholder has any special or discounted
pricing arrangements that are not terminable by the Buyer at any
time, or rebate programs with any Customer.
(i) Each of the Seller and the Stockholder is solvent and
has paid and intends to pay its and his respective creditors in the
ordinary and normal course.
(j) All of the Fixed Assets are in good working order,
subject to normal wear and tear.
(k) The Seller has conducted its business in the ordinary
and normal course since the dates of the Financial Statements
delivered to the Buyer in connection with paragraph 7(g) and, since
December 31, 1997, except as set forth in Schedule 7(k) there has not
been with respect to the Seller:
(i) any adverse change in its Business, Assets,
liabilities or Financial Statements, results of
operations or prospects;
(ii) any change or amendment to its charter
documents;
(iii) any increase of more than ten percent (10%) in
any individual case or in the aggregate, in the
compensation payable or to become payable to
any employee other than the Stockholder, nor
any other change in any employment or
consulting arrangement;
(iv) any sale, assignment or transfer of any Asset,
or any additions to or transactions involving
any Asset, other than those in the ordinary
course of business; and
(v) there has not been any other occurrence, event,
incident, action, failure to act or transaction
involving the Seller other than in the ordinary
course of business.
(l) This Agreement and the Related Documents contain no
misrepresentation or untrue statement of fact by the Seller or the
Stockholder, nor does any document omit to state a fact necessary to
make such representation or statement by the Seller or the
Stockholder contained herein not misleading.
(m) There has not been incurred any obligation on behalf of
the Seller or the Stockholder to pay any commission, finder's fee or
similar charge in connection with this transaction and the Seller and
the
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Stockholder shall indemnify the Buyer with respect to any valid claim
by any person or entity claiming such fee.
(n) Except as set forth on Schedule 7(n), there is no
action, suit or proceeding at law or in equity or by or before any
governmental instrumentality, agency or arbitral body now pending or,
to the knowledge of the Seller and the Stockholder, threatened
against or affecting the Seller or any of the Assets which, if
adversely determined, would impair the right of the Seller to carry
on its business as now conducted or, which would impair its right or
ability to convey the Assets or consummate the transactions
contemplated hereunder. Neither the Seller nor the Stockholder knows
of any fact that could be reasonably anticipated to form the basis of
a product liabilities or tort claim against the Seller.
(o) No approval, consent or authorization of or
registration, declaration or filing with any governmental body or
agency is required in connection with the execution, delivery or
performance by the Seller of this Agreement or the Related Documents.
(p) None of the employees of the Seller is employed under
a contract which is not terminable at will.
(q) Each of the exhibits and schedules attached hereto is
incorporated herein by reference and is true, correct and complete in
all material respects with respect to each item thereof.
(r) Except as otherwise disclosed on the schedules hereto,
the Seller has no long-term contract with any Customer or supplier
and is not subject to any license or franchise agreement. No consent
of any supplier is required in order for the Buyer to distribute such
suppliers' merchandise, which is a part of the Assets, to the
Customers.
(s) Schedule 1(f) is a list of all contracts, leases,
licenses and other similar agreements relating to the Business of the
Seller being acquired by the Buyer and of which a reasonable buyer
would desire to be informed in a purchase of assets similar to the
purchase of assets contemplated hereby (the "Contracts"). The Seller
is not in default nor has it received any notice of default under any
such Contract or under any other obligation. Except as noted on
Schedule 1(f), all Contracts are assignable to the Buyer and have
been assigned to the Buyer by the Seller.
(t) Except as shown on Schedule 1(b) attached hereto, each
item of the Inventory is merchantable and useable in the ordinary
operations of the business, none of such items is obsolete and
nonsalable, and none of such items has been pledged or otherwise
given as collateral or is held by Seller on assignment or
consignment.
(u) The Seller has available to it on the property subject
to the Lease Agreement (the "Leased Property") sufficient power,
natural gas and water supplies and adequate sewerage and waste
disposal systems for the operation of its business as presently
conducted, and all such supplies and systems will be available after
the Closing.
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(v) To the best of the Seller's and Stockholder's
knowledge, the buildings, structures and improvements included within
the Leased Property (collectively, the "Improvements") comply in all
material respects with all applicable restrictions, building
ordinances and zoning ordinances and all regulations of the
applicable health and fire departments, and no material alteration,
repair, improvement or other work has been performed in respect to
such Improvements within the last 120 days. To the best of the
Seller's and Stockholder's knowledge, the Leased Property and the
Seller's continued use, occupancy and operation of the Leased
Property as currently used, occupied and operated does not constitute
a nonconforming use under any law, code, ordinance, rule, regulation
or order affecting such real property, and the continued existence,
use, occupancy and operation of each Improvement, and the right and
ability to repair and/or rebuild such Improvement in the event of
casualty, is not dependent on any special permit, exception, approval
or variance. To the best of Seller's knowledge, each Improvement has
direct access, adequate for the operation of the business of the
Seller in the ordinary course, to a public street adjoining such real
property on which such Improvement is situated, and no existing way
of access to any Improvement crosses or encroaches upon any property
or property interest not leased or owned by the Seller. To the best
of Seller's knowledge, there is no condemnation proceeding pending or
threatened with respect to any such real property.
(w) Except as set forth on Schedule 7(w) attached hereto,
(i) the Seller has not installed any tanks in, on or under the Leased
Property that are used or have been used for the storage of petroleum
products or any other substance, nor to the knowledge of the Seller
or Stockholder, have any such tanks ever been located in, on or under
such real property; (ii) except in the ordinary course of business
and in compliance with all applicable laws, the Seller has not stored
or used any hazardous substances or oil within the meaning of the
Environmental Laws (as defined below), in, on or at any such real
property, nor have any such hazardous substances or oil been stored
or used in, on or at any such real property; (iii) the Seller has
not, and, to the best of Seller's knowledge, no other party has,
released, spilled or disposed of any solid or hazardous wastes or
substances within the meaning of the Environmental Laws (as defined
below) in, on or under such real property; (iv) the Seller has
disposed of all hazardous wastes (as defined for purposes of the
Environmental Laws (as defined below)), if any, generated in, at or
on such real property at an off-site location in full compliance with
applicable laws and regulations; (v) the Seller has not installed or
caused to be installed any asbestos-containing materials in, on or at
any of the real property leased by it; and (vi) the Seller has not
installed or caused to be installed any, and electrical transformers,
fluorescent light fixtures with ballasts or other equipment
containing polychlorinated biphenyls located in, on or at any of the
real property leased by it.
(x) The Seller is in compliance with all applicable
Federal, state, local and foreign laws, ordinances, regulations,
orders, judgments and decrees, including, without limitation, all
Environmental Laws (as defined below) with which noncompliance could
reasonably expect to cost or will cost the Seller or the Buyer, in
the case of each such noncompliance over $200 in costs, expenses,
fines, fees, penalties, remedies, assessments, settlement costs,
damages and any other costs associated with fully curing such
noncompliance and attorneys fees, fully satisfying any governmental
or quasi-governmental authority with authority over such matters, and
the Seller has not received notice that violation of any such law,
ordinance, regulation, order, judgment or decree is being alleged. To
the best knowledge of the Seller and Stockholder, there are no
proposed laws, ordinances or regulations relating exclusively or
principally to the Business that, if enacted, would materially and
adversely affect the business of the Seller. As used herein,
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"Environmental Laws" shall mean any and all Federal, state and local
laws, regulations, ordinances and other requirements relating to
pollution or protection of the environment, including, without
limitation, laws, regulations and requirements relating to emissions,
discharges, releases or threatened releases of storm water,
pollutants, contaminants, toxic or hazardous substances, or solid or
hazardous wastes into the environment (including without limitation
ambient air, surface water, groundwater or land), or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, toxic or hazardous substances, or solid or hazardous
wastes. The Environmental Laws include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended.
(y) The Seller has filed or will file all tax returns
required to be filed for any period ending on or before the Closing
Date, or if applicable, any period that includes the Closing Date,
and has paid or will pay or cause to be paid, all income taxes due to
any taxing authority with respect to all such periods. The Seller has
not received written notice that the Internal Revenue Service or any
other taxing authority has asserted against Seller any deficiency or
claim for additional income taxes in connection therewith. The Seller
has not granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment or filing of, any
income tax.
(z) The insurance policies owned and maintained by the
Seller are listed in Schedule 7(z). The Seller has made available to
the Buyer complete and correct copies of all such policies, together
with all riders and amendments thereto. All such policies are in full
force and effect, all premiums due and payable have been paid, and no
notice of cancellation or termination has been received with respect
to any such policy which has not been replaced on substantially
similar terms prior to the date of such cancellation.
(aa) Schedule 7(aa) contains a list of all "employee
benefit plans" (as defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), bonus, stock
option, stock purchase, stock appreciation rights, phantom stock or
equity based upon compensation, deferred compensation plans or
arrangements, fringe benefits and other material employee benefit
plans, programs and arrangements maintained, or contributed to, by
the Seller for the benefit of any officers, directors or employees of
the Seller (all the foregoing being herein called "Benefit Plans").
None of such Benefit Plans constitutes an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA). Except as set forth in
Schedule 7(aa), the Seller has not incurred any liability under Title
IV of ERISA, and the Seller has not engaged in any transaction
described in Section 4069 of ERISA. Except as set forth in Schedule
7(aa), no "prohibited transaction" (within the meaning of Section 406
of ERISA or Section 4975 of the Code) in connection with which the
Seller could have any liability for damages, excise taxes or
penalties has occurred with respect to any Benefit Plan. Except as
required by Section 4980B of the Code or as set forth in Schedule
7(aa), no Benefit Plan that is an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) provides for the payment of
benefits following retirement or other termination of employment. The
Seller and all the Benefit Plans are in compliance in all respects
with the applicable provisions of ERISA and the Code. Except as set
forth in Schedule 7(aa), there are no unfunded vested liabilities
under any Benefit Plan. Except as set forth in Schedule 7(aa), no
employee of the Seller will become entitled to any bonus, retirement,
severance, job security or similar benefit solely as a result of the
Agreement, nor
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will the Agreement result in any increase or acceleration of the
rights of any participants in any Benefit Plan.
(bb) Except as set forth in Schedule 7(bb), (i) there is,
and during the past two years there has been, no labor strike,
dispute, work stoppage or lockout pending or threatened, against the
Seller; (ii) no labor organization has been certified as a
representative of any employee of the Seller, and, to the Seller's
knowledge, no union organizational campaign is in progress with
respect to the employees of the Seller and no question concerning
representation exists respecting such employees; (iii) the Seller is
not engaged in any unfair labor practice; (iv) there is no unfair
labor practice charge or complaint against the Seller pending or, to
the best knowledge of the Seller and the Stockholder, threatened,
before the National Labor Relations Board; (v) there are no pending
or, to the best knowledge of the Seller and the Stockholder,
threatened, union grievances against the Seller as to which there is
a possibility of adverse determination; (vi) there are no pending or,
to the best knowledge of the Seller and the Stockholder, threatened
charges against the Seller or any employee of the Seller before the
Equal Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices; and
(vii) the Seller has not received written notice during the past two
years of the intent of any Governmental Entity responsible for the
enforcement of labor or employment laws to conduct an investigation
of the Seller and no such investigation is in progress.
(cc) All accounts receivable of Seller have arisen out of
bona fide transactions in the ordinary course of business.
(dd) Except for those warranties expressly set forth in
this Agreement, the Seller makes no warranties, express or implied,
with respect to the Business and/or the Assets.
8. Representation and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller:
(a) The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, has legal authority to enter into and perform this
Agreement and the Related Documents and has duly authorized the
execution, delivery and performance of this Agreement and the Related
Documents.
(b) The execution and delivery of this Agreement and the
Related Documents, the consummation of the transactions contemplated
hereby and thereby, and the fulfillment and compliance with the terms
and conditions hereof and thereof, do not and will not violate,
conflict with or constitute a breach of or default under or require
any consent pursuant to any law or regulation presently applicable to
the Buyer, its articles of incorporation or bylaws or any order of
any court, regulatory body or arbitral tribunal or any agreement or
instrument to which the Buyer is a party or by which it or any of its
property is bound.
(c) This Agreement and the Related Documents do not contain
any misrepresentation or untrue statement of fact by the Buyer nor
does any of such documents omit to state a material fact necessary in
order to make any such representation or statement by the Buyer
contained herein not misleading.
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(d) There has not been incurred any obligation on behalf of
the Buyer to pay any commission, finder's fee or similar charge in
connection with this transaction and the Buyer shall indemnify the
Seller and the Stockholder with respect to any claim by any person or
entity claiming such fee.
(e) This Agreement and the Related Documents, upon
execution and delivery thereof by the respective parties, will be the
legal, valid and binding agreements of the Buyer enforceable against
the Buyer in accordance with their respective terms.
(f) The Buyer acknowledges that it is knowledgeable in the
business of the administration and fulfillment of associate
recognition programs in general, and is experienced in the
acquisition and managing of businesses engaged in activities similar
to the Business. The Buyer believes that it has been afforded full
access to the books, records, facilities and personnel of the Seller
for the purpose of conducting, and has conducted, such due diligence
investigation as it has deemed advisable of the Assets, the Assumed
Liabilities and the Business.
9. Seller's Noncompetition Agreement.
(a) Noncompetition. The Seller hereby agrees that it will not, for a
period of three (3) years, following the date of this Agreement, unless
specifically authorized by the Buyer in writing):
(i) Solicit or hire for employment or as an
independent contractor any employee of the
Seller or Buyer or solicit, encourage or
support any such employee to leave the
employment of the Buyer; and/or
(ii) Solicit, encourage or support any advertiser or
sponsor with or supplier of goods or services
to the Seller or Buyer to discontinue doing or
to reduce the amount of business with the
Buyer;
(iii) Engage in any "Competitive Activity" (as
defined below) within the "Restricted
Territory" (as defined below); and/or
(iv) Call upon any person or entity which is, at
that time, or which has been, within one (1)
year prior to that time, a customer of Seller
(including any subsidiaries thereof) within the
Restricted Territory for the purpose of
soliciting or selling products or services in
direct Competition with the Buyer.
"Competitive Activity" means: (1) the sale or production of
gifts and other items for associate recognition programs and other
similar programs with which the Seller was involved prior to this
Agreement; (2) the operation, management or direct or indirect
ownership or attempted operation, management or direct or indirect
ownership of a store, facility or business that produces, packages or
sells gifts and other items for associate recognition programs and
other similar programs; and/or (3) assist any person or other entity
in the activities described in (1) or (2) above.
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"Restricted Territory" means a geographic area within 100
miles of where the Seller conducted business, including any territory
serviced by the Seller or any of its subsidiaries
Seller acknowledges that the restrictions placed upon
Seller by this section of the Agreement are reasonable given the area
in which the Seller marketed, and the Buyer will continue to market,
its products and services, and the consideration provided by the
Buyer to the Seller and to the Stockholder pursuant to this Agreement
and the Employment Agreement. Specifically, Seller acknowledges that
the length of the covenant not to compete is reasonable and that the
definitions of "Competitive Activity" and "Restricted Territory" are
reasonable.
Seller acknowledges that all of the provisions of this
section of the Agreement are fair and necessary to protect the
interests of the Company. Accordingly, Seller agrees not to contest
the validity or enforceability of this section of the Agreement and
agrees that if any court should hold any provision of this section to
be unenforceable, the remaining provisions will nonetheless be
enforceable according to their terms. Further, if any provision or
subsection is held to be overbroad as written, Seller agrees that a
court should view the above provisions and subsections as separable
and uphold those separable provisions and subsections deemed to be
reasonable.
(b) Enforcement. In the event of any breach or threatened breach of
this section by Seller, the Buyer shall be entitled to an injunction, without
bond, restraining such breach, and costs and attorneys' fees relating to any
such proceeding or any other legal action to enforce those sections of the
Agreement. Nothing herein shall be construed as prohibiting the Seller from
pursuing other remedies available to if for such breach or threatened breach.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the covenants contained in this Section 9 shall not apply in the event
that the Buyer remains in material violation of any of its material obligations
under this Agreement to the Seller and/or Stockholder for more than thirty (30)
days after written notice to the Buyer from Stockholder or the Seller describing
the material violation or violations with enough specificity to provide the
Buyer with reasonable opportunity to cure such default.
10. Stockholder's Employment Agreement. The Stockholder shall,
simultaneously with the execution of this Agreement, enter into an employment
agreement with the Buyer (the "Employment Agreement") substantially in the form
of Exhibit B attached hereto.
11. Noncompliance with Bulk Transfer Laws; Indemnification.
(a) The Seller and the Stockholder hereby jointly and severally agree
to indemnify and hold harmless the Buyer against any claim, loss, cost or
expense, including reasonable attorneys' fees, which the Buyer may sustain as a
result of any payment which may be required to be made or any liability of any
kind which may be imposed upon the Buyer as a result of any claim, loss, cost or
expense or reasonable attorneys' fees which may be required of or incurred by
the Buyer whatsoever arising out of noncompliance with any bulk transfer laws,
the assertion of any claim against the Buyer arising out of claims against
Seller, any claims by any person for commissions, broker's or finder's fees or
similar charges, the Seller's
13
failure to qualify to transact business in any state or the existence of any
lien, encumbrance or security interest on any of the Assets.
(b) The Seller and the Stockholder hereby jointly and severally agree
to indemnify and hold harmless the Buyer against any damages suffered or
incurred by the Buyer caused by or resulting from the existence of any lien,
encumbrance or security interest on any of the Assets, or any breach of or
noncompliance with any representation, warranty or covenant of the Seller or the
Stockholder contained herein or in the Related Documents; provided, however,
that the indemnification obligations hereunder shall not apply with respect to
any liability or damage which individually does not exceed Two Thousand Five
Hundred Dollars ($2,500) until such amounts, in the aggregate exceed Two
Thousand Five Hundred Dollars ($2,500). The proviso of the preceding sentence
shall not apply to any breach or noncompliance with any representation or
warranty of which the Seller or Stockholder had actual knowledge at any time
prior to the date on which such representation or warranty is made or any
intentional breach by the Stockholder or the Seller of any covenant or
obligation.
(c) Upon receipt by the Buyer of any claim against it as described in
subsections (a) or (b) above (the "Indemnified Claims"), it shall advise the
Seller and the Stockholder of such claims and the Seller and the Stockholder
shall pay the same within ninety (90) days after notification.
(d) The Buyer shall have the right to set off against any obligation
of the Buyer to the Seller and the Stockholder, including any amounts due
pursuant to the terms of this Agreement or the Related Documents, and any
damage, loss, cost or expense, including reasonable attorneys' fees, incurred by
it resulting from Indemnified Claims or from a breach or violation by the Seller
or the Stockholder of the provisions of this Agreement after an arbitrator or
arbitrators have determined that Buyer is entitled to such amounts.
(e) The Buyer agrees to indemnify and hold harmless the Seller and
the Stockholder from and against any damages suffered or incurred by the Seller
and/or the Stockholder caused by or resulting from any breach of or
noncompliance with any representation, warranty or covenant of the Buyer
contained herein or in the Related Documents; provided, however, that the
indemnification obligations hereunder shall not apply with respect to any
liability or damage which individually does not exceed Two Thousand Five Hundred
Dollars ($2,500) until such amounts, in the aggregate exceed Two Thousand Five
Hundred Dollars ($2,500). The proviso of the preceding sentence shall not apply
to any breach or noncompliance with any representation or warranty of which the
Buyer had actual knowledge at any time prior to the date on which such
representation or warranty is made or any intentional breach by the Buyer of any
covenant or obligation.
(f) Notwithstanding anything provided herein to the contrary, the
total aggregate indemnification obligations of the Seller and the Stockholder on
the one hand, and the Buyer on the other hand, created pursuant to this
Agreement shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000.00), determined cumulatively. In addition, the indemnification
rights created hereunder shall survive the Closing and shall be effective,
subject to the provisions giving rise to such rights, only with respect to the
specific matters for which a notice of a claim for indemnification is duly given
by the party entitled to indemnification hereunder (an
14
"Indemnitee") to the party obligated to provide indemnification hereunder (an
"Indemnitor") prior to the third anniversary of the Closing.
12. Closing Date. The closing shall be at 9:00 a.m. on July 30, 1998
(the "Closing Date"), at the offices of Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.,
Charlotte, North Carolina, or as otherwise agreed upon by the parties (the
"Closing"); provided, however, that upon Closing the passage of title to the
Assets shall be deemed effective as of 12:01 a.m. on July 30, 1998.
13. Post-Closing Covenants.
(a) Payments. The Buyer will promptly deliver to the Seller all
checks or other payments in any form received which constitute payment of any
bona fide pre-Closing accounts receivable.
(b) Delivery of Mail, Etc. The Seller will deliver promptly to the
Buyer any mail, documents or instruments received by it after the Closing Date
pertaining to the post-Closing Date operations of the Buyer and the Buyer will
promptly deliver to the Seller any mail, documents or instruments received by it
after the Closing Date pertaining to the pre-Closing Date operations of such
Seller.
(c) Announcements. Seller will take all steps reasonably requested by
the Buyer to announce the transaction described herein and to facilitate the
transfer of the Assets. As a part of such process, (i) the Seller will cooperate
with the Buyer in the preparation of customer letters, press releases and other
announcements of such transaction and (ii) the parties will keep the Purchase
Price and terms of the transaction confidential, to the extent possible
considering their business needs and legal requirements.
14. Seller's Closing Deliveries. The Seller shall deliver, or caused
to be delivered, to the Buyer at the Closing each of the following, in form and
substance reasonably satisfactory to the Buyer:
(i) Certified copies of articles of incorporation and
bylaws of the Seller;
(ii) Certificate of Existence as to the Seller issued by
the Secretary of State of the State of Wisconsin as of a recent date
and any other jurisdiction in which the Seller is required to so
qualify in order to conduct business as to the good standing of the
Seller in such jurisdiction as of a recent date;
(iii) From the Department of Revenue of the State of
Wisconsin, a tax clearance certificate stating that the Seller does
not owe any employment or sales taxes to the State of Wisconsin and a
tax clearance letter stating that the Seller does not owe any
franchise or income taxes to the State of Wisconsin.
(iv) Certified copies of resolutions of the Seller's
Shareholders and Board of Directors approving the transactions set
forth herein;
(v) A signature and incumbency certificate for the Seller;
15
(vi) A Xxxx of Sale in the form of Exhibit D attached
hereto (the "Xxxx of Sale"), and such other bills of sale,
assignments of the Contracts or other certificates necessary to
transfer title to the Assets to the Buyer;
(vii) The Assignment and Assumption of Lease;
(viii) The Employment Agreement;
(ix) A favorable opinion, dated as of the Closing Date, of
Xxxxx and Keulthau, S.C., counsel to the Seller, that is acceptable
to counsel to the Buyer;
(x) An invoice for the 1998 ad valorem taxes levied on the
Assets;
(xi) A UCC-3 Termination form, prepared for filing with
the office of the Secretary of State of Wisconsin, and executed by
Firstar Bank Milwaukee, N.A., or the successor thereof, terminating
Financing Statement number 1365262.
(xii) With respect to each of the Contracts, an Assignment
and Assumption of Liabilities executed by the Seller and consented to
by each of the parties consenting thereto as contained therein
(collectively, the "Assignment and Assumption of Liabilities").
15. Buyer's Closing Deliveries.
(a) The Buyer shall have satisfied and paid $1,300,000.00
of the Purchase Price at the Closing, by wire transfer to the
Seller's account.
(b) The Buyer shall deliver or cause to be delivered to
the Seller at the Closing each of the following, in form and
substance reasonably satisfactory to the Seller:
(i) Certified copies of the Articles of
incorporation and bylaws of the Buyer;
(ii) Certificate of Existence for the Buyer
issued by the Secretary of State of the State of Delaware;
(iii) Certified copies of resolutions adopted
by the Buyer's Board of Directors approving the
transactions set forth herein;
(iv) A signature and incumbency certificate for
the Buyer;
(v) The Assignment and Assumption of Lease;
(vi) The Employment Agreement;
16
(vii) A favorable opinion, dated as of the
Closing Date, of Xxxxx Xxxxx Mulliss & Xxxxx, L.L.P.,
counsel to the Buyer, that is acceptable to counsel to the
Seller; and
(viii) With respect to each of the Contracts,
an Assignment and Assumption of Liabilities executed by
the Buyer and consented to by each of the parties
consenting thereto as contained therein;
(ix) the Buyer's Note; and
(x) the Letter of Credit.
16. Payment of Liabilities. The Seller shall, at the closing, fully
satisfy or cause to have been satisfied all third party liabilities and
obligations of the Seller.
17. Survival of Representations and Warranties. The representations
and warranties in this Agreement or in any exhibit, list, instrument or document
delivered in connection herewith shall survive the Closing Date for a period of
two (2) years from the Closing Date.
18. Notices. All notices, certificates or other communications
hereunder shall be deemed sufficiently given and shall be deemed given when
delivered by hand-delivery or mailed by first class, postage prepaid, registered
or certified mail, return receipt requested, and addressed as follows:
If to the Seller or Xx. Xxxxxxx X. Xxxxxx, Xx.
the Stockholder at: 00000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxx 00000
If to the Buyer at: Casco International, Inc.
0000 X. Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxx
The Seller, the Stockholder and the Buyer may by notice given
hereunder, designate from time to time any further or different addresses to
which subsequent notices, certificates or other communications shall be sent.
19. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Seller, the Stockholder and the Buyer and their
respective heirs, administrators, successors and assigns.
20. Amendment, Execution in Counterparts. This Agreement may not be
amended, changed, modified, altered or terminated except by instrument in
writing signed by the parties to be charged. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
21. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of North Carolina.
17
22. Severability. In the event any provision of this Agreement or any
instrument delivered in connection herewith shall be held invalid or
unenforceable by any arbitral body or court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof
or thereof.
23. Headings, Exhibits and Schedules. The paragraph headings in this
Agreement are for convenience only, and they form no part of this Agreement and
shall not affect its interpretation. All exhibits and schedules attached hereto
are hereby incorporated by reference and made a part of this Agreement.
24. Payment of Expenses; Default. Each of the parties to this
Agreement shall pay its own expenses, costs and attorneys' fees associated with
the negotiation, preparation, execution and delivery of this Agreement and the
documents related thereto and the consummation of the transactions contemplated
herein. In the event of a default in the performance of any of the provisions of
this Agreement or any of the documents related thereto, the defaulting party
shall pay the reasonable attorneys' fees of the non-defaulting party associated
with the enforcement of any of the provisions of any such document or agreement.
25. Arbitration. Except as otherwise provided herein, any
controversy, dispute or question arising out of, or in connection with, or in
relation to this Agreement or its interpretation, performance or non-performance
or any breach thereof shall be determined by arbitration conducted in Charlotte,
North Carolina in accordance with the then existing rules of The American
Arbitration Association and any decision rendered by The American Arbitration
Association shall be binding upon the parties hereto. The expenses (including
reasonable attorneys' fees) of any such proceeding shall be borne as determined
by the arbitrator(s) who shall allocate such expenses according to the relative
merits of the claims or defenses of the parties thereto. Any judgment upon any
award, which may include an award of damages, may be entered in the highest
State or Federal court having jurisdiction thereof.
26. Entire Agreement. This Agreement and accompanying documents
contain the entire agreement between the parties with respect to the subject
matter hereof and all prior or contemporaneous written or oral agreements with
respect to the subject matter hereof are superseded hereby.
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IN WITNESS WHEREOF, the Seller and the Buyer have caused this
Agreement to be executed in their respective names by their duly authorized
officers and their respective seals to be hereunto affixed and the Stockholder
has hereunto set his hand and seal all as of the day first above written.
ATTEST: SELLER:
AWARDS & GIFTS, INC.
--------------------------
, Secretary
--------------
(CORPORATE SEAL) By: /s/ Xxxxxxx X. Xxxxxx, Xx.
---------------------------------
Xxxxxxx X. Xxxxxx, Xx., President
STOCKHOLDER:
/s/ Xxxxxxx X. Xxxxxx, Xx. (SEAL)
-----------------------------
Xxxxxxx X. Xxxxxx, Xx.
ATTEST: BUYER:
Xxxxxxx X. Xxxx CASCO INTERNATIONAL, INC.
--------------------------
, Secretary
--------------
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------
(CORPORATE SEAL) Xxxxxxx X. Xxxxx, President
and Chief Executive Officer
