EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
SYNALLOY CORPORATION
AND
RITE INDUSTRIES, INC.
July 22, 2003
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 22nd day of July,
2003, between RITE INDUSTRIES, INC., a corporation organized and existing under
the laws of the state of Delaware (hereinafter sometimes referred to as "Rite"),
SYNALLOY CORPORATION, a corporation organized and existing under the laws of the
state of Delaware (hereinafter sometimes referred to as "Purchaser").
WITNESSETH:
WHEREAS, Rite is indebted to Congress Financial Corporation (Southern),
a corporation organized and existing under the laws of the state of Georgia
(hereinafter sometimes referred to as "Congress") in the approximate amount of
$4,200,000 and Rite is in default in the payment of such obligations and other
terms and conditions of the Loan and Security Agreement between Rite and
Congress dated December 31, 1999, as amended (the "Loan Agreement"); and
WHEREAS, Congress has a first priority security interest in the
equipment, accounts receivable, inventory and other assets and properties of
Rite and its Affiliate, GCS Liquidation, Corp. (the "Collateral") pursuant to
the Loan Agreement and the other agreements, documents, and instruments executed
and/or delivered in connection therewith (collectively, together with the Loan
Agreement, the "Financing Agreements"); and
WHEREAS, Rite desires to sell and Purchaser desires to purchase certain
assets of Rite which have been pledged to Congress as Collateral, on the terms
set forth herein; and
WHEREAS, Congress shall, in accordance with the terms hereof, release
its lien on the Collateral sold pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties and covenants hereinafter set forth, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings
unless the context otherwise clearly requires:
1.1 "Affiliate" means, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, such Person. For purposes of this definition, the term "control"
(including, without limitation, the correlative terms "controlling", "controlled
by" and "under common control with") means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person through the ownership of voting securities or by contract.
1.2 "Agreement" shall mean this Asset Purchase Agreement.
1.3 "Applicable Law" shall mean all applicable federal, state, local,
municipal, foreign, international and multinational laws, and other
administrative orders, constitutions, laws, ordinances, principles of common
law, regulations, statutes and treaties.
1.4 "Assumption Notice" shall have the meaning assigned to such term in
Section 8.4(a).
1.5 "Closing" shall mean the consummation of the transactions provided
for in this Agreement except for the purchase of the Surplus Assets.
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1.6 "Closing Date" shall have the meaning assigned to such term in
Section 7.1.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "Consent" shall mean any approval, consent, ratification, waiver,
or other authorization from or by any Person (including, without limitation, any
Governmental Authorization).
1.9 "Contemplated Transactions" shall mean all of the transactions
contemplated by this Agreement.
1.10 "Damages" shall have the meaning assigned to such term in Section
8.2.
1.11 "Direct Claim" shall have the meaning assigned to such term in
Section 8.5.
1.12 "Escrow Agent" shall mean Haynsworth Sinkler Boyd, PA, its
successors and assigns.
1.13 "Escrow Agreement" shall have the meaning assigned to such term in
Section 2.2.
1.14 "GAAP" shall mean the then current accounting principles
recommended by the American Institute of Certified Public Accountants, or in the
event not covered by recommendations, principles having general acceptance among
certified public accountants at the particular time.
1.15 "Governmental Entity" shall mean any federal, state, local,
foreign or other governmental or administrative authority, agency, entity, body,
court or tribunal.
1.16 "Governmental Authorization" means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Entity or pursuant to
any legal requirement.
1.17 "Indemnifiable Loss" shall mean any item or matter eligible for
indemnification pursuant to Sections 8.2 or 8.3, as applicable, hereunder,
whether or not indemnification is sought.
1.18 "Indemnifying Party" shall have the meaning assigned to such term
in Section 8.3(a).
1.19 "Indemnitee" shall have the meaning assigned to such term in
Section 8.5(a).
1.20 "Indemnity Response Period" shall have the meaning assigned to
such term in Section 8.3.2.
1.21 "Organizational Documents" means (a) the articles or certificate
of incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any certificate or statement of partnership of a
general partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) the articles or certificate
of organization of a limited liability company and the operating agreement or
limited liability company agreement of a limited liability company; (e) any
charter or similar document adopted or filed in connection with the creation,
formation or organization of a Person; and (f) any amendment to any of the
foregoing.
1.22 "Person" shall mean any individual, corporation (including,
without limitation, any non-profit corporation), general or limited partnership,
limited liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Entity.
1.23 "Purchase Price" shall have the meaning assigned to such term in
Section 2.2.
1.24 "Purchaser Indemnified Persons" shall have the meaning assigned to
such term in Section 8.3.
1.25 "Representative" means, with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including, without limitation, legal counsel, accountants, and
financial advisors.
1.26 "Rite Indemnified Persons" shall have the meaning assigned to such
term in Section 8.2.
1.27 "Stated Price" shall mean the lower of cost or market value of
Inventory on the books and records of Rite computed under GAAP.
1.28 "Surplus Assets" shall have the meaning assigned to such term in
Section 2.1.
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1.29 "Taxes" means all taxes (including, without limitation, income,
corporation, capital, sales, use, withholding, franchise, customs duties,
profits, gross receipts, excise, property, stamp, transfer, water, business, and
goods and services taxes), imposts, duties, levies, deductions, withholdings,
charges, assessments, reassessments or fees of any nature (including, without
limitation, interest, penalties and additions) that are imposed by any relevant
taxing authority; and "Tax" shall mean any one of them.
1.30 "Third Party Claim" shall have the meaning assigned to such term
in Section 8.4(a).
1.31 "Third Party Claim Notice" shall have the meaning assigned to such
term in Section 8.4(a).
ARTICLE II
COVENANTS AND UNDERTAKINGS
2.1 Purchase of Surplus and Idle Assets. On the date hereof, Purchaser
shall purchase from Rite and Rite shall sell to Purchaser certain surplus and
idle production and laboratory equipment as listed on Schedule 2.1A (the
"Surplus Assets"). The purchase price for the Surplus Assets shall be $35,000
and shall be paid by certified check delivered to Rite's blocked account
maintained at Branch Banking and Trust Company pursuant to the account
information shown on Schedule 2.1B ("Rite's Account").
2.2 Purchase of Assets. At Closing, Purchaser shall purchase from Rite
its customer list and certain remaining production and laboratory equipment
owned by Rite as designated by Purchaser prior to Closing and required to
maintain the business currently conducted by Rite (the "Assets"). The purchase
price for the Assets shall be $165,000 (the "Purchase Price") payable by wire
transfer to the Escrow Agent pursuant to the escrow agreement in the form of
Exhibit 2.2 (the "Escrow Agreement").
2.3 Accounts Receivable. Purchaser is not purchasing Rite's accounts
receivable. Accordingly, after Closing, Purchaser will forward any collections
of Rite's accounts receivable in existence at Closing (the "Accounts
Receivable") to Rite's Account. within three (3) business days of their receipt.
All payments from a customer will be allocated to the oldest invoice first,
unless such customer designates a different allocation; provided, however, that
in the event of any discrepancies with, or lack of, such designation, either
Rite or Purchaser may contact such customer to seek further clarification with
respect to the proper designation or allocation for such payment. Title to the
Accounts Receivable shall remain with Rite, subject to any security interest by
Congress.
2.4 Inventory. Purchaser shall use its reasonable commercial efforts,
consistent with its practices with its own inventory, to purchase for use or
resale Rite's salable inventory listed on Schedule 2.4 ("Inventory") and shall
not purchase the items in Inventory from an outside supplier prior to purchasing
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those items from Rite. On the execution of this Agreement, Rite has the usable
and saleable inventory in the quantities and at the Stated Prices listed on
Schedule 2.4. Title to the Inventory shall remain in the name of Rite until
purchased under this Agreement. Upon the sale of the Inventory, Purchaser shall
convey title to the Inventory to Purchaser who shall immediately pay Rite the
Stated Price with respect to any item of Inventory sold. Except as provided
herein, Purchaser shall pay all of the costs of maintaining and selling the
Inventory following the Closing, including the costs associated with monitoring
the Inventory flow and providing reasonable reports concerning the Inventory to
Congress. Congress shall have the right to review such reports to determine the
accuracy thereof during regular business hours on a reasonable basis. For sixty
(60) days after Closing, Purchaser shall have the exclusive right to purchase
the Inventory and Rite will not sell such Inventory to any other party.
Beginning after such sixty (60) day period if Purchaser has not purchased at
least $1,400,000 of the Inventory, Rite or Congress shall be permitted to market
the unsold Inventory to potential buyers. Purchaser's obligations under this
Section 2.4 shall terminate in the event Rite (i) makes a general assignment for
the benefit of creditors or to an agent authorized to liquidate any substantial
amount of its assets; or (ii) becomes the subject of an "order for relief"
within the meaning of the United States Bankruptcy Code; or (iii) files a
petition in bankruptcy, or for reorganization, or to effect a plan or other
arrangement with creditors; or (iv) files an answer to a creditor's petition,
admitting the material allegations thereof, for an adjudication of bankruptcy or
for reorganization or to effect a plan or other arrangement with creditors; and
Purchaser is denied access to the Inventory, Rite's plants or the warehouse
where the Inventory is located. Until the Inventory is either sold to Purchaser
or to a bona fide third party, such Inventory shall remain the property of Rite
and subject to the lien of Congress. After title to the Inventory transfers to
Purchaser or a bona fide third party, the lien of Congress will attach to the
proceeds of such sale and the Inventory shall be sold free and clear of
Congress' lien. Purchaser's obligation to purchase Inventory shall terminate six
(6) months after Closing. Rite will be responsible for the disposal of any
Inventory not sold whether located at the High Point Plant or at the Spartanburg
warehouse.
2.5 Excluded Liabilities. Purchaser shall not assume any liabilities of
Rite or Congress including, without limitation, any severance or other costs
pertaining to employees of Rite, the High Point Plant (as defined below) closure
costs, legal expenses, loan costs or Receiver expenses.
2.6 Closure of High Point Plant. Upon the closure of Rite's High Point,
North Carolina plant (the "High Point Plant"), Purchaser will assist Rite, at
Rite's expense, in moving the remaining Inventory that Purchaser determines has
potential to be sold to a warehouse in Spartanburg, South Carolina and will
manage such Inventory in a manner acceptable to Rite and Congress until its
final disposition. The Inventory owned by Rite will be kept separate from any
Inventory owned by Purchaser or any other person, shall be labeled as property
of Rite and, at the request of Congress, Purchaser shall authorize the filing of
UCC-1 financing statements by Congress designating Purchaser as consignee, Rite
as consignor and Congress as assignor of consignor's rights with respect to such
Inventory.
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2.7 Interim Period After Closing. During a transition period after
Closing, not to extend past October 31, 2003, Rite shall blend and liquify
inventory for Purchaser at the High Point Plant at a charge equal to $25,000 per
month plus the actual expenses incurred by Rite, during such period in the
amount of the expenses and subject to the limitations set forth on the budget,
including the list of assumptions included in such budget attached as Schedule
2.7 (the "Budget"). Rite shall perform such tolling services in a workmanlike
manner. Such charges shall be circulated each Friday and payable on the
following Monday. Purchaser may terminate its obligations under this Section 2.7
immediately upon written notice to Rite if Rite is not performing such tolling
services or Rite is not paying its current bills as they come due. No rent or
building expense, legal, professional or receiver expense nor expenses related
to the debt to Congress from Rite shall be included in such expenses. Prior to
Closing, Rite shall provide written assurance from the landlord of the High
Point Plant that such landlord will permit Rite to remain on the premises and
operate its business on such premises until November 15, 2003 so long as the
rent is paid for the time of such occupancy. In addition, Rite shall deliver a
waiver by the landlord of the High Point Plant in favor of Purchaser's lender
covering any personal property of Purchaser at the High Point Plant.
2.8 Conduct of the Business of the Company Prior to Closing. Except
with the consent in writing of Purchaser or as provided otherwise in this
Agreement, Rite covenants that, between the date of this Agreement and the
Closing Date, the business of Rite (the "Business") will be conducted in the
ordinary course consistent with its operations during the thirty (30) days
immediately preceding the date hereof, and Rite will: (a) not incur any expenses
not necessary for the continued operation of the Business until Closing; (b) use
its best efforts to preserve the Business intact and to preserve the goodwill of
customers and others having material business relations with Rite; (c) maintain
the Assets in all material respects in the same working order and condition as
such Assets are in as of the date of this Agreement, reasonable wear and tear
excepted, and not liquidate the Assets to cash except in the ordinary course of
business or as otherwise provided in this Agreement; and (d) keep in force at no
less than their present limits all existing bonds and policies of insurance
insuring the assets or the business of Rite.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF RITE
Rite represents and warrants to Purchaser as follows:
3.1 Authority and Status. Rite has the power, capacity and authority to
execute and deliver this Agreement, to perform hereunder, and to consummate the
transactions contemplated hereby. This Agreement and each and every agreement,
document and instrument to be executed, delivered and performed by Rite in
connection herewith, constitute or will, when executed and delivered, constitute
the valid and legally binding obligations of Rite, enforceable against Rite in
accordance with their respective terms, except as enforceability may be limited
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by applicable equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally.
3.2 Agreement Does Not Violate Other Instruments; Consents. The
execution and delivery of this Agreement and each and every agreement, document
and instrument to be executed, delivered and performed by Rite does not, and the
consummation of the transactions contemplated hereby will not, violate or
constitute an occurrence of default under any provision of, or conflict with, or
result in acceleration of any obligation under, or give rise to a right by any
party to terminate its obligations under, any mortgage, deed of trust,
conveyance to secure debt, note, loan, lease, agreement, instrument, or any
order, judgment, decree or other arrangement to which Rite is a party or is
bound and that is material to Rite's business or that materially affects the
Assets, the Surplus Assets or the Inventory other than pursuant to agreements
with Congress and the High Point Plant landlord. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by Rite in connection with the
execution and delivery by Rite of this Agreement or any of the agreements,
certificates or other documents delivered or to be delivered on or after the
date hereof and at or prior to the Closing in connection with the transactions
contemplated hereby to which Rite is or will be a party or the consummation by
it of the transactions contemplated hereby and thereby to be consummated by it.
3.3 Assets and Inventory. Rite is the record owner of, and has good,
valid and marketable title to, the Surplus Assets, the Assets and Inventory.
Rite hereby delivers to Purchaser good, valid and marketable title to the
Surplus Assets free and clear of all liens, security interests, claims, options,
charges, pledges and encumbrances of any kind whatsoever including but not
limited to claims asserted pursuant to 11 USC ss. 105 or ss. 541 et. seq. or any
state fraudulent conveyance statutes upon receipt as provided in Section 2.1 of
payment in immediately available funds of the purchase price for the Surplus
Assets. At the Closing, Rite will deliver to Purchaser, good, valid and
marketable title to the Assets free and clear of all liens, security interests,
claims, options, charges, pledges and encumbrances of any kind whatsoever
including but not limited to claims asserted pursuant to 11 USC ss. 105 or ss.
541 et. seq. or any state fraudulent conveyance statutes upon receipt as
provided on Section 2.2 of payment in immediately available funds of the
purchase price for the Assets. At the time sold by Purchaser, Rite will deliver
to Purchaser, good, valid and marketable title to the Inventory free and clear
of all liens, security interests, claims, options, charges, pledges and
encumbrances of any kind whatsoever including but not limited to claims asserted
pursuant to 11 USC ss. 105 or ss. 541 et. seq. or any state fraudulent
conveyance statutes upon receipt as provided on Section 2.4 of payment in
immediately available funds of the purchase price for the Inventory. Rite
represents that Schedule 2.4 accurately reflects the Stated Cost of the
Inventory. The Surplus Assets, the Assets and Inventory are being sold "AS IS,
WHERE IS." EXCEPT AS PROVIDED HEREIN, RITE MAKES NO REPRESENTATION OR WARRANTY
CONCERNING THE SURPLUS ASSETS, THE ASSETS OR INVENTORY, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE,
MERCHANTABILITY OR OTHERWISE, REGARDING THE SURPLUS, ASSETS, THE ASSETS OR
INVENTORY.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Rite as follows:
4.1 Power and Authority. Purchaser has the power, capacity and
authority to execute and deliver this Agreement, to perform hereunder, and to
consummate the transactions contemplated hereby. This Agreement, and each and
every other agreement, document and instrument to be executed, delivered and
performed by Purchaser in connection herewith, constitutes the valid and legally
binding obligation of Purchaser enforceable against him in accordance with their
respective terms, except as enforceability may be limited by applicable
equitable principles, or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws from time to time in effect affecting the enforcement of
creditors' rights generally.
4.2 Agreement Does Not Violate Other Instruments; Consents. The
execution and delivery of this Agreement and each and every agreement, document
and instrument to be executed and delivered in connection herewith by Purchaser
does not violate or constitute an occurrence of default under any provision of,
or conflict with, result in acceleration of any obligation under, or give rise
to a right by any party to terminate its obligations under, any mortgage, deed
of trust, conveyance to secure debt, note, loan, lien, lease, agreement,
instrument, or any order, judgment, decree or other arrangement to which
Purchaser is a party or is bound or by which its assets are affected which
violation, default, conflict, acceleration or termination, either singularly or
in the aggregate, would have a material adverse effect on the ability of
Purchaser to perform under this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required to be obtained or made by or with respect to Purchaser in
connection with the execution and delivery by Purchaser of this Agreement or any
of the agreements, certificates or other documents delivered or to be delivered
on or after the date hereof and at or prior to Closing in connection with the
transactions contemplated hereby to which Purchaser is a party or the
consummation of the transactions contemplated hereby.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF RITE
TO CLOSE
The obligations of Rite to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each and every one of the following conditions.
5.1 Covenants of Purchaser. Purchaser shall have duly performed all of
the covenants, acts and undertakings to be performed by it on or prior to the
Closing Date and Purchaser shall deliver to Rite a certificate dated as of the
Closing Date certifying to the fulfillment of this condition and the condition
set forth in Section 5.3.
5.2 No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, this Agreement or the consummation of the
Contemplated Transactions.
5.3 Representations True at Closing. The representations and warranties
made by Purchaser to Rite in this Agreement or any document or instrument
delivered to Rite hereunder on the Closing Date shall be true and correct on the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of such time.
5.4 Documents to be Delivered. Purchaser shall have obtained for
delivery at Closing the documents set forth in Section 7.2.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER TO CLOSE
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each and every one of the following conditions.
6.1 Covenants of Rite. Rite shall have duly performed all of the
covenants, acts and undertakings to be performed by them on or prior to the
Closing Date, and Rite shall deliver to Purchaser certificates dated as of the
Closing Date certifying to the fulfillment of this condition and the condition
set forth in Section 6.3.
6.2 No Injunction, Etc. No action, proceeding, investigation,
regulation or legislation shall have been instituted, before any court,
governmental agency or legislative body to enjoin, restrain, prohibit, or obtain
substantial damages in respect of, this Agreement or the consummation of the
Contemplated Transactions.
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6.3 Representations True at Closing. The representations and warranties
made by Rite to Purchaser in this Agreement hereto or any document or instrument
delivered to Purchaser hereunder or on the Closing Date shall be true and
correct on the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of such time.
6.4 Document Delivery. Purchaser shall have obtained for delivery at
Closing the documents set forth in Section 7.3.
6.5 Northern Business. Purchaser shall have obtained assurances from
Howard Printz, Gordon Hoffmann and Chris Arnold and/or Dimeling, Schreiber &
Park that they will provide services or assistance to a newly formed entity to
receive an assignment of this Agreement under Section 10.11 on terms reasonably
acceptable to such persons and Purchaser (which may include an equity
participation by those persons in such entity) and an acceptable leasing
arrangement for Rite's Clifton, New Jersey facility.
6.6 Financing. Purchaser shall have obtained the approvals from its
primary lender to complete the Contemplated Transactions as such primary lender
shall determine to be reasonably necessary.
6.7 Congress Funding. Congress shall commit to provide adequate funding
to Rite to fund Rite's receivership as contemplated by Section 6.9 and to fund
Rite's obligations under the budget attached as Schedule 6.7 (the "Budget")
subject to and in accordance with the order appointing the Receiver.
6.8 Receiver. Jeff Granger of Focus Management, Inc. or such other
person as may be acceptable to Rite, Purchaser and Congress shall have been
appointed as a receiver (the "Receiver") pursuant to applicable North Carolina
law, received approval of this Agreement on behalf of Rite, notified the
creditors of Rite and receive court approval for the transactions contemplated
under this Agreement including the approval of a procedure and deadline for
creditors of Rite to object to the transactions contemplated in this Agreement.
6.9 Release of Employees. Rite and its Affiliates shall have released
Howard L. Printz, and upon the written request of Purchaser, all other employees
of Rite that Purchaser wishes to hire, from their employment agreements
including any obligations not to compete against Rite or its Affiliates.
ARTICLE VII
CLOSING
7.1 Time and Place of Closing. The Closing shall be held at the offices
of Haynsworth Sinkler Boyd P.A., Columbia, South Carolina commencing at 10:00
a.m., eastern time, on a date to be mutually selected by the Parties within ten
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days of the satisfaction of the conditions in Articles V and VI (the "Closing
Date") unless another place or date is agreed to in writing by the Parties.
7.2 Rite Performance at Closing. At the Closing, Rite shall deliver to
Purchaser the following:
7.2.1 such good and sufficient bills of sale, assignments
(including the required consents), deeds and other good and sufficient
instruments of sale, conveyance, transfer and assignment as are reasonably
necessary in order to effectively vest in Purchaser good title to the Assets
free and clear of all liens, security interests and encumbrances of whatever
nature and termination statements for all liens on the Assets;
7.2.2 certificate described in Section 5.1; and
7.2.3 consent by Congress to the transactions contemplated
herein including the sale in accordance with the terms hereof the Assets free
and clear of any liens.
7.3 Performance by Purchaser at Closing. At the Closing, Purchaser,
shall deliver to Rite the following:
7.3.1 The Purchase Price under Section 2.2; and
7.3.2 Certificate described in Section 6.1.
ARTICLE VIII
INDEMNIFICATION; REMEDIES
8.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement by Purchaser
and Rite are material and have been relied on by the other party hereto. All
representations, warranties, covenants and agreements set forth in this
Agreement and the remedies of Purchaser and Rite with respect thereto, shall
survive the Closing Date and shall not merge in the performance of any
obligation by any party hereto.
8.2 Indemnification and Payment of Damages by Purchaser. Purchaser will
indemnify and hold Rite and their Affiliates (collectively, the "Rite
Indemnified Persons") harmless for, and will pay to the Rite Indemnified
Persons, the amount of, any loss, liability, claim, damage (including, without
limitation, actual, consequential, multiple, exemplary, punitive and incidental
damage), fine, penalty or expenses (collectively, "Damages"), incurred by the
Rite Indemnified Persons arising, directly or indirectly, from or in connection
with:
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(a) any breach of any representation or warranty made by
Purchaser in this Agreement or in any other certificate or document delivered by
Purchaser pursuant to this Agreement; and
(b) any breach by Purchaser of any covenant or obligation of
Purchaser in this Agreement or in other certificate or document delivered by
pursuant to this Agreement.
8.3 Indemnification and Payment of Damages by Rite. Rite will indemnify
and hold Purchaser and its Affiliates (collectively, the "Purchaser Indemnified
Persons") harmless for, and will pay to the Purchaser Indemnified Persons, the
amount of any Damages incurred by the Purchaser Indemnified Persons arising,
directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by Rite
in this Agreement, or any other certificate or document delivered by Rite
pursuant to this Agreement; and
(b) any breach by Rite of any covenant or obligation of Rite
in this Agreement or in other certificate or document delivered by Purchaser
pursuant to this Agreement.
8.4 Procedure for Indemnification--Third Party Claims.
(a) If any Purchaser Indemnified Person or Rite Indemnified
Person entitled to indemnification under this Agreement (an "Indemnitee")
receives notice of the commencement of any Proceeding by any Person who is not a
party to this Agreement or an Affiliate of such a party (a "Third Party Claim")
against such Indemnitee for which a party is obligated to provide
indemnification under this Agreement (an "Indemnifying Party"), the Indemnitee
will give such Indemnifying Party reasonably prompt written notice thereof (the
"Third Party Claim Notice"), but the failure to so notify Indemnifying Party
shall not relieve Indemnifying Party of its indemnity obligations with respect
to such Third Party Claim unless the Indemnifying Party establishes that the
defense of such Third Party Claim is actually prejudiced by the Indemnitee's
failure to give such notice. The Third Party Claim Notice will describe the
Third Party Claim in reasonable detail and will indicate the estimated amount,
if reasonably practicable, of the Damages that have been or may be sustained by
the Indemnitee. Except as otherwise set forth in this Section 8.4, the
Indemnifying Party will have the right to assume the defense of any Third Party
Claim at the Indemnifying Party's own expense and with counsel selected by the
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Indemnifying Party (which counsel shall be reasonably satisfactory to the
Indemnitee) by giving to the Indemnitee written notice in which the Indemnifying
Party acknowledges its responsibility to indemnify the Indemnitee (the
"Assumption Notice") no later than thirty calendar days after receipt of the
Third Party Claim Notice. The Indemnifying Party shall not be entitled to assume
the defense of, and the Indemnitee shall be entitled to have sole control over,
the defense or settlement of any Third Party Claim to the extent that such claim
seeks an order, injunction or other equitable relief against the Indemnitee
which, if successful, would be reasonably likely to materially interfere with
the business, operations, assets, or financial condition of the Indemnitee. In
the event the Indemnifying Party assumes the defense of a Third Party Claim, the
Indemnitee will cooperate in good faith with the Indemnifying Party in such
defense and will have the right to participate in the defense of any Third Party
Claim assisted by counsel of its own choosing and at its own expense.
Notwithstanding the foregoing, if the named parties to the Third Party Claim
(including, without limitation, any impleaded parties) include both the
Indemnifying Party and the Indemnitee or if the Indemnifying Party proposes that
the same counsel represent both the Indemnitee and the Indemnifying Party and
the Indemnitee in good faith determines that representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them, then the Indemnitee shall have the right to retain its
own counsel at the cost and expense of the Indemnifying Party. If the Indemnitee
does not receive the Assumption Notice within the thirty calendar day period set
forth above or if the Indemnifying Party is not entitled, as provided in this
Section 8.4(a), to assume the defense of the Third Party Claim, the Indemnitee
shall have sole control over the defense and settlement of the Third Party
Claim, and the Indemnifying Party will be liable for all Damages paid or
incurred in connection therewith to the extent the Indemnifying Party is
obligated to provide indemnification under this Agreement.
(b) If the Indemnifying Party assumes the defense of the Third
Party Claim, the Indemnifying Party shall not compromise or settle such claim
without the Indemnitee's consent (which will not be unreasonably withheld)
unless (i) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnitee, (ii) the sole relief
provided is monetary damages that are paid in full by the Indemnifying Party and
(iii) the settlement includes as an unconditional term a complete release of
each Indemnitee from all liability in respect of such claim.
(c) Each Indemnifying Party who assumes the defense of a Third
Party Claim shall use reasonable efforts to diligently defend such claim.
8.5 Procedure for Indemnification--Direct Claims. Any claim by an
Indemnitee for indemnification under this Agreement other than indemnification
against a Third Party Claim (a "Direct Claim") will be asserted by the
Indemnitee by giving the Indemnifying Party prompt written notice thereof, and
the Indemnifying Party will have a period of thirty calendar days within which
to respond in writing to such Direct Claim. If the Indemnifying Party does not
respond within such thirty calendar day period, the Indemnifying Party will be
deemed to have rejected such claim, in which event the Indemnitee will be free
to pursue such remedies as may be available to the Indemnitee under this
Agreement or pursuant to law.
8.6 Alternative Remedy. If any creditor of Rite makes a claim against
the Purchaser or the Assets after Closing which Purchaser reasonably believes to
be valid, including but not limited to, claims under 11 U.S.C. ss. 105 or ss.
541 et. seq. or any state fraudulent conveyance statutes, Purchaser shall have
the option, as its exclusive remedy, of returning the Assets to Rite and shall
receive the full Purchase Price for the Assets from Rite as Damages under this
Article VIII.
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8.7 Exclusive Remedy. The sole and exclusive remedy of a Purchaser
Indemnified Person or a Rite Indemnified Person for any act or omission under
this Agreement shall be limited to the indemnification remedies expressly set
forth in this Article VIII and the parties hereto acknowledge and agree that
they shall have no remedies hereunder at law or in equity other than as
expressly set forth in this Article VIII.
8.8 Limitations. No claims for breaches of representations, warranties,
covenants or obligations may be brought after the first anniversary of the
Closing. Notwithstanding anything herein to the contrary, Rite shall have no
obligation to indemnify any Purchaser Indemnified Person for any amounts which
exceed $1,000,000.
ARTICLE IX
TERMINATION
9.1 Termination. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date (the "Agreement Termination Date").
9.1.1 by mutual consent of Purchaser and Rite;
9.1.2 by any party if the Closing shall not have occurred on
or before July 23, 2003;
9.1.3 by Rite in the event of any material breach by Purchaser
of any of Purchaser's agreements, covenants, representations or warranties
contained herein and the failure of Purchaser's to cure such breach within
fifteen (15) days after receipt of notice from Purchaser requesting such breach
to be cured; or,
9.1.4 by Purchaser in the event of any material breach by Rite
of any of Rite's agreements, covenants, representations or warranties contained
herein and the failure of Rite to cure such breach within seven days after
receipt of notice Purchaser requesting such breach to be cured.
9.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to Section 9.1 shall give notice of such termination to the
other party to this Agreement.
9.3 Effect of Termination. In the event this Agreement shall be
terminated pursuant to Section 9.1.1, each party shall pay all expenses incurred
by it in connection with this Agreement, and no party shall have any further
obligations or liability for any damages or expenses under this Agreement. In
the event of any other termination, all further obligations of the parties under
this Agreement (other than as provided in 10.10 below) shall be terminated
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without further liability of any party to the other, but each party shall retain
any and all rights incident to a breach by the other party of any covenant,
representation or warranty under this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices, requests, demands and other communications
shall be in writing and shall be delivered by hand or mailed by registered or
certified mail, return receipt requested, first class postage prepaid, or sent
by telecopy confirmed by a copy sent by the sender registered or certified mail,
first class postage prepaid, in each case, addressed as follows:
10.1.1 If to Rite :
c/o Dimeling, Schreiber and Park
1629 Locust Street
Philadelphia, PA 19103
Attn: Chris Arnold
Fax: (215) 546-9160
and to
Reed Smith, LLP
2500 One Liberty Place
Philadelphia, PA 19103
Attn: Lori L. Lasher
Fax: (215) 851-1420
and to
Congress Financial Corporation (Southern)
200 Galleria Parkway
Atlanta, Georgia 30339
Attn: Portfolio Manager
Fax (770) 956-8120
and to
Otterbourg, Steindler, Houston & Rosen, P.C.
230 Park Avenue
New York, New York 10169
Attn: Andrew Kramer
Fax (212) 628-6104
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10.1.2 If to Purchaser:
Synalloy Corporation
2155 West Croft Circle
Spartanburg, South Carolina 29302
Attn: President
Fax: (864) 596-1501
and to:
Haynsworth Sinkler Boyd, P.A.
1201 Main Street, Suite 2200
Columbia, South Carolina 29201
Attn: Randolph B. Epting, Esq.
Telecopier: (803) 765-1243
10.1.3 If delivered personally, the date on which a notice,
request, instruction or document is delivered shall be the date on which such
delivery is made and, if delivered by mail, the date on which such notice,
request, instruction or document is received shall be the date of delivery, and
in the case of telecopy, when the telecopy or the confirmed copy is received,
whichever is earlier. In the event any such notice, request, instruction or
document is mailed to a party in accordance with this Section 6.1 and is
returned to the sender as nondeliverable, then such notice, request, instruction
or document shall be deemed to have been delivered, or received on the fifth day
following the deposit of such notice, request, instruction, or document in the
United States mail.
10.1.4 Any party hereto may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section 10.1.
10.2 Brokers. The parties represent and warrant to each other that no
broker or finder has acted for him or any entity controlling, controlled by or
under common control with him in connection with this Agreement. Each party
releases, discharges and agrees to indemnify and hold harmless the other party
and the Company against any fee, loss or expense arising out of any claim by any
broker or finder employed or allegedly to have been employed by him or it.
10.3 Further Assurance. Each party covenants that at any time, and from
time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and purposes
of this Agreement.
10.4 Waiver. Any failure on the part of either party hereto to comply
with any of its obligations, agreements or conditions hereunder may be waived
only in writing by the other party hereto. No waiver of any provision of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
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10.5 Taxes and Expenses. Each party to this Agreement shall pay all of
its own expenses incurred by such applicable party in connection with the
authorization, preparation and execution of this Agreement and the Closing of
the Contemplated Transactions, including, without limitation of the generality
of the foregoing, all fees and expenses of counsel and accountants employed by
such applicable party.
10.6 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, executors, administrators, successors and assigns.
10.7 Headings. The section and other headings in this Agreement are
inserted solely as a matter of convenience and for reference, and are not a part
of this Agreement.
10.8 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by an agreement in
writing signed by the party against whom or which the enforcement of such
change, waiver, discharge or termination is sought.
10.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina without regard to
principles of conflicts of law.
10.10 Confidentiality. Each party hereto shall, and shall cause its
Affiliates to, and shall use reasonable commercial efforts to cause its
representatives to treat as confidential and not utilize in its respective
business or otherwise all information and documents concerning any other party
hereto or any of its Affiliates ("Confidential Information") furnished to it by
such other party or its Representatives in connection with this Agreement or the
transactions contemplated hereby and to Notwithstanding the foregoing, the
following will not constitute Confidential Information for purposes of this
Agreement: (i) information which was already in the possession of the disclosing
party or its Affiliate prior to the date hereof and which was not acquired or
obtained from any other party or its Affiliates, (ii) information which is
independently developed by the disclosing party or any Affiliate thereof without
access to the Confidential Information, (iii) information which is obtained or
was previously obtained by the disclosing party from a third Person who, insofar
as is known to the disclosing party or its Affiliate, is not prohibited from
transmitting the information to the other party or such Affiliate by a
contractual, legal or fiduciary obligation to the other party or any of its
Affiliates, and (iv) information which is or becomes generally available to the
public other than as a result of a disclosure by the disclosing party or any
Affiliate thereof or their agents or employees. If this Agreement is terminated
pursuant to Article IX hereof, each party hereto will not use any such
Confidential Information in competition with or in any manner to the detriment
of the other party, will not disclose any Confidential Information except as
17
required by court order or by law and will promptly return to the other party
Confidential Information delivered to such party or its Representatives, by or
on behalf of the other party.
10.11 Assignment. Purchaser may assign its rights under this Agreement
to an Affiliate. Except as otherwise expressly provided herein, no party to this
Agreement shall be entitled to assign or otherwise transfer any rights or
obligations under this Agreement without the written consent of all other
parties to this Agreement.
10.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.13 Pronouns. All pronouns used herein shall be deemed to refer to
the masculine, feminine or neuter gender as the context requires.
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IN WITNESS WHEREOF the parties hereto, intending to be legally bound,
have executed this Agreement as of the date first-above mentioned.
[SIGNATURES AND SCHEDULES OMITTED]
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FIRST AMENDMENT
TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") is entered into as of the ____
day of July, 2003, by and between SYNALLOY CORPORATION, a Delaware corporation
("Purchaser"), and RITE INDUSTRIES, INC., a Delaware corporation ("Rite").
STATEMENT OF PURPOSE
WHEREAS, Purchaser and Rite are party to that certain Asset Purchase
Agreement dated as of July 22, 2003 (the "Agreement"), whereby Purchaser agrees
to buy from Rite, and Rite agrees to sell to Purchaser, certain of Rite's
Surplus Assets (as defined in the Agreement); and
WHEREAS, Purchaser and Rite desire to amend certain provisions of the
Agreement as more particularly described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agree as follows:
1. Capitalized Terms. All capitalized, undefined terms used in this
Amendment shall have the meanings assigned thereto in the Agreement.
2. Amendment. Section 2.3 of the Agreement is hereby amended to read as
follows:
"Accounts Receivable. Purchaser is not purchasing Rite's accounts
receivable. Accordingly, after Closing, (a) Purchaser will forward any
collections of Rite's accounts receivable (the "Accounts Receivable")
to Rite's Account within three (3) business days of Purchaser's receipt
thereof, and (b) in the event Rite receives collections from the
payment of accounts receivable of Purchaser (collectively, the
"Purchaser Accounts Receivable"), Rite will forward any such
collections to deposit account number 2003207445010 at Wachovia Bank,
N.A. within three (3) business days of Rite's receipt thereof. All
payments from a customer will be allocated to the oldest invoice first,
unless such customer designates a different allocation; provided,
however, that in the event of any discrepancies with, or lack of, such
designation, either Rite or Purchaser may contact such customer to seek
further clarification with respect to the proper designation or
allocation for such payment. Title to the Accounts Receivable shall
remain with Rite, subject to any security interest by Congress. Title
to the Purchaser Accounts Receivable shall remain with Purchaser,
subject to any security interest of Wells Fargo Foothill, Inc., as
Purchaser's secured lender."
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3. Limited Amendment; Full Force and Effect. Except as expressly agreed
to herein, the Agreement shall continue to be and shall remain in full force and
effect. This Amendment shall not be deemed (a) to be a waiver, modification or
amendment of any other term or condition of the Agreement other than as
expressly provided herein, or (b) to prejudice any other right or rights which
either party may now have or may have in the future under or in connection with
the Agreement, as the same may be amended or modified from time to time.
4. Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with the laws of the State of North Carolina without
regard to the conflicts of law principles thereof.
5. Counterparts. This Amendment may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
[Signature Page Follows.]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment under
seal as of the date first written above.
[SIGNATURES OMITTED]
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