ASSET PURCHASE AGREEMENT
AMONG
BLUE GIANT CORPORATION
as Buyer
AND
BLUE GIANT USA CORPORATION
as Seller
Dated October 31, 1997
TABLE OF CONTENTS
PAGE
----
ASSET PURCHASE AGREEMENT........................................................................................ 1
Background...................................................................................................... 1
Terms ....................................................................................................... 1
ARTICLE I THE TRANSACTION.................................................................... 2
1.1. Sale and Purchase of Assets........................................................ 2
1.2. Excluded Assets.................................................................... 4
1.3. Purchase Price..................................................................... 5
1.4. Payment of Purchase Price.......................................................... 6
1.5. Allocation of Purchase Price....................................................... 6
1.6. Post-Closing Adjustment to Purchase Price.......................................... 7
1.7. Assumption of Liabilities.......................................................... 9
1.8. Closing............................................................................ 14
1.9. Deliveries and Proceedings at Closing.............................................. 14
1.10. Regarding Certain Consents......................................................... 16
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER........................................... 17
2.1. Organization....................................................................... 17
2.2. Subsidiaries....................................................................... 18
2.3. Qualification; Location of Business and
Assets............................................................................. 18
2.4. Authorization and Enforceability................................................... 18
2.5. No Violation of Laws or Agreements................................................. 19
2.6. Financial Statements............................................................... 20
2.7. Undisclosed Liabilities............................................................ 21
2.8. No Changes......................................................................... 21
2.9. Taxes.............................................................................. 26
2.10. Inventory.......................................................................... 27
2.11. Accounts Receivable................................................................ 28
2.12. No Pending Litigation or Proceedings............................................... 29
2.13. Contracts; Compliance.............................................................. 29
2.14. Compliance with Laws............................................................... 31
2.15. Environmental Matters.............................................................. 32
2.16. Consents........................................................................... 38
2.17. Personal Property.................................................................. 38
2.18. Real Estate........................................................................ 39
2.19. Transactions with Related Parties.................................................. 43
2.20. Condition of Assets................................................................ 43
2.21. Compensation Arrangements; Officers and
Directors.......................................................................... 44
2.22. Labor Relations.................................................................... 44
2.23. Products Liability................................................................. 45
2.24. Insurance.......................................................................... 45
2.25. Patents and Intellectual Property Rights........................................... 46
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2.26. Employee Retirement Income Security Act of
1974, as amended ("ERISA")......................................................... 48
2.27. Brokerage.......................................................................... 50
2.28. Disclosure......................................................................... 50
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER............................................ 51
3.1. Organization and Good Standing..................................................... 51
3.2. Corporate Power and Authority...................................................... 51
3.3. Due Authorization.................................................................. 51
3.4. Brokerage.......................................................................... 52
3.5. No Breaches; Etc................................................................... 52
3.6. Disclosure......................................................................... 52
3.7. Litigation......................................................................... 53
3.8. Business Activities................................................................ 53
ARTICLE IV CERTAIN OBLIGATIONS OF SELLER...................................................... 53
4.1. Conduct of Business Pending Closing................................................ 53
4.2. Insurance.......................................................................... 57
4.3. Fulfillment of Agreements.......................................................... 57
4.4. Access, Information and Documents.................................................. 58
4.5. Negotiations....................................................................... 59
4.6. Public Announcements............................................................... 59
ARTICLE V CONDITIONS TO CLOSING; TERMINATION................................................. 60
5.1. Conditions Precedent to Obligations of
Buyer.............................................................................. 60
5.2. Conditions Precedent to the Obligations of
Seller............................................................................. 62
5.3. Termination........................................................................ 65
ARTICLE VI CERTAIN ADDITIONAL COVENANTS....................................................... 66
6.1. Costs, Expenses and Taxes.......................................................... 66
6.2. Brokers............................................................................ 66
6.3. Blue Giant USA Corporation Retirement
Savings Plan....................................................................... 66
6.4. Employees of the Business.......................................................... 68
6.5. Indemnification.................................................................... 69
6.6. Confidentiality and Non-Competition................................................ 76
6.7. Access to Information.............................................................. 78
6.8. Prohibition on use of Blue Giant Name.............................................. 80
6.9. Cooperation........................................................................ 80
6.10. Riverside and Blue Europe Receivables.............................................. 80
ARTICLE VII MISCELLANEOUS...................................................................... 81
7.1. Further Assurances; Cooperation.................................................... 81
7.2. Nature and Survival of Representations............................................. 81
7.3. Notices............................................................................ 82
7.4. Successors and Assigns............................................................. 82
7.5. Governing Law...................................................................... 83
7.6. Headings........................................................................... 83
7.7. Amendment and Waiver............................................................... 83
7.8. Entire Agreement................................................................... 83
7.9. Counterparts....................................................................... 84
7.10. Enforcement........................................................................ 84
7.11. Construction....................................................................... 84
7.12. Defined Terms...................................................................... 84
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LIST OF SCHEDULES AND EXHIBITS.................................................................................. 86
ANNEX A DEFINITIONS................................................................................... 88
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ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT (the "Agreement"), dated October
31, 1997 by and between Blue Giant Corporation, a Delaware corporation ("Buyer")
and Blue Giant USA Corporation, an Alabama corporation ("Seller").
Background
----------
Seller is engaged in the business of manufacturing and selling manual
and electric stackers and pallet trucks, electric tow tractors, vehicle
restraint devices, hydraulic scissor lifts and dock levelers (the "Business").
Seller desires to sell and transfer to Buyer and Buyer desires to purchase from
Seller certain of the assets of Seller used or associated with the Business, all
upon the terms and subject to the conditions set forth in this Agreement, and to
be effective as of 11:59 p.m. on October 31, 1997 (the "Effective Time"). Seller
shall operate the Business solely for the benefit of Buyer from and after the
Effective Time.
Terms
-----
In consideration of the mutual covenants contained herein and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
THE TRANSACTION
---------------
1.1. Sale and Purchase of Assets. Subject to the terms and conditions
hereof, at the Closing referred to in Section 1.8 below, Seller will sell,
transfer, convey and assign to Buyer, free and clear of all Liens of every kind,
nature and description, except for the Excluded Assets (as defined in Section
1.2) or as otherwise disclosed and agreed in this Agreement, and Buyer will
purchase from Seller, all of Seller's properties and business as a going concern
and good will and assets of every kind, nature and description existing on the
date of Closing, wherever such assets are located and whether real, personal or
mixed, tangible or intangible, and whether or not any of such assets have any
value for accounting purposes or are carried or reflected on or specifically
referred to in its books or financial statements (collectively, the "Purchased
Assets"), including, without limitation, all of Seller's right, title and
interest in and to the following, as the same may exist on the Closing Date:
(a) subject to Section 1.2(a), all the real property, together
with the buildings, fixtures, structures and other improvements erected thereon,
and together with all easements, rights and privileges appurtenant thereto, as
more particularly described in Schedule 1.1(a) hereto;
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(b) all of Seller's machinery, equipment, tooling, dies, jigs,
vehicles, spare parts and supplies, including without limitation the items
listed on Schedule 1.1(b) hereto;
(c) all of Seller's raw materials, work in progress, parts,
subassemblies, finished goods and other inventories, wherever located and
whether or not obsolete or carried on Seller's books of account;
(d) all of Seller's other tangible assets, including office
furniture, office equipment and supplies, computer hardware and software,
leasehold improvements and vehicles;
(e) all of Seller's trade and other notes and accounts receivable;
(f) all of Seller's books, records, manuals, documents, books of
account, correspondence, sales and credit reports, customer lists, literature,
brochures, advertising material and the like;
(g) all of Seller's rights under leases for real or personal
property, and all of the Seller's rights under all other leases, contracts,
agreements and purchase and sale orders (the "Assigned Contracts"), as
specifically set forth on Schedule 2.13 hereto or the Bill of Sale;
(h) all of Seller's claims, choses in action, causes of action and
judgments;
(i) all of Seller's good will and rights in and to the name "Blue
Giant," and in any other tradename, trademark, fictitious name or service mark,
or any variant of any of them,
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and any registrations or applications for registration therefor, and any other
forms of intellectual property or industrial property rights, including any
patents, copyrights, trade secrets, know-how or proprietary manufacturing
processes and all licenses, sublicenses or other rights relating thereto
including, without limitation, those listed on Schedule 2.25; and
(j) all transferable or assignable registrations, licenses,
permits, approvals, certificates of occupancy and operating rights held in
connection with the Purchased Assets.
1.2. Excluded Assets. Notwithstanding any other provision of this
Agreement, Seller shall retain and the Purchased Assets shall not include the
following assets (collectively, the "Excluded Assets"):
(a) the real property, together with the buildings, fixtures,
structures and other improvements erected thereon, and together with all
easements, rights and privileges appurtenant thereto, located at 204 Industrial
Park Drive, Pell City, Alabama (the "Alabama Real Property");
(b) all of the Seller's cash, cash in banks, certificates of
deposit, cash equivalents, bank and mutual fund accounts, deposits, investments,
securities, advance payments, prepaid items and expenses, deferred charges,
rights of offset and credits, claims for refund and other cash equivalents on
hand or on deposit in any financial institution on the Closing Date;
(c) all of Seller's interest in SAGA Insurance Company, Limited;
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(d) all consideration received by and the rights of the Seller
under or pursuant to this Agreement or any agreement, instrument or document
ancillary hereto;
(e) all notes and receivables owing to Seller on the Closing Date
(i) from any Subsidiaries or Related Party and (ii) with respect to workers'
compensation insurance policies for all policy years prior to the current policy
year;
(f) the corporate records of the Seller including, without
limitation, its minute books, articles of incorporation, bylaws, minutes of
proceedings, stock transfer ledger, letters patent and corporate seal;
(g) all privileged communications;
(h) intercompany (among the Seller and any Affiliate other than
Blue Giant Canada Limited) accounts receivable;
(i) payments from insurance companies pertaining to claims filed
by Seller prior to the Closing Date and only to the extent relating to any
liability or obligation included within the Excluded Liabilities (as defined in
Section 1.7(b));
(j) all assets, properties and rights described in Schedule 1.2
hereto; and
(k) all the issued and outstanding capital stock of Blue Giant
Europe Limited ("Blue Europe") that is owned by Seller.
1.3. Purchase Price. The aggregate purchase price for the Purchased
Assets (the "Purchase Price") shall be Four Million Four Hundred Sixty-Five
Thousand U.S. Dollars ($4,465,000)
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subject to adjustment as provided in Section 1.6, plus the assumption of certain
liabilities of Seller, as provided in Section 1.7.
1.4. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer to Seller as follows:
(a) Buyer's delivery of Three Million Two Hundred Fifteen Thousand
U.S. Dollars ($3,215,000) in cash by wire transfer at Closing.
(b) Buyer's delivery of One Million Two Hundred Fifty Thousand
U.S. Dollars ($1,250,000) in cash or by bank check or wire transfer at Closing
to SouthTrust Bank, National Association (the "Escrow Agent") pursuant to the
Escrow Agreement, substantially in the form of Exhibit A hereto (the "Escrow
Agreement").
(c) By Buyer's assumption at Closing of Seller's liabilities as
required by Section 1.7. Any amounts owing Buyer or Seller pursuant to Section
1.6 as a result of an adjustment to the Purchase Price shall be paid by Seller
or Buyer to the other in cash, by bank check or by mutual direction to the
Escrow Agent to disburse a portion of the funds held under the Escrow Agreement
within 10 days after the amount is finally determined pursuant to Section 1.6.
1.5. Allocation of Purchase Price. Buyer shall prepare a definitive
allocation of the Purchase Price within 45 days following the Closing Date.
Buyer and Seller agree that each will report the federal, state and local income
and other tax
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consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation including the preparation and filing of Form 8594 pursuant
to Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code")
and that neither will take any position inconsistent therewith upon examination
of any tax return, in any refund claim, in any litigation, or otherwise.
1.6. Post-Closing Adjustment to Purchase Price.
(a) Preparation of Closing Statement of Net Asset Value. Within 45
days after the Closing, Buyer shall, at its expense, prepare and deliver to
Seller a statement of the Net Asset Value of the Seller as of the Effective Time
(the "Closing Statement"), as determined by independent certified accountants
chosen by Buyer. The Closing Statement shall be prepared in accordance with
generally accepted accounting principles applied on a basis consistent, to the
extent not inconsistent with generally accepted accounting principles, with
those principles applied by Seller in the preparation of its June 28, 1997
financial statements. The Closing Statement as originally proposed by Buyer and
as adjusted as hereinafter described shall not contain a "warranty reserve" or
any other similar reserve or allowance, it being agreed by the parties that
Buyer shall be solely responsible for all warranty claims for products
manufactured and services provided by Seller, irrespective of whether such
claims first arose before or after the Closing. In the event that Seller
disagrees with the Closing Statement,
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Seller shall hire an independent certified accountant at its expense, which
shall prepare Seller's proposed adjustments to the Closing Statement within 45
days of Seller's receipt of the Closing Statement. Any dispute (and only those
items in dispute) concerning the Closing Statement which cannot be resolved by
the parties and their respective independent certified accountants within 30
days of Buyer's receipt of Seller's proposed adjustments to the Closing
Statement will be submitted no later than 45 days after such receipt to the
Atlanta, Georgia office of Arthur Andersen, or such other independent certified
accounting firm mutually selected by Buyer and Seller, and the determination of
such firm shall be final and binding on the parties. All parties represent
hereto that they have not had a business relationship with Arthur Andersen
during the five year period preceding the date of this Agreement and that they
shall not establish such a business relationship between the date of this
Agreement and the final determination of the Closing Statement pursuant to this
Section 1.6(a). The fees and expenses of Arthur Andersen shall be borne equally
by the Buyer and Seller.
(b) Adjustment Formula. If the Net Asset Value (as hereinafter
defined) at the Effective Time as reflected on the Closing Statement is more
than $3,051,166, then the Purchase Price shall be increased by the amount of
such excess and Buyer shall pay Seller such amount by certified or bank check.
If such Net Asset Value is less than $3,051,166 at the Effective Time, the
Purchase Price shall be reduced by the amount of such
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deficiency and Seller shall pay Buyer such amount by certified or bank check.
Buyer or Seller, as the case may be, shall make any payment required as a result
of an adjustment to the Purchase Price pursuant to this Section within 10 days
after the amount of such payment has been finally determined in accordance with
Section 1.5(a). In any event, Seller shall pay Buyer, or Buyer shall deduct from
amounts otherwise owing to Seller, an amount in cash equal to the cash received
by Seller after the Effective Time and before the Closing Date. As used herein,
"Net Asset Value" shall mean the remainder of (i) the book value of the assets
of Seller that are included in the Purchased Assets but exclude the Excluded
Assets (the "Book Assets") minus (ii) the book value of the liabilities of
Seller that constitute the Assumed Liabilities but exclude the Excluded
Liabilities, as all such amounts are reflected on the Closing Statement
calculated in accordance with generally accepted accounting principles on a
basis consistent with the calculation of the "Net Asset Value" of Seller as of
June 30, 1997 attached hereto as Exhibit 1.6.
1.7. Assumption of Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall by an
appropriate instrument of assumption to be executed and delivered at Closing and
to be substantially in the form attached as Exhibit B hereto (the "Assumption
Agreement"), assume and agree to perform, pay or discharge, when due, to the
extent not theretofore performed, paid or discharged: all of (a) Seller's
obligations and liabilities (including the obligations to make
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payments) under the Assigned Contracts arising on or after the Closing Date; (b)
all of Seller's trade accounts payable, but only to the extent reflected on the
Closing Statement; (c) Seller's sales tax payable, payroll tax payable, payroll
deduction payable and accured payroll, but in each case only to the extent
reflected on the Closing Statement; (d) all liabilities and obligations of
Seller (including the obligations to make payments) first arising after the
Closing Date under all licenses, permits, approvals, certificates of occupancy
and operating rights held in connection with the Purchased Assets to the extent
such licenses, permits, approvals, certificates of occupancy and operating
rights are included in the Purchased Assets; (e) warranty claims for all
products manufactured, assembled, sold, serviced or distributed by Seller prior
to the Closing Date; (f) any claims relating to the condition or operation of
any work in process or other inventories that are a part of the Purchased
Assets; (g) unfilled sales orders for products or services sold or committed,
but not delivered by Seller as of the Closing Date, to the extent that such
unfilled sales orders are included within the Purchased Assets; (h) liabilities
for materials which have been ordered but have not been delivered to and paid
for by Seller as of the Closing Date, to the extent that such materials have
been ordered in the ordinary course of business and are of a type that would be
included in the Purchased Assets had they been delivered to Seller prior to the
Closing Date; (i) management bonus payable,
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but only to the extent reflected on the Closing Statement; and (j) all
liabilities and obligations incurred by Seller in its operation of the Business
pursuant to this Agreement from the Effective Time through and including the
Closing Date. The obligations and liabilities to be assumed by Buyer pursuant to
this Section are hereinafter sometimes referred to as the "Assumed Liabilities."
Except with respect to the Assumed Liabilities, Buyer does not hereby and shall
not assume or in any way undertake to pay, perform, satisfy or discharge any
liabilities or obligations of Seller, and Seller agrees to pay and satisfy when
due any such liabilities and obligations not assumed by Buyer including the
Excluded Liabilities (as hereinafter defined).
(b) Excluded Liabilities. Except as expressly provided in Section
1.7(a), Seller shall retain and Buyer shall not assume or be liable for any
liabilities and obligations of Seller, including without limitation the
following: (the "Excluded Liabilities"):
(i) any liabilities or obligations of Seller, contingent or
otherwise, for any indebtedness of Seller;
(ii) the Liabilities or obligations of Seller to its
stockholders respecting dividends, distributions to its stockholders in
liquidation, redemptions of stock, or otherwise;
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(iii) liabilities or obligations of Seller arising out of any
transactions occurring, or obligations incurred, after the Closing;
(iv) any obligations of Seller for expenses, taxes or fees
incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, all attorneys and
accountants fees and all brokers or finders fees or commissions payable by
Seller (including but not limited to those referred to in Section 6.2 hereof);
(v) any obligation of Seller under or arising out of this
Agreement;
(vi) liabilities to the extent that the Seller is insured or
otherwise indemnified or which would have been covered by insurance (or
indemnification) but for a claim by the insurer (or the indemnitor) that the
insured (or the indemnitees) had breached it obligations under the policy of
insurance (or the contract of indemnity) or had committed fraud in the insurance
application;
(vii) any liability or obligation of Seller to any Related
Party (as hereinafter defined);
(viii) any liabilities or obligations, the existence of which
constitute a breach of the representations, warranties or covenants of Seller
contained in this Agreement;
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(ix) any obligations or liabilities of Seller to indemnify
its officers, directors, employees or agents;
(x) any liability or obligation in respect of the Excluded
Assets;
(xi) all federal, state, local, foreign and other
governmental taxes imposed on Seller, including (i) any Tax of any other
corporation which tax is assessed against Seller by virtue of its status, prior
to the Closing Date, as a member of any consolidated group of which such other
corporation was also a member and (ii) any Taxes imposed as a result of the
consummation of the transaction under this Agreement;
(xii) any Environmental Liabilities;
(xiii) except for the Assumed Liabilities, any obligation or
liability arising under any contract, instrument or agreement (1) that is not
transferred to Buyer as part of the Purchased Assets, or (2) that is not
transferred to Buyer because of Seller's failure or inability to obtain any
third party consent required for the transfer or assignment of such contract or
agreement to Buyer, or (3) that relates to any breach or default (or an event
which might, with the passing of time or the giving of notice, or both,
constitute a default) under any contract, instrument or agreement or to any
services to be provided by Seller under any such contract, instrument or
agreement arising out of or relating to periods on or prior to the Effective
Time, or (4) for which Seller received payment prior to the Effective Time; and
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(xiv) any other liability or obligation of Seller or its
Affiliates including any liability or obligation directly or indirectly arising
out of or relating to the operation of the Business or ownership of the
Purchased Assets on or prior to the Effective Time, whether contingent or
otherwise, fixed or absolute, known or unknown, matured or unmatured, present,
future or otherwise, except for the Assumed Liabilities.
1.8. Closing. The closing under this Agreement (the "Closing") will
take place at 10:00 A.M., local time, on November 12, 1997 at the offices of
Dechert Price & Rhoads, or at such other time, date or place as the parties
shall mutually agree. The date on which Closing occurs is sometimes referred to
herein as the "Closing Date."
1.9. Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver or cause to be
delivered to Buyer:
(i) a general warranty bill of sale and instrument of
assignment to the tangible Purchased Assets (other than certificated motor
vehicles) including a list of the Assigned Contracts as of the Closing Date,
duly executed by the Seller substantially in the form of Exhibit C hereto (the
"Bill of Sale");
(ii) an assignment of all transferable or assignable
licenses, permits and warranties relating to the Purchased Assets and of any
trademarks, trade names, patents and
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the like, duly executed and in recordable form, subject to Section 1.10 hereof;
(iii) title certificates to any motor vehicles included in
the Purchased Assets duly executed by the Seller (together with any other
transfer forms necessary to transfer title to such vehicles) promptly following
the Closing but in no event later than two (2) weeks following the Closing Date;
(iv) powers of attorney to Buyer to endorse all checks made
payable to Seller relating to trade and other notes and accounts receivable of
Seller;
(v) the Escrow Agreement;
(vi) a general warranty bill of sale and instrument of
assignment to all certificated motor vehicles included in the Purchased Assets
as of the Closing Date, duly executed by Seller substantially in the form of
Exhibit D hereto;
(vii) an amendment to the Blue Giant 401(k) Plan (as defined
in Section 6.3(a), amending the employer and plan sponsor to be Blue Giant
Corporation, a Delaware corporation, effective 11:59 p.m. of the Closing Date;
and
(viii) such other instruments of conveyance as shall, in the
reasonable opinion of Buyer and its counsel, be necessary to vest in Buyer good,
valid and marketable title to the Purchased Assets in accordance with Section
1.1.
(b) Deliveries by Buyer. At the Closing, Buyer will deliver to
Seller:
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(i) the cash portion of Purchase Price;
(ii) the Assumption Agreement;
(iii) the Escrow Agreement; and
(iv) the CLARK Guaranty.
(c) Other Deliveries. The closing certificates, opinions of
counsel and other documents required to be delivered pursuant to this Agreement
will be exchanged.
1.10. Regarding Certain Consents. Nothing in this Agreement shall be
construed as an attempt to assign any contract, agreement, permit, franchise, or
claim included in the Purchased Assets which is by its terms or in law
nonassignable without the consent of the other party or parties thereto, unless
such consent shall have been given, or as to which all the remedies for the
enforcement thereof enjoyed by Seller would not, as a matter of law, pass to
Buyer as an incident of the assignments provided for by this Agreement. In
order, however, to provide Buyer the full realization and value of every
contract, agreement, permit, franchise and claim of the character described in
the immediately preceding sentence, Seller agrees that on and after the Closing,
it will, at the request and under the direction of Buyer, in the name of Seller
or otherwise as Buyer shall specify take all reasonable action (including
without limitation the appointment of Buyer as attorney-in-fact for Seller) and
do or cause to be done all such things as shall in the reasonable opinion of
Buyer or its counsel be necessary or proper (a) to assure that the rights of
Seller under such
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contracts, agreements, permits, franchises, and claims shall be preserved for
the benefit of Buyer and (b) to facilitate receipt of the consideration to be
received by Seller in and under every such contract, agreement, permit,
franchise, and claim, which consideration shall be held for the benefit of, and
shall be delivered to, Buyer. All expenses and obligations incurred by Seller
under any contract or agreement that is not included in the Purchased Assets but
from which Buyer realizes value pursuant to this Section 1.10 shall be paid to
Seller by Buyer within ten (10) days of request by Seller, including reasonable
supporting documentation. Nothing in this Section shall in any way diminish
Seller's obligations hereunder to obtain all consents and approvals and to take
all such other actions prior to or at Closing as are necessary to enable Seller
to convey or assign valid title to all the Purchased Assets to Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents, warrants and covenants to and with Buyer as
follows:
2.1. Organization. Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of Alabama. Seller has all
requisite corporate power and authority to own or lease its properties and
assets as now owned or leased, to carry on its businesses as and where now being
conducted and to enter into this Agreement, and perform its
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obligations hereunder. The copies of Seller's articles of incorporation and
bylaws, as amended to date, which have been delivered to Buyer, are correct and
complete and are in full force and effect.
2.2. Subsidiaries. Except for the subsidiaries listed on Schedule 2.2
hereto (collectively, the "Subsidiaries" and individually, a "Subsidiary"),
Seller does not, directly or indirectly, own any stock of, or any other interest
in, any other corporation or business entity.
2.3. Qualification; Location of Business and Assets The Seller is duly
qualified and in good standing as a foreign corporation, duly authorized to do
business in the jurisdictions set forth on Schedule 2.3 hereto, and such
jurisdictions are the only jurisdictions wherein the character of the properties
owned or leased or the nature of activities conducted by Seller make such
qualification necessary and where the failure to so qualify would have a
material adverse effect on Seller, the Business or the Purchased Assets. Set
forth on Schedule 2.3 hereto is each location (specifying state, county and
city) where Seller: (a) has a place of business, (b) owns or leases real
property, and (c) owns or leases any other property, including inventory,
equipment, furniture, tools and dies.
2.4. Authorization and Enforceability. The execution, delivery and
performance of this Agreement has been, and at Closing the Assumption Agreement,
the Bill of Sale and such other agreements necessary to vest in Buyer good,
valid and
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marketable title to the Purchased Assets (the "Ancillary Agreements") shall have
been duly authorized by all necessary corporate action on the part of Seller,
including, if necessary, shareholder approval. This Agreement has been, and at
Closing the Ancillary Agreements shall have been duly executed and delivered by
Seller, and this Agreement constitutes, and at Closing the Ancillary Agreements
will constitute, the legal, valid and binding obligations of Seller, enforceable
in accordance with their respective terms, except as enforcement may be limited
by bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights in general, moratorium laws or by general principles of
equity.
2.5. No Violation of Laws or Agreements. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement and the compliance with the terms, conditions and provisions of
this Agreement by Seller, will not (a) contravene any provision of Seller's
articles of incorporation or bylaws; (b) conflict with or result in a breach of
or constitute a default (or an event which might, with the passage of time or
the giving of notice or both, constitute a default) under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement or
any other agreement or instrument to which Seller is a party or by which it or
any of its assets may be bound or affected except as set forth on Schedule 2.16,
or any judgment or order of any court or governmental department,
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commission, board, agency or instrumentality, domestic or foreign, or any
applicable law, rule or regulation, (c) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon Seller's assets or
give to others any interests or rights therein, (d) result in the maturation or
acceleration of any liability or obligation of Seller that will not be paid in
full by Seller at Closing (or give others the right to cause such a maturation
or acceleration), or (e) result in the termination of or loss of any right (or
give others the right to cause such a termination or loss) under any of the
Assigned Contracts except as set forth on Schedule 2.16.
2.6. Financial Statements. The books of account and related records of
Seller fairly reflect in reasonable detail its assets, liabilities and
transactions and are in adequate condition for the preparation of the Financial
Statements (as defined below) of Seller in accordance with generally accepted
accounting principles applied on a consistent basis. Seller has delivered to
Buyer the following financial statements (the "Financial Statements"):
(a) Audited statements of income and retained earnings and
statements of changes in financial position of Seller for the years
ended December 31, 1993 through December 31, 1996 inclusive, and
balance sheets of Seller at such dates.
(b) Unaudited statements of income and retained earnings of Seller
for the six (6) months ended June 28, 1997 and a balance sheet of
Seller at such date.
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The Financial Statements referred to in paragraph (a) above: (i) fairly present
the financial condition, assets and liabilities of Seller as at their respective
dates and the results of its operations and changes in financial position for
the periods covered thereby, (ii) have been prepared in accordance with
generally accepted accounting principles consistently applied and (iii) have
been audited by Raughton & Company, C.P.A., the independent certified public
accountants for Seller. All references in this Agreement to the "Balance Sheet"
shall mean the balance sheet of Seller as at June 28, 1997 included in the
Financial Statements and all references to the "Balance Sheet Date" shall mean
June 28, 1997.
2.7. Undisclosed Liabilities. To Seller's Knowledge after due inquiry,
Seller has no liability or obligation of any nature, whether due or to become
due, absolute, contingent or otherwise, including liabilities for or in respect
of federal, state, local or foreign taxes and any interest or penalties related
hereto, except for liabilities that are (a) fully reflected on the Balance Sheet
or (b) incurred in the ordinary course of business since the Balance Sheet Date
and fully reflected as liabilities on the Seller's books of account, none of
which individually or in the aggregate, has been materially adverse or (c)
disclosed on Schedule 2.7 hereto.
2.8. No Changes. Except as disclosed on Schedule 2.8 hereto, since
December 31, 1996, the Seller has conducted its business only in the ordinary
course. Without limiting the
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generality of the foregoing sentence, except as disclosed on Schedule 2.8
hereto, since the Balance Sheet Date, there has not been:
(a) any change in the financial condition, assets, liabilities,
net worth or business of the Seller, except changes in the ordinary course of
business, none of which, individually or in the aggregate has been or will be
materially adverse to Seller;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting the properties, business or prospects
of Seller, or any material deterioration in the operating condition of Seller's
assets;
(c) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind of Seller's assets, tangible or intangible;
(d) any strike, walkout, labor trouble or any other new or
continued event, development or condition of any character which has or could
materially adversely affect the business, properties or prospects of Seller;
(e) any declaration, setting aside or payment of a dividend or
other distribution in respect of any capital stock of Seller, or any direct or
indirect redemption, purchase or other acquisition of any such stock or any
rights to purchase such stock or securities convertible into or exchangeable for
such stock;
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(f) any increase in the salaries or other compensation (excluding
increases in the ordinary course of business and consistent with past practice)
payable or to become payable to, or any advance (excluding advances for ordinary
business expenses) or loan to, any officer, director, employee or shareholder of
Seller, or any increase in, or any addition to, other benefits (including
without limitation any bonus, profit-sharing, pension or other plan) to which
any of its officers, directors, employees or shareholders may be entitled, or
any payments to any pension, retirement, profit-sharing, bonus or similar plan
except payments in the ordinary course of business and consistent with past
practice made pursuant to the employee benefit plans described on Schedule 2.26
hereto, or any other payment of any kind to (or on behalf of) any such officer,
director, employee or shareholder other than payment of base compensation and
reimbursement for reasonable business expenses in the ordinary course of
business;
(g) any making or authorization of any capital expenditures in
excess of $50,000.00;
(h) any cancellation or waiver of any right material to the
operation of Seller's business or any cancellation or waiver of any debts or
claims of substantial value or any cancellation or waiver of any debts or claims
against any Related Party (as such term is hereinafter defined);
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(i) any sale, transfer or other disposition of any assets of
Seller, except sales of assets in the ordinary course of business;
(j) any payment, discharge or satisfaction of any liability or
obligation (whether accrued, absolute, contingent or otherwise) by Seller, other
than the payment, discharge or satisfaction, in the ordinary course of business,
of liabilities or obligations shown or reflected on the Balance Sheet or
incurred in the ordinary course of business since the Balance Sheet Date;
(k) any adverse change or any threat of any adverse change in
Seller's relations with, or any loss or threat of loss of, Seller's suppliers,
clients or customers, which change or loss would have a material adverse affect
on Seller or its Business;
(l) any write-offs as uncollectible of any notes or accounts
receivable of Seller or right-downs of the value of any assets or inventory by
Seller other than in immaterial amounts or in the ordinary course of business
consistent with past practice and at a rate no greater than during the twelve
months ended on the Balance Sheet Date;
(m) any change by Seller in any method of accounting or keeping
its books of account or accounting practices;
(n) any creation, incurrence, assumption or guarantee by Seller of
any obligations or liabilities (whether
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absolute, accrued, contingent or otherwise and whether due or to become due),
except in the ordinary course of business, or any creation, incurrence,
assumption or guarantee by Seller of any indebtedness for money borrowed;
(o) any payment, loan or advance of any amount to or in respect
of, or the sale, transfer or lease of any properties or assets (whether real,
personal or mixed, tangible or intangible) to, or entering into of any
agreement, arrangement or transaction with, any "Related Party" (as hereinafter
defined), except for (i) directors' fees, (ii) compensation to the officers and
employees of Seller at rates not exceeding the rates of compensation disclosed
on Schedule 2.19 hereto and (iii) reimbursements of or advances for expenses
incurred for business-related purposes not exceeding $5,000 outstanding in the
aggregate at any given time (as used herein, a "Related Party" means any of the
officers, directors or shareholders of Seller, any affiliate or relative of
Seller or of any shareholder of Seller, or any of their respective officers or
directors, or any business or entity in which any shareholder of Seller or any
affiliate or relative of any such persons or of Seller has any direct or
material indirect interest);
(p) any disposition of or failure to keep in effect any rights in,
to or for the use of any patent, trademark, service mark, trade name or
copyright, or, to Seller's Knowledge, any disclosure to any person not an
employee or other disposal of any trade secret, process or know-how; or
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(q) any transaction, agreement or event to which Seller is a party
or a participant outside the ordinary course of Seller's business or
inconsistent with past practice.
2.9. Taxes. Seller has (a) timely filed all federal, state and local
income, payroll, withholding, excise, sales, use, personal property, use and
occupancy, business and occupation, mercantile, real estate, capital stock and
franchise or other tax returns of any kind whatsoever (all the foregoing taxes,
including interest and penalties thereon and including estimated taxes, being
hereinafter collectively called "Taxes" and individually a "Tax"), (b) has paid
all Taxes which are shown to have become due pursuant to such returns and (c)
paid all other Taxes for which a notice of assessment or demand for payment has
been received. All such returns have been prepared in accordance with all
applicable laws and requirements and accurately reflect the taxable income (or
other measure of Tax) of the party filing the same. The accruals for Taxes
contained in the Balance Sheet are adequate to cover all liabilities for Taxes
of the Seller for all periods ending on or before the Balance Sheet Date and
nothing has occurred subsequent to that date to make any of such accruals
inadequate as of the Balance Sheet Date. All Taxes for periods beginning after
the Balance Sheet Date have been paid or are adequately reserved against on the
books of Seller. Seller has timely filed all information returns or reports,
including forms 1099, which are required to be filed and has accurately reported
all information required to be included on such returns
- 26 -
or reports. True copies of federal and state income tax returns of Seller for
each of the fiscal years ended December 31, 1992 through December 31, 1996 have
been delivered to Buyer. To Seller's Knowledge, there are no proposed
assessments of Tax against Seller or proposed adjustments to any tax returns
filed, pending against Seller. Except as disclosed on Schedule 2.9, Seller has
not received notice that any Tax return is under examination by any taxing
authority. Except as disclosed on Schedule 2.9 hereto, Seller has not executed a
waiver or consent extending any statute of limitation for federal income or
other tax liability which remains outstanding. Except as disclosed on Schedule
2.9 hereto, since January 1, 1990, Seller has not (a) joined in or been required
to join in filing a consolidated federal income tax return, or (b) entered into
a closing agreement with any taxing authority.
2.10. Inventory. All of the inventories of Seller, including that
reflected in the Balance Sheet, are valued at the lower of cost or market, the
cost thereof being determined on a first-in, first-out basis, except as
disclosed in the Financial Statements. All of the inventories of Seller
reflected in the Balance Sheet and all such inventories acquired since the
Balance Sheet Date consist of items of a quality and quantity usable and
saleable in the ordinary course of Seller's business within a reasonable period
of time and at normal profit margins (other than normal trade discounts
regularly offered by the Business for prompt payment or quantity purchase), and
all of the raw
- 27 -
materials and work in process inventory of Seller reflected in the Balance Sheet
and all such inventories acquired since the Balance Sheet Date can reasonably be
expected to be consumed in the ordinary course of business within a reasonable
period of time. Attached hereto is Schedule 2.10 which sets forth a summary of
the book value of Seller's inventory of finished goods, work in process and raw
materials as of September 28, 1997 according to the internal accounting records
of the Seller as of said date.
2.11. Accounts Receivable. All of the Seller's trade accounts and notes
receivable represent amounts receivable for merchandise actually delivered or
services actually provided (or, in the case of non-trade accounts or notes,
represent amounts receivable in respect of other bona-fide business
transactions), have arisen in the ordinary course of business, are not subject
to any counterclaims or offsets and have been billed and are generally due
within 30 days after such billing (with regard to U.S. trade accounts) and
within 90 days (with regard to non-U.S. trade accounts). All such receivables
are fully collectible in the normal and ordinary course of business, except to
the extent of a reserve in an amount not in excess of the reserve for doubtful
accounts reflected on the Balance Sheet. Schedule 2.11 hereto sets forth (a) the
total amount of accounts receivable of the Seller outstanding as of September
28, 1997 and (b) the aging of such receivables based on the following schedule:
0-30 days,
- 28 -
31-60 days, 61-90 days, and over 90 days, from the due date thereof.
2.12. No Pending Litigation or Proceedings. Except as set forth on
Schedule 2.12 hereto, there are no actions, suits, investigations, proceedings
or claims pending or, to Seller's Knowledge, threatened against or affecting
Seller or Seller's agents or their assets, at law or in equity, by or before any
court or governmental department, agency or instrumentality, and to Seller's
Knowledge, there is no basis for any such action, suit, investigation,
proceeding or claim. There are presently no outstanding judgments, decrees or
orders of any court or any governmental or administrative agency against or, to
Seller's Knowledge, affecting Seller or any of their businesses or assets.
2.13. Contracts; Compliance. Except as listed on Schedule 2.13 hereto,
Seller is not a party to or bound by any lease, contract or commitment, oral or
written, formal or informal, of the following types:
(a) mortgages, indentures, security agreements or other agreements
and instruments relating to the borrowing of money, the extension of credit or
the granting of liens or encumbrances;
(b) employment and consulting agreements;
(c) union or other collective bargaining agreements;
(d) powers of attorney;
- 29 -
(e) sales agency, manufacturers representative and distributorship
agreements or other distribution or commission arrangements;
(f) licenses of patent, trade secrets, know- how, trademark,
copyrights and other intellectual property rights;
(g) agreements, orders or commitments for the purchase of
services, raw materials, supplies or finished products from any one supplier for
an amount in excess of $5,000.
(h) agreements, orders or commitments for the sale of products or
services for more than $5,000 to any single purchaser;
(i) contracts or options relating to the sale by Seller of any
asset, other than sales of inventory in the ordinary course of business;
(j) bonus, profit-sharing, compensation, stock option, pension,
retirement, deferred compensation, accrued vacation pay, group insurance,
welfare agreements or other plans, agreements, trusts or arrangements for the
benefit of employees;
(k) agreements or commitments for capital expenditures in excess
of $50,000.00 for any single project;
(l) joint venture agreements;
(m) agreements requiring the consent of any party thereto to the
consummation of the transactions contemplated hereby;
(n) agreements with any Related Party;
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(o) lease agreements under which it is either lessor or lessee;
(p) agreements, contracts or commitments for any charitable or
political contribution; or
(q) other agreements, contracts and commitments which are material
to the business of Seller, or which involve payments or receipts of more than
$5,000.00 in any single year, or which were entered into other than in the
ordinary and usual course of business.
All such leases, contracts and other commitments are in full force and
effect; all parties to such leases, contracts and other commitments have
complied with the provisions thereof; no such party is in default under any of
the terms thereof; and no event has occurred that with the passage of time or
the giving of notice or both would constitute a default by any party under any
provision thereof. Set forth on Schedule 2.13 hereto is a summary of unfilled
firm purchase orders of Seller as of September 26, 1997 other than any unfilled
firm purchase order which has a value of less than $1,000.
2.14. Compliance with Laws. Schedule 2.14 hereto sets forth a list of
all material permits, certificates, licenses, orders, registrations, franchises,
authorizations and other approvals from all federal, state, local and foreign
governmental and regulatory bodies held by Seller. The Seller holds and is in
compliance with all material permits, certificates, licenses, orders, approvals,
registrations, franchises and authorizations
- 31 -
required under all laws, rules and regulations in connection with its business,
and, to Seller's Knowledge, all of such permits, certificates, licenses, orders,
approvals, registrations, franchises and authorizations are in full force and
effect. The Seller has complied with all applicable statutes, rules, regulations
and orders, federal, state and municipal, which, if not complied with, would
have a material adverse effect on its business. No notice, citation, summons or
order has been issued, no complaint has been filed, no penalty has been assessed
and, to Seller's Knowledge, no investigation or review is pending or threatened
by any governmental or other entity (a) with respect to any alleged violation by
Seller of any law, ordinance, rule, regulation or order of any governmental
entity or (b) with respect to any alleged failure by Seller to have any permit,
certificate, license, approval, registration or authorization required in
connection with its business.
2.15. Environmental Matters.
(a) Except as disclosed on Schedule 2.15 hereto or in the site
assessments of the Owned Real Property performed by or on behalf of Buyer (true
and complete copies of which Buyer has delivered to Seller):
(i) To Seller's knowledge, Seller has complied with and is
not in violation of any federal, state, regional or local statutory or common
law, regulation, rule, order, ordinance, guideline, direction, policy or notice,
relating to the environment, public health and safety, and employee
- 32 -
health and safety, including those relating to Hazardous Substances
("Environmental Laws").
(ii) To Seller's knowledge, Seller holds and is in compliance
with all environmental permits, certificates, consent or other settlement
agreements, licenses, approvals, registrations and authorizations required under
all Environmental Laws ("Environmental Permits"), and all of such Environmental
Permits are valid and in full force and effect. All such Environmental Permits
held by Seller are listed on Schedule 2.15 hereto and any that are not
transferable are so designated. Seller has made or will make before the Closing
timely application for renewals of all such Environmental Permits for which
Environmental Laws require that applications must be filed on or before the
Closing to maintain the Environmental Permits in full force and effect after the
Closing Date.
(iii) No consent, approval or authorization of, or
registration or filing with any Person, including any environmental governmental
Authority or regulatory agency, is required in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
(iv) No notice, citation, summons or order has been issued or
served upon, no complaint has been filed, no penalty has been assessed and, to
Seller's Knowledge, no investigation or review is pending or threatened by any
Authority or Person: (a) with respect to any alleged violation by Seller
- 33 -
of any Environmental Law; or (b) with respect to any alleged failure by Seller
to have any Environmental Permit; or (c) with respect to any use, possession,
generation, treatment, storage, recycling, transportation or disposal
(collectively "Management" or "Managed," as the context requires) of any
Hazardous Substances by or on behalf of Seller or its predecessors.
(v) Seller has not received any request for information,
notice of claim, demand, order or notification that it or any of its
predecessors are or may be potentially responsible with respect to any
investigation or clean-up of any threatened or actual Release of any Hazardous
Substance.
(vi) Except for Hazardous Substances stored or used in the
ordinary course of their manufacturing processes, in quantities and in a manner
(1) not in violation of any applicable law, or (2) which has not or is not
reasonably likely to create a condition which requires investigation,
remediation or other responsive action or responsibility or liability under
Environmental Laws, neither Seller nor any Affiliate of Seller has used,
generated, treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on any property now owned, operated or leased by Seller or
any Affiliate of Seller or on any formerly owned, operated or leased property,
nor to Seller's Knowledge has anyone else during the period that such property
has been owned, operated or leased by Seller or, to Seller's Knowledge, during
any other period, treated, stored for more than 90 days, recycled or disposed of
any Hazardous
- 34 -
Substances on any property now owned, operated or leased by Seller or any
Affiliate of Seller or on any formerly owned, operated or leased property.
(vii) To Seller's Knowledge, no polychlorinated biphenyls or
asbestos-containing materials are or have been present at any property now
owned, operated or leased by Seller or any Affiliate of Seller, or at any
formerly owned, operated or leased property during the period that such property
was owned, operated or leased by Seller, nor are there any underground storage
tanks, active or abandoned, at any property now owned, operated or leased by
Seller or any Affiliate of Seller or during the period that such property was
owned, operated or leased by Seller, at any formerly owned, operated or leased
property.
(viii) To Seller's Knowledge, no Hazardous Substance
generated by Seller or any Affiliate of Seller has been recycled, treated,
stored, disposed of or transported by any entity in violation of any
Environmental Law or in a manner which has created or is reasonably likely to
create any liability or responsibility under any Environmental Law.
(ix) To Seller's Knowledge, without any independent inquiry,
no Hazardous Substance managed by Seller or any Affiliate of Seller has come to
be located at any site which is listed or proposed for listing under the
National Priorities List ("NPL") under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), the Comprehensive
- 35 -
Environmental Response, Compensation and Liability Information List ("CERCLIS")
or on any similar state list, or at any site which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
claims against Seller or any Affiliate, or Buyer for clean-up costs, remedial
work, damages to natural resources or for personal injury claims, including, but
not limited to, claims under CERCLA.
(x) No Hazardous Substance has been Released at, on, about or
under by Seller or, to Seller's Knowledge is present in any property now owned,
operated or leased by Seller or any Affiliate of Seller or any formerly owned,
operated or leased property which requires investigation, remediation or other
response action.
(xi) No oral or written notification of a Release or threat
of Release of a Hazardous Substance has been filed by or on behalf of Seller or
any Affiliate of Seller or in relation to any property now or previously owned,
operated or leased by Seller or any Affiliate of Seller. To Seller's Knowledge,
without any independent inquiry, no such property is listed or proposed for
listing on the NPL promulgated pursuant to CERCLA, on CERCLIS or on any similar
state list of sites requiring investigation or clean-up.
(xii) There are no environmental Liens on any properties
owned or leased by Seller or any Affiliate of Seller which would impair Buyer's
ability to lawfully operate the Business as such Business was operated prior to
the Closing Date
- 36 -
and, to Seller's Knowledge, no government actions have been taken or are in
process or pending which could subject any of such properties to such Liens.
(xiii) No deed or other instrument of conveyance of real
property to Seller or any Affiliate of Seller with respect to real property
presently owned, operated or leased by Seller contains a restriction relating to
the actual or suspected presence of Hazardous Substances, which restriction
would impair Buyer's ability to lawfully operate the Business as such Business
was operated prior to the Closing Date.
(xiv) To Seller's Knowledge, there are no facts or
circumstances related to environmental matters concerning real property owned,
operated or leased by Seller or businesses conducted by Seller that could
reasonably be expected to lead to any future environmental claims against
Seller, or Buyer under current law.
(xv) There have been no environmental inspections,
investigations, studies, audits, tests, reviews or other analyses conducted by
or at the direction of Seller or, in the possession of Seller indicating the
presence of any Hazardous Substance in or on any property or business now or
previously owned, operated, or leased by Seller or any Affiliate of Seller in
violation of any Environmental Law or which has created a condition which
requires investigation, remediation or other response action under Environmental
Law which have not been provided to Buyer prior to the date hereof.
- 37 -
2.16. Consents. Except as set forth on Schedule 2.16, no consent,
approval or authorization of, or registration or filing with, any Person, is
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.17. Personal Property. The Seller owns all of its tangible personal
property and assets, including the properties and assets reflected in the
Balance Sheet (except those disposed of in the ordinary course of business since
the Balance Sheet Date); and at the Closing none of such properties or assets
will be subject to any mortgage, pledge, lien, restriction, encumbrance,
tenancy, license, encroachment, covenant, right of way, easement, claim,
security interest, charge or any other matter affecting title, except, (a) minor
imperfections of title, none of which, individually or in the aggregate,
materially detracts from the value of or impairs the use of the affected
properties or impairs any operations of the Seller, (b) liens for current taxes
not yet due and payable, or (c) as disclosed on Schedule 2.17 hereto
(collectively "Personal Property Permitted Encumbrances"). All tangible personal
property and assets which are consigned or leased to the Seller and are used in
the operation of the businesses of Seller are listed on Schedule 2.17.
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2.18. Real Estate.
(a) Schedule 2.18 hereto contains a true, correct and complete
list of all real properties owned, leased, subleased, licensed or otherwise
occupied by Seller (collectively, the "Real Properties") separately indicating
the nature of Seller's interest therein. Except as set forth on Schedule 2.18
hereto, no other Person has any oral or written right, agreement or option to
acquire, lease, sublease or otherwise occupy all or any portion of such Real
Properties. Seller has not received any written or oral notice for assessment
for public improvements against any of the Real Properties which remains unpaid
and, to Seller's Knowledge, no such assessment has been proposed. There is no
pending condemnation, expropriation, eminent domain or similar proceeding
affecting all or any portion of any of the Real Properties and, to Seller's
Knowledge, no such proceeding is contemplated.
(b) Accurate and current copies of all real property leases,
subleases, licenses or other occupancy agreements (and all amendments thereto)
listed on Schedule 2.18 hereto have previously been delivered to Buyer
(collectively, the "Leases"). Seller has not assigned its rights under any
Leases other than collateral assignments executed in connection with financings
identified on the schedules attached hereto. The Leases are in full force and
effect and constitute binding obligations of the Seller and the other parties
thereto and (i) there are no defaults thereunder by Seller or by any other party
- 39 -
thereto, and (ii) to Seller's Knowledge, no event has occurred which with
notice, lapse of time, or both would constitute a default by the Seller or, to
Seller's Knowledge, by any other party thereto.
(c) Except as disclosed on Schedule 2.18 hereto,
(i) Seller has (1) indefeasible, good, marketable and
insurable equitable fee simple title to the real property owned by Seller (the
"Owned Real Property"), and (2) a valid and enforceable leasehold interest to
the property leased pursuant to the Leases (the "Leased Real Property"). The
Owned Real Property is free and clear of any and all Liens, exceptions, items,
encumbrances, easements, restrictions and other matters either of record or not
of record which either individually or in the aggregate, could prohibit or
adversely interfere with Buyer's use of such property except (a) matters set
forth on Schedule 2.18 and referred to as "Exceptions that will not exist at
Closing" (the "Exceptions That Will Not Exist at Closing"), (b) matters set
forth on Schedule 2.18, none of which is material in amount and none of which,
individually or in the aggregate, impairs, or grants or evidences rights which
if exercised would impair, the use of the affected property in the manner such
property is currently being used, or impairs the current operations of the
Seller, (c) defects of title, conditions, easements, encroachments, covenants or
restrictions, if any, none of which is material in amount and none of which,
individually or
- 40 -
in the aggregate, materially impairs, or grants or evidences rights which if
exercised would materially impair, the use of the affected property in the
manner such property is currently being used, or impairs the current operations
of the Seller, and (d) zoning or land use ordinances, none of which, to Seller's
Knowledge, individually or in the aggregate, impairs the use of the affected
property in the manner such property is currently being used or impairs the
current operations of the Seller (collectively, the "Permitted Real Property
Encumbrances"). No material default or breach exists under any of the covenants,
conditions, restrictions, rights-of-way or easements, if any, affecting all or
any portion of the Owned Real Properties.
(ii) The current zoning of each of the Owned Real Properties
permits the operator of such property to use such property for the current
respective use thereof. Seller has not made any application for a rezoning of
any of the Real Properties. To Seller's Knowledge, without any independent
inquiry, there are no proposed or pending change to any zoning affecting any of
the Owned Real Properties.
(iii) All utilities, including without limitation, potable
water, sewer, gas, electric, telephone, and other public utilities and all storm
water drainage required by law or necessary for the operation of the Owned Real
Properties, 1) either enter the Owned Real Properties through open public
streets adjoining the Owned Real Properties, or, if they pass through adjoining
private land, do so in accordance with valid
- 41 -
public or private easements or rights of way which will inure to the benefit of
Buyer, 2) are installed, connected, operating and adequate for the operation of
the Business as it has been previously conducted by Seller, with all
installation and connection charges paid in full, including, without limitation,
connection and the right to discharge sanitary waste into the collector system
of the appropriate sewer utility, and 3) are adequate (in both quality and
quantity) to service the Owned Real Properties for their respective use in the
business as presently conducted thereon.
(iv) Each of the Owned Real Property is located along one or
more dedicated public streets or has access thereto. All curb-cut and
street-opening permits or licenses required for vehicular access to and from the
Real Properties to any adjoining public street or to any parking spaces utilized
in connection with the Owned Real Property have been obtained and paid for, are
in full force and effect and shall inure to the benefit of Buyer.
(v) The improvements located on the Owned Real Properties,
including the roof, structure, soil, elevators, walls, heating, ventilation, air
conditioning, plumbing, electrical, drainage, fire alarm, communications,
security and exhaust systems and their component parts, or other improvements on
or forming a part of the Owned Real Properties, are adequate for the operation
of the Business as it has been previously conducted by Seller. Seller has not
received any notification of
- 42 -
and there are no outstanding or incomplete work orders in respect of any of the
buildings, improvements or other structures constructed on the Owned Real
Properties or of any current non-compliance with applicable statutes and
regulations or building and zoning by-laws and regulations.
(d) Except as set forth on Schedule 2.18 hereto, there are no
deeds of trust or mortgages which are a Lien upon the Owned Real Properties.
2.19. Transactions with Related Parties. Except as disclosed on
Schedule 2.19, no Related Party has:
(a) borrowed money or loaned money to Seller which remains
outstanding;
(b) any contractual or other claims, express or implied, of any
kind whatsoever against Seller;
(c) any interest in any property or assets used by Seller in its
business; or
(d) is engaged in any other transaction with Seller (other than
employment relationships at the salaries disclosed in Schedule 2.19 hereto).
2.20. Condition of Assets. The buildings, machinery, equipment, tools,
furniture, improvements and other fixed assets of the Seller, including those
reflected in the Balance Sheet, are adequate for the operation of the Business
as it has been previously conducted by the Seller.
- 43 -
2.21. Compensation Arrangements; Officers and Directors. Schedule 2.21
hereto sets forth the following information:
(a) The names and current annual salary, including any bonus, if
applicable, of all present officers and employees of Seller whose current annual
salary, including any promised, expected or customary bonus, equals or exceeds
$50,000 together with a statement of the full amount of all remuneration paid by
Seller to each such person and to any director of Seller, during the 12 month
period preceding the date hereof.
(b) the names and titles of each trustee, fiduciary or plan
administrator of each employee benefit plan of the Seller.
2.22. Labor Relations. The overall relations of each Seller with its
employees are good. No employee of Seller is represented by any union or other
labor organization. There is no unfair labor practice complaint against Seller
pending or, to Seller's Knowledge, threatened before the National Labor
Relations Board. There is no labor strike, dispute, slow down or stoppage
actually pending or, to Seller's Knowledge, threatened against or involving
Seller. No employee grievance which might have an adverse effect on Seller or
the conduct of its businesses is pending. No private agreement restricts Seller
from relocating, closing or terminating any of its operations or facilities.
Seller has not in the past three years experienced
- 44 -
any work stoppage or slow down or committed any unfair labor practice.
2.23. Products Liability. Except for lawsuits, claims, damages and
expenses adequately covered by the Seller's insurance, there are no (a)
liabilities of Seller, fixed or contingent, asserted or, to Seller's Knowledge,
unasserted, with respect to any product liability or any similar claim that
relates to any product manufactured and sold by Seller to others, or (b)
liabilities of Seller, fixed or contingent, asserted or, to Seller's Knowledge,
unasserted, with respect to any claim for the breach of any express or implied
product warranty or any other similar claim with respect to any product
manufactured and sold by Seller to others other than standard warranty
obligations (to replace, repair or refund) made by the Seller in the ordinary
course of business to purchasers of its products and special warranties made by
the Seller with regard to certain pit dock levelers and truck restraints, for
which the Seller matches competitors' warranties.
2.24. Insurance. Attached hereto as Schedule 2.24 is a complete and
correct list of all policies of insurance of which Seller is the owner, insured
or beneficiary, or covering any of its property, true, correct and complete
copies of which have been delivered to Buyer, indicating for each policy the
carrier, the insured, type of coverage, the amounts of coverage, deductible,
premium rate, cash value if any, expiration date and any pending claims
thereunder. All such policies are in full
- 45 -
force and effect. The coverages provided by such policies are reasonable, in
both scope and amount, in light of the risks attendant to the businesses in
which the Seller is, or has been, engaged. Seller has paid-in-full all premiums
due on such policies as of the Closing Date. To Seller's Knowledge, there is no
default with respect to any provision contained in any such policy, nor has
there been any failure to give any notice or present any claim under any such
policy in a timely fashion or in the manner or detail required by the policy.
Except as set forth on Schedule 2.24, there are no outstanding unpaid premiums
or claims under such policies. No notice of cancellation or non-renewal with
respect to, or disallowance of any claim under, any such policy has been
received by Seller. Except as set forth on Schedule 2.24, Seller has not been
refused any insurance, nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last five years. Except as set forth on Schedule 2.24, all
products liability and general liability policies maintained by or for the
benefit of the Seller during the last five years have been "occurrence" policies
and not "claims made" policies.
2.25. Patents and Intellectual Property Rights. Attached hereto as
Schedule 2.25 is a correct list of all patents, patent applications, trademarks,
service marks and trade names, copyrights, intellectual property licenses, logos
and the like, held, owned or used by the Seller (all the above
- 46 -
collectively referred to as the "IP Rights"), and as to all such IP Rights that
are registered, all of such registrations, and as to all such IP Rights for
which registration has been applied, such applications are valid and in good
standing. To Seller's Knowledge, none of the IP Rights infringes (nor has any
claim been made that any of them infringes) the patents, trademarks or other
rights of others. Except as set forth on Schedule 2.25, to Seller's Knowledge,
the manufacture, sale or use of any products now or heretofore manufactured or
sold by Seller did not and does not infringe (nor has any claim been made that
any such action infringes) the patents or intellectual property rights of
others. The Seller owns or possesses adequate licenses or other rights (at
reasonable market costs) to use all patent, patent applications, copyrights,
trademarks, service marks and tradenames necessary to conduct its business as
now conducted. Except as set forth on Schedule 2.25, there is no agreement to
which Seller is a party or to which Seller is legally bound and no restriction
or Liens, materially and adversely affecting the use by Seller and, after the
Closing, the use by Buyer, of any of the IP Rights. There is no pending
litigation or other legal action with respect to any of the IP Rights, and no
order, holding, decision or judgment has been rendered by any Authority, and no
agreement, consent or stipulation exists to which, in any such event, Seller is
a party or of which Seller has Knowledge, which would prevent Seller, or after
the Closing, Buyer, from using any of the IP Rights.
- 47 -
2.26. Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(a) Except for the welfare benefit plans listed on Schedule
2.26(A) hereto (the "Welfare Plans"), the pension benefit plans listed on
Schedule 2.26(B) hereto (the "Pension Plans") and the multiemployer plans listed
on schedule 2.26(C) hereto, (the "Multiemployer Plans") (together the "Plans"),
Seller does not sponsor, maintain and is not required, either by law or by
contract, to contribute to any employee welfare benefit plan, within the meaning
of section 3(1) of ERISA, nor to any employee pension benefit plan, within the
meaning of section 3(2) of ERISA nor to any multiemployer plan, within the
meaning of section 3(37) of ERISA. Seller does not contribute to and is not
required to contribute to any multiemployer plan, within the meaning of section
3(37) of ERISA.
(b) Neither Seller nor any other employer (an "ERISA Affiliate")
that is, or at any relevant time was, together with Seller considered a "single
employer" under Code ss.414(b), ss.414(c) or ss.414(m), has, at any time since
January 1, 1991 (i) maintained or contributed to any employee pension benefit
plan subject to Title IV of ERISA or Code ss.412 or (ii) been required to
contribute to, or incurred any withdrawal liability within the meaning of ERISA
ss.4201 to, any multiemployer plan as defined in ERISA ss.3(37).
(c) All contributions required, by law or by contract, to be made
by Seller to any Plan for any plan year, or
- 48 -
other period on the basis of which contributions are required, ending before the
date hereof, have been made as of the date hereof or have been adequately
provided for in the Financial Statements.
(d) The Plans, and any trusts or insurance contracts maintained in
connection therewith, have been administered in compliance with ERISA and the
Code, in all material respects, and the Seller has complied in all material
respects with all reporting and disclosure requirements with respect to the
Plans.
(e) No Plan, nor any trust created thereunder, nor any trustee or
administrator thereof, has engaged in any transaction prohibited by section 406
or section 407 of ERISA, or by section 4975 of the Code which could subject
Seller or any Plan to any penalty imposed under ERISA or to any tax imposed by
section 4975 of the Code or, if any such transaction has occurred, it has been
corrected, within the meaning of section 4975 of the Code and all applicable
taxes and penalties with respect thereto have been paid.
(f) The Pension Plans have been determined by the Internal Revenue
Service to be "qualified" within the meaning of section 401(a) of the Code. To
Seller's Knowledge, there is no fact that may adversely affect the qualified
status of any of such Pension Plans.
- 49 -
(g) Seller has provided Buyer with true and correct copies of IRS
Form 5500 most recently filed for each Plan.
(h) There are no actions, suits, investigations or proceedings
pending or, to Seller's Knowledge, threatened against or affecting any Plan, any
fiduciaries thereof or the assets of any trust thereunder, at law or in equity,
by or before any court or governmental department, agency or instrumentality,
and to Seller's Knowledge, there is no basis for any such action, suit,
investigation or proceeding. There are presently no outstanding judgments,
decrees or orders of any court or any governmental or administrative agency
against or affecting any Plan, any fiduciaries thereof or the assets of any
trust thereunder.
2.27. Brokerage. Except as described in Section 6.2, neither Seller nor
any shareholder thereof has made any agreement or taken any other action which
might cause anyone to become entitled to a broker's fee or commission as a
result of the transaction contemplated hereunder.
2.28. Disclosure. No representation or warranty by Seller in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
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 statements or
facts contained herein or therein not misleading or
- 50 -
necessary to provide Buyer with proper information as to the Seller and the
Purchased Assets. Seller shall disclose to Buyer at Closing any information then
in the possession of Seller that indicates that Buyer is in breach of this
Agreement or which may provide the basis for a claim by Seller that Buyer has
breached this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
3.1. Organization and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of Delaware.
3.2. Corporate Power and Authority. Buyer has all requisite corporate
power and authority to make, execute, deliver and perform this Agreement, the
Assumption Agreement and all other agreements, documents and instruments to
which it is a party or is otherwise obligated which are executed, delivered or
performed pursuant to this Agreement.
3.3. Due Authorization. The execution, delivery and performance of this
Agreement, the Assumption Agreement and all other agreements, documents and
instruments to which the Buyer is a party or is otherwise obligated which are to
be executed, delivered or performed pursuant to this Agreement have been duly
authorized by all necessary corporate action on the part of Buyer, and this
Agreement constitutes, and the Assumption
- 51 -
Agreement and the Note and the other instruments to be delivered by Buyer at
Closing, when executed and delivered at Closing, will constitute, the legal,
valid and binding obligations of Buyer, enforceable against it in accordance
with their respective terms.
3.4. Brokerage. Buyer has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder.
3.5. No Breaches; Etc. The execution, delivery and performance of this
Agreement and the other agreements contemplated by this Agreement and the
consummation of the transactions contemplated by this Agreement do not and will
not result in any breach or acceleration of any of the terms or conditions of
its articles of incorporation or bylaws, or of any mortgage, bond, indenture,
contract, agreement, license or other instrument or obligation to which Buyer is
a party. The execution, delivery and performance of this Agreement or the other
agreements contemplated by this Agreement will not result in the material
violation of any statute, regulation, judgment, writ, injunction or decree of
any court, threatened or entered in a proceeding or action in which Buyer is,
was or may be bound.
3.6. Disclosure. No representation or warranty by Buyer in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
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
- 52 -
will omit to state a material fact necessary to make the statements or facts
contained herein or therein not misleading or necessary to provide Seller with
proper information as to the Buyer and the Purchased Assets. Buyer shall
disclose to Seller at Closing any information then in the possession of Buyer
that indicates that Seller is in breach of this Agreement or which may provide
the basis for a claim by Buyer that Seller has breached this Agreement.
3.7. Litigation. There is no action, suit, proceeding or investigation
pending, or, to Buyer's knowledge, threatened, against or related to Buyer or
its respective properties or business which would be reasonably likely to
adversely affect or restrict Buyer's ability to consummate the transactions
contemplated by this Agreement, and there is no reasonable basis known to Buyer
for any such action that may result in such effect and is probable of assertion.
3.8. Business Activities. The Buyer has not engaged in any activities
other than those incident to its organization or is contemplated by the terms of
this Agreement. [The Buyer is duly qualified to transact business in the State
of Alabama.]
ARTICLE IV
CERTAIN OBLIGATIONS OF SELLER
-----------------------------
4.1. Conduct of Business Pending Closing. From and after the date
hereof and pending Closing, and unless Buyer shall
- 53 -
otherwise consent or agree in writing, Seller covenants and agrees that:
(a) Ordinary Course; Compliance. The business of the Seller will
be conducted only in the ordinary course and consistent with past practice,
including billing, shipping and collection practices, inventory transactions and
payment of accounts payable; the Seller will maintain its property, equipment
and other assets in at least as good order and condition as existed on the date
of this Agreement; and the Seller will timely comply with the provisions of all
its leases, agreements, contracts and commitments, will obtain, maintain in full
force and effect and comply with all permits, certificates, licenses, approvals,
patents, registrations and authorizations required under all laws in connection
with its businesses or assets, and will comply with all laws, rules and
regulations applicable to its businesses or assets.
(b) Preservation of Business. Seller will use all reasonable
efforts to preserve the business organization of the Seller intact, to keep
available to Buyer the services of the present officers and employees of the
Seller, and to preserve for Buyer the good will of the suppliers, customers and
others having business relations with the Seller.
(c) Material Transaction. Seller will not:
(i) amend its Articles of Incorporation or Bylaws;
- 54 -
(ii) change its authorized or issued capital stock or issue
any rights or options to acquire shares of its capital stock;
(iii) enter into any contract or commitment the performance
of which may extend beyond the Closing, except those made in the ordinary course
of business, and the terms of which are consistent with past practice;
(iv) enter into any employment or consulting contract or
arrangement with any person which is not terminable at will, without penalty or
continuing obligation;
(v) sell, transfer, lease or otherwise dispose of any of its
assets other than sales of inventory in the ordinary course of business and
consistent with past practice;
(vi) incur, create, assume or suffer to exist any mortgage,
pledge, lien, restriction, encumbrance, tenancy, license, encroachment,
covenant, condition, right-of-way, easement, claim, security interest, charge or
other matter affecting title on any of its assets or other property, except
Personal Property Permitted Encumbrances and Real Property Permitted
Encumbrances;
(vii) fail to pay before delinquent all taxes, assessments,
governmental charges or levies imposed upon it or its income, profits or assets
or otherwise required to be paid by it, or fail to pay when due any liability or
charge which, if unpaid, might become a lien or charge upon any of its assets;
- 55 -
(viii) make, change or revoke any tax election or make any
agreement or settlement with any taxing authority;
(ix) declare or pay any dividend or other distribution in
respect of any class of its capital stock, or make any payment to redeem,
purchase or otherwise acquire, or call for redemption, any of such stock or any
securities convertible into or exchangeable for such stock;
(x) increase or otherwise change the compensation payable or
to become payable to any officer, employee or agent other than in the ordinary
course of business consistent with past practice;
(xi) make or authorize the making of any capital expenditure
in excess of $50,000.00;
(xii) incur any debt or other obligation for money borrowed;
(xiii) contractually incur any other obligation or liability,
absolute or contingent except in the ordinary course of business and consistent
with past practice;
(xiv) waive or permit the loss of any substantial right;
(xv) guarantee or become a co-maker or accommodation maker or
otherwise become or remain contingently liable in connection with any liability
or obligation of any person other than another Seller;
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(xvi) loan, advance funds or make an investment in or capital
contribution to any person other than another Seller, other than advances to
employees for business-related expenses made in the ordinary course of business
and consistent with past practice and in an amount not to exceed $5,000 in the
aggregate; or
(xvii) take any action or permit to occur any event set forth
in subparagraphs (c), (e) through (j) and (l) through (p) of Section 2.8 hereof;
or
(xviii) take any action or omit to take any action which will
result in a violation of any applicable law or cause a breach of any agreements,
contracts or commitments, the violation or breach of which would have a material
adverse effect on Seller, the Business or the Purchased Assets.
4.2. Insurance. Seller shall maintain in full force and effect the
policies of insurance listed on Schedule 2.24 in effect as of the date hereof,
subject only to variations required by the ordinary operations of its business,
or else will obtain, prior to the lapse of any such policy, substantially
similar coverage with insurers of recognized standing and approved in writing by
the Buyer, which approval shall not be unreasonably withheld or delayed. Seller
shall promptly advise the Buyer in writing of any change of insurer or type of
coverage in respect of the policies listed on Schedule 2.24 hereto.
4.3. Fulfillment of Agreements. Seller shall use its best efforts to
cause all of the conditions to the obligations of
- 57 -
the Buyer under Section 5.1 of this Agreement to be satisfied on or prior to the
Closing. Seller shall use best efforts to conduct its business in such a manner
that at the Closing the representations and warranties of the Seller contained
in this Agreement shall be true and correct as though such representations and
warranties were made on, as of, and with reference to such date. Seller will
promptly notify Buyer in writing of any event or fact which represents or is
likely to cause a breach of any of its representations, warranties, covenants or
agreements. Seller shall promptly advise Buyer in writing of the occurrence of
any condition or development (exclusive of general economic factors affecting
business in general) of a nature that, to Seller's Knowledge, is or may be
materially adverse to the business, operations, properties, assets, prospects or
conditions (financial or otherwise) of Seller.
4.4. Access, Information and Document. Seller will give to Buyer and to
Buyer's counsel, accountants and other representatives sufficient access during
normal business hours to all of the Seller's properties, books, tax returns,
contracts, commitments, records, officers and accountants and will furnish to
Buyer all such documents and copies of documents (certified to be true copies if
requested) and all information with respect to the affairs of the Seller as
Buyer may reasonably request. Pending the Closing, Buyer will preserve the
confidentiality of any information provided by Seller to Buyer relating to the
- 58 -
Seller which is confidential in nature and, if Closing is not held, will return
all such information to Seller and will not use or allow such information to be
used by Buyer, CLARK or any of their respective Affiliates for any purpose
whatsoever.
4.5. Negotiations. Between the date of this Agreement and the Closing
Date, neither the Seller nor any of its Affiliates, officers, directors,
employees, shareholders, agents or advisors, shall solicit, initiate, furnish
information relating to or participate in any discussions or negotiations with
any Person concerning the sale or other disposition of any or all of the
Purchased Assets (except as contemplated herein). The Seller shall promptly
notify Buyer if any such discussion or negotiations are sought to be initiated
with, any such information is requested from, or any proposal is received by
Seller or any of their Affiliates, officers, directors, employees, shareholders,
agents or advisors.
4.6. Public Announcements. To the fullest extent reasonably
practicable, no party hereto shall make or issue, or cause to be made or issued,
any public announcement or written statement concerning this Agreement or the
transactions contemplated hereby for dissemination to the general public,
customers or suppliers (except to their respective directors, officers or
employees on a need to know basis or as may be specifically required by
applicable law or administrative or legal process) without the prior written
consent of the other parties which will not be unreasonably withheld or delayed.
- 59 -
ARTICLE V
CONDITIONS TO CLOSING; TERMINATION
----------------------------------
5.1. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer to proceed with the Closing under this Agreement are
subject to the fulfillment prior to or at Closing of the following conditions
(any one or more of which may be waived in whole or in part by Buyer at Buyer's
option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement shall be
true and correct on and as of the date of Closing, with the same force and
effect as though such representations and warranties had been made on, such date
and Buyer shall have received a certificate to such effect signed by the
President or a Vice President of Seller.
(b) Performance and Compliance. Seller shall have performed all of
the covenants and complied with all of the provisions required by this Agreement
to be performed or complied with by on or before the Closing and Buyer shall
have received a certificate to such effect signed by the President or a Vice
President of Seller.
(c) Opinion of Counsel. Buyer shall have received from Hand
Arendall, L.L.C., counsel for Seller, an opinion dated the date of the Closing
in form and substance satisfactory to Buyer, to the effects set forth in Exhibit
E hereto.
- 60 -
(d) Satisfactory Instruments of Transfer. All instruments and
documents required on the Seller's part to effectuate and consummate the
transactions contemplated hereby shall be delivered to Buyer and shall be in
form and substance reasonably satisfactory to Buyer and its counsel.
(e) Required Consents. All statutory and regulatory consents and
approvals which are required under the laws or regulations of the United States
or any other Authority shall have been obtained; and consents and approvals of
third parties listed on Schedule 5.1(e).
(f) Accounts Receivable and Inventory Certificates. Buyer shall
have received a certificate of an officer of Seller certifying as to a summary
of (i) the amount and an aging of the Seller's accounts and notes receivable as
of the close of business on the day prior to the day of Closing and (ii) the
Seller's inventory of finished goods, work in process and raw materials as of
September 27, 1997.
(g) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which would materially limit or adversely affect Buyer's ownership or
control of any of the Purchased Assets or the business of Seller, and there
shall not have been threatened, nor shall there be pending, any action or
proceeding by or before any court or governmental agency or other regulatory or
administrative agency or commission, (i) challenging any of the transactions
contemplated
- 61 -
by this Agreement or seeking monetary relief by reason of the consummation of
such transactions or (ii) by any present or former owner of any capital stock or
equity interest in Seller (whether through a derivative action or otherwise)
against Seller or any officer, director or shareholder of Seller in his capacity
as such or (iii) which might have a material adverse effect on the Purchased
Assets or on the business, prospects or condition (financial or otherwise) of
Seller.
(h) Alabama Lease. Seller shall have executed and delivered a
lease (the "Alabama Lease") with Buyer for the Seller's Pell City, Alabama
facility, substantially in the form of Exhibit F hereto.
(i) Additional Agreements. Kurt Larsen shall have executed and
delivered a Consulting Agreement and a Noncompetition Agreement with Buyer,
substantially in the form of Exhibits G and H, respectively. (the "Consulting
Agreement) and (Noncompete Agreement"). Colin Larsen shall have entered into and
delivered an Employment and a Noncompetition Agreement with Buyer, substantially
in the form of Exhibits I and J hereto (the "Employment Agreement" and the
"Noncompetition Agreement").
(j) Canada Purchase Agreement. Blue Giant Canada Limited shall
have executed and delivered the Canada Purchase Agreement and shall have closed
the transaction contemplated contemporaneous with the Closing hereunder.
5.2. Conditions Precedent to the Obligations of Seller. The obligations
of Seller to proceed with the Closing
- 62 -
hereunder are subject to the fulfillment prior to or at Closing of the following
conditions (any one or more of which may be waived in whole or in part by Seller
at Seller's option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct on and as of the date of Closing, with the same force and
effect as though such representations and warranties had been made on, as of and
with reference to such date and Buyer shall have delivered to Seller a
certificate, signed by its President or a Vice President, to such effect.
(b) Performance and Compliance. Buyer shall have performed all of
the covenants and complied with all the provisions required by this Agreement to
be performed or complied with by it on or before the Closing and Buyer shall
have delivered to Seller a certificate, signed by its President or a Vice
President, to such effect.
(c) Opinion of Counsel for Buyer. Seller shall have received from
Dechert Price & Rhoads, counsel for Buyer, an opinion dated the date of the
Closing in form and substance satisfactory to Seller, to the effects set forth
in Exhibit K hereto.
(d) Satisfactory Instruments. All instruments and documents
required on the Buyer's part to effectuate and consummate the transactions
contemplated hereby shall be
- 63 -
delivered by Buyer and shall be in form and substance reasonably satisfactory to
Seller and its counsel.
(e) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby and there shall not have been threatened, nor shall there be pending, any
action or proceeding by or before any court or governmental agency or other
regulatory or administrative agency or commission, challenging any of the
transactions contemplated by this Agreement or seeking monetary relief by reason
of the consummation of such transactions.
(f) Required Consents. All statutory and regulatory consents and
approvals which are required under the laws or regulations of the United States
or any other Authority for the transactions contemplated hereby shall have been
obtained and all necessary consents and approvals of third parties to the
transactions contemplated hereby shall have been obtained, including the
consents listed on Schedule 5.1(e).
(g) Other Contracts. Buyer shall have executed and delivered the
Consulting Agreement, the Noncompete Agreement, the Noncompetition Agreement and
the Employment Agreement.
(h) Alabama Lease. Buyer shall have executed and delivered the
Alabama Lease.
(i) Canada Purchase Agreement. Clark Material Handling of Canada,
Ltd. shall have executed and delivered the
- 64 -
Canada Purchase Agreement and shall have closed the transaction contemplated
contemporaneous with the Closing hereunder.
(j) CLARK Guaranty. CLARK shall have executed and delivered the
CLARK Guaranty, substantially in the form of Exhibit L hereto (the "CLARK
Guaranty").
5.3. Termination.
(a) When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) By mutual consent of Buyer and Seller;
(ii) By Buyer if there has been a misrepresentation by
Seller, a breach by Seller of any of its warranties or covenants, or if any of
the conditions specified in Section 5.1 hereof shall not have been fulfilled by
the time required and shall not have been waived by Buyer;
(iii) By Seller if there has been a misrepresentation by
Buyer, a breach by Buyer of any of its warranties or covenants, or if any of the
conditions specified in Section 5.2 hereof shall not have been fulfilled by the
time required and shall not have been waived by Seller;
(iv) By Buyer or Seller if Closing shall not have occurred
prior to November 14, 1997; provided that Buyer or Seller may terminate this
Agreement pursuant to this subparagraph (iv) only if Closing shall not have
occurred by such date for a reason other than a failure by such party to satisfy
the conditions to Closing of the other party set forth in Section 5.1 or 5.2
hereof.
- 65 -
(b) Effect of Termination. In the event of termination of this
Agreement by Seller or Buyer, as provided above, this Agreement shall forthwith
terminate and there shall be no liability on the part of Seller or Buyer or
their respective officers or directors, except for liabilities arising from a
breach of this Agreement prior to such termination; provided, however, that the
obligations of the parties set forth in Section 6.5 hereof shall survive such
termination.
ARTICLE VI
CERTAIN ADDITIONAL COVENANTS
----------------------------
6.1. Costs, Expenses and Taxes. Buyer and Seller will each pay all
their own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including (a) all costs and expenses stated
herein to be borne by a party, and (b) all accounting, legal and appraisal fees
and settlement charges. All transfer taxes associated with any motor vehicles
shall be paid by Buyer.
6.2. Brokers. Seller has engaged Geneva Corporate Finance, Inc. as a
broker in connection with this transaction, and any fee payable to such broker
will be paid by Seller.
6.3. Blue Giant USA Corporation Retirement Savings Plan.
(a) Assumption of Sponsorship. At Closing, Buyer shall become plan
sponsor, within the meaning of ERISA ss.
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3(16)(B), of the Blue Giant USA Corporation Retirement Savings Plan ("Blue Giant
401(k) Plan").
(b) Seller Cooperation. Seller will take any and all action
reasonably requested by Buyer, or the trustee(s) appointed by Buyer to insure
transfer of sponsorship of the Blue Giant 401(k) Plan to Buyer and transfer of
all right, title and interest in and to any assets thereof, and specifically
including, without limitation, any and all group annuity contracts issued to the
Trustee of the Blue Giant 401(k) Plan by Nationwide Insurance Company, to
Buyer's trustee(s).
(c) Seller Indemnification. Except to the extent that any such
claims are properly payable from assets of the Blue Giant 401(k) Plan
transferred into the control of Buyer's trustee(s), Seller shall be responsible
for, and hold Buyer harmless from and against, any claim or liability relating
to the Blue Giant 401(k) Plan with respect to any act or omission occurring on
or before the Closing Date.
(d) Buyer's Indemnification. Buyer shall be responsible for, and
hold Seller harmless from and against (i) any claim or liability properly
payable from assets of the Blue Giant 401(k) Plan transferred to Buyer and
Buyer's trustee(s) as part of Buyer's assumption of sponsorship of the Blue
Giant 401(k) Plan and (ii) any claims or liabilities arising from acts or
omissions by Buyer or Buyer's trustee(s) following Buyer's assumption of
sponsorship of the Blue Giant 401(k) Plan on the
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Closing Date and Buyer's trustee's control of the assets of that Plan.
6.4. Employees of the Business.
(a) Effective as of the Closing Date, Buyer shall offer to hire on
an at-will basis substantially all active employees of Seller as of that date.
The Seller will cooperate with and assist Buyer in obtaining the continued
employment of all such employees. Seller shall be responsible for all salaries,
wages, employment taxes, contractual severance arrangements and all terms of
employment for each of its respective employees accruing prior to the Closing
Date. Notwithstanding the foregoing, Buyer assumes and agrees to timely
discharge all of Seller's liabilities and obligations for (i) the salaries,
wages, employment taxes and related payroll obligations for the payroll period
for which such employees are employed by Buyer and (ii) all accrued vacation for
Seller's employees who become employed by Buyer existing as of the Closing Date;
provided the obligations described in (i) and (ii) are properly accrued for on
the Closing Statement.
(b) Seller shall remain responsible and liable for any and all
obligations to any employees of Seller through and until 11:59 p.m. local time
on the Closing Date, at which time all such employees shall be terminated by
Seller.
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6.5. Indemnification.
(a) General Indemnification Obligations.
(i) Indemnification by Seller. Seller hereby agrees to
indemnify and hold harmless Buyer from and against:
(1) any and all Damages arising out of or resulting from
any misrepresentation, breach of warranty or nonfulfillment of any agreement on
the part of Seller contained in this Agreement or in any certificate furnished
or to be furnished to Buyer pursuant hereto or in connection with the
transactions contemplated hereby;
(2) any and all Damages arising out of or resulting from
any liabilities of Seller of any nature, whether due or to become due, whether
accrued, absolute, contingent or otherwise existing on the Closing Date or
arising out of any transactions entered into, or any state of facts existing,
prior to such date, except Assumed Liabilities.
(3) any Damages arising out of or resulting from any
claim asserted against Buyer with respect to Excluded Liabilities.
(ii) Indemnification by Buyer. Buyer hereby agrees to
indemnify and hold harmless Seller from and against:
(1) any Damages arising out of or resulting from any
misrepresentation, breach of warranty or nonfulfillment of any agreement on the
part of Buyer contained in this Agreement or in any certificate furnished or to
be furnished
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to Seller in connection with the transactions contemplated hereby;
(2) any Damages resulting from or arising out of the
failure by Buyer to pay or discharge, or cause to be paid or discharged, any of
the Assumed Liabilities;
(3) any Damages arising out of or resulting from any
claim asserted against Seller with respect to Assumed Liabilities;
(4) any Damages resulting from any claims, proceedings,
actions or investigations brought by third parties relating to (i) Sellers'
transfer of any Plans to any successor plans established by Buyer or
post-closing continuation of the existing Plans by Buyer. The indemnification
obligations of Buyer under this Section 6.5(a)(ii)(4) shall not be limited in
amount or subject to any time restrictions; provided, however, the foregoing
shall in no way limit any defense Buyer may have; or
(5) effective only upon consummation of the transactions
at Closing, any and all Damages arising out of or resulting from any liabilities
of Buyer of any nature, whether due or to become due, whether accrued, absolute,
contingent or otherwise, arising out of Buyer's transactions or its operation of
the Business after the Effective Time.
(iii) For purposes of this Agreement, "Damages" means the
aggregate amount of all damages, claims, losses, obligations, liabilities
(including any governmental
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penalty, fines or punitive damages), deficiencies, interest, costs and expenses
arising out of or relating to a matter and any actions, judgments, costs and
expenses (including reasonable attorneys' fees and all other expenses incurred
in investigating, preparing or defending any litigation or proceeding, commenced
or threatened) incident to such matter or to the enforcement of this Agreement,
including, but not limited to, reasonable legal fees incurred by the party
entitled to indemnification under this Agreement.
(b) General Indemnification Procedures.
(i) Buyer and Seller shall cooperate in the defense or
prosecution of any claim, action, suit or proceeding asserted against either of
them by a party other than a party hereto or an Affiliate of any party hereto in
respect of which indemnity may be sought hereunder (a "Third Party Claim") and
shall furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.
(ii) No action or claim for Damages resulting from breaches
of the representations and warranties of Seller or Buyer shall be brought or
made after March 31, 1999, except that such time limitation shall not apply to
(a) claims for misrepresentations or breaches of warranty relating to Section
2.9 (relating to Taxes) or Section 2.26 (relating to ERISA), which may be
asserted until 60 days after the running of
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the applicable statute of limitations with respect to the taxable period to
which the particular claims relates, (b) claims for misrepresentations or
breaches of warranty relating to Section 2.1 (relating to Organization), Section
2.3 (relating to Qualification, Location of Business and Assets) or Section 2.4
(relating to Authorization and Enforceability), which may be asserted for a
three (3) year period from the Closing Date, (c) or Section 2.17 (relating to
Personal Property), which may be asserted for a six (6) year period from the
Closing Date (d) Section 2.18 (relating to Real Property) or Section 2.15
(relating to Environmental) which may be asserted for a three (3) year period
from the Closing Date, (e) claims for Damages under Section 6.5(a)(i)(3) for
Environmental Liabilities, which may be asserted for a seven (7) year period
from the Closing Date, unless such Damages relate to properties formerly owned,
operated or leased by the Seller, the Business or any of its Affiliates (and not
the Purchased Assets) or relate to off-site locations, in which case the claims
for Damages may be asserted for a ten (10) year period from the Closing Date and
(f) any claims which have been the subject of a written notice from Buyer to
Seller prior to the expiration of the applicable period under this Section
6.5(b) period, which notice specifies in reasonable detail the nature of the
claim.
(iii) Notwithstanding anything to the contrary in this
Section 6.5, no limitation or condition of liability provided in this Section
shall apply to the breach of
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any of the representations and warranties contained herein if such
representation or warranty was made with actual knowledge that it contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements or facts contained therein not misleading and
such a claim for such breach was made not later than the period specified in
Section 6.5(b)(ii)(a), 6.5(b)(ii)(b), 6.5(b)(ii)(c), and 6.5(b)(ii)(d), plus in
each case three (3) years.
(iv) If there shall be a judicial determination that any
party (the "Indemnified Party") seeking indemnification from another party (the
"Indemnifying Party") under this Agreement is not entitled to such
indemnification in the amount originally claimed, then the Indemnifying Party
shall be entitled to reimbursement from the Indemnified Party for its costs and
expenses, including reasonable attorneys' fees, incurred in the defense of the
claim for such indemnity pro rata, to the extent that the amount awarded is less
than the amount originally claimed.
(v) Following the receipt by either party of a complaint
initiating a lawsuit in respect of a Third Party Claim in respect of which
indemnity may be sought from the other party hereunder, within a reasonable time
after such receipt, the party receiving the complaint shall notify the other
party of such Third Party Claim.
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(vi) This Agreement does not relieve any party hereto of its
obligations under appropriate law to mitigate damages.
(vii) Buyer shall notify Seller and Seller shall notify Buyer
of any claim for Damages. Such notice shall describe, to the extent reasonably
available, the nature of the claim, the proposed remedy and the cost to remedy
or to satisfy the claim. Buyer and Seller shall, in good faith, consult with the
other party and give the other party a reasonable opportunity to propose an
alternative method to remedy or satisfy the claim. Provided, however, that if
the nature of the claim is such that, in Buyer and Seller's judgment, the above
notice and opportunity provisions could reasonably be expected to cause further
Damages or would otherwise not be appropriate under the circumstances, then the
prior notice and opportunity shall not be required. Neither Buyer nor Seller
shall be required in any event to adopt the method proposed by the other party.
Buyer and Seller's failure to give the other party the prior notice and
opportunity or to adopt the method proposed, shall not bar in any event either
party from asserting an indemnification claim against the other under and
subject to the terms and conditions described in this Section 6.5, but, in any
such claim, the failure of either party to give prior notice and opportunity, or
to adopt the method proposed shall be admissible evidence if either party shall
contest the reasonableness of the amount of the Damages that it may recover from
the other party.
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(c) Indemnification Threshold. Buyer shall not be entitled to
indemnification or other recovery from Seller under any provision of this
Agreement or otherwise until such time and only to the extent as the claims
subject to indemnification by the Seller pursuant to this Agreement exceed, in
the aggregate, One Hundred Fifty Thousand Dollars $150,000 (the "Threshold");
provided, however, that any claims for indemnification by Buyer relating to
Sections 6.5(b)(ii)(b) and (c) shall not be subject to any limitation or
condition pursuant to this Section 6.5(c); provided further, however, that any
claims under this Section 6.5 shall be aggregated with any claims under the
section of the Canada Purchase Agreement (as hereinafter defined) corresponding
to this Section 6.5(e) in meeting the Threshold. The "Canada Purchase Agreement"
means the agreement by and between Clark Material Handling of Canada, Ltd. and
Blue Giant Canada Limited, dated the Closing Date, whereby Blue Giant Canada
Limited has agreed to sell certain assets and Clark Material Handling of Canada,
Ltd. has agreed to buy certain assets (the "Canada Purchase Agreement").
(d) Indemnification Limitation. The aggregate obligation of the
Seller to Buyer for indemnification or otherwise under any provision of this
Agreement and of Blue Giant Canada Limited to Clark Material Handling of Canada
Ltd. or under any provision of the Canada Purchase Agreement or otherwise shall
be limited to an amount not to exceed Five Million Dollars ($5,000,000);
provided, however, that any claims for
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indemnification by Buyer relating to Sections 6.5(b)(ii)(b) and (c) shall not be
subject to any limitation or condition pursuant to this Section 6.5(d).
(e) Buyer's Right of Setoff. Buyer shall have the right to set off
against any payments due and owing from Buyer to Seller pursuant to the Alabama
Lease to the extent Buyer has a claim for indemnity for Damages against Seller
under this Section 6.5, in accordance with the set off procedure set forth in
the Alabama Lease.
(f) Alabama Mortgage. Seller shall execute and deliver to Buyer a
mortgage on the Alabama Real Property (the "Alabama Mortgage") equal to
$5,000,000 to secure any claim for indemnity Buyer may have for Damages against
Seller under this Section 6.5 substantially in the form of Exhibit M attached
hereto.
6.6. Confidentiality and Non-Competition.
(a) Confidentiality. From and after the Closing, Seller shall keep
confidential and not disclose to any other Person or use for his or its own
benefit or the benefit of any other Person any trade secrets or other
confidential proprietary information in its possession or control regarding
Seller or its respective businesses and operations. The obligations of the
Seller under this Section 6.6(a) shall not apply to information which (i) is or
becomes generally available to the public without breach of the commitment
provided for in this Section; or (ii) is required to be disclosed by law, order
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or regulation of a court or tribunal or governmental authority; provided,
however, that, in any such case, Seller shall notify Buyer as early as
reasonably practicable prior to disclosure to allow Buyer to take appropriate
measures to preserve the confidentiality of such information.
(b) Noncompetition. For a period of ten (10) years from and after
the Closing (the "Ten Year Term"), Seller shall not, directly or indirectly, (i)
own, manage, operate, join, control or participate in the ownership, management,
operation or control of, or be connected as a stockholder, partner or otherwise
with, (1) an entity engaged in the Business or the forklift industry (other than
Blue Europe), or (2) any entity using the name "Blue Giant" (other the Blue
Europe) or "Clark" (collectively, the "Competing Businesses"), or (ii) solicit,
employ, retain as a consultant, interfere with or attempt to entice away from
Buyer, its Affiliates, or any successor to any of the foregoing, any individual
who is, has agreed to be or within one year of such solicitation, employment,
retention, interference or enticement has been, employed or retained by Buyer,
its Affiliates or any successor to any of the foregoing in a senior executive
capacity or as a general manager or sales, manufacturing, or technical employee.
Ownership of not more than 2% of the outstanding stock of any publicly traded
company shall not, in and of itself, be a violation of this Section 6.6(b). The
restrictive covenant contained in this Section 6.6(b) is a covenant independent
of any other provision
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of this Agreement, and the existence of any claim which Seller may allege
against Buyer, whether based on this Agreement or otherwise, shall not prevent
the enforcement of this covenant. Seller agrees that a breach by Seller of this
Section 6.6(b) shall cause irreparable harm to Buyer, and its Affiliates, that
Buyer's remedies at law for any breach or threat of breach by Seller of the
provisions of this Section 6.5(b) shall be inadequate, and that Buyer shall be
entitled to an injunction or injunctions to prevent breaches of this Section
6.6(b) and to enforce specifically the terms and provisions hereof, in addition
to any other remedy to which Buyer may be entitled at law or in equity. The Ten
Year Term shall be tolled with respect to Seller during any period of violation
of this covenant not to compete by Seller. In the event that this covenant not
to compete shall be determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographical area or by reason of its being too extensive in any
other respect, it shall be interpreted to extend only over the longest period of
time for which it may be enforceable, and/or over the largest geographical area
as to which it may be enforceable and/or to the maximum extent in all other
aspects as to which it may be enforceable, all as determined by such court in
such action.
6.7. Access to Information. Seller and Buyer shall reasonably cooperate
with each other after the Closing so that (subject to any limitations that are
reasonably required to
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preserve any applicable attorney-client privilege) each party has access to the
business records, contracts and other information existing at the Closing Date
and relating to Seller (whether in the possession of Seller or Buyer) (including
copies thereof) as is reasonably necessary for the (a) preparation for or the
prosecution or defense of any suit, action, litigation or administrative,
arbitration or other proceeding or investigation (other than one by or on behalf
of a party to this Agreement) by or against Buyer or Seller (b) preparation and
filing of any Tax Return or election relating to Seller and any audit by any
taxing authority of any returns of Buyer or Seller relating thereto, (c)
preparation and filing of any other documents required by governmental or
regulatory bodies and (d) transfer of data to Buyer relating to the Seller. The
party requesting such information and assistance shall reimburse the other party
for all out-of-pocket costs and expenses incurred by such party in providing
such information and in rendering such assistance. The access to files, books
and records contemplated by this Section 6.8 shall be during normal business
hours and upon not less than two (2) business days prior written request, shall
be subject to such reasonable limitations as the party having custody or control
thereof may impose to preserve the confidentiality of information contained
therein, and shall not extend to material subject to a claim of privilege unless
expressly waived by the party entitled to claim the same.
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6.8. Prohibition on use of Blue Giant Name. Seller and its respective
Affiliates are prohibited from using the "Blue Giant" name as a trade name,
trade mark or service mark in connection with any of their businesses or
operations.
6.9. Cooperation. With respect to the Excluded Liabilities, the Buyer
agrees to reasonably cooperate with Seller in connection with Sellers' defense
of any claims or lawsuit relating thereto, including, without limitation, making
available to Seller for inspection and copying business records of the Buyer
pertaining to such claims or lawsuits and making employees of the Buyer
available as needed from time to time for interviews, depositions, trial
testimony and similar appearances; provided, however, that Buyer is reimbursed
by Seller for any out-of-pocket costs or expenses, and that such cooperation
does not unreasonably interfere with Buyer's operation of its business.
6.10. Riverside and Blue Europe Receivables. As of the date hereof,
Riverside and Blue Europe each has a past due receivable (collectively, the
"Receivables") estimated to be $82,000 and(pound)20,000, respectively, due and
owing to the Seller. Buyer shall use commercially reasonable efforts to collect
the Receivables for a ninety day period from the date hereof and to remit the
Receivables to Seller in the event that Riverside and Blue Europe identify such
payments to Buyer as payments of the Receivables; provided, however, that such
collection efforts by Buyer shall not require Buyer to refuse to ship any
product to
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Riverside or Blue Europe or to modify any of its terms of sale to Riverside or
Blue Europe.
ARTICLE VII
MISCELLANEOUS
-------------
7.1. Further Assurances; Cooperation. At and after the Closing, Seller
will execute and deliver such further instruments of conveyance and transfer as
Buyer may reasonably request to convey and transfer effectively to Buyer the
Purchased Assets or to put Buyer in actual possession and control of the
business of the Seller.
7.2. Nature and Survival of Representations. The representations,
warranties, covenants and agreements of Buyer and Seller contained in this
Agreement, and all statements contained in this Agreement or any Exhibit or
Schedule hereto or any certificate delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective party delivering the same. All such representations, warranties,
covenants and agreements shall survive the Closing hereunder subject to Section
4.5 hereof. Seller acknowledges that its representations and warranties in this
Agreement shall not be affected or mitigated by any investigation conducted by
Buyer or its representative prior to the Closing or any knowledge of Buyer.
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7.3. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or, if mailed, when mailed by United States first-class,
certified or registered mail, postage prepaid, to the other party at the
following addresses (or at such other address as shall be given in writing by
any party to the other):
If to Buyer, to:
Blue Giant Corporation
172 Trade Street
Lexington, Kentucky 40511
Attention: Michael J. Grossman, Esq.,
Vice President and General
Counsel
With a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
If to Seller to:
Colin S. Larsen
2803 Abbott Drive
Pell City, AL 35128
With required copies to:
W. Clark Watson, Esq.
Hand Arendall, L.L.C.
900 Park Place Tower
2001 Park Place North
Birmingham, AL 35203
7.4. Successors and Assigns. This Agreement, and all rights and powers
granted hereby, will bind and inure to the
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benefit of the parties hereto and their respective successors and assigns.
7.5. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of Alabama.
7.6. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
7.7. Amendment and Waiver. The parties may by mutual agreement amend
this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the party against whom
enforcement of the same is sought.
7.8. Entire Agreement. This Agreement and the Schedules hereto, each of
which is hereby incorporated herein, set forth all of the promises, covenants,
agreements, conditions and undertakings between the parties hereto with respect
to the subject matter hereof, and supersede all prior and
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contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
7.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
7.10. Enforcement. Buyer and Seller agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that each of Buyer and Seller shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which it is entitled at law or in equity.
7.11. Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits hereto.
7.12. Defined Terms. As used herein, the terms defined in Annex A shall
have the respective meanings set forth therein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BLUE GIANT CORPORATION
By: /s/ Michael J. Grossman
---------------------------------------
Michael J. Grossman, Vice President
BLUE GIANT USA CORPORATION
By: /s/ Kurt K. Larsen
---------------------------------------
Kurt K. Larsen, President
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LIST OF SCHEDULES AND EXHIBITS
------------------------------
Schedule 1.1(a) Description of Real Estate
Schedule 1.1(b) Description of Equipment
Schedule 1.2 Additional Excluded Assets
Schedule 2.2 Subsidiaries
Schedule 2.3 Locations of Assets; Qualification
Schedule 2.7 No Undisclosed Liabilities
Schedule 2.8 Changes Since Balance Sheet Date
Schedule 2.9 Taxes
Schedule 2.10 Inventory
Schedule 2.11 Accounts Receivable
Schedule 2.12 Pending Litigation
Schedule 2.13 Contracts; Unfilled Firm Purchase Orders
Schedule 2.14 Permits
Schedule 2.15 Environmental Matters
Schedule 2.16 Consents
Schedule 2.17 Personal Property Permitted Encumbrances
Schedule 2.18 Real Estate
Schedule 2.19 Transactions With Related Parties
Schedule 2.21 Compensation Arrangements
Schedule 2.24 Insurance
Schedule 2.25 Patents, Trademarks, Etc.
Schedule 2.26(A) Welfare Benefits Plans
Schedule 2.26(B) Pension Plans
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Schedule 2.26(C) Multiemployer Plans
Schedule 5.1(e) Required Consents
Exhibit A Escrow Agreement
Exhibit B Assumption Agreement
Exhibit C Bill of Sale
Exhibit D Vehicle Bill of Sale
Exhibit E Opinion of Seller's Counsel
Exhibit F Alabama Lease
Exhibit G Consulting Agreement
Exhibit H Noncompete Agreement
Exhibit I Employment Agreement
Exhibit J Noncompetition Agreement
Exhibit K Opinion of Buyer's Counsel
Exhibit L CLARK Guaranty
Exhibit M Alabama Mortgage
Exhibit N Power of Attorney
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ANNEX A
DEFINITIONS
-----------
"Affiliate" means any Person directly or indirectly controlling,
controlled by or under common control with such Person, and includes any Person
who is an officer, director or employee of such Person and any Person that would
be deemed to be an "affiliate" or an "associate" of such Person, as those terms
are defined in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. As used in this definition,
"controlling" (including, with its correlative meanings, "controlled by" and
"under common control with") means possession, directly or indirectly, of power
to direct or cause the direction of management or policies, whether through
ownership of securities, partnership or other ownership interests, by contract
or otherwise.
"Authority" means any federal, state, local or foreign governmental or
regulatory entity, or any department, agency, authority or political subdivision
thereof.
"CLARK" means CLARK Material Handling Company, a Delaware corporation.
"Environmental Liabilities" means any liabilities (including costs of
Remediation) known or unknown, foreseen or unforeseen, whether contingent or
otherwise, fixed or absolute, present or future, asserted against or incurred by
Buyer or the Business arising out of or relating to (1) environmental conditions
first occurring or existing prior to the Closing
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(whether disclosed or undisclosed) including, without limitation, the presence,
Release, threat of Release, Management or exposure of or to Hazardous Materials
(each as defined herein) at, on, in or under any property now or previously
owned, operated or leased by Seller, the Business or any of its Affiliates or
predecessors (whether into the air, soil, ground or surface waters on-site or
off-site), except to the extent such condition are exacerbated by the acts of
Buyer after the Closing Date; (2) the off-site transportation, storage,
treatment, recycling or disposal of Hazardous Substances Managed, Released or
generated prior to the Closing by Seller or the Business or any of its
Affiliates or predecessors or generated in connection with any of their
operations; or (3) any violation of any Environmental Law first occurring or
existing prior to the Closing (including, without limitation, costs and expenses
for applying for and obtaining Environmental Permits or pollution control
equipment, (either of which would have been required under Environmental Laws
prior to the Closing Date and not as a result of the Buyer's acquisition of the
Purchased Assets pursuant to this Agreement or the transfer or reissuance of
existing Environmental Permits to the Buyer necessitated by this transaction),
either of which are required to bring the Business into compliance with
Environmental Laws and fines, penalties and defense costs incurred for such
reasonable time after the Closing as it takes Buyer to come into compliance).
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"Hazardous Substances" means any hazardous, toxic or polluting
materials, substances, wastes, pollutants or contaminants (including, without
limitation, petroleum and petroleum products, PCBs, radioactive materials,
asbestos or asbestos-containing materials).
"Lien" or "Liens" means any lien, charge, claim, pledge, security
interest, conditional sale agreement or other title retention agreement, lease,
tenancy, ground rent, license, mortgage, security agreement, covenant,
condition, restriction, right-of-way, easement, encroachment, option, judgment
or of other encumbrance of matter of title.
"PCBs" means polychlorinated biphenyls.
"Person" means any individual, a corporation, a partnership, an
association, a trust or other entity or organization, including an Authority.
"Release" means spill, leak, disposal, pump, pour, emit, empty, inject,
leach, dump, migrate or escape, as such terms relate to Hazardous Substances.
"Remediation" means any actions to clean up, investigate, remove,
treat, monitor or in any other way respond to any presence, Release or threat of
Release, or minimize the further Release of any Hazardous Substance.
"Seller's Knowledge" means the knowledge, after due inquiry (unless
otherwise provided), of Kurt Larsen, Colin Larsen, Helen Senn and Pete Santiago.
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BLUE GIANT USA CORPORATION
Net Asset Value as of June 28, 1997
Book Assets
Accounts Rec. - Trade (1) $ 2,408,075
Note Receivable (2) 0
Inventories 1,709,547
Prepaid Expenses 231,721
Net P, P&E (3) 428,440
Investments (4) 55,517
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Total Book Assets $4,833,300
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Book Liabilities
A/P - Trade $(420,305)
A/P - B.G. Canada (971,145)
Sales Tax Payable 0
Payroll Tax Payable (26,687)
Payroll Deduction Payable 0
Accrued Payroll 0
Management Bonus Payable (112,000)
Accrued Expenses (251,997)
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Total Book Liabilities $(1,782,134)
Net Asset Value $ 3,051,166
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(1) Excludes amounts due from Blue Giant Europe Ltd. ($62,000) and from
Riverside Installations ($82,000), both of which are Excluded Assets.
(2) Note Receivable due from Blue Giant Europe Ltd ($33,310) which is an
Excluded Asset.
(3) Excludes Pell City property ($540,000) and U.K. condominium ($59,000),
both of which are Excluded Assets.
(4) Excludes $15,000 for captive insurance company which is an Excluded Asset.