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EXHIBIT 10.77
This Asset Purchase Agreement (this "Agreement"), dated as
of December 31, 1998 is made and entered into by and among TOLEDO
PICKLING AND STEEL SALES, INC., an Ohio corporation, (hereinafter
referred to as "Seller"), and TPSS ACQUISITION CORPORATION, an
Ohio corporation (hereinafter referred to as "Purchaser").
RECITALS:
A. Seller is in the business of processing, warehousing
and selling steel (the "Business"). The principal customers of
Seller are located in Ohio, Michigan, Indiana and Illinois.
B. Purchaser desires to purchase from Seller, and Seller
desires to sell to Purchaser, substantially all of the assets of
Seller and to assume certain liabilities of Seller, upon the
terms and conditions set forth in this Agreement.
Now, Therefore, in consideration of the recitals and of the
terms and conditions set forth below, the parties hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement to Purchase and Sell. Subject
to all of the terms and conditions of this Agreement, at the
Closing (as defined in Section 2.1), Seller shall sell, transfer
and deliver to Purchaser, and Purchaser shall purchase, all
right, title and interest of Seller in and to all of the Assets
(as defined in Section 1.2), free and clear of all mortgages,
liens, security interests and encumbrances, except for the
Assumed Liabilities, as hereinafter defined.
Section 1.2 Assets to be Sold. The term "Assets"
shall mean all of the assets, properties and rights of Seller
used directly or indirectly in the conduct of, or generated by or
constituting, the Business, except as expressly set forth in
Section 1.3, including, without limitation:
(a) all cash and cash equivalents, in transit, on hand or in
bank accounts, all checks, drafts and deposits of any kind or
nature, investments, and the cash surrender value of any life
insurance policies net of loans (collectively, "Cash");
(b) all notes and accounts receivable;
(c) all inventory, consisting of raw materials, spare parts and
supplies;
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(d) all prepaid items and assets;
(e) all machinery, equipment, furniture, fixtures, leasehold
improvements, data processing and other systems, capitalized
leases, and other tangible personal property;
(f) to the extent permitted by applicable law, all rights under
all written or oral contracts, purchase orders, sales orders,
commitments, agreements, leases, subleases, instruments,
licenses, certificates of occupancy, operating permits or any
other permit or approvals of any nature, or other document,
commitment, arrangement, undertaking, practice or authorization
to which Seller is a party;
(g) all of Seller's right, title and interest in and to the name
"Toledo Pickling and Steel Sales, Inc." and Seller's business
telephone numbers;
(h) all rights under any trademark, service xxxx, trade name or
copyright, whether registered or unregistered, and any
applications therefor;
(i) all technologies, methods, formulations, data bases, trade
secrets, know-how, inventions and other intellectual property
used in the Business or under development;
(j) all information, files, accounts, books, records, data and
plans related to the Business, including customer and supplier
lists;
(k) the Seller's Business as a going concern and its goodwill.;
and
(l) all claims, rights of action and choses in action of Seller
that arose or accrued or relate to time periods prior to Closing.
Section 1.3 Excluded Assets. Notwithstanding the
foregoing, the term "Assets" shall not include any of the
following, as the Seller is not selling and Purchaser is not
purchasing or assuming obligations with respect to the following
(collectively the "Excluded Assets"):
(a) the items set forth on Schedule 1.3;
(b) the corporate seal, certificate of incorporation, minute
books, stock transfer records, tax returns, books of account and
other records having to do with the corporate organization of the
Seller; and
(c) all rights accruing to Seller under this Agreement and the
instruments and certificates delivered in connection with this
Agreement.
Section 1.4 Purchase Price; Assumption of Liabilities;
Excluded Liabilities
(a) As consideration for the purchase of the Assets,
Purchaser shall, at Closing, assume and agree to pay, discharge,
or perform, as appropriate, the following liabilities and
obligations of Seller (collectively, the "Assumed Liabilities")
set forth in this Section 1.4(a); provided, however, that (i)
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Purchaser shall not assume, agree to pay, discharge or perform
the liabilities and obligations of Seller set forth in Section
1.4(b) and (ii) Purchaser's obligations hereunder are further
subject to the limitations set forth in Section 1.4(c):
(i) Seller's liabilities and obligations under the Restated Loan
and Security Agreement by and among Seller, National Bank of
Canada ("NBC") and Finova Capital Corporation ("Finova"), dated
December 1, 1997, as to which the outstanding principal loan
balance due thereunder as of November 30, 1998 (the "Balance
Sheet Date") was approximately $6,570,814 (the "Revolving Loan
Agreement");
(ii) Seller's liabilities and obligations under the Loan and
Security Agreement by and between Seller and Finova, dated
December 1, 1997, as to which the outstanding principal loan
balance due thereunder, as of the Balance Sheet Date was
approximately $2,686,964 (the "Term Loan Agreement");
(iii) all liabilities and obligations relating to product
liability claims for use of goods or products manufactured,
sold, tested, handled or distributed by Seller in connection
with the Business prior to or on the Closing Date or by the
Purchaser in connection with the Business after the Closing
Date which causes or caused, or allegedly causes or caused, or
is deemed to cause or have caused personal injury or property
damage taking place with respect to all injured persons and
damaged property subsequent to the Closing Date;
(iv) any liabilities or obligations of Seller relating to
warranty claims for products sold by Seller within 90 days
prior to the Closing Date;
(v) all liabilities and obligations of the Seller existing as of
the Closing Date under the Leases and Contracts listed as items
3, 4, 5, 6, 14, 15, 19, 22, 32, 33 and 34 of Schedule 3.21
("Assumed Leases and Contracts"); and
(vi) the items set forth on Schedule 1.4(a).
(b) Notwithstanding Section 1.4(a), in no event shall
Purchaser assume or incur any liability or obligation under this
Section 1.4 or otherwise in respect of any of the following
(collectively, the "Excluded Liabilities"):
(i) any liability or obligation in respect of any claim of any
breach by Seller of any provision of any agreements, contracts,
commitments, purchase orders, equipment leases, real property
leases, subleases, documents, instruments and undertakings
relating to the Business which are outstanding on the Closing
Date (collectively, the "Contracts"), regardless of when made
or asserted, which arises out of Seller's operation of the
Business prior to the Closing or any service performed or any
product designed, sold, manufactured or shipped by or on
behalf of Seller prior to the Closing;
(ii) any liability or obligation relating to the Excluded
Assets;
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(iii) subject to Section 8.2, any liability or obligation of
Seller arising or incurred in connection with the negotiation,
preparation and execution of this Agreement and the
transactions contemplated hereby, including any fees or
expenses of Seller's counsel, accountants or other experts,
and any brokerage or finders fee or commission or other
payment to any entity or person in connection with the
consummation of the transactions contemplated hereby; and
(iv) any liability or obligation of Seller identified on
Schedule 1.4(b) as an "Excluded Liability".
(c) Purchaser and Seller acknowledge and agree that
the total amount of Seller's debt to NBC and Finova ("Secured
Debt") which is to be assumed, paid or discharged by Purchaser
pursuant to the terms and provisions of this Agreement, and as
specifically set forth in Section 1.4(a)(i) and (a)(ii), shall
not exceed Ten Million Nine Hundred Thousand Dollars
($10,900,000). The total amount of Seller's liabilities other
than Secured Debt ("Non-Secured Debt") which is to be assumed,
paid or discharged by Purchaser pursuant to the terms and
provisions of this Agreement shall not exceed Eight Million Eight
Hundred Thousand Dollars ($8,800,000). Accordingly, the total
amount of the Assumed Liabilities shall not exceed Nineteen
Million Seven Hundred Thousand Dollars ($19,700,000). In the
event that the amount of the Secured Debt to be assumed, paid or
discharged by Purchaser is greater than $10,900,000 and/or the
amount of the Non-Secured Debt to be assumed, paid or discharged
by Purchaser is greater than $8,800,000, Seller shall deliver to
Purchaser at Closing, in immediately available funds, an amount
equal to the amount by which the Secured Debt and/or the Non-
Secured Debt exceed their respective above-stated ceilings.
Section 1.5 Allocation of Purchase Price. The
purchase price shall be allocated among the Assets as set forth
in a purchase price allocation statement (the "Purchase Price
Allocation") to be executed and delivered by each party at the
Closing. The Purchase Price Allocation may be adjusted after
Closing by Purchaser and Seller in writing. The Purchase Price
Allocation shall be arrived at arm's length between the parties.
Each party agrees to complete and to file IRS Form 8594 with its
federal income tax return consistent with the Purchase Price
Allocation for the tax year in which the Closing occurs, and no
party shall take a position on any tax return before any
governmental agency or in any judicial proceeding that is in any
manner inconsistent with the Purchase Price Allocation without
prior consent of the other party.
ARTICLE II
CLOSING
Section 2.1 Time and Place of Closing. The closing
(the "Closing") of the transactions contemplated herein shall be
held at the offices of Xxxxxxx & Xxxxx at 0000 Xxxxxxxx Xxxxx,
Xxxxxx, Xxxx, at 10:00 a.m., on December __, 1998 or such other
place or date as the parties may agree (the "Closing Date").
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Section 2.2 Items to be Delivered at Closing. At
the Closing, the following documents (the "Closing Documents")
shall be executed and delivered by the parties thereto:
(a) Seller shall execute and deliver to Purchaser:
(i) an assignment and xxxx of sale, substantially in the form of
Exhibit A;
(ii) an assumption agreement substantially in the form of
Exhibit B (the "Assumption Agreement");
(iii)the Purchase Price Allocation;
(iv) UCC-1 Financing Statement, as appropriate; and
(v) such other documents or instruments as Purchaser may
reasonably require.
(b) Purchaser shall execute and deliver to Seller:
(i) the Assumption Agreement;
(ii) the Purchase Price Allocation;
(iii)an Employment/Consulting Agreement between Xxxxxxx
Xxxxxxxx and Purchaser in substantially the form attached
hereto as Exhibit C;and
(iv) such other documents or instruments as Seller may
reasonably require.
(c) Purchaser shall deliver to Seller:
(i) the Equipment Purchase Agreement relating to Xxxx-Xxxx .50
inch maximum level line and the Xxxx-Xxxx .25 inch maximum
level line in the form attached hereto as Exhibit D;
(ii) the Unconditional and Continuing Guaranty of
Consolidated Capital of North America, Inc. with respect to
the Unconditional and Continuing Guaranty July 6, 1998,
issued by Xxxxxxx Xxxxxxxx in favor of Toledo Blank, Inc.
(iii)Purchaser's Consent and Acknowledgment of Capital Bank,
N.A.'s security interest in the equipment subject to the
Equipment Lease Agreements referenced in paragraph (d)(iv)
and(d)(v);
(iv) an agreement by the Purchaser to indemnify Shareholder
regarding any liabilities that Shareholder may have under
the Leases and Contracts listed in items 7 through 13, 16,
17, 18, 20, 21 and 24 through 30 of Schedule 3.21, in the
form attached hereto as Exhibit G hereto; and
(v) legal opinions of Purchaser's counsel in substantially the
same form as Exhibit E attached hereto.
(d) Seller shall deliver to Purchaser:
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(i) an Employment/Consulting Agreement between Xxxxxxx Xxxxxxxx
and Purchaser in substantially the form attached hereto as
Exhibit C, executed by Xxxxxxx Xxxxxxxx;
(ii) lease for the real property occupied by Seller and
located at 0000 Xxxxxxxx Xxxx, Xxxxxx, Xxxx (the "Plant") by
and between Xxxxxxxx Investors, as lessor, and Purchaser, in
form and substance satisfactory to Purchaser in its sole
discretion, and executed by the lessor;
(iii) the Equipment Purchase Agreement relating to Xxxx-Xxxx
.50 inch maximum level line and the Xxxx-Xxxx .25 inch maximum
level line in the form attached hereto as Exhibit D, as
executed by Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx;
(iv) an assignment of the Equipment Lease Agreement between
Seller and Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx dated as of June
1, 1998 relating to a Xxxx-Xxxx .50 inch maximum level line;
(v) an assignment of the Equipment Lease Agreement between
Seller and Xxxxxxx Xxxxxxxx dated as of June 1, 1998 relating
to a Xxxx-Xxxx .25 inch maximum level line; and
(vi) legal opinions of Seller's counsel in substantially the
same form as Exhibit F attached hereto.
Section 2.3 Delivery of Possession. At the Closing,
Seller shall deliver possession of the Assets and, simultaneously
with such delivery shall take all steps as may be required to put
Purchaser in actual possession and operating control of the
Assets, including, without limitation, delivery to Purchaser of
all keys to the premises on which the Business is operated or the
Assets are located, all access codes, security codes, passwords
and the like. Seller shall execute and deliver such further
documents and instruments as Purchaser may reasonably request in
order to cause full possession and control of all of the Assets
and of all other things and matters pertaining to the operation
of the Business to be transferred and delivered to Purchaser.
Section 2.4 Third Party Consents. If Purchaser
closes notwithstanding the absence of any necessary third-party
consents, Seller, at its expense, shall use commercially
reasonable efforts to obtain any such required consents as
promptly as possible after Closing, provided that Seller shall
not be required to expend any money for such purposes.
Section 2.5 Further Assurances. From time to time
after the Closing, at Purchaser's request and expense, Seller
shall execute, acknowledge and deliver to Purchaser such other
instruments of conveyance and transfer and shall take such other
actions and execute and deliver such other documents,
certifications and further assurances as Purchaser may reasonably
require in order to put Purchaser more fully in possession of any
of the Assets, or to better enable Purchaser to perform or
discharge any of the Assumed Liabilities. Each of the parties
hereto shall cooperate with the other and execute and deliver to
the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time
to time by the other party hereto as necessary to carry out,
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evidence, and confirm the intended purposes of this Agreement and
the consummation of the transactions hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as
follows:
Section 3.1 Corporate Existence. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio. Seller is duly qualified to
do business, and is in good standing as a foreign corporation in
each jurisdiction where the conduct of the Business by it
requires it to be so qualified, except where the failure to be so
qualified or licensed would not have a material adverse effect on
Seller, Purchaser or the Business. Seller has not, within the
six (6) year period immediately preceding the date of this
Agreement, changed its name, been the surviving entity of a
merger or consolidation, or acquired all or substantially all of
the assets of any person or entity. Schedule 3.1 sets forth all
the fictitious names under which Seller or its predecessors have
conducted business.
Section 3.2 Corporate Power; Authorization;
Enforceable Obligations. Seller has the corporate power and
authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Seller
has been duly authorized by all necessary corporate action. This
Agreement has been, and the other agreements, documents and
instruments required to be executed and delivered by Seller
hereunder (the "Seller's Documents") will be, duly executed and
delivered by Seller and constitute valid and legally binding
obligations of Seller, enforceable against it in accordance with
the terms hereof and thereof.
Section 3.3 No Conflicts. The execution, delivery
and performance of this Agreement and the Seller's Documents does
not and will not violate, conflict with or result in the breach
of any term, condition or provision of, or require the consent of
any other person under: (a) any existing law or governmental rule
or regulation to which Seller is subject, (b) any judgment,
order, writ, injunction or decree of any court, arbitrator or
governmental or regulatory authority applicable to Seller, (c)
the charter documents or code of regulations of, or any
securities issued by, Seller, or (d) any mortgage, indenture,
agreement, contract, lease or other instrument or document to
which Seller is a party, by which Seller may have rights or by
which any of the Assets may be bound or affected, or which gives
any party with rights thereunder the right to terminate, modify,
accelerate or otherwise change the existing rights or obligations
of Seller thereunder.
Section 3.4 Consents and Approvals. No
authorization, approval, consent, or other action by, or
registration or filing with, any governmental or regulatory
authority, or any other person or entity, which consent has not
been obtained and is in full force and effect, is required in
connection with the execution, delivery or performance of this
Agreement or any of Seller's Documents (as such term is defined
in Section 3.2) by Seller. Seller has all licenses, permits,
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consents, approvals, authorizations, qualifications and orders of
governmental authorities required for the conduct of its business
as presently conducted.
Section 3.5 Absence of Defaults and Certain
Liabilities. Except as set forth on Schedule 3.5, Seller is not
in default under or in violation of (1) any contract, indenture,
instrument or other agreement, arrangement or understanding to
which such Seller is a party and by which the Business may be
bound or affected, and no fact, circumstance or event has
occurred which, upon notice, lapse of time or both, would
constitute such a default or violation; (2) any applicable law,
rule or regulation affecting the Business; or (3) any judgment,
order, decree or award of any court, arbitrator, mediator or
governmental agency or instrumentality by which the Business is
bound or affected. Seller is not in default under, or in
violation of, any provision of its Articles of Incorporation or
Code of Regulations. Seller has no liability or obligation
relating to product liability claims for use of goods or products
manufactured, sold, tested, handled or distributed by Seller in
connection with the Business prior to or on the Closing Date
which causes or caused, or allegedly causes or caused, or is
deemed to cause or have caused personal injury or property damage
taking place with respect to any injured person or damaged
property. Seller has no liability or obligation relating to
warranty claims for products manufactured by Seller and delivered
to the purchaser thereof 90 days or more prior to the Closing
Date.
Section 3.6 Title to Properties. Except as set
forth on Schedule 3.6 and for assets which are currently being
leased, as of the Closing Date, Seller shall have good and
marketable title to all of the Assets (except for inventory or
other assets sold in the ordinary course of business consistent
with past practice), free and clear of all mortgages, liens,
security interests and other encumbrances and defects of title.
Section 3.7 Condition of Tangible Assets. Except as
set forth in Schedule 3.7, all tangible property included in the
Assets, including, without limitation, all equipment of Seller,
is in good operating condition and repair, except for normal wear
and tear, is not obsolete, and is available for immediate use in
the regular and ordinary course of business. Seller has not
delayed or deferred any maintenance or repair of the tangible
Assets other than consistent with good industry practices.
Section 3.8 Litigation. Except as set forth on
Schedule 3.8, there is no pending litigation, including any
arbitration, investigation or other proceeding before any court,
arbitrator or governmental or regulatory authority, or, to
Seller's knowledge, threatened against Seller relating to the
Assets, the Business or the transactions contemplated by this
Agreement. Seller is not a party to or subject to any judgment,
order, writ, injunction, or decree of any court, arbitrator or
governmental or regulatory authority which may adversely affect
Seller, the Assets or the transactions contemplated hereby.
Section 3.9 Disclosure. No representation or
warranty made in this Agreement or any exhibit or schedule hereto
and no statement or certificate or memorandum furnished or to be
furnished to Purchaser pursuant hereto or in connection with the
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transactions covered hereby contains or will contain any untrue
statement of a material fact, or omit any material fact, the
omission of which would be misleading.
Section 3.10 Financial Statements. The unaudited
consolidated balance sheet of Seller as of September 30, 1998 and
the audited financial statements for the periods ended September
30, 1997 and 1996, copies of which have been previously delivered
or are attached hereto as Schedule 3.10 (the "Financial
Statements"), are true and correct and have been prepared in
accordance with generally accepted accounting principles
consistently applied. The balance sheets contained in the
Financial Statements fairly present, in all material respects,
the Seller's financial position as of their respective dates and
set forth in full and reflect all liabilities of such business as
of such dates that would properly be reflected or reserved
against in a balance sheet prepared in accordance with generally
accepted accounting principles, and the income statements fairly
present, in all material respects, the results of the Seller's
operations for the periods indicated and covered thereby. The
footnotes contained in the financial statements for the periods
ended September 30, 1997 and 1996 disclose or describe all
contingent liabilities to the extent such liabilities are
required to be disclosed or described in financial statement
footnotes under generally accepted accounting principles. The
inventory valuations are based upon pricing the inventories at
the lower of cost or market in accordance with the established
practice of Seller for a number of years, with all obsolete or
unusable or not readily saleable inventories having been either
eliminated, properly written down or reserved against. Seller
does not know or have any reason to know of any liability or any
basis for the assertion against Seller of any liability required
to be reflected or reserved against in the balance sheets
according to generally accepted accounting principles,
consistently applied, and not so reflected or reserved. Since
September 30, 1998, no liabilities or obligations have been
incurred by Seller except for liabilities and obligations
(absolute, accrued, contingent or otherwise) incurred in the
ordinary course of business and consistent with past practice, or
as disclosed in this Agreement.
Section 3.11 Pending Claims. Except as set forth in
Schedule 3.11:
(i) there are no claims, actions, suits, disputes,
audits by a governmental authority, including claims for unpaid
taxes of any kind, pending or, to Seller's knowledge, threatened
against or affecting Seller's business;
(ii) there are no unpaid judgments of any kind against
Seller relating to its business or the Assets; and
(iii) Seller is not charged with or, to its
knowledge threatened, with a charge or violation nor, to its
knowledge, is it under investigation with respect to any alleged
violation of any provision of any federal, state or local law or
administrative ruling or regulation relating to any aspect of its
business or the Assets.
Section 3.12 Compliance with Laws. Except as set
forth in Schedule 3.12, Seller has conducted since September 30,
1995, and is presently conducting, its business in material
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compliance with all applicable U.S. and foreign laws, statutes,
ordinances, rules and regulations, except where failure to comply
would not have a material adverse effect on the Business or the
Assets. Seller is not in violation of any term of any judgment,
writ, decree, injunction or order entered by any court or
governmental authority (domestic or foreign) and outstanding
against Seller with respect to any of the Assets or the business
of Seller.
Section 3.13 Inventory. The inventory being
transferred on the Closing Date consists of items of a quality
and quantity useable or salable in the ordinary course of
business of Seller except as reserved for in the Financial
Statements. The inventory is not subject to any material write-
down or write-off for which appropriate reserves have not been
included in the Financial Statements.
Section 3.14 Other Property. Schedule 3.14 to this
Agreement is a complete and accurate schedule describing all
machinery, equipment, furniture, and other tangible personal
property owned by, in the possession of, or used by Seller in
connection with the Business, except items with net book value of
less than One Thousand Dollars ($1,000). Except as set forth on
Schedule 3.14, all property described on Schedule 3.14 is
situated at the location set forth on Schedule 3.14. Except as
stated in Schedule 3.14, no personal property used by Seller in
connection with its business is held under any lease, security
agreement, conditional sales contract, or other title retention
or security arrangement, or is located other than in possession
of Seller.
Section 3.15 Customers and Suppliers. Schedule 3.15
to this Agreement is a correct and current list, in all material
respects, of the twenty largest (by dollar volume) customers and
suppliers of the Seller's business during the last 24 months.
Seller has not received any communication from any material
customer or supplier of any intention to terminate or materially
reduce purchases from, or supplies to, Seller or the business.
Section 3.16 Corporate Documents. Seller has
furnished to Purchaser for its examination true and correct
copies of the following:
(i) the articles of incorporation and all amendments
thereto to date and Code of Regulations, as amended to date, of
Seller;
(ii) the minute book of Seller for the period
commencing June 27, 1984, containing all records required to be
set forth of all proceedings, consents, actions and meetings of
shareholders and the board of directors (including committee
meetings) of Seller; and
(iii) all governmental permits, orders and consents
issued with respect to Seller's business, and all applications
for such permits, order and consents.
Section 3.17 Zoning. Seller's business as conducted
on the Closing Date and all current uses of the Plant do not
conflict with applicable federal, state or local laws,
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ordinances, regulations, orders or zoning laws so as to interfere
with or prevent, in any material adverse manner, its continued
use for the purposes for which it is being used.
Section 3.18 OSHA. Other than as described on
Schedule 3.18, Seller and its operations and properties as such
relate to the Business are presently, in all material respects,
in compliance with all applicable Occupational Safety and Health
Administration ("OSHA") rules, regulations and laws and Seller
has not received any notice of any potential occupational safety
and health problem in connection with the operations or
properties of Seller where such problem would have a material
adverse effect on the operation of the Business.
Section 3.19 Intellectual Property. All U.S. and
foreign intellectual property owned by or licensed to Seller,
including without limitation, all license agreements relating to
patents and/or inventions, and all patents and patent
applications, all copyrights, trademarks (whether registered or
unregistered) and trade names owned by or licensed to Seller
which are of any value or importance to its business or which it
is authorized to use in the production or marketing of any
products now produced or proposed to be produced by Seller
(collectively, the "Intellectual Property") are listed in
Schedule 3.19, and to the extent indicated therein have been duly
registered in, filed in or issued by the United States and
foreign Patent Offices or other appropriate governmental office.
Except as set forth in Schedule 3.19, except for any residual
rights retained by the owners of any third party-owned
Intellectual Property licensed to Seller (all of which are
described on Schedule 3.19), Seller is the sole person entitled
to use the Intellectual Property, free and clear of any claims or
demands of any other person. Except as noted above, Seller does
not use any of the Intellectual Property by consent of any other
rightful owner thereof and there are no attachments, liens or
encumbrances thereon. Except as set forth on Schedule 3.19,
Seller does not pay any licensing fee, royalty or other payment
to any other person or entity with respect to any of the
Intellectual Property or the use thereof, and Seller's right to
use and transfer any and all of the Intellectual Property is
perpetual and unrestricted. Except as set forth on Schedule
3.19, there are no claims or demands of any other person, firm or
corporation pertaining to any of the Intellectual Property and no
actions or proceedings which have been instituted or are pending
or, to Seller's knowledge, threatened, which challenge the
validity of, or the rights of Seller with respect thereto, and,
to Seller's knowledge, no Intellectual Property infringes or is
being infringed by others or is subject to any outstanding order,
decree, judgment or stipulation.
Section 3.20 Environmental Matters. (a) Except as
disclosed on Schedule 3.20:
(i) the property and assets of Seller's business and
any of Seller's operations conducted thereon or elsewhere do not
violate, and during the period of any applicable statute of
limitations have not violated, in a material manner, any
applicable Environmental Law (as hereinafter defined), and Seller
reasonably believes that compliance with any Environmental Law
that is applicable to the Plant or the Assets, or to any of
Seller's operations conducted thereon or elsewhere on or prior to
the Closing, has been timely attained and maintained, and Seller
is not subject to any existing or, to Seller's knowledge, pending
or threatened investigation, inquiry or proceeding involving
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Environmental Laws by any person or to any order, decree,
judgment, agreement or similar obligation under any Environmental
Law;
(ii) all notices, permits, licenses or similar
authorizations, if any, currently required to be obtained or
filed under any Environmental Law in connection with (i) the use
of the Plant and Assets including, without limitation, any
underground storage tanks, and (ii) the operations of the
Business including, without limitation, past or present
treatment, storage, disposal or release of any or all petroleum
products, and any or all Hazardous Substances (as such term is
hereinafter defined) into the environment (hereinafter the
"Environmental Permits"), have been obtained or filed and Seller
has not been advised (A) that the Environmental Permits will not
be timely renewed and complied with, without material expense,
and (B) that any additional Environmental Permits that may be
required will not be timely obtained and complied with, without
material expense;
(iii) all Hazardous Substances generated at or in
connection with the Plant and operations of the Business have
been transported and otherwise handled, treated, and disposed of
in compliance with all applicable Environmental Laws;
(iv) no Hazardous Substances have been disposed of or
otherwise released, handled or stored by Seller in violation of
applicable Environmental Laws.
(b) "Environmental Laws" shall mean any and all
applicable laws, rules, orders, regulations, statutes,
ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common
law) of the United States, or any state, local, municipal or
other governmental authority, regulating, relating to or imposing
liability or standards of conduct concerning protection of the
environment or of human health or safety.
(c) "Hazardous Substances" shall mean any petroleum
products, asbestos, radioactive material, or hazardous, acutely
hazardous, or toxic substance or waste defined and regulated as
such under Environmental Laws, including without limitation the
Federal Comprehensive Environmental Response, Compensation and
Liability Act and the Federal Resource Conservation and Recovery
Act.
(d) Except as disclosed on Schedule 3.20, (i) no
notice of any violation of any Environmental Laws has been
received by Seller concerning the Plant or Assets used by Seller
and to Seller's knowledge there are no existing or pending
requirements of any governmental authority relating to
environmental matters requiring any remedial action or other
work, repairs, construction or capital expenditures with respect
to the Plant; and (ii) Seller has not been named as a
"potentially responsible party" in connection with any
environmental litigation, investigation or similar matter, and
Seller does not know of any matter in which Seller may be so
named.
(e) Except as set forth in Schedule 3.20, there is
not located in, on or under the real properties owned or used by
the Business (1) electrical transformers or other equipment
13
containing PCBs, (2) to Seller's knowledge, underground storage
tanks, whether or not regulated under the Resource Conservation
and Recovery Act, (3) to Seller's knowledge, urea-formaldehyde
foam insulation, or (4) asbestos in friable form.
Section 3.21 Leases and Contracts.
(a) Schedule 3.21 hereto sets forth a complete and
accurate list of all contracts, agreements, purchase orders,
leases, subleases, options and commitments, oral or written, and
all assignments, amendments, schedules, exhibits and appendices
thereof, affecting or relating to any asset, the Business, or any
interest therein, to which Seller is a party or by which Seller
or the Assets is bound or affected, including without limitation,
service contracts, management agreements, equipment leases,
leases of space and ground leases pertaining to any real estate
that involve commitments in excess of $2,500 (collectively the
"Leases and Contracts" and individually a "Lease and Contract").
Except as set forth on Schedule 3.21, all Leases and Contracts
are valid and in full force, and there does not exist any default
or event that notice or lapse of time, or both, would constitute
a default or event of acceleration under any of these Leases and
Contracts. Except as set forth on Schedule 3.21, no officer,
director or key employee of Seller, nor any spouse, child or
relative of any of these persons owns or has any interest,
directly or indirectly, in connection with the Leases and
Contracts.
(b) Other than as described on Schedule 3.21, none of
the Leases and Contracts has been modified, amended, assigned or
transferred and each of the Leases and Contracts is in full force
and effect and is valid, binding and enforceable in accordance
with its respective terms on each party thereto.
(c) Other than as described on Schedule 3.21, no event
or condition has happened or presently exists which constitutes a
default or breach or, after notice or lapse of time or both,
would constitute a default or breach by any party under any of
the Leases and Contracts, and Seller shall do no act nor omit to
do any act which would cause such a default or breach. There are
no counterclaims or offsets under any of the Leases and
Contracts.
(d) Except as set forth on Schedule 3.21, there does
not exist, and between the date hereof and the Closing Date
Seller will not grant or suffer, any security interest, lien,
encumbrance, mortgage or claim of others created or suffered to
exist on any interest created under any of the Leases or
Contracts.
(e) None of the Leases or Contracts shall be amended
in any material respect between the date hereof and the Closing
Date without the prior written consent of Purchaser.
(f) Except as identified on Schedule 3.21, hereto,
none of the Leases and Contracts is: (1) a capitalized lease
within the meaning of generally accepted accounting principles;
or (2) a lease with a remaining term of one (1) year or more from
Closing and which cannot be canceled within thirty (30) days at
the option of Seller without penalty.
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(g) Other than as described on Schedule 3.21, the
assignment to Purchaser of the Leases and Contracts (to the
extent that such are assigned hereunder) will not cause a default
under, alter or terminate any of the Leases and Contracts, and
such assignment will confer all Seller's rights thereunder to
Purchaser except for those consents described on Schedule 3.21,
not received by the Closing Date which were waived by Purchaser
in writing. Other than as set forth on Schedule 3.21, hereto,
the assignment to Purchaser of the Leases and Contracts (to the
extent that such are assigned hereunder) does not require any
consents. Seller has provided true and correct copies of the
Leases and Contracts, including true, correct and complete copies
of any and all written modifications and interpretations thereof
and descriptions of any and all oral modifications and
interpretations thereof.
Section 3.22 Employees. Except as provided on
Schedule 3.22, Seller does not have any employment agreements
with its employees and all such employees are employed on an "at
will" basis. Except for the liabilities assumed by Purchaser
hereunder pursuant to Section 1.4(a) above, Seller shall be
responsible for, and shall indemnify and hold harmless Purchaser
from and against any and all claims of Seller's employees for
claims arising out of their pre-Closing employment by Seller, and
Seller shall retain sole responsibility for and fully and timely
pay all salaries, wages and benefits (including long-term
disability and payroll taxes) that have accrued to their
employees through the Closing Date (whether or not such amounts
are payable prior to the Closing Date).
Section 3.23 Labor Matters. Other than as described
on Schedule 3.23 hereto, Seller is not a party to any labor
contract, collective bargaining agreement, contract, letter of
understanding (or to Seller's knowledge any other agreement,
formal or informal) with any labor union or organization which
obligates Seller to compensate its employees at prevailing rates
or union scale, nor are any of its employees represented by any
labor union or organization. Other than as set forth on Schedule
3.23, there is no pending, or to Seller's knowledge, threatened
labor dispute, work stoppage, unfair labor practice complaint,
strike, administrative, arbitration or court proceeding or order
between Seller and any present or former employees of Seller or
affecting the Seller or the Business. Seller has provided to the
Purchaser true, correct and complete copies of the executed
collective bargaining agreements, including true, correct and
complete copies of any and all written modifications and
interpretations thereof and descriptions of any and all oral
modifications and interpretations thereof. No representations
have been made to Seller, its employees or agents to employees of
Seller with respect to the Purchaser's intentions to employ, or
not to employ, Seller's employees, other than Xxxxxx Xxxx and
Xxxxxx Xxxxxxxx.
Section 3.24 Employee Benefit Plans. (a) Schedule
3.24 hereto contains a correct and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (including multiemployer plans within the meaning of
Section 3(37) of ERISA)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs,
policies or other arrangements relating to the employees of
Seller, whether or not subject to ERISA (including any funding
15
mechanism therefor now in effect or required in the future as a
result of the transactions contemplated in this Agreement or
otherwise), whether formal or informal, oral or written, under
which any employee or former employee of the Seller has any
present or future right to benefits or under which the Seller has
any present or future liability. All such plans, agreements,
programs, policies and arrangements are referred to collectively
as "Seller's Plans".
(b) The Seller has delivered, or made available, to
Purchaser a current, accurate and complete copy (or, to the
extent no such copy exists, an accurate description) of Seller's
Plans and, to the extent applicable and in existence, with
respect to Seller's Plans, (i) any related trust agreement,
annuity contract or other funding instrument; (ii) the most
recent determination letter; (iii) any summary plan description
and other written communications (or a description of any oral
communications) by Seller to its employees concerning the extent
of the benefits provided under Seller's Plans; and (iv) for the
three most recent years (A) the Form 5500 and attached schedules;
(B) audited financial statements; and (C) attorney's response to
an auditor's request for information.
(c) Seller's Plans have been administered
substantially in compliance with the terms of such Plans and all
applicable laws and no event or condition exists which, by virtue
of the transaction contemplated by this Agreement, with respect
to Seller's Plans, could reasonably be likely to result in any
liability to Purchaser, except such liabilities as are expressly
set forth in the Seller's Plans assumed by Purchaser hereunder.
(d) Except for the liabilities assumed by Purchaser
hereunder pursuant to Section 1.4(a) above, Purchaser shall not
be liable and not be responsible for any debt, obligation,
contribution, responsibility, withdrawal liability or other
liability of Seller under any of Seller's Plans.
Section 3.25 Brokers' Fee. Other than The Parkland
Group, whose fee will be settled by Seller, Seller has not
employed and is not liable for the payment of any fee to any
finder, broker, consultant or similar person in connection with
the transactions contemplated by this Agreement.
Section 3.26 Receivables. Seller's accounts
receivable and other receivables being sold pursuant to this
Agreement (collectively, "Receivables") arose from bona fide
transactions in the ordinary course of business. Other than
ordinary course adjustments not material in the aggregate, no
counterclaims or offsetting claims with respect to presently
outstanding Receivables are pending or, to the knowledge of
Seller, threatened.
Section 3.27 Insurance. Schedule 3.27 hereto sets
forth a complete and accurate list of Seller's insurance policies
maintained on its respective properties and assets (including the
Assets) and with respect to its employees and representatives and
business and which, in the reasonable judgment of Seller, covers
risks customarily insured by businesses similar to the business
of Seller.
16
Section 3.28 Absence of Certain Changes or Events.
Since November 30, 1998, and except as otherwise disclosed herein
or set forth in Schedule 3.28 or other Schedules hereto, there
has not been (i) any material adverse change in the condition
(financial or otherwise), results of operations, Assets,
properties, business or prospects of Seller taken as a whole,
(ii) any material damage, destruction or loss relating to the
business or assets of Seller, whether or not insured, (iii) any
liability created or incurred which Purchaser will assume
hereunder pursuant to this Agreement other than liabilities
created or incurred in the ordinary course of business and in
amounts not unusual in respect of the business of Seller as
customarily conducted, (iv) any material lien created on any
Asset, (v) any material capital expenditures or commitment to
make any such expenditures with respect to the Assets or as to
which Purchaser will become obligated after the Closing pursuant
to Section 1.4 of this Agreement, (vi) any condemnation
proceedings commenced with respect to any Asset or notice
received by Seller as to the proposed commencement of any such
proceedings, (vii) any rights of substantial value knowingly
waived with respect to the Assets or the business of Seller,
(viii) any sale or transfer of any Assets other than dispositions
in the ordinary course of business, or (ix) any labor disputes or
organizational activities by Seller's employees. Since June 30,
1998, other than acts relating to the transactions contemplated
by this Agreement, the business of Seller has been conducted in
all significant respects only in the ordinary course, consistent
with past practice.
Section 3.29 Tax Matters. (a) Except as set forth on
Schedule 3.29, all Tax Returns required to be filed by Seller (or
any of their predecessors) on or before the Closing Date have
been or shall be timely filed and all Taxes which are due or
which may be claimed to be due have been or shall be paid when
due. There are no liens upon any of the Assets in respect of
Taxes except for liens for current Taxes that are not yet due and
payable. All Taxes required to be withheld by Seller have been
withheld and paid over to the appropriate Tax authority. Seller
(or any predecessor) is not a party to and has not received any
written notice with respect to any proposed or pending action by
any governmental authority for assessment or collection of Taxes,
nor is party to any dispute or, to its knowledge, any threatened
dispute in which an adverse determination of such action or
dispute reasonably could be expected to result in a foreclosure
of the Assets and no such claim for assessment or collection of
Taxes has been made upon Seller. Seller has properly accrued and
reflected on the financial statements and will from the date
hereof through the Closing Date, properly accrue, all liabilities
for taxes and assessments, all such accruals being in the
aggregate sufficient for payment of all such taxes and
assessments. True , correct and complete copies of the federal
and state income tax returns and state and local sales, use, real
property and personal property tax returns of Seller for the past
three years have been delivered to Purchaser.
(b) For purposes of this Agreement, (i) the term "Tax"
or "Taxes" shall mean all income, gross receipts, gains, sales,
use, employment, franchise, profits, excise, property, value
added and other taxes, fees, stamp taxes and duties, assessments
or charges of any kind, together with any interest and penalties,
additions to tax or additional amounts imposed by any Tax
authority with respect thereto, (ii) the term "Tax Returns" shall
mean any and all returns, reports and information statements with
respect to Taxes required to be filed with the Internal Revenue
Service or other Tax authority, whether domestic or foreign,
including, without limitation any and all consolidated, combined
17
and unitary tax returns and (iii) the term "Tax authority" shall
mean any authority having jurisdiction over Taxes.
Section 3.30 Real Property. (a) Schedule 3.30 hereto
is a correct and current list, by address, owner and usage, a
true and complete list of all real property agreements (including
any amendments thereto) pursuant to which Seller leases,
subleases or otherwise occupies any real property (the "Real
Property Leases") which list is true and complete (including all
amendments and supplements thereto) and copies of which have been
furnished to Purchaser. Pursuant to the Real Property Leases,
Seller has validly existing and enforceable leasehold,
subleasehold or occupancy interests in the property leased
thereunder, in each case free and clear of all liens and free
from defaults and events which with the passage of time or notice
or both would constitute a default. The Real Property Lease is
in full force and effect and is a valid and binding obligation of
each of the parties in accordance with its terms. Except as set
forth in Schedule 3.30, the consummation of the transaction
contemplated by this Agreement will not require any consent or
approval of any landlord or sublandlord under any such Real
Property Lease, result in any increase in rent or penalty to the
party which is a tenant or subtenant thereunder or result in the
early termination of any Real Property Lease. Seller has not
transferred, assigned, hypothecated, pledged or encumbered any of
its rights or interest under any Real Property Lease. Seller has
not received any notice from any landlord or sublandlord or any
other party of the termination of any Real Property Lease.
(b) To Seller's knowledge, Seller has all permits
(including operating permits) and certificates of occupancy
necessary to operate the Plant and the equipment therein as such
is currently being operated and used, and no such permits will be
required, as a result of the consummation of the transaction
contemplated by this Agreement, to be reissued, amended, modified
or supplemented after the Closing in order to permit Purchaser
following the consummation of the transaction contemplated by
this Agreement to continue to operate the Plant and the equipment
therein as such is currently being operated and used, other than
any such permits which are ministerial in nature and are listed
in Schedule 3.30.
(c) There is no pending or, to Seller's knowledge,
threatened condemnation, expropriation, eminent domain or other
governmental taking of all or any part of any of the Leased Real
Property and Seller has not received any oral or written notice
of any of the same.
(d) None of the Leased Real Property is subject to any
contract or other restriction of any nature whatsoever (recorded
or unrecorded) preventing or limiting Seller's right to use it as
currently operated.
(e) All components of buildings, structures and other
improvements included within the Leased Real Property, including,
but not limited to, the roofs and structural elements thereof and
the heating, ventilation, air conditioning, plumbing, electrical,
mechanical, sewer, waste water, storm water, paving and parking,
and systems and facilities included therein, are in good working
order and repair (ordinary wear and tear excepted) and free of
structural defects.
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(f) All Leased Real Property and the improvements
thereon are supplied with the utilities necessary for the
operation of such facilities as currently operated.
(g) Seller has not received written notice of any
special assessment relating to any Leased Real Property or any
portion thereof, and Seller has no knowledge of any pending or
threatened special assessments.
Section 3.31 Entire Business. On the Closing Date,
Seller will transfer to Purchaser all of the Assets used by
Seller in and necessary for the conduct by Purchaser of the
Business, except for the Assets excluded from purchase hereunder
pursuant to Section 1.3.
Section 3.32 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article III,
Seller makes no representations or warranties, express or
implied, at law or in equity, in respect of the Business or the
Assets, including, but not limited to, the liabilities or
operation of the Business.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and its
successors and assigns, that:
Section 4.1 Organization. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of Ohio.
Section 4.2 Authority. Purchaser has taken all
necessary corporate action on its part as may be required under
the laws of Ohio, and under its Certificate of Incorporation and
Code of Regulations to authorize the execution, delivery and
carrying out of this Agreement on its behalf. Purchaser has the
corporate power and authority to execute, deliver and perform
this Agreement, and the other agreements, documents and
instruments required to be executed and delivered by Purchaser
hereunder (the "Purchaser Documents").
Section 4.3 Enforceability. This Agreement and the
other agreements, documents and instruments required to be
executed and delivered by Purchaser hereunder are and will be,
duly executed and delivered by Purchaser. This Agreement
constitutes a valid and legally binding obligation of Purchaser
enforceable in accordance with the terms hereof.
Section 4.4 Brokers' Fee. Purchaser has not
employed and is not liable for the payment of any fee to any
finder, broker, government official, consultant or similar person
in connection with the transactions contemplated by this
Agreement.
19
Section 4.5 No Conflicts. The execution, delivery
and performance of this Agreement and the Purchaser's Documents
by Purchaser does not and will not violate, conflict with or
result in the breach of any term, condition or provision of, or
require the consent of any other party to: (a) any existing law,
ordinance, or governmental rule or regulation to which Purchaser
is subject, (b) any judgment, order, writ, injunction or decree
of any court, arbitrator or governmental or regulatory authority
which is applicable to Purchaser, (c) the charter documents or by-
laws of Purchaser, or (d) any mortgage, indenture, agreement,
contract, lease or other instrument or document to which
Purchaser is a party or by which Purchaser is bound. No
authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory authority or third
party is required in connection with the execution, delivery and
performance of this Agreement.
Section 4.6 No Litigation. There is no claim,
litigation, investigation or proceeding pending or to the
knowledge of the Purchaser, threatened against Purchaser which
would challenge, prevent or delay the consummation of the
transactions contemplated by this Agreement.
Section 4.7 Disclaimer of Other Representations and
Warranties. Except as expressly set forth in this Article IV,
Purchaser makes no representations or warranties, express or
implied, at law or in equity.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1 Preservation of Business and Assets.
From the date hereof until the Closing, Seller agrees to use its
best efforts and shall do or cause to be done all such acts and
things as may be necessary to preserve, protect and maintain
intact the Assets, the Business and operation of the Business as
a going concern consistent with prior practice and in the
ordinary course of business, to preserve, protect and maintain
for Purchaser the goodwill of the Business' customers, suppliers,
employees, tenants and others having business relations with
Seller. Seller shall continue to collect accounts receivable
consistent with its past practices. Seller shall provide
Purchaser promptly with interim financial statements of Seller
and any other management reports, as and when they are available.
In the event there is any damage to or loss of any of the Assets
(whether by fire, theft, vandalism or other cause or casualty)
between the date hereof and the Closing Date, the Purchase Price
shall be reduced by the amount necessary to repair the damage,
which reduction shall be offset by any amounts paid by Seller's
insurance company assigned to Purchaser.
Section 5.2 Conduct of Business. Without limiting
the generality of Section 5.1, Seller agrees that, except as
required or contemplated by this Agreement or otherwise consented
to in writing by Purchaser, during the period commencing on the
date hereof and ending on the Closing Date, it will:
20
(a) (i) maintain its books, accounts and records
relating to Seller's business in the usual, regular and ordinary
manner, on a basis consistent with past practice, (ii) comply
with all laws and contractual obligations applicable to Seller
and the conduct of the business and (iii) perform all of its
material obligations relating to the Business;
(b) not (i) make any capital expenditures, (ii)
dispose of any of the Assets owned by it, (iii) modify or change
in any material respect or enter into or terminate any material
contract relating to the business of Seller; except in each case
for such actions taken in the ordinary course of business and
consistent with past practice; provided that the aggregate of
such capital expenditures shall not exceed $10,000 per month,
(iv) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial portion of the stock or
assets of, or by any other manner, any business or any
corporation, partnership, joint venture, association or other
business organization or division thereof, or (v) upgrade its
computer system;
(c) not make any change in its accounting policies
from those applied in the preparation of the 1997 audited
financial statements;
(d) not (i) permit or allow any of the Assets owned by
it to become subject to any liens or other security interest
(except as set forth in Schedule 3.6 hereto), (ii) waive any
material claims or rights relating to the business of Seller,
(iii) grant any increase in the compensation of any of Seller's
employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment), except for
reasonable increases in the ordinary course of business and
consistent with past practice, or as a result of contractual
arrangements or sales compensation plans existing on the date
hereof or (iv) enter into any agreements giving rise to
obligations on the part of Seller with respect to the business in
excess of $5,000 individually or $25,000 in the aggregate or
otherwise not terminable by the parties upon 30 days' notice,
except commitments to purchase raw materials and other trade
obligations in the ordinary course of business and consistent
with past practice;
(e) maintain such insurance as is currently in effect;
(f) give Purchaser a copy of any notice received
during the period from the date hereof to the Closing Date from
any governmental or regulatory authority or any other person
alleging any violation of any rule, regulation, law, order or
ruling;
(g) not enter into any material arrangement or
transaction between, or with its shareholder or any officer,
director, employee or affiliate of such shareholder or Seller;
(h) not amend its charter or Code of Regulations;
(i) not declare, set aside or pay any dividends on, or
make any other distributions in respect of its capital stock; and
21
(j) not enter into any contract or agreement that
violates any of the foregoing.
Section 5.3 Access to Books and Records. (a) From
the date hereof until the Closing, Seller shall give to Purchaser
and to Purchaser's counsel, accountants, and other
representatives, full access during normal business hours to all
of Seller's offices, properties, books, contracts, commitments,
records and affairs relating to the Assets and to the Business so
that Purchaser may inspect and audit them (including, without
limitation, a Phase I, Phase II, or such other environmental
assessment as may be reasonably requested) and shall furnish to
Purchaser a copy of all documents and information concerning the
properties and affairs of the Assets as Purchaser may reasonably
request. If any such books, records and materials are in the
custody of third parties, Seller shall direct such third parties
to promptly provide them to Purchaser. Copies of documents
furnished to Purchaser by Seller will be returned to Seller upon
request if the transaction is not consummated.
(b) Following the Closing Date, Purchaser shall permit
Seller's representatives (including, without limitation, their
counsel and auditors), during normal business hours, to have
reasonable access to, and examine and make copies of all books
and records of the Seller's prior business which are transferred
to Purchaser hereunder and which relate to transactions or events
occurring prior to the Closing Date.
(c) Followin g the Closing Date, Seller shall permit
Purchaser and its representatives (including, without limitation,
its counsel and auditors), during normal business hours, to have
reasonable access to, and examine and make copies of all books
and records of Seller relating to Seller's business or the
Assets, including tax records, which are retained by Seller and
which relate to transactions or events contemplated by this
Agreement occurring prior to the Closing Date. For a period of
seven (7) years after the Closing, Seller agrees that, prior to
the destruction or disposition of any such books or records,
Seller shall provide not less than forty-five (45) days nor more
than ninety (90) days prior written notice to Purchaser of such
proposed destruction or disposal. If Purchaser desires to obtain
any such documents, it may do so by notifying Seller in writing
at any time prior to the date scheduled for such destruction or
disposal. In such event, Seller shall not destroy such documents
and the parties shall then promptly arrange for the delivery of
such documents to Purchaser, its successors or assigns. All out-
of-pocket costs associated with the delivery of the requested
documents shall be paid by Purchaser.
Section 5.4 Confidentiality. Unless and until the
Closing has been consummated, Purchaser and Seller will hold, and
shall cause their officers, directors, employees, counsel,
independent certified public accountants, bankers, appraisers and
other agents to hold, in confidence all documents, records, data
and information made available to them in connection with this
Agreement with respect to the Business (the "Confidential
Information"). Prior to the Closing Date, Purchaser shall not
use any Confidential Information or other information relating to
Business which is not otherwise publicly available for any
purpose unrelated to the consummation of the transactions
contemplated hereby. Prior to the Closing Date or in the event
this Agreement is terminated, Purchaser shall not disclose any
such Confidential Information or other information to any person,
unless and until such time as such Confidential Information or
22
other information is otherwise publicly available or as the
parties are advised by counsel that such Confidential Information
or other information is required by law to be disclosed (in which
case, the other party shall be promptly notified). In the event
this Agreement is terminated, the parties agree, upon request, to
return promptly every document furnished to the other in
connection with the transactions contemplated hereby, any copies
that may have been made, and the parties shall cause their
representatives and agents to whom such documents were furnished
promptly to return such documents and any copies thereof.
Section 5.5 Expenses. Except as otherwise set forth
herein, without regard to whether the sale contemplated herein is
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses. The foregoing shall
not affect the legal right of any party to recover expenses
pursuant to any breach of this Agreement.
Section 5.6 Additional Agreements. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including but not limited to,
using its reasonable best efforts to obtain all necessary
waivers, consents, authorizations and approvals of or exemptions
by any governmental authority, self-regulatory authority or third
party, and effecting all necessary registrations and filings. In
case at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of the parties, as
the case may be, shall promptly take all such necessary action.
Where the consent of any third party is required under the terms
of any of the leases or contracts to be assumed by Purchaser
hereunder, the Seller which is a party to such lease or contract
will take all reasonable and necessary steps to obtain such
consent on terms and conditions not materially less favorable
than as in effect on the date hereof or to otherwise provide
Purchaser with the benefits of such leases or contracts. The
costs incurred in connection with the obtaining of such consents
shall be the responsibility of Seller. Seller and Purchaser
shall cooperate fully with each other to the extent reasonably
required to obtain such consents. Notwithstanding anything to
the contrary set forth in this Agreement, to the extent that any
consent or approval is not obtained with respect to any lease,
contract or any other agreement as contemplated above, this
Agreement shall not constitute an assignment or an attempted
assignment thereof. In each such case, Seller agrees to
cooperate with Purchaser in any reasonable arrangement designed
to (i) provide for Purchaser the benefits under any such lease,
contract or agreement, including enforcement at the cost and for
the account of Purchaser or any and all rights of Purchaser
against the other party or otherwise and (ii) insure performance
by Purchaser of Seller's obligations thereunder to the extent
Purchaser receives such benefits. Notwithstanding any other
provision of this Agreement, to the extent that such arrangement
cannot be made, Purchaser shall not have any obligation with
respect to any such lease, contract or agreement.
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Section 5.7 Notification. Seller shall promptly
notify Purchaser of, and furnish Purchaser any information
Purchaser may reasonably request, and keep Purchaser advised of,
the occurrence of any event or condition or the existence of any
fact that would cause any of the conditions to Purchaser's
obligations to consummate the transactions contemplated by this
Agreement not to be fulfilled, including, but not limited to the
occurrence of (i) any litigation or administrative proceeding
pending or, to the knowledge of Seller, threatened against Seller
which could, if adversely determined, have a material adverse
effect; (ii) any material damage or destruction of any of the
Assets; and (iii) any material adverse change in the condition
(financial or other), results of operations, assets, business or
prospects of Seller taken as a whole.
Section 5.8 Affiliate Transactions. Except as set
forth in Schedule 5.8 hereto, Seller shall terminate any
transactions or agreements between Seller, on the one hand, and
any officers, directors, or employees of Seller, on the other
hand.
Section 5.9 Certain Post-Closing Matters. Seller
has represented to Purchaser that Seller intends to continue its
existence following the Closing. Seller covenants that it will
not dissolve for at least one year following the Closing Date.
Seller also agrees not to provide goods or services of the kind
it provided prior to the Closing Date in competition with
Purchaser for at least twenty four months following the Closing
Date.
ARTICLE VI
SELLER'S CONDITIONS TO CLOSE
The obligations of Seller under this Agreement are subject
to the satisfaction, or waiver by Seller, on or prior to Closing,
of the following conditions:
Section 6.1 Representations and Warranties True at
Closing; Compliance with Agreement. The representations and
warranties of Purchaser contained in this Agreement (including
the Schedules and Exhibits hereto) or in any certificate or
document delivered to Seller pursuant hereto, shall be deemed to
have been made again at the Closing Date and shall then be true
in all material respects; and Purchaser shall have performed and
complied with all covenants, agreements and conditions required
by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
ARTICLE VII
PURCHASER'S CONDITIONS TO CLOSE
The obligations of Purchaser under this Agreement are
subject to the satisfaction, or waiver by Purchaser, on or prior
to Closing, of the following conditions:
Section 7.1 Representations and Warranties True at
Closing; Compliance with Agreement. The representations and
warranties of Seller contained in this Agreement (including the
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Schedules and Exhibits hereto) or in any certificate or document
delivered to Purchaser pursuant hereto, shall be deemed to have
been made again at the Closing Date and shall then be true in all
material respects; and Seller shall have performed and complied
with all covenants, agreements and conditions required by this
Agreement to be performed or complied with by them prior to or at
the Closing Date.
ARTICLE VIII
INDEMNIFICATION AND SURVIVAL OF PROVISIONS
Section 8.1 Survival. The covenants and agreements
contained in this Agreement and any agreements, certificates or
other instruments delivered pursuant to this Agreement, shall
survive the Closing and remain in full force and effect from the
date hereof. The representations and warranties set forth herein
shall survive the Closing and remain in full force and effect
until eighteen (18) months after the Closing Date; provided, that
the representations and warranties which relate to title of the
Assets shall survive indefinitely.
Section 8.2 Seller's and Shareholder's
Indemnification Obligation. If the Closing occurs, then from and
after the Closing, for a period of eighteen (18) months, Seller
and Shareholder jointly and severally shall reimburse, indemnify
and hold harmless and defend Purchaser, its officers, directors,
employees, representatives and other agents, and their successors
and assigns, against and in respect of:
(a) except for the Assumed Liabilities and for those
matters identified on Schedule 8.2 hereto, any and all claims,
demands, causes of action, damages, losses, liabilities, costs,
expenses, fees (including, without limitation, reasonable
attorneys' fees), judgments and good faith settlements of claims
or judgments arising out of or resulting from:
(i) any breach or violation of this Agreement by Seller;
(ii) any breach of the representations, warranties or
covenants made by Seller in this Agreement;
(iii) any inaccuracy or misrepresentation in the schedules
hereto or in any certificate or document delivered by
Seller in accordance with the terms of this Agreement
or in connection with the closing of the transactions
contemplated hereby; and
(iv) the Excluded Liabilities, and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section.
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Section 8.3 Purchaser's Indemnification Obligation.
If the Closing occurs, then from and after the Closing, for a
period of eighteen (18), Purchaser shall reimburse, indemnify and
hold harmless Seller, its officers, directors, employees,
representatives and other agents, and their successors and
assigns, against and in respect of:
(a) except for the Excluded Liabilities, any and all
claims, demands, causes of action, damages, losses, liabilities,
costs, expenses, fees (including, without limitation reasonable
attorneys' fees), judgments and good faith settlements of claims
or judgments arising out of or resulting from:
(i) any breach or violation of this Agreement by Purchaser;
(ii) any breach of the representations, warranties or
covenants made by Purchaser in this Agreement;
(iii) any inaccuracy or misrepresentation in any certificate
or document delivered by Purchaser in accordance with the
terms of this Agreement or in connection with the closing
of the transactions contemplated hereby; and
(iv) the Assumed Liabilities (including the Assumed Leases
and Contracts); and
(b) any and all actions, suits, claims, proceedings,
investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation,
reasonable attorneys' fees and expenses) incident to any of the
foregoing or to the enforcement of this Section.
Section 8.4 Method of Asserting Claims, etc.
(a) In the event that any claim or demand ("Claim")
for which a party (the "Indemnifying Party") is asserted against
or sought to be collected from the Indemnified Party by a third
party, the Indemnified Party shall promptly notify the
Indemnifying Party of such Claim, specifying the nature of the
Claim and the amount or estimated amount thereof (which estimate
shall not be conclusive of the final amount of such Claim) (the
"Claim Notice"). The Indemnifying Party shall have 30 days from
the Claim Notice (the "Notice Period") to notify the Indemnified
Party (i) whether or not it disputes liability to the Indemnified
Party with respect to such Claim, and (ii) notwithstanding any
such dispute, whether or not it desires, at its sole cost and
expense, to defend the Indemnified Party against such Claim.
(b) If the Indemnifying Party disputes its liability
with respect to the Claim (whether or not the Indemnifying Party
desires to defend the Indemnified Party against such Claim as
provided below), the Claim shall be resolved in accordance with
the provisions hereof relating to arbitration. Pending
resolution of the dispute, such Claim shall not be settled
without prior consent of the Indemnified Party.
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(c) In the event that the Indemnifying Party notifies
the Indemnified Party within the Notice Period that it desires to
defend the Indemnified Party against such Claim then the
Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings. If the Indemnified Party
desires to participate in (but not control) any such defense, it
may do so at its sole cost and expense.
(d) If the Indemnifying Party does not dispute its
liability with respect to such Claim, the amount of such Claim,
or if the same be defended by the Indemnifying Party then that
portion thereof as to which such defense is unsuccessful, shall
be conclusively deemed to be a liability of the Indemnifying
Party.
(e) In the event an Indemnified Party has a Claim
against the Indemnifying Party hereunder that is not being
asserted against or sought to be collected from the Indemnified
Party by a third party, the Indemnified Party shall promptly send
a Claim Notice with respect to such Claim to the Indemnifying
Party. If the Indemnifying Party disputes its liability with
respect to such Claim, such dispute shall be resolved in
accordance with the terms hereof. If the Indemnifying Party does
not notify the Indemnified Party within the Notice Period that it
disputes such Claim, the amount of such Claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder.
Section 8.5 Payment. Upon the determination of
liability of the Indemnifying Party hereunder, the Indemnifying
Party shall pay to the Indemnified Party, within 10 days after
such determination, the amount of the liability. The
Indemnifying Party shall receive a credit for any insurance
proceeds or other third-party payment received or receivable by
the Indemnified Party with respect to the Claim. Upon payment in
full, the Indemnifying Party shall be subrogated to the rights of
the Indemnified Party against any third person, firm or
corporation with respect to the Claim.
Section 8.6 Limitation on Indemnification.
Notwithstanding anything to the contrary herein, no Indemnified
Party shall be entitled to be indemnified until the amount of the
Claims against such Indemnifying Party equals or exceeds $25,000.
Once the amount of such Claims equals or exceeds $25,000, then
the Indemnified Party shall be entitled to full indemnification
for all Claims against the Indemnifying Party. Notwithstanding
anything to the contrary herein, Seller's total obligation to
indemnify Purchaser in respect of Purchaser's claims for
indemnification hereunder shall not exceed $1,100,000 (the
"Indemnification Cap"); provided, however, that said limitation
on liability shall not apply with respect to claims for a breach
of the representations set forth in Section 3.20 hereof, which
claims shall be limited to the Indemnification Cap plus the value
of the Shareholder's interest in Xxxxxxxx Investors, an Ohio
general partnership.
27
Section 8.7 Arbitration. All disputes under this
Section shall be settled by arbitration in Xxxxx County, Ohio
before a single arbitrator pursuant to the rules of the American
Arbitration Association ("AAA"). Arbitration may be commenced at
any time by any party hereto giving written notice to each other
party to a dispute that such dispute has been referred to
arbitration under this Section. The arbitrator shall be selected
by the joint agreement of Seller and Purchaser, but if they do
not so agree within 20 days after the date of the notice referred
to above, the selection shall be made pursuant to AAA rules. Any
award rendered by the arbitrator shall be accompanied by a
written opinion of the arbitrator giving the reasons for the
award, and shall be conclusive and binding upon the parties.
This provision for arbitration shall be specifically enforceable
by the parties. The decision of the arbitrator shall be final
and binding, and there shall be no right of appeal therefrom.
Any arbitration award shall be enforceable in the Common Pleas
Court of the State of Ohio, County of Xxxxx. The prevailing
party in such arbitration, as determined by the arbitrator, shall
be entitled to reasonable attorney's fees and costs of such
arbitration, costs of suit to enforce such arbitration award and
all costs of collection of such arbitration award.
ARTICLE IX
TERMINATION
Section 9.1 General. This Agreement may be
terminated and the transactions contemplated herein may be
abandoned prior to Closing, (a) by the Purchaser upon written
notice to Seller, (b) by either Purchaser or Seller, if any
permanent injunction or action by any governmental authority
preventing the consummation of the Closing shall have become
final and nonappealable, or (c) by any party by notice to the
other party in the event that the Closing Date shall not have
occurred on or before December 31, 1998.
Section 9.2 No Liabilities in Event of Termination.
In the event of any termination of the Agreement as provided in
Section 10.1 above, this Agreement shall forthwith become wholly
void and of no further force and effect and there shall be no
liability on the part of Purchaser or Seller, except that the
obligations of Purchaser and Seller under Section 9 of this
Agreement shall remain in full force and effect, and except that
termination shall not preclude any party from suing the other
party for breach of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Headings. The subject headings of the
sections, paragraphs and subparagraphs of this Agreement are
included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
Section 10.2 Entire Agreement, Modification and
Waiver. This Agreement constitutes the entire agreement between
the parties pertaining to its subject matter and supersedes all
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prior and contemporaneous agreements, representations and
understandings of the parties. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by all the parties. No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver
of any other provision, whether or not similar, nor shall any
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
Section 10.3 Counterparts. This Agreement may be
executed simultaneously in one or more counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
Section 10.4 Rights of Parties. Nothing in this
Agreement, whether expressed or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on
any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of
any third persons to any party to this Agreement, nor shall any
provision give any third persons any right of subrogation or
action over or against any party to this Agreement.
Section 10.5 Assignment. Purchaser shall not assign
this Agreement except to an affiliated designee. This Agreement
shall be binding on, and shall inure to the benefit of, the
parties to it and their respective heirs, legal representatives
and successors. Seller shall be free to assign its right to
receive payments under this Agreement to any party.
Section 10.6 Remedies. Each party's obligation under
this Agreement is unique. If any party should default in its
obligations under this Agreement, the parties each acknowledge
that it would be extremely impracticable to measure the resulting
damages; accordingly, the nondefaulting party, in addition to any
other available rights or remedies, may xxx in equity for
specific performance, and the parties each expressly waive the
defense that a remedy in damages will be adequate.
Section 10.7 Effect of Certain Actions. No action
taken pursuant to or related to this Agreement, including without
limitation any investigation by or on behalf of any party, shall
be deemed to constitute a waiver by the party taking such action
of compliance with any representation, warranty, condition or
agreement contained herein.
Section 10.8 Notices. All notices, requests, demands
and other communications under this Agreement shall be in writing
and shall be deemed to have been duly given on the date of
service if served personally on the party (including without
limitation service by overnight courier service) to whom notice
is to be given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, at the address set
forth below, or on the date of service if delivered by facsimile
to the facsimile number set forth below which facsimile is
confirmed within three days by deposit of a copy of such notice
29
in first class mail, registered or certified, postage prepaid at
the address set forth below. Any party may change its address
for purposes of this paragraph by giving the other parties
written notice of the new address in the manner set forth above.
If to Seller: TOLEDO PICKLING & STEEL SALES, INC.
0000 Xxxxxxxx Xxxx
Xxxxxx, Xxxx 00000
Facsimile number 419) 255-2243
Attention: Xx. Xxxxxxx Xxxxxxxx
with a copy to: Xxxxxxx & Xxxxxxx Co., L.P.A.
0000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, XX 00000
Facsimile number (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
If to TPSS Acquisition Corporation
Purchaser: 00000 Xx. Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile number (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
With copies to: Xxxxxxx & Xxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile number (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Section 10.9 Severability. If any provision of this
Agreement shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all other
provisions of this Agreement shall not be affected and shall
remain in full force and effect.
Section 10.10 Governing Law. This Agreement shall be
construed in accordance with, and governed by the laws of, the
State of Ohio.
In Witness Whereof, the parties to this Agreement have duly
executed it as of the date first set forth above.
Toledo Pickling & Steel Sales, Inc. Tpss Acquisition
Corporation
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By /s/ Xxxxxxx Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
--------------------- ----------------------
Name: Xxxxxxx Xxxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: President Title: President
The Shareholder by execution of this Agreement acknowledges and
confirms his obligations under Article VIII hereof.
/s/ Xxxxxxx Xxxxxxxx
---------------------
Xxxxxxx Xxxxxxxx
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List of Exhibits
Exhibit A: Assignment and Xxxx of Sale
Exhibit B: Assumption Agreement
Exhibit C: Employment/Consulting Agreement
Exhibit D: Equipment Purchase Agreement
Exhibit E: Legal opinion of Purchaser's counsel
Exhibit F: Legal opinion of Seller's counsel
Exhibit G: Indemnification of Shareholder
