ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into to be
effective as of the close of business on the 31st day of May, 1999, by and among
ABATIX CORP., a Delaware corporation (hereinafter referred to as "Buyer"), NORTH
STATE SUPPLY CO. OF PHOENIX, an Arizona corporation (hereinafter referred to as
"Seller"), and DAN BIRNLEY (hereinafter referred to as "Owner").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of selling, marketing, and
distributing construction tools and supplies, materials, equipment and other
businesses, activities and endeavors related thereto (the businesses, activities
and endeavors described herein are hereinafter collectively referred to as the
"Business"); and
WHEREAS, pursuant to the terms and provisions contained herein, Seller desires
to sell to Buyer and Buyer desires to purchase from Seller, the Business as a
going concern and certain properties, assets and rights of Seller's Business as
provided herein; and
WHEREAS, Owner is a director, officer and sole stockholder of Seller, and he
joins such parties solely for the purposes stated herein; and
NOW, THEREFORE, for and in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
TERMS OF PURCHASE AND SALE
SECTION 1.1 PURCHASE AND SALE OF ASSETS.
(a) Pursuant to the terms and provisions contained herein, Seller
hereby agrees to sell, assign, transfer and convey to Buyer at Closing (as
defined hereafter), and Buyer hereby agrees to purchase from Seller at Closing,
certain properties, assets and rights of Seller as described as follows, and as
additionally identified on EXHIBIT A attached hereto and incorporated herein by
reference:
(i) All cash and cash equivalents of Seller;
(ii) All Seller's trade accounts receivable as of the date
of Closing;
(iii) All of Seller's inventory (the "Disposable Inventory")
of construction tools and supplies and samples;
(iv) All of Seller's equipment inventory (the "Equipment
Inventory"; the Disposable Inventory and the Equipment Inventory are
sometimes hereinafter collectively referred to as the "Inventory");
(v) All right, title and interest, if any and of whatever kind
or character, of Seller in and to all customer lists, customer files,
customer information, marketing and promotional materials, manuals,
marketing studies or analysis or any other records or memorandum
relating in any manner whatsoever to Seller's customers (the
"Customers") or sales of the Inventory (hereinafter collectively
referred to as the "Customer Lists");
(vi) All original files, books and records of Seller with
respect to the Customers and Customer Lists including, without
limitation, all Customer files, Customer account histories, Customer
purchasing and payment history, Customer credit files, etc., as well as
a list of all current and previous suppliers or manufacturers to the
Business within the past two (2) years with purchases in excess of Five
Thousand and 00/100 Dollars ($5,000.00) per year;
(vii) To the extent such are assumable, all right, title and
interest of Seller as of the date of Closing in, to and under the
contracts, leases, franchises, agreements, arrangements,
understandings, commitments and business relationships (hereinafter
collectively referred to as the "Contract Rights") and all of Seller's
rights (including rights of refund and offset), deposits, privileges,
claims, causes of action and options relating to or pertaining to the
Contract Rights; PROVIDED, HOWEVER, except as is provided otherwise
herein in Section 1.1(c), Buyer does not and shall not assume any
liability or responsibility relating to, or arising in connection
hereby with any such Contract Rights;
(viii) All of Seller's right, title and interest in and to any
and all income and payments due Seller arising out of the Business as
of the date of Closing;
(ix) To the extent transferable, all right, title and interest
of Seller as of the date of Closing in, to and under all permits and
licenses relating to the Business or all or any of the Assets (as
defined below);
(x) All right, title and interest of Seller in and to all
prepaid rentals and other prepaid expenses, receivables from employees,
bonds, deposits and financial assurance requirements relating to any of
the Assets or the Business;
(xi) All right, title and interest of Seller in and to any
benefit of and the right to enforce the covenants and warranties, if
any, the Seller is entitled to enforce with respect to the Assets
against Seller's predecessors and title to the Assets;
(xii) All of Seller's right, title and interest in the name
"North State Supply Co. of Phoenix," "North State Supply" and all
related and similar names, logos and trade names including, without
limitation, any of Seller's corporate, copyright, trademark, trade name
and service mark rights and interest in such names, logos and trade
names;
(xiii) All right, title and interest of Seller in, to and
under all rights, privileges, claims, causes of actions and options
relating or pertaining to the Business or the Assets;
(xiv) All right, title and interest of Seller in and to the
goodwill of the Business and Seller;
(xv) Seller's business address;
(xvi) Seller's "800" and "888" telephone numbers and all
business telephone numbers;
(xvii) All right, title and interest of Seller in and to the
leasehold interest of Seller's commercial lease (the "Real Property
Lease"), a copy of which is attached hereto as SCHEDULE
1.1(A)(XVII)(I), the Piney Bowes mail equipment lease and the computer
hardware and software leases; and
(xviii) Seller's internet web page and registered internet
domain name, if any.
All of the assets, properties and rights listed in this
subparagraph (a) shall hereinafter be referred to collectively as the
"Assets."
(b) Notwithstanding anything to the contrary contained herein, the
Assets shall not include (i) the original corporate minute book of Seller; (ii)
all claims of Seller for refunds for any income taxes (whether federal, state,
local, foreign or other) applicable to periods prior to the or after the date of
Closing; (iii) any rights accruing as a result of, or any proceeds paid or
payable in accordance with the Agreement; (iv) any and all insurance proceeds
and insurance claims of Seller, except for proceeds and claims relating to any
damage, loss or casualty to the Assets accruing after the execution of this
Agreement but prior to the date of Closing; or (v) the assets and contracts
specifically listed on SCHEDULE 1.1(B) hereto (hereinafter collectively referred
to as the "Excluded Assets").
(c) It is expressly understood and agreed among the parties hereto that
Buyer is not assuming, and shall not be deemed to assume, any liabilities of
Seller relating to the Assets or arising out of the Business, except those
specifically listed on SCHEDULE 1.1(C) hereto (the "Assumed Liabilities").
SECTION 1.2 PURCHASE PRICE AND OTHER CONSIDERATION.
(a) The total consideration to be paid by Buyer to Seller (the
"Purchase Price") for all of the Assets purchased hereunder shall be equal to
Two Million One Hundred Thousand and No/100 Dollars ($2,100,000.00) in cash,
less the cash paid, or amount assumed (on a basis as set forth on SCHEDULE
1.1(C)), by Buyer of long-term liabilities identified on SCHEDULE 1.1(C).
However, Buyer agrees to pay in cash Seller's outstanding loan (the "Stockholder
Loan") from Owner in the amount of Two Hundred Twenty Four Thousand Three
Hundred Twenty Four and No/100 Dollars ($224,324.00). The Purchase Price shall
be payable at or before Closing by (a) delivery by Buyer of one or more
certified checks or wire transfers drawn on Buyer's bank account of an amount
not to exceed Two Million One Hundred Thousand and No/100 Dollars
($2,100,000.00), either payable to Seller or Seller's creditor(s) as set forth
specifically on SCHEDULE 1.1(C) hereto, and/or (b) assumption of certain
obligations of Seller as set forth specifically on SCHEDULE 1.1(C) hereto.
(b) In addition, Buyer and Seller agree and acknowledge that, at the
sole option of Buyer, (i) the Purchase Price may be adjusted by Buyer, or (ii)
Buyer may elect to terminate all of its obligations under this Agreement with no
further obligation of Buyer, in the event of a material change in the Business
prior to the Closing; for purposes of illustration but not for purposes of
exclusion, a "material change" in the Business would include but shall not be
limited to (x) a loss of a one or more customer relationship(s) which constitute
individually or in the aggregate more than ten percent (10%) by gross revenue of
Seller or (y) a decrease in the "net asset value" of Seller's December 31, 1998
financial statements which were previously provided to Buyer below the amount of
Four Hundred Twenty Five Thousand and No/100 Dollars ($425,000.00). For purposes
of this Section 1.2(b) and Section 3.1 below, the term "net asset value" shall
mean the book value of Seller's Assets, less the Assumed Liabilities, set forth
on Seller's December 31, 1998 financial statements.
(c) Simultaneous with the Closing, Buyer (i) shall offer employment to
Owner, Ruben Diaz and Leonard Strege, and such parties agree to be employed by
Buyer, subject to the terms and conditions set forth in the Employment
Agreements on EXHIBITS B, C AND D, respectively, which are incorporated herein
for all purposes, and (ii) may, but shall not be obligated to, offer employment
on a temporary or permanent basis to the other employees of Seller. Seller shall
encourage all employees offered employment by Buyer to accept employment with
Buyer, and neither Seller nor Owner shall, directly or indirectly, solicit the
employment of or seek to retain the services of any such employee without the
prior consent of Buyer.
(d) The parties hereto acknowledge and agree that Buyer shall not be
required to, nor shall Buyer assume, adopt or accept any other employee benefit
plan, contract, practice, program, policy or arrangement or any kind of Seller,
including without limitation, any stock option, bonus, compensation, retirement,
profit sharing, vacation, retirement, medical, disability benefit, life
insurance or severance pay plan, contract, practice, program or policy or
arrangement and shall have no liability whatsoever under any such employee
benefit plan, contract, practice, program, policy or arrangement; PROVIDED,
HOWEVER, that Buyer shall assume the vacation obligations of certain of Seller's
employees as set forth on SCHEDULE 2.14 attached hereto.
SECTION 1.3 PHYSICAL INVENTORY. Buyer and Seller hereby acknowledge and
agree that after the close of business of Seller on May 31, 1999 and within
forty-five (45) days of the date of Closing, Buyer or its designee may perform a
physical inventory of Seller's Inventory to compare the actual Inventory to the
list set forth on EXHIBIT A. Buyer and Seller agree that, for purposes of the
measure of "net asset value" adjustments described in Section 1.2(b) and Section
3.1 herein, no change in the value of Seller's Inventory as a result of the
physical inventory shall be taken into account unless the difference in value
between Seller's perpetual Inventory and the actual physical inventory exceeds
Ten Thousand and No/100 Dollars ($10,000.00).
SECTION 1.4 COMPLIANCE WITH UNIFORM COMMERCIAL CODE - BULK TRANSFERS.
Seller and Buyer acknowledge and agree that the purchase and sale of the Assets
may be subject to Chapter 6 of the Uniform Commercial Code enacted in the State
of Arizona regarding bulk transfer. In that regard, Seller and Owner hereby
agree to indemnify, defend and hold harmless Buyer, and Buyer's directors,
officers and agents from and against any and all demands, claims, actions or
causes of actions, assessments, losses, damages, liabilities, costs and
expenses, including reasonable attorney's fees, asserted against or imposed upon
or incurred by Buyer, its directors, officers and agents, as the case may be,
directly or indirectly, in whole or in part, resulting from any alleged
noncompliance of such former provisions by Seller.
SECTION 1.5 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Assets in the manner set forth in a schedule to be delivered
by Buyer to Seller within ninety (90) days of the Closing Date, subject to
adjustments, as provided in Section 1.2(a) hereof; and the parties agree (a) to
comply with all filing, notice and reporting requirements described in Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code") and (b) that,
without the consent of both parties, neither party will make any representation
to any party as to such allocation that is at variance with the allocation set
forth on such schedule.
ARTICLE II
REPRESENTATIONS AND
WARRANTIES OF SELLER AND OWNER
Seller and Owner hereby jointly and severally represent and warrant to
Buyer as follows, and acknowledge that Buyer is relying on such representations
and warranties, in connection with the purchase by Buyer of the Assets and
consummation of the other transactions described herein.
SECTION 2.1 TITLE TO AND OWNERSHIP AND CONDITION OF ASSETS.
(a) Seller has, at the Closing, and shall convey to Buyer, good and
indefeasible title to the Assets, free and clear of all liens, security
interests, claims, demands, charges or other encumbrances of any kind and
character whatsoever, save and except for any lien burdening the Assets as a
result of the Assumed Liabilities.
(b) There are no outstanding contractual or other rights of third
parties to acquire any portion of the Assets, and there are no outstanding
agreements, options or other arrangements or commitments which would require
Seller to obtain the consent of any party to effect the consummation of the
transactions contemplated hereby, except for any notification or consent
required from any parties for which the liabilities identified on SCHEDULE
1.1(C) are not paid at closing.
(c) Seller shall pay its remaining liabilities (other than the Assumed
Liabilities) that exist as of the date of Closing in the ordinary course of
business, and shall fulfill and satisfy, during the period after the Closing,
all of its debts, obligations and liabilities (other than the Assumed
Liabilities) existing as of the Closing Date, in order to ensure that the
purchase of the Assets by Buyer is effective against any and all persons holding
claims against Seller based on transactions or events occurring prior to the
Closing.
SECTION 2.2 ORGANIZATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona.
Seller conducts its Business and maintains its properties in such jurisdiction
and is presently qualified as a foreign or domestic corporation under the laws
of all jurisdictions in which it conducts its Business. Seller has the requisite
power and authority to own or lease its properties and to carry on its Business
as, and in the places where it currently owns and conducts such Business. There
are 100 issued and outstanding shares of Seller's $100.00 per share common
stock.
SECTION 2.3 POWER AND AUTHORITY. Seller has full corporate power,
authority and legal right to enter into and perform this Agreement and all other
documents or instruments contemplated herein, and the execution, delivery and
performance of such agreements and the consummation of the transactions
contemplated thereby will not (i) result in any breach of, default under,
violation of, or conflict with or require consent under any term or provision of
Seller's Articles of Incorporation or Bylaws, (ii) result in any material breach
or default under any mortgage, loan agreement, deed of trust, indenture or other
loan-related instrument to which Seller is a party or by which it is bound,
(iii) violate any order, writ, injunction or decree applicable to any Seller, or
(iv) violate any provisions of laws, rules or regulations to which any Seller is
subject. This Agreement constitutes, and all other agreements and documents
executed in connection herewith by Seller, upon due execution and delivery by
Seller, shall constitute valid and binding obligations of Seller, enforceable
against Seller in accordance with their terms, except insofar as enforcement
hereof may be limited by bankruptcy, insolvency or similar laws for general
equitable principles, or as otherwise set forth herein.
SECTION 2.4 INVENTORY. Seller shall be present during, and shall
warrant the results of, the Physical Inventory as of the Closing Date. No items
included in Inventory are or will be pledged as collateral (other than in
connection with the loan(s) identified as an Assumed Liability on SCHEDULE
1.1(C)) or held by Seller, as applicable, on consignment from others. Seller
shall list the Consigned Inventory on SCHEDULE 2.4 attached hereto and
incorporated herein for all purposes.
SECTION 2.5 ACCOUNTS RECEIVABLE. Except as set forth in SCHEDULE 2.5
attached hereto and incorporated herein for all purposes, all the receivables of
Seller reflected in the financial statements of Seller dated December 31, 1998
(the "Financial Statements"), arising after the applicable dates of the
Financial Statements, or recorded on the books of the Company as of the Closing
Date relating thereto (i) did or will represent bona fide indebtedness, (ii)
arose or will have arisen on or prior to the Closing Date in the ordinary course
of business, and (iii) were or will be subject to no prior assignment, claim,
lien or security interest (other than liens as disclosed in SCHEDULE 1.1(C)
attached hereto for all purposes). The bad debt reserves, if any, established in
connection with such receivables are in conformity with generally accepted
accounting principles.
SECTION 2.6 LIABILITIES AND LITIGATION. At Closing, there shall be no
liabilities of any kind whatsoever (except for loans from parties identified in
SCHEDULE 1.1(C)), whether accrued, absolute, contingent, determined or
determinable, which would encumber the Assets or title thereto or result in any
liability to Buyer with respect thereto. At Closing there shall exist no claim,
circumstances or matter whatsoever, of or relating to the Assets of the Business
(other than in connection with the Assumed Liabilities) which would encumber the
title thereto or result in any liability to Buyer with respect thereto;
PROVIDED, HOWEVER, Seller shall be permitted to discharge such obligations
within a commercially reasonable period of time after the Closing but shall not
permit any encumbrances or liens to attach to the Assets. There are no actions,
proceedings or investigations pending or, to the best of Seller's knowledge,
threatened against Seller or any shareholder of Seller or any of their
respective properties or rights, at law or in equity or before or by any court
or federal, state, municipal or other governmental department, commission,
board, bureau, agency or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign (collectively, "Agent"
and "Agency"). Seller is not, nor is any shareholder of Seller, directly or
indirectly, subject to any continuing court or Agency order, writ, in junction
or decree applicable specifically to it, the Assets or the Business. Seller
shall continue to be solely liable for, and Buyer is not assuming responsibility
or liability for, any and all matters described in this Section 2.6, unless
specifically set forth as the Assumed Liabilities.
SECTION 2.7 BREACH OF OTHER AGREEMENTS. Seller warrants that the
execution of this Agreement or any documents contemplated herein, and the
consummation of the transactions contemplated herein, will not violate, conflict
with, modify or breach (i) any material term or provision of, or cause a default
under, or be an event which, with notice and/or lapse of time, would constitute
a default under, or result in the acceleration of, or result in the creation of
any encumbrance upon any of the Assets pursuant to any material contract or
agreement to which Seller is a party, (ii) any judgment, decree, writ, order or
injunction of any court or arbitration body relating to the Assets or Seller, or
(iii) any order or other action of any governmental authority, commission,
bureau or administrative agency.
SECTION 2.8 TAXES. Seller has duly filed all federal, state, local and
other tax returns, including, without limitation, all federal and state payroll
tax returns, all federal and state income and/or franchise tax returns and state
or local sales tax returns, which are or were required to be filed by it as of
Closing. Seller has paid all taxes that have become due, have accrued or have
been or will be assessed against it, including all taxes, penalties and interest
which any taxing authority has proposed or asserted to be owing on or relating
to its Business or Assets for all periods through the Effective Date; PROVIDED,
HOWEVER, that Buyer shall cooperate with Seller in assuming Seller's obligation
for May sales taxes and providing sufficient information to Seller to allow
Seller to file its May sales tax returns. There are no tax deficiencies or
claims presently being asserted against any Seller relating to the Assets or the
operation of its Business. There is no pending or threatened claim by any
federal, state or local taxing authority against or with respect to any Seller
for payment of additional taxes for any period prior to the date hereof. No
Seller has executed any waiver or extension of any statute of limitations
relating to assessment or collection of taxes, and neither has any such waiver
or extension been executed on behalf of it nor is any such waiver or extension
in force with respect to or applicable to Seller. Notwithstanding anything to
the contrary contained herein, all risk and liability with respect to any tax
obligation or liability of Seller relating to or arising with respect to its
ownership, use, control or operation of the Assets or the Business during any
period up to and including the Closing Date, or arising as of a result of the
transactions contemplated herein, shall be borne exclusively by Seller.
SECTION 2.9 COMPLIANCE WITH LAWS. To the best of its knowledge, Seller
has not violated and is not now in violation of, any federal, state or municipal
law, ordinance, order, regulation or requirement affecting the Assets, and no
written notice of any such violation has been issued by any governmental
authority.
SECTION 2.10 PRIOR BULK SALES. During the period beginning four (4)
years prior to the Closing Date and continuing through the Closing Date, Seller
has not transferred in bulk or otherwise not in the ordinary course of its
business all or any major part of the materials, supplies, merchandise or other
inventory of the Business, or any substantial portion of the equipment of the
Business, in connection with a bulk transfer of its Inventory.
SECTION 2.11 NO FINDER'S FEES. Seller has not made any agreement with
any broker or other person or entity or taken any action which would cause any
broker or other person or entity to become entitled to any fee or commission in
connection with the transactions contemplated hereby.
SECTION 2.12 ATTACHMENTS AND OTHER PROCEEDINGS. There are no
attachments, executions, assignments for the benefit of creditors, receiverships
or voluntary or involuntary proceedings in bankruptcy or pursuant to any debtor
relief laws contemplated or filed by or against Seller relating to the Business
or the Assets.
SECTION 2.13 GOVERNMENTAL AND OTHER CONSENTS. No consent, approval or
other authorization of any governmental authority or other third party is
required in connection with the execution or delivery of this Agreement by
Seller or the consummation by Seller of the transactions contemplated hereby.
SECTION 2.14 EMPLOYEES AND BENEFITS.
(a) Seller is not a party to, or bound by, any collective bargaining
agreements or other labor agreements. SCHEDULE 2.14 contains a list of all
written and oral employment, profit sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consultant, retirement, benefit or
incentive plans or similar contracts to which Seller is a party or by which it
is bound. Furthermore, Seller is not in default with respect to any of such
agreements, which default would materially and adversely effect the Business or
the Assets of Seller, and all such plans and contracts, if any, are in
compliance with all federal, state and local laws, the violation of which would
materially and adversely effect the Business or Assets of Seller (including
minimum funding requirements). All returns and reports with respect to such
plans and contracts required to be filed by Seller have been filed with all
appropriate governmental offices or departments in a timely manner.
(b) SCHEDULE 2.14 sets forth all oral and written plans or agreements
to which Seller is a party and which constitute "fringe benefits" to its
employees, including without limitation, vacation plans or programs, sick leave
plans or programs, employee discounts and related benefits. Correct copies of
all written agreements, plans and programs, certified by Seller and Owner, will
be made available to Buyer prior to the Closing. Seller is in compliance with
all federal, state and local laws respecting employment, wages and hours and
occupational safety and health standards. Seller is not engaged in the unfair or
unsafe labor practices nor have any unfair or unsafe labor practices or other
complaints been filed against Seller or threatened to be filed against Seller
with or by any agency or instrumentality of any state or local government.
Seller is in full compliance with the terms of all contracts, agreements, plans
and programs described herein. SCHEDULE 2.14 also sets forth the vacation plan
obligation agreed to be assumed by Buyer.
SECTION 2.15 ENVIRONMENTAL MATTERS.
(a) To the best knowledge of Seller or Owner, Seller, and the
properties and Assets of Seller, are in compliance with all material respects
with all existing Environmental Laws (as hereinafter defined);
(b) To the best knowledge of Seller or Owner, there are no present or
past Environmental Conditions (as hereinafter defined) or violations of any
existing Environmental Law in any way relating to Seller or any of its present
or former assets or properties that is likely to lead to the imposition of any
liability or that Seller should reasonably expect would give rise to any civil
or criminal litigation, suit, action, claim, proceeding or investigation by any
person, including any Governmental Authority (as hereinafter defined);
(c) To the best knowledge of Seller or Owner, there are no above ground
or underground waste disposal units, including landfills, surface impoundments,
pits, ponds or lagoons, whether or not in use or to the knowledge of Seller,
formerly used and still containing Contaminants (as hereinafter defined), or any
underground storage tanks, or subsurface disposal systems, including injection
wells, dry wells, leach field or septic systems on any property of Seller;
(d) There is no pending, or to the best knowledge of Seller or Owner,
threatened civil or criminal litigation or suit, action, claim, proceeding or
investigation by any person, including any Governmental Authority, or written
notice of violation of, or formal administrative proceedings relating to, any
existing Environmental Laws involving Seller of any of its Assets or properties;
(e) "Contaminants" shall mean any material, pollutant, substance or
waste which is defined in, regulated by or subject to any Environmental Law,
including, but not limited to, asbestos and asbestos containing materials that
may require cleanup and disposal under current governing state or federal laws;
(f) "Environmental Conditions" shall mean the ambient state of (1) the
surface, sub-surface, soil, air, surface waters, including streams, channels,
marshes and wetlands, groundwater, wastewater, leachate and run-on and run-off
of precipitation beneath, interior or exterior to any building or improvements;
(2) any and all structures above and below ground, improvements, appurtenances,
pipes, pumps, valves, fittings, tanks, vessels and containers; and (3) any and
all systems for the collection, treatment, storage or disposal of Contaminants;
(g) "Environmental Laws" shall mean all Governmental Rules relating to
the protection or pollution of the environment or community health and safety,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, the Federal Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act and the Hazardous and Solid Waste
Amendments, the Clean Air Act, the Clean Water Act, the Toxic Substances Control
Act, the Safe Drinking Water Act and any similar or analogous statutes,
regulations and decisional law of any Governmental Authority, as now exist; and
(h) "Governmental Authority" shall mean any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any jurisdiction, municipality or other political subdivision thereof
where the Company is now operating or has operated.
SECTION 2.16 TAX CONSEQUENCES. Seller has had the opportunity to review
with its own tax advisors the tax consequences to the undersigned of the
Agreement and transactions contemplated thereby. Seller understands that it must
solely rely on its advisors and not on any statements or representations by
Buyer or any of its agents. Seller understands that it (and not Buyer) shall be
responsible for any such tax liability that may arise as a result of the
Agreement or any transactions contemplated thereby.
SECTION 2.17 ENFORCEABILITY. This Agreement and any other agreement to
be entered into pursuant to the terms hereof or as contemplated hereby by Seller
constitute valid and binding obligations of Seller, enforceable in accordance
with their respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors rights generally and the application of general principles of
equity.
SECTION 2.18 FULL DISCLOSURE. No representation or warranty of Seller
made in this Agreement, nor any written statement or certificate furnished or to
be furnished by Seller to Buyer pursuant hereto, or in connection with the
transactions contemplated hereby, contains, or will contain, any untrue
statement of a material fact, or omits, or will omit to state, a material fact
necessary to make the statement or facts contained herein or therein not
misleading. No Seller has withheld, and no Seller will withhold, from Buyer
knowledge of any events, conditions or facts of which Seller has knowledge which
could materially and adversely affect the Assets or Buyer.
ARTICLE III
COVENANTS OF SELLER AND OWNER
Seller and Owner hereby jointly and severally covenant and agree with
Buyer as follows:
SECTION 3.1 CONDUCT OF BUSINESS. From April 30, 1999 to the Closing,
Seller will, in all material respects, and will cause such entities to, conduct
its Business in the ordinary course and use good faith and commercially
reasonable efforts to preserve such Business, and shall not, without Buyer's
prior written consent, impair or fail to use its best efforts to preserve its
relationships with employees, suppliers, Customers, creditors and others having
business relationships with Seller. In this regard, Seller's net asset value
shall not decrease below the amount of Four Hundred Twenty Five Thousand and
No/100 Dollars ($425,000.00) based upon Seller's April 30, 1999 financial
statements which were provided to Buyer.
SECTION 3.2 NOTICES AND APPROVALS. Prior to the Closing, Seller shall,
at its sole expense, promptly give all notices to and use its best efforts to
obtain all consents from third parties which may be necessary or deemed
desirable by Buyer in connection with this Agreement and the consummation of the
transactions contemplated hereby, including without limitation, those shown on
SCHEDULE 3.2 hereto. If all such consents are not forthcoming by the date of
Closing, Seller shall continue to use their best efforts to obtain all such
consents, at the sole expense of Buyer.
SECTION 3.3 FULFILLMENT OF ALL COVENANTS AND OBLIGATIONS. Seller shall
satisfy and fulfill all of its other obligations and covenants set forth in this
Agreement or as may otherwise be contemplated herein or necessary or appropriate
to consummate the transactions set forth herein.
SECTION 3.4 CERTIFIED CORPORATE DOCUMENTS. At or prior to the Closing,
Seller shall deliver to Buyer certified copies of the resolutions of its Board
of Directors and shareholders authorizing this Agreement and the consummation of
the transactions contemplated hereby and Certificates of Incumbency of Owner,
whom shall be authorized to sign and execute this Agreement and all ancillary
documents on behalf of Seller.
SECTION 3.5 GOOD STANDING. At the Closing, Seller shall deliver to
Buyer a current certificate of good standing from the State of Arizona and all
other jurisdictions in which Seller is qualified to do business.
SECTION 3.6 TERMINATION OF SELLER'S BUSINESS. Seller shall use its best
efforts to sell and/or close all remaining portions of its Business which are
not acquired by the Buyer pursuant hereto and which would otherwise violate the
Covenants Not to Compete, Trade Secrets or Confidentiality set forth in Sections
3.11, 3.12 or 3.13 hereto as soon as possible after the Closing Date.
SECTION 3.7 MATERIAL CHANGE. From May 1, 1999 to the date of Closing,
Seller shall promptly inform Buyer in writing of any material adverse change to
the Business or the Assets. Notwithstanding the disclosure to Buyer of any such
material adverse change, Seller shall not be relieved of any liability to Buyer
pursuant to this Agreement or, nor shall provide such information by Seller to
Buyer be deemed a waiver by Buyer of, the breach of any representation or
warranty of Seller contained in this Agreement.
SECTION 3.8 MATERIAL CONTRACTS. From May 1, 1999, Seller shall not,
without the prior written consent of Buyer, incur any obligation or otherwise
take any action outside the ordinary course of business.
SECTION 3.9 CONTRACTS. Except with Buyer's prior written consent,
Seller shall not waive any material right or cancel any material contract, debt
or claim that constitutes an Asset.
SECTION 3.10 NON-COMPETITION; CONFIDENTIALITY.
(a) Seller recognizes and acknowledges that it will derive substantial
benefit from the consummation of the transactions contemplated by this
Agreement. Seller further recognizes and acknowledges that Buyer is making a
substantial investment pursuant to this Agreement in reliance upon the fact that
the knowledge and expertise developed by Seller and its management of the
affairs of Seller and in the Business will be preserved and will not be used in
competition with the Business purchased by Buyer. Seller hereby agrees that it
is reasonable and necessary for the protection of Buyer and the Business to be
purchased by Buyer that Seller agrees to take all necessary actions to assure
that Seller will not, directly or indirectly, except for the benefit of Buyer or
with the prior written consent of Buyer, which consent may be granted or
withheld at Buyer's sole discretion or except for activities of Owner relating
to his continued ownership and operation of North State Supply Co. Inc., a
Pennsylvania corporation located in Homer City, Pennsylvania:
(i) Own, manage, engage in, control, be employed by,
participate in or be connected with, in any manner whatsoever, the
ownership, management, operation or control of any business which
sells, promotes or distributes products or services, or which otherwise
performs services, which are reasonably like and which may reasonably
compete with those products or services previously offered by the
Seller, any affiliate or subsidiary of Seller or the Buyer at any time
during the term of this Agreement;
(ii) Canvas, solicit or accept business from "Customers of the
Buyer" after the Closing (except on behalf of the Buyer) which, for
purposes of this Agreement, shall mean any person or entity which has
been contacted by Seller or its affiliates or subsidiaries, or has
engaged in business with Seller or any of its affiliates or
subsidiaries, during the three (3) year period prior to the effective
date of this Agreement;
(iii) Directly or indirectly request or advise any Customer
of the Buyer to withdraw, curtail or cancel such Customer's business
with the Buyer, or otherwise interfere with the business relationship
between such Customers and the Buyer, or any of its affiliates or
subsidiaries;
(iv) Otherwise aid, consult or assist anyone engaged in any
business which is competitive with the "Business of the Buyer," which
"Business of the Buyer" shall include all business activities in which
the Buyer or any of its affiliates or subsidiaries is engaged at any
time after the date of Closing (including, but not limited to, the
manufacturing of print band equipment, operation of the business of
print band engineering, sales and the acquisition of such types of
business) or in which the Buyer or any of its affiliates or
subsidiaries plans to engage after the date of Closing; or
(v) Communicate to any person or entity any trade secrets,
customer lists, information (financial or otherwise), strategies,
systems, methods or any other business data or secrets of the Buyer,
any of the Buyer's affiliates or subsidiaries.
(b) Seller's covenants against competition as set forth in
subparagraph (a) above shall commence on the date of this Agreement and shall
continue for a period of three (3) years after the Effective Date of this
Agreement. The restraints against competition imposed on and agreed to by each
Seller hereunder shall apply to, and be enforceable in, the State of Arizona,
and/or an area within fifty (50) miles of any location where the Buyer, or any
of its affiliates or subsidiaries, or any Acquisition Candidate, is doing
business.
(c) The restrictions set forth in this Section 3.10 shall apply only to
Seller and shall not apply to Owner, individually. Any restrictions on
competition regarding Owner shall be limited to those restrictions as set forth
in the respective Employment Agreement of Owner.
SECTION 3.11 TRADE SECRETS.
(a) In consideration of the employment of Owner under the terms of the
Employment Agreement and in consideration of the exhaustive benefits derived by
Seller under the terms of this Agreement, Seller covenants and agrees that it
will not, directly or indirectly, for its own account or benefit, or for the
account or benefit of any other person or party, communicate to any person or
entity any trade secrets, customer lists, information (financial or otherwise),
strategies or any other business data or secrets of Buyer.
(b) Seller's covenant against disclosure as set forth in subparagraph
(a) above shall commence on the date of this Agreement and shall continue for a
period of three (3) years from the Effective Date of this Agreement.
SECTION 3.12 NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Seller acknowledges that Buyer may disclose or has previously
disclosed certain confidential information to such party. Seller hereby
covenants and agrees that it will not, without prior written consent of Buyer,
at the closing or at any time thereafter, disclose or permit to be disclosed to
any third party by any method whatsoever any of the confidential information of
Buyer whether acquired prior to or after the Closing Date. For purposes of this
Agreement, "confidential information" shall include, but not be limited to, any
and all records, notes, memoranda, data, ideas, processes, methods, techniques,
systems, formulas, patents, models, devices, programs, computer software,
writings, research, personnel information, plans, or any other information of
whatever nature in the possession or control of Buyer which has not been
published or disclosed to the general public, or which gives to Buyer an
opportunity to obtain an advantage over competitors who do not know of or use
it.
(b) The foregoing paragraph shall not be applicable if and to the
extent Seller is required to testify in a judicial or regulatory proceeding
pursuant to an order of a judge or administrative law judge issued after such
party and his legal counsel urge that the aforementioned confidentiality be
preserved.
(c) Any breach of this nondisclosure covenant will result in the waiver
by Seller of any and all rights to compensation, if any, unpaid at the time of
the breach. In such event Buyer shall have no further obligation to pay any
amounts related thereto.
SECTION 3.13 REMEDY FOR BREACH.
(a) The parties hereto, recognizing that irreparable injury will
result to Buyer, its business and property in the event of a breach or
threatened breach of any of the above covenants in Section 3.10, 3.11 or 3.12,
respectively, by Seller and that Buyer's purchase of the Assets pursuant hereto,
agree that in the event of a violation of any of the covenants herein against
competition or disclosure of confidential information by Seller:
(i) Owner's employment described hereunder may be
terminated in the sole discretion of Buyer; and
(ii) in addition to any other legal or equitable remedies and
damages available, the Buyer shall be entitled to the issuance of
restraining orders or injunctions, both temporary and permanent, in
order to restrict the violation thereof by Seller, its partners,
agents, servants, employees and employers, and all persons acting
directly or indirectly for or with it.
(b) The restrictive covenants contained in this Agreement shall survive
the date of Closing and any termination of Owner's employment provided under the
terms of the respective Employment Agreement and provided under the terms of
this Agreement and any termination of this Agreement, and shall be enforceable
according to their respective terms.
(c) If any court of competent jurisdiction should hereinafter determine
in the course of litigation that the provisions of this paragraph are
unreasonable with respect to length of time, geographical area, or activities so
restrained, then this clause shall be construed to operate for such period of
time and such geographical area or areas and in respect of such activities as
said court shall determine to be the maximum reasonable restraint in the
circumstances, and the parties agree to submit such question or questions to
such court in the event of any such determination of unreasonableness.
(d) The waiver of any party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by either such party. The failure to enforce any provision(s) of the Agreement
shall not be construed as a waiver of such provision(s).
(e) The covenants of Sections 3.10, 3.11, 3.12 or 3.13 hereof
shall survive the Closing of this Agreement, and be enforceable according to
their terms.
SECTION 3.14 CONFLICT WITH EMPLOYMENT AGREEMENT. In the event of any
conflict between the terms and provisions of Sections 3.10, 3.11, 3.12 or 3.13
and those of Article IV of the Employment Agreement, the terms and provisions of
Sections 3.10, 3.11, 3.12 or 3.13, as the case may be, of the Agreement shall
govern; PROVIDED, HOWEVER, that the invalidity or unenforceabilty of all or a
part of such Article IV shall not have any effect upon the validity or
enforceability of Sections 3.10, 3.11, 3.12 or 3.13, as the case may be.
ARTICLE IV
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Assets and consummate the
transactions at the Closing shall be subject to the satisfaction on or prior to
the Closing Date (as defined below) of all of the following conditions, except
such conditions as Buyer may waive in writing:
SECTION 4.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. All of
the representations and warranties of Seller contained herein shall be accurate
in all material respects when made and as of the Closing Date with the same
effect as though such representations and warranties (in the exact language
contained herein with appropriate modification of tense in the case of
representations and warranties relating to statements of fact as of specified
dates) had been made as of the Closing Date, and Seller shall have complied in
all material respects with all of its respective agreements and covenants
contained herein to be performed on or prior to the Closing Date.
SECTION 4.2 FURTHER ACTION. All action that shall be required to be
taken by Seller in order to effect the sale and transfer of the Assets to Buyer
and to consummate the other transactions contemplated herein shall have been
taken.
SECTION 4.3 AUTHORIZING RESOLUTIONS. Seller shall have delivered
to Buyer copies of evidence of authority for Seller relating to consummation of
the transactions contemplated herein.
SECTION 4.4 OPINION OF COUNSEL OF SELLER. Seller's counsel shall have
delivered to Buyer an opinion of counsel in the form shown on EXHIBIT E attached
hereto and incorporated herein for all purposes.
ARTICLE V
REPRESENTATIONS OF BUYER
Buyer hereby represents and warrants to Seller as follows, and
acknowledges that Seller is relying upon such representations and warranties, in
connection with the purchase by Buyer of the Assets and the consummation of the
other transactions described herein.
SECTION 5.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Buyer conducts its business and maintains its properties in each jurisdiction
and is presently qualified as a foreign or domestic entity under the laws of all
jurisdictions in which it conducts its business. Buyer has the requisite power
and authority to own or lease properties and to carry on its businesses as, and
in the places where, such properties are owned or leased and such business is
conducted.
SECTION 5.2 POWER AND AUTHORITY. Buyer has the power, authority and
legal right to enter into and perform this Agreement and all other documents or
instruments contemplated herein, and the execution, delivery and performance of
such agreements and the consummation of the transactions contemplated thereby
will not (i) result in any breach of, default under, violation of, or conflict
with or require consent under any term or provision of Buyer's Certificate of
Incorporation or Bylaws, (ii) result in any material breach or default under any
mortgage, loan agreement, deed of trust, indenture or other loan-related
instrument to which any Buyer is a party or by which it is bound, (iii) violate
any order, writ, injunction or decree applicable to any Buyer, or (iv) violate
any provisions of laws, rules or regulations to which any Buyer is subject. This
Agreement constitutes, and all other agreements and documents executed in
connection herewith by Buyer upon due execution and delivery by Buyer shall
constitute valid and binding obligations of Buyer, enforceable against it in
accordance with their terms, except insofar as enforcement hereof may be limited
by bankruptcy, insolvency or other similar laws for general equitable
principles, or as otherwise set forth herein.
SECTION 5.3 BREACH OF OTHER AGREEMENTS. The execution of this Agreement
or any documents contemplated herein, and the consummation of the transactions
contemplated herein, will not violate, conflict with, modify or breach (i) any
material term or provision of, or cause a default under, or be an event which,
with notice and/or lapse of time, would constitute a default under, or result in
the acceleration of, or result in the creation of any encumbrance upon any of
the Assets pursuant to any material contract or agreement to which Buyer is a
party, (ii) any judgment, decree, writ, order or injunction of any court or
arbitration body relating to the Assets, or (iii) any order or other action of
any governmental authority, commission, bureau or administrative agency.
SECTION 5.4 TAXES. Buyer has duly filed all federal, state, local and
other tax returns, including, without limitation, all federal and state payroll
tax returns, all federal and state income and/or franchise tax returns and state
or local sales tax returns, which are or were required to be filed by it as of
Closing. Buyer has paid all taxes that have become due, have accrued or have
been or will be assessed against it for all periods through the date of Closing.
There are no tax deficiencies or claims presently being asserted against Buyer
relating to the operations of its business.
SECTION 5.5 FINDER'S FEES. Buyer has not made any agreement with any
person or entity or taken any action which would cause any person or entity to
become entitled to any fee or commission in connection with the transactions
contemplated hereby.
SECTION 5.6 ATTACHMENTS AND OTHER PROCEEDINGS. There are no
attachments, executions, assignments for the benefit of creditors, receiverships
or voluntary or involuntary proceedings in bankruptcy or pursuant to any debtor
relief laws contemplated or filed by or against Buyer.
SECTION 5.7 GOVERNMENTAL AND OTHER CONSENTS. No consent, approval or
other authorization of any governmental authority or other third party is
required in connection with the execution or delivery of this Agreement by Buyer
or the consummation by Buyer of the transactions contemplated hereby.
SECTION 5.8 FULL DISCLOSURE. No representation or warranty of Buyer
made in this Agreement, nor any written statement or certificate furnished or to
be furnished by Buyer to Seller pursuant hereto, or in connection with the
transactions contemplated hereby, contains, or will contain, any untrue
statement of a material fact, or omits, or will omit to state, a material fact
necessary to make the statement or facts contained herein or therein not
misleading. Buyer has withheld, nor will it withhold, from Seller knowledge of
any events, conditions or facts of which Buyer has knowledge which could
materially and adversely affect the Assets or Seller.
ARTICLE VI
COVENANTS OF BUYER
SECTION 6.1 ASSUMPTION OF LIABILITIES. Buyer hereby covenants to,
effective with the date of Closing, assume the Assumed Liabilities as set forth
in SCHEDULE 1.1(C). Buyer shall timely pay the Assumed Liabilities, including
without limitation the accounts payable assumed by Buyer, in the normal course
of business and so as not to negatively impact Seller's or Owner's credit
standing or rating.
SECTION 6.2 FULFILLMENT OF ALL COVENANTS AND OBLIGATIONS. Buyer shall
satisfy and fulfill all of its other obligations and covenants set forth in this
Agreement or as may otherwise be contemplated herein or necessary or appropriate
to consummate the transactions set forth herein.
SECTION 6.3 CERTIFIED CORPORATE DOCUMENTS. At or prior to the Closing,
Buyer shall deliver to Seller or its representative certified copies of the
resolutions of its Board of Directors authorizing this Agreement and the
consummation of the transactions contemplated hereby.
ARTICLE VII
CLOSING
SECTION 7.1 CLOSING.
(a) The closing (the "Closing") of the purchase and sale of the Assets
and the other transactions contemplated hereby shall take place at the offices
of Buyer beginning at 1:00 p.m. C.D.T. on May 27, 1999 (the "Closing Date"), or
at such other place, date and time as the parties may agree upon in writing. The
Closing of the transactions contemplated herein shall be effective as of the
close of business on May 31, 1999 ("Effective Date"). In particular, the parties
hereto shall deliver the following at the Closing:
(i) Seller shall deliver to Buyer a fully and validly executed
Bill of Sale, Assignment and Assumption Agreement, filings,
assignments, licenses, consents and all other documents contemplated or
specifically identified in this Agreement or which are otherwise
necessary or appropriate to fully effectuate the transfer of the Assets
to Buyer as contemplated herein;
(ii) Buyer shall deliver to Seller the Purchase Price as
specified in Section 1.2 hereof;
(iii) Seller shall deliver to Buyer possession of all books,
accounts, records, documents, agreements and reports (excluding any
original minute books) held by Seller with respect to the Customers;
(iv) Buyer shall deliver to Owner, Ruben Diaz and Leonard
Strege, respectively, the Employment Agreements; and
(v) Seller's counsel shall deliver to Buyer the opinion
of counsel as set forth in Section 4.4 hereof.
(b) Following the Closing Date, Buyer and Seller hereby agree to
provide for the following:
(i) Seller shall, as soon as possible following the Closing
Date, but in no event later than thirty (30) days following the Closing
Date, change the name of Seller to a name other than "North State
Supply Co. of Phoenix" which is not deceptively similar to such name;
(ii) The Physical Inventory set forth in Section 1.3
shall take place within thirty (30) days of the Closing Date, as
provided in Section 1.3 above; and
(iii) The Purchase Price shall be allocated among the Assets
as set forth in Section 1.5 within ninety (90) days of the Closing
Date.
ARTICLE VIII
INDEMNIFICATION AND ARBITRATION
SECTION 8.1 AGREEMENT TO INDEMNIFY.
(a) Subject to the conditions and provisions set forth in this Article
VIII, Seller and Owner agree, upon the lapse of the thirty (30) day period after
Seller is notified in writing of such a demand, claim, action or cause of
action, to indemnify, defend and hold harmless the Buyer from and against all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including reasonable attorney's fees, asserted
against or imposed upon or incurred by the Buyer, as the case may be, directly
or indirectly, in whole or in part, resulting from (i) all debts, liabilities
and obligations, actual or alleged, arising at any time from or related to the
ownership, control or operation of the Assets or Business by Seller prior to
Closing, (ii) sales taxes imposed upon Seller and arising out of the operation
of the Businesses or with respect to Seller's ownership, use, control, operation
or sale of the Assets, (iii) any obligation of Seller pertaining to interest on
the shareholder loans whether directly to the shareholder advancing funds to
Seller or to any federal, state or local tax authority, (iv) a breach of any
covenant, or the inaccuracy in any respect of any representation or warranty, of
Seller contained in or made pursuant to this Agreement and (v) all other
liabilities for which the Buyer may become liable and which are covered by this
indemnity, including, without limitation, all federal, state and local taxes
applicable to the ownership, control or operation of the Assets on and prior to
the Closing Date and liabilities arising as a result of the calculation of same.
(b) Subject to the conditions and provisions of this Article VIII,
Buyer agrees, upon the lapse of the thirty (30) day period after Buyer is
notified in writing of such a demand, claim, action or cause of action, to
indemnify, defend and hold harmless the Seller from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
cost and expenses, including reasonable attorney fees, asserted against or
imposed upon or incurred by the Seller, as the case may be, directly or
indirectly, in whole or in part, resulting from (i) the failure of Buyer to pay
any of the Assumed Liabilities (except as may be set forth in Section 1.2
above), (ii) a breach of any covenant, or other inaccuracy in any respect of any
representation or warranty, of Buyer contained in or made pursuant to this
Agreement, (iii) all other liabilities for which Seller may become liable and
which are covered by this indemnity, including, without limitation, all federal,
state and local taxes applicable to the ownership, control or operation of the
Assets after the Closing Date and liabilities arising as a result of the
calculation of same.
(c) All of the adjustments, demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses to which a
party may be entitled to recover or for which such party may be entitled to
indemnification pursuant to this Agreement shall hereinafter be referred to as
the "Indemnification Claims".
SECTION 8.2 ARBITRATION. Any and all disputes arising between the
parties with respect to the validity and/or payment of any Indemnification Claim
as provided by this Article VIII shall be finally settled by binding arbitration
pursuant to the commercial rules of the American Arbitration Association
following the Federal Rules of Civil Procedure. If the parties cannot agree on a
single arbitrator for purposes of settling such a dispute, the indemnifying
party and the indemnified party shall each appoint an arbitrator and so advise
the other party, and these two arbitrators will appoint a third arbitrator. If
either party fails to appoint an arbitrator within thirty (30) days after
receipt of written request to do so, the decision of the appointed arbitrator
shall be final. If an arbitrator fails or is unable to act, his successor will
be appointed in the same manner as the arbitrator whom he succeeds. The
arbitrators appointed as aforesaid shall immediately proceed to arbitrate the
dispute between the indemnified party and the indemnifying party, and they
shall, within fifteen (15) days of the arbitration proceeding, or as soon
thereafter as may be practicable, render their decision in writing and transmit
such written decision to the parties hereto. The forum for such proceeding shall
be in the city of Dallas, Texas and the arbitrators shall be entitled to such
information, including the business records of Buyer and Seller, as they deem
necessary or desirable for purposes of determining or resolving the dispute. The
decision of the majority of the arbitrators then serving shall be binding and
final upon the parties, and judgment made upon the order may be entered in any
court having appropriate jurisdiction. The arbitrator shall determine which
party shall bear the costs, including attorney's fees, of the proceedings or the
portion of such cost, which each party should bear.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 DATE OF AGREEMENT. The term "date of this Agreement" as
used herein shall mean the date this Agreement has been fully executed by Seller
and the Buyer as indicated by their signatures below.
SECTION 9.2 DATE OF PERFORMANCE. In the event the Closing Date or any
other date or provision provided herein should fall, expire or be due on a legal
holiday, Saturday or Sunday, such date or provision shall be extended to the
next working day which is not a legal holiday, Saturday or Sunday, and such next
working day shall be considered to be the due date, performance date or
expiration date for all purposes hereunder. Similarly, upon the occurrence of
any act of God or any other event which is out of either party's control or
otherwise considered to be a condition of force majeure, the performance
hereunder including the Closing hereunder shall be extended until such time as
performance is possible.
SECTION 9.3 ENTIRE AGREEMENT. This Agreement contains the complete
agreement between the parties hereto and cannot be varied, modified or altered
except by the written agreement of the parties hereto. The parties agree that
there are no oral agreements, understandings, representations or warranties that
are not expressly set forth herein. This Agreement (including the Exhibits and
Schedules hereto) shall supersede all prior agreements and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof and no party shall be liable or bound to the other in any manner by any
warranties, representations or covenants not set forth herein or contemplated
hereby.
SECTION 9.4 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
parties hereto and their successors, representatives, heirs, administrators,
executors and assigns. This Agreement may not be assigned by any party without
the prior written consent of the other party hereto.
SECTION 9.5 THIRD PARTY BENEFICIARY. Nothing in this Agreement shall be
deemed to create any right in any creditor or other person not a party hereto,
and this instrument shall not be construed in any respect to be a contract in
whole or in part for the benefit of any other party except as aforesaid.
SECTION 9.6 IDENTICAL COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original and all of which shall constitute the same instrument, but only one
of which need be produced to evidence the agreement of the parties hereto.
SECTION 9.7 HEADINGS. The captions and headings of the paragraphs and
subparagraphs of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of, or to construe or limit the meaning of, this
Agreement or to affect the construction hereof.
SECTION 9.8 USE OF CERTAIN TERMS. As used in this Agreement, the words
"herein", "hereof", and "hereunder" and the other words of similar import refer
to this Agreement as a whole and not to any particular paragraph, subparagraph
or other subdivision.
SECTION 9.9 CONSENT AND WAIVER. No consent or waiver, express or
implied, by any party hereto of any breach or default by any other party hereto
in the performance of its obligations hereunder shall be deemed or construed to
be a consent or waiver to or of any other breach or default in the performance
by such party of the same or any other obligations of such party hereunder.
Failure on the part of any party to complain of any act or failure to act of the
other party or to declare the other party in default, irrespective of how long
such failure continues, shall not constitute a waiver by such party of its
rights hereunder.
SECTION 9.10 SEVERABILITY. If any provision of this Agreement or the
application thereof to any person or circumstance shall be held invalid or
unenforceable to any extent, such illegality or unenforceability shall extend to
that provision solely, and the remainder of this Agreement shall be enforced to
the greatest extent permitted by law as if such illegal or unenforceable
provision were not incorporated herein.
SECTION 9.11 EXHIBITS, SCHEDULES, ETC. All statements contained in any
Exhibit, Schedule, certificate or other instrument delivered by or on behalf of
the parties hereto, or in connection with the transactions contemplated hereby,
are an integral part of this Agreement, and shall be deemed to be incorporated
herein by reference. The Parties agree that certain schedules may be delivered
after Closing.
SECTION 9.12 NOTICES. Any notice or communication required or permitted
hereunder shall be deemed to be delivered and received when actually received by
the intended recipient or, whether actually received or not, on the third (3rd)
day after it is deposited in the United States mail, postage fully prepaid,
registered or certified mail, return receipt requested, addressed to the
intended recipient at the address shown below:
If to the Buyer, to: Abatix Corp.
8311 Eastpoint Drive, Suite 400
Dallas, Texas 75227
Attn: Terry W. Shaver
With a copy to: Bellinger & DeWolf, L.L.P.
750 North St. Paul, Suite 900
Dallas, Texas 75201
Attn: Glen A. Bellinger, Esq.
If to Owner: Dan Birnley
28720 North 55th Street
Cave Creek, Arizona 85331
With a copy to: James Carmella, Esq.
Attorney at Law
724 Church Street
Indiana, Pennsylvania 15701
or at such other address for a party as shall be specified by like notice.
SECTION 9.13 SURVIVAL. The representations and warranties of the
parties contained herein shall survive the Closing for the period specified
herein. All covenants and agreements made in this Agreement shall survive, and
shall not be extinguished by, the Closing for the period specified herein.
SECTION 9.14 EXPENSES. Except as otherwise expressly provided herein,
each party will pay all of its expenses, including attorneys' fees, in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated by
this Agreement.
SECTION 9.15 FURTHER ASSURANCES. The parties hereto will execute and
deliver such further instruments of conveyance and transfer and take such
additional actions as the other party may reasonably request to effect,
consummate, confirm or evidence the transfer to the Buyer of the Assets. Seller
will execute such documents as may be necessary to assist the Buyer in
preserving or perfecting its rights in the Assets and will also do such acts as
are necessary to fully perform any Seller's representations, warranties and
agreements contained herein.
SECTION 9.16 GOVERNING LAW. This agreement and the obligations of the
parties hereto shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Texas. Each of the parties hereto
agrees that any suit, action or proceeding for the enforcement of this Agreement
shall be brought only in the State courts or Federal courts in the State of
Texas, County of Dallas, and each party hereby consents to the jurisdiction of
such courts.
SECTION 9.17 KNOWLEDGE. As used herein, the term "to the best of their
knowledge" or "to the best of its knowledge", and all similar terms or phrases
shall mean all facts and information presently known to such person and any
facts and information which such person should have known in the exercise of
such care as a reasonable and prudent person would exercise under the same or
similar circumstances, without the need for any independent investigation.
SECTION 9.18 TIME. The parties hereto agree that time is of the
essence.
SECTION 9.19 FACSIMILE SIGNATURES. The parties hereto agree that the
Closing may occur simultaneously, with facsimile signatures of each party
serving for purposes of the Closing, with the understanding that the parties
shall obtain fully executed original signatures following the Closing.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date set forth above.
SELLER:
NORTH STATE SUPPLY CO. OF PHOENIX
an Arizona corporation
By: s/s Dan Birnley
Dan Birnley, President
OWNER:
s/s Dan Birnley
Dan Birnley
BUYER:
ABATIX CORP.
a Delaware corporation
By: s/s Terry W. Shaver
Terry W. Shaver, President
EXHIBIT A
ASSETS SUBJECT TO PURCHASE
(i) All cash and cash equivalents of Seller;
(ii) All Seller's trade accounts receivable as of the date of
Closing;
(iii) All of Seller's inventory (the "Disposable Inventory") of
construction tools and supplies and samples;
(iv) All of Seller's equipment inventory (the "Equipment Inventory";
the Disposable Inventory and the Equipment Inventory are sometimes hereinafter
collectively referred to as the "Inventory");
(v) All right, title and interest, if any and of whatever kind or
character, of Seller in and to all customer lists, customer files, customer
information, marketing and promotional materials, manuals, marketing studies or
analysis or any other records or memorandum relating in any manner whatsoever to
Seller's customers (the "Customers") or sales of the Inventory (hereinafter
collectively referred to as the "Customer Lists");
(vi) All original files, books and records of Seller with respect to
the Customers and Customer Lists including, without limitation, all Customer
files, Customer account histories, Customer purchasing and payment history,
Customer credit files, etc., as well as a list of all current and previous
suppliers or manufacturers to the Business within the past two (2) years with
purchases in excess of Five Thousand and 00/100 Dollars ($5,000.00) per year;
(vii) To the extent such are assumable, all right, title and interest
of Seller as of the date of Closing in, to and under the contracts, leases,
franchises, agreements, arrangements, understandings, commitments and business
relationships (hereinafter collectively referred to as the "Contract Rights")
and all of Seller's rights (including rights of refund and offset), deposits,
privileges, claims, causes of action and options relating to or pertaining to
the Contract Rights; PROVIDED, HOWEVER, except as is provided otherwise herein
in Section 1.1(c), Buyer does not and shall not assume any liability or
responsibility relating to, or arising in connection hereby with any such
Contract Rights;
(viii) All of Seller's right, title and interest in and to any and all
income and payments due Seller arising out of the Business as of the date of
Closing;
(ix) To the extent transferable, all right, title and interest of
Seller as of the date of Closing in, to and under all permits and licenses
relating to the Business or all or any of the Assets (as defined below);
(x) All right, title and interest of Seller in and to all prepaid
rentals and other prepaid expenses, receivables from employees, bonds, deposits
and financial assurance requirements relating to any of the Assets or the
Business;
(xi) All right, title and interest of Seller in and to any benefit of
and the right to enforce the covenants and warranties, if any, the Seller is
entitled to enforce with respect to the Assets against Seller's predecessors and
title to the Assets;
(xii) All of Seller's right, title and interest in the name "North
State Supply Co. of Phoenix," "North State Supply" and all related and similar
names, logos and trade names including, without limitation, any of Seller's
corporate, copyright, trademark, trade name and service mark rights and interest
in such names, logos and trade names;
(xiii) All right, title and interest of Seller in, to and under all
rights, privileges, claims, causes of actions and options relating or pertaining
to the Business or the Assets;
(xiv) All right, title and interest of Seller in and to the goodwill of
the Business and Seller;
(xv) Seller's business address;
(xvi) Seller's "800" and "888" telephone numbers and all business
telephone numbers;
(xvii) All right, title and interest of Seller in and to the leasehold
interest of Seller's commercial lease (the "Real Property Lease"), the Piney
Bowes mail equipment lease and the computer software and hardware lease; and
(xviii) Seller's internet web page and registered internet, if any.
EXHIBIT B
EMPLOYMENT AGREEMENT
Dan Birnley
EXHIBIT C
EMPLOYMENT AGREEMENT
Ruben Diaz
EXHIBIT D
EMPLOYMENT AGREEMENT
Leonard Strege
EXHIBIT E
SELLER'S OPINION OF COUNSEL
SCHEDULE 1.1(A)(XVII)
REAL PROPERTY LEASE
SCHEDULE 1.1(B)
EXCLUDED ASSETS
None
SCHEDULE 1.1(C)
ASSUMED LIABILITIES
1) Outstanding trade payables incurred in the ordinary course of business
not to exceed, in the aggregate, the amount of $550,000.00, which shall
be assumed by Buyer at Closing and not deducted from the Purchase
Price.
2) Accrued expenses and other payables incurred in the ordinary course of
business not to exceed, in the aggregate, the amount of $225,000.00,
which shall be assumed by Buyer at Closing and not deducted from the
Purchase Price.
3) Vehicle loan from M&I Bank not to exceed the amount of $17,000.00,
which shall be assumed by Buyer at Closing and will be deducted from
the Purchase Price.
4) Vehicle loan from Wells Fargo Bank not to exceed the amount of
$2,000.00, which shall be assumed by Buyer at Closing and will be
deducted from the Purchase Price.
5) Term loan from M&I Bank not to exceed the amount of $315,000.00, which
shall be paid in cash by Buyer at Closing and will be deducted from the
Purchase Price.
6) Line of credit from M&I Bank not to exceed the amount of $60,000.00,
which shall be paid in cash by Buyer at Closing and not deducted from
the Purchase Price.
7) Promissory note to Don Askew not to exceed the amount of $99,000.00,
which shall be paid in cash by Buyer at Closing and will be deducted
from the Purchase Price.
8) Demand note to Daniel Birnley not to exceed the amount of $224,324.00,
which shall be paid in cash by Buyer at Closing and will be deducted
from the Purchase Price.
9) Phoenix, Arizona Real Property Lease.
10) Lease(s) for computer hardware and software.
11) Lease for Pitney Bowes mailing equipment.
SCHEDULE 2.4
CONSIGNMENT INVENTORY
SCHEDULE 2.5
ACCOUNTS RECEIVABLE RESERVES
None
SCHEDULE 2.7
AGREEMENTS REQUIRING NOTICE AND/OR CONSENT
1. The Bank Loan(s).
2. The Real Property Lease.
3. Lease Line Computer Lease.
SCHEDULE 2.14
EMPLOYEES AND BENEFITS
EMPLOYEES DAYS ASSUMED BY BUYER
Dan Birnley 15 Days
Jennifer Hersey 9 Days
Manny Flores 9 Days
Ron Promberger 9 Days
Bill Owens 9 Days
John McKamey 10 Days
Karen SeGuin 10 Days
Terry Ingmire 10 Days
Ruben Diaz 5 Days
Byrl Meeks 9 Days
Leonard Strege 9 Days
Mike Mockenhaupt 8 Days
Chris Gauna 2 Days
Joe Munoz 2 Days
Guadalupe Olivo 7 Days
Shawn Rudnick 5 Days
Marc O'Sullivan 5 Days
Ken Main (Last Day To Be 5/28) 7 DAYS
SCHEDULE 3.2
NOTICES AND APPROVALS
None