EXHIBIT 2
ASSET PURCHASE AND SALE AGREEMENT
Dated as of July 17, 1995
By and Among
CAPITAL INDUSTRIES, INC., an Indiana Corporation
and
TRUCKPRO PARTS & SERVICE, INC., an Indiana Corporation
and
HAYGOOD LIMITED PARTNERSHIP, an Arkansas Limited Partnership
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (the "Agreement") is
made and entered into this 17th day of July, 1995 (the "Execution
Date") by and between CAPITAL INDUSTRIES, INC., an Indiana
Corporation ("Capital"); TRUCKPRO PARTS & SERVICE, INC., an
Indiana Corporation ("Seller"); and HAYGOOD LIMITED PARTNERSHIP,
an Arkansas limited partnership ("Buyer"). Buyer, Capital and
Seller are hereby referred to from time-to-time herein as the
"Parties" and individually as a "Party."
W I T N E S S E T H:
WHEREAS, Capital is the sole shareholder of Seller, and has
no other businesses or business operations; and
WHEREAS, Seller owns and operates a truck parts distribution
and service business (the "Business") with offices and facilities
in Indiana, Florida, and Ohio; and
WHEREAS, Seller desires to sell to Buyer and Buyer desires
to purchase from Seller, upon the terms and conditions
hereinafter set forth, all of Seller's right, title and interest
in and to the assets relating directly or indirectly to the
Business, other than certain assets of Seller, as such assets are
described herein, and other than the stock of Seller;
NOW THEREFORE, in consideration of the premises and the
mutual agreements, covenants, representations and warranties
hereinafter set forth, the Parties hereby agree as follows;
ARTICLE I
ASSETS
1.1 Assets to be Sold. The Parties agree, subject to the
terms and conditions of this Agreement, that on the Closing Date
(as defined herein), Seller shall sell, assign, transfer and
convey to Buyer the Transferred Assets (as defined herein), free
and clear of all liens, charges, claims and encumbrances of every
kind and character except those permitted by this Agreement.
Seller shall retain the Retained Assets (as defined herein) as
Seller's property.
1.2 Transferred Assets. "Transferred Assets" shall mean
all of the assets of Seller as of the Closing Date used directly
or indirectly in the Business, but shall not include the Retained
Assets. The Transferred Assets shall include, but shall not be
limited to, the following:
(a) all of Seller's ownership right, title and
interest in and to, and all of Seller's rights to use (which
ownership and rights to use shall be quitclaimed to Buyer),
the names used by the Business including, but not limited
to, "Truckpro", "Truckpro Parts & Service, Inc.", "Truckpro,
Inc.", "Truckpro Heavy Duty Professionals", "EAB, Inc.",
"Parts For Trucks, Inc.", "Cleveland Springs Company", "Dent
Spring Service, Inc.", "Aronol", "AGA National Products
Group", "Gyronol", "The Horton Company," and/or any similar
names or all derivatives thereof (collectively, the "Seller
Names"), under which Seller has operated the Business or any
portion thereof, and all logos (the "Seller Logos") under
which Seller has operated the Business or any portion
thereof. A true, correct and complete schedule of Seller
Names and Seller Logos in reasonable detail is set forth
upon Exhibit 1.2A and
(b) all of Seller's ownership right, title and
interest in and to, and all of Seller's rights to use (which
ownership and rights to use shall be quitclaimed to Buyer),
all patents, trademarks, trademark licenses, trade names,
mastheads, brand names, slogans, copy rights, know-how,
formulas, trade secrets and all other intangible assets
related to or used in the Business (together, with all
proposed or pending applications for any of the above, if
and as appropriate, collectively referred to herein as the
"Other Intangible Assets"), any interest which is owned or
used directly or indirectly by, or registered in the name
of, Seller. A true, correct and complete schedule of such
Other Intangible Assets in reasonable detail is set forth
upon Exhibit 1.2B; and
(c) any and all (i) cash and cash equivalents;
(ii) partnership interests, investments and securities
(collectively, the "Securities") of every kind and character
(including interests in mutual funds), with the sole
exception of those Securities which constitute Retained
Assets; and (iii) accounts of every kind and character (the
"Financial Institution Accounts") and safe deposit boxes
(the "Deposit Boxes") with financial institutions, of
Seller, related to or held by Seller directly or indirectly
in connection with the Business (specifically including any
cash on hand as of the Closing Date in such accounts). A
true, correct and complete schedule of the Securities, the
Financial Institution Accounts, and the Deposit Boxes is set
forth upon Exhibit 1.2C, showing in reasonable detail a
description of the Securities and the name, address,
telephone number, account number and Box number of the
financial institution(s) holding the Financial Institution
Accounts and the Deposit Boxes; and
(d) all accounts receivable, bills and notes
receivable, commercial paper and acceptances, any other
evidences of indebtedness to Seller, caused by or arising
directly or indirectly from the Business including amounts
due to Seller from vendors but, excluding, however, any
Seller Receivable from Capital and any receivables
evidencing volume rebates from HD America, Inc.
(collectively, the "Seller Receivables"). A true, correct
and complete schedule of the Seller Receivables shall be
delivered to Buyer on or immediately following the Closing
Date as Schedule 1.2D in accordance with Section 5.35
hereof. Such schedule shall show, as to each Seller
Receivable, the name, address, and telephone number of the
obligor, the amount due and payable as of the Effective
Date, the interest rate, the monthly, quarterly or annual
payment, any balloon payment and the due date thereof; and
(e) all inventories of parts and materials,
including but not limited to work-in-progress, raw materials
and finished goods held for resale by Seller (collectively,
the "Inventory"). The Parties agree that on or immediately
following the Closing Date a true, correct and complete
detail schedule of the Inventory as of the Effective Date
shall be prepared by Seller and delivered to Buyer by Seller
as Schedule 1.2E in accordance with Section 5.35 hereof; and
(f) all furniture, fixtures, machinery and
equipment (the "FFE") owned by Seller, and used directly or
indirectly in the Business. A true, correct and complete
schedule of the FFE having a net book value in excess of
Five Hundred Dollars ($500.00) in reasonable detail is set
forth upon Schedule 1.2F, to be delivered by Seller to Buyer
on or immediately following the Closing Date in accordance
with Section 5.35 hereof; and
(g) any and all vehicles owned or leased by
Seller and used directly or indirectly in the Business.
Exhibit 1.2G lists all such vehicles by make, model, year,
license plate number and serial or VIN number; and
(h) all data processing hardware (the "Hardware")
and Software (as such term is defined in Section 3.29)
developed, purchased, leased or otherwise used directly or
indirectly in the operation of the Business. A true,
correct and complete schedule of the Hardware in reasonable
detail is set forth upon Exhibit 1.2H and a true, correct
and complete schedule of the Software in reasonable detail
is set forth upon Exhibit 1.2I; provided, however, that
Buyer agrees that Seller shall quitclaim the Software to
Buyer; and
(i) all supplies and materials owned or leased by
Seller and used directly or indirectly by Seller in
connection with the Business; and
(j) all customer, supplier and all other related
lists and records of Seller; and
(k) the leases (and all options thereunder)
(collectively, the "Leases") and all of Seller's right,
title and interest in and to all real properties (the
"Leased Real Properties") leased by Seller and used directly
or indirectly in the Business. A true, correct and complete
schedule of the Leased Real Properties is set forth upon
Exhibit 1.2J, which schedule more particularly identifies
each parcel of Leased Real Property by name of Seller's
retail stores (collectively, the "Stores") operated thereon,
address, telephone number and legal description; and
(l) all real properties (the "Owned Real
Properties") owned by Seller, including, but not limited to,
the parcels of property more particularly identified by
address and legal description upon Exhibit 1.2K, excluding,
however, a certain parcel of unimproved real property owned
by Seller containing approximately 23,000 square feet
located at the corner of Beaver Street and McDuff Avenue in
Jacksonville, Florida (the "Jacksonville Excess Land"),
which parcel is also more particularly identified upon
Exhibit 1.2K; and
(m) all (whether written or oral) contracts,
agreements, arrangements, commitments and understandings,
franchises, confidentiality agreements, personal property
leases, security deposits and options under leases, supply
contracts, purchase contracts, service contracts, and
understandings of every kind and character (collectively,
the "Contracts") to which Seller is a party that are related
to or connected directly or indirectly to the Business;
provided, however, that Seller shall not be required to
disclose Contracts which are (i) terminable on thirty (30)
days or less notice without penalty or cost or (ii) require
the payment, in the aggregate as to each, of Five Thousand
Dollars ($5,000) or less. A true, correct and complete
schedule of the Contracts in reasonable detail is set forth
upon Exhibit 1.2L, which schedule more particularly
identifies each Contract by party, date, description of
service or type, whether assignable (and if so, any terms
and conditions of assignment) and expiration date; and
(n) all rights and claims under insurance
policies for non-material damage to Transferred Assets to
the extent that any damaged Transferred Assets have not been
repaired or replaced prior to Closing; and
(o) all licenses, permits, approvals and
authorizations (collectively, the "Permits") issued by any
and all governmental authorities relating directly or
indirectly to the Transferred Assets or the Business. A
true, correct and complete schedule of the Permits in
reasonable detail is set forth upon Exhibit 1.2M, which
schedule more particularly identifies each Permit by party,
date, description of service or type, whether assignable
(and if so, any terms and conditions of assignment) and
expiration date; and
(p) all security deposits and prepaid expenses of
every kind and character (collectively, the "Prepaid
Expenses") other than prepaid income taxes of Capital or
Seller, if any, that are related directly or indirectly to
or connected with the Business, including, but not limited
to, utility deposits and similar monies held by third
parties and loans to employees. A true, correct and
complete schedule of the Prepaid Expenses in reasonable
detail is set forth upon Exhibit 1.2N, which schedule shows,
as to each such Prepaid Expense, the amount thereof, its
purpose, the holder thereof, and any limitations upon
Seller's ability to utilize the full value thereof; and
(q) all financial, employee, operational,
historical, and other records of every kind and character
relating directly or indirectly to the Business
(collectively, the "Books and Records") including, without
limitation, all Books and Records relating to (i) employees;
(ii) the purchase of materials, supplies and services; and
(iii) dealings with customers and distributors of the
Business, including all other existing records relating to
the Business, other than confidential information regarding
HD America in the possession of Seller (except as otherwise
provided herein regarding HD America information), the
corporate minute books, capital stock books and original tax
returns of Seller (provided, however, that true and complete
copies of all such tax returns shall be furnished to Buyer),
however and wherever held, including computer tapes,
microfiche, tape recordings, video tapes and/or all other
forms of data storage; and
(r) if not otherwise set forth above, and with
the sole exception of the Retained Assets, all other assets
of every kind and character used directly or indirectly in
or required for the continuance of the Business, whether
tangible or intangible, owned by Seller on the Closing Date.
1.3 Retained Assets. The term "Retained Assets" shall mean
the following specified assets of Seller used directly or
indirectly in the Business:
(a) all of the issued and outstanding shares of the
capital stock of Seller;
(b) the Jacksonville Excess Land;
(c) the stock record books, original tax returns and
corporate minute books of Seller;
(d) all receivables owed to Seller by Capital, as set
forth as of the Execution Date upon Exhibit 1.3;
(e) all receivables related to volume discounts from HD
America, Inc., the stock of HD America, Inc. owned by
Capital and/or Seller, and certain promissory notes (the
"HDA Notes") owed by HD America, Inc. to Seller;
(f) the aggregate accrued interest on the HDA Notes;
(g) any deposits held by third parties related to
Seller's health and dental Plans; and
(h) all funds escrowed by Seller under and pursuant to
Seller's first mortgage encumbering Seller's Owned Real
Properties located in Jacksonville, Florida.
ARTICLE II
PRICE AND TERMS
2.1 Consideration. Subject to the terms and conditions of
this Agreement, and in consideration of the sale, conveyance,
assignment, transfer and delivery by Seller of the Transferred
Assets, on the Closing Date Buyer shall deliver or cause to be
delivered to Seller, shall assume certain liabilities of Seller
or pay certain liabilities on Seller's behalf to the persons owed
by Seller, in the manner set forth herein and in payment (the
"Estimated Purchase Price") for the sale, conveyance, assignment,
transfer and delivery of the Transferred Assets, the following:
(a) A wire transfer of federal or other immediately
available funds into an account designated in writing for such
purpose by Seller at least two (2) days before the Closing Date,
all in an aggregate amount equal to the Estimated Purchase Price,
which shall be determined in accordance with the provisions of
Section 2.2 below:
(b) As to the following liabilities of Seller, to the
person(s) owed such sums by Seller, funds to satisfy such
liabilities as such liabilities become due and payable in
accordance with the terms thereof:
(i) the aggregate dollar amount of the aggregate
accrued but unpaid trade payables (the "Trade Payables") of
Seller as of the Effective Date. The Parties agree that a
true, correct and complete schedule and aging of the Trade
Payables showing the person owed, the amount owed by Seller,
the date due and the age thereof as of the Effective Date
shall be delivered as Schedule 2.1B to Buyer on or
immediately following the Closing Date in accordance with
Section 5.35 hereof; and
(ii) subject to the Parties' agreements set forth
in Section 2.3(d), the aggregate dollar amount of the
accrued but unpaid expenses (the "Accrued Expenses") of
Seller as of the Effective Date. The Parties agree that a
true, correct and complete schedule of the Accrued Expenses
as of the Effective Date shall be delivered to Buyer on or
immediately following the Closing Date as Schedule 2.1C in
accordance with Section 5.35; and
(c) As to the following liabilities of Seller,
Assignment and Assumption Agreements, substantially in the forms
set forth on Exhibit 2.1A hereto (collectively, the "Assumption
Agreements"), whereby as of the Effective Date and subject to the
Parties' agreements set forth in Section 2.4, Buyer shall assume
and thereafter pay, perform or discharge such liabilities:
(i) the Leases as listed on Exhibit 1.2J;
provided, however, that the assumption thereof shall be
subject to the provisions of Section 5.3 hereof; and
(ii) the Contracts as listed upon Exhibit 1.2L;
provided, however, that the assumption thereof shall be
subject to the provisions of Section 5.3 hereof and
provided, further, however, that Buyer shall not and does
not assume the obligations of Seller, if any, under and
pursuant to an Agreement for Purchase and Sale of Assets
(the "City Truck Agreement") dated as of July 1, 1991 by and
between Capital, Seller, City Truck and Trailer Parts, Inc.,
an Alabama corporation and others.
The Parties agree that following the Closing the Estimated
Purchase Price shall be subject to review and, if required,
adjustment in the manner set forth in this Agreement.
The Parties further agree that the liabilities of Seller
identified in subsections 2.1(b)(i) and (ii) shall be referred to
herein as the "Funded Liabilities;" the liabilities of Seller
identified in subsections 2.1(c)(i) and (ii) as the "Assumed
Liabilities;" and the Funded Liabilities and the Assumed
Liabilities collectively as the "Liabilities." The Parties
further agree there shall be excluded, from each of the above,
any amounts owed to any Affiliate of Seller by Seller.
2.2 Estimated Purchase Price; Adjustment. The Parties
hereby agree as follows:
(a) The cash portion of Estimated Purchase Price to be
paid by Buyer to Seller for the Transferred Assets at Closing
shall be an amount of immediately available funds equal to:
(i) the aggregate dollar value of the Transferred
Assets minus
(ii) the aggregate dollar value of the outstanding
balance of the Liabilities,
all as set forth on the Closing Statement (as such term is
defined below), to be prepared in accordance with Section 2.3.
(b) Upon delivery by Seller to Buyer of the August 31
Statement, and completion of (i) the audit thereof, (ii) the
Parties' review thereof, and (iii) all action taken by the
Arbitrator, if required, the Estimated Purchase Price shall be
re-calculated in the manner set forth in Section 2.2(a) based
upon the Final Statement (as such term is defined below), and if
necessary, adjusted in the manner set forth below. Following such
re-calculation, the Estimated Purchase Price as so re-calculated
shall be deemed for all purposes of this Agreement the "Final
Purchase Price".
(c) Upon completion of the actions set forth in
2.2(b)(i)-(iii) above, the Final Purchase Price shall be compared
to the Estimated Purchase Price paid by Buyer at Closing. If
such comparison shows that at Closing Seller was paid too much,
Buyer and Seller agree that Seller shall immediately pay the
amount of any such excess to Buyer, which funds shall be
delivered to Buyer via wire transfer of federal or other
immediately available funds to an account designated in writing
by Buyer for such purpose. If, however, such comparison shows
that Seller was paid too little at Closing, Buyer shall
immediately pay the amount of any such deficiency to Seller via
wire transfer of federal or other immediately available funds to
an account designated in writing by Seller for such purpose.
2.3 Financial Statements Related to the Closing.
(a) July 31 Balance Sheet; Closing Statement. As soon
as reasonably possible after July 31, 1995, but in no event later
than August 21, 1995, Capital shall deliver to Buyer:
(i) an unaudited consolidating balance sheet (the
"July 31 Balance Sheet") of Capital as of 11:59 p.m. on
July 31, 1995. The July 31 Balance Sheet shall be
prepared in accordance with generally accepted
accounting principles applied in a manner consistent
with preparation of the March 31 Balance Sheet (as such
term is defined below); provided, however, that Buyer
acknowledges and agrees that the July 31 Balance Sheet
shall not contain, when delivered to Buyer, Capital's
normal year-end adjustments. The July 31 Balance Sheet
shall be delivered to Buyer as Schedule 2.3A in
accordance with Section 5.35 hereof and shall be
accompanied by a certificate of the Chief Financial
Officer of Capital (or, if no such officer exists, the
officer performing the duties of a Chief Financial
Officer) stating that it has been prepared in
accordance with the foregoing; and
(ii) an unaudited Statement of Assets To Be Sold
and Liabilities To Be Funded or Assumed, dated as of
July 31, 1995 (the "Closing Statement"), together with
workpapers setting forth the adjustments to the July 31
Balance Sheet identified in next sentence. To prepare
the Closing Statement, Capital shall adjust the assets
and liabilities set forth on the July 31 Balance Sheet
by the financial and other adjustments set forth in
Section 2.3(d). Capital shall otherwise prepare the
Closing Statement in accordance with generally accepted
accounting principles applied in a manner consistent
with preparation of the March 31 Balance Sheet. The
Closing Statement shall be delivered to Buyer as
Schedule 2.3B in accordance with Section 5.35 hereof
and accompanied by a certificate of the Chief Financial
Officer of Capital (or, if no such officer exists, the
officer performing the duties of a Chief Financial
Officer) stating that it has been prepared in
accordance with the foregoing.
(b) August 31 Balance Sheet; August 31 Statement. As
soon as reasonably possible after August 31, 1995, but in no
event later than October 1, 1995, Capital shall prepare and
deliver to Buyer and to Coopers & Lybrand, LLP, Capital's
auditors (the "Auditors"), the following:
(i) an unaudited consolidating balance sheet (the
"August 31 Balance Sheet") of Capital as of 11:59 p.m.
on August 31, 1995. The August 31 Balance Sheet shall
be prepared in accordance with generally accepted
accounting principles applied in a manner consistent
with preparation of the March 31 Balance Sheet. The
August 31 Balance Sheet shall be delivered to Buyer as
Schedule 2.3C in accordance with Section 5.35 hereof
and accompanied by a certificate of the Chief Financial
Officer of Capital (or, if no such officer exists, the
officer performing the duties of a Chief Financial
Officer) stating that it has been prepared in
accordance with the foregoing; and
(ii) an unaudited Statement of Assets To Be Sold
and Liabilities To Be Funded or Assumed, dated as of
August 31, 1995 (the "August 31 Statement"), together
with workpapers setting forth the adjustments to the
August 31 Balance Sheet identified in next sentence.
To prepare the August 31 Statement, Capital shall
adjust the August 31 Balance Sheet by the financial and
other adjustments set forth in Section 2.3(d). Capital
shall otherwise prepare the August 31 Statement in
accordance with generally accepted accounting
principles applied in a manner consistent with
preparation of the March 31 Balance Sheet. The August
31 Statement shall be delivered to Buyer in accordance
with Section 5.35 hereof as Schedule 2.3D and
accompanied by a certificate of the Chief Financial
Officer of Capital (or, if no such officer exists, the
officer performing the duties of a Chief Financial
Officer) stating that it has been prepared in
accordance with the foregoing.
(c) Audit. Capital shall then, at Capital's expense,
cause the Auditors to audit the August 31 Statement and to
prepare a report on the results of such audit as soon as
reasonably possible following Capital's delivery of the August 31
Statement. The report of Capital's Auditors shall be prepared
and delivered on or before October 31, 1995 and shall be
delivered contemporaneously to Buyer, Seller and Capital by
Capital's Auditors. The audited August 31 Statement shall be
referred to herein as the "Final Statement."
(d) Closing and Post-Closing Adjustments. The
following adjustments shall be made by Capital acting through its
Chief Financial Officer (or, if no such officer exists, the
officer performing the duties of a Chief Financial Officer) to
the July 31 Balance Sheet and the August 31 Balance Sheet to
create the Closing Statement and the July 31 Statement (the
Parties agree the July 31 Balance Sheet adjustments shall be
collectively referred to as the "Closing Adjustments," and the
August 31 Balance Sheet adjustments as the "Post-Closing
Adjustments"):
(1) the aggregate dollar value of Seller's inventories
shall be reduced by:
(a) seventy five percent (75%) of the
aggregate dollar amount of any carrying costs
which have been capitalized by Seller, plus
(b) an amount equal to the aggregate of:
(i) one hundred percent (100%) of the
aggregate dollar value of all items of
inventory that are, in Buyer's reasonable
judgment, damaged or in otherwise unsalable
condition;
(ii) sixty five percent (65%) of the
aggregate dollar value of all Fuel-Dri
(Seller Vendor Code "FD") products; and
(iii) as to the aggregate dollar value of the
applicable inventory items, a reduction in
such values in an aggregate dollar amount
determined by: (y) multiplying such values by
the percentages set forth upon Exhibit 2.3A
as to all inventory classified under Seller's
current inventory classification system as
"Class 13" (i.e., inventory items that have
not sold during the preceding twelve months);
provided, however, that for any Seller vendor
line not included upon Exhibit 2.3A, the
Parties agree that the percentage shall be
fifty percent (50%), and (z) obtaining the
sum of the resulting values; and
(c) fifty percent (50%) of the aggregate
dollar value of any freight costs which have
been capitalized by Seller as part of Seller's
aggregate inventories.
(2) the aggregate dollar value of all intangible
assets, including, but not limited to, customer
lists, patents, trademarks, goodwill or covenants
not to compete shall be reduced to zero.
(3) the aggregate dollar value of all prepaid loan
costs and deferred moving costs shall be reduced
to zero.
(4) the value of Seller's furniture and fixtures shall
be increased by the sum of One Hundred Forty Seven
Thousand Dollars ($147,000).
(5) Certain of Seller's Owned Real Properties shall be
valued as follows: (a) Seller's service center at
3140 West Morris Street in Indianapolis, Indiana
valued at One Million Dollars ($1,000,000), based
upon an Appraisal Report dated as of January 19,
1995 prepared by Meid Compton Realty; (b) Seller's
store located at 2525 West Beaver Street in
Jacksonville, Florida (excluding, however, the
Jacksonville Excess Land) shall be valued at Five
Hundred Fifty Thousand Dollars ($550,000), based
upon an Appraisal Report dated as of January 27,
1995 prepared by Hollis Wilson Wagand, Inc.; and
(c) Seller's store located at 1616 Western Avenue
in South Bend, Indiana shall be valued at its
appraised fair market value as of the Effective
Date; provided, however, that notwithstanding the
results of any appraisal of such property the
Parties agree that Buyer shall not be required to
pay more than Sixty Thousand Dollars ($60,000) for
the South Bend store. In addition, the Parties
agree that, as to the Owned Real Properties
identified in this subsection 2.3(d)(5), if
expenditures for the improvement of such
properties have not been recorded by Seller in
general ledger asset accounts which relate
directly to such real properties, but instead have
been recorded by Seller in other asset accounts of
Seller, all such asset amounts shall be considered
Retained Assets and shall not be purchased by
Buyer.
(6) To the extent that Capital, Seller or the Buyer
become aware of any new facts or circumstances
that would affect any estimates made in the
preparation of the July 31 Balance Sheet or the
August 31 Balance Sheet or the July 31 Balance
Sheet accruals or the August 31 Balance Sheet
accruals, including but not limited to the
accruals for incurred but unpaid health claims,
warranty expense, and vacation and sick pay, such
accruals shall be adjusted based upon such new
facts and circumstances. If, at Closing, no such
new facts and circumstances shall exist, Capital's
Chief Financial Officer shall so certify in
writing to Buyer.
(7) Over-banked cores (over-returns to core bank)
shall be valued at the vendor's cost of such
cores, less a reserve calculated in a manner
consistent with preparation of the March 31
Balance Sheet.
(8) The Seller Receivables (excluding amounts due
Seller from Capital, amounts evidencing volume
rebates from HD America, Inc., and accounts
receivable due Seller from vendors; vendor
accounts are specifically addressed in Section
2.3(d)(10) below), shall be purchased at their net
amounts.
(9) The Retained Assets and all liabilities of Seller
set forth on the July 31 Balance Sheet and the
August 31 Balance Sheet, respectively, which do
not constitute Liabilities shall be valued at
zero.
(10) The aggregate dollar value of any accounts
receivable due Seller for warranty and other
returns to Seller's vendors shall be reduced by an
adequate reserve reasonably satisfactory to Buyer
for denied warranty claims, unacceptable
merchandise returned and handling charges.
(11) The aggregate dollar amount of any accrued expense
of Seller regarding Seller's health benefit plans
shall be reduced to zero.
The Parties further agree as follows: (i) the inventories of
Seller included in the August 31 Statement shall be based on
physical inventories taken by Seller or Capital, or the Auditors,
at Seller's or Capital's expense, and Buyer shall be given
reasonable notice and an opportunity to participate, at Buyer's
expense, in the taking of such inventories, and (ii) as
appropriate, the Closing and Post-Closing Adjustments shall be
made to the applicable financial statement line items reflecting
general ledger accounts of Seller or Capital which require
adjustment to effect the agreements of the Parties set forth in
this subsection 2.3(d).
(e) Escrow Agreement. In connection with the Parties'
agreements set forth in this Section 2.3, the Parties agree to
execute and deliver on the Closing Date an Escrow Agreement (the
"Escrow Agreement") in the form attached hereto as Exhibit 2.3B,
whereby the note payment received from HDA in August, 1995 (the
"August Note Payment") and the HDA Notes shall be placed into
escrow at Closing to provide a fund to satisfy other obligations
of Seller to Buyer, as set forth in Section 5.16.
(f) No Disputes; Disputes. The Parties agree as
follows:
(i) The Parties shall have ten (10) days
following their receipt of the Final Statement in which to
evaluate the Final Statement. If no Party has an objection
thereto, at the end of such ten (10) day period the Purchase
Price shall be re-calculated, and, if required, adjusted
based upon the Final Statement. Such re-calculation and
adjustment shall occur on or before the expiration of a
period ending fifteen (15) days after the Parties' receipt
of the Final Statement.
(ii) If either Seller or Buyer shall dispute the
results of the Final Statement, or any portion thereof, the
disputing Party(s) shall notify the other thereof in
writing, which notice (the "Dispute Notice") shall specify
in reasonable detail all points of disagreement. The
Dispute Notice shall be given within ten (10) days following
the Parties' receipt of the Final Statement. If a Dispute
Notice is given, Buyer and Seller shall promptly meet and
use their best efforts, acting in good faith, to resolve
such disputes within ten (10) business days following the
date of the Dispute Notice. If such disputes cannot be
resolved by Buyer and Seller within ten (10) business days
following the date of the Dispute Notice, independent
accountants designated by Seller ("Seller's Accountants")
and independent accountants designated by Buyer ("Buyer's
Accountants") shall, within five (5) days after the
expiration of such ten-business day period, jointly select
from the "Big Six" accounting firms a firm of independent
public accountants which has not performed any services
since January 1, 1992 for either Seller or Buyer or their
respective Affiliates to act as an arbitrator (the
"Arbitrator") to determine and resolve in favor of either
Buyer or Seller all points of disagreement. Such
arbitration shall occur pursuant to the rules of the
American Arbitration Association then existing. The
Arbitrator shall render its decision within thirty (30) days
following the date of its appointment as Arbitrator. All
determinations made by the Arbitrator shall be final,
conclusive and binding on the Parties.
The Purchase Price shall then be adjusted by the Parties, acting
through their Chief Financial Officers (or, if no such officer
exists, the officer performing the duties of a Chief Financial
Officer) within five (5) days of the Parties' receipt of the
decision of the Arbitrator, based upon such decision.
(g) Access to Books and Records. Buyer and Seller
shall afford the other, their counsel, their Accountants and the
Arbitrator such access to the books and records of the other
relating to the Business as is reasonably necessary or desirable
to effect the Parties' agreements set forth in this subsection
2.3. Buyer and Seller agree to use their respective best efforts
to cause Buyer's Accountants, Seller' Accountants and the
Arbitrator to cooperate fully in resolving fully any disputes
regarding the Final Statement. Such cooperation shall include,
without limitation, exchange of all relevant information and
documentation.
(h) Expenses. Buyer and Seller shall pay,
respectively, the fees of the Accountants employed by each. The
Party objecting to the Final Statement shall pay the fees and
expenses of the Arbitrator (if any) incurred in connection with
any disputes involving the Final Statement; if both Parties shall
object to the Final Statement, the fees and expenses of the
Arbitrator shall be paid equally by Buyer and Seller.
2.4 Liabilities Not Assumed or Funded. The Parties agree
as follows:
(a) Except as and to the extent otherwise expressly
set forth in this Agreement, the Parties agree that Buyer has not
agreed to assume or to fund and shall have no obligation
regarding any liability or obligation, direct or indirect,
absolute or contingent, of Seller, any Affiliate of Seller, the
Business or any other person. Except for the Liabilities and the
covenants of Buyer set forth in this Agreement and in the
Subsidiary Agreements, the Parties agree there shall be no
liability or obligation of Buyer either (i) to Seller; (ii) to
Seller's creditors; or (iii) to any other person growing out of
or arising directly or indirectly from the consummation of the
transactions contemplated by this Agreement. In connection
therewith, the Parties specifically agree that Buyer shall not
assume: (1) Seller's or Capital's bank indebtedness; (2)
convertible subordinated debentures of Capital; (3) Seller's or
Capital's local, federal or state income taxes; (4) any
intercompany accounts between Capital and Seller; (5) the Plans
(as defined in Section 3.13); (6) the Funded Liabilities; or (7)
as is set forth above, any other liability of any kind or
character of Seller not specifically assumed or funded by Buyer
as set forth herein.
(b) Seller shall pay and discharge any liability or
obligation of Seller not expressly assumed or to be funded by
Buyer hereunder no later than the respective maturity date
thereof, if prior to the Closing Date, or on or before the
Closing Date if any such liability or obligation is secured by a
lien or liens on any of the Transferred Assets. All other
liabilities of Seller which are not Liabilities shall remain the
sole obligation and expense of Seller and shall be paid by Seller
in full, either before, on or after the Closing Date, unless the
subject of a dispute by Seller with the other parties thereto,
acting in good faith.
2.5 Documents of Sale and Conveyance. The sale,
conveyance, assignment, transfer and delivery of the Transferred
Assets shall be effected by delivery by Seller to Buyer of
(a) duly executed Bills of Sale in recordable
form substantially in the form of Exhibit 2.5A hereto
(collectively, the "Bills of Sale");
(b) Quitclaim Bills of Sale (the "Quitclaim
Bills") substantially in the form attached hereto as
Exhibit 2.5B in recordable form regarding all Seller
Names, Seller Logos and the Other Intangible Assets,
(c) Assignment and Assumption Agreements
regarding the Leases (the "Leasehold Assignments")
substantially in the form attached hereto as
Exhibit 2.5C, accompanied by Consent and Estoppel
Agreements in the form attached as Exhibit 2.5D;
(d) Assignment and Assumption Agreements regarding
the Contracts (the "Contract Assignments")
substantially in the form attached as Exhibit 2.5E,
accompanied by Consent and Estoppel Agreements in the
form attached as Exhibit 2.5F; and
(e) Such other good and sufficient instruments of
conveyance and transfer (collectively, the "Other
Instruments") as Buyer shall reasonably request and as
shall be necessary to vest in Buyer good, valid and
marketable title to the Transferred Assets, free and
clear of any and all liabilities, obligations, claims,
liens and encumbrances (whether absolute, accrued,
contingent or otherwise), with the sole exception of
(x) the agreements of Buyer and Seller set forth herein
whereby Buyer has agreed to accept Seller's quitclaim
conveyance of certain of the Transferred Assets; (y)
liens, encumbrances and exceptions related directly to
the Liabilities; and (z) liens, encumbrances and
exceptions expressly permitted by this Agreement.
2.6 Effective Date; Closing Date. The Parties agree as
follows:
(a) The effective date (the "Effective Date") of the
consummation of the transactions contemplated by this Agreement
shall be 11:59 P.M. on August 31, 1995. The Parties further agree
that (i) from and after the Effective Date, all results of the
operation of the Business shall become the Buyer's property and
for the Buyer's account; (ii) as is set forth elsewhere herein,
all operational cutoffs and prorations (i.e., payroll, utilities,
and the like) shall take effect as of the Effective Date, and any
such matter not specifically addressed herein shall be prorated
as of the Effective Date; and (iii) between the Effective Date
and the Closing Date Seller shall operate the Business in
accordance with the terms and conditions of this Agreement.
(b) The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices
of Barnes & Thornburg, 1313 Merchants Bank Building, 11 South
Meridian Street, Indianapolis, Indiana 46204 on August 31, 1995
or, if later, the first business day following the date on which
all of the conditions contained in Articles VI and VII, to the
extent not waived by the Party benefiting thereby, are satisfied,
but not later than the later of (i) September 30, 1995, or
(ii) such other date as Buyer and Seller may agree in writing
prior to September 30, 1995 (September 30, 1995, or such other
date, as applicable, is referred to herein as the "Final Date").
The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date."
(c) Deliveries by Seller. At the Closing, Seller
shall deliver to Buyer the following:
1. the Bills of Sale and the Quitclaim Bills;
2. the Assignments, the Contract Assignments and
the Leasehold Assignments;
3. the Other Instruments;
4. the Consent and Estoppel Agreements;
5 documents evidencing the transfers of licenses
and registrations referred to in Section 5.5 hereof;
6. documents evidencing the transfers of all
motor vehicles and registrations thereof referred to in
Section 5.5 hereof;
7. officers' certificates referred to in Section
6.3 hereof;
8. the opinion of counsel referred to in Section
6.6 hereof;
9. executed counterparts of any consents referred
to in Section 5.3 hereof;
10. all Books and Records;
11. the Certificates of Amendment and Articles of
Amendment of Seller regarding Seller's name change referred
to in Section 5.9 hereof; provided, however, that Buyer
agrees that Seller shall file such Certificates and/or
Articles immediately following the Closing Date; and
12. all other previously undelivered documents,
instruments and writings required to be delivered by Seller
to Buyer at or prior to Closing pursuant to this Agreement.
(d) Deliveries By Buyer. At the Closing, Buyer shall
deliver to Seller (unless delivered previously) or into escrow
the following:
1. the Estimated Purchase Price via wire transfer
of federal or other immediately available funds referred to
in Section 2.1(a) hereof;
2. the Assignment and Assumption Agreements
referred to in Section 2.1(c) hereof;
3. the officer's certificates referred to in
Section 7.2 and 7.3 hereof;
4. the opinion of counsel referred to in Section
7.6 hereof; and
5. all other previously undelivered documents,
instruments and writings required to be delivered by Buyer
to Seller at or prior to the Closing pursuant to this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY SELLER AND CAPITAL
Each of Capital and Seller hereby jointly and severally
represent and warrant to Buyer the following, both on the
Execution Date hereof and on the Closing Date:
3.1 Organization and Good Standing. Capital and Seller are
corporations duly organized and validly existing under the laws
of the State of Indiana.
3.2 Authority. Capital and Seller will have all requisite
corporate power and authority to own their properties and to
conduct their business, and, subject to the obtaining of the
approval of their Boards of Directors in accordance with Section
5.37 hereof, when such approval is obtained, to execute and
deliver this Agreement and any instruments and agreements
contemplated herein required to be executed and delivered by them
pursuant to this Agreement, including, without limitation, the
Bills of Sale, Assignments, and the Other Instruments, and to
consummate the transactions contemplated hereby and thereby.
Subject to the obtaining of the approval of their Boards of
Directors in accordance with Section 5.37 hereof, when such
approval is obtained, this Agreement will be duly authorized,
executed and delivered by Capital and Seller, and no other
corporate act or proceeding on the part of Capital or Seller will
be necessary to authorize this Agreement or any agreement or
instrument contemplated hereby (which, for purposes of
convenience, are referred to herein as the "Subsidiary
Agreements") or the transactions contemplated hereby or thereby.
Subject to the obtaining of the approval of their Boards of
Directors in accordance with Section 5.37 hereof, when such
approval is obtained this Agreement will be, and each of the
Subsidiary Agreements, when executed and delivered to Buyer by
Capital or Seller, or both, as the case may be, at the Closing,
will be a valid and binding obligation of such entity,
enforceable against such entity in accordance with its terms,
except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights generally. Subject to the
obtaining of the approval of their Boards of Directors, in
accordance with Section 5.37 hereof, when such approval is
obtained the consummation of the transactions contemplated by
this Agreement and the Subsidiary Agreements will not violate,
breach or constitute a default under the applicable Certificate
of Incorporation or Articles of Incorporation or Bylaws of Seller
or Capital.
3.3 No Violation. Neither the execution and delivery by
Capital or Seller of this Agreement or any of the Subsidiary
Agreements, nor the consummation by Capital or Seller of the
transactions contemplated hereby or thereby, will violate any
provision of law, the Certificate of Incorporation or Articles of
Incorporation or By-Laws of Seller or Capital, or, except as set
forth in Exhibit 3.3, violate or be in conflict with, or
constitute a default (or an event or condition which, with notice
or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance
required by, or cause the acceleration of the maturity of any
liability or obligation of Seller or Capital pursuant to, or
result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any of the Transferred
Assets under any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Seller
or Capital is a party or by which Seller or Capital may be bound
or affected or to which any of the Transferred Assets may be
subject, or violate any statute or law or any judgment, decree,
order, writ, injunction, regulation or rule of any court or
governmental authority.
3.4 Brokers. Seller has not employed any broker, agent or
finder in connection with any transaction contemplated by this
Agreement.
3.5 Seller. Capital owns all the outstanding capital stock
of Seller free and clear of all options, liens, claims, charges
or encumbrances of any kind, and there are no outstanding
options, rights or agreements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity
securities of Seller to any person. Except for the Securities,
the Transferred Assets do not include any capital stock of any
corporation.
3.6 Financial Statements; Undisclosed Liabilities.
(a) Capital has previously delivered to Buyer true,
correct and complete copies of: (i) the consolidated balance
sheets of Capital dated as of March 31, 1992, March 31, 1993,
March 31, 1994 and March 31, 1995; and (ii) the related audited
consolidated statements of operations, stockholders' equity and
cash flows for the years ended March 31, 1992, March 31, 1993,
March 31, 1994 and March 31, 1995, all certified by Coopers &
Lybrand LLP, independent accountants for Capital (all
collectively referred to herein as the "Audited Financial
Statements"). True, correct and complete copies of such
financial statements shall be delivered to Buyer on or
immediately following the Closing Date as Schedule 3.6A in
accordance with Section 5.35 hereof. The Audited Financial
Statements were prepared from the books and records of Capital in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved. The
Audited Financial Statements fairly present in all material
respects the consolidated financial position of Capital as of the
respective dates set forth therein and the consolidated results
of operations and changes in financial position or cash flows, as
appropriate, of Capital for the respective fiscal years and
periods set forth therein.
(b) Capital has previously delivered to Buyer true,
correct and complete copies of the following financial statements
(the "Interim Financial Statements") of Capital:
(i) Consolidating balance sheet and statement
of operations for Capital as of and for the nine months
ended December 31, 1994, and
(ii) Consolidating balance sheets and
statements of operations for Capital as of and for the
months ending January 31, 1995, February 28, 1995, April 30,
1995, May 31, 1995 and June 30, 1995.
All such Interim Financial Statements have been prepared
from the books and records of Capital, present fairly in all
material respects the financial position of Capital as of the
dates indicated and the results of Capital's and Seller's
operations for the periods therein specified, and have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved;
provided, however, that Buyer acknowledges and agrees that the
Interim Financial Statements shall not contain, when delivered to
Buyer, Capital's normal year-end adjustments. True, correct and
complete copies of the Interim Financial Statements shall be
delivered to Buyer on or immediately following the Closing Date
as Schedule 3.6B in accordance with Section 5.35 hereof.
(c) Seller has delivered to Buyer, in accordance with
Section 5.35 hereof, as Schedule 3.6C an audited, consolidating
balance sheet of Capital as of March 31, 1995 (the "March 31
Balance Sheet"). There are no material liabilities or obligations
of Capital or Seller whether accrued, absolute, contingent or
otherwise, except (i) those reflected or otherwise provided for
in the Audited and Interim Financial Statements, (ii) those
specifically described in the Exhibits hereto, and (iii) those
arising in the ordinary course of business since March 31, 1995,
and no facts or circumstances exist that could give rise to any
material liability or obligation of any nature whatsoever
regarding the Business not fully reflected or reserved against or
to be reserved against in the March 31 Balance Sheet, the July 31
Balance Sheet or the August 31 Balance Sheet to the extent
required by generally accepted accounting principles or not
incurred in the ordinary course of business and consistent with
past practice since the date thereof.
3.7 Title to Property, Encumbrances. At Closing, and with
the exception of the Software, the Seller Names, the Seller Logos
and the Other Intangible Assets, Seller will convey good, valid
and marketable title to all Transferred Assets which it purports
to lease or own, including, without limitation, all Transferred
Assets reflected on the March 31 Balance Sheet and all
Transferred Assets acquired by Seller since March 31, 1995
(excepting only such inventory sold, accounts receivable
collected and non-material assets disposed of or consumed in the
ordinary course of business); Buyer agrees that at Closing Seller
shall quitclaim the Software, the Seller Names, the Seller Logos
and the Other Intangible Assets to Buyer, and that Seller makes
no representation or warranty as to Seller's title therein.
Except as set forth in Exhibit 3.7, all properties and assets
constituting Transferred Assets are owned free and clear of all
mortgages, liens, claims, charges, pledges, security interests or
other encumbrances of any nature whatsoever including, without
limitation, capitalized leases, chattel mortgages, conditional
sales, contracts, collateral security arrangements and other
title or interest retention arrangements (collectively, the
"Encumbrances;"), and are not, in the case of the Owned or Leased
Real Properties, subject to any rights of way, restrictive
covenants, licenses, profits, easements, building use
restrictions, exceptions, variances, reservations, options to
purchase or limitations of any nature whatsoever (collectively,
the "Exceptions"). After giving effect to the release of
Encumbrances to be effected by Seller as part of the Closing, the
Encumbrances and the Exceptions disclosed in Exhibit 3.7 do not
and will not impair the ability of Buyer to conduct the
activities or operations of the Business as conducted by Seller
on the Execution Date.
3.8 Plants, Machinery, FFE and Vehicles. Set forth on
Schedule 1.2F is a list as of May 31, 1995 of each item of
machinery, equipment, furniture and fixtures owned by Seller
having a net book value in excess of Five Hundred Dollars
($500.00) indicating for each item a description thereof. Set
forth on Exhibit 1.2G is a list as of May 31, 1995 of each
vehicle owned or leased by Seller describing each such vehicle by
make, model, year, license plate number and serial or VIN number.
Except as set forth in Exhibit 3.8, to the best of Seller's
knowledge all buildings, fixtures, furniture, plants, structures,
machinery, vehicles and equipment owned, leased or used by the
Business are in good and normal operating condition and repair,
and are adequate for the uses to which they are being put; none
of such plants, buildings, structures, machinery, equipment or
vehicles are in need of maintenance or repairs except for
ordinary, routine maintenance and repairs which are not
substantial in nature or cost.
3.9 Real Property Leases. Exhibit 1.2J contains a true,
correct and complete list of all parcels of all Leased Real
Property, including identification of each lease or sublease and
all amendments thereof and modifications thereto pursuant to
which Seller leases or subleases directly or indirectly any real
properties and improvements for the direct and indirect use or
benefit of the Business, which list includes the street address,
legal description of such Leased Real Property and description of
all contracts, agreements, subleases, options and commitments,
written or oral, affecting Seller's title to such real estate or
any interest therein to which Seller is a party or by which
Seller is bound. With respect to such Leases:
(a) The Leases are in full force and effect and are
valid, binding and enforceable in accordance with their
respective terms;
(b) No amounts payable under any Lease are past due;
(c) To the best of Seller's knowledge, each party
thereto has complied with all commitments and obligations on its
part to be performed or observed under each Lease, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the enforcement of
creditors' rights generally;
(d) Neither Seller nor any Affiliate (as defined
below) has received any notice of a default, offset or other
counterclaim under any Lease, or any other communication calling
Seller to comply with any provision of any Lease or ascertaining
noncompliance, and no event or condition has happened or
presently exists which constitutes a default or, after notice of
lapse of time or both, would constitute a default under any
Lease;
(e) Following procurement of all necessary lessor's
consents by Seller, and upon their assignment to Buyer at the
Closing, all such Leases will be valid, binding and enforceable
by Buyer in accordance with their respective terms; and
(f) Seller has delivered to Buyer true, correct and
complete copies of the Leases, and such copies have been
delivered to Buyer by Seller in accordance with Section 5.35
hereof as Schedule 3.9.
(g) Upon satisfaction of the Huntington National Bank
Line of Credit (the "Huntington Debt"), and the release by
Huntington National Bank of its security interest in the
Transferred Assets securing such Huntington Debt, there will be
no security interest, lien, encumbrance or claim of any kind on
Seller's leasehold interest under any Lease created by Seller.
Seller, in accordance with Article Five hereof, has delivered to
Buyer accurate, correct and complete copies of existing title
insurance policies, title reports, surveys, environmental audits
and similar reports, if any, for the Leased Real Properties in
the possession or under the control of Seller.
3.10 Compliance with Applicable Law. Except as set forth
in Exhibit 3.10:
(a) Seller is presently complying regarding its
operations, practices, real properties (both the Owned and Leased
Real Properties), plants, structures, machinery, equipment,
vehicles and other property, and all other aspects of its
business, in all material respects with all applicable laws
(whether statutory or otherwise), rules, regulations, ordinances,
judgments, decrees, orders, writs and injunctions of all
governmental authorities (federal, state, local, foreign or
otherwise) (collectively, the "Laws"), including, but not limited
to, all Laws relating to the safe conduct of business,
environmental protection and conservation, antitrust, taxes,
consumer protection, currency exchange, equal opportunity,
health, sanitation, fire, zoning, building, occupational safety,
pension, securities, trademarks and copyrights and, to the best
of Seller's knowledge, there have been no claims or charges of
violations of the rights of the disabled.
(b) Neither Seller nor any of its Affiliates have
received any notification which is outstanding or uncured from
any governmental authority within the last three years that the
Business is in violation of any applicable health, sanitation,
fire, environmental, safety, zoning, building or other law,
ordinances or regulation in respect of its buildings, plants,
structures, properties, machinery, equipment, vehicles or
operations.
(c) Neither Seller nor any of its Affiliates have
received any notification which is outstanding or uncured from
any governmental authority or any person within the last three
years that the Business fails to comply with the requirements of
the Americans With Disabilities Act of 1990 (42 U.S.C. Sec.
12101, et. seq.).
3.11 Environmental Matters. The ownership, use and
operation by Seller, and each of its predecessors, of each
Facility (including but not limited to the Owned Real Properties
and the Leased Real Properties) used in the Business has been
and, to the knowledge of Seller, all ownership, use and operation
of each such Facility by any other person has been, in compliance
with all federal, state and local environmental and
anti-pollution laws and regulations, including the Comprehensive
Environmental Response, Compensation and Liability Act, as
amended (42 U.S.C. Sec. 9601, et.seq.) ("CERCLA"), its
implementing regulations and all applicable state laws and
regulations relating to Hazardous Substances; the Occupational
Safety and Health Act, as amended (29 U.S.C. Sec. 651, et.seq.)
("OSHA"), its implementing regulations, the Emergency Planning
and Community Right-to-Know Act, as amended (42 U.S.C. Sec.
11001, et.seq.), its implementing regulations; the Toxic
Substances Control Act, as amended (15 U.S.C. Sec. 2601,
et.seq.), its implementing regulations, the Resource Conservation
and Recovery Act, as amended (42 U.S.C. Sec.6901 et.seq.
("RCRA"), its implementing regulations and all applicable state
hazardous waste laws, rules and regulations; the Clean Water Act,
as amended, its implementing regulations and all applicable state
effluent discharge laws and regulations; the Clean Air Act, as
amended, its implementing regulations and all applicable state
air emission laws and regulations; and all such laws, rules and
regulations concerning (i) particulate emissions, hazardous
substance communication, surface water pollution, air pollution,
solid wastes, hazardous wastes, storage, handling, treatment,
transportation, spills or other releases; (ii) disposal of any
substance, materials or wastes; or (iii) exposure to or
notification regarding any substance, material or waste
(collectively, the "Environmental Laws"). No action, suit,
proceeding, investigation, complaint or charge exists for
violation of any Environmental Laws and there is no meritorious
basis therefor. Seller has no duty, responsibility, liability or
obligation for fines or penalties, or for investigation, expense,
Removal or Remedial Action to effect compliance with or discharge
any duty, responsibility, liability, obligation or claim under
any Environmental Laws, and no such claims, actions, suits,
proceedings or investigations under any Environmental Laws exist
or may be meritoriously brought or threatened. There has not
been, and is not occurring, at any Facility owned or operated or
previously owned or operated by Seller (including but not limited
to the Owned or Leased Real Properties), any Release or
threatened Release of any Hazardous Substance or petroleum,
including crude oil or any fraction thereof, nor has Seller any
reason to believe such a Release either is occurring or has
occurred at any time in the past. Seller has not applied or
disposed of any Hazardous Substance or petroleum, including crude
oil or any fraction thereof, in any manner which may form the
basis for any present or future claim, demand or action seeking
investigation, expenses, Removal, Remedial Action or expense at
any Facility, site, location or body of water, surface or
subsurface. Except as set forth upon Exhibit 3.11, Seller has
never sent, arranged for disposal or treatment, arranged with a
transporter for transport for disposal or treatment, transported,
or accepted for transport any Hazardous Substance, Solid Waste or
petroleum, including crude oil or any fraction thereof, to a
Facility, site or location, which, pursuant to CERCLA or any
similar state or local law, (a) has been placed or is proposed to
be placed, on the National Priorities List or its state
equivalent or (b) is subject to a claim, administrative order or
other request to take Removal or Remedial Action. Seller does
not store, generate or produce any Hazardous Substance or
Hazardous Waste. There has not been any contamination of
groundwaters, surface waters, soils or sediments, as a result of
the manufacture, storage, processing, loss, leak, escape,
spillage, disposal or other handling or disposition by or on
behalf of the Seller of any product or substance on or prior to
the Closing Date at any Facility owned or operated or previously
owned or operated by Seller (including but not limited to the
Owned Real Properties or the Leased Real Properties). All
Facilities or any other real property owned or leased by Seller
(including but not limited to the Owned Real Properties or the
Leased Real Properties) have been approved by all necessary
governmental authorities, and the Seller has obtained and is in
possession of all environmental permits and licenses necessary
for the Business. Exhibit 3.11 identifies all environmental
audits or assessments or occupational health studies undertaken
by or on behalf of the Seller or any governmental agency with
respect to Seller or its assets, employees, Facilities or
properties (including but not limited to the Owned Real
Properties and the Leased Real Properties), the results of
groundwater and soil testing, the results of underground fuel,
water or waste tank tests and soil samples, written
communications with Federal, state or local governments on
environmental matters, and OSHA citations. There are no
Hazardous Substances, Hazardous Wastes, Solid Wastes, tanks,
containers, cylinders, drums or cans buried, stored or deposited
in or on any real property currently or formerly owned or
operated by Seller (including but not limited to the Owned Real
Properties and the Leased Real Properties). There has not been
located on or disposed of on any Facility owned or operated by
Seller (including but not limited to the Owned Real Properties
and the Leased Real Properties) during any period of such
ownership or operations at any other time: (a) any asbestos; any
material, equipment or structure constructed of or containing any
asbestos; or any product or item made in whole or in part of
asbestos, or (b) any polychlorinated biphenyl; any compound or
material containing any polychlorinated biphenyl; or any
equipment, article or item using, containing, or made up in whole
or in part of any polychlorinated biphenyl. Seller expressly
warrants that the representations and warranties contained in
this Section 3.11 apply not only to the present locations of the
Business, but all prior locations as well. As used in this
Agreement, the terms "Removal", "Remedial Action", "Facility",
"Release", "Hazardous Substance" and "National Priorities List"
shall have the same meaning as those terms are given in CERCLA
and its implementing regulations, and the terms "Hazardous Waste"
and "Solid Waste" shall have the same meaning as those terms are
given in RCRA and its implementing regulations.
3.12 Taxes.
(a) Capital and/or Seller have (i) filed all returns
required to be filed by each with respect of all federal, state
and local or foreign income, payroll, withholding, excise, sales,
use, real and personal property, use and occupancy, business and
occupation, mercantile, real estate, capital stock and franchise
or other tax of any kind or character (all the foregoing taxes,
including interest and penalties thereon and including estimated
taxes thereof, are hereinafter collectively referred to as
"Taxes"), (ii) paid all taxes required by law to be paid, and
(iii) paid all other Taxes for which a notice of assessment or
demand for payment has been received.
(b) Other than the statutory lien in Indiana of
property taxes which are not yet due and payable, there are no
Tax liens upon any of the Transferred Assets, and neither Capital
nor Seller is aware of any audit or other proceeding or
investigation, or of any position taken on a Tax return of
Capital or Seller which could give rise to a Tax lien upon any
Transferred Assets.
3.13 Employee Benefit Plans; ERISA. Except as set forth on
Exhibit 3.13, Seller does not maintain, administer, or otherwise
contribute to any "employee benefit plan", as defined in section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which is subject to any provision of ERISA and
covers any employee, whether active or retired (any such plan,
copies of all of which, including all amendments thereto, have
been heretofore made available to Buyer, being herein referred to
as an "Employee Plan"). None of the Employee Plans is a "multi-
employer plan" as defined in section 3(37) of ERISA, and Seller
has not been obligated to make a contribution to any such
Employee Plan within the past five years on behalf of any
employee of the Business. Except as set forth on Exhibit 3.13
and exclusive of any Employee Plan, Seller does not maintain any
form of current or deferred compensation (other than base salary
and base wages), bonus, incentive compensation, profit sharing,
stock option, stock appreciation right, separation pay,
retirement, pension, salary continuation, group or individual
health, dental, medical, life insurance, survivor benefit or
similar plan, policy or arrangement for the benefit of any
employee, whether active or retired, of the Business, any class
or classes of such employees (any such plan or arrangement,
copies of all of which have been heretofore made available to
Buyer, being herein referred to as a "Benefit Arrangement;" the
Employee Plans and the Benefit Arrangements are referred to
collectively herein as the "Plans"). Regarding all Employee
Plans and Benefit Arrangements, Seller is in substantial
compliance with the terms of such plan or arrangement and with
the requirements prescribed by any and all Laws currently in
effect, including but not limited to ERISA and the Code,
applicable to such plans or arrangements. Seller has not failed
to make any contribution to, or pay any amount due and owing as
required by applicable law or by the terms of, any Employee Plan
or Benefit Arrangement. Except as disclosed in Exhibit 3.13,
there is no pending or threatened legal action, proceeding or
investigation against Seller or any Employee Plan regarding the
Employees, other than routine claims for benefits, which could
result in liability to such plans or Seller. Except as disclosed
in Exhibit 3.13, the execution of this Agreement and consummation
of the transactions contemplated hereby, including but not
limited to the merger and/or liquidation of Capital and Seller
and the termination of any Plan will not result in any payment
(whether of separation pay or otherwise) becoming due from Seller
for which Buyer is or will become liable to any current or former
consultant or employee of the Business or result in the vesting,
acceleration of payment or increase in the amount of any benefit
payable to or in respect of any such current or former consultant
or employee of Seller.
3.14 Contracts and Commitments.
(a) Except as set forth in Exhibit 1.2L:
(i) Seller is not a party to or bound by any
agreements, contracts or commitments which are applicable to
the operations, condition (financial or otherwise),
liabilities, assets, earnings, working capital or prospects
of the Business other than (A) the Leases listed in Exhibit
1.2J, and (B) the Plans listed in Exhibit 3.13;
(ii) Subject to the obtaining of any requisite
consents of third parties (including, but not limited to,
consents to the delivery of the Assignments to Buyer), the
enforceability of the agreements, contracts and commitments
referred to in subsection (a) of this Section 3.14 will not
be affected in any manner by the execution and delivery of
this Agreement or consummation of the transactions
contemplated hereby;
(iii) No purchase contracts or commitments of
Seller relating to its Business are in excess of the normal,
ordinary and usual requirements of the Business at the time
entered into or were entered into at any price in excess of
the price available at such time to companies similar in
size to Seller and similarly situated;
(iv) Neither Seller nor any Affiliate of Seller is
a party to or bound by any outstanding agreements,
arrangements or contracts relating to the Business with any
of their respective officers, employees, agents,
consultants, advisors, salesmen, sales representatives,
distributors, or dealers that: (A) are not cancelable by it
on notice of not longer than thirty (30) days and without
liability, penalty or premium; (B) provide for the payment
of any bonus or commission based on sales or earnings; or
(C) provide for any bonus or other payment based on the sale
of the Transferred Assets or any portion thereof other than
(1) the Leases listed on Exhibit 1.2J, and (2) the Plans
listed on Exhibit 3.13.
(v) Seller is not a party to or bound by any
employment agreement, consulting agreement or any other
agreement that contains any severance or termination pay
liabilities or obligations.
(vi) Seller is not in default under or in
violation of, nor is there any basis for any valid claim of
default under or violation of, any contract, agreement or
commitment made or obligation relating to the Business;
(vii) Seller has no: (A) indebtedness for (1)
borrowed money or (2) the deferred purchase price for
property, including guarantees of, or agreements to acquire,
any such indebtedness of others, or (B) contract, commitment
or arrangement for the borrowing of money or for a line of
credit; and
(viii) Neither Seller nor any of its officers,
directors, stockholders, Affiliates or associates is a party
to or bound by any agreement or arrangement for the sale of
any of the Transferred Assets (other than in the ordinary
course of business and consistent with past practice) or for
the grant of any preferential rights to purchase any of the
Transferred Assets.
(b) Subject to obtaining requisite consents of third
parties, regarding each contract and agreement listed on Exhibit
1.2L: (A) each of such contracts and agreements is valid, binding
and in full force and effect and is enforceable by Seller and
Buyer hereto in accordance with its terms; (B) neither Seller nor
any other party is in breach of any provision thereof; and (C)
there does not exist any default under, or any event or condition
which, with the giving of notice or passage of time, or both,
would become a breach or default under the terms of any such
contract or agreement on the part of Seller on or on the part of
any other party thereto.
(c) Seller has delivered to Buyer a true, correct and
complete copy of any and all Contracts which are written.
3.15 Intangible Assets. To the best of Seller's knowledge,
Seller owns and possesses all necessary Seller Names, Seller
Logos and Other Intangible Assets required for Seller to use
Seller Names, Seller Logos and Other Intangible Assets now used
in the conduct of its business in connection with the Business;
and all such trade names and Intangible Assets are listed on
Exhibit 1.2A. To the best of Seller's knowledge, such Seller
Names, Seller Logos and Other Intangible Assets are in full force
and effect and have not been amended or modified. Except as
disclosed in Exhibit 1.2A, Seller has not sold, assigned,
transferred, licensed, sub-licensed or conveyed the Seller Names,
Seller Logos or Other Intangible Assets, or any of them, or any
interest in the Seller Names, Seller Logos or Other Intangible
Assets, or any of them to any person, and to the best of Seller's
knowledge, Seller has the right, title and interest (free and
clear of all security interests, liens and encumbrances of every
nature other than any security interest created pursuant to the
instruments listed in Exhibit 1.2A) in and to the Seller Names,
Seller Logos and the Other Intangible Assets necessary to
Seller's conduct of the Business as currently being conducted;
and except as disclosed in Exhibit 1.2A, neither the validity of
such items, nor the use thereof by Seller, is the subject of any
pending or threatened opposition, interference, cancellation,
nullification, concurrent use or litigation or other proceeding.
Except as disclosed in Exhibit 1.2A, to the best of Seller's
knowledge, the use of the trade names in the conduct of the
Business as currently being conducted in the locations so
conducted does not conflict with or infringe any rights of any
third parties. Except as disclosed on Exhibit 1.2A, to the best
of Seller's knowledge there is no infringement of any proprietary
right owned or licensed by Seller and used in the Business.
3.16 Litigation. Except as set forth on Exhibit 3.16,
there are no claims, actions, proceedings, investigations or
inquiries in progress, pending, or threatened against Seller that
could affect directly or indirectly the Transferred Assets or the
transactions contemplated hereby; nor is there any valid basis
for any such claim, action, suit, proceeding, inquiry or
investigation. Except as set forth in Exhibit 3.16, no claim,
action, suit, proceeding, inquiry or investigation set forth in
Exhibit 3.16 would, if adversely decided, have an adverse effect
on the business, operations, condition (financial or otherwise),
liabilities, assets, earnings, working capital or prospects of
the Business. Seller is not subject to any judgment, order or
decree entered in any lawsuit or proceeding which has had or may
have a significant adverse effect on its business practices
regarding the Business or on the ability of Buyer to acquire any
property for the use or benefit of the Business or conduct the
Business.
3.17 Insurance. Seller now has and has had for at least
the past three years in full force and effect fire, liability and
other insurance coverages as set forth in Exhibit 3.17, in
amounts and against such losses and risks as are therein set out,
and valid policies for such insurance as is shown to be in effect
on the date of this Agreement will be outstanding and duly in
force on the Closing Date. Such policies are sufficient for
compliance with all requirements of law and of all agreements
regarding the operation of the Business to which Seller is a
party; are valid, outstanding and binding policies; and the
coverage provided thereby, regarding any act or event occurring
on or prior to the Closing Date, will not in any way be affected
by or terminate or lapse by reason of the transactions
contemplated by this Agreement. Except as set forth upon Exhibit
3.17, there are no pending or asserted claims against such
insurance coverages as to which any insurer has denied liability,
and there are no claims under such insurance coverages that have
not been properly filed. Exhibit 3.17 will at Closing also set
forth the claims experience of Seller for the last two full
fiscal years and the interim period through the Effective Date.
3.18 Employees. Exhibit 3.18A lists as of June 28, 1995
all Employees of Seller, together with dates of employment and
bi-weekly and hourly compensation (including federal and state
income tax withholding), and all contracts with employees
including, but not limited to (i) all salary, bonus, incentive
compensation, profit sharing, pension, vacation, group insurance
or employee welfare plans of any nature whatsoever, and (ii) all
collective bargaining agreements and other contracts to or with
any labor union, employee representative or group of employees.
Except as set forth in Exhibit 3.18B, (a) Seller has not violated
any applicable laws regarding employment and employment
practices, terms and conditions of employment, and wages and
hours, and Seller is not engaged in any unfair labor practice or
unlawful employment practice in connection with the Business; (b)
there is no unfair labor practice charge or complaint against
Seller pending or threatened before the National Labor Relations
Board nor is there any grievance nor any arbitration proceeding
arising out of or under any collective bargaining agreement
pending and no basis for any such charge, complaint or grievance
exits; (c) there is no labor strike, slowdown or work stoppage
pending threatened against Seller; (d) Seller has not experienced
any significant work stoppages or been a party to any proceedings
before the National Labor Relations Board involving any
significant issues for the past three years or been a party to
any arbitration proceeding arising out of or under any collective
bargaining agreement for the past three years; (e) there is no
bargaining agreement for the past three years; (f) there is no
charge or complaint actually pending or threatened against Seller
before the Equal Employment Opportunity Commission or the
Department of Labor or any state or local agency of similar
jurisdiction; provided, however, that Seller makes no
representation or warranty regarding the Americans With
Disabilities Act of 1990 (42 U.S.C. Sec. 12101, et. seq.) other
than that Seller represents and warrants that, to the best of
Seller's knowledge, there have been no claims or charges of
violations of the rights of such Act.
3.19 Permits, Licenses, Etc. To the best of Seller's
knowledge, there are no permits, licenses, orders or approvals of
governmental or administrative authorities required to permit
Seller to carry on the Business as presently conducted
(including, without limitation, those required under federal,
state or local laws or regulations relating to pollution or
protection of the environment) other than the Permits which are
described in Exhibit 1.2M. Exhibit 1.2M further identifies those
Permits listed thereon which are, to the best of Seller's
knowledge, assignable to Buyer without the consent of the issuers
thereof. To the best of Seller's knowledge, the conduct by
Seller of the Business does not violate or infringe, and does not
cause a default under, any of the Permits. Seller has not
received any written notification of any threatened suspension or
cancellation of any of the Permits. To the best of Seller's
knowledge, all Permits are in full force and effect.
3.20 Asset Necessary to Business. The Transferred Assets
include all of the assets, properties, licenses and other
agreements (other than the Retained Assets) (i) reflected or to
be reflected on the March 31 Balance Sheet, the July 31 Balance
Sheet and the August 31 Balance Sheet, except those assets
disposed of in the ordinary course of business, and (ii) that are
presently being used in the Business as presently conducted.
3.21 Inventory. The inventory of Seller as the same shall
exist on the Closing Date shall consist of substantially the same
types of inventory as that reflected on the March 31 Balance
Sheet, the July 31 Balance Sheet, the August 31 Balance Sheet and
the Closing and Final Statements, and the Inventory as the same
shall exist on the Closing Date will consist of items
substantially all of which were and will be of the usual quality
and quantity necessary for the normal conduct of Seller's
business and reasonably expected to be usable or saleable within
a reasonable period of time in the ordinary course of Seller's
business, except items of inventory which had been written down
to realizable market value or written off completely as of March
31, 1995, July 31, 1995, August 31, 1995 and the Closing Date,
respectively, and damaged, broken or spoiled items in an amount
which does not have an adverse effect on the value of the
Inventory.
3.22 Commitments. There are no outstanding orders for
inventory or supplies other than in the ordinary course of
business as presently being conducted.
3.23 Accounts Receivable. Schedule 1.2D when delivered
will set forth an accurate, correct and complete aging of all
Seller Receivables reflected on the July 31 Balance Sheet and the
August 31 Balance Sheet. All outstanding Seller Receivables
reflected on the financial statements delivered to Buyer are, net
of the financial statement reserves applicable thereto, due and
valid claims against account debtors for goods or services
delivered or rendered, collectible in full within thirty (30)
days of delivery and subject to no defenses, offsets or
counterclaims. All Seller Receivables arose in the ordinary
course of business. Except as set forth upon Schedule 1.2D, no
Seller Receivables are subject to prior assignment, claim, lien
or security interest. Except in the ordinary course of business,
Seller has not incurred any liabilities to customers for
discounts, returns, promotional allowances or otherwise. Seller
has no liability for any refunds, allowances or returns in
respect of products manufactured, published, processed,
distributed, shipped or sold by or for the account of Seller on
or prior to the Effective Date, except to the extent of the
reserves therefor to be reflected on the July 31 Balance Sheet,
the August 31 Balance Sheet and the Closing and Final Statements.
Where Seller Receivables arose out of secured transactions, all
financing statements and other instruments required to be filed
or recorded to perfect the title or security interest of Seller
have been properly filed and recorded. The reserves regarding
such receivables set forth on the March 31 Balance Sheet and to
be set forth on the July 31 Balance Sheet, the August 31 Balance
Sheet and the Closing and Final Statements have been and will be
computed in accordance with generally accepted accounting
principles calculated consistent with past practice.
3.24 Books and Records. Seller maintains its Books and
Records and accounts (including, but not limited to, those kept
for financial reporting purposes and for tax purposes) in
accordance with good business practice and in sufficient detail
to reflect accurately and fairly the transactions of its assets,
liabilities and equities.
3.25 Recent Actions. Except as and to the extent set forth
in Exhibit 3.25, since March 31, 1995;
(a) no material adverse change has occurred in the
business, operations, prospects or condition (financial or
otherwise) in of the Transferred Assets or the Business nor has
there occurred any event which has had or reasonably could be
expected to have a material adverse effect on any of the
foregoing;
(b) Seller has not experienced any decrease in any of
the Transferred Assets from the amounts reflected on the March 31
Balance Sheet other than decreases occurring in the ordinary
course of business;
(c) Seller has not increased, or experienced any
change in any assumption underlying or methods of calculating,
any bad debt, contingency or other reserves;
(d) Seller has not paid, discharged or satisfied any
claims, encumbrances, liabilities or obligations (whether
absolute, accrued, contingent or otherwise and whether due or to
become due) other than the payment, discharge or satisfaction in
the ordinary course of its business and consistent with its past
practice of liabilities and obligations reflected or reserved
against in the March 31 Balance Sheet or incurred in the ordinary
course of business and consistent with its past practice since
the date thereof;
(e) Seller has not permitted, allowed or suffered any
of the Transferred Assets (tangible or intangible) to be
subjected to any mortgage, pledge, lien encumbrance, restriction
or charge of any kind, other than liens or encumbrances
specifically permitted pursuant to Section 3.7 hereof;
(f) Seller has not canceled any indebtedness
(individually or in the aggregate) owing to it or waived any
claims or rights of substantial value;
(g) Seller has not sold, transferred or otherwise
disposed of any of its property or assets (tangible or
intangible) except in the ordinary course of business and
consistent with past practice;
(h) Seller has not disposed of or permitted to lapse
any right to the use of any Seller Name, Seller Logo or Other
Intangible Asset used or useful in connection with the Business
or the Transferred Assets;
(i) Seller has not granted any general increase in the
compensation of officers or employees (including, without
limitation, any increase or change pursuant to any bonus,
pension, profit-sharing retirement or other plan or commitment)
or any increase in any compensation payable to or to become
payable to any officer or employee (other than any increases
resulting from employee promotions), and no such increase is
customary on a periodic basis or required by any agreement or
understanding;
(j) Seller has not paid, loaned or advanced any amount
to, or sold, transferred or leased any properties or assets
(tangible or intangible) to, or entered into any agreement or
arrangement with, any of the officers or directors of Seller or
paid, loaned or advanced any of their respective Affiliates,
except for compensation to officers at rates not exceeding the
rates of compensation paid during the fiscal year ended March 31,
1995, and routine travel advances to officers and employees;
(k) Seller has not provided for any distribution, loan
or advance of any nature whatsoever to Seller or any Affiliate of
Seller;
(l) Seller has not entered into any collective
bargaining or labor agreement, or experienced any labor dispute
or difficulty;
(m) Seller has not made any single capital expenditure
or commitment for which Buyer shall be responsible in excess of
Twenty Five Thousand Dollars ($25,000) for additions to Seller's
property, plant, equipment or for any other purpose and Seller
has not made aggregate capital commitments for which Buyer shall
be responsible in excess of Fifty Thousand Dollars ($50,000) for
additions to Seller's property, plant, equipment or for any other
purpose;
(n) Seller has not made any change in any method of
accounting or accounting practice or policy; or
(o) Seller has not suffered any casualty loss
regarding any single asset which would have been included in
Transferred Assets in excess of $5,000 (whether or not insured
against), and Seller has not suffered aggregate casualty losses
in excess of $15,000 (whether or not insured against).
3.26 Dividends and Other Distributions. Since March 31,
1995, Seller has not declared or paid any dividends on, purchased
or made any payment on account of, or set apart assets for a
sinking or other analogous fund for the purchase, redemption,
retirement or other acquisition of, any shares of any class of
capital stock of Seller, or made any other distribution in
respect thereof, either directly or indirectly, whether in cash,
property or obligations of Seller.
3.27 Consents. No consent, approval, license, permit or
authorization or order of or with any court, governmental body or
other person is required in connection with the execution and
delivery of this Agreement by Seller, or the consummation of the
transactions contemplated herein, except for approval of Seller's
shareholders, consents of lessors of leases and other non-Seller
parties to the Contracts and agreements included in the
Transferred Assets or the Liabilities.
3.28 Transactions with Employees, Stockholders and
Director/Affiliates. Except as otherwise disclosed in
Exhibit 3.28, no Affiliate:
(a) Owns, directly or indirectly, any debt, equity or
other interest or investment in any corporation, firm or other
entity which is a competitor, lessor, lessee, customer, supplier
or advertiser of the Business;
(b) Has any cause of action or other claim whatsoever
against or owes any amount to, or is owed any amount by, Seller;
(c) Has any interest in or owns any property or right
used in the conduct of the Business;
(d) Has lent or advanced any money to, or borrowed any
money from, or guaranteed or otherwise become liable for any
indebtedness or other obligations of, or acquired any capital
stock, obligations or securities of, Seller;
(e) Is a party to any contract, lease, agreement,
arrangement or commitment used in the Business; or
(f) Other than salary or bonus paid to employees for
services rendered as an employee, received from or furnished to
the Business any goods or services (with or without
consideration) since March 31, 1995.
As used anywhere in this Agreement, the term "Affiliate" shall
mean any member of the immediate family (including spouse,
brother, sister, descendant, ancestor or in-law) of any officer,
director or stockholder owning ten percent (10%) or more of the
issued and outstanding stock of Seller or Capital, or any
corporation, partnership, trust or other entity in which Seller
or Capital, any such stockholder or any such family member has an
interest or is a director, officer, partner or trustee. The term
"Affiliate" shall also include any entity which controls, or is
controlled by, or is under common control with any of the
individuals or entities described in the preceding sentence.
3.29 Software and Information Systems. As to the
electronic data processing systems, information systems, computer
software programs, program specifications, charts, procedures,
source codes, input data, routines, data bases and report layouts
and formats, record file layouts, diagrams, functional
specifications and narrative descriptions, flow charts and other
related material used in the Business (collectively the
"Software") set forth upon Exhibit 1.2I, which contains an
accurate, correct and complete list and summary description of
all Software, neither Seller nor any Affiliate has received
notice of any violation of trade secret rights, copyrights or
other proprietary rights with respect to any Software and neither
Seller nor any Affiliate knows of any meritorious basis therefor.
3.30 Financial Accounts/Securities. Exhibit 1.2C contains
an accurate, correct and complete list of the names and addresses
of all banks and financial institutions in which Seller has
(i) Financial Accounts, (ii) Deposit Boxes; or (iii) lines of
credit or other loan facilities, with the names of all persons
authorized to draw on those accounts or deposits, or to borrow
under such lines of credit or other loan facilities, or to obtain
access to such boxes. Exhibit 1.2C also contains an accurate,
correct and complete list of all Securities owned beneficially or
of record by Seller. Seller has good and marketable title to all
such Securities. The Securities reflected on Seller's financial
statements are (a) properly valued at the lower of cost or
market, (b) readily marketable, and (c) fully paid and not
subject to assessment or other claims upon the holder thereof.
Exhibit 1.2C also contains the names of all persons, if any,
holding powers of attorney from Seller and a summary statement of
the terms thereof.
3.31 Full Disclosure. The representations and warranties
of Seller and Capital contained in this Agreement and each
Schedule, certificate or other written statement delivered
pursuant to this Agreement or in connection with the transactions
contemplated herein are accurate, correct and complete, and do
not contain any untrue statement of a material fact or,
considered in the context in which presented, omit to state a
material fact necessary in order to make the statements and
information contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer hereby represents and warrants the following to Seller
both on the Execution Date and on the Closing Date:
4.1 Organization and Good Standing. Buyer is a limited
partnership, duly organized, validly existing and in good
standing under the laws of the State of Arkansas.
4.2 Authority. Buyer has all requisite power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by Buyer and, subject to the
agreements of the Parties set forth in Section 5.37 hereof,
constitutes a valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally. The consummation of the transactions contemplated by
this Agreement will not violate, breach or constitute a default
under any provision of the Partnership Agreement of Buyer.
4.3 No Violation. Neither the execution and delivery by
Buyer of this Agreement or any of the Subsidiary Agreements, nor
the consummation by Buyer of the transactions contemplated hereby
or thereby, will violate any law, or violate any statute or law
of judgment, decree, order writ, injunction, regulation or rule
of any court of governmental authority or violate or be in
conflict with or constitute a default or an event or condition
which with notice or lapse of time or both would constitute a
default under any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, commitment, understanding, agreement,
arrangement or restriction of any kind or character to which
Buyer is a party or by which it is bound.
4.4 Consents. No consent, approval, license, permit or
authorization or order of or with any court, governmental body or
other person is required in connection with the execution and
delivery of this Agreement by Buyer or the consummation of the
transactions contemplated therein.
4.5 Full Disclosure. The representations and warranties of
Buyer contained in this Agreement and each Schedule, certificate
or other written statement delivered pursuant to this Agreement
or in connection with the transactions contemplated herein are
accurate, correct and complete, and do not contain any untrue
statement of a material fact or, considered in the context in
which presented, omit to state a material fact necessary in order
to make the statements and information contained herein or
therein not misleading.
4.6 Brokers. Buyer has not employed any broker, agent or
finder in connection with any transaction contemplated this
Agreement.
ARTICLE V
AGREEMENTS OF BUYER, CAPITAL AND SELLER PENDING CLOSING
5.1 Seller Actions Pending Closing. Except to the extent
consented to in writing and in advance by Buyer, Capital and
Seller agree that pending the Closing, they will conduct their
business, operations, activities and practices only in the
ordinary course of business and consistent with past practice.
Without limiting the generality of the foregoing, from the date
hereof to the Closing, Capital and Seller shall not:
(a) fail to maintain their corporate existence nor
institute proceedings for merger, consolidation or dissolution;
(b) incur any liabilities or obligations of any nature
(whether absolute, accrued, contingent or otherwise and whether
due or to become due) except nonmaterial items incurred in the
ordinary course of business and consistent with past practice;
(c) sell, transfer or otherwise dispose of any of
their property or assets (tangible or intangible) except in the
ordinary course of business and consistent with past practice;
(d) grant any general increase in the compensation of
officers or employees (including, without limitation, any
increase or change pursuant to any bonus, pension, profit-
sharing, retirement or other plan or commitment), or any increase
in any compensation payable or to become payable to any officer
or employee, except for increases for employees (other than
officers and other management employees) in the ordinary course
of business and consistent with past practice, which shall not
exceed four (4%) percent;
(e) enter into any collective bargaining or labor
agreement;
(f) other than regarding Retained Assets, make any
single capital expenditure or commitment in excess of Five
Thousand Dollars ($5,000) for additions to property, leasehold
improvements, plant, equipment or intangible capital assets or
for any other purpose and or incur in the aggregate capital
expenditures or commitments in excess of Twenty Five Thousand
Dollars ($25,000) for additions to Seller's property, plant,
leasehold improvements, equipment or for any other purpose;
(g) make any change in any method of accounting or
accounting practice or policy;
(h) except with the prior written consent of Buyer,
permit any option to renew any lease to expire;
(i) omit to do any act, or permit any act or omission
to act, which will cause a breach of any contract, commitment or
obligation or any breach of any representation, warranty,
covenant or agreement made by Seller herein;
(j) fail to use such efforts as are consistent with
prior practices to keep the Business intact, to maintain,
preserve and protect the Transferred Assets, to keep available
the services of their employees, and to preserve the good will of
suppliers, customers, creditors and others having business
relations with Seller in connection with the Business.
5.2 Supplying of Information. The Parties shall furnish to
the other or their respective representatives, from time-to-time
as reasonably requested by the other Parties, complete and
accurate information in cooperation with any audit, review,
investigation or examination of the books and records, accounts,
contracts, properties, assets, operations and facilities of
Seller. In connection therewith, each Party shall direct and
authorize its independent accountants to make available to the
other and its accountants all working papers reasonably
requested. Prior to Closing, Seller shall supply to the Buyer
full and adequate information and data as reasonably requested by
Buyer to be assured that Seller has the right and power to
transfer the Transferred Assets to Buyer, free and clear of any
liens, claims, encumbrances or judgments other than those
permitted by this Agreement. Each Party agrees to keep all
information obtained by it pursuant to this Section confidential
except:
(i) to the extent that counsel for the Party
providing the information advises that disclosure of such
must be made pursuant to the applicable law, regulations,
subpoena, judicial process or the like;
(ii) the receiving Party may use such information
to the extent useful in evaluating and consummating the
transactions contemplated by this Agreement, including, but
not limited to distribution of such information to Buyer's
debt and equity financing sources and any potential
financing sources and all accountants, auditors, attorneys
and advisors to Buyer and such real and potential financing
sources who agree in writing to maintain the confidentiality
of the information provided; and
(iii) the receiving Party may use such information
to enforce compliance with the terms and conditions of this
Agreement and all related documents and in connection with
any action taken by it to protect the rights and interests
hereunder and in connection with the transactions
contemplated hereby.
In the event this Agreement is terminated and no further
negotiations are conducted between Buyer and Seller, each Party
agrees to return all copies of information then in its possession
obtained pursuant to this Section to the furnishing Party. Any
Exhibit or Schedule which, with the consent of Buyer, is not
attached hereto at the time that Buyer executes this Agreement
shall not be subsequently attached hereto or incorporated herein
unless such Exhibit or Schedule is acceptable to Buyer in Buyer's
reasonable judgment and Buyer approves such in writing.
5.3 Consents. Seller agrees that Seller shall use its best
efforts to obtain, prior to the Closing and at its expense (and
in form, scope and substance reasonably acceptable to Buyer), all
consents necessary or advisable, in the opinion of Buyer and its
counsel and in connection with the consummation of the
transactions contemplated hereby, including, without limitation,
(a) the consent of each lessor of real property leased by Seller
and included in the Transferred Assets to the assignment of the
Seller's interest under such Lease to Buyer, (b) the consent of
each lessor of personal property and each party to any Contract
either included in the Transferred Assets or included in the
Assumed Liabilities to the assignment of the Seller's interest
under such personal property lease or Contract to Buyer;
provided, however, that Buyer agrees that Seller shall not be
required to obtain the consent of the other party to any Contract
that is terminable on thirty (30) days or less notice without
penalty or liability; and (c) all other consents, approvals,
licenses, permits and authorization (and the declarations,
filings and registrations) listed or referred to on Exhibit 5.3.
All such consents shall be in writing and in form and substance
reasonably satisfactory to Buyer and Buyer's counsel and executed
counterparts thereof shall be delivered to Buyer promptly after
receipt thereof by the Seller but in no event later than the
Closing Date. Buyer agrees to assist and cooperate with Seller
as may be reasonably required in obtaining such consents,
including, without limitation, by way of furnishing financial and
other information as may reasonably be requested by Seller or any
lessor or other third party, but without material expense to
Buyer.
5.4 Other Transactions. Except as may be required by law,
prior to the Closing, Seller and Capital shall not, nor shall
they permit any of its Affiliates, officers, directors,
stockholders or other representatives to, directly or indirectly,
encourage, solicit, initiate or participate in discussions or
negotiations with, or provide any information or assistance to,
any corporation, partnership, person, or other entity or group
(other than Buyer and its representatives) concerning any merger,
sale of securities, sale of substantial assets or similar
transaction involving Seller or Capital and relating to the
Business or the Transferred Assets.
5.5 Motor Vehicles/Permits. Seller shall take all actions
and prepare all documents necessary to effect the transfer to
Buyer of all motor vehicle licenses and registrations pertaining
to automobiles, trucks and other motor vehicles of whatever kind
owned by Seller constituting Transferred Assets in compliance
with the motor vehicle registration, licensing and other
applicable laws of any jurisdictions where such motor vehicles
are registered or licensed. All such documents evidencing the
transfer of licenses and registrations required hereby shall be
delivered to Buyer at or prior to the Closing. Seller shall
further take all actions and prepare all documents necessary to
effect the transfer to Buyer of all Permits on the Closing Date
in accordance with Section 5.3 hereof.
5.6 Supplemental Disclosure. Seller shall have the
continuing obligation to supplement promptly or amend promptly
all Exhibits regarding any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would
have been required to be set forth or described in such Exhibits;
provided, however, that for the purpose of the rights and
obligations of the Parties hereunder, any such supplemental or
amended disclosure shall not be deemed to have been disclosed as
of the Execution Date or the Closing Date unless so agreed to in
writing by Buyer.
5.7 Discharge of Liens. Seller shall cause, at its
expense, all Encumbrances on any real or personal property owned
or leased by the Seller which is included in the Transferred
Assets (other than those permitted by Section 3.7 hereof or those
expressly assumed by Buyer hereunder) to be terminated or
otherwise discharged fully and in form, scope and substance
reasonably satisfactory to Buyer on or prior to the Closing Date.
5.8 Employees. Seller shall use its reasonable efforts to
preserve intact the availability of the Employees so as to permit
Buyer the opportunity to hire such of those Employees as Buyer
desires, effective upon the Closing Date. Seller will not take
any action to dissuade any of the Employees from accepting
employment with Buyer after the Closing.
5.9 Name Change. Immediately following the Closing Date,
Seller will take all steps necessary to make the use of all names
of the Business immediately available to Buyer, including
changing Seller's corporate name(s) and amending and causing such
changes to be made to its Articles of Incorporation and other
corporate attributes, all in form, scope and substance reasonably
satisfactory to Buyer, so as to enable Buyer to obtain ownership
of and the use of the Seller Names, Seller Logos and the Other
Intangible Assets. Copies of all such amendments and other
corporate actions shall be delivered to Buyer when filed.
5.10 Damage or Destruction. If all or any portion of the
Transferred Assets shall be damaged or destroyed by fire or other
cause prior to the time of Closing, Seller shall immediately
notify Buyer thereof in writing and as soon as reasonably
possible thereafter furnish to Buyer a written statement of the
amount of insurance, if any, payable on account thereof. In
addition, Buyer and Seller hereby agree as follows:
(a) In the event of damage or destruction of
Transferred Assets with a fair market value, in Buyer's
reasonable judgment, of Five Hundred Thousand Dollars ($500,000)
or more, Buyer in Buyer's sole judgment may elect upon written
notice to Seller:
(i) to cancel, upon written notice to Seller and
without liability on the part of Buyer or Seller or
Capital to the other, the transactions contemplated
hereby; or
(ii) to proceed to effect the Closing (assuming
all other requirements and conditions of this Agreement
have been satisfied or waived). In such event, Buyer,
may, at Buyer's sole option, (y) effect the Closing but
exclude from the transactions contemplated hereby the
damaged or destroyed Transferred Assets, in which event
Buyer and Seller shall meet as soon as reasonably
possible to negotiate in good faith to effect a
reduction in the Purchase Price in the amount of the
aggregate value of such Transferred Assets, or (z)
effect the Closing including the damaged or destroyed
Transferred Assets, in which Seller shall repair or
replace the damaged or destroyed Assets to their
condition existing immediately prior to such damage or
destruction, and Closing shall be delayed, and
notwithstanding any contrary provision of this
Agreement, this Agreement shall not terminate until
such restoration shall be effected by Seller to Buyer's
reasonable satisfaction. Upon the delivery of a notice
contemplated by Section 5.10(a)(ii)(y) from Buyer to
Seller, the Parties shall meet within ten (10) days of
the date of such notice and shall, in the exercise of
their reasonable best efforts, negotiate in good faith
to effect a reduction in the Purchase Price to reflect
the value of the Transferred Assets so damaged or
destroyed.
(b) In the event of damage or destruction of
Transferred Assets with a fair market value, in Buyer's
reasonable judgment, of less than Five Hundred Thousand Dollars
($500,000), Buyer in Buyer's sole judgment may elect upon written
notice to Seller:
(i) to require that Seller, at Seller's expense,
promptly restore or replace the Transferred Assets to
their condition existing immediately prior to such
damage or destruction. In such event Closing shall be
delayed and, notwithstanding any contrary provision of
this Agreement, this Agreement shall not terminate
until such restoration shall be effected by Seller to
Buyer's reasonable satisfaction, or
(ii) effect the Closing but exclude from the
transactions contemplated hereby the damaged or
destroyed Transferred Assets, in which event Buyer and
Seller shall meet as soon as reasonably possible to
negotiate in good faith to effect a reduction in the
Purchase Price in the amount of the aggregate value of
such Transferred Assets. Upon the delivery of such
notice from Buyer to Seller, the Parties shall meet
within ten (10) days of the date of such notice and
shall, in the exercise of their reasonable best
efforts, negotiate in good faith to effect a reduction
in the Purchase Price to reflect the value of the
Transferred Assets so damaged or destroyed.
5.11 Taxes. Seller shall be responsible for and shall
promptly cause to be paid when due the following taxes and
interest and penalties thereon:
(a) All federal, state and local taxes (including, but
not limited to, any reserve for Taxes accrued on Seller's books
and on the July 31 and August 31 Balance Sheets, the Closing and
August 31 Statements and the Final Statement) of every kind and
character attributable to income or other gain accrued, earned or
otherwise generated by the operation of the Business for all time
periods prior to and up to and including the Effective Date;
(b) To the extent such taxes are not Funded
Liabilities, all real and personal property taxes of every kind
and character accrued and allocable to the Transferred Assets for
all time periods prior to and up to and including the Effective
Date;
(c) All other taxes of every kind and character
attributable to the operation of the Business for all time
periods prior to and up to and including the Effective Date; and
(d) any Taxes accruing from gains and losses, if any,
arising directly or indirectly from the transactions contemplated
hereby.
5.12 Title Policies. The Parties agree as follows:
(a) On or before the Execution Date, Seller shall
deliver to Buyer, as to each parcel of Owned or Leased Real
Property true, correct and complete copies of all of the
following in the possession of Seller or under Seller's direct or
indirect control: (i) title commitments; (ii) title policies;
(iii) abstracts and the like; and (iv) any and all documents,
instruments and agreements that create an Exception (as such term
is defined below) to Seller's or Seller's Affiliates' title to
such properties. The items set forth in 5.12(a)(i)-(iv) above
are referred to collectively herein as the "Existing Title Work."
(b) As soon as reasonably possible after the Execution
Date, but no later than August 14, 1995, Seller shall provide to
Buyer, at Seller's cost and expense, commitments for title
insurance ("Title Commitments") issued by a national title
company satisfactory to Buyer in Buyer's reasonable judgment for
the issuance of ALTA Owners or Leasehold Title Policies (the
"Title Policies") regarding the Owned and Leased Real Properties.
Each Title Commitment shall list as exceptions all easements,
covenants, restrictions, liens, encumbrances, tenancies and other
exceptions to title affecting title to the applicable item of
real property or leased real property (collectively, the
"Exceptions") and shall include copies of all instruments
creating such Exceptions. The Title Commitments and the Title
Policies, together with all instruments, agreements and the like
creating the Exceptions are collectively referred to herein as
the "New Title Work." The Parties agree that at Closing Seller
shall provide to Buyer, at Seller's expense, ALTA Owners Title
Insurance Policies insuring Buyer's title to the Owned Real
Properties in accordance with the requirements of this Section
5.12. Buyer may, at Buyer's option and at Buyer's expense,
obtain ALTA Leasehold Title Insurance Policies regarding the
Leased Real Properties.
(c) Buyer shall have the right to review each Title
Commitment, including copies of all instruments shown as
Exceptions, together with the New Surveys and/or the Existing
Surveys, as defined below. All Exceptions (or portions thereof)
to which Buyer does not provide Seller written notice of
objection within the later of fifteen days after the date of this
Agreement or fifteen days after receipt of the Title Commitment
(and all related documents and the Surveys referred to below)
shall be deemed permitted exceptions (the "Permitted
Exceptions"). With respect to any non-Permitted Exception (or
portions thereof) to which Buyer objects, Seller shall promptly,
at Seller's expense, use its best efforts to cure, remove or
otherwise satisfy such objection to Buyer's reasonable
satisfaction within ten (10) days after Seller's receipt of
Buyer's written notice of objection. Buyer may, upon written
request therefor from Seller, extend such ten (10) day periods in
Buyer's sole judgment. If Seller, in the exercise of Seller's
best efforts, is unable to cure any such Exception, Seller shall
notify Buyer thereof in writing and Buyer shall have the right,
upon written notice to Seller, in its sole judgment, which may be
unreasonably exercised, to (i) waive all objectionable Exceptions
to title which have not been cured, in which event all uncured
Exceptions shall be deemed Permitted Exceptions; (ii) terminate
Buyer's obligation to purchase the Transferred Assets subject to
such Exception(s); in which case the Parties shall meet promptly
to agree in good faith upon a reduction of the Purchase Price to
reflect the removal of such properties from the Transferred
Assets; or (iii) terminate this Agreement. In the event of any
termination pursuant to clause (ii) or (iii) immediately above,
Buyer and Seller shall each be released from any and all
liability to the other under the terms hereof to the extent of
the transaction pertaining to such Assets or with regard to the
transactions contemplated hereby, as applicable.
5.13 Surveys. The Parties agree as follows:
(a) On or before the Execution Date, Seller shall
deliver to Buyer, as to each parcel of Owned or Leased Real
Property true, correct and complete copies of all of the
following in the possession of Seller or under Seller's direct or
indirect control: (i) real property surveys (the "Existing
Surveys"); and (ii) any and all documents, instruments and
agreements that relate directly or indirectly to such Existing
Surveys.
(b) On or before August 14, 1995, Seller shall cause
to be prepared and delivered to Buyer, at Seller's expense, a
current minimum standard detail survey (the "New Surveys") of
each parcel of Owned Real Property in each case prepared in
insurable form in accordance with standards applicable to
registered and licensed land surveyors making surveys in the
States in which each such parcel is located are located and in
accordance with the further provisions of this Section. Each
such New Survey shall show all easements, encroachments, access,
dimensions, setbacks and restrictions and be certified to Buyer
and the Title Company and shall be in form reasonably
satisfactory to counsel for Buyer and the Title Company.
5.14 Environmental Audits. The Parties agree as follows:
(a) On or before the Execution Date, Seller shall
provide to Buyer true, correct and complete copies of all
environmental audits or assessments or occupational health
studies undertaken by or on behalf of the Seller or any
governmental agency with respect to Seller or its assets,
employees, Facilities or properties (including but not limited to
the Owned Real Properties and the Leased Real Properties), the
results of groundwater and soil testing, the results of
underground fuel, water or waste tank tests and soil samples,
written communications with Federal, state or local governments
on environmental matters, and OSHA citations regarding the Owned
or Leased Real Properties in the possession of Seller or under
Seller's direct or indirect control, which shall include all such
materials which relate directly or indirectly to the Jacksonville
Excess Land.
(b) As soon as reasonably possible after the Execution
Date, but no later than August 14, 1995, Seller shall provide to
Buyer, at Seller's cost and expense, an environmental audit
(collectively, the "Audit") of all real properties and
improvements to be purchased or leased by Buyer from and after
the Closing Date which Audit shall show, to the reasonable
satisfaction of Buyer, the absence of hazardous substances,
hazardous wastes or toxic materials in, on or under the
Facilities, as such materials are defined in Section 3.11 hereof.
The Audit shall be conducted by environmental professionals
(collectively, the "Experts") satisfactory to Buyer in Buyer's
reasonable judgment, and shall be conducted at Seller's expense.
Seller shall provide Buyer and/or the Experts full access to all
such real properties for the purposes of such Audit and shall
otherwise provide all reasonable cooperation and assistance in
connection with same. Buyer shall give Seller reasonable prior
notice, which may be oral, of the date, time and place of such
Audit (or of site visits to do any of the foregoing). The
Parties agree, subject to the requirements of applicable law, to
keep any information resulting from such Audit or investigations
confidential.
5.15 Sales and Use Taxes. Buyer shall pay all state and
local sales and use taxes payable in connection with the
consummation and performance of the transactions contemplated
hereby and waives any and all rights to collect same from Seller.
Buyer shall report and remit all of such state and local sales
and use taxes to the appropriate governmental authority as
required by the law of any State applicable to the transactions
contemplated hereby. The Parties will cooperate to the extent
reasonably possible to minimize sales and use tax arising in
connection with the transactions contemplated hereby. Seller
agrees that Seller shall bear the responsibility for the payment
of any such taxes for all periods prior to the Effective Date.
5.16 Escrow Agreement. Pursuant to Section 2.3 hereof, the
August Note Payment and the HDA Notes will be put into escrow on
the Closing Date to provide a fund to satisfy: (i) Seller's and
Capital's joint and several obligation to indemnify and hold
Buyer harmless regarding Seller's and Capital's representation,
warranties, agreements and covenants set forth herein; (ii)
Seller's obligation to satisfy fully either on or after the
Closing Date all obligations and liabilities of the Business
which are not Liabilities; and (iii) any obligation of Seller to
deliver funds to Buyer as a result of the Parties' determination
of the Final Purchase Price in the manner contemplated herein.
In connection therewith, the Parties agree that the
Escrow Agreement shall provide by its terms for the following:
(i) the Escrow Agreement shall exist for a period of three (3)
years; and (ii) on December 31, 1996, December 31, 1997 and the
third anniversary of the Closing Date, Seller may withdraw all
cash then in the escrow, less an aggregate amount of cash equal
to all valid claims then outstanding under and pursuant to this
Agreement and/or the Escrow Agreement.
Seller and/or Capital agree they shall obtain, in form,
scope and substance reasonably satisfactory to Buyer, all
consents required in Buyer's and Buyer's counsel's reasonable
judgment for the placing of the HDA Notes into the escrow
contemplated hereby, the payment of all payments of principal and
interest coming due under the HDA Notes into the escrow account
created by the Escrow Agreement, and the purchase of the HDA
Notes by Buyer. In connection with the obtaining of such
consents, Seller and Capital agree that Seller shall obtain an
agreement in form, scope and substance reasonably satisfactory to
Buyer from HD America that for so long as such HDA Notes remain
outstanding, HD America will provide to Buyer financial
information reasonably satisfactory to Buyer and/or Buyer's
lenders regarding HD America's financial condition.
Subject to the provisions of Section 9.4(c) Capital
hereby agrees to guarantee the full payment of the HDA Notes in
accordance with their terms pursuant to the Guaranty, and Seller
hereby unequivocally and unconditionally guarantees to Buyer the
full payment of the HDA Notes in accordance with their terms.
5.17 Cleveland Service Center. On the Execution Date,
Buyer agrees and Seller acknowledges that Buyer and Breckenridge
Corporation shall enter into an Agreement in the form attached as
Exhibit 5.17 hereto, regarding the real properties (the
"Cleveland Store") more particularly identified in Exhibit 5.17
hereto, which on the Execution Date are owned by Breckenridge
Corporation and leased by Seller and which constitute Seller's
service center located at East 34th Street and Superior Avenue in
Cleveland, Ohio. Seller hereby agrees to terminate its lease of
the Cleveland Store on the Closing Date.
5.18 Expenses. The Parties agree as follows:
(a) If the Closing shall occur, Seller shall pay the
following costs as Seller's sole cost and expense: (i) all costs
and expenses of Seller as set forth herein; (ii) Seller's
attorneys' fees; (iii) all costs of the issuance of the New Title
Work; (iv) all costs of the New Surveys; (v) all abstracting
costs; (vi) any brokerage commission payable by Seller; (vii) the
cost of the Audit(s); (viii) the cost of any documentary stamps
or transfer taxes caused by the conveyance of the Transferred
Assets to Buyer; and (ix) any costs associated with the obtaining
of any consent, permit or authorization required for the
consummation of the transactions contemplated hereby. Buyer
shall pay the following costs as Buyer's sole cost and expense:
(i) all costs and expenses of Buyer as set forth herein; (ii)
Buyer's attorneys' fees; and (iii) any brokerage commission
payable by Buyer.
(b) If the Closing shall not occur, Capital and Seller
on the one hand and Buyer on the other shall pay equally the out-
of-pocket expenses of Seller's obtaining of title insurance
commitments, surveys, and environmental audits, and Buyer's out-
of-pocket expenses for appraisals incurred by Buyer in seeking
Buyer's financing. The Parties agree that their agreements set
forth in this Section 5.18(b) shall survive termination of this
Agreement as a valid and binding agreement of the Parties.
5.19 Shareholders Meeting.
(a) Seller will, as soon as practicable following the
date of this Agreement and in accordance with the By-laws of the
Seller and applicable law, duly call, give notice of, convene and
hold a meeting of its stockholders (the "Stockholders Meeting")
for the purpose of approving this Agreement and the transactions
contemplated by this Agreement. Seller shall, through its Board
of Directors, recommend to its stockholders approval of this
Agreement and the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, Seller and
Capital agree that their obligations pursuant to this Section
5.19(a) shall not be affected by the commencement, public
proposal, public disclosure or communication to Seller or Capital
of any takeover proposal related directly or indirectly to Seller
or Capital.
(b) Capital agrees that it will vote all shares of the
capital stock of Seller owned by Capital in favor of and to
approve the transactions contemplated by this Agreement.
5.20 Best Efforts; Notification. (a) Upon the terms and
subject to the conditions set forth in this Agreement, each of
the Parties agrees to use its best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other Parties in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including (i) the obtaining of
all necessary actions or nonactions, waivers, consents and
approvals from all governmental entities (the "Governmental
Entities") and the making of all necessary registrations and
filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals or waivers from third parties,
(iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Entity vacated or reversed and (iv) the execution and delivery of
any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes
of, this Agreement, provided that, in the case of Buyer, Buyer
can do so without the occurrence of any out-of-pocket expenses
(other than de minimis transaction expenses) on terms Buyer
believes are commercially reasonable and will not result in a
material diminution of the benefits Buyer expects to realize from
this Agreement and the transactions contemplated hereby. In
connection with and without limiting the foregoing, Seller,
Capital and their Boards of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar
statute or regulation is or becomes applicable to this Agreement
or any of the transactions contemplated hereby and (ii) if any
state takeover statute or similar statute or regulation becomes
applicable to this Agreement or any of the transactions
contemplated hereby, take all action necessary to ensure that the
transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or
regulation on the such transactions.
(b) Seller on the one hand and Buyer on the other
shall give prompt notice to the other, of (i) any representation
or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any
respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect
or (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
Parties or the conditions to the obligations of the Parties under
this Agreement.
5.21. Public Announcements. Seller and Capital on the one
hand and Buyer on the other will consult with each other before
issuing, and provide each other the opportunity to review and
comment upon, any press release or other public statements with
respect to the transactions contemplated by this Agreement, and
shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required
by applicable law or court process.
5.22 UCC Review. As soon as reasonably possible after the
Execution Date, but no later than August 14, 1995, Seller shall
have caused to be delivered to Buyer an appropriate certificate
from the Uniform Commercial Code filing officers of (i) the
States in which the Business is conducted by Seller, and (ii) the
applicable counties of such States listing creditors of Seller
that have filed financing statements with respect to any of the
Transferred Assets. Buyer shall have fifteen (15) days from the
date of receipt of said certificates to examine such and notify
Seller in writing of its objections with respect thereto, which
objections shall be reasonably determined by Buyer. If Seller is
unable to satisfy such objections prior to the Closing Date,
Buyer shall either (a) accept Seller's title to the applicable
Transferred Assets in its then condition, or, (b) at Buyer's
election, exercised in Buyer's sole judgment, Buyer may, upon
written notice to Seller, reduce the Purchase Price by the
aggregate amount of Seller's aggregate debt secured by the
applicable Transferred Asset(s), as such value is determined by
Buyer in Buyer's reasonable judgment, and at Closing apply the
reduction in full satisfaction of such obligation of Seller.
5.23 Guaranty. Capital agrees as follows:
(a) On the Execution Date, Capital agrees to execute
and to deliver to Buyer the Guaranty (the "Guaranty") attached
hereto as Exhibit 5.22.
(b) If Capital owns any assets utilized by Seller in
the conduct of the Business, all such assets shall be considered
Transferred Assets and shall be conveyed, in the manner set forth
herein, by Capital to Buyer at Closing.
5.24 Post-Closing Warranty Work. The Parties agree as
follows regarding the performance from and after the Closing Date
of warranty work (collectively, the "Post Closing Warranty Work")
relating to the operations of the Business by Seller prior to the
Closing Date: if claims arise as result of any warranties on
Inventory sold prior to the Closing Date, Buyer shall perform
such work at a cost equal to Buyer's cost for materials (to the
extent that applicable materials are not recovered from Seller's
vendor) and direct labor. To the extent the costs of such
warranty work are not reflected on the Closing Balance Sheet,
such costs shall not be an Assumed Liability, but shall be an
expense of Seller. Buyer agrees that Buyer, in the ordinary
course of Buyer's business, shall attempt to recover the costs of
such warranty work from Seller's vendors. Buyer shall indemnify
and hold Seller harmless for all Damages (as such term is defined
herein) caused by or arising directly or indirectly from Buyer's
failure to perform fully such warranty work.
5.25 Bulk Sale. Seller shall comply in all material
respects with the bulk transfer provisions under the Uniform
Commercial Code enacted in any of the jurisdictions in which any
of the Transferred Assets are located.
5.26 Allocation. The Purchase Price, consisting of (i) the
amount of cash transferred pursuant to Section 2.2(a) hereof and
(ii) the aggregate dollar amount of the Funded and Assumed
Liabilities and (iii) all other consideration delivered to Seller
hereunder shall be allocated among the Transferred Assets
(collectively, the "Basis") in a manner determined by Buyer.
Such allocation of the Basis shall be conclusive and binding on
both Buyer and Seller for purposes of their federal, state and
local income (if any) tax returns. Buyer and Seller shall
prepare and timely file all such reports and returns as may be
required by Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"), to report such allocation of the Basis.
5.27 Employees, Benefit Plans, Etc.
(a) Employees. Seller agrees to permit Buyer
throughout the period between the Execution Date and the Closing
Date (i) to meet with the employees of Seller (the "Employees")
at such times as shall be approved by a representative of Seller
(which approval shall not be unreasonably withheld) and (ii) to
distribute to the Employees such forms and other documents
setting forth terms and conditions upon which employment, if any,
by Buyer is offered (the Parties agreeing there being no
obligation of Buyer to do so) and any other forms and documents
relating to employment after the Closing Date by Buyer as Buyer
may request.
(b) WARN. If required, Seller agrees to comply fully
with the United States Workers' Adjustment and Retaining
Notification Act.
(c) Benefits. Seller agrees that, regarding all
claims by employees of Seller arising from events occurring on or
prior to the Closing Date under the Plans (including, but not
limited to, life insurance, medical and disability programs), or
otherwise, Seller at its own expense shall honor or cause its
insurance carriers to honor such claims whether made on, before
or after the Closing Date, as applicable, in accordance with the
terms and conditions of such plans or programs without regard to
the employment by Buyer of any Employee after the Closing Date.
(d) Benefit Plans. The Parties agree Buyer shall not
assume or be responsible for any liability or obligation
whatsoever regarding any of the Plans. Seller hereby agrees to
indemnify and hold harmless Buyer from and against any and all
liabilities or obligations accrued by employees of Seller under
or pursuant to or in connection with the Plans or in connection
with their employment by Seller. Buyer shall provide such
benefits to those Employees of Seller that become employed by
Buyer on or after the Closing Date as Buyer, in its sole
discretion, shall determine.
(e) Seller 401(k) Plan. The Parties agree as follows:
(i) Before the Closing, Capital and Seller shall
take any and all steps necessary to terminate the Employees'
Profit Sharing and Salary Deferral Plan of Capital Industries,
Inc. (the "Capital 401(k) Plan"). As part of the termination of
the Capital 401(k) Plan, Capital and Seller shall request a
determination from the Internal Revenue Service that termination
of the Capital 401(k) Plan shall not adversely affect its
continuing tax qualification, and Capital and Seller shall delay
distributions from the terminated Capital 401(k) Plan until they
receive a favorable determination from the Internal Revenue
Service. Capital and Seller also agree that they will not
establish a successor plan within the meaning of Treas. Reg. Sec.
1401(k)-1(d)(3) at any time during the period ending twelve (12)
months after distribution of all assets from the terminated
Capital 401(k) Plan.
(ii) Buyer hereby agrees that it shall take any and
all action necessary to permit the participants in the Capital
401(k) Plan who become, at Buyer's sole option, employed by Buyer
to elect to have their account balances held at Closing in the
Capital 401(k) Plan and otherwise distributable to them to be
transferred in accordance with Section 401(a)(31) of the Code to
Buyer's 401(k) plan as soon as applicable after Capital and
Seller receive a favorable determination from the Internal
Revenue Service that the termination of the Capital 401(k) Plan
does not adversely affect the Capital 401(k) Plan's continuing
tax qualification. Buyer's obligation, however, to so is
conditioned upon its receipt from the trustee of the Capital
401(k) Plan of a true, correct and complete copy of such
determination letter.
(iii) Buyer shall amend its 401(k) plan upon terms
and conditions satisfactory to Buyer in Buyer's reasonable
judgment to provide credit for eligibility and vesting purposes
to the employees of Seller, if any, who become employees of Buyer
to reflect the period of such employee's employment with Seller.
5.28 Mail Received After Closing. On or after the Closing,
Seller agrees (i) to deliver or cause to be delivered to Buyer
all correspondence addressed to Seller relating to the Business,
the Transferred Assets or the Funded or Assumed Liabilities, and
(ii) that Buyer may receive and open all mail addressed to the
Seller or the Business and deal with the contents thereof to the
extent that such mail and the contents thereof relate to the
Business or any of the Transferred Assets or Liabilities. Buyer
agrees to deliver or to cause to be delivered to Seller all other
mail received which is addressed to Seller and does not relate to
the Transferred Assets, the Business or the Assumed Liabilities.
5.29 Access to Books and Records. Seller and Buyer agree
that on and until the Closing Date each will permit the other and
their respective representatives (including their counsel,
accountants and auditors), during normal business hours, to have
reasonable access to and examine and make copies (at the expense
of the requesting Party) of all Books and Records in their
respective possession or the possession of any of their
respective subsidiaries, if any, pertaining to the Business
(including, but not limited to, correspondence, memoranda, books
of account, payroll records and the like); provided, however,
that Buyer shall not be entitled to access to confidential
information of HD America in the hands of Seller, except as
provided by Section 5.16 hereof.
5.30 Interim Financial Statements. Capital shall deliver
to Buyer in accordance with Section 5.35 true, correct and
complete copies of Capital's consolidating balance sheets and
statements of operations for Capital as of and for the months
ending between the Execution Date and the Closing Date. When so
delivered, all such Interim Financial Statements shall be
considered delivered as part of Schedule 3.6B .
5.31 Jacksonville Property. Seller hereby agrees, at
Seller's expense, to obtain and deliver to Buyer, as soon as
reasonably possible following the Execution Date, a Phase I and
Phase II environmental audit of Seller's real properties and
improvements located at 2525 West Beaver Street, Jacksonville,
Florida (the "Jacksonville Property"). Seller and Capital
further agree that if either such audit shall reveal
environmental contamination of the Jacksonville Property, Seller
shall promptly and fully remediate all such contamination in
accordance with all applicable federal, state and local
regulations and to the reasonable satisfaction of Buyer.
Capital and Seller further agree that Buyer shall not be
obligated to purchase the Jacksonville Property unless and until
Buyer shall have received both Audits in form, scope and
substance reasonably satisfactory to Buyer showing the absence of
any environmental contamination at the Jacksonville Property and
that Seller's representations and warranties set forth in Section
3.11 hereof are true, correct and complete regarding the
Jacksonville Property. The Parties agree that on the Closing
Date, if either Audit is either (i) not available because
uncompleted and in progress, or (ii) show the presence of any
environmental contamination at the Jacksonville Property and/or
that Seller's representations and warranties set forth in Section
3.11 hereof are not true, correct and complete regarding the
Jacksonville Property, Buyer shall not purchase the Jacksonville
Property at Closing but shall instead lease the Jacksonville
Property from Seller on the Closing Date, which lease shall be
triple net and further provide by its terms for a month-to-month
rental at a fixed monthly rental of Five Thousand Dollars
($5000.00) per month and that it will terminate automatically
upon the first to occur of the following: (y) both Audits are
received by the Parties showing the absence of any environmental
contamination at the Jacksonville Property and that Seller's
representations and warranties set forth in Section 3.11 hereof
are true, correct and complete regarding the Jacksonville
Property, or (z) Seller has promptly and fully remediated, at
Seller's expense, any environmental contamination revealed by
either Audit in accordance with both all applicable federal,
state and local regulations and to the reasonable satisfaction of
Buyer, at which time Buyer shall purchase the Jacksonville
Property from Seller as required by this Agreement.
In the event that Seller must undertake remediation at the
Jacksonville Property, Seller agrees with Buyer that Seller shall
undertake such remediation promptly and pursue such remediation
without interruption and with all reasonable due diligence until
completed fully in accordance with the requirements of this
Section 5.31.
5.32 Liquidation, Distribution. Buyer acknowledges that
Buyer has been notified by Seller and Capital that after the
Closing Date: (i) Capital intends to merge Seller into Capital,
with Capital to be the surviving entity, and (ii) following such
merger, Capital intends to liquidate and cease its corporate
existence, all under and pursuant to the laws of Indiana.
Capital and Seller hereby agree that they will not effect such
merger and liquidation until the Final Purchase Price is
determined as required by this Agreement, and further agree that
they shall not effect such merger or dissolution, or distribute
or otherwise convey the funds delivered to them at the Closing
contemplated hereby to their shareholders until the Final
Purchase Price has been determined and any transfers of funds
contemplated by Section 2.2 hereof completed.
5.33 Contracts. Pursuant to Section 1.2 hereof, Seller is
not required to disclose to Buyer Contracts which are (i)
terminable on thirty (30) days or less notice without penalty or
cost or (ii) require the payment, in the aggregate as to each, of
Five Thousand Dollars ($5,000). Seller agrees to indemnify and
hold Buyer harmless from any and all Damages caused by or arising
directly or indirectly from Seller's failure to disclose any such
agreements to Buyer, and further agrees that such indemnification
shall not be subject to the requirement set forth in Section 9.3
hereof that Damages suffered by Buyer must exceed the sum of
Fifty Thousand Dollars ($50,000) before Buyer may seek
indemnification from Seller and Capital, and Seller and Capital
agree that Buyer may seek indemnification from Seller and Capital
without regard to such limitation.
5.34 Software and Intangible Assets. As to the Software,
the Seller Names, the Seller Logos and the Other Intangible
Assets, Buyer agrees that Seller shall quitclaim the Software,
the Seller Names, the Seller Logos and the Other Intangible
Assets to Buyer at Closing, and notwithstanding any contrary
provision of this Agreement, Buyer agrees that Seller and Capital
shall indemnify and hold Buyer harmless in the manner set forth
herein only as to any claims caused by or arising directly or
indirectly from Seller's or its Affiliates' ownership and use of
the Software, the Seller Names, the Seller Logos and the Other
Intangible Assets prior to the Closing Date.
5.35 Schedule Deliveries by Seller. Buyer and Seller
hereby agree as follows regarding the deliveries by Seller
contemplated by this Agreement:
(a) Seller and Capital shall deliver to Buyer, in accordance
with the terms and conditions of this Agreement, the following
Schedules:
1.2D Schedule of Seller Receivables
1.2E Schedule of Inventory
1.2F Schedule of Furniture, Fixtures and Equipment
2.1B Schedule of Trade Payables
2.1C Schedule of Accrued Expenses
2.3A July 31 Balance Sheet
2.3B Closing Statement
2.3C August 31, 1995 Balance Sheet
2.3D August 31 Statement
3.6A Consolidated Balance Sheets as at March 31,
1993, 1994, and 1995
3.6B Interim Financial Statements as of December
31, 1994, January 31, 1995, February 28, 1995,
April 30, 1995, and May 31, 1995
3.6C Audited Consolidated Balance Sheet as of March
31, 1995
3.9 Copies of the Leases
(b) Seller and Capital hereby agree that the delivery of
each of the Schedules shall be accompanied by a certificate of
the president or any duly authorized executive officer of Seller
that such Schedules are delivered under and pursuant to the
applicable sections of this Agreement and comply fully with the
requirements of such sections, including any representations or
warranties of Capital or Seller set forth therein.
5.36 City Truck. Seller and Capital acknowledge that Buyer
has not assumed and shall not be construed or deemed to have
assumed the obligation of Seller and/or Seller's Affiliates under
and pursuant to the City Truck Agreement. In connection
therewith, however, Buyer acknowledges to Seller and Capital that
from and after the Closing Date Buyer will be subject to the
restrictions applicable to Seller and Seller's Affiliates set
forth in the City Truck Agreement on Buyer's use of the Truckpro
name.
5.37 Board Approval. Seller and Capital have not received,
as of the Execution Date, the approval (the "Board Approval") of
their respective Boards of Directors for the transactions
contemplated hereby. Seller and Capital agree to seek Board
Approval at regular or special meetings of their Boards of
Directors on or before July 21, 1995. If, on or before such
date, the Board Approval is not obtained in form, scope and
substance reasonably satisfactory to Buyer on the one hand and
Seller and Capital on the other, the Parties agree that,
notwithstanding any contrary provision of this Agreement, this
Agreement shall at 11:59 p.m. CST on July 21, 1995 become null
and void and of no further force and effect, and Buyer on the one
hand and Seller and Capital on the other shall have no
obligations of any kind or character to the other hereunder.
5.38 HDA Note. Buyer, Seller and Capital acknowledge and
agree that, after the Execution Date, Seller will receive from HD
America, Inc., pursuant to Seller's agreements with HD America,
Inc., cash, the August Note Payment and an additional HDA Note
relating to Seller's business operations prior to the Closing
Date. Seller agrees that upon Seller's receipt of the August
Note Payment and such HDA Note, but not such cash, shall be
promptly delivered to the Escrow Agent into escrow under and
pursuant to the Escrow Agreement and thereafter dealt with by the
Escrow Agent in accordance with the terms and conditions of the
Escrow Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to close shall be subject to the
following conditions precedent:
6.1 Fulfillment of Covenants. Capital and Seller shall
have performed and completed all covenants, obligations and
agreements required by this Agreement to be so performed or
complied with by it at or prior to the Closing, and Capital and
Seller shall deliver to Buyer a certificate dated as of the
Closing Date executed by the Chairman of the Board, the President
or any Vice President of each such corporation so stating.
6.2 Corporate Approval. Buyer shall have received a
certified copy of the resolutions of the shareholders and Board
of Directors of Capital and Seller, authorizing the execution of
this Agreement and the consummation of the transactions
contemplated hereby.
6.3 Representations and Warranties. The representations
and warranties of Capital and Seller contained in this Agreement
shall be complete and accurate on the date when made and shall
also be accurate in all such respects on the Closing Date to the
same extent as if made on such date. Capital and Seller shall
deliver to Buyer a certificate dated as of the Closing Date
executed by the Chairman of the Board, the President or any Vice
President of each such corporation stating that such
representations and warranties are true, correct and accurate to
the same extent as if made on the Closing Date, and that all
conditions precedent to Closing to be performed by Seller and
Capital shall have been performed.
6.4 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court
or governmental or other regulatory or administrative agency or
commission requesting an order, judgment or decree which (a)
restrains or prohibits the consummation of the transactions
contemplated hereby, (b) if adversely decided will have a
material adverse effect on the business, operations, condition
(financial or otherwise), liabilities, assets, earnings or
prospects of the Business.
6.5 No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or any
order of any nature issued by a court of competent jurisdiction
restraining or prohibiting the consummation of the transactions
contemplated hereby.
6.6 Opinion of Seller's Counsel. Buyer shall have received
an opinion of Barnes & Thornburg, counsel to Seller, dated the
Closing Date, in substantially the form of Exhibit 6.6 hereto.
6.7 Documents. The Subsidiary Agreements and all other
documents to be delivered by Seller to Buyer at the Closing Date
shall be in form and substance reasonably satisfactory to Buyer.
6.8 Consents and Approvals. All licenses, permits,
consents, approvals and authorizations of all third parties and
governmental bodies and agencies shall have been obtained which
are necessary, in the reasonable opinion of counsel to Buyer, in
connection with (a) the execution and delivery by Seller of this
Agreement or the Subsidiary Agreements, (b) the consummation by
Seller of the transactions contemplated hereby or thereby, (c)
the ownership or leasing and operation by Buyer of the
Transferred Assets, (d) the assumption by Buyer of the Assumed
Liabilities, including the Contracts, or (e) the conduct by Buyer
of the Business as previously conducted by Seller on the
Execution Date.
6.9 Liens Discharged. The Encumbrances other than the
Permitted Encumbrances shall have been terminated or otherwise
discharged to Buyer's reasonable satisfaction.
6.10 Liabilities Other Than Assumed Liabilities. Seller
shall have paid or shall have made provision in form and
substance reasonably satisfactory to Buyer for the payment of all
liabilities of Seller not constituting Assumed Liabilities.
6.11 Certificates. Buyer shall have received such
certificates of officers of Seller and public officials as Buyer
may reasonably request to assure itself that the representations
and warranties of Seller contained herein are true at and as of
the Closing Date and that the other conditions to Buyer's
obligations hereunder have been satisfied. Seller agrees,
however, that the obtaining thereof by Buyer shall not limit,
waive, abate, release, limit or otherwise affect Seller's
covenants, agreements, representations and warranties set forth
herein or in any Subsidiary Agreement.
6.12 Title Policies. Seller's title to all Transferred
Assets shall be satisfactory to Buyer in Buyer's reasonable
judgment.
6.13 Audit. Buyer shall have received the Audit in form,
scope and substance reasonably satisfactory to Buyer, showing the
absence of any hazardous or toxic materials in, on, or under the
Facilities, as defined in Section 3.11.
6.14 Other Matters. Buyer shall have received copies of
such other documents, certificates, approvals, opinions, surveys,
waivers and amendments as Buyer and its counsel may reasonably
require.
6.15 Employment Agreements. Buyer shall have entered into
Employment Agreements or other arrangements satisfactory to
Buyer, in its reasonable judgment, with Messrs. H. William Mutz,
Darrell Fife, Ed Hugill, and Don Jones.
6.16 Cleveland Service Center. Buyer shall be satisfied in
its reasonable judgement that the transactions contemplated by
its Agreement with Breckenridge Corporation shall be consummated
on the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION OF
SELLER AND CAPITAL TO CLOSE
The obligation of Seller and Capital to close shall be
subject to the following conditions precedent:
7.1 Fulfillment of Covenants. Buyer shall have performed
or complied with all of its covenants, obligations and agreements
required by this Agreement to be so performed or complied with by
it at prior to Closing, and Buyer shall deliver to Seller and
Capital a certificate dated as of the Closing Date executed by
its General Partner.
7.2 Partnership Approval. Seller shall have received a
certified copy of the resolutions of the Board of Directors of
Buyer's General Partner, certified by its Secretary or an
Assistant Secretary, authorizing the execution of this Agreement
and the consummation of the transactions contemplated hereby.
7.3 Representations and Warranties. The representations
and warranties of Buyer contained in this Agreement shall be
complete and accurate on the date when made and shall also be
accurate in all such respects on the Closing Date to the same
extent as if made on such date. Buyer shall deliver to Seller a
certificate dated as of the Closing Date executed by the Chairman
of the Board, the President or any Vice President of Buyer's
General Partner stating that such representations and warranties
are true, correct and accurate to the same extent as if made on
the Closing Date, and that all conditions precedent to Closing to
be performed by Buyer shall have been performed.
7.4 No Proceeding or Litigation. There shall not be
threatened, instituted or pending any suit, action,
investigation, inquiry or other proceeding by or before any court
or governmental or other regulatory or administrative agency or
commission requesting an order, judgment or decree which
restrains or prohibits the consummation of the transactions
contemplated hereby.
7.5 No Injunction. On the Closing Date there shall be no
effective injunction, writ, preliminary restraining order or an
order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of
them not be consummated as so provided.
7.6 Opinion of Buyer's Counsel. Seller shall have received
an opinion from the Rose Law Firm, P.A., counsel to Buyer, dated
the Closing Date, in substantially the form of Exhibit 7.6
hereto.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of Buyer and Seller,
(b) by Buyer, if it so elects pursuant to clause (a)(ii) of
Section 5.10; or
(c) by Buyer or Seller at any time after September 30,
1995.
8.2 Procedure Upon Termination. In the event of
termination pursuant to Section 8.1 hereof, written notice
thereof shall forthwith be given by the terminating Party to the
other Party or Parties and the transactions contemplated by this
Agreement shall be terminated, without further action by either
Party or Parties. If the transactions contemplated by this
Agreement are terminated as provided herein:
(a) Each Party shall return all documents, work papers, and
other material of any other Party relating to the transactions
contemplated hereby, whether so obtained before or after the
execution hereof, to the Party furnishing the same; the Parties
agree that they shall, in addition, keep all such information
confidential and shall not disclose or allow disclosure to others
of any portion of such information unless such disclosure is
required by law;
(b) Notwithstanding any other provision of this
Agreement or any other document, neither Capital, Seller nor any
other person shall have any further rights or remedies against
Buyer, or any of its partners, Affiliates, shareholders,
officers, directors or employees;
(c) Notwithstanding any other provision of this
Agreement or any other document, neither Buyer nor any other
person shall have any further rights or remedies against Capital
or Seller, or any of their Affiliates, officers, directors or
employees; and
(d) such termination shall not in any way limit or
restrict the rights and remedies of any Party hereto against any
other Party which has willfully or otherwise breached any of the
agreements, covenants, representations, warranties or other
provisions of this Agreement prior to termination hereof.
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Representations. All representations,
warranties, covenants and agreements made by any Party to this
Agreement or pursuant hereto shall be true, complete and correct
as of the Execution Date and at and as of the Closing Date as
though such representations, warranties, covenants and agreements
were initially made at and as of the Closing Date. The
representations, warranties, covenants and agreements of the
Parties shall survive the Closing hereunder and any investigation
made by or on behalf of any Party hereto for three (3) years
after the Closing Date. The representations and warranties
contained herein shall not be affected by any investigation,
verification or examination by any Party hereto or by anyone on
behalf of any such Party, except as specifically set forth
herein.
9.2 Statements as Representations. All financial
statements contained herein and the financial statements referred
to in Section 3.6 hereof, the Exhibits and all officers'
certificates delivered pursuant to this Agreement shall be deemed
representations and warranties within the meaning of Sections
3.31, 6.3, 7.3 and Article 9 hereof.
9.3 Capital's and Seller's Agreement to Indemnify. Subject
to the terms and conditions of this Article 9, Capital and Seller
jointly and severally agree to indemnify, defend and hold
harmless Buyer and any partner, director, officer, subsidiary or
Affiliate of Buyer (collectively, the "Buyer Group"), at any time
after consummation of the Closing, from and against all demands,
claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without
limitation, interest, penalties and reasonable attorneys' fees
and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by Buyer Group or any
member thereof, directly or indirectly, by reason of or resulting
from (a) obligations or claims of or against Seller or any
Affiliate of Seller (whether absolute, accrued, contingent or
otherwise) existing as of the Closing Date or arising out of
facts, conditions or circumstances occurring at or prior to the
Closing Date whether or not such liabilities, obligations or
claims were known at the time of the Closing, other than the
Liabilities; (b) a breach of any representation, warranty or
agreement of Seller contained in or made pursuant to this
Agreement or in any Exhibit, certificate, instrument or other
document delivered pursuant hereto or in connection herewith; (c)
any actual or alleged pollution or threat to the environment
relating to the Business to the extent that such actual or
alleged pollution or threat to the environment is related in any
way to facts, conditions or circumstances that occurred or
existed on or prior to the Closing Date, including, but not
limited to, (i) Damages resulting from any noncompliance with any
Environmental Laws, (ii) any action to bring the Business into
such compliance or (iii) any other Damages imposed pursuant to
any Environmental Laws; (d) any claims received or liability
incurred for brokerage commissions or finder's fees arising
directly or indirectly by reason of any action taken or not taken
by Seller; or (e) any claim by any person caused by or arising
directly or indirectly from Seller's solicitation of the approval
of its shareholders, including but not limited to, the
preparation and transmittal of the Proxy Statement; provided,
however, that Seller and Capital will not have any such liability
to Buyer until the aggregate of all Damages incurred by Buyer
exceeds on a cumulative basis the sum of Fifty Thousand Dollars
($50,000), in which case all Damages relating to timely asserted
claims owing by Seller or Capital at such time to Buyer
(including without limitation such $50,000 threshold), and at any
time thereafter may be recovered. All such claims are referred
to collectively herein as the "Buyer Claims".
Buyer agrees that nothing in this Section 9.3 shall be
deemed to or shall be construed to prohibit the merger of Seller
into Capital following the Closing Date. Buyer further agrees
that, solely as to Seller's conveyance to Buyer of the Software,
the Seller Names, the Seller Logos and the Other Intangible
Assets, Seller shall have no obligation to indemnify or hold
Buyer harmless in accordance with the provisions of this
Paragraph 9.3 regarding any claim for infringement regarding the
ownership or use of such assets of Seller following the Closing
Date.
9.4 Buyer's Recourse. Capital and Seller hereby represent
and warrant to Buyer that following the Closing Date Capital and
Seller shall merge under the laws of Indiana, with Capital to be
the surviving entity, and that following such merger, Capital
will liquidate and cease its existence as an entity. Buyer on
the one hand and Capital and Seller on the other hereby agree, as
to Capital's and Seller's joint and several obligation to
indemnify and hold Buyer harmless, to the following:
(a) Capital and Seller hereby agree that for so long as
either or both shall maintain its existence, Buyer may seek
indemnification from either or both. Capital agrees that the
merger of Seller into Capital shall not prohibit, limit, abate,
waive or diminish in any way Capital's or Seller's joint and
several obligation to indemnify and hold Buyer harmless under and
pursuant to the terms and conditions of this Agreement.
(b) Buyer hereby consents to (i) the merger of Seller
into Capital, with Capital as the surviving entity, from and
after the Closing Date; Seller and Capital agree such merger
shall be subject to the terms and conditions of this Agreement,
and (ii) the subsequent liquidation of Capital and the cessation
of Capital's existence as a corporation, under and pursuant to
the laws of Indiana; Capital agrees such liquidation shall be
subject to the terms and conditions of this Agreement.
(c) Buyer hereby agrees that following the merger of
Seller into Capital, with Capital the surviving entity, and the
effective date of Capital's dissolution, Buyer shall look solely
to the monies and assets of Seller contained in the escrow
established pursuant to Sections 2.3(e) and 5.16 hereof as the
sole source of funds from which to satisfy any obligation of
Seller or Capital to indemnify and hold Buyer harmless in the
manner set forth herein, and Buyer agrees that Buyer shall not
seek recourse from any of Capital's shareholders or any member of
the Seller Group, as such term is defined below.
9.5 Buyer's Agreement to Indemnify. Subject to the terms
and conditions of this Article 9, Buyer agrees to indemnify,
defend and hold harmless Seller or any Affiliate of Seller (the
"Seller Group"), at any time after the Closing Date, from and
against all Damages asserted against, resulting to, imposed upon
or incurred by the Seller, directly or indirectly, by reason of
or resulting from (a) Buyer's failure to satisfy fully or to fund
fully the Liabilities, or (b) a breach of any representation,
warranty or agreement of Buyer contained in or made pursuant to
this Agreement or in any Exhibit, certificate, instrument or
other document delivered pursuant hereto or in connection
herewith (collectively, "Seller Claims"); provided, however, that
Buyer will not have any such liability to Seller or Capital until
the aggregate of all Damages incurred by Buyer exceeds on a
cumulative basis the sum of Fifty Thousand Dollars ($50,000), in
which case all Damages relating to timely asserted claims owing
by Buyer at such time to Seller or Capital (including without
limitation such $50,000 threshold), and at any time thereafter
may be recovered; and provided, further, however, that Buyer's
failure to deliver the Purchase Price to Seller at Closing or
failure to pay or otherwise satisfy fully the Liabilities in
accordance with the requirements of this Agreement shall not be
subject to the requirement set forth in this Section 9.5 hereof
that Damages suffered by Seller must exceed the sum of Fifty
Thousand Dollars ($50,000) before Seller may seek indemnification
from Buyer, and Buyer agrees that Seller may seek indemnification
from Buyer without regard to such limitation.
9.6 Conditions of Indemnification. The obligations and
liabilities of Seller and Buyer regarding Seller Claims and Buyer
Claims (collectively, "Claims") made by third parties shall be
subject to the following terms and conditions:
(a) The indemnified Party will give the indemnifying
Party prompt notice of any such Claim, and the indemnifying Party
shall have the right, upon the delivery of written notice thereof
to the other Party, to undertake the defense thereof by
representatives chosen by it;
(b) If the indemnifying Party, within fifteen (15)
business days after receipt notice of such Claim, fails to defend
the indemnified Party against which such Claim has been asserted,
the indemnified Party shall (upon further notice to the
indemnifying Party) have the right to undertake the defense,
compromise or settlement of such Claim on behalf of and for the
account and risk of the indemnifying Party subject to the right
of the indemnifying Party to assume the defense of such Claim at
any time prior to settlement, compromise or final determination
thereof; and
(c) Anything in this Section 9.5 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
Claim may affect the indemnified Party other than as a result of
money damages or other money payments, the indemnified Party
shall have the right, at its own cost and expense, to defend,
compromise or settle such Claim; provided, however, that if such
Claim is settled without the indemnifying Party's consent (which
consent shall not be unreasonably withheld), the indemnified
Party shall be deemed to have waived all rights hereunder against
the indemnifying Party for money damages arising out of such
Claims, and (ii) the indemnifying Party shall not, without the
written consent of the indemnified Party, settle or compromise
any Claim or consent to the entry of any judgment which does not
include as unconditional term thereof the giving by the claimant
or the plaintiff to the indemnified Party a release from all
liability in respect to such Claim.
9.7 Remedies Cumulative. Except as herein expressly
provided, the remedies provided herein shall be cumulative and
shall not preclude assertion by any Party hereto of any other
rights or the seeking of any other remedies against any other
Party hereto.
ARTICLE X
MISCELLANEOUS
10.1 Reformation and Severability. If any provision of
this Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof:
(a) in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this
Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be
legal, valid and enforceable; and
(b) the legality, validity and enforceability of the
remaining provisions hereof shall not in any way be affected or
impaired thereby.
10.2 Relief. Buyer on the one hand and Seller and Capital
on the other acknowledge and agree that in view of the uniqueness
of the business and the Transferred Assets damages at law would
be insufficient for breach of any of their respective covenants
in this Agreement. Accordingly, the Parties hereto agree that in
the event of a breach or threatened breach of any provisions of
this Agreement, Buyer or Seller, as appropriate, shall be
entitled to equitable relief in the form of an injunction or, if
applicable, specific performance, to prevent irreparable injury.
Nothing herein shall be construed as prohibiting any party hereto
from pursuing any remedies, including damages, for breach or
threatened breach of this Agreement.
10.3 Further Assurances. Each Party hereto shall, from
time to time after the Closing, at the request of any other Party
hereto and without further consideration, execute and deliver
such other instruments of conveyance, assignments, transfer and
assumption, and take such other actions, as such other Party may
reasonably request to more effectively consummate the
transactions contemplated by this Agreement.
10.4 Notices. Any notice or other communication required
or permitted to be given hereunder shall be sent by certified
mail, return receipt requested (or by the most nearly comparable
method if mailed from or to a location outside of the United
States), or by telex, telegram or facsimile transmissions, or
delivered by hand or by overnight or similar delivery service,
fees prepaid, to the Party to whom it is to be given at the
address of such Party set forth below or to such other address
for notice as such Party shall provide in accordance with the
terms of this section. Except as otherwise specifically provided
in this Agreement, any notice given by certified mail (or by such
comparable method) shall be deemed to have been given three
business days after the time of certification thereof (or
comparable act).
If to Buyer: Haygood, Inc.
1100 North University
Suite 1100
Little Rock, Arkansas 72207
Attn.: J. Dale Dawson
With a copy to: The Rose Law Firm
120 East Fourth Street
Little Rock, Arkansas 72201
Attn.: William H. Kennedy III
If to Seller or Capital: Capital Industries, Inc.
8900 Keystone Crossing
Suite 1150
Indianapolis, IN 46240
Attn: O.U. Mutz
With a copy to: Barnes & Thornburg
1313 Merchants Bank Building
11 South Meridian Street
Indianapolis, Indiana 46204
Attn.: Robert H. Reynolds
10.5 Headings. The headings of sections contained in this
Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of
this Agreement.
10.6 Waiver. The failure of any Party to insist, in any
one or more instances, upon performance of any of the terms,
covenants or conditions of this Agreement shall not be construed
as a waiver or a relinquishment of any right or claim granted or
arising hereunder or of the future performance of any such term,
covenant, or condition, and such failure shall in no way affect
the validity of this Agreement or the rights and obligations of
the Parties hereto.
10.7 LAW GOVERNING. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS RULES OR CHOICE OF
LAWS RULES THEREOF.
10.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the
same instrument notwithstanding that all Parties are not
signatories to each counterpart.
10.9 Assignability and Binding Effect. This Agreement
shall inure to the benefit of and be binding upon the Parties
hereto and their respective successors and permitted assigns.
This Agreement and the rights and obligations hereunder may not
be assigned by Seller, except that after the Closing Date Seller
and Capital may assign their respective rights and obligations
under this Agreement and the Subsidiary Agreements to any trustee
of a liquidating trust or other duly authorized agent in
connection with the contemplated merger of Seller and dissolution
of Capital. In such event, such trust or agent shall agree in
writing, in form, scope and substance reasonably satisfactory to
Buyer, to be bound by the terms and conditions of this Agreement.
Buyer may assign this Agreement and the rights and obligations
hereunder to any subsidiary of or Affiliate of Buyer provided
Buyer shall remain a Party to this Agreement.
10.10 Amendments. This Agreement may not be modified,
amended or supplemented except by an agreement in writing signed
by all of the Parties thereto.
10.11 Third Parties. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any
person other than the Parties hereto and their successors or
permitted assigns, any rights or remedies under or by reason of
this Agreement.
10.12 Number and Gender of Words. When the context so
requires in this Agreement, words of gender shall include either
or both genders and the singular number shall include the plural.
10.13 Entire Agreement. This Agreement and the executed
documents, the forms of which are attached hereto as Exhibits or
referred to herein, together with the Exhibits hereto and
thereto, shall constitute the entire agreement between the
Parties hereto regarding the transactions contemplated hereby and
shall supersede all prior negotiations, understandings and
agreements, including the Letter of Intent, which is hereby
terminated; provided, however, that Buyer, Seller and Capital
hereby agree this Paragraph 10.13 shall not extend to the
provisions of a letter agreement regarding the payment of certain
expenses of the transactions contemplated hereby and the payment
of auditors' expenses dated July 6, 1995.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed as of the date first above written.
CAPITAL INDUSTRIES, INC.
By: /s/ O. U. Mutz
----------------------------
--
Name: O. U. Mutz
Title: Chairman
TRUCKPRO PARTS & SERVICE, INC.
By: /s/ O. U. Mutz
--------------------------
Name: O. U. Mutz
Title: Chairman
HAYGOOD LIMITED PARTNERSHIP,
HAYGOOD, INC., an Arkansas
corporation,
General Partner
By: /s/ J. D. Dawson
----------------------------
Name: J. Dale Dawson
Title: President
CORAL THREE, an Arkansas
corporation, General Partner
By: /s/ Jon E. Jacoby
-----------------------------
Name: Jon E. Jacoby
Title: President
DAWSON CAPITAL CORPORATION, an
Arkansas corporation,
General Partner
By: /s/ J. D. Dawson
-----------------------------
Name: J. Dale Dawson
Title: President