EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is made on September ____, 2000 between
Neogen Corporation, a Michigan corporation whose address is 620 Lesher Place,
Lansing, Michigan 48912 ("Buyer"), Squire Laboratories, Inc., a Massachusetts
corporation whose address is 100 Mill Street, Revere, Massachusetts 02151
("Seller"), and Americo L. Salerno, a Massachusetts resident whose address is 93
Fuller Pond Road, Middleton, MA 01949 ("Salerno") ("Agreement").
RECITALS
A. Seller is engaged in the pharmaceutical business primarily for
animals. Seller uses the name "Squire Laboratories" in the business of
manufacturing and marketing various products to improve the health and
performance of animals. Seller's business is collectively referred to as the
"Business".
B. Buyer desires to purchase and Seller desires to sell, those assets of
Seller described in this Agreement upon the terms, conditions and covenants
contained in this Agreement.
The parties agree as follows:
1. Purchase and Sale of Assets. Based upon the representations,
warranties and agreements contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, at the Closing Date, as defined in
Paragraph 4, Seller shall sell, transfer and deliver to Buyer, and Buyer shall
purchase and accept from Seller, all of the assets used or employed by Seller in
the conduct of the Business (collectively referred to as the "Purchased
Assets"), including but not limited to the following:
(a) Machinery and Equipment. All manufacturing, laboratory, and office
machinery and equipment, furniture, fixtures, supplies, fixed assets and all
other tangible personal property used in the Business including, but not limited
to, the equipment listed on attached Exhibit 1.(a) ("Machinery and Equipment").
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(b) Intangible Property. All of the intangible property of Seller used in
the Business, including, but not limited to, the following listed on attached
Exhibit 1.(b):
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(1) Patents, trademarks, service marks, trade names, trade dress and
copyrights and all applications therefore;
(2) Trade secrets, secret processes, proprietary processes and
technology and secret manufacturing processes;
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(3) To the extent assignable, all permits and licenses used or
employed by Seller in the Business; and
(4) The name "SQUIRE LABORATORIES", and `STRESS-DEX" and all
derivations thereof, and the associated goodwill throughout the world, formulae,
processes, procedures, product formulations, product names, designs, research
and development, production, sales, and credit reports, data, models, catalogs,
technical specifications, files, engineering data, business and accounting
records, customer lists, supplier lists, sales literature, marketing materials,
budgets, forecasts and all other business documents and information, software,
source code and computer programs (including all current and historical data
bases) which relate primarily to the Business and all domain names, URLs and
websites used in the Business.
Subparagraphs 1(b)(1) to (4) are collectively referred to as
"Intangible Property".
(c) Accounts Receivable. All receivables generated from sales of inventory
in the ordinary course of Seller's Business that are neither disputed nor have
invoice dates earlier than 90 days prior to the Closing, including but not
limited to, those listed on attached Exhibit 1.(c) ("Receivables").
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(d) Inventories. All inventories, including, but not limited to,
merchandise, materials, component parts, manufacturing and packaging supplies,
raw materials, work in process and finished goods relating to the Business
including, but not limited to, the inventories listed on attached Exhibit 1.(d)
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("Inventories").
(e) Contract Rights. All rights, benefits and causes of action in favor of
Seller resulting or arising from contracts, purchase orders, sales orders,
service agreements, commission agreements, dealership or distribution
agreements, marketing agreements, licensing agreements, warranties, guaranties
or otherwise, which relate primarily to the Business ("Contract Rights"). These
include, but are not limited to, those listed on Exhibit 1.(e).
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(f) Other Current Assets. All deposits, prepaid expenses and other current
assets relating to the Business including, but not limited to, those listed on
Exhibit 1.(f) ("Other Current Assets").
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(g) Excluded Assets. The Purchased Assets do not include the following:
(i) cash and marketable securities (ii), automobiles (iii), accounts receivable
of $130,000 or less, and (iv) assets and products related to the Fura-Zone
product line listed on Exhibit 1.(g) ("Fura-Zone Assets"). The products made
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with the Fura-Zone Assets are referred to as the "Fura-Zone Products".
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2. Non-Assumption of Liabilities.
(a) General Non-Assumption of Liabilities. Buyer shall not assume,
expressly or implicitly, pay, perform or discharge any debts, liabilities or
obligations of any nature of Seller, whether or not related to the Business,
other than those specifically listed in Exhibit 2.(a) ("Assumed Liabilities").
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All the debts, liabilities and obligations of Seller, whether fixed or
contingent, accrued or unaccrued, known or unknown shall continue to be the
responsibility of Seller, which shall pay, perform and discharge them in
accordance with their terms, and nothing contained in this Agreement shall be
construed in any fashion as imposing, directly or indirectly, responsibility for
any such debt, liability and obligation on Buyer except the Assumed Liabilities.
(b) Product Liabilities; Warranty Claims. Without limiting the generality
of Subparagraph 2(a), Buyer shall not assume, nor be liable whatsoever for,
liabilities, obligations or claims for losses, damages, liabilities, costs or
expenses exceeding Five Hundred Dollars ($500) per claim and Two Thousand
Dollars ($2,000) in the aggregate based upon, or arising out of, any claim
alleging defect or negligence in the assembly, processing, manufacture or sale
of products, goods or services by Seller in connection with the Business on or
prior to the Closing Date, including, but not limited to, negligence, product
liability, whether based on contract or tort, or warranty claims regarding such
products, goods or services arising out of transactions, accidents or events on,
prior to, or after the Closing Date, and regardless of any claim was filed or
made known to the Seller or Buyer prior to the Closing Date ("Product Claims").
(c) Additional Liabilities. Notwithstanding the provisions of Subparagraph
2(a) to the contrary, and as an express exception thereto, Buyer shall assume,
perform and discharge Seller's liability, existing as of the Closing Date, with
respect to all duties and obligations of Seller with respect to the distribution
and sales agreements listed in Exhibit 1.(e), the assumption of which Buyer
expressly and separately acknowledges to Seller on the Closing Date ("Sales
Agreement Liabilities").
(d) Assets Free of Liens. The Purchased Assets shall be transferred by
Seller to Buyer free and clear of any and all claims, liens, mortgages, security
interests, encumbrances, charges or other restrictions of title or ownership,
except as otherwise specifically provided in this Agreement.
3. Purchase Price and Method of Payments. The purchase price to be paid
by Buyer to Seller for the Purchased Assets shall be computed and paid as
provided in this Paragraph 3 ("Price").
(a) Buyer shall pay Seller an initial payment of One Million Dollars
($1,000,000), of which Buyer has already paid $50,000 ("Remaining Cash
Payment"). The Remaining Cash Payment shall be paid in cash at Closing.
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(b) If Seller's Inventories, determined in accordance with Section 5(h),
are less than $100,000, then the difference shall be subtracted from the Price.
If Seller's Receivables exceed $130,000, the excess shall be subtracted from the
Price. The purchase price to be paid by Buyer shall be reduced by the aggregate
dollar amount of all Receivables that are not collected by Buyer within 60 days
following the Closing Date ("Uncollected Receivables"). Buyer shall use its best
efforts (which shall not include an obligation to commence collection
litigation) to collect the Receivables. Payments shall be applied to the oldest
invoice first, unless the customer otherwise indicates. All Uncollected
Receivables shall be reassigned to Seller and their value shall be deducted from
any future purchase price payments owed to Seller by Buyer; provided if no
future purchase price payments are owed to Seller by Buyer, then Seller shall
pay Buyer the amount of Uncollected Receivables within 10 business days
("Receivables Payment") (plus interest at eight percent (8%) if the Receivables
Payment is not paid timely).
(c) An amount equal to Fifteen Thousand Dollars ($15,000) of the Remaining
Cash Payment shall be assigned to a Covenant Not To Compete from Seller and
Salerno pursuant to Paragraph 23.
(d) The purchase price to be paid by Buyer shall be allocated in the
manner required by Section 1060 of the Internal Revenue Code of 1986, as amended
("Code"), and the Treasury Regulations promulgated thereunder. In making the
allocation, Buyer and Seller shall apply the fair market values set forth on the
Certificate of Allocation substantially in the form of attached Exhibit 3.(d)
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This allocation shall be conclusive and binding on the Buyer and Seller for all
purposes, including the reporting and disclosure requirements of the Code.
4. The Closing. The parties agree that the effective date of the
completion of the transaction shall be as of the close of business on the 31st
day of August, 2000. The closing of the purchase and sale provided for in this
Agreement shall be held at the offices of Buyer, or at such other place as may
be fixed by mutual agreement of Buyer and Seller, within 10 days of the date of
execution of this Agreement by Seller. The date and event of closing are
respectively referred to in this Agreement as the "Closing Date" and "Closing."
At the Closing:
(a) Seller shall deliver to Buyer a Warranty Bill of Sale, substantially
in the form of attached Exhibit 4.(a)-1, for the Purchased Assets ("Warranty
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Bill of Sale"), Assignment and Assumption of Contracts, substantially in the
form of Exhibit 4.(a)-2 ("Assignment Agreement"), and the certificates, opinions
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and other matters required by Paragraph 7; and
(b) Buyer shall deliver to Seller the Remaining Cash Portion and the
certificates, opinions and other matters required by Paragraph 8.
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5. Representations and Warranties of Seller and Salerno. In order to
induce Buyer to enter into this Agreement, Seller and Salerno, jointly and
severally, make the following representations and warranties, each of which
shall be deemed to be independently material and relied upon by Buyer,
regardless of any investigation made by, or information known to, Buyer:
(a) Organization and Qualification. Seller is validly existing and in good
standing under the laws of the State of Massachusetts. No failure on the part of
Seller to be qualified as a foreign corporation in any jurisdiction materially
and adversely affects the Business or financial position or results of the
operation of the properties of Seller by reason of any disability affecting its
right to own property, collect receivables, enforce contracts or otherwise.
Seller has the requisite corporate power and authority to own or hold under
lease or similar agreement all of the Purchased Assets and to carry on the
Business as it is now being conducted.
(b) No Violation. Except as disclosed in Exhibit 5.(b), the execution and
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delivery of this Agreement by Seller and the consummation of the transactions
contemplated by it will not violate any provision of law, order, or regulation
of any governmental authority, the corporate charter or by-laws of Seller or
constitute a default under any judgment, order or decree of any court of
governmental agency or instrumentality, or conflict or constitute a breach or a
default under any agreement to which the Seller is a party or by which it is
bound.
(c) Financial Information. Seller has provided in Exhibit 5.(c) its (i)
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unaudited balance sheet and statements of income, stockholders equity and cash
flows as of and for the period ended December 31, 1999 ("Unaudited Financial
Statements"); and (ii) interim financial statements for the periods ending April
30, 2000 ("Interim Financial Statements") (collectively, "Financial
Statements"). The Financial Statements:
(1) Have been prepared in accordance with the books of account and
records of Seller.
(2) Fairly present and are true, complete and correct statements of
Seller's financial position, the results of its operation, stockholder's equity
and cash flows of Seller as of and for the periods specified in the Financial
Statements.
(3) Have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied.
(4) Do not include or omit to state any fact that renders them
misleading.
(5) Make full and adequate disclosure of all Seller's obligations and
liabilities (fixed or contingent, known or unknown).
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(6) Do not contain any items of special or non-recurring income or
expenses except as expressly stated in the Financial Statements.
(d) Title to Assets. Seller owns and has corporate power to own, and has
good and marketable title to all of the Purchased Assets free and clear of
liens, security interests, mortgages, pledges, claims or encumbrances of any
kind whatsoever, except as shown in Exhibit 5.(d).i. Seller has delivered to
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Buyer true and complete copies of all written leases, contracts, agreements,
options, purchase orders, instruments and commitments relating to the Purchased
Assets or the Business and written summaries of all oral contracts binding on
Seller, as evidenced in Exhibit 5.(d).ii (collectively, "Contracts"). All
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Contracts are legally valid and binding and in full force and effect, and there
are no defaults or breaches by Seller or counterclaims or defenses against it.
Seller has received no notice of any default, breach, counterclaim or offset by
any other party to any of the Contracts, nor does Seller or Salerno have any
knowledge thereof. All Contracts will continue in full force and effect on the
same terms as currently exist, notwithstanding the consummation of the sale
contemplated by this Agreement.
(e) Condition of Assets. All Purchased Assets utilized in the Business
conform in all material respects with all applicable building, zoning,
environmental, health and safety rules and other rules and regulations. All of
the Purchased Assets utilized in the Business, including all their components
and parts, are ready for operation, and, taking into account their ages, are in
normal operating condition and good order and repair. There are no conditions or
events, except for normal wear and tear, proper use and the age of the Purchased
Assets, which would prevent the continued normal operation of the Purchased
Assets or would otherwise materially and adversely affect their operation or use
by Buyer after the Closing as currently used by Seller.
(f) Intellectual Property. Seller owns, or is licensed to use, or
otherwise has the right to use all patents, trademarks, service marks, trade
names, trade secrets, franchises, and copyrights, and all applications for any
of the foregoing, and all technology, know-how and processes necessary for the
conduct of the Business as now conducted (collectively, "Proprietary Rights").
With respect to Seller's Proprietary Rights:
(1) All license arrangements relating in any manner to any of the
Proprietary Rights (whether or not in writing) are set forth on Exhibit
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5.(f)(1). Except as disclosed in Exhibit 5.(f)(1), Seller is in compliance with
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and is not in default under any of such license agreements, and all other
parties to any of such license agreements are in full compliance with and are
not in default under any of the license agreements.
(2) Exhibit 5.(f)(2) sets forth a complete list of all patents,
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trademarks, service marks, and copyrights used by Seller in the conduct of the
Business that are currently registered in any jurisdiction, and Seller has good
and marketable title to all
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such assets free and clear of all liens, charges and encumbrances (except for
such license agreements listed in Exhibit 5.(f)(1) and all filing or maintenance
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fees that are required to maintain such registrations that are due and payable
as of the date of this Agreement have been paid and all associated maintenance
filings have been made.
(3) Exhibit 5.(f)(3) sets forth a complete list of all unregistered
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trademarks, service marks, and trade names used by Seller in the conduct of the
Business, and Seller has good and marketable title to all such assets free and
clear of all liens, charges and encumbrances (except for such license agreements
listed in Exhibit 5.(f)(1)).
(4) For each trademark, service mark, copyright or trade name listed
in Exhibits 5.(f)(2) and 5.(f)(3), Exhibit 5.(f)4) sets forth the dates of first
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use and the geographic territory of use for each trademark, service mark, or
trade name, and Seller represent that such marks and trade names have been in
continuous use in their respective territories since the listed dates of first
use;
(5) Exhibit 5.(f)(5) sets forth a complete list of all software that
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the Seller has had written or developed by any person or entity not an employee
of Seller, lists the current owner of the copyright interest in such software,
and if Seller is the current owner, lists the date of the written assignment of
the copyright interest to Seller;
(6) Seller, except as disclosed in Exhibit 5.(f)(6), has not
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infringed, misappropriated, or otherwise used in an unauthorized manner the
proprietary rights (including but not limited to the patent, trade secret,
trademark, trade dress, or copyright rights) of any third party.
(7) Seller has not granted or committed to grant any rights in
Seller's Proprietary Rights of any nature whatsoever to any third party except
as disclosed in Exhibit 5.(f)(7);
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(8) Except as disclosed in Exhibit 5.(f)(8), no claim has been
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asserted by any person or entity (i) to the effect that any action by Seller
infringes on the intangible or intellectual property rights of any other person
or entity; or (ii) that challenges or questions the right of Seller to use any
of the Proprietary Rights being used by it; or (iii) which asserts the right of
any third party to use such Proprietary Rights.
(9) Except as disclosed on Exhibit 5.(f)(9), there is no basis for
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any claim against Seller that any of its operations, activities, products, or
publications infringes on any patent, trademark, service mark, trade name,
copyright, or other proprietary right of a third party, or that it is illegally
or in any unauthorized manner using the trade secrets or any proprietary rights
of others.
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(10) Each of Seller and Salerno has no knowledge of any person or
entity infringing upon or has misappropriated any of Seller's Proprietary
Rights.
(g) Receivables. The list of Receivables attached as Exhibit 1.(c) is a
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complete and accurate list of all the Receivables. All of the Receivables listed
on Exhibit 1.(c) arose from bona fide sales transactions of Seller, and no
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portion of the Receivables is subject to counterclaim or offset or is otherwise
in dispute. All of the Receivables are good and collectible in full in the
ordinary course of business at the net aggregate amounts disclosed on Exhibit
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1.(c).
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(h) Inventories. The inventories reflected on the Financial Statements and
the Inventories are accurately and consistently valued at the last invoice
amount for (i) raw materials; and (ii) material content, cost of packaging,
components and labels for finished goods, plus, for finished goods, the costs of
conversion, all of which approximates the first-in, first-out method of
accounting for inventories in accordance with GAAP. The inventory of Seller will
have an aggregate value at least equal to that shown on Exhibit 1.(d) as of the
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Closing Date. The Inventories, in the aggregate, are usable and saleable in the
ordinary course of the Business within 90 days following the Closing and contain
no slow-moving or obsolete items. No Inventories have been consigned to others.
(i) Contracts. Exhibit 5.(d).ii describes all Contract Rights and
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Contracts to which Seller is a party or to which it is bound and which arose out
of, or relate to, the Purchased Assets or the Business that extend beyond the
Closing Date. Seller has delivered true and correct copies of all such documents
evidencing the Contract Rights and Contracts to Buyer. If Buyer assumes such
Contract Rights or Contracts, the benefits thereof may be assigned to Buyer and
Buyer shall be vested with Seller's rights thereunder notwithstanding the
consummation of the transactions contemplated by this Agreement, except as
described on Exhibit 5.(d).i.
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(j) Litigation. Except as disclosed in Exhibit 5.(j), there are no
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actions, suits, proceedings or investigations pending or threatened against
Seller at law or in equity, or before any federal, state or municipal or other
governmental department, commission, board, agency or instrumentality, domestic
or foreign, which involves a demand for any judgment or liability and which
could materially affect the Business, the Purchased Assets or the transactions
contemplated by this Agreement. Seller is not in default with respect to any
order, writ, injunction or decree of any court of federal, state, or municipal
or other governmental department, commission, board, agency or instrumentality,
domestic or foreign, and that there are no such orders, decrees, injunctions or
regulations issued specifically against Seller which may affect, limit or
control the method or manner of the Business, the Purchased Assets or any
transactions contemplated by this Agreement.
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(k) Compliance with Law. Seller has complied with all applicable laws,
orders and regulations of any federal, state or municipal or other governmental
department, commission, board, agency or instrumentality, domestic or foreign,
having jurisdiction, including, but not limited to, laws, orders and regulations
thereof relating to antitrust, wage, hours, collective bargaining, environmental
protection, employee safety, or legislation pertaining to illegal bribes or
kickbacks.
(l) Payment of Taxes. Other than those taxes specifically listed in
Exhibit 5.(l), Seller has timely filed all required declarations, returns, and
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reports with foreign, federal, state and local taxing authorities ("Returns").
All taxes, interest and penalties owed (whether or not shown on the Returns)
have been paid. There is no tax audit or examination now pending or threatened
with respect to the Business. As of the Closing date, Seller did not have any
liability for taxes of any sort other than taxes for which full provision has
been made in the Interim Financial Statements. True, accurate and complete
copies of Seller's 1998 - 1999 U.S. and Massachusetts Corporate Income Tax
Returns have been provided to Buyer.
(m) No Adverse Changes. Since December 31, 1999, except as disclosed in
Interim Financial Statements, there has been no material adverse change in the
condition, financial or otherwise, of the Seller or the Purchased Assets or in
the Business other than changes (not in the aggregate either material or
adverse) occurring in the ordinary course of business.
(n) Warranties and Product Liability. Seller has previously delivered to
Buyer true, correct and complete copies of all outstanding standard product
warranties and guaranties given by Seller with respect to the Business and true,
correct and compete copies of all other product warranties and guaranties now in
effect with respect to products manufactured or sold by Seller concerning the
Business. Except as fully described in Exhibit 5.(n)-1, there are no pending
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claims or actions against the Seller for breach of warranty or based upon
product liability (whether based on tort or contract principles) and, to the
best of Seller's knowledge, no such claims or actions are threatened. There are
no defects in craftsmanship, design or engineering with respect to any product
now or previously sold or manufactured by Seller in the Business which may
constitute the basis for any such claim against Seller or Buyer. All of Seller's
products being sold to Buyer as part of the Purchased Assets are listed in
attached Exhibit 5.(n)-2. The only products not being sold to Buyer as part of
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the Purchased Assets are those listed in Exhibit 1.(g).
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(o) Contingent and Undisclosed Liabilities. Seller has no debts,
obligations or liabilities, whether known or unknown, fixed or contingent, of
any nature whatsoever, relating to the Business or the Purchased Assets not
disclosed in writing to Buyer and Seller knows of no basis for any assertion of
any claim against the Seller or Buyer for any liability relating to the Business
or Purchased Assets except those disclosed in Exhibit 5.(o).
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(p) Performance of Contracts. Except as disclosed in Exhibit 5.(p), Seller
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is not in default, nor has it breached any provision of, any contract,
agreement, lease, obligation, license or permit (including the Contracts and the
Contract Rights) with regard to all agreements relating to the Business to which
it is a party or by which it is bound. Except as disclosed in Exhibit 5.(p),
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Seller has fully performed each material term, condition and covenant of each
such contract, agreement, lease, obligation, license or permit required to be
performed on or prior to the date of this Agreement (including the Contract
Rights and the Contracts). Except as disclosed in Exhibit 5.(p), Seller knows of
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no state of facts which, with or without the giving of notice or the passage of
time, or both, would give rise to any default or revocation. Except as disclosed
in Exhibit 5.(p), Seller is neither subject to any penalty, discount or
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liquidated damages due to the delayed delivery of products, goods or services of
the Business, nor has it received any notice that any of the Business's customer
relations are in jeopardy because of such late deliveries or otherwise.
(q) Events Subsequent to December 31, 1999. Except as disclosed in Exhibit
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5.(q), Seller has not, since December 31, 1999:
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(1) Incurred Liabilities. Incurred any obligation or liability
(absolute, contingent, accrued or otherwise) or guaranteed or become a surety of
any debt, except in connection with the performance of this Agreement or in the
ordinary course of business;
(2) Discharged Debt. Discharged or satisfied any lien or encumbrance,
pertaining to the Purchased Assets or the Business, or paid or satisfied any
obligation or liability (absolute, contingent, accrued or otherwise) other than
(i) liabilities shown on Seller's accounting records on December 31, 1999 or
(ii) liabilities incurred since December 31, 1999 in the ordinary course of
business;
(3) Encumbrances. Mortgaged, pledged or subjected to any lien,
charge, security interest or other encumbrance any of the Purchased Assets;
(4) Disposition of Assets. Sold or transferred any of the Purchased
Assets, or canceled any debts or claims or waived any rights, except in the
ordinary course of business;
(5) Sale of Business. Entered into any contract for the sale of the
Business or the Purchased Assets, or any part thereof, or for the purchase of
another business, whether by merger, consolidation, exchange of capital stock or
otherwise (other than negotiations with respect to this Agreement);
(6) Accounting Procedure. Changed or modified the accounting methods
or practices relating to the Business; or
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(7) Capital Expenditure. Purchased or made a commitment for the
purchase of capital assets for use or employment in the Business.
(r) Customer Relations. Seller knows of no state of facts, nor have any
communications been made to it, which would indicate that (i) any current
customer of Seller which accounted for more than 5% of Seller's sales relative
to the Business for the most recent fiscal year ending, or (ii) any current
supplier of Seller (if such supplier could not be replaced by Seller at
comparable cost), will terminate its business relations with Seller.
(s) Brokerage. Seller has made no commitment for a brokerage fee in
connection with the transactions contemplated by this Agreement, other than to
the Walden Group, Inc., 560 White Plains Road, Tarrytown, New York 10591
("Broker"). Seller agrees to pay Broker and shall hold Buyer harmless from all
amounts owed by Seller to Broker.
(t) Books and Records. The books and accounts of Seller relating to the
Business are true, complete and correct in all material respects and fully and
fairly reflect all of the transactions entered into by or on behalf of Seller to
which it is a party or by which it is affected.
(u) Use of Closing Proceeds. Seller shall apply the proceeds to be
received at Closing first toward any unpaid taxes that are presently due and
payable and then to the taxes generated from this transaction.
(v) Binding effect. The Agreement and all related documents have been duly
executed, made and delivered by Seller and Salerno, as appropriate, and
constitute legal, valid and binding obligation of Seller and Salerno, as
appropriate, enforceable against them, as appropriate, in accordance with their
respective terms, subject to the laws of general application affecting
creditors' rights.
(w) Authorization. The execution and delivery of this Agreement and the
transactions contemplated by this Agreement have been duly authorized by the
Board of Directors of Seller and on the Closing Date all of the necessary
corporate action to authorize the execution and delivery of this Agreement will
have been taken. Salerno has the authority to enter into this Agreement.
(x) Employee Relations. Exhibit 5.(x) sets forth a list of all of the
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officers, employees and agents of Seller and, for each individual, indicates his
or her position, salary or wage rate and respective fringe benefits and any
other remuneration paid or payable. Except as disclosed on Exhibit 5.(x):
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(1) There is not now in existence or pending, nor has there been
within the last three years, any grievance, arbitration, administrative hearing,
claim of unfair labor practice, wrongful discharge, employment discrimination or
sexual harassment or other employment dispute of any nature pending or, to the
best of Seller's knowledge, threatened against Seller.
(2) Seller is, and during all applicable limitation periods has been,
in material compliance with all applicable Federal, state, local or foreign
laws, executive orders and regulations respecting employment and employment
practice, terms and conditions of employment, occupational safety, wages and
hours and there is no existing but unasserted claim for violation of any such
laws, executive orders or regulations nor, to the best of Seller's knowledge, is
there any factual basis upon which such a claim could be asserted.
(3) Seller has no collective bargaining agreements and is not a party
to any written or oral, express or implied, other contract, agreement or
arrangement with any labor union or any other similar arrangement that is not
terminable at will by Seller without cost, liability or penalty.
(4) Seller is not a party to any written or oral contract, agreement
or arrangement with any of its present or former directors, officers, employees
or agents with respect to length, duration or conditions of employment (or the
termination thereof), salaries, bonuses, percentage compensation, deferred
compensation or any other form of remuneration, or with respect to any matter
not disclosed on Exhibit 5.(x)(4).
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(5) There is no pending claim or, to the best of Seller's knowledge,
threatened or existing but unasserted claim, against Seller for violation of any
contract, agreement or arrangement described in Exhibit 5.(x)(4), nor to the
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best of Seller's knowledge, is there any factual basis upon which such a claim
could be asserted.
(6) Upon termination of the employment of any of the Seller's
employees by Seller, Buyer shall not incur any liability for severance or
termination pay or any other obligation to Seller's employees.
(y) Employee Benefit Plans.
(1) Exhibit 5.(y) sets forth all "employee welfare benefit plans",
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"employee pension benefit plans" and "multi-employer plans" within the
respective meanings of Sections 3(1) and 3(2) and 3(37) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), all incentive
compensation plans, benefit plans for retired employees and all other employee
benefit plans maintained by Seller, or to which Seller has made payments or
contributions on behalf of its employees since 1974, including, without
limitation, all plans or contracts providing for bonuses, pensions, profit-
sharing, stock options, stock purchase rights, deferred compensation,
12
insurance and retirement benefits of any nature, whether formal or informal and
whether legally binding or not (each such plan is referred to individually as a
"Plan", collectively as the Plans").
(2) Except for any multi-employer plans, all Plans covered by the
Code and ERISA are, and during all applicable limitation periods have been, in
compliance with the Code and ERISA, and all retirement or pension Plans and
welfare benefit plans are qualified plans under the Code and each Plan is in
compliance with the applicable provisions of the Code.
(3) There has been no transaction in connection with which Seller or
any of its directors, agents, officers, or employees could be subject to either
a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code or any similar provision of foreign law.
(4) No Plan that is a qualified plan under Section 401(a) of the Code
and no trust created thereunder has been terminated, partially terminated,
curtailed, discontinued or merged into another plan or trust, except in
compliance with notice and disclosure to the Internal Revenue Service ("IRS"),
the Department of Labor and the Pension Benefit Guaranty Corporation ("PBGC");
and any such termination, partial termination, curtailment, discontinuance or
merger has been accompanied by the issuance of a current favorable determination
letter by the IRS and, where applicable, has been accompanied by plan
termination proceedings with and through the PBGC.
(5) There are no payments that have become due from any Plan, the
trusts created thereunder, or from Seller which have not been paid through
normal administrative procedures to the Plan participants or beneficiaries
entitled thereto.
(6) Seller has made full and timely payment of all required and
discretionary contributions to the Plans, and no unfunded liability exists with
respect to any Plan.
(7) There has been no "reportable event" as defined in Section 4043
of ERISA with respect to any Plan or any trust created thereunder.
(8) None of the Plans is a "defined benefit plan" within the meaning
of Section 3(35) of ERISA and none is subject to Title IV of ERISA.
(9) Neither Seller nor any of its directors, officers, employees, or
agents have any outstanding liabilities of any nature to the PBGC, the IRS, or
the Department of Labor in any way relating to the Plans, and all annual returns
required to be filed with respect to the Plans have been timely filed.
13
(10) Seller is not a party to or otherwise subject to any express or
implied agreement or plan to provide health coverage or other benefits to
retired or current employees except as set forth in Exhibit 5.(y)(10).
-----------------
(11) Seller is not a party to or otherwise subject to any express or
implied agreement or plan to provide any employee benefits, wages, deferred
compensation, or any other form of benefit or remuneration beyond the date of
Closing.
(12) With respect to all of its employees, former employees and
qualified beneficiaries as of the Closing Date, Seller has or will comply with
all applicable health care continuation requirements under the Code, ERISA and
current and proposed Federal Regulations. Accordingly, Seller will be
responsible for providing continuation coverage to any employees of Seller that
elect continuation coverage. Seller represents that Buyer will not be
responsible for providing continuation coverage to any of Seller's employees.
Seller agrees to use its best efforts expeditiously to provide Buyer with all
information that Buyer deems necessary to determine whether there have been any
failures to comply with the continuation health care requirements of section
162(k)/4980B of the Code and sections 601 through 609 of ERISA as such
requirements have applied to any group health plan maintained by or for Seller
which failure occurred with respect to any current or former employee of Seller
or any spouse, former spouse, dependent child, or former dependent child of any
such employee, on or prior to the Closing Date. Seller further agrees to use its
best efforts expeditiously to provide to Buyer all information that Buyer deems
necessary to correct any failures to comply with such continuation health care
coverage requirements. Such information shall include, without limitation, the
identification of all covered employees (as defined in section
162(k)(7)(B)/4980B(f)(7) of the Code) and their qualified beneficiaries (as
defined in section 162(k)(7)(B)/4980B(g)(1) of the Code), the identification of
all qualifying events with respect to such covered employees or qualified
beneficiaries (as defined in section 162(k)(3)/4980B(f)(3) of the Code, and
information otherwise demonstrating compliance with all of the continuation
health care coverage requirements of section 162(k)/4980B of the Code and
sections 601 through 608 of ERISA. For purposes of this provision, references to
the Code and ERISA shall include references to any provisions of such statutes
as they may be amended from time to time.
(z) Environmental Matters. Except as disclosed on Exhibit 5.(z):
-------------
(1) Seller has never conducted or operated any business from any
location other than the Premises.
(2) Seller and the Premises comply with all applicable Environmental
Laws.
14
(3) No Hazardous Substances have been or are currently generated,
stored, transported, utilized, disposed of, managed, released or located on,
under or from the Premises or any other parcel of real estate (collectively,
"Seller Properties") (whether or not in reportable quantities) by Seller or its
agents or invitees, or in any manner introduced onto Seller Properties by Seller
or its agents or invitees, including, without limitation, the septic, sewage or
other waste disposal systems serving the Premises and all Hazardous Substances
disclosed on Exhibit 5.z have been generated, stored, transported, utilized,
-----------
disposed of, managed, released or located on, under or from the Seller
Properties only in accordance with all applicable Environmental Laws.
(4) Seller has no knowledge of any threat of Release of any Hazardous
Substances on, under or from the Premises. There is no threat of Release of any
Hazardous Substances which Seller or any of its agents or invitees generated,
stored, transported, utilized, disposed of, managed or owned.
(5) Seller has no liability for response or corrective action,
natural resource damage, or other harm pursuant to any Environmental Laws;
Seller is not subject to, has no notice or knowledge of, and is not required to
give any notice of any Environmental Claim involving Seller or the Seller
Properties; there are no conditions or occurrences at the Seller Properties
which could form the basis for an Environmental Claim against the Seller.
(6) Seller has not received any notice from the United States
Environmental Protection Agency or any other Governmental Authority claiming
that (i) the Seller Properties or any use thereof violates any of the
Environmental Laws, or (ii) Seller or any of its employees or agents have
violated any of the Environmental Laws.
(7) Seller has not incurred any liability to the State of
Massachusetts, the United States of America or any other Governmental Authority
under any of the Environmental Laws.
(8) The Seller Properties are not subject to any, and neither Seller
nor Salerno has any knowledge of any imminent, restriction on the ownership,
occupancy, use, or transferability of the Premises in connection with any (i)
Environmental Laws or (ii) Release, threatened Release, or disposal of Hazardous
Substances.
(9) The Premises do not contain and have not contained any: (i)
underground storage tanks, (ii) any amount of asbestos-containing building
material, (iii) any landfills or dumps, (iv) Hazardous Substances resulting in
its classification as a hazardous waste management facility as defined pursuant
to RCRA or any comparable state law, or (v) Hazardous Substances resulting in
its classification as a site on or nominated for the National Priority List
promulgated pursuant to CERCLA or any state remedial priority list promulgated
or published pursuant to any comparable state law.
15
(10) There are no Environmental Enforcement Actions pending or, to
the best of Seller's knowledge, threatened.
(11) There are no conditions or circumstances at or migrating from
the Premises which pose a risk to the environment or the health or safety of
persons.
(12) There are no environmental reports, investigations and audits
relating to the Seller Properties (whether conducted by or on behalf of Seller,
Salerno or a third party, and whether done at the initiative of Seller or
Salerno or directed by a governmental or other third party) (collectively,
"Reports"). A true, complete and accurate copy of each of the Reports has been
provided to Buyer.
(13) The following definitions apply to this paragraph.
(A) "CERCLA" shall mean the Comprehensive Environmental
------
Response Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorizations Act of 1986, 42 USC 9601 et seq., and future
amendments;
(B) "Environmental Claim" shall mean any investigation, notice,
-------------------
violation, demand, allegation, action, suit, injunction, judgment, order,
consent decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial, or private in nature) arising (A) pursuant to, or in
connection with, an actual or alleged violation of, any Environmental Laws, (B)
in connection with any Hazardous Substances, (C) from any abatement, removal,
remedial, corrective, or other response action in connection with Hazardous
Substances, Environmental Laws or other order of a Governmental Authority or (D)
from any actual alleged damage, injury, threat, or harm to health, safety,
natural resources, or the environment;
(C) "Environmental Enforcement Actions" means actions or orders
---------------------------------
instituted, threatened, required or completed by any Governmental Authority and
all claims made or threatened by any person against Seller with respect to the
Premises arising out of or in connection with any of the Environmental Laws or
the assessment, monitoring, clean-up, containment, re-mediation or removal of,
or damages caused or alleged to be caused by, any Hazardous Substances (A)
located on or under the Premises, (B) emanating from the Premises or (C)
generated, stored, transported, utilized, disposed of, managed or released by
Seller on, under or from the Premises;
(D) "Environmental Laws" means federal, state and local laws,
------------------
statutes, ordinances, rules, regulations, codes, orders, judgments, orders and
the like applicable to (A) environmental conditions on, under or emanating from
the Premises including, but not limited to, (a) laws of the State of
Massachusetts; and the associated rules and regulations promulgated in
connection with any of these laws, and (b) laws of the federal government
commonly known as CERCLA, RCRA, the Toxic Substance Control Act, as amended, the
Federal Water Pollution Control Act, as amended, and the
16
Federal Clean Air Act; and the associated rules and regulations promulgated in
connection with any of these laws; and (B) the generation, storage,
transportation, utilization, disposal, management or release of Hazardous
Substances by Seller (whether or not on, under or from the Premises) or Seller
(on, under or from the Premises);
(E) "Governmental Authority" means agencies, authorities, bodies,
----------------------
boards, commissions, courts, instrumentalities, legislatures and offices of any
nature whatsoever for any government unit or political subdivision, whether
federal, state, county, district, municipal, city or otherwise, and whether now
or later in existence;
(F) "Hazardous Substances" shall mean, collectively, (A) any
--------------------
"hazardous material," "hazardous substance," "hazardous waste," "oil,"
"regulated substance," "toxic substance," "restricted hazardous waste," "special
waste" or words of similar import as defined under any of the Environmental
Laws; (B) asbestos in any form; (C) urea formaldehyde foam insulation; (D)
polychlorinated biphenyls; (E) radon gas; (F) flammable explosives; (G)
radioactive materials; (H) any chemical, contaminant, solvent, material,
pollutant or substance that may be dangerous or detrimental to the environment
or the health and safety of occupants of the Premises or of the owners or
occupants of any other real property nearby the Premises, and (I) any substance,
the generation, storage, transportation, utilization, disposal, management,
Release or location of which on, under or from the Premises is prohibited or
otherwise regulated pursuant to any of the Environmental Laws;
(G) "Premises" shall mean all locations listed on Exhibit
-------- -------
5.(z)(13)(G).
- ------------
(H) "RCRA" shall mean the Solid Waste Disposal Act, as amended by the
----
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 USC 6901 et seq., and any future amendments; and
(I) "Release" shall mean any spilling, leaking, pumping, pouring,
-------
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the indoor or outdoor environment, including, without limitation,
the abandonment or discarding of barrels, drums, containers, tanks, and other
receptacles containing or previously containing any Hazardous Substances.
(aa) Shareholder List. Attached as Exhibit 5.(aa) is a complete and
--------------
accurate list of each shareholder of Seller and the number of shares owned by
the shareholder.
(bb) Insurance. Exhibit 5.(bb) lists all policies of liability, property
--------------
damage, fire, workers' compensation/employer's liability, title or other forms
of insurance owned or carried by Seller ("Policies") and insurance agents or
brokers providing such
17
insurance coverage. Seller has received no notice from any insurance carrier
regarding the possible cancellation of or premium increase with respect to the
Policies. Seller has no claim pending or anticipated against any of the
insurance carriers under any of the Policies and there has been no actual or
alleged occurrence of any kind that may give rise to any such claim.
(cc) Permits and Licenses. Attached Exhibit 5.(cc)-1 is a complete and
----------------
accurate list of all licenses, permits, authorizations and approvals required by
any Governmental Entities (collectively, "Licenses") as are necessary to own,
lease or operate Seller's Business. All of the Licenses are valid and in full
force and in effect. Except as disclosed in Exhibit 5.(cc)-2, Seller is in full
----------------
compliance with all obligations under all Licenses, and no event has occurred
that allows, or after notice or lapse of time would allow, revocation or
termination of any Licenses. The term "Governmental Entities" shall mean any
federal, state, local, foreign or supranational court, commission, governmental
body, regulatory agency, authority or tribunal
(dd) Representations and Warranties True and Correct. The representations
and warranties contained herein, and all statements or information disclosed by
any of the Exhibits, do not include any untrue statement or material fact nor
omit to state a material fact required to be stated herein or therein or
necessary in order to make the statements herein or therein, in light of the
circumstances under which they are made, not misleading.
6. Representations and Warranties of Buyer. In order to induce Seller
and Salerno to enter into this Agreement, Buyer makes the following
representations and warranties, each of which shall be deemed to be independent
materially and relied upon by Seller and Salerno, regardless of any
investigation made by, or information known to, Seller:
(a) Organization. Buyer is, and on the Closing Date shall be, a
corporation validly existing and in good standing under the laws of the State of
Michigan.
(b) Authorization. The execution and delivery of this Agreement and the
transactions contemplated by it have been duly authorized by the Board of
Directors of Buyer and on the Closing Date all of the necessary corporate action
to authorize the execution and delivery of this Agreement will have been taken.
(c) No Violation. The execution and delivery of this Agreement by the
Buyer and the consummation of the transactions contemplated by it will not
violate any law, order or regulation of any governmental authority, or corporate
charter or bylaws of Buyer or constitute a default under any judgment, order or
decree of any court or governmental agency or instrumentality, or conflict with
or constitute a breach or default under any agreement to which Buyer is a party
or by which it is bound.
18
(d) Brokerage. Buyer has not made a commitment for a brokerage, finders or
similar fees in connection with the transactions contemplated by this Agreement.
(e) Binding Effect. The Agreement and all related documents have been duly
executed, made and delivered by Buyer and constitute legal, valid and binding
obligations of Buyer enforceable against Buyer in accordance with their
respective terms, subject to the laws of general application affecting
creditors' rights.
(f) Representations and Warranties True and Correct. The representations
and warranties contained in this Agreement do not include any untrue statement
or material fact nor omit to state a material fact required to be stated herein
or therein or necessary in order to make the statements herein or therein, in
light of the circumstances under which they are made, not misleading.
7. Conditions of Buyer's Obligation To Close. The obligations of Buyer
pursuant to this Agreement are subject to the following conditions having been
met, or waived in writing by Buyer, at or prior to the Closing Date:
(a) Representations and Warranties. The representations and warranties
made by Seller and Salerno contained in this Agreement and in any exhibit,
document or instrument delivered by any of them pursuant to this Agreement shall
be true and correct in all material respects on and as of the Closing Date.
(b) Approvals and Consents. All necessary approvals and consents with
respect to the transactions contemplated by this Agreement, the absence of which
would have a material adverse effect on Buyer's rights under this Agreement, or
which would result in the forfeiture or breach of any material rights acquired
by Buyer pursuant to the provision of any material contract or agreement assumed
by Buyer, or without which the Buyer would be precluded or materially impeded
from conducting the Business, shall have been received by Buyer.
(c) Delivery of Instruments of Conveyance of the Purchased Assets. Seller
shall have delivered to Buyer, satisfactory to Buyer in form and substance,
conveyancing documents to transfer title to the Purchased Assets to Buyer.
(d) No Litigation. No investigation, suit, action or other proceedings
shall be threatened or pending before any court or governmental agency in which
it is sought to restrain, prohibit or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
(e) No Adverse Change. There shall have been no change or development
related to the Business, the Purchased Assets, results of operations or in the
condition, financial or otherwise, of the Business, which has had or may
reasonably be expected
19
to have a material adverse effect on the condition, financial or otherwise, of
the operation of the Business or ownership of the Purchased Assets.
(f) Related Documents. All of the related documents are executed at or
prior to closing, including the Warranty Bill of Sale, the Assignment Agreement
and the agreements provided for in Paragraph 12.
(g) Opinion of Counsel. Buyer shall have received an opinion of counsel of
Seller and Salerno, dated the Closing Date, satisfactory in form and substance
to Buyer and its counsel substantially in the form of attached Exhibit 7.(g).
-------------
8. Conditions to Seller's and Salerno's Obligation to Close. The
obligations of Seller and Salerno pursuant to this Agreement are subject to the
following conditions having been met, or waived in writing by Seller and
Salerno, at or prior to the Closing Date:
(a) Representations and Warranties. The representations and warranties of
Buyer in this Agreement and in any exhibit, document or instrument delivered by
Buyer pursuant to this Agreement in all shall be correct in all material
respects on and as of the Closing Date.
(b) Payment of Purchase Price. Buyer shall have delivered to Seller the
Remaining Cash Payment, as adjusted pursuant to Paragraph 3.
(c) No Litigation. No investigation, suit, action or other proceedings
shall be threatened or pending before any court or governmental agency in which
it is sought to restrain, prohibit or obtain damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby.
(d) Opinion of Counsel. Seller shall have received an opinion of Buyer's
counsel, dated the Closing Date, satisfactory in form and substance to Seller
and its counsel substantially in the form of attached Exhibit 8.(d).
-------------
(e) Related Documents. All of the related documents provided for in
Paragraph 12 are executed at or prior to Closing.
(f) Approvals and Consents. All necessary approvals and consents with
respect to the transactions contemplated by the Agreement, the absence of which
would have a material adverse effect of Seller's rights will have been received
by Buyer.
9. Survival of Representations and Indemnification.
(a) Survival of Representations. Buyer and Seller agree that all
representations, warranties and covenants of Seller and Salerno
("Representations")
20
shall survive the execution and delivery of this Agreement, the Closing Date and
any investigation or audit made by Buyer. The Representations given in
Paragraphs 5.(a), (d), (f), (j), (k), (l), (v), (w), (z), (aa), (cc) and (dd)
shall continue indefinitely and all others shall expire upon the fifth
anniversary of the Closing Date.
(b) Indemnification by Seller and Salerno. Subject to the limitations set
forth in Paragraph 9.(f), Seller and Salerno, jointly and severally, agree to
indemnify and hold Buyer harmless from and against any and all Damages (as
defined in Paragraph 9.(c)) incurred by Buyer or which Buyer may sustain at any
time arising out of or by reason of:
(1) The inaccuracy or breach of any of the Representations made by Seller
or Salerno in or pursuant to this Agreement (in each case without giving effect
to any disclosure to matters contained in the Exhibits and without giving effect
to any materiality qualification);
(2) Any failure by Seller or Salerno to perform any obligation or comply
with any covenant or agreement of Seller or Salerno specified in this Agreement
or in any other document executed at Closing;
(3) Any claim (i) for wages or fringe benefits made by any employee of
Seller with respect to the period ending immediately preceding the Closing Date;
(ii) for severance payments or other liabilities with respect to the termination
of any employees of Seller; or (iii) with respect to the injury or death of any
such employee arising out of events occurring prior to the Closing Date;
(4) Any claim (including, without limitation, claims alleging death or
injury to persons or damage to property), whether based in tort, contract or
otherwise resulting from or caused by any product sold, or service provided, by
Seller prior to the Closing Date;
(5) Any debt, obligation or liability, whether known or unknown, fixed or
contingent, of any nature whatsoever before the Closing Date, including but not
limited to all environmental liabilities of any nature (collectively, "Pre-
Closing Debts"), other than any Pre-Closing Debts which are part of the Assumed
Liabilities, Product Claims or Sales Agreement Liabilities;
(6) Any of the matters disclosed on any of the Exhibits;
(7) Buyer being deemed to be a "successor" employer to Seller for the
purpose of COBRA obligations; or
(8) The ownership, lease, use, occupation or operation of any facility or
property at any time owned, leased, used, occupied or operated by Seller.
21
Seller and Salerno specifically acknowledges and agrees that Buyer may
proceed against either of them under Paragraph 9.(b) without contemporaneously,
or at any time, proceeding against the other. Salerno agrees that he shall not
have any claim or right of indemnification or contribution or any other right of
recourse against Seller with respect to Damages and he waives and releases any
and all such claims and right, until all indemnity obligations of Seller in
favor of Buyer have expired.
(c) Indemnification by Buyer. Buyer agrees to defend, indemnify and hold
harmless Seller and Salerno from and against any Damages incurred by reason of
(I) any breach of any representation, warranty or covenant of Buyer, (II) any
liabilities arising from the operation or conduct of the Business by Buyer
subsequent to the Closing Date and (III) any product shipped or manufactured by
or any services provided by the Buyer with respect to the Business subsequent to
the Closing Date.
(d) Damages. An Indemnified Party shall be entitled to recover the full
amount of any liabilities, losses, debts, obligations, monetary damages, fines,
fees, penalties, deficiencies, expenses (including amounts paid in settlement,
interest obligations, court costs, the reasonable costs of investigators, the
reasonable fees and expenses of attorneys, accountants, financial advisors or
other experts, and other reasonable expenses of litigation or administrative
proceedings) incurred due to the matter for which indemnification is sought, but
any recovery shall be net of any economic benefit to which the Indemnified Party
is entitled due to such liabilities, expenses, costs or loss, including, without
limitation, (i) any tax refund, reduction or benefit, (ii) any insurance
proceeds to which the Indemnified Party is entitled and (iii) any warranty
reimbursements (collectively, "Damages").
(e) Assertion and Defense of Indemnification Claims.
(1) Assertion of Claim. Buyer or Seller and Salerno under Paragraphs
9.(b) and (d), respectively ("Indemnified Party"), shall give notice to the
other ("Indemnifying Party") as soon as reasonably possible after the
Indemnified Party has actual knowledge of any claim to which the Indemnifying
Party has an obligation to indemnify, including the amount, if known, and shall
promptly supply any other information in possession of the Indemnified Party
supporting the claim. The omission by the Indemnified Party to give Notice as
soon as reasonably possible will not relieve the Indemnifying Party of its
indemnification obligations, unless the failure to give notice to the
Indemnifying Party materially prejudices the Indemnifying Party or notice is
given after the end of the survival period of the applicable representation of
warranty or other basis of the claim. All indemnification claims must be
asserted by giving notice within the survival period of the applicable
representation or warranty or other basis for the claim. Buyer shall have the
right to set off any Damages it may incur against the amount it owes Seller.
This right of set off shall be in addition to any other rights or remedies Buyer
may have against Seller.
22
(2) Defense of Undisputed Claim. The Indemnified Party will permit
the Indemnifying Party (at its expense) to assume the defense of any third party
claim in any litigation. The Indemnifying Party may settle or compromise any
third party claim or litigation only with the consent of the Indemnified Party,
which consent shall not be unreasonably withheld. The Indemnified Party shall
have the right at all times to participate in the defense, settlement,
negotiations or litigation relating to any third party claim or demand at its
own expense. If the Indemnifying Party does not assume the defense of any matter
which it has an obligation to indemnify, then the Indemnified Party shall have
the right to defend any such third party claim or demand, and will be entitled
to settle any such claim or demand in its discretion, all at the expense of the
Indemnifying Party. In any event, the Indemnified Party will cooperate in the
defense of any such action at the expense of the Indemnifying Party and the
pertinent records of each party shall be available to the other with respect to
the defense.
(3) Defense of Disputed Claim. Should an Indemnifying Party provide
Notice to the Indemnified Party regarding a claim or action by a third party for
which the Indemnifying Party denies liability, the Indemnified Party shall give
the Indemnifying Party a reasonable opportunity: (1) to conduct any proceedings
or negotiations in connection therewith; (2) to take all other required steps or
proceedings to settle or defend any third party action; or (3) to employ counsel
to contest any third party claim or action in the name of the Indemnified Party
or otherwise. If the Indemnifying Party desires to assume the defense of the
third party claim or action, it shall promptly give Notice to the Indemnified
Party. The Indemnifying Party and the Indemnified Party may participate in the
defense at their own expense.
(f) Limitation on Recovery. Anything in this Paragraph 9 to the contrary
notwithstanding, there shall be no recovery (I) under Paragraphs 9.(b)(1) or (6)
until the total claims for indemnification under those provisions exceed $5,000;
and (II) under Paragraph 9.(b) after the total recovery on all claims for
indemnification under Paragraph 9.(b) have exceeded the Price.
(g) Attempt at Resolving Disputes. Seller and Buyer agree to use
reasonable efforts to settle any dispute during the 30 days immediately
following a claim for indemnity being made; provided, Buyer shall have no duty
to seek resolution under this Paragraph 9.(g) of any breach, threatened breach
or dispute pursuant to Paragraphs 23 and 24.
10. Covenants.
(a) Salerno's and Seller's Covenants. Seller and Salerno covenant and
agree with Buyer as follows:
23
(1) Access to Properties and Records of Seller. Seller will give
Buyer and its representatives full access during normal business hours to all of
its properties, books, contracts, documents and records, the opportunity to make
reasonable investigation, and any additional financial statements of, and all
information with respect to the business and affairs of, Seller that Buyer may
reasonably request.
(2) Conduct of Seller's Business Pending Closing. Between the
date of the Agreement and the Closing Date, Seller shall operate its business in
the usual, regular and ordinary manner on a basis consistent with prior years
and shall use it best efforts to preserve its present business organization
intact, keep available the services of its present officers an employees and
preserve it present business relationships with persons having business
relationships with it.
(3) Right of First Refusal. Seller and Salerno agree to give
Buyer the right of first refusal to purchase or license the Fura-Zone Assets
(including the Fura-Zone Products) on mutually acceptable terms and conditions.
(4) Name Change. Promptly after the Closing, Seller and Salerno
agree to change Seller's corporate name and agree not to use "Squire
Laboratories" (or any derivative) in the new corporate name.
11. Intentionally Omitted.
12. Transactions Subsequent to Closing.
(a) Further Assurances. Buyer and Seller agree that, from time to
time after Closing, and upon request, they shall execute, acknowledge and
deliver such other instruments as reasonably may be required to more effectively
transfer and vest in Buyer the Purchased Assets or to otherwise carry out the
terms and conditions of this Agreement.
(b) Maintenance of Seller. Until the Federal, state and local income
tax liabilities of Seller attributable for all periods ending on or prior to the
Closing have been examined and reported on by the IRS (or closed by applicable
statute of limitations) and finally determined, Salerno agrees to maintain at
all times sufficient working capital to insure Seller's ability to pay its tax
obligations on a punctual basis.
(c) Interim Management Agreement. Salerno and Buyer agree to enter
into the Interim Management Agreement in the form attached as Exhibit 12(c).
------------
(d) License Agreement. Buyer and Seller agree to enter into a License
Agreement in the form attached as Exhibit 12(d).
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24
(e) Distributor and Purchase and Supply Agreements. Seller and Buyer
agree to enter into a Distributor Agreement in the form attached as Exhibit
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12(e)-1. Also, Seller and Buyer agree to enter into a Purchase and Supply
- -------
Agreement in the form attached as Exhibit 12.(e)-2.
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(f) Consulting. Salerno agrees to provide up to 15 days of his time
or that of Seller's manufacturing manager to help Buyer in the orderly
relocation of the Purchased Assets and startup at the new location at no cost to
Buyer. Any travel expenses related to this consulting shall be paid by Buyer.
13. Notices. All notices and other communications required or
permitted under this Agreement shall be given if mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or messenger,
fax or telegram to the parties at the following addresses, or to such other
changed address as such party may have given by notice:
Buyer: Neogen Corporation
620 Lesher Place
Lansing, Michigan 48912
Attn: President
Facsimile: 517-372-0108
And a copy to: Fraser Trebilcock Davis & Foster, P.C.
Attention: Richard C. Lowe
1000 Michigan National Tower
Lansing, MI 48933
Facsimile: 517-482-0887
Seller: Squire Laboratories, Inc.
100 Mill Street
Revere, Massachusetts 02151
Attn: President
Facsimile: 781- 289-5907
And a copy to: Vacovec, Mayotte & Singer
Attention: John G. Ganick
Two Newton Place, Suite 340
255 Washington Street
Newton, Massachusetts 02458-1634
Facsimile: 617-969-2002
14. Applicable Law; Venue. This Agreement has been executed,
delivered and accepted at and shall be deemed to have been made at Lansing,
Michigan and shall be interpreted and the rights and liabilities of the parties
shall be determined in
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accordance with the laws of the State of Michigan. The parties waive personal
service of any and all process upon them and consent that all such service of
process be made by registered mail directed to the parties at their addresses
set forth on page 1 of the Agreement and service so made shall be deemed to be
completed five business days after the material shall have been deposited in the
U.S. mail, postage prepaid. The parties agree that any action shall be brought
in the court of appropriate jurisdiction in Ingham County, Michigan or U.S.
District Court for the Western District located in Lansing, Michigan. The
parties consent to jurisdiction and waive all claims of improper venue and forum
non-conviens.
15. Bulk Transfer. Buyer agrees to waive compliance with the
provisions of any applicable bulk sale or transfer of law in exchange for
Seller's covenant to indemnify and hold Buyer harmless from and against all
liabilities Buyer may incur arising from such non-compliance.
16. Integration. This Agreement and the Confidentiality Agreement,
dated on or about April 25, 2000 (between Buyer and The Walden Group, Inc.),
sets forth the entire agreement and understanding between the parties as to the
subject matter, and supersedes all prior discussions, representations,
amendments or understandings of every kind and nature between them.
17. Amendments. Any amendment, alteration, supplement, modification
or waiver shall be invalid unless it is set forth in writing, signed by the
party intending to be bound thereby.
18. Severability. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without the
provision.
19. Assignability. This Agreement may be assigned by Buyer without
the prior written consent of Seller; provided, Buyer shall continue to be liable
for the performance of all obligations pursuant to the Agreement. This Agreement
may not be assigned by Seller or Salerno without the prior written consent of
Buyer.
20. Benefit. This Agreement shall be binding upon and inure to the
benefit of Buyer and Seller and their respective successors and permitted
assigns and on Salerno and his heirs, personal representatives, successors and
permitted assigns.
21. Captions. Captions contained in this Agreement are inserted for
reference and in no way define, limit, extend or describe the Agreement or the
intent of any provision in this Agreement.
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22. Pronouns. All pronouns and any variation thereof shall be deemed
to refer to the masculine, feminine, neuter, singular or plural as the identity
of the parties may require.
23. Covenant Not to Compete. Without prior written consent of Buyer,
Seller and Salerno each agree that, for a ten year period from and after the
Closing Date, they shall not individually or jointly, alone, or as an officer,
agent, employee, director, representative, stockholder, partner, co-venturer,
independent contractor or otherwise, of any other corporation, non-profit
organization or any other entity, directly or indirectly, own, manage, operate,
or control in the ownership, management, operation, or control of or work for,
or permit the use of their names by, or be connected in any manner with any
business or activity in any country which is at the time competitive with any
product of the Business as defined in Recital A. Anything in the preceding
sentence to the contrary notwithstanding, Seller and Salerno shall be permitted
to manufacture and sell Fura-Zone Products with its present formula and
packaging without being in violation of this Paragraph 23. While the
restrictions set forth above are considered by the parties to be reasonable in
all circumstances, it is recognized that restrictions of the nature in question
may fail for technical reasons unforeseen and accordingly it is hereby agreed
and declared that if any of such restrictions shall be adjudged to be void as
going beyond what is reasonable in all the circumstances for the protection of
the interests of the Buyer but would be valid if part of the wording were
deleted or the periods reduced or the range of activities or area dealt with
reduced in scope, these restrictions shall be applied with such modifications as
may be necessary to make them valid and effective.
As consideration for this agreement not to compete, Fifteen Thousand
Dollars ($15,000) as a part of the Remaining Cash Payment shall be deemed as
payment for this covenant not to compete to Seller and Salerno. No additional
consideration shall be paid by Buyer.
24. Confidential Information. It is agreed that the products,
information and technology relating to the Business and anticipated improvements
relating to them constitute trade secrets. Seller and Salerno agree that they
shall not individually or jointly disclose to any person any Confidential
Information regardless of nature, type or physical manifestation or any other
information concerning the business affairs of Buyer and the Business,
including, but not limited to, information related to the products identified in
Recital A and improvements made thereto, except as specifically consented to in
advance in writing by Buyer. This restriction shall include information imparted
or divulged to, gained or developed by, or otherwise discovered by Seller or
Salerno in executing this Agreement. Anything in this Agreement to the contrary
notwithstanding, Seller and Salerno shall not be bound by this Paragraph 24 to
the extent that the information they desire to divulge is or becomes publicly
known, other than through a breach of their obligations pursuant any agreement
with Buyer or as required by law.
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25. Injunctive Relief. Seller and Salerno acknowledge that a breach
of any of the covenants, agreements or promises contained in Paragraphs 23 and
24 could result in irreparable injury to Buyer for which there might be no
adequate remedy at law, and that, in the event of such a breach or threatened
breach, Buyer shall be entitled to obtain a temporary restraining order,
preliminary injunction and permanent injunction restraining Seller and Salerno
from engaging in any of the activities prohibited by Paragraphs 23 and 24.
26. Exhibits. The parties agree that the Exhibits attached to this
Agreement shall be treated for all purposes as part of this Agreement.
27. Prevailing Party. The prevailing party in any litigation
involving this Agreement (other than those matters governed by Paragraph 9,
which, for the avoidance of doubt, contains its own provision for fees and
expenses) shall be entitled to recover, in addition to any other relief
obtained, the costs and expenses, including reasonable attorney's fees and
expenses, incurred by the prevailing party.
28. Construction of Agreement. The parties agree that this Agreement
has been jointly drafted and that neither party may assert an ambiguity in the
construction of this Agreement against another party because the other party
allegedly drafted the allegedly ambiguous provision.
29. Defined Terms. Defined terms used in this Agreement have the
meanings ascribed to them in the paragraphs contained in attached Exhibit 29.
[The rest of this page has been intentionally left blank.]
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The parties have executed this Agreement as of the date first above
written.
SELLER: Americo L. Salerno:
Squire Laboratories, Inc.
By:__________________________________ __________________________
Americo L. Salerno, its President
BUYER:
Neogen Corporation
By:__________________________________
James L. Herbert, its President
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