1
EXHIBIT 2.1
ALL EXHIBITS AND SCHEDULES IN THIS EXHIBIT 2.1 HAVE BEEN OMITTED. BIOCHEM
INTERNATIONAL INC. WILL FURNISH A COPY OF ANY EXHIBITS OR SCHEDULES TO THE
COMMISSION UPON REQUEST.
Page 5 of 31
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the 1st day
of July, 1998, by and between Anesco, Inc., a Kentucky corporation ("Seller"),
and SurgiVet, Inc., a Delaware corporation ("Purchaser").
RECITALS
A. Seller is engaged in the development, production and sale of veterinary
anesthesia equipment (the "Business"); and
B. Purchaser desires to purchase from Seller, and Seller desire to sell,
transfer and assign to Purchaser, substantially all of the assets of the
Business except Excluded Assets (as hereinafter defined), and Purchaser has
agreed to assume certain specified liabilities related to the Business, for the
Final Purchase Price (as hereinafter defined) and upon the terms and subject to
the conditions hereinafter set forth.
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF BUSINESS AND ASSETS
1.1 Assets Transferred. Seller will sell, assign and deliver to Purchaser
and Purchaser will acquire from Seller, at the Closing (as hereinafter
defined), substantially all of Seller's assets relating to and used in
connection with the Business (except for the Excluded Assets), and including,
without limitation, those assets described on Schedule 1.1 attached hereto
(collectively, the "Purchased Assets").
1.2 Excluded Assets. Seller will retain and not transfer the assets
described on Schedule 1.2 attached hereto (collectively, the "Excluded
Assets").
1.3 Transfer at Closing. At the Closing, Seller shall assign, transfer or
otherwise convey the Purchased Assets to Purchaser free and clear of all
liabilities, obligations, liens and encumbrances whatsoever.
1.4 Assumed Liabilities. At the Closing, the Purchaser shall assume, and
thereafter perform and fully satisfy, only the following described specific
liabilities and obligations of the Seller:
(a) Seller's obligation to manufacture and deliver to Abbott
Laboratories, Inc. [QUANTITY] [PRODUCT DESCRIPTION] pursuant to
[CONTRACT/PURCHASE ORDER] dated _________________, 199__, for which
Seller has been pre-paid and for which Purchaser will not seek
reimbursement from Seller.
2
Page 6 of 31
(b) the incremental amount of accounts payable in excess of
historical ordinary course levels (defined as the simple average of the
prior twelve (12) months' ending accounts payable balances) that are
incurred by Seller in obtaining the inventory necessary to permit
Purchaser to have available for shipment sufficient Products (as
hereinafter defined) during the period between the Closing Date (as
hereinafter defined) and the time when Purchaser begins production at
its Waukesha, Wisconsin facility (provided that such inventory shall not
be considered as Seller's property for purposes of computing any portion
of the Final Purchase Price due hereunder).
(c) Seller's liability for purchase of used Ohmeda vaporizers at
prices not exceeding Two Hundred Dollars ($200) per unit.
(d) Seller's royalty and other obligations owed to Dr. David S.
Hodgson under the terms of that certain Consulting Contract, dated
December 1, 1993.
(e) Seller's warranty service obligations for all Products
manufactured and sold by the Business.
ARTICLE II
CLOSING
2.1 Time and Place of Closing. The closing of the sale of the Purchased
Assets (the "Closing") shall take place at 10:00 a.m., local time, on the 1st
day of July, 1998, at ____________________________, or at such other time and
place as the parties may agree (the "Closing Date").
ARTICLE III
PURCHASE PRICE
3.1 Calculation and Payment of Preliminary Purchase Price.
(a) Preliminary Purchase Price. At Closing, in consideration of the
sale, assignment and delivery of the Purchased Assets by Seller to
Purchaser, Purchaser shall (i) pay to Seller an amount equal to Four
Million Dollars ($4,000,000) (the "Preliminary Purchase Price") less the
Escrow Funds (as defined below), and (ii) deposit the sum of Four Hundred
Thousand Dollars ($400,000) (the "Escrow Funds") with American National
Bank and Trust Company of Chicago to be held pursuant to the terms of an
Escrow Agreement in the form attached as Exhibit A hereto. The Escrow
Funds shall be used for (i) settlement of the Final Purchase Price as set
forth in Section 3.1(c), and (ii) payment of any amounts due under
Article XIV.
(b) Preparation of Balance Sheets. Seller and Purchaser acknowledge
that the Preliminary Purchase Price has been established with reference
to that certain unaudited balance sheet of Seller as of April 30, 1998
(the "Initial Balance Sheet"), a
3
Page 7 of 31
copy of which is attached hereto as Schedule 3.1(b). Immediately after
the Closing Date, Purchaser and Seller will jointly prepare a balance
sheet that reflects Seller's balance sheet as of the opening of business
on the Closing Date (the "Closing Balance Sheet"). The Closing Balance
Sheet will be completed no later than thirty (30) days following the
Closing Date. The Closing Balance Sheet will be prepared in accordance
with the same accounting procedures used in preparing the Initial Balance
Sheet. The amounts set forth on the Closing Balance Sheet will be the
basis for determination of the Final Purchase Price (as hereinafter
defined) with no further right of either party to object to the Final
Purchase Price. If Seller and Purchaser are unable to agree upon
completion of the Closing Balance Sheet, Seller and Purchaser will submit
such dispute to binding resolution before a nationally recognized firm of
independent auditors mutually acceptable to Seller and Purchaser whose
decision will be final and binding on the parties. The parties will
split equally the cost of any third party auditing firm as used
hereunder.
(c) Calculation of Final Purchase Price. Immediately after the
Closing Balance Sheet is finalized pursuant to Section 3.1(b) above, the
parties shall calculate the "Final Purchase Price." Such Final Purchase
Price shall be equal to the Preliminary Purchase Price diminished, on a
dollar-for-dollar basis, by the amount, if any, that the carrying amount
of the Purchased Assets reflected on the Closing Balance Sheet decreases
from the carrying amount of the Purchased Assets reflected on the Initial
Balance Sheet, by more than the sum of (x) One Hundred Thousand Dollars
($100,000) plus (y) five percent (5%) of the carrying amount of the
Purchased Assets reflected on the Initial Balance Sheet.
(d) Settlement Payments. In the event the Preliminary Purchase
Price exceeds the Final Purchase Price, the Purchaser and Seller shall
direct the Escrow Agent to pay the difference to the Purchaser, in
immediately available funds from the Escrow Funds, together with interest
at the rate earned on those Escrow Funds.
(e) Payment and Settlement Not Remedy for Breach. The provisions
provided in this Section 3.1 are intended to derive, and provide for
payment and settlement of, the Final Purchase Price assuming compliance
by both parties with the representations, warranties, covenants and
agreements contained in this Agreement. Any breach of a representation,
warranty, covenant or agreement shall be remedied by application of the
indemnification provisions set forth in Article XIV of this Agreement.
ARTICLE IV
ALLOCATION OF PURCHASE PRICE
4.1 Allocation of Purchase Price. The Final Purchase Price shall be
allocated by Purchaser, in accordance with generally accepted accounting
principles and applicable Internal Revenue Service guidelines, among the
Purchased Assets for all purposes, including the filing of all tax returns and
Internal Revenue Service Form 8594, which shall be prepared
4
Page 8 of 31
by Purchaser upon final determination of the Final Purchase Price and delivered
to Seller and thereupon incorporated into this Agreement as Schedule 4.1
hereto. The amount allocated to assets that result in ordinary income tax
treatment to the Seller, in excess of the carrying amount of those assets on
the Closing Balance Sheet, shall not exceed One Million Dollars ($1,000,000).
Seller and Purchaser covenant and agree that each will prepare its tax returns
employing the allocation made pursuant to Schedule 4.1 and will not take a
position in any tax proceeding or audit inconsistent with such allocation.
Each party will promptly notify the other if the Internal Revenue Service or
any other taxing authority proposes to challenge or revise such allocation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that:
5.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Kentucky. Seller
has all requisite power and authority to own, lease, license and operate its
properties and assets, including the Purchased Assets, and to conduct the
Business now owned, leased, licensed and operated by it. Seller is duly
qualified, licensed and in good standing in each jurisdiction where the nature
of its activities conducted in connection with the Business, or the character
of the properties owned, leased or operated by it in connection with the
Business, require such qualification or licensing.
5.2 Corporate Authorization, Certain Corporate Actions, No Conflicts.
Seller has all requisite power and authority to execute and deliver this
Agreement and all necessary corporate proceedings have been taken to authorize
the execution, delivery and performance by Seller of this Agreement and the
transactions described herein. This Agreement has been duly authorized,
executed and delivered by Seller, is the legal, valid and binding obligation of
Seller, and is enforceable as to Seller in accordance with its terms, except as
such validity, binding effect or enforcement may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally or by
equitable principles relating to the availability of remedies. Neither the
execution, delivery nor performance of this Agreement by Seller will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any provision of
Seller's certificate of incorporation, bylaws or any franchise, mortgage, deed
of trust, lease, license, agreement, understanding, law, rule or regulation or
any order, judgment, or decree to which the Seller is a party or by which the
Seller may be bound or affected.
5.3 Financial Information. The unaudited financial statements of Seller
for the fiscal years ended December 31, 1997 and December 31, 1996,
respectively, and the unaudited financial statements of Seller for the four (4)
month period ending April 30, 1998, complete copies of which have been provided
to Purchaser: (a) are true and correct in all respects, and (b) fairly present
in accordance with Generally Accepted Accounting Principles ("GAAP"),
consistently applied, (i) the consolidated financial position of Seller as of
said dates, and (ii) changes in financial position, stockholders' equity and
cash flows, and the
5
Page 9 of 31
results of operations for such fiscal years. The foregoing financial
statements are hereinafter referred to collectively as the "Historical
Financial Statements."
5.4 Operations of the Business; Adequacy of Purchased Assets. The
Business is operated and conducted only through Seller by its officers and
employees, and not through any direct or indirect subsidiary, affiliate, agent
or representative of Seller. The Purchased Assets and the Excluded Assets
comprise all the assets, properties and rights of every type and description
used in or necessary to the operation of the Business in the ordinary course.
No assets of Seller, other than Purchased Assets and Excluded Assets, are used
by the Business. All machinery and equipment constituting part of the
Purchased Assets are in good repair and working order, normal wear and tear
excepted.
5.5 Absence of Certain Changes or Events. Since April 30, 1998, there has
not been any Material Adverse Change in the Condition of the Business (as
defined in Section 5.29), or event or development likely to give rise to a
Material Adverse Change in the Condition of the Business, and Seller has not,
in any amount or manner: (a) sold, transferred, leased to others or otherwise
disposed of any of the assets used in the Business, except for inventory sold
in the ordinary course of business; (b) canceled or compromised any debt or
claim, or waived or released any right of value relating to the Business; (c)
received any notice of termination of any contract, lease or other agreement
relating to the Business; (d) had any actual or threatened employee strikes,
work stoppages, slow-downs or lockouts affecting the Business, or had any
change in its relations with its key employees, agents, customers, or suppliers
relating to the Business; (e) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any
license, patent, copyright, trademark, trade name, invention or similar right
relating to the Business, or modified any existing right with respect thereto;
(f) made any change in the rate of compensation, commission, or other direct or
indirect remuneration payable, or paid or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation, pension, severance
or vacation pay, to any officer, employee, salesman, distributor or agent of
Seller relating to the operation of the Business, other than in the ordinary
course of business; (g) made any capital expenditures or capital additions or
betterments in respect of the Business in excess of an aggregate amount of Five
Hundred Dollars ($500); (h) failed to replenish Seller's inventories and
supplies in a normal and customary manner consistent with prudent business
practices, or made any purchase commitment in excess of the normal, ordinary
and usual requirements of the Business or at any price in excess of the then
current market price or upon terms and conditions more onerous than those usual
and customary in the industry, or made any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice and
prudent business practices; (i) made any loans or advances to any Person (as
defined in Section 5.29) or assumed, guaranteed or otherwise become responsible
for the obligations of any Person; (j) made any change in accounting methods;
or (k) entered into any agreement or made any commitment to take any of the
types of action described in subparagraphs (a) through (j) above.
6
Page 10 of 31
5.6 Undisclosed Liabilities. Seller has no debts, liabilities or
obligations, contingent, accrued or absolute, of a nature required by GAAP to
be reflected on a consolidated balance sheet, other than those debts,
liabilities or obligations reflected or reserved against in the balance sheets
of the Seller included as part of the Historical Financial Statements, except
for the matter identified on Schedule 5.7 hereto. Since December 31, 1997,
Seller has incurred no debts, liabilities or obligations, contingent, accrued
or absolute, of a nature required by GAAP to be reflected on a balance sheet of
Seller, other than those in the ordinary course of the Business. A complete
and accurate list of the employees of the Business as of the Closing Date,
together with all amounts each such employee is now or will by the passage of
time hereafter become entitled to receive on account of accrued vacation time,
vacation pay or severance pay, attributable to the time prior to and through
the Closing Date, including amounts that each such employee becomes entitled to
receive as a result of the consummation of the transactions contemplated
hereby, is provided on Schedule 5.6 attached hereto. All such amounts will be
paid by Seller.
5.7 Litigation; Orders. Except for the matter identified on Schedule 5.7
hereto, there is no claim, legal action, administrative proceeding,
governmental investigation, arbitration or other proceeding pending, nor to
Seller's Knowledge (as defined in Section 5.29), threatened, against Seller
arising from or otherwise relating to the Business, and Seller has no reason to
be aware of any basis for the same. There is no judgment or outstanding order,
injunction, decree, stipulation or award (whether rendered by a court or
administrative agency, or by arbitration) against Seller relating to the
Business or that would prohibit the consummation of the transaction
contemplated by this Agreement. No citations, fines or penalties have been
asserted against Seller with respect to the Business since April 30, 1998,
under any foreign, federal, state or local law.
5.8 Intellectual Property. Schedule 5.8 contains a complete and correct
list of all patents, trade names, trademarks, trademark registrations, service
marks, registered user names and copyright, and applications for registration
of the foregoing, both domestic and foreign, presently owned, possessed, used
or held by Seller relating to the Business. All of the Intellectual Property
(as defined in Schedule 1.1) is valid or in full force and effect and Seller
has not received any notice or claim that any of the Intellectual Property is
invalid or unenforceable by it. The Intellectual Property and Know-How (as
defined in Schedule 1.1) are owned by Seller free and clear of any license,
sublicense, agreement, right, understanding, judgment, order, decree,
stipulation, lien, charge or encumbrance. The rights being transferred to
Purchaser pursuant to this Agreement, including rights to the Intellectual
Property, constitute all such rights necessary to produce, market and sell the
products of the Business and to conduct the Business as currently conducted by
the Seller. None of the Intellectual Property, the technology covered thereby
or the Know-How has been misappropriated from any Person. Seller is not, in
connection with the Business, infringing upon or otherwise acting adversely to
any intellectual property owned by any other Person, and there is no claim or
action by any Person pending, or to Seller's Knowledge threatened, with respect
thereto. There is no infringement or improper use by any third party of the
Intellectual Property or the Know-How relating to the Business, and there is no
action or
7
Page 11 of 31
proceeding instituted by Seller pending in which an act constituting an
infringement of any of the rights to such Intellectual Property or Know-How was
alleged to have been committed by a third party. Seller has not taken or
omitted to take any action that would have the effect of waiving any rights to
any Intellectual Property or Know-How related to the Business. Schedule 5.8
lists all licenses, sublicenses or agreements relating to the use by third
parties of the Intellectual Property and Know-How, or the use by the Business
of the Intellectual Property of another Person, and there is no default under
any such license, sublicense or agreement.
5.9 Labor Matters. As of the date hereof, there is no collective
bargaining agreement or any labor dispute, arbitration, lawsuit or
administrative proceeding relating to labor matters involving employees of the
Business. There is no labor strike or work stoppage pending or threatened, and
none has occurred during the last five (5) years. The Business is in
compliance with all applicable federal, state and local laws and regulations
respecting employment and employment practices.
5.10 Compliance with Laws. The conduct of the Business complies in all
respects with all applicable statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto. To Seller's Knowledge, there
are no proposed laws, rules, regulations (including zoning regulations),
ordinances, orders, judgments, decrees, governmental takings, condemnations or
other proceedings that would be applicable to the Business and that could have
a Material Adverse Effect on the Condition of the Business.
5.11 Insurance. Seller presently maintains liability insurance, including
product liability, casualty, property loss and other insurance coverage upon
its properties and related to the conduct of the Business, in such amounts, of
such kinds and with such insurance carriers as are generally deemed appropriate
and sufficient for companies of a similar size engaged in similar types of
business and operations, and which will be sufficient to fully indemnify
Purchaser from and against any claims, losses or expenses attributable to any
actions or inactions of Seller prior to the Closing Date. Seller has provided
Purchaser with: (i) a true and complete list of all policies of fire,
liability, indemnity and other forms of insurance relating to Seller or the
Business, whether currently in force or otherwise applicable to any current or
future liabilities, setting forth the type and amount of coverage, policy
number, policy periods and the status of premiums paid thereon; and (ii) a true
and complete description of all product liability claims pertaining to Seller
or the Business that have been brought against Seller during the immediately
preceding five (5) years, detailing for each such claim, the claimant thereof,
the basis therefor, and the status or ultimate resolution thereof, as
applicable.
5.12 Taxes. Seller has timely filed all federal, state, local and foreign
income tax returns and other tax reports relating to the operations of the
Business and required under applicable law to be filed on or prior to the date
hereof. All taxes, assessments and other governmental charges relating to the
income, receipts, payrolls, transactions, or capital of the Business reflected
on such tax returns and reports that are due and payable have been or will
8
Page 12 of 31
prior to Closing be paid, other than those currently payable without penalty or
interest. Without limiting the foregoing, Seller has paid all sales and use
taxes due on account of operations of the Business or has obtained exemption
certificates where applicable. Seller has filed all federal, foreign, state,
local and other returns and reports with respect to employee income tax
withholding and social security and unemployment taxes in compliance with
applicable tax withholding provisions applicable to the Business. There are no
existing deficiencies (or proposed deficiencies or adjustments) for any taxes,
or interest or penalties thereon that have been asserted or proposed in writing
or assessed against Seller relating to the Business by any governmental unit.
5.13 Contracts.
(a) There is no contract, agreement, commitment or arrangement
("Contract"), or any outstanding unaccepted offer ("Offer"), whether
written or oral, express or implied, fixed or contingent, that affects
any of the Purchased Assets or to which Seller is bound and which relates
to the Business:
(i) that is or relates to a mortgage, indenture, security
agreement or other agreement or instrument relating to the
borrowing of money by, or any extension of credit either by or
to, Seller;
(ii) that is or relates to a collective bargaining
agreement or other union contract;
(iii) that contains or relates to covenants or other
provisions limiting Seller's right to compete in any line of
business or with any person or in any area;
(iv) that is or relates to a license agreement, either as
licensor or licensee;
(v) that provides for or relates to any sharing of profits
with others or any joint venture or similar enterprise;
(vi) that is or relates to a revocable or irrevocable
power of attorney or proxy granted to any person for any
purpose whatsoever;
(vii) that involves any remaining or unsatisfied
obligation (A) to make capital expenditures (whether through
the purchase of real or personal property or otherwise)
involving Twenty-Five Thousand Dollars ($25,000) or more in the
case of any one item or group of items, (B) to purchase goods
involving Twenty-Five Thousand Dollars ($25,000) or more in the
case of any one item or group of items, or (C) other than the
contract referred to in Section 1.4(a) above, to supply
products or provide
9
Page 13 of 31
services involving Twenty-Five Thousand Dollars ($25,000) or
more in the case of any one item or group of items;
(viii) that involves any sales agency, manufacturer's
representative, distributorship or marketing agreement that is
not cancelable without cost or payment on not more than thirty
(30) days' notice;
(ix) that relates to a lease or other arrangement relating
to the Business to which Seller is a lessee of personal
property or equipment other than as described on Schedule
5.13(a)(ix); or
(x) that is any other agreement, contract or commitment
that in any case involves payment or receipts of more than
Twenty-Five Thousand Dollars ($25,000) or that is in any way
material to the Business.
(b) Seller is not a party to: (a) any agreements with any
executive officer or other key employee of the Business, (i) the
benefits of which are contingent, or the terms of which are materially
altered, upon the occurrence of a transaction involving the Business of
the nature of the transaction contemplated by this Agreement, (ii)
providing any term of employment or compensation guarantee, (iii)
providing severance benefits or other benefits after the termination of
employment of such employee regardless of the reason for such
termination of employment; or (b) any other employee agreement or plan
including, without limitation, any incentive or bonus plan, stock
option plan, stock appreciation right plan or stock purchase plan.
(c) Neither Seller nor any other party to a Contract is in breach
thereof or default thereunder, and there does not exist any event,
including the execution, delivery and performance of this Agreement and
the transactions contemplated hereby, that, with the giving of notice
or the lapse of time, would constitute such a breach or default, and
all Contracts to which the Seller is a party that relate to the
Business are in full force and effect. To the extent any Contract or
Offer can be transferred only with the consent or approval of or notice
to another party, such necessary consent, notice or approval has been
obtained, or will be obtained, without cost to Purchaser prior to
Closing.
5.14 Receivables. All receivables relating to the Business (including
accounts receivable, loans receivable and advances) that are reflected on the
Seller's balance sheet as of December 31, 1997 have, and all receivables
resulting from operations of the Business between December 31, 1997 and the
Closing Date will have, arisen only from bona fide transactions in the ordinary
course of the Business and (to the extent not already collected) are fully
collectible when due, or in the case of each account receivable, within ninety
(90) days after it arose, without resort to litigation and without offset or
counterclaim, except to the extent of the allowance for doubtful accounts with
respect to accounts receivable as set
10
Page 14 of 31
forth or reflected on the Closing Balance Sheet.
5.15 Inventories. The inventories of raw materials, work in process,
finished products, goods, spare parts, replacement and component parts that are
reflected on the Seller's balance sheet as of December 31, 1997 (and not
subsequently disposed of in the ordinary course of business) are, and all such
inventories resulting from operations of the Business between December 31, 1997
and the Closing Date (and not subsequently disposed of in the ordinary course
of business) will be, in all respects merchantable, or suitable and useable for
the production or completion of merchantable products, for sale in the ordinary
course of business, are valued at the lower of cost or market in accordance
with GAAP and are sufficient but not excessive in order to meet the normal
requirements of the Business (as well as the requirements referred to in
Section 1.4(b) above), in each case subject to applicable reserves as required
by GAAP for valuation, excess and obsolete inventory.
5.16 Backlog. Schedule 5.16 lists all of Seller's Contracts to supply
goods or services involving Five Thousand Dollars ($5,000) or more in the case
of any one item or group of items that are not substantially complete on the
date of this Agreement. Schedule 5.16 also sets forth, by Contract, the
current estimate of Seller of the total revenues remaining to be earned with
respect to each such Contract and Seller's current estimate of the cost of
completion and gross profit remaining. The list of Contracts described in this
Section 5.16 has been prepared by management of Seller on a reasonable basis
consistent with past practices, and there is no fact or circumstance that casts
doubt in any material respect on the accuracy or completeness thereof.
5.17 Consents, Approvals, etc. To Seller's Knowledge, there are no
filings required to be made by Seller with, and there are no consents,
approvals, permits or authorizations required to be obtained by Seller from,
governmental and regulatory authorities of the United States, the several
states or any other jurisdiction in connection with the execution and delivery
of this Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby.
5.18 Certain Payments; Absence of Certain Business Practices. Neither
Seller nor any of its representatives or agents has made or will cause to be
made by or on behalf of the Business, any payments, loans or gifts or promises
or offers of payments, loans or gifts of any money or anything of value,
directly or indirectly, (i) to or for the use or benefit of any official or
employee of any government, (ii) to any political party or official or
candidate thereof, (iii) to any other person either in advance or as a
reimbursement if he or it knows or has reason to suspect that any part of such
payment, loan or gift will be directly or indirectly given or paid by such
other person, or will reimburse such other person for payments, gifts or loans
previously made, to any governmental official or political party or candidate
or official thereof, or (iv) to any other person or entity, the payment of
which would violate the laws, or regulations having the force of law, of the
United States or the country of domicile and/or residence of such party.
Neither the Internal Revenue Service nor any other federal, state, local or
foreign government agency or entity has notified Seller of any pending or
11
Page 15 of 31
threatened investigation of any payment made by or on behalf of the Business
of, or alleged to be of, the type described in this Section 5.18.
5.19 Licenses and Permits. To Seller's Knowledge, Seller has obtained and
maintains all governmental licenses and permits necessary to conduct the
Business. Such licenses and permits are valid and in full force and effect,
and none of such licenses or permits will be terminated or impaired or become
terminable as a result of the transactions contemplated by this Agreement, and
each of such licenses and permits can be transferred to Purchaser without
consent or payment.
5.20 Employee Benefit Plans and Employee Matters.
(a) Schedule 5.20 lists each pension, retirement, profit sharing,
deferred compensation, bonus and other incentive plan, other employee
benefit programs, arrangements, agreements and understandings, medical,
vision, dental and other health plans, life insurance and disability
plans, and any other employee benefit plans, employment contracts and
severance agreements including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") to which Seller contributes or
is a party or is bound or under which it may have liability and under
which employees or former employees of the Business (or their
beneficiaries) are eligible to participate or derive a benefit ("Employee
Benefit Plans"). Seller has delivered to Purchaser true, correct and
complete copies of all Employee Benefit Plans. There are no claims,
pending or threatened, based on asbestosis, carpal tunnel syndrome,
hearing loss or impairment, extensive back injury or any other exposure
or alleged exposure to cumulative trauma injuries or exposures, and there
is no basis for the same.
(b) All contributions required by law or collective bargaining
agreement to have been made under any of the Employee Benefit Plans
(without regard to any funding waivers granted under applicable law) to
any funds or trusts established thereunder or in connection therewith
have been made by the due date thereof (including any valid extension).
Neither the Seller nor any of the Purchased Assets is subject to any
liability for or any lien with respect to any of the following: (i)
excise taxes imposed under Chapter 43 of the Internal Revenue Code of
1986, as amended (the "Code"); (ii) liability to the PBGC under Title IV
of ERISA; (iii) liability under ERISA Section 502 (other than claims for
benefits in the ordinary course) or Section 4071; (iv) liability imposed
under Title IV, Subtitle E of ERISA with respect to any "multiemployer
plan" as defined in Section 3(37)(A) of ERISA; or (v) liability arising
as the result of a failure to make required contributions under Section
412 of the Code or Section 302 of ERISA. No Employee Benefit Plan is a
"welfare benefit plan" within the meaning of Section 3(l) of ERISA that
provides for continuing benefits or coverage for any participant or any
beneficiary of a participant after the participant's retirement or other
termination of employment, except as may be required under Section 4980B
of the Code and Part 6 of Subtitle B of Title I of ERISA and proposed
12
Page 16 of 31
regulations thereunder and at the sole expense of the participant or the
participant's beneficiary.
5.21 Transactions with Interested Persons. No officer, director or
affiliate of Seller owns directly or indirectly, on an individual or joint
basis, any material interest in, or serves as an officer or director of, any
customer, competitor or supplier of Seller or any organization that has a
contract, agreement, arrangement or commitment with Seller relating to the
Business. Seller is not indebted to any director, officer, employee or agent
of Seller, except for amounts due as normal salaries, commissions, wages,
bonuses and in reimbursement of ordinary expenses on a current basis. Except
as set forth on Schedule 5.21, no employee or agent of Seller is indebted to
Seller except for advances for ordinary business expenses in a normal amount.
5.22 Environmental Matters.
(a) Without in any manner limiting the scope of the representations
set forth elsewhere in this Agreement, the operations of the Business are
in compliance in all material respects with, and Seller has not received
oral or written, direct or indirect, notice of violations under, any
federal, state or local environmental laws as enacted, re-authorized or
amended, including by way of illustration, but not limited to (i) the
Clean Air Act, 42 U.S.C. 7401 et seq., its implementing regulations and
state analogues or equivalents to such act and regulations provided
thereunder; (ii) the Clean Water Act, 33 U.S.C. 1251 et seq., its
implementing regulations and state analogues or equivalents to such act
and regulations provided thereunder; (iii) the Rivers and Harbors Act of
1899, 33 U.S.C. 401 et seq. and its implementing regulations; (iv) the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq., its implementing regulations and
state analogues or equivalents to such act and the regulations provided
thereunder; (v) the Toxic Substances Control Act, 15 U.S.C. 2601-2629,
and the regulations promulgated thereunder; (vi) the Comprehensive
Environmental Response Compensation and Liability Act of 1980 ("CERCLA"),
42 U.S.C. 9601 et seq., as amended by the Superfund Amendment and
Reauthorization Act of 1986 ("SARA" and "SARA, Title III"), subsequent
amendments, revisions and regulations in effect on the date hereof,
implementing regulations and state analogues or equivalents to CERCLA,
SARA and SARA, Title III and regulations provided thereunder; (vii) all
federal, state, and local statutes and regulations governing underground
storage tanks; and (viii) all common law decisions restricting or
regulating noise, air, or water emissions or discharge;
(b) Schedule 5.22 identifies (i) all environmental audits or
assessments or occupational health studies relating to property or
facilities of the Business undertaken by governmental agencies or by
employees, agents, or independent contractors working at the request of a
federal, state or local government agency, (ii) properties and facilities
of the Business with respect to which Seller or the Business has received
13
Page 17 of 31
oral or written communication from a federal, state or local
environmental agency (or their designees) in the last five (5) years or
concerning which a violation has at any time in the past been brought,
but which has not been formally resolved, and (iii) all claims made or
attributions, warnings or reports relating to or arising under the
Occupational Safety and Health Act during the past five (5) years;
(c) There has not been, and is not occurring, any "release" of any
"hazardous substance" on real estate presently occupied by the Business,
nor has Seller any reason to believe such a "release" either is occurring
or has occurred in the past at any such facility. For purposes of this
provision the terms "release" and "hazardous substance" shall have the
same meaning as those terms are given in CERCLA at 42 U.S.C. 9601 (22)
and (14), respectively, except that the terms shall include petroleum,
gasoline (leaded or unleaded), oil, fuel, diesel fuel, petroleum
solvents, or crude oil or, any fraction thereof, whether or not it is
specifically listed or designated as a hazardous substance under Sections
A through F of 42 U.S.C. 6901 (14) or any state equivalent of that
exclusion;
(d) The Business has not sent wastes to a site that, pursuant to
CERCLA or any similar state or federal law (i) has been placed on the
"National Priorities List" (the "NPL") of hazardous waste sites or state
equivalent of the NPL or (ii) is subject to a claim, administrative
order, or other request to take "removal" or "remedial" action as those
terms are defined under CERCLA at 42 U.S.C. 9601 (23) and (24),
regardless of whether such claim, order or request is made pursuant to a
validly enacted federal, state or local statute or regulation;
(e) Schedule 5.22 sets forth all environmental licenses, permits,
approvals, authorizations, exemptions, classifications, certificates and
registrations (collectively the "Permits") in existence with respect to
and necessary to continue to operate the Business consistent with past
practice and at historical levels, together with a description of any
compliance schedules relating thereto. All such Permits are in full
force and effect and there does not exist under any of them or under any
compliance schedule, any default, event of default, or event which, with
notice or lapse of time or both, would constitute an event of default;
and
(f) Schedule 5.22 identifies (i) all on-site and off-site locations
where the Business has stored, disposed or arranged for the disposal of
hazardous substances or wastes, (ii) all underground storage tanks, and
the capacity and contents of such tanks, located on the real property
owned by the Seller or any leased property, (iii) all asbestos contained
in or forming part of any building, building component, structure or
office space owned or leased by Seller pertaining to the Business, and
(iv) all polychlorinated biphenyls used or stored at any property owned
or leased by Seller pertaining to the Business.
14
Page 18 of 31
5.23 Defects in Products or Designs. There are no defects in the design
or manufacture of any of the products of the Business ("Products"), designed,
manufactured or sold by the Business that would adversely affect the
performance or quality of the Products to any third parties (excluding
normal-course warranty obligations).
5.24 Products. Schedule 5.24 sets forth the warranty experience of Seller
since December 31, 1996. The Products manufactured and sold by Seller have
been designed and manufactured in compliance with all regulatory, engineering,
industrial and other codes generally recognized as being applicable thereto.
There have been no product recalls or material defects in the design or
manufacture of any Products sold by Seller (excluding normal-course warranty
obligations) that would materially and adversely affect the performance or
quality of such Products.
5.25 Properties. Seller has good, marketable and legal title, or holds by
valid and existing leases or licenses, free and clear of all mortgages,
pledges, liens, or security interests, to each piece of its real and personal
property, except for such imperfections of title, mortgages, pledges, liens, or
security interests that are not material to Seller's ability to perform its
obligations hereunder. All such leases and other agreements are legal, valid,
and effective in accordance with their terms, and there does not exist
thereunder any default or event or condition which, after notice, lapse of time
or both, would constitute a default thereunder by any party thereto.
5.26 Letters of Credit, Surety Bonds, Guarantees. There are no letters of
credit, performance or payment bonds, guaranty arrangements and surety bonds of
any nature, issued by or on behalf of the Seller, relating to the Business.
5.27 All Material Information; Disclosure. All material facts concerning
the Business have been disclosed to Purchaser, and no representation or
warranty made herein by Seller, and no statement contained in any certificate
or other instrument furnished or to be furnished to Purchaser in connection
with the transaction contemplated by this Agreement (all of which statements
shall be deemed to have been made by Seller for all purposes of this
Agreement), contains or will contain any untrue statement of a material fact or
omits or will omit to state any material facts necessary to make the
information contained therein not misleading or necessary in order to provide a
prospective purchaser of the Business with adequate information as to the
condition, properties, assets, liabilities, business and prospects of the
Business, and Seller has disclosed to Purchaser in writing all material facts
known to it relating to the same.
5.28 Brokers. The Seller has not entered into any arrangement for the
provision of services in connection with this Agreement or the transactions
contemplated hereby that may give rise to an obligation to pay any brokers' or
finders' fees or other commissions.
5.29 Certain Defined Items. References in Article V and elsewhere in this
Agreement to (i) "Seller's Knowledge" shall mean the facts and circumstances
that Seller
15
Page 19 of 31
knew or should have known after appropriate inquiry; (ii) "Material Adverse
Change in the Condition of the Business" or "Material Adverse Effect on the
Condition of the Business" shall mean a change or effect that likely would,
independently or in combination with other changes or events, have a material
adverse change or effect on the business, assets, properties, financial
condition, results of operations or prospects of the Business; and (iii)
"Person" shall mean any individual, corporation, partnership, proprietorship or
other entity of any kind.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller that:
6.1 Corporate Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite power and authority to own and operate its properties and
assets and to conduct the businesses now conducted by it.
6.2 Corporate Authorization, Certain Corporate Actions, No Conflicts.
Purchaser has all requisite power and authority to execute and deliver this
Agreement and all necessary corporate proceedings have been taken to authorize
the execution, delivery and performance by Purchaser of this Agreement and the
transaction described herein. This Agreement is the legal, valid and binding
obligation of Purchaser, and is enforceable as to Purchaser in accordance with
its terms, except as such validity, binding effect or enforcement may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by equitable principles relating to the availability of remedies.
Neither the execution, delivery or performance of this Agreement by Purchaser
will, with or without the giving of notice or the passage of time, or both,
conflict with, result in a default, right to accelerate or loss of rights
under, or result in the creation of any lien, charge or encumbrance pursuant to
any provision of Purchaser's certificate of incorporation or bylaws or any
franchise, mortgage, deed of trust, lease, license, agreement, understanding,
law, rule or regulation or any order, judgment, or decree to which Purchaser is
a party or by which Purchaser may be bound or affected.
6.3 Litigation; Orders. As of the date hereof, there is no judgment or
outstanding order, injunction, decree, stipulation or award against Purchaser
that would prohibit the consummation of the transaction contemplated by this
Agreement.
6.4 Consents, Approvals, etc. No filings are required to be made by
Purchaser with, and no consents, approvals, permits or authorizations are
required to be obtained by Purchaser from, governmental and regulatory
authorities of the United States, the several states or any other jurisdiction
in connection with the execution and delivery of this
16
Page 20 of 31
Agreement by Purchaser and the consummation by Purchaser of the transaction
contemplated hereby.
6.5 Brokers. Purchaser has not entered into any arrangement for the
provision of any services in connection with this Agreement or the transactions
contemplated thereby that may give rise to an obligation to pay brokers' or
finders' fees or other commissions.
ARTICLE VII
CONDUCT OF BUSINESS PRIOR TO CLOSING
7.1 Conduct of the Business. Prior to the Closing, Seller shall conduct
the business and affairs of the Business only in the ordinary course and
consistent with its prior practice and shall maintain, keep and preserve the
assets and properties of the Business in good condition and repair and maintain
insurance thereon in accordance with present practices, and, except as
otherwise agreed by Purchaser and Seller, will use its best efforts to: (i)
preserve the Business intact, (ii) keep available to Purchaser the services of
the present employees, agents, and independent contractors of the Business,
(iii) preserve for the benefit of Purchaser the goodwill of the suppliers,
customers, landlords and others having business relations with the Business,
and (iv) obtain, with the assistance and cooperation of Purchaser, the consent
of any lessor or other party to any lease or contract with Seller where the
consent of such lessor or other party may be required by reason of the
transaction contemplated hereby. Without limiting the generality of the
foregoing, prior to the Closing, Seller will not, without Purchaser's prior
written approval: (i) enter into or modify any contract, agreement, commitment
or any other understanding or arrangement relating to the Business; or (ii)
perform, take any action or incur or permit to exist any act, transaction,
event, or occurrence of any type that would have been inconsistent with the
representations and warranties of Seller set forth in Section 5 hereof had the
same occurred prior to the date hereof. THE FOREGOING NOTWITHSTANDING,
Seller's increase in accounts payable, and a resulting increase in inventory
levels, for the purpose contemplated by Section 1.4(b) above shall not be
deemed to violate this provision.
7.2 Changes in Information. Seller shall give Purchaser prompt written
notice of any change in any of the information contained in the representations
and warranties made in Article V, elsewhere in this Agreement or the schedules
or exhibits referred to herein that occurs prior to the Closing.
7.3 Contracts and Policies. Seller shall consult with Purchaser with
respect to (i) the cancellation of contracts, agreements, commitments or other
understandings or arrangements to which Seller is a party relating to the
Business including, without limitation, purchase orders for items of inventory
and commitments for capital expenditures or improvements, and (ii) Seller's
purchasing, pricing or selling policies (including, without limitation, selling
merchandise at discounts); provided, however, that nothing contained in this
Section shall require Seller to take or fail to take any action that, in
Seller's reasonable
17
Page 21 of 31
judgment, is likely to give rise to a penalty or claim for damages by any third
party against Seller, or is likely to result in losses to Seller, or is
otherwise likely to prejudice in any material respect, or unduly interfere with
the conduct of, Seller's business operations in the ordinary course consistent
with prior practice, or is likely to result in a breach by Seller of any of its
representations, warranties, or covenants contained in this Agreement (unless
any such breach is first waived in writing by Purchaser).
ARTICLE VIII
ACCESS TO INFORMATION AND DOCUMENTS
8.1 Access Prior to Closing. Upon reasonable notice and during regular
business hours, Seller will give Purchaser and Purchaser's attorneys,
accountants and other representatives full access to the personnel and all
properties, documents, contracts, books and records of Seller relating to the
Business or the Purchased Assets and will furnish Purchaser with copies of such
documents (certified by Seller's officers if so requested) and with such
information with respect to the affairs of the Business as Purchaser may from
time to time request. Any such furnishing of such information to Purchaser or
any investigation by Purchaser shall not affect Purchaser's right to rely on
any representation or warranty made in this Agreement or in connection herewith
or pursuant hereto. Seller shall keep Purchaser informed as to the affairs of
the Business and to consult with the representatives of Purchaser on important
matters pertaining to the Business and the Purchased Assets.
8.2 Access After Closing.
(a) After the Closing Date, upon reasonable notice and during
regular business hours, Seller will give Purchaser and its attorneys,
accountants and other representatives full access to all properties,
documents, contracts, books and records of Seller relating to the
Business or the Purchased Assets. In connection herewith, Seller hereby
agrees to retain all such books and records for a period of not less than
five (5) years after the Closing Date in order to afford Purchaser such
access, and Purchaser shall have the right at any time to make copies
thereof. If Seller wishes to destroy any such books or records at any
time during such period, Seller shall give Purchaser not less than sixty
(60) days' prior written notice thereof, whereupon Purchaser may elect to
take possession of such books and records. In addition, Seller shall
provide Purchaser with access to any officers, employees and agents of
Seller as may be necessary in connection with the prosecution or defense
of any tax audits or third party claims, suits or actions by or against
Purchaser.
(b) After the Closing Date, upon reasonable notice and during
regular business hours, Purchaser will give Seller reasonable access to
any records and files of the Business transferred pursuant to this
Agreement, relating to a period prior to the Closing Date, and to any
employees of Purchaser formerly employed by Seller as may be necessary in
connection with the prosecution or defense of any tax audits or
18
Page 22 of 31
third party claims, suits or actions by or against Seller relating to the
Business.
ARTICLE IX
EMPLOYEES
9.1 Employee-Related Liabilities. Purchaser will assume no
employee-related liabilities or expenses based on events or pursuant to service
by employees of Seller prior to the Closing Date, nor will Purchaser be liable,
directly or by way of reimbursement, for any accrued vacation pay due Seller's
employees for any time prior to July 6, 1998. Seller will not file Form UI-21
or any similar notice with the Kentucky Department of Employment Services nor
discontinue any worker's or unemployment compensation insurance coverage or
other existing employee-related benefit programs until such time as all of
Seller's post-closing services for Purchaser hereunder have been completed.
ARTICLE X
ADDITIONAL COVENANTS
10.1 Name Change. As soon as possible after Closing, Seller shall change
its name to a name which is not similar to "Anesco, Inc." or any derivation
thereof, and shall discontinue use thereof.
10.2 Post-Closing Services. From and after the Closing Date, pending
Purchaser's removal of the Purchased Assets from Seller's premises in
Georgetown, Kentucky to Purchaser's facility in Waukesha, Wisconsin, Seller
will continue the conduct of the Business on a sub-contract basis in the name
and for the benefit of Purchaser. For such services, Purchaser will reimburse
Seller, on a dollar-for-dollar basis, for Seller's expenses for rent,
utilities, maintenance and upkeep, insurance (including worker's and
unemployment compensation insurance), payroll costs and taxes (including
benefits and claims costs relating to the post-Closing period) and any other
direct, out-of-pocket expenses incurred by Seller (but none of the foregoing in
excess of current rates, other than as agreed in advance by the parties). In
addition, upon withdrawal from Seller's premises, Purchaser will pay Seller an
additional amount equal to the aggregate weekly straight-time salary of each of
Seller's employees who is not becoming an employee of Purchaser and who has
remained in the employ of the Seller from the Closing Date to such date of
withdrawal. In such undertaking, Seller shall retain all liability and
responsibility for its employees and any employment-related claims. Purchaser
shall reimburse Seller only for the actual time during which Purchaser makes
use of such facilities. Subject to Purchaser's performance of its obligations
hereunder, Seller will protect Purchaser and hold it harmless from any lien or
assertion of lien or adverse interest on property or assets of Purchaser on
Seller's premises, whether asserted by the owner of such property or any other
party. Purchaser agrees to indemnify Seller for any liability exceeding
Seller's CGL insurance coverage.
19
Page 23 of 31
ARTICLE XI
FURTHER ASSURANCES
11.1 Further Assurances. After the Closing and for no further
consideration, Seller shall (a) perform all acts (including, without
limitation, the use of Seller's commercially reasonable efforts to enable
Purchaser to accomplish transfer of registration, permits, approvals, and the
like as contemplated by this Agreement), and (b) execute, acknowledge and
deliver such assignments, transfers, consents and other documents and
instruments as Purchaser or its counsel may reasonably request, in each case,
to vest in Purchaser or protect Purchaser's right, title and interest in, and
enjoyment of, the Purchased Assets.
ARTICLE XII
BULK SALES COMPLIANCE
12.1 Bulk Sales Compliance. Purchaser hereby waives compliance by Seller
with the provisions of the bulk sales laws of any state, and Seller warrants
and agrees to give prompt notice immediately following the Closing to, and pay
and discharge when due all claims of, creditors (including any governmental
agencies and taxing authorities) that could be asserted against Purchaser by
reason of such non-compliance to the extent that such liabilities are not
specifically assumed by Purchaser. Seller hereby agrees to indemnify and hold
Purchaser harmless from, against and in respect of (and shall on demand
reimburse Purchaser for) any loss, liability, cost or expense including,
without limitation, reasonable attorneys' fees, suffered or incurred by
Purchaser by reason of the failure of Seller to pay or discharge any such
claim. Seller shall furnish to Purchaser such evidence as Purchaser may
reasonably request in order to confirm that Seller has complied with the
provisions of this Article.
ARTICLE XIII
CONDITIONS TO OBLIGATIONS OF THE PARTIES
13.1 Conditions to Obligations of Each Party. The respective
obligations of Seller and Purchaser to consummate the transactions contemplated
by this Agreement are subject to the conditions that: (a) there shall be no
decision by any court or administrative body restraining, enjoining or
otherwise preventing the consummation of the transactions contemplated hereby;
and (b) the parties will have received all necessary approvals and clearances.
13.2 Conditions Precedent to Purchaser's Obligations. All obligations
of Purchaser hereunder are subject, at the option of Purchaser, to the
fulfillment of each of the following conditions at or prior to the Closing, and
Seller shall exert its reasonable commercial effort to cause each such
condition to be so fulfilled:
20
Page 24 of 31
(a) All representations and warranties of Seller contained herein or
in any document delivered pursuant hereto shall be true and correct in
all respects as of the date hereof, and shall then be true and correct in
all respects except for changes in the ordinary course of business after
the date hereof in conformity with the covenants and agreements contained
herein;
(b) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Seller at or before the Closing Date
shall have been duly and properly performed in all respects;
(c) There shall not have occurred any Material Adverse Change in the
Condition of the Business;
(d) Purchaser shall have received an opinion of Kinkead, Stilz &
Alford, legal counsel to Seller, dated the Closing Date, substantially in
the form of Exhibit B;
(e) Seller shall have delivered to Purchaser at the Closing the Bill
of Sale and Assignment in the form of Exhibit C, and all other documents,
certificates and agreements necessary to transfer to Purchaser good,
marketable and legal title to the Purchased Assets, free and clear of any
and all liens thereon including, without limitation:
(i) assignments of all Intellectual Property, Contracts and
other agreements of Seller dated the Closing Date, assigning to
Purchaser all of Seller's right, title and interest in and to all
such Intellectual Property, Contracts and agreements, with any
required consent endorsed thereon;
(ii) certificates of title to all motor vehicles to be
transferred to Purchaser hereunder, duly endorsed for transfer to
Purchaser as of the Closing Date; and
(iii) assignments of all leases with any required consents of
the lessors endorsed thereon;
(f) All corporate and other proceedings of Seller in connection
with the transactions contemplated by this Agreement, and all documents
and instruments incident to such proceedings, shall be reasonably
satisfactory in form and substance to Purchaser and its counsel, and
Purchaser and its counsel shall have received all such documents and
instruments, or copies thereof (certified if requested) as may be
reasonably requested;
(g) This Agreement and the transactions contemplated hereby shall
have been approved by Purchaser's Board of Directors;
21
Page 25 of 31
(h) The results of Purchaser's due diligence review shall be
satisfactory to Purchaser;
(i) All permits and licenses necessary for the conduct of the
Business shall have been transferred to Purchaser; and
(j) Purchaser shall have entered into Employment Agreements with
certain key employees of the Business for their continued employment as
Purchaser shall require, in the form of Exhibit D as attached hereto.
13.3 Conditions Precedent to Seller's Obligations. All obligations of
Seller at the Closing are subject, at the option of Seller, to the fulfillment
of each of the following conditions at or prior to the Closing Date, and
Purchaser shall exert its reasonable commercial efforts to cause each such
condition to be so fulfilled:
(a) All representations and warranties of Purchaser contained herein
or in any document delivered pursuant hereto shall be true and correct in
all respects when made and as of the Closing;
(b) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Purchaser at or before the Closing
shall have been duly and properly performed in all respects; and
(c) All corporate and other proceedings by Purchaser in connection
with the transactions contemplated by this Agreement, and all documents
and instruments incident to such proceedings, shall be reasonably
satisfactory in form and substance to Seller and its counsel, and Seller
and its counsel shall have received all such documents and instruments, or
copies thereof (certified if requested) as may reasonably be requested.
ARTICLE XIV
INDEMNIFICATION
The indemnification provisions set forth in this Article XIV are
independent of and in addition to any purchase price adjustment contained in
Article III of this Agreement and any other provision of this Agreement.
14.1 Seller's Indemnification. Seller hereby agrees to indemnify and
hold Purchaser harmless from, against and in respect of (and shall on demand
reimburse Purchaser for):
(a) any and all loss, liability, or damage, including reasonable
attorneys' fees and expenses (collectively "Damages") suffered or
incurred by Purchaser by
22
Page 26 of 31
reason of any untrue representation, breach of warranty or
non-fulfillment or non-performance of any covenant or agreement of Seller
contained herein or in any certificate, document or instrument delivered
to Purchaser pursuant hereto or in connection herewith;
(b) any and all Damages suffered or incurred by Purchaser in respect
of or in connection with any liabilities of Seller not expressly assumed
by Purchaser including, without limitation, any Damages arising out of or
relating to the conduct of the Business prior to the Closing Date, and
claims of, or relating to, Seller's employees, including those engaged in
providing Seller's services pursuant to Section 10.2 hereof; and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses including, without limitation,
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
14.2 Purchaser's Indemnification. Purchaser hereby agrees to indemnify
and hold Seller harmless from, against, and in respect of (and shall on demand
reimburse Seller for):
(a) any and all Damages suffered or incurred by Seller by reason of
any untrue representation, breach of warranty or non-fulfillment or
nonperformance of any covenant or agreement by Purchaser contained herein
or in any certificate, document or instrument delivered to Seller
pursuant hereto or in connection herewith;
(b) any and all Damages suffered or incurred by Seller in respect of
or in connection with liabilities or obligations expressly assumed by
Purchaser;
(c) any and all Damages suffered or incurred by Seller by reason of
or in connection with any claim for finders' or brokers' fees or other
commission arising by reason of any services alleged to have been
rendered to or at the instance of Purchaser with respect to this
Agreement or any of the transactions contemplated hereby; and
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses including, without limitation,
reasonable attorneys' fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or oppose
the imposition thereof, or in enforcing this indemnity.
14.3 Limitations on Indemnification.
(a) Notwithstanding the other provisions of this Article XIV, Seller
shall not be liable to indemnify Purchaser for Purchaser's Damages and
Purchaser shall not
23
Page 27 of 31
be liable to indemnify Seller for Seller's Damages, arising from or
relating to a breach of representation or warranty set forth in this
Agreement unless the Indemnified Party (as hereinafter defined) notifies
the Indemnifying Party (as hereinafter defined) in writing of its claim
or potential claim for indemnification not later than the day that is
thirty-six (36) months after the Closing Date, and except as set forth in
subsection (b) below or Article XV.
(b) The limitations in Section 14.3(a) shall not apply to any claim
by a party for indemnification based on Purchaser's failure to receive
good title to any personal property included in the Purchased Assets or
to any other breach of the representation contained in Section 5.25, nor
to any breach of a representation relating to compliance with laws, taxes
or environmental matters as set forth in Sections 5.10, 5.12 and 5.22.
14.4 Procedure.
(a) In order for a party (the "Indemnified Party"), to be entitled
to any indemnification provided under this Agreement in respect of,
arising out of or involving a claim made by any third party against the
Indemnified Party (a "Third Party Claim"), such Indemnified Party shall
notify the other party (the "Indemnifying Party") in writing of the Third
Party Claim within twenty (20) business days after receipt by such
Indemnified Party of written notice of the Third Party Claim; provided,
however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the Indemnifying
Party can demonstrate actual monetary prejudice as a direct or indirect
result of such failure. Thereafter, the Indemnified Party shall deliver
to the Indemnifying Party, within five (5) business days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party relating to
the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense thereof
and, if it acknowledges in writing its obligations to indemnify the party
seeking indemnification and so chooses to assume the defense thereof, it
may do so with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim,
the Indemnifying Party will not be liable to the Indemnified Party for
any legal expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. If the Indemnifying Party assumes
such defense, the Indemnified Party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such defense. The
Indemnifying Party shall be liable for the fees and expenses of counsel
employed by the Indemnified Party for any period during which the
Indemnifying Party has not assumed the defense thereof (other than after
the 20-day
24
Page 28 of 31
period described in Section 14.4(a) if the Indemnified Party shall have
failed to give notice of the Third Party Claim). If the Indemnifying
Party chooses to defend or prosecute a Third Party Claim, the parties
hereto shall cooperate in the defense or prosecution thereof. Such
cooperation shall include the retention and (upon the Indemnifying
Party's request) the provision to the Indemnifying Party of records and
information that are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. If the Indemnifying Party chooses to defend or prosecute any
Third Party Claim, the Indemnified Party will consent to any settlement,
compromise or discharge of such Third Party Claim that the Indemnifying
Party may recommend and that by its terms involves the payment of money
only and which the Indemnifying Party will pay in full in connection with
such Third Party Claim. If the Indemnifying Party shall have assumed the
defense of a Third Party Claim, the Indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the Indemnifying Party's prior written consent, which
shall not be unreasonably withheld.
ARTICLE XV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
15.1 Survival. All statements, representations and warranties made by
each of the parties hereto shall survive the Closing for a period of
twenty-four (24) months, except the representations contained in Sections 5.25,
5.10, 5.12 and 5.22, which shall survive indefinitely thereafter. All
indemnities, covenants and agreements made herein shall survive for the period
expressly indicated herein, or, if not so indicated, indefinitely.
ARTICLE XVI
MISCELLANEOUS
16.1 Entire Agreement; Modification. This writing constitutes the entire
agreement of the parties with respect to the subject matter and supersedes any
prior agreements, oral or written, with respect thereto and may not be
modified, amended or terminated except by written agreement specifically
referring to this Agreement and signed by each party hereto.
16.2 Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered,
sent by express mail, or overnight courier service or first class registered
mail, return receipt requested, or telefaxed (with a copy also sent by express
mail or overnight courier services) addressed to parties at the addresses set
forth below or at such other address as any party may specify by notice to the
other parties, or, in the case of a telefax, to the telefax number indicated:
25
Page 29 of 31
If to Purchaser: SurgiVet, Inc.
N7 W22025 Johnson Drive
Waukesha, Wisconsin 53186
Attention: Ann M. Johnson
Telefax: 414-513-9069
with a copy to: Holleb & Coff
55 East Monroe Street, Suite 4100
Chicago, Illinois 60603
Attention: Stephen A. Marcus, Esq.
Telefax: 312-807-3900
If to Seller: Anesco, Inc.
115 Etter Lane
Georgetown, Kentucky 40324
Attention: John Engle
Telefax: 502-867-0390
with a copy to: Kinkead, Stilz & Alford
PNC Bank Plaza, Suite 300
200 W. Vine Street
Lexington, Kentucky 40507
Attention: D. Barry Stilz
Telefax: 606-255-1965
16.3 Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
16.4 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of each party hereto, its successors and assigns.
16.5 Numbers and Headings. The section and paragraph numbers and
headings contained herein are for the purposes of reference and convenience
only and are not intended to define or limit the contents of said paragraphs or
sections.
16.6 Exhibits and Schedules. The exhibits and schedules referred to
herein are hereby incorporated by reference as if set out in full and form an
integral part of this Agreement.
16.7 Further Actions. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement.
26
Page 30 of 31
16.8 Transaction Taxes. Seller will pay all sales, transfer and
documentary taxes, if any, and any and all further taxes arising by virtue of
the sale, transfers and deliveries to be made to Purchaser as contemplated
hereby. Gains, income and similar taxes shall be paid by the entity or person
on which such tax is imposed.
16.9 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
16.10 Expenses. Subject to any express provisions of this Agreement to
the contrary, each party shall bear the expenses, costs and fees incurred by it
in connection with the transactions contemplated hereby, whether or not the
transaction shall be consummated. Any such payments by Seller shall be made
out of Seller's assets other than the Purchased Assets and shall not reduce the
Purchased Assets being transferred hereunder.
16.11 Validity of Provisions. If any provision of this Agreement or any
agreement referenced herein shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case because it
conflicts with any other provision or provisions hereof or any constitution,
statute, rule of public policy, or for any other reason, such circumstances
shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other
provision or provisions herein contained invalid, inoperative or unenforceable
to any extent whatsoever. The invalidity of any one or more phrases,
sentences, clauses, sections, or, subsections of this Agreement or any other
agreements referenced herein shall not affect the remaining portions thereof.
16.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Wisconsin applicable to contracts
made and to be performed therein.
16.13 Consent to Jurisdiction and Waiver of Jury Trial. The parties
hereto hereby consent to the exclusive jurisdiction of any federal or state
court situated in Waukesha County, Wisconsin, and waive any objection based on
lack of personal jurisdiction, improper venue or forum non convenience with
regard to any actions, claims, disputes or proceedings related to this
Agreement or any other document delivered pursuant thereto. In addition, the
parties hereto waive their rights to a jury trial in any judicial proceedings
involving, directly or indirectly, in any matter in any way arising out of,
related to or connected with this Agreement whether sounding in contract, tort
or otherwise.
16.14 Risk of Loss. The risk of any loss, damage, impairment,
confiscation or condemnation of the Purchased Assets, or any part thereof,
shall be upon the Seller at all times prior to the Closing Date. In any such
event, the proceeds of, or any claims or any loss payable under, Seller's
insurance policy, judgment or award with respect thereto shall be
27
Page 31 of 31
payable to Seller, which shall repair, replace or restore any such property to
Purchaser's reasonable satisfaction as soon as possible after its loss,
impairment, confiscation or condemnation, or make such other provision as the
parties may agree.
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first above written.
PURCHASER:
SURGIVET, INC.
By: /s/ Frank Katarow
-------------------------
Its: President
-------------------------
SELLER:
ANESCO, INC.
By: /s/ John Engle
-------------------------
Its: President
-------------------------
By: /s/ Jeff Baker
-------------------------
Its: Vice President
-------------------------