Execution Copy
ASSET PURCHASE AGREEMENT
AMONG
WELLTECH EASTERN, INC.,
B&L HOTSHOT, INC.,
MCDOWELL & SONS, INC.,
4 STAR TRUCKING, INC.,
R.B.R., INC.,
ROYCE D. THOMAS,
JOHN F. MCDOWELL
AND
JOHN R. MCDOWELL
December 13, 1996
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
December 13, 1996 among WellTech Eastern, Inc., a Delaware corporation
("Buyer"), B&L Hotshot, Inc., a Michigan corporation ("B&L"), McDowell & Sons,
Inc., a Michigan corporation ("McDowell"), 4Star Trucking, Inc., a Michigan
corporation ("4Star"), R.B.R., Inc., a Michigan corporation ("RBR"), Royce D.
Thomas ("Royce"), John F. McDowell ("John F.") and John R. McDowell ("John R.").
B&L, McDowell, 4Star and RBR are referred to collectively herein as the
"Sellers" and individually as a "Seller." Royce, John F. and John R. are
referred to collectively herein as the "Shareholders" and individually as a
"Shareholder."
W I T N E S S E T H:
WHEREAS, the Sellers desire to sell substantially all of their assets,
and Buyer desires to acquire such assets.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements, and subject to the terms
and conditions herein contained, the parties hereto hereby agree as follows:
Article I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of the Assets. Subject to the terms and
conditions set forth in this Agreement, the Sellers hereby agree to sell,
convey, transfer, assign and deliver to Buyer all of the assets of the Sellers
existing on the date hereof other than the Excluded Assets (defined below),
whether real, personal, tangible or intangible, including, without limitation,
the following assets of the Sellers relating to or used or useful in the
operation of the businesses as conducted by the Sellers on and before the date
hereof (the "Businesses") (all such assets being sold hereunder are referred to
collectively herein as the "Assets"):
(a) all tangible personal property of the Sellers (such as
machinery, equipment, leasehold improvements, furniture and fixtures,
and vehicles), including, without limitation, that which is more fully
described on Schedule 1.1(a) hereto (collectively, the "Tangible
Personal Property");
(b) all of the Sellers' inventory, including without
limitation, that which is more fully described on Schedule 1.1(b)
hereto (collectively, the "Inventories"), subject to changes in the
ordinary course of business since the Balance Sheet Date (as defined in
Section 2.1.4 hereof);
(c) all of the Sellers' intangible assets, including without
limitation, (i) all of the Sellers' rights to the names under which
they are incorporated or under which they currently do business, (ii)
all of the Sellers' rights to any patents, patent applications,
trademarks and service marks (including registrations and applications
therefor), trade names, and copyrights and written know-how, trade
secrets, licenses and sublicenses and all other similar proprietary
data and the goodwill associated therewith (collectively, the
"Intellectual Property") used or held in connection with the
Businesses, including without limitation, that which is more fully
described on Schedule 1.1(c) hereto (the "Seller Intellectual
Property") and (iii) the Sellers' phone numbers and all of their
account ledgers, sales and promotional literature, computer software,
books, records, files and data (including customer and supplier lists),
and all other records of the Sellers relating to the Assets or the
Businesses, excluding the corporate minute books of the Sellers
(collectively, the "Intangibles");
(d) those leases, subleases, contracts, contract rights, and
agreements relating to the Assets or the operation of the Businesses,
specifically listed on Schedule 1.1(d) hereto (collectively, the
"Contracts");
(e) all of the permits, authorizations, certificates,
approvals, registrations, variances, waivers, exemptions,
rights-of-way, franchises, ordinances, orders, licenses and other
rights of every kind and character (collectively, the "Permits")
relating principally to all or any of the Assets or to the operation of
the Businesses, including, but not limited to, that which is more fully
described on Schedule 1.1(e) hereto (collectively, the "Seller
Permits");
(f) the goodwill and going concern value of the Businesses; and
(g) all other or additional privileges, rights, interests,
properties and assets of the Sellers of every kind and description and
wherever located that are used in the Businesses or intended for use in
the Businesses in connection with, or that are necessary for the
continued conduct of, the Businesses.
The Assets shall not include the following (collectively, the "Excluded
Assets"): (i) all of the Sellers' accounts receivable and all other rights of
the Sellers to payment for services rendered by the Sellers before the date
hereof; (ii) all cash accounts of the Sellers and all petty cash of the Sellers
kept on hand for use in the Businesses; (iii) all right, title and interest of
the Sellers in and to all prepaid rentals, other prepaid expenses, bonds,
deposits and financial assurance requirements, and other current assets relating
to any of the Assets or the Businesses; (iv) all assets in possession of the
Sellers but owned by third parties; (v) the corporate charter, related
organizational documents and minute books of the Sellers; (vi) the capital stock
of 4Star, all of which is held by B&L; and (vii) the cash consideration paid or
payable by Buyer to Seller pursuant to Section 1.2 hereof.
1.2 Consideration for Assets. As consideration for the sale of the
Assets to Buyer and for the other covenants and agreements of the Sellers and
the Shareholders contained herein, Buyer agrees to pay to the Sellers, on the
date hereof, the amount of $4,643,400 in the form of a cashier's check or bank
check or wire transfer of immediately available funds to an account designated
by the Sellers.
1.3 Liabilities. Effective on the date hereof, Buyer shall assume
those, and only those, liabilities and obligations of the Sellers to perform the
Contracts to the extent that the Contracts have not been performed and are not
in default on the date hereof (the "Assumed Liabilities"). On and after the date
hereof, the Sellers shall be responsible for all other liabilities and
obligations of the Sellers other than the Assumed Liabilities, including,
without limitation, any obligations arising from (i) the labor dispute described
in Schedule 2.1.9 hereto, (ii) the litigation described in Schedule 2.1.13
hereto and (iii) the Sellers' employment of those employees of the Sellers
listed on Schedule 3.2 hereto before the date hereof (collectively, the
"Retained Liabilities").
Article II
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS AND THE SHAREHOLDER
2.1 Representations and Warranties of the Sellers and the Shareholders.
Each of the Sellers and the Shareholders jointly and severally represents and
warrants to Buyer as follows:
2.1.1. Organization and Good Standing. Each of the Sellers is
a corporation duly organized, validly existing and in good standing
under the laws of its state of organization, has full requisite
corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently
owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to
do business in all jurisdictions in which the character of the
properties owned or the nature of the business conducted by it would
make such qualification or licensing necessary.
2.1.2. Agreements Authorized and their Effect on Other
Obligations. The execution and delivery of this Agreement have been
authorized by all necessary corporate and shareholder action on the
part of each of the Sellers, and this Agreement is the valid and
binding obligation of each of the Sellers and the Shareholders
enforceable (subject to normal equitable principals) against each of
such parties in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally. The
execution, delivery and performance of this Agreement and the
consummation of the transaction contemplated hereby, will not conflict
with or result in a violation or breach of any term or provision of,
nor constitute a default under (i) the charter or bylaws (or other
organizational documents) of any of the Sellers, (ii) any obligation,
indenture, mortgage, deed of trust, lease, contract or other agreement
to which any of the Sellers or the Shareholders is a party or by which
any of the Sellers or the Shareholders or their respective properties
are bound; or (iii) any provision of any law, rule, regulation, order,
permits, certificate, writ, judgment, injunction, decree,
determination, award or other decision of any court, arbitrator, or
other governmental authority to which any of the Sellers or the
Shareholders or any of their respective properties are subject.
2.1.3. Contracts. Schedule 1.1(d) hereto sets forth a complete
list of all contracts, including leases under which any of the Sellers
is lessor or lessee, which relate to the Assets and are to be performed
in whole or in part after the date hereof. All of the Contracts are in
full force and effect, and constitute valid and binding obligations of
the Sellers. All of the Sellers' duties, obligations and rights under
each of the Contracts are assignable (and are hereby assigned) to Buyer
without the consent of any of parties thereto other than the Sellers.
None of the Sellers are, and no other party to any of the Contracts is,
in default thereunder, and no event has occurred which (with or without
notice, lapse of time, or the happening of any other event) would
constitute a default thereunder. No Contract has been entered into on
terms which could reasonably be expected to have a material adverse
effect on the use of the Assets by Buyer. None of the Sellers or the
Shareholders have received any information which would cause any of
such parties to conclude that any customer of the Sellers will (or is
likely to) cease doing business with the Sellers or Buyer as a result
of the consummation of the transactions contemplated hereby.
2.1.4. Title to and Condition of Assets. The Sellers have
good, indefeasible and marketable title to all of the Assets, free and
clear of any Encumbrances (defined below). All of the Assets are in a
state of good operating condition and repair, ordinary wear and tear
excepted, and are free from any known defects except as may be repaired
by routine maintenance and such minor defects as to not substantially
interfere with the continued use thereof in the conduct of normal
operations. All of the Assets conform to all applicable laws governing
their use. Except as set forth on Schedule 2.1.4 hereto, no notice of
any violation of any law, statute, ordinance, or regulation relating to
any of the Assets has been received by any of the Sellers or the
Shareholders, except such as have been fully complied with. The term
"Encumbrances" means all liens, security interests, pledges, mortgages,
deeds of trust, claims, rights of first refusal, options, charges,
restrictions or conditions to transfer or assignment, liabilities,
obligations, privileges, equities, easements, rights of way,
limitations, reservations, restrictions, and other encumbrances of any
kind or nature.
2.1.5. Bulk Sales Act Not Applicable. None of the Sellers are in the
business of selling merchandise from stock or manufacturing what it sells.
2.1.6. Licenses and Permits. Schedule 1.1(e) hereto sets forth
a complete list of all Permits necessary under law or otherwise for the
operation, maintenance and use of the Assets in the manner in which
they are now being operated, maintained and used. Each of the Seller
Permits and the Sellers' rights with respect thereto is valid and
subsisting, in full force and effect, and enforceable by the Sellers
subject to administrative powers of regulatory agencies having
jurisdiction. Each of the Sellers is in compliance in all material
respects with the terms of each of the Seller Permits. None of the
Seller Permits have been, or to the knowledge of any of the Sellers or
the Shareholders, are threatened to be, revoked, canceled, suspended or
modified. Except for the Common Motor Carrier Certificate issued by the
Michigan Public Service Commission held by 4Star, all of the Seller
Permits are assignable (and are hereby assigned) to Buyer without the
consent of any regulatory agency. On and after the date hereof, each of
the Seller Permits and Buyer's rights with respect thereto will be
valid and subsisting in full force and effect, and enforceable by Buyer
subject only to the administrative powers of regulatory agencies having
jurisdiction over the assigned Permit.
2.1.7. Intellectual Property. Schedule 1.1(c) hereto sets
forth a complete list of all Intellectual Property material to or
necessary for the continued conduct of the Businesses. The Seller
Intellectual Property is owned or licensed by the Sellers free and
clear of any Encumbrances. None of the Sellers have granted to any
other person any license to use any Seller Intellectual Property. Use
of the Seller Intellectual Property will not, and the conduct of the
Businesses did not, infringe, misappropriate or conflict with the
Intellectual Property rights of others. None of the Sellers or the
Shareholders have received any notice of infringement,
misappropriation, or conflict with the intellectual property rights of
others in connection with the use by any Seller of the Seller
Intellectual Property.
2.1.8. Financial Statements. Each of the Sellers have
delivered to Buyer copies of such Seller's unaudited balance sheet
(collectively, the "10/31 Balance Sheets") and related statements of
income, retained earnings and cash flows (collectively, the "10/31
Financial Statements") as at and for the ten months (seven months for
B&L) ended October 31, 1996 (the "Balance Sheet Date"). The 10/31
Financial Statements, copies of which are attached hereto as Schedule
2.1.8, are true, correct and complete in all material respects and
present fairly and fully the financial condition of the applicable
Seller as at the dates indicated, and have been prepared in accordance
with generally accepted accounting principles as promulgated by the
American Institute of Certified Public Accountants ("GAAP") applied on
a consistent basis, except as noted therein. Each of the 10/31
Financial Statements include all adjustments which are necessary for a
fair presentation of the applicable Seller's results for that period.
The inventories of the each of the Sellers reflected in the applicable
10/31 Balance Sheet, or which have thereafter been acquired by such
Seller, consist of items of a quality and quantity salable in the
normal course of the applicable Business. The values at which such
inventories are carried are in accordance with GAAP applied on a
consistent basis, and are consistent with the normal inventory level
and practices of Seller with respect to the applicable Business.
2.1.9. Absence of Certain Changes and Events. Other than as a result of the
transactions contemplated by this Agreement and except as set forth in Schedule
2.1.9 hereto, since the Balance Sheet Date, there has not been:
(a) Financial Change. Any adverse change in the Assets, the Businesses or
the financial condition, operations, liabilities or prospects of any of the
Sellers;
(b) Property Damage. Any damage, destruction, or loss to any of the
Assets or the Businesses (whether or not covered by insurance);
(c) Waiver. Any
waiver or release of a material right of or claim held by any of the Sellers;
(d) Change in Assets. Any acquisition, disposition, transfer, encumbrance,
mortgage, pledge or other encumbrance of any asset of any of the Sellers other
than in the ordinary course of business;
(e) Labor Disputes. Any labor disputes
between any of the Sellers and its employees; or
(f) Other Changes. Any other
event or condition known to any of the Sellers or the Shareholders that
particularly pertains to and has or might have an adverse effect on the Assets,
the operations of the Businesses or the financial condition or prospects of any
of the Sellers.
2.1.10. Necessary Consents. The Sellers have obtained and
delivered to Buyer all consents to assignment or waivers thereof
required to be obtained from any governmental authority or from any
other third party in order to validly transfer the Assets hereunder,
including any consents required to assign the Contracts and transfer
the Permits.
2.1.11. Environmental Matters. None of the current or past
operations of the Businesses of any of the Sellers or any of the Assets
is being or has been conducted or used in such a manner as to
constitute a violation of any Applicable Environmental Laws (defined
below). None of the Sellers or the Shareholders have received any
notice (whether formal or informal, written or oral) from any entity,
governmental agency or individual regarding any existing, pending or
threatened investigation or inquiry related to violations of any
Applicable Environmental Laws or regarding any claims for remedial
obligations or contribution for removal costs or damages under any
Applicable Environmental Laws. There are no writs, injunction decrees,
orders or judgments outstanding, or lawsuits, claims, proceedings or
investigations pending or, to the knowledge of any of the Sellers or
the Shareholders, threatened relating to the ownership, use,
maintenance or operation of the Assets or the conduct of the Businesses
of the Sellers, nor, to the knowledge of any of the Sellers or the
Shareholders, is there any basis for any of the foregoing. Buyer is not
required to obtain any permits, licenses or similar authorizations
pursuant to any Applicable Environmental Laws in effect as of the date
hereof to operate and use any of the Assets for their current or
proposed purposes and uses. To the knowledge of any of the Sellers or
the Shareholders, the Assets include all environmental and pollution
control equipment necessary for compliance with all Applicable
Environmental Laws. There are no environmental conditions or
circumstances, including without limitation, the presence or release of
any Hazardous Materials, on any property presently or previously owned
by the Sellers, or on any property to which Hazardous Materials
generated by the Sellers' operations or the use of the Assets were
disposed of, which would result in a material adverse change in the
business or business prospects of the Sellers. The term "Applicable
Environmental Laws" means any applicable federal, state or local law,
statute, ordinance, rule, regulation, order or notice requirement
pertaining to human health, the environment, or to the storage,
treatment, discharge, release or disposal of hazardous wastes or
hazardous substances, including, without limitation (i) the
Comprehensive Environmental Response, Compensation and Liability Act of
1980 (42 U.S.C. **9601 et seq.), as amended from time to time,
including, without limitation, as amended pursuant to the Superfund
Amendments and Reauthorization Act of 1986 ("CERCLA"), and regulations
promulgated thereunder, (ii) the Resources Conservation and Recovery
Act of 1976 (42 U.S.C. **6901 et seq.), as amended from time to time
("RCRA"), and regulations promulgated thereunder, (iii) the Federal
Water Pollution Control Act (U.S.C.A. *9601 et seq.), as amended, and
regulations promulgated thereunder, and (iv) any applicable state laws
or regulations relating to the environment. The term "Hazardous
Materials" means (x) asbestos, polychlorinated biphenyls, urea
formaldehyde, lead based paint, radon gas, petroleum, oil, solid waste,
pollutants and contaminants, and (y) any chemicals, materials, wastes
or substances that are defined, regulated, determined or identified as
toxic or hazardous in any Applicable Environmental Laws, including, but
not limited to, substances defined as "hazardous substances,"
"hazardous materials," or "hazardous waste" in CERCLA, RCRA, the
Hazardous Materials Transportation Act (49 U.S.C. * 1801, et seq.), or
comparable state and local statutes or in the regulations adopted and
publications promulgated pursuant to said statutes.
2.1.12. No ERISA Plans or Labor Issues. No employee benefit
plan of any of the Sellers, whether or not subject to any provisions of
the Employee Retirement Income Security Act of 1974, as amended, will
by its terms or applicable law, become binding upon or an obligation of
Buyer. None of the Sellers have engaged in any unfair labor practices
which could reasonably be expected to result in a material adverse
effect on the Assets. Except as set forth in Schedule 2.1.9 hereto,
none of the Sellers have any dispute with any of its existing or former
employees and there are no labor disputes or, to the knowledge of any
of the Sellers or the Shareholders, any disputes threatened by current
or former employees of any of the Sellers.
2.1.13. Investigations; Litigation. No investigation or review
by any governmental entity with respect to any of the Sellers or any of
the transactions contemplated by this Agreement is pending or, to the
knowledge of any of the Sellers or the Shareholders, threatened, nor
has any governmental entity indicated to any of the Sellers or the
Shareholders an intention to conduct the same. Except as set forth in
Schedule 2.1.13 hereto, there is no suit, action, or legal,
administrative, arbitration, or other proceeding or governmental
investigation pending to which any of the Sellers or the Shareholders
is a party or, to the knowledge of any of the Sellers or the
Shareholders, might become a party or which particularly affects the
Assets.
2.1.14. Absence of Certain Business Practices. None of the
Sellers, or any officer, employee or agent of any of the Sellers, or
any other person acting on behalf of any of the Sellers, have, directly
or indirectly, within the past five years, given or agreed to give any
gift or similar benefit to any customer, supplier, government employee
or other person who is or may be in a position to help or hinder the
profitable conduct of the Businesses or the profitable use of the
Assets, (or to assist the Sellers in connection with any actual or
proposed transaction) which if not given in the past, might have had a
material adverse effect on the profitable conduct of the Businesses or
the profitable use of the Assets, or if not continued in the future,
might materially adversely effect the profitable conduct of the
Businesses or the profitable use of the Assets.
2.1.15. Solvency. None of the Sellers is now insolvent, nor
will the Sellers be rendered insolvent by the occurrence of the
transactions contemplated by this Agreement. The term "insolvent", with
respect to a particular Seller, means that the sum of the present fair
and saleable value of such Sellers's assets does not and will not
exceed its debts and other probable liabilities, and the term "debts"
includes any legal liability whether matured or unmatured, liquidated
or unliquidated, absolute fixed or contingent, disputed or undisputed
or secured or unsecured.
2.1.16. Untrue Statements. The Sellers have made available to
Buyer true, complete and correct copies of all contracts, documents
concerning all litigation and administrative proceedings, licenses,
permits, insurance policies, lists of suppliers and customers, and
records relating principally to the Businesses and the Assets, and such
information covers all commitments and liabilities of Buyer relating
principally to the Businesses and the Assets. This Agreement does not
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made herein and therein
not misleading in any material respect.
2.1.17. Finder's Fee. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on
by the Sellers, the Shareholders and their counsel directly with Buyer
and its counsel, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or any similar payment.
Article III
ADDITIONAL AGREEMENTS AND ACKNOWLEDGMENTS
3.1 Noncompetition. Except as otherwise consented to or approved in
writing by Buyer, and subject to Section 3.6 and Section 3.7 hereof, each of the
Sellers and the Shareholders agree that for a period of 60 months following the
date hereof, such party will not, directly or indirectly, acting alone or as a
member of a partnership or a holder of, or investor in as much as 5% of any
security of any class of any corporation or other business entity (i) engage in
any business in competition with the business or businesses conducted by Buyer
(or Buyer's affiliates) or any of the Sellers at the Effective Date, or in any
service business the services of which are provided and marketed by Buyer (or
Buyer's affiliates) or any of the Sellers at the Effective Date in any state of
the United States, or any foreign country in which by Buyer (or Buyer's
affiliates) or any of the Sellers transact business on the Effective Date; (ii)
request any present customers or suppliers of any of the Sellers to curtail or
cancel their business with Buyer; (iii) disclose to any person, firm or
corporation any trade, technical or technological secrets of Buyer (or Buyer's
affiliates) or any of the Sellers or any details of their organization or
business affairs or (iv) induce or actively attempt to influence any employee of
Buyer (or Buyer's affiliates) to terminate his employment. Each of the Sellers
and the Shareholders agree that if either the length of time or geographical as
set forth in this Section 3.1 is deemed too restrictive in any court proceeding,
the court may reduce such restrictions to those which it deems reasonable under
the circumstances. The obligations expressed in this Section 3.1 are in addition
to any other obligations that the Sellers and the Shareholders may have under
the laws of any state requiring an employee of a business or a shareholder who
sells its assets in a corporation to limit its activities so that the goodwill
and business relations of employer and of the corporation whose assets it has
sold (and any successor corporation) will not be materially impaired. Each of
the Sellers and the Shareholders further agree and acknowledge that Buyer does
not have any adequate remedy at law for the breach or threatened breach by any
of the Sellers or the Shareholders of this covenant, and agree that Buyer may,
in addition to the other remedies which may be available to it hereunder, file a
suit in equity to enjoin such Seller or Shareholder from such breach or
threatened breach. If any provisions of this Section 3.1 are held to be invalid
or against public policy, the remaining provisions shall not be affected
thereby. Each of the Sellers and the Shareholders acknowledges that the
covenants set forth in this Section 3.1 are being executed and delivered by such
party in consideration of the covenants of Buyer contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged.
3.2 Hiring Employees. Schedule 3.2 hereto is a complete and accurate
listing of all employees of each of the Sellers that are involved in the
operation of the Assets (the "Employees"). Effective as of the date hereof, all
of the Employees shall be terminated by the applicable Seller and hired by
Buyer. Buyer shall have no liability or obligation with respect to any employee
benefits of any Employee except those benefits that accrue pursuant to such
Employees' employment with Buyer on or after the date hereof. Each of the
Sellers and the Shareholders shall cooperate with Buyer in connection with any
offer of employment from Buyer to the employees and use its best efforts to
cause the acceptance of any and all such offers. All Employees hired by Buyer
shall be at-will employees of Buyer.
3.3 Allocation of Purchase Price. The parties hereto agree to allocate
the purchase price paid by Buyer for the Assets hereunder as set forth on
Schedule 3.3 hereto, and shall report this transaction for federal income tax
purposes in accordance with the allocation so agreed upon. The parties hereto
for themselves and for their respective successors and assigns covenant and
agree that they will file coordinating Form 8594's in accordance with Section
1060 of the Internal Revenue Code of 1986, as amended, with their respective
income tax returns for the taxable year that includes the date hereof.
3.4 Name Change. Each of the Sellers and the Shareholders shall, within
thirty (30) days from the date hereof, caused to be filed (i) with the secretary
of state of such Seller's state of organization an amendment to the charter (or
other applicable organization document) of such Seller changing the name of such
Seller from its current name to a name that is not similar to such name, and
(ii) with the appropriate authorities of such Seller's state of organization and
any other states such documents as are required to effect such name change,
including without limitation, amendments or withdrawals of certificates of
authority to do business and assumed name filings. Each of the Sellers and the
Shareholders shall, within five (5) days from the date of receipt of
confirmation of such filings from the applicable state authorities, cause to be
delivered to Buyer copies of all such confirmations.
3.5 Environmental Reports. The parties hereto acknowledge that as a
condition of sale, a Phase I and Phase II Environmental Site Assessment was
conducted on the real property owned and operated by the Sellers, which real
property is being sold to Buyer in connection with the execution and delivery of
this Agreement. The parties hereto further acknowledge that the Phase I and
Phase II Environmental Assessment Report dated November 24, 1996 prepared by
Gosling Czubak Engineering Sciences, Inc. at the direction of the Sellers and
the Shareholders to validate their representations and warranties contained in
Section 2.1.11 hereof (the "Environmental Report") has been made available to
Buyer for inspection.
3.6 Limitation on Noncompetitioon. Irrespective of whether or not the
following entities compete with Buyer on the date hereof, the Shareholders may
remain employees of and retain their investment and ownership interest in the
following entities: (A) S&R Cable, Inc., a Michigan corporation, (B) Midwest Bit
Service, Inc., a Michigan corporation, and (C) Sindeco, L.L.C., an Indiana
limited liability company (referred to herein collectively with their successors
and assigns as the "Shareholder Companies") subject to the following terms and
conditions:
1. In the event that any of the Shareholder Companies expand their
business such that such Shareholder Company competes with the business of Buyer
or (Buyer's affiliates) as conducted on the date hereof, the covenants of the
Shareholders contained in clauses (i) and (ii) of the first sentence of Section
3.1 hereof shall not apply with respect to such new business of such Shareholder
Company if and only if (i) none of the Shareholders are employees or consultants
of such Sharehoolders Company or otherwise provide any services to such
Shareholder Company; (ii) the ownership interests of each of the Shareholders in
such Shareholder Company is not greater than their current ownership interest in
such Shareholder Company on the date hereof; and (iii) the Sale Condition (as
defined in Section 3.7 hereof) is met in accordance with the provisions of
Section 3.7 hereof. Notwithstanding the foregoing, clauses (iii) and (iv) of the
first sentence of Section 3.1 hereof shall apply without exception.
2. In the event that Buyer expands its business such that Buyer
competes with the business of any of the Shareholder Companies as conducted on
the date hereof, the covenants of the Shareholders contained in clauses (i) and
(ii) of the first sentence of Section 3.1 hereof shall not apply with respect to
such new business of Buyer (and clauses (iii) and (iv) of the first sentence of
Section 3.1 hereof will apply without exception).
3.7 Sale Condition . The Sale Condition shall be considered met if the
following conditions are met:
1. The Shareholder(s) owning an interest in the applicable Shareholder
Company (the "Offering Shareholder(s)") shall promptly notify Buyer
upon the occurrence of the business expansion of such Shareholder
Company and as to whether any shareholder, redemption, buy/sell or
similar agreements (the "Other Agreements") exist which affect the
offer and sale by the Offering Shareholder(s) pursuant to this Section
3.7.
2. If no Other Agreements exist, the Offering Shareholder(s) shall
cause an appraisal of the fair market value of the Offering
Shareholder(s)' entire ownership interest in such Shareholder Company
to be performed by Plant and Moran, certified public accountants, using
the asset appraisal prepared by Superior Auction. The Offering
Shareholder(s) shall promptly submit a written offer to sell such
ownership interest to Buyer at the fair market value determined by the
aforementioned appraisal process. Buyer shall have thirty (30) days to
accept such offer in writing. If such offer is accepted, the sale shall
be consummated within twenty (20) days following the Offering
Shareholder(s)' receipt of the written acceptance. If such offer is not
accepted within such 30-day period, the offer shall expire and the Sale
Condition shall be considered met.
3. If any Other Agreements exist, the offer and sale hereunder shall be
made in compliance with such Other Agreements; provided, however, that
if compliance with such Other Agreements does not result in a sale of
all of the Offering Shareholder(s)' ownership interest in such
Shareholder Company to one or more third parties, the entire unsold
ownership interest shall be offered (in accordance with the procedures
set forth in paragraph 2 above) to Buyer at a price equal to the lesser
of (i) the price at which the Offering Shareholder(s)' ownership
interest was offered or sold to such third parties and (ii) the fair
market value of the unsold ownership interest as determined by the
appraisal process described in paragraph 2 above (if such appraisal is
ordered by Buyer). If the entire ownership interest of the Offering
Shareholder(s) is sold to one or more third parties and/or Buyer, or if
Buyer does not accept the Offering Shareholder(s)' offer to sell the
unsold ownership interest in accordance with the procedures set forth
in paragraph 2 above, the Sale Condition shall be considered met.
3.8 Further Assurances. From time to time, as and when requested by any
party hereto, any other party hereto shall execute and deliver, or cause to be
executed and delivered, such documents and instruments and shall take, or cause
to be taken, such further or other actions as may be reasonably necessary to
effect the transactions contemplated hereby, including one or more of the
Sellers entering into any sublease, subcontract or other agreement with Buyer as
is required to enable Buyer to enjoy the benefits of any Contract, Permit or
other Asset ineffectively transferred or assigned hereby.
Article IV
INDEMNIFICATION
4.1 Indemnification by the Sellers and the Shareholder. Subject to
Section 4.3 hereof, in addition to any other remedies available to Buyer under
this Agreement, or at law or in equity, each of the Sellers and the Shareholders
shall, jointly and severally, indemnify, defend and hold harmless Buyer and its
officers, directors, employees, agents and stockholders, against and with
respect to any and all claims, costs, damages, losses, expenses, obligations,
liabilities, recoveries, suits, causes of action and deficiencies, including
interest, penalties and reasonable attorneys' fees and expenses (collectively,
the "Damages") that such indemnitee shall incur or suffer, which arise, result
from or relate to (i) any breach of, or failure by any of the Sellers or the
Shareholders to perform, their respective representations, warranties, covenants
or agreements in this Agreement or in any schedule, certificate, exhibit or
other instrument furnished or delivered to Buyer by the Sellers or the
Shareholders under this Agreement; and (ii) the Retained Liabilities.
4.2 Indemnification Procedure. If any party hereto discovers or
otherwise becomes aware of an indemnification claim arising under Section 4.1 of
this Agreement, such indemnified party shall give written notice to the
indemnifying party, specifying such claim, and may thereafter exercise any
remedies available to such party under this Agreement; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. Further, promptly after
receipt by an indemnified party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Article 5, such indemnified party shall, if a claim
in respect thereof is to be made against any indemnifying party, give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of any obligations hereunder, to the extent the
indemnifying party is not materially prejudiced thereby. In case any such action
is brought against an indemnified party, the indemnifying party shall be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
with counsel reasonably satisfactory to such indemnified party, and after such
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expenses subsequently incurred by
the latter in connection with the defense thereof unless the indemnifying party
has failed to assume the defense of such claim and to employ counsel reasonably
satisfactory to such indemnified person. An indemnifying party who elects not to
assume the defense of a claim shall not be liable for the fees and expenses of
more than one counsel in any single jurisdiction for all parties indemnified by
such indemnifying party with respect to such claim or with respect to claims
separate but similar or related in the same jurisdiction arising out of the same
general allegations. Notwithstanding any of the foregoing to the contrary, the
indemnified party will be entitled to select its own counsel and assume the
defense of any action brought against it if the indemnifying party fails to
select counsel reasonably satisfactory to the indemnified party, the expenses of
such defense to be paid by the indemnifying party. No indemnifying party shall
consent to entry of any judgment or enter into any settlement with respect to a
claim without the consent of the indemnified party, which consent shall not be
unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such claim. No
indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
indemnifying party, without the consent of such indemnifying party, which
consent shall not be unreasonably withheld.
4.3 Limitation on Indemnification. To the extent that Buyer suffers
Damages as result of the breach by any of the Sellers or the Shareholders of
their representations and warranties contained in Section 2.1.11 hereof, the
Sellers and the Shareholders shall be responsible for such Damages only to the
extent that such Damages in the aggregate exceed $25,000.
Article V
MISCELLANEOUS
5.1 Survival of Representations, Warranties and Covenants. All
representations and warranties made by the parties hereto shall survive for a
period of 36 months from the date hereof, notwithstanding any investigation made
by or on behalf of any of the parties hereto; provided, however, that the
representations and warranties contained in Section 2.1.11 hereof shall survive
for a period of 12 months from the date hereof notwithstanding any review by
Buyer of the Environmental Report. All statements contained in any certificate,
schedule, exhibit or other instrument delivered pursuant to this Agreement shall
be deemed to have been representations and warranties by the respective party or
parties, as the case may be, and shall also, except as provided therein, survive
for a period of 36 months from the date hereof notwithstanding any investigation
made by any of the parties hereto. All covenants and agreements contained herein
shall survive indefinitely without limitation, except as otherwise provided
herein.
5.2 Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
5.3 Counterparts. Any number of counterparts of this Agreement may be
executed and each such counterpart shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one instrument.
5.4 Notices and Waivers. Any notice or waiver to be given to any party
hereto shall be in writing and shall be delivered by courier, sent by facsimile
transmission or first class registered or certified mail, postage prepaid,
return receipt requested.
If to Buyer
Addressed to: With a copy to:
WellTech Eastern, Inc. Porter & Hedges, L.L.P.
Two Tower Center, Tenth Floor 700 Louisiana
East Brunswick, New Jersey 08816 Houston, Texas 77210-4744
Attn: General Counsel Attention: Samuel N. Allen
Facsimile: (908) 247-5148 Facsimile: (713) 228-1331
If to a Seller or a Shareholder
Addressed to: With a copy to:
B&L Hotshot, Inc. ger, Cotant, Menkes & Aardema, P.C.
415 Seeley Road 308 W. Main
Kalkaska, Michigan 49646 Gaylord, Michigan 49735
Attn: Royce Thomas Attn: Michael Menkes
Facsimile: (616) 258-8957 Facsimile: (517) 732-4922
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business hours
on any business day.
5.5 Captions. The captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section, or paragraph hereof.
5.6 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of and be enforceable by the successors and assigns of the
parties hereto.
5.7 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void,
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such which may
be hereafter declared invalid, void or unenforceable.
5.8 Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Michigan.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the Shareholders have executed this Agreement and the other
parties hereto have caused this Agreement to be signed in their respective
corporate names by their respective duly authorized representatives, all as of
the day and year first above written.
WELLTECH EASTERN, INC.
By:
Name:
Title:
B&L HOTSHOT, INC.
By:
Name:
Title:
MCDOWELL & SONS, INC.
By:
Name:
Title:
4STAR TRUCKING, INC.
By:
Name:
Title:
R.B.R., INC.
By:
Name:
Title:
THE SHAREHOLDERS:
----------------------------------
Royce D. Thomas
---------------------------------
John F. McDowell
----------------------------------
John R. McDowell