UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 28, 2002
(Date of Report)
METWOOD, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-5391 83-0210365
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
819 Naff Road
Boones Mill, VA 24065
(Address of principal executive offices)
(540) 334-4294
(Registrant's telephone number, including area code)
1
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 10, 2002, Metwood, Inc. purchased substantially all the assets of
Providence Engineering, P.C. pursuant to an Asset Purchase Agreement, dated
January 1, 2002, between Providence Engineering, P.C. and Metwood, Inc.
This Form 8-K/A amends the current report on Form 8-K, dated June 10, 2002, to
include Exhibit 2.1, inadvertently omitted from the original 8-K filing.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired - N/A to this amendment
(b) Pro Forma financial information - N/A to this amendment
(c) Exhibits
2.1 Asset Purchase Agreement, dated January 1, 2002, by and between
Providence Engineering, P.C. and Metwood, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
METWOOD, INC.
Date: June 28, 2002 By: /s/ Robert M. Callahan
President and Director
2
Exhibit Index
Exhibit
No. Description
- ------ -----------
2.1 Asset Purchase Agreement by and between Providence Engineering, P.C.
and Metwood, Inc.
3
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PROVIDENCE ENGINEERING, P.C.
AND
METWOOD, INC.
JANUARY 1, 2002
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is dated as of January 1,
2002 and is by and between Providence Engineering, P.C., a Virginia Corporation
("Seller"), and Metwood, Inc., a Nevada corporation ("Buyer").
WITNESSETH:
WHEREAS, Seller is willing to sell and transfer substantially all
of its assets to Buyer and Buyer desires to purchase and acquire the assets in
accordance with the terms set forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals, the
covenants and agreements contained herein, including, but not limited to, the
payments herein described, and other good and valuable consideration, the full
receipt and sufficiency of which is hereby acknowledged by each of the parties
hereto, the parties agree as follows:
ARTICLE 1. Transfer of Assets.
1.1 Transfer of Assets; Liabilities.
1.1.1 Transfer of Assets to Buyer by Seller. Upon and subject to the
terms and conditions stated in this Agreement, on the Closing Date (as
hereinafter defined), Seller shall convey, transfer and deliver to Buyer and
Buyer shall purchase and acquire from Seller substantially all of the assets and
properties of Seller, real and personal, tangible and intangible, of every kind
and description used by Seller in connection with the business and operations of
the Seller as a going concern, including, without limitation, rights under
contracts and leases, real and personal property, equipment, inventories,
customer lists and related information, intangibles, and goodwill. The rights,
assets, property and business of Seller to be transferred to Buyer pursuant to
this Article 1 are hereinafter referred to as the "Purchased Assets." Except as
otherwise expressly provided herein, the parties hereto expressly acknowledge
and agree that the transfer of the Purchased Assets by Seller to Buyer on the
Closing Date shall be on an "AS-IS, WHERE-IS" basis. For purposes of this
Agreement, December 31, 2001, shall be referred to as the "Balance Sheet Date."
The Purchased Assets shall include, without limitation, the
following:
(a) Tangible Personal Property. All equipment, vehicles (including,
but not limited to, all rolling stock), furniture, fixtures, office materials
and supplies, spare parts, inventory (including finished goods, work-in-process
and raw materials) and other tangible personal property of every kind and
description owned or held as of the date of this Agreement by Seller and used or
useful in connection with the business and operations of Seller, including,
without limitation, those shown on Schedules, attached hereto and incorporated
herein, and any additions, improvements, replacements and alterations thereto
made between the Balance Sheet Date and the Closing Date.
(b) Design and Project Agreements. Those orders, contracts and
agreements, for the design, and sale of engineering services, as set forth on
Schedules, attached hereto and incorporated herein.
(c) Other Contracts. All contracts entered into by Seller in
connection with the business and operations of Seller set forth on Schedule 3,
attached hereto and incorporated herein (such Schedule 3 shall specify those
contracts the assignment of which requires the consent of any third party);
together with (i) all contracts that have been or will have been entered into in
the ordinary course of business and which on the Balance Sheet Date will be
terminable by Buyer on not more than thirty (30) days written notice without
4
obligation being incurred upon such termination, and (ii) all additional
contracts entered into in the ordinary course of business of Seller between the
Balance Sheet Date and the Closing Date that are in effect on the Closing Date;
provided, however, that Buyer shall assume, and does hereby assume, only those
contracts set forth on Schedule 3. As used in this Agreement, "contract" means
any agreement, arrangement, commitment or understanding, written or oral,
expressed or implied, to which Seller is a party or is bound.
(d) Trademarks, etc. All trademarks, trade secrets, manufacturing
processes and other intangible personal property, including Seller's corporate
or trade name "Providence Engineering" to the extent permitted by the Virginia
Professional Corporation Act, owned, used by or useful to Seller in connection
with the business and operations of Seller as of the date hereof, including
without limitation those shown on Schedules, attached hereto and incorporated
herein, which shall include all acquired with respect to Seller between the
Balance Sheet Date and the Closing Date.
(e) Files and Records. All files and other records of Seller relating
to the business and operations of Seller, provided that Buyer shall provide
Seller reasonable access to and copies of such files and records for a period of
three (3) years after the Closing Date. In this connection, Buyer expressly
agrees not to destroy or discard any such files and records without first giving
Seller notice and an opportunity to retake possession of the same.
(f) Goodwill. All of Seller's goodwill in and going concern value of
Seller.
(g) Trade Receivables, Notes, Accounts Receivable. All trade
receivables, notes and accounts receivable (including all retainages and
unbilled receivables) of Seller relating to or arising out of the operation of
Seller.
(h) Prepaid Items. All prepaid expenses and taxes expended by
Seller in connection with Seller.
(i) Other Assets. Capitalized start-up expenses and other
miscellaneous assets disclosed to Buyer.
(j) Noncompetition. Seller shall not, directly or indirectly, except
as employees of Buyer, own, manage, operate, join, control, or participate in
the ownership, management operations, or control or be connected in any manner
with the rendering and sale of engineering products and service for a period of
one (1) year following the Closing Date in DC, MD, VA, NC, SC, WV and TN. In the
event of any actual or threatened breach of this provision, buyer shall be
entitled to an injunction restraining Seller. Buyer shall also be permitted to
pursue any other remedy available for such breach or threatened breach,
including the recovery of damages from Seller. If at the time of enforcement of
this covenant not to compete, a court holds that the duration, scope or area
restrictions stated herein are unreasonable under the circumstances then
existing, the parties hereto agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the stated
duration, scope or area.
1.1.2 Assumption of Liabilities.
(a) Except as provided in Section 2.5 of this Agreement, the
Purchased Assets shall be sold and conveyed to Buyer free and clear of all
liabilities, obligations, liens, security interests and encumbrances, except
that Buyer will, and hereby does, assume the obligations of Seller for accounts
payable and notes payable, billings in excess of cost and other accrued expenses
existing as of the Balance Sheet Date as well as those obligations of Seller
arising after the closing Date under leases and contracts assigned to Buyer, the
details of which leases and contracts are set forth on Schedules.
(b) Seller will pay all of its own payroll, salary, commissions,
payroll taxes, or other taxes accrued through the Balance Sheet Date and the
same shall not be assumed by Buyer.
(c) Buyer expressly covenants and agrees that, from and after the
Balance Sheet Date, Buyer shall timely perform to completion the obligations
assumed hereunder in accordance with the terms thereof. Without limiting the
generality of the preceding sentence, with respect to any project contracts
conveyed to Buyer and assumed by Buyer hereunder, Buyer expressly covenants and
agrees that it shall timely perform and complete such project contracts in a
good and workmanlike manner and in accordance with their respective plans and
specifications; provided, however, that Buyer shall not be liable for any defect
in the structural, engineering or architectural design shop drawings,
manufacture, delivery or erection of any project assumed and completed by Buyer
that is a result of plans and specifications (incorporating such defect) that
were provided by, completed, used or approved by Seller or its agents. The
assumption of responsibility to complete any such contract is contingent upon
receiving the project in time to complete the same timely and in a good
workmanlike manner and contingent upon the condition of the projects as
received. The work done to the date of transfer must not contain any defects
requiring remedy, or causing delay of the project beyond its scheduled
completion date. The
5
status of each project transferred (including the percentage of completion)
shall be a fact to be determined in good faith between the parties and subject
to clarification of the reason that any project is not so completed. Buyer shall
not be responsible for product liabilities, tort or contractual claims, taxes of
Seller, any liabilities of Seller regarding litigation, warranty liabilities,
workers' compensation claims or other claims at law or equity relating to or
arising from the business conducted by Seller prior to the Balance Sheet Date,
whether or not such litigation, proceeding or claim is pending, threatened or
asserted before, on or after the Balance Sheet Date. The assumption of
liabilities shall be limited to those liabilities described by Seller on
Schedules, to be adjusted through the Balance Sheet Date to reflect liabilities
incurred in the ordinary course of business, such adjusted Schedule to be
delivered within thirty (30) days following the Closing.
1.1.3 Collection and Remittance of Accounts Receivable. After the
Balance Sheet Date, Seller shall cooperate with and assist Buyer in the
collection of accounts receivable transferred and assigned to Buyer hereunder as
Buyer may from time to time reasonably request. To the extent that Seller
receives any payments toward such assigned accounts receivable after the Balance
Sheet Date (but prior to the reassignment of any such accounts receivable back
to Seller, Seller shall promptly endorse (if necessary) and remit such payments
to Buyer. Such cooperation and assistance by Seller to Buyer in the collection
of accounts receivable shall not extend to the retention of counsel or any
collection agency, nor to the institution of litigation.
Buyer shall provide Seller with a monthly written accounting report
of all amounts collected or received by Buyer with respect to accounts
receivable assigned to Buyer as part of the Purchased Assets. Buyer shall employ
its ordinary and customary collection procedures in connection with the
collection of the accounts receivable assigned to Buyer hereunder; provided,
however, that Buyer shall not be required to institute litigation, to file liens
or to take any other legal action in connection with the collection of such
accounts receivable. Notwithstanding any provision contained in this Agreement
to the contrary, if, prior to the Balance Sheet Date, Buyer collects or receives
(or has collected or received) any amounts attributable to the accounts
receivable of Seller, Buyer shall immediately remit to Seller any and all such
amounts collected prior to the Balance Sheet Date and all such amounts shall be
deemed and treated as though such amounts were collected by Seller prior to the
Balance Sheet Date.
Costs of collection of any account shall be borne by Seller and
Buyer in proportion to the benefit received by each.
1.2 Consideration. In consideration of Seller's performance of this
Agreement and the transfer and delivery of the Purchased Assets to Buyer, the
total consideration paid by Buyer to Seller hereunder (the "Purchase Price")
shall be Three Hundred Fifty Thousand Dollars ($350,000.00), payable in cash
and/or Metwood, Inc. common stock, at Metwood's option, to Ronald B. Shiflett
(75%) and Sean C. Goldsmith (25%). Any shares of Metwood, Inc. common stock
shall be issued on a restrictive and investment basis as follows:
(a) Metwood, Inc. has the option to repurchase any or all of the
shares issued set forth in 1.2 above at a price to be negotiated on or before
December 31, 2002.
1.3 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held in the offices of John F. Hanzel, P.A.,
at 1:00 p.m. Eastern time on June 10, 2002, or at such later time and place as
shall be mutually agreed upon by the parties (the "Closing Date"). At the
Closing, each party shall execute and deliver to the other party such
instruments of conveyance or assumption as may be required by this Agreement and
which shall be in form and substance satisfactory to the other party and its
counsel.
ARTICLE 2. Representations and Warranties of Seller.
Seller represents and warrants as follows:
2.1 Incorporation. Seller is a professional corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia. Seller is duly licensed or qualified to do business
and is in good standing and authorized to do business in the Commonwealth of
Virginia. There is no other jurisdiction in which Seller has any facility or
office included in the Purchased Assets by reason of which such licensing or
qualification is otherwise required. Seller has full corporate power to carry on
the business of Seller as such business is now being conducted, to own and
operate the Purchased Assets, and to enter into and complete the transactions
contemplated by this Agreement.
2.2 Financials. Seller has delivered to Buyer copies of the balance
sheets and income statements of Seller pertaining to Seller as of and for the
fiscal year ended December 31, 2001. All such financial statements
6
present fairly the financial position of Seller in accordance with the
books and records regularly maintained by Seller with respect to Seller. All
such financial statements fairly present (a) the assets and liabilities of
Seller as at the Balance Sheet Date and (b) the revenues and expenses of Seller
for the fiscal period ended on such date. All financial statements have been and
will be prepared in accordance with generally accepted accounting principles
consistently applied.
2.3 Business Since the Balance Sheet Date. From the Balance Sheet
Date through the Closing Date, the business of Seller has been conducted in
substantially the same manner as it was before the Balance Sheet Date. Since the
Balance Sheet Date, there has been no material adverse change in the business
condition (financial or otherwise) or results of operations of Seller, except as
disclosed in writing to Buyer on Schedule 7.
2.4 Condition and Adequacy of Assets. The Purchased Assets are all
assets necessary and sufficient for the operation of Seller in the manner
heretofore conducted by Seller; provided, however, that the Purchased Assets
transferred to Buyer by Seller pursuant to this Agreement are sold "AS-IS,
WHERE-IS." Except as otherwise disclosed to Buyer in writing at the Closing, the
tangible assets included in the Purchased Assets, including without limitation
any real property improvements, are in good operating condition and repair,
reasonable wear and tear in ordinary usage excepted, and are adequate and
suitable in accordance with general industry practices for the purposes for
which they are currently used and intended to be used.
2.4.1 Capitalization and Repair. Since the Balance Sheet Date through
the Closing Date, the normal policies of capitalization of asset repair versus
expensing of repair have been and will be followed. Attached hereto as Schedule
8 is a complete list of all capitalization items in excess of $10,000.00
occurring since the Balance Sheet Date.
2.4.2 Inventory. The inventory (raw materials, work in process and
finished goods) reflected on the Balance Sheet Date was computed in accordance
with generally accepted accounting principles, consistently applied. The
inventory to be reflected on the Closing Balance Sheet will consist of items
that are good and merchantable and of a quality presently usable or saleable in
the ordinary course of business, and will not contain obsolete, damaged,
defective, or excess inventory or items not saleable or usable.
2.4.3 Accounts Receivable. Accounts receivable reflected on the
balance sheet at the Balance Sheet Date shall include only receivables arising
from bona fide sales of merchandise or services arising in the ordinary course
of business. The collectibility of all such accounts receivable is guaranteed.
2.4.4 Accounts Payable. The accounts payable reflected on the
balance sheet at the Balance Sheet Date shall include only obligations incurred
by Seller in the ordinary course of business of Seller.
2.4.5 Absence of Undisclosed Liabilities. Except as and to the extent
disclosed on the balance sheet at the Balance Sheet Date in this Agreement or in
the Schedules attached hereto, and except for liabilities which have been or
will be incurred in the ordinary course of business of Seller, Seller has not
incurred and will not incur any liabilities or obligations (including, but not
limited to, job back-charges or losses), secured or unsecured (whether absolute,
contingent or otherwise), arising out of any transaction, event or state of
facts occurring or accruing on or prior to the Closing Date.
2.5 Title to Real Property, etc. Seller has, or as of the Closing
Date Seller will have, good and marketable title to all the real property to be
transferred to Buyer hereunder, free and clear of all mortgages, security
interests, liens, claims, charges or encumbrances of any nature whatsoever,
except for real property taxes not yet due and payable, and except as otherwise
disclosed in Schedule 2 to this Agreement, none of which exceptions adversely
affects the marketability of title or the use of such property in the manner
currently used by Seller. Schedule 2 to this Agreement contains descriptions of
all the real properties owned or leased by Seller with respect to Seller and all
improvements thereon, legal descriptions thereof, all liens, mortgages,
encumbrances and easements thereon (except those, if any, that do not affect the
full use and enjoyment of such real properties for their full use and enjoyment
of such real properties for their intended purposes), leases, licenses or other
rights to possession thereof, and a description of any policies insuring title
thereto including the amount thereof (copies of which will be furnished to Buyer
prior to the Closing). To the best knowledge of Seller, the leases referred to
in Schedule 2 are valid, binding and enforceable in accordance with their terms,
and (i) no landlord or tenant is in default thereunder, and (ii) there are no
offsets or defenses by either landlord or tenant against the other. Except as
described in Schedule 2, the assignment to Buyer of any lease to which Seller is
a party as tenant will not permit the landlord to accelerate the rent, cause the
lease terms to be renegotiated or constitute a default under the lease, and will
not require the consent of any such landlord to the assignment of such lease.
Except as described in Schedule 2, there are no amendments or changes to any
real property lease
7
referred to in Schedule 2 that would affect the full use and enjoyment of
the leasehold premises, access, parking and use of common areas as provided in
the lease, and Seller is not in default under any such lease. The Purchased
Assets include all the furniture and equipment located in the structures
referred to in Schedule 2. All other assets and property included in the
Purchased Assets are, and on the Closing Date will be, in each case free and
clear of all security interests, mortgages, pledges, liens, conditional sales
agreements, leases, claims, encumbrances or charges of any nature whatsoever,
except as expressly stated in Schedule 2. To the best knowledge of Seller, all
of the above-described real estate, structures and appurtenances comply with all
applicable ordinances and regulations and building, zoning or other laws in all
respects necessary to conduct the business of Seller as such business presently
is being conducted.
2.6 Contracts.
(a) Schedule 3 contains a complete list of all contracts, agreements
and understandings that are necessary to the conduct of the business of Seller
as currently conducted by Seller and which are expressly assumed by Buyer
pursuant to Subsection 1.1.1(d) hereof. Provided that any requisite consent to
the assignment thereof to Buyer has been obtained, each of the contracts and
leases constituting part of the Purchased Assets that is in effect on the
Balance Sheet Date and is assigned to and assumed by Buyer on the Balance Sheet
Date will be valid and in full force and effect and there will be at that time
no default by either party thereto in existence and continuing with respect
thereto. To the best knowledge of Seller, no facts exist which, with the passage
of time or the giving of notice or both, will constitute an event of default
thereunder. All project contracts of Seller for the design, engineering,
manufacture and/or erection (as described in Schedule 3 hereof) in progress as
of the Balance Sheet Date have been performed, and through the Closing Date will
be performed, by Seller in a good and workmanlike manner and in accordance with
their respective plans and specifications, which plans and specifications were
accurate, complete and appropriate for each project. Seller has provided, or by
the Balance Sheet Date will provide, Buyer with true and complete copies of all
of the contracts and leases listed in Schedules 2 and 3 and of the payroll list
of Seller as of December 31, 2001.
(b) In the event that any requisite consent to the transfer of any
contract hereunder cannot be obtained, any contract for products or services
normally performed by Seller shall be serviced and completed by Buyer as a
subcontractor in the name of Seller with the profit or loss thereon to be deemed
the profit or loss of Buyer. The completion of any such contract under the
auspices of or in the name of Seller shall be without additional consideration
to Seller. The representations and warranties of Seller herein with respect to
the absence of any default under any contract assumed by Buyer hereunder shall
not apply to a default caused by the assignment to Buyer of any contract
hereunder without the requisite consent to the transfer thereof.
2.7 Trademarks, etc. Schedule 4 to this Agreement sets forth as of
the date hereof a correct and complete list of, and on the Closing Date will be
updated to show as of that date a correct and complete list of, all trademarks
and service marks included in the Purchased Assets, all of which are valid, in
good standing and, to the best knowledge of Seller, uncontested. The list set
forth in Schedule 4 constitutes a complete list of all such trademarks and
service marks that are necessary to, and currently used in the business of
Seller as currently conducted in connection with Seller. Seller is duly
authorized by means of rights, licenses or other authority, to use all service
marks, trademarks and trade names necessary to conduct the business of Seller,
as presently conducted or presently proposed to be conducted by Seller; Seller
has not received any notice with respect to any alleged infringement or unlawful
or improper use of any trademark, service mark, trade name or other intangible
property right owned or alleged to be owned by others and used in connection
with Division. No director, officer or employee of Seller has any interest in
any asset or right listed on Schedule 4, all of which are free and clear of any
lien, security interest, claim or encumbrance of any kind. Seller has not
granted any outstanding licenses or other rights to any asset or right listed in
Schedule 4, except as otherwise disclosed on Schedule 4, and Seller has no
knowledge of any infringement of any such asset or right. Seller owns no patents
in connection with Seller.
2.8 Litigation. Except as set forth on Schedule 9: (i) Seller with
respect to Seller has not been operating under or subject to, or in default with
respect to, any order, writ, injunction or decree of any court or federal,
state, municipal or other governmental department, commission, board, agency or
instrumentality, foreign or domestic; (ii) Seller has not received any inquiry,
written or oral, from any federal, state or local agency concerning any of the
operations or business of Seller during the 12-month period prior to the date of
this Agreement which could be expected to have a material adverse effect on the
operations of Seller; and (iii) there is no litigation pending by or against, or
to Seller's knowledge threatened against, Seller relating to or affecting any of
the Purchased Assets, or the business of Seller or any products of Seller.
8
2.9 Compliance with Laws. Seller, with respect to Seller, has
substantially complied with all laws, regulations and orders applicable to it,
and the current uses by Seller of the Purchased Assets do not violate any such
laws, regulations or orders.
2.10 No Violation. Neither the execution and delivery by Seller of
this Agreement nor the consummation by Seller of the transactions contemplated
hereby is an event which, of itself or with the giving of notice or the passage
of time or both, constitutes a violation of or will conflict with or result in
any material breach of or any default under, the terms, conditions or provisions
of any judgment, law or regulation to which Seller or the Purchased Assets are
subject, or of Seller's Charter or bylaws, or of any agreement or instrument to
which Seller is a party or by which it is bound (except for any default arising
as a result of Seller's assignment of certain contracts to Buyer without the
written consent of the other party to each such contract, where required to
effect such assignment), or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever on any of the Purchased Assets,
other than as specifically created or contemplated by this Agreement or any
instrument delivered or executed in connection herewith.
2.11 Changes. Except as shown on Schedule 6 to this Agreement, since
the Balance Sheet Date, Seller has not, with respect to Seller:
2.11.1 mortgaged, pledged or subjected to lien or any other
encumbrance, any of the Purchased Assets;
2.11.2 sold or transferred any of the Purchased Assets, except in the
ordinary course of business;
2.11.3 increased the compensation payable or to become payable to
Seller's employees or agents, except for normal increases in compensation
consistent with the payroll practices of Seller in prior years and Seller shall
have notified Buyer prior to Closing of the amount of any such increase;
2.11.4 suffered any material damage, destruction or loss not covered
by insurance or the acquisition, condemnation or taking of property by any
governmental authority;
2.11.5 experienced any work stoppage; 2.11.6 experienced any
materially adverse change; or 2.11.7 lost any material contracts.
2.12 Brokers. There is no broker or finder or other person who would
have any valid claim against any of the parties to this Agreement for a
commission or brokerage fee in connection with this Agreement or the
transactions contemplated hereby as a result of any agreement, understanding or
action by Seller. Seller shall be solely responsible for the payment of any such
commission or brokerage fee.
2.13 Employee Relations. Except as shown on Schedule 9, there are no
labor disputes or proceedings pending or, to the best knowledge of Seller,
threatened between Seller and any of the employees of Seller and Seller has no
collective bargaining units representing any of the employees of Seller.
2.14 Corporate Action. All corporate actions and proceedings
necessary to be taken by or on the part of Seller in connection with the
transactions contemplated by this Agreement and necessary to make the same
effective have been duly and validly taken, or will have been taken on or before
the Closing Date, and this Agreement has been duly and validly authorized,
executed and delivered by Seller and constitutes a valid and binding agreement,
enforceable in accordance with and subject to its terms, except as limited by
(i) bankruptcy, reorganization, insolvency and other laws affecting the
enforcement of creditors' rights or contractual obligations generally and (ii)
general principles of equity (whether the enforceability of this Agreement is
considered in a proceeding in equity or at law).
2.15 Instruments of Conveyance; Good Title. The instruments to be
executed by Seller and delivered to Buyer at the Closing, conveying the
Purchased Assets to Buyer, will transfer good and marketable title to the
Purchased Assets, free and clear of all liabilities, obligations, liens and
encumbrances, except those obligations referred to in the first paragraph of
Subsection 1.1.3 hereof, including the Schedules delivered thereunder.
2.16 Accounts Receivable. Seller has no reason to believe that any
specific account receivable (including any retainage) included in the Purchased
Assets is not good and collectible in the normal course of business or that any
accounts receivable that prove to be uncollectible, in the aggregate, exceed
Seller's reserve for doubtful accounts.
2.17 Pension and Other Employee Plans and Agreements. Seller has no
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code of 1986, as amended, with respect to any pension plan or
other employee benefit plan. Seller expressly acknowledges and agrees that Buyer
shall neither assume nor bear any responsibility for any pension plan or other
employee benefit plan of Seller.
9
2.18 Taxes. Seller has properly and accurately completed and duly
filed in correct form with the appropriate United States, state and local
governmental agencies and with the appropriate foreign countries and political
subdivisions thereof, all tax returns and reports required to be filed; such
returns and reports are accurate and complete; and Seller has paid in full or
made adequate provisions on its financial statements for all taxes, interest,
penalties, assessments or deficiencies shown to be due on such tax returns and
reports or claimed to be due by any taxing authority or otherwise due and owing,
including, without limitation, those due in respect of properties, income,
franchises, licenses, sales and payrolls. Seller has made all payments of
estimated income tax due through the date hereof and all withholdings of tax
required to be made under all applicable United States, state and local tax
regulations and such withholdings have either been paid to the respective
governmental agencies or set aside in accounts for such purpose or accrued,
reserved against and entered upon the books of Seller. Estimated income taxes
that are not yet due to be paid to the Internal Revenue Service or any state or
local taxing authority have been accrued, reserved against and entered upon the
books of Seller. Seller has not executed or filed with the Internal Revenue
Service or any other taxing authority, domestic or foreign, any agreement or
other document extending, or having the effect of extending, the period for
assessment or collection of any taxes. Seller is not a party to any pending
action or proceeding, nor, to the best knowledge of Seller, is any such action
or proceeding threatened, by any governmental authority for assessment or
collection of taxes and no claim for assessment or collection of taxes has been
asserted against Seller, nor has Seller been notified by any governmental
authority that an audit or review of any tax matter is contemplated. To the best
knowledge of Seller, no state of facts presently exists with respect to Seller
or Seller that would constitute grounds for the assessment by the federal
government or any foreign, state or local taxing authority of any tax liability
with respect to any period ended prior to the date hereof. There are no tax
liens (other than liens for taxes for current and subsequent years which are not
yet due and delinquent) upon any properties or assets of Seller, whether real,
personal or fixed, tangible or intangible.
2.19 Environmental Matters.
(a) The Real Property and its existing and prior uses comply and have
at all times complied with, and Seller is not in violation of, and has not
violated, in connection with the ownership, use, maintenance or operation of the
Real Property and the conduct of the business related thereto, any applicable
federal, state, county or local statutes, laws, regulations, rules, ordinances,
codes, licenses and permits of all governmental authorities relating to
environmental matters, including by way of illustration and not by way of
limitation, (i) the Clean Air Act, the Federal Water Pollution Control Act of
1972, the Resource Conservation and Recovery Act of 1976, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Toxic
Substances Control Act (and any amendments or extensions thereof), and (ii) all
other applicable environmental requirements.
(b) Without limiting the generality of Subsection 2.19(a), Seller (i)
has operated the Real Property and has at all times received, handled, used,
stored, treated, shipped and disposed of all hazardous substances, petroleum
products and wastes in compliance with all applicable environmental, health or
safety statutes, ordinances, orders, rules, regulations or requirements, and
(ii) has removed from and off the Real Property all hazardous substances,
petroleum products and wastes and any contamination on or to the Real Property
resulting therefrom.
(c) There are no statutes, orders, rules or regulations relating to
environmental matters requiring any work, repairs, construction or capital
expenditures with respect to the Real Property, nor has Seller received any
notice of any of the same.
(d) No hazardous or toxic materials, substances, pollutants,
contaminants or wastes have been released into the environment, or deposited,
discharged, placed, recycled or disposed of at, on or near the Real Property,
nor has the Real Property been used at any time by any person as a landfill or
waste disposal site.
(e) (i) No notices of any violation of any of the matters referred to
in Subsections 2.19(a) through 2.19(d) relating to the Real Property or its use
have been received by Seller, and (ii) there are no writs, injunctions, decrees,
orders or judgments outstanding, no lawsuits, claims, proceedings or
investigations pending or threatened, to the best knowledge of Seller, relating
to the ownership, use, maintenance or operation of the Real Property, nor, to
the best knowledge of Seller, is there any basis for such lawsuits, claims,
proceedings or investigations being instituted or filed.
ARTICLE 3. Representations and Warranties of Buyer.
10
Buyer represents and warrants as follows:
3.1 Incorporation. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.
3.2 No Violation. Neither the execution and delivery of this
Agreement, nor the execution and delivery of any agreement executed in
connection with this Agreement, nor the consummation of the purchase of the
Purchased Assets, nor the assumption of any liabilities pursuant to this
Agreement is an event which, of itself or with the giving of notice or the
passage of time or both, constitutes a violation of or will conflict with or
result in any breach of or default under, the terms, conditions or provisions
of, any judgment, law or regulation, or Buyer's articles of incorporation or
bylaws, or any agreement or instrument to which Buyer is a party or by which it
is bound.
3.3 Corporate Action. All corporate actions and proceedings necessary
to be taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement and necessary to make the same effective have
been duly and validly taken, or will have been taken on or before the Closing
Date, and this Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes its valid and binding agreement, enforceable
in accordance with and subject to its terms, except as limited by (i)
bankruptcy, reorganization, insolvency and other laws affecting the enforcement
of creditors' rights or contractual obligations generally and (ii) general
principles of equity (whether the enforceability of this Agreement is considered
in a proceeding in equity or at law).
3.4 Brokers. There is no broker or finder or other person who would
have any valid claim against Buyer for a commission or brokerage fee in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding or action by Buyer.
3.5 Litigation. There is no governmental investigation or any action,
suit, proceeding, claim or development pending or, to Buyer's best knowledge,
threatened or any order, writ, injunction or decree of any court or federal,
state, municipal or other governmental department, commission, board, agency or
instrumentality, foreign or domestic, which, in reasonable likelihood, might
adversely affect the ability of Buyer to perform its obligations under this
Agreement.
3.6 Inspection. Buyer has inspected and approved: (i) all leases
listed in Schedule 2, (ii) the physical and operating condition of the Purchased
Assets and (iii) all financial statements, operating profit analyses and other
data relating to the operation of Seller that were delivered to Buyer pursuant
to Section 2.2 hereof. Buyer has advised Seller of those contracts deemed
"material." No inspection, however, shall be deemed a waiver of representations,
covenants or warranties of Seller hereunder.
ARTICLE 4. Covenants of Seller.
Seller covenants and agrees that:
4.1 Access to Facilities, Files and Records. At the reasonable
request of Buyer, Seller shall from time to time give or cause to be given to
the officers, employees, accountants, counsel and authorized representatives of
Buyer (i) full access during normal business hours, for purposes of inspection,
to all facilities, property, accounts, books, minute books, deeds, title papers,
insurance policies, licenses, agreements, contracts, tax returns, records and
files of every character (including those in the possession or custody of
Seller's certified public accountants), equipment, machinery, fixtures,
furniture, vehicles, notes and accounts payable and receivable and inventories
related to Seller, (ii) all such other information concerning the business or
affairs of Seller, as Buyer may reasonably request and (iii) access to the
certified public accountants of Seller.
4.2 Consents. Seller will use its best efforts to obtain or cause to
be obtained consents to the assignment to or assumption by Buyer of all
licenses, leases, and other contracts and instruments and rights of Seller
included in the Purchased Assets that require the consent of any third party by
reason of the transactions provided for in this Agreement. Seller shall cause
such consents to be in recordable form if requested by Buyer or if necessary to
render such assignment effective. If consent or approval is not obtained with
respect to any contracts on Schedule 2 or 3 to this Agreement, then Seller will
cooperate with Buyer in any reasonable arrangement necessary or desirable to
provide to Buyer after the Balance Sheet Date the benefits under such contracts,
including, at Buyer's expense, enforcement for the benefit of Buyer of any and
all rights of Seller against third parties, all as set forth in Subsections 2.6
(a) and (b).
11
4.3 Corporate Action. Subject to the provisions of this Agreement,
Seller will take all necessary corporate and other action required of it to
carry out the transactions contemplated by this Agreement.
4.4 Consummation of Agreement. Seller shall fulfill and timely
perform all conditions and obligations on its part to be fulfilled and performed
under this Agreement and to cause the transactions contemplated by this
Agreement to be fully carried out.
ARTICLE 5. Covenants of Buyer.
Buyer covenants and agrees that:
5.1 Corporate Action. Subject to the provisions of this Agreement,
Buyer will take all necessary corporate and other action required of it to carry
out the transactions contemplated by this Agreement and any agreement executed
in connection herewith.
5.2 Consummation of Agreement. Buyer shall fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under this
Agreement and to cause the transactions contemplated by this Agreement to be
fully carried out. Buyer will assist Seller in obtaining any necessary or
desired consents from third parties for the assignment to Buyer of any license,
lease, contract or instrument required to be assigned pursuant to this
Agreement.
ARTICLE 6. Conditions to the Obligations of Seller.
The obligations of Seller under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date:
6.1 Representations, Warranties, Covenants.
6.1.1 Each of the representations and warranties of Buyer contained
in this Agreement and in any agreement, statement, certificate, schedule or
other document delivered by Buyer pursuant hereto or in connection with the
transactions contemplated hereby, shall have been true and accurate as of the
date when made and shall be deemed to be made again on and as of the Closing
Date and shall then be true and accurate; and
6.1.2 Buyer shall have delivered to Seller a certificate of an
officer of Buyer, dated the Closing Date, certifying to the fulfillment of the
condition set forth in Section 6.1.1.
6.2 Proceedings. (a) No action or proceeding shall have been
instituted before any court or governmental body to restrain or prohibit, or to
obtain substantial damages in respect of, the consummation of this Agreement
which, in the reasonable opinion of Seller, may reasonably be expected to result
in a preliminary or permanent injunction against such consummation; and (b)
neither of the parties to this Agreement shall have received written notice from
any governmental body of (i) its intention to institute any action or proceeding
to restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation into the consummation of this Agreement
or (ii) the actual commencement of such an investigation.
In the event such a notice of intention is received or such an
investigation is commenced, this Agreement may not be abandoned by Seller for a
period of ninety (90) days from the date of such notice of intention or notice
of commencement, but the Closing shall be delayed during such period. This
Agreement may be abandoned after the expiration of such 90-day period if, in the
reasonable opinion of Seller, there is a likely probability that an
investigation will result in an action or proceeding of the type described in
clause (a) of this Section 6.2.
6.3 Opinion of Counsel. Seller shall have received an opinion of John
F. Hanzel, P.A., counsel to Buyer, dated the Closing Date, in form and substance
satisfactory to Seller and its counsel that:
6.3.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of Nevada and has full corporate power and
authority to carry on its business as now conducted and to own and operate the
property and assets owned and operated by it;
6.3.2 All necessary corporate proceedings required by Buyer to effect
the execution, delivery and performance of this Agreement and all related
documents in the consummation of the transactions contemplated hereby have been
taken;
6.3.3 The Agreement and all other related documents delivered to
Seller by Buyer constitute the legal, binding and enforceable obligations of
Buyer, enforceable in accordance with their respective terms, subject to
12
bankruptcy, insolvency and similar acts affecting the enforcement of creditors'
rights or contractual obligations generally, and general principles of equity;
6.3.4 The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby do not conflict with
the terms of any agreement or instrument to which Buyer is a party or is
otherwise bound or with any statute, governmental regulation, judgment or,
injunction or decree; and
6.3.5 To the best knowledge of counsel for Buyer, there is no pending
or threatened litigation, investigation, administrative proceeding or claim
against Buyer that will or, in reasonable likelihood, may prevent or delay the
consummation by Buyer of this Agreement or the transactions contemplated herein.
ARTICLE 7. Conditions to the Obligations of Buyer.
The obligations of Buyer under this Agreement are, at its option,
subject to the fulfillment of the following conditions prior to or on the
Closing Date, or on the date specified.
7.1 Representations, Warranties, Covenants.
7.1.1 Each of the representations, warranties and covenants of Seller
contained in this Agreement and in any agreement, statement, deed, certificate,
schedule or other document delivered pursuant to this Agreement or in connection
with the transactions contemplated hereby, shall have been true and accurate as
of the date when made and shall be deemed to be made again on and as of the
Closing Date and shall then be true and accurate; and
7.1.2 Seller shall have delivered to Buyer a certificate of an
officer of Seller, dated the Closing Date, certifying to the fulfillment of the
condition set forth in Section 7.1.1.
7.2 Proceedings. No action or proceeding shall have been instituted
and be pending against Seller that in the reasonable opinion of Buyer could be
expected to have a material and adverse effect on the business of Seller prior
to or following the Closing Date. In addition: (a) no action or proceeding shall
have been instituted before any court or governmental body to restrain or
prohibit, or to obtain substantial damages in respect of, the consummation of
this Agreement which, in the reasonable opinion of Buyer, may reasonably be
expected to result in a preliminary or permanent injunction against such
consummation; and (b) neither of the parties to this Agreement shall have
received written notice from any governmental body of (i) its intention to
institute any action or proceeding to restrain or enjoin or nullify this
Agreement or the transactions contemplated hereby, or to commence any
investigation into the consummation of this Agreement or (ii) the actual
commencement of such an investigation. Seller shall give notice to Buyer of any
such intent, investigation or inquiry promptly upon Seller's receipt of notice
of its occurrence.
In the event such a notice of intention is received or such an
investigation is commenced, this Agreement may not be abandoned by Buyer for a
period of ninety (90) days from the date of such notice of intention or notice
of commencement, but the Closing shall be delayed during such period. This
Agreement may be abandoned after the expiration of such 90-day period if, in the
reasonable opinion of Buyer, there is a likely probability that an investigation
will result in an action or proceeding of the type described in clause (a) of
this Section 7.2.
7.3 Opinion of Counsel. Buyer shall have received an opinion of
Arthur P. Strickland, P.C., counsel to Seller, dated the Closing Date, that:
7.3.1 Seller is a professional corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Virginia and
has full corporate power and authority to carry on the business of Seller as now
conducted and to own and operate the Purchased Assets owned and operated by it;
7.3.2 All necessary corporate proceedings required by Seller to
effect the execution, delivery and performance of this Agreement and all related
documents in the consummation of the transactions contemplated hereby have been
taken;
7.3.3 The Agreement and all other related documents delivered to
Buyer by Seller constitute the legal, binding and enforceable obligations of
Seller, enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency and similar acts affecting the enforcement of creditors'
rights or contractual obligations generally, and subject to general principles
of equity, and subject to the further qualification that, although noncompete
agreements are generally enforceable under the laws of the Commonwealth of
Virginia, no opinion is expressed with respect to whether the noncompete
agreement set forth in the Agreement will in fact be enforced;
13
7.3.4 Except as disclosed in the Agreement, including the Schedules
thereto, all consents or agreements of any kind which are required for the
legally effective and valid sale, transfer, assignment and delivery of the
Purchased Assets to Buyer by Seller and the consummation of the other
transactions contemplated herein have been obtained;
7.3.5 Except as disclosed in the Agreement, including the Schedules
thereto, the execution, delivery and performance of this Agreement and the
consummation of the contracts contemplated hereby do not conflict with the terms
of any agreement or instrument to which Seller is a party or is otherwise bound
or with any statute, governmental regulation, judgment, injunction or decree;
and
7.3.6 To the best knowledge of counsel for Seller, there is no
pending or threatened litigation, investigation, administrative proceeding or
claim against Seller that will, or in reasonable likelihood may, prevent or
delay the consummation by Seller of this Agreement or the transactions
contemplated herein.
7.4 Consents. Seller shall have obtained, prior to the Closing Date,
consents from third parties with respect to the assignment of contracts on
Schedule 2 or 3 to this Agreement. This condition to Buyer's obligations under
this Agreement shall be deemed to have been satisfied if, with respect to any
contract for which Seller is unable to obtain consent from any such third party,
Seller is able to provide by any reasonable arrangement to Buyer after the
Closing Date the benefits under such contracts, including, at Buyer's expense,
enforcement for the benefit of Buyer of any and all rights of Seller against
third parties.
7.5 Damage to the Purchased Assets. The Purchased Assets shall not
have suffered material damage on account of fire, explosion or other cause of
any nature that is sufficient to prevent or materially impair the normal
operation of any of Seller operations in any of the three (3) locations for a
period of more than three (3) consecutive business days and which shall not have
been repaired as of the Closing Date; provided, however, that if Buyer elects to
waive the condition set forth in this Section 7.5 and consummate the Closing,
then Buyer shall be entitled to collect and receive on behalf of Seller the
proceeds of any insurance payable to Seller on account of such damage that have
not been applied to the repair thereof.
7.6 Good Standing Certificates. Seller shall have delivered to Buyer
certificates of good standing of Seller issued by the State Corporation
Commission of Virginia and any other state in which Seller would cause the
Seller to obtain a certificate of authority to conduct business within such
states.
7.7 Allocation of Purchase Price. The allocation of the Purchase
Price for the Purchased Assets after inspection of all of the properties shall
be made in a manner satisfactory to Buyer. The execution of a document at
Closing so allocating the Purchase Price as specified by Buyer shall be agreed
to by Seller, so that all matters are handled on both sides of the transaction
in an identical fashion. This shall be a condition precedent to Closing. If
post-Closing adjustments require additional supplemental undertakings or the
execution of addition allocation documents, each party's obligation to execute
the same shall survive the Closing.
7.8 No Liability for Employee Retirement or Other Benefits. Buyer
shall not be required to assume any obligation with regard to vacation,
including accrued vacation (if any), or any employee pension, profit sharing,
insurance, bonus plans or other benefit plans. Buyer will not be required to
assume any liability (past or future) in connection with any such plans, all of
which shall be terminated as of the Balance Sheet Date without liability to
Buyer. Any and all such obligations of Seller (including but not limited to the
payment of profit sharing or bonus accruals at locations qualifying, in
accordance with past practices) will be computed as of the Balance Sheet Date
and shall be paid or otherwise fulfilled within sixty (60) days following the
Closing Date.
7.9 No Material Adverse Changes. Since the Balance Sheet Date there
will have been no material adverse change in the business condition (financial
or otherwise) or results of operations of Seller, except as disclosed in writing
to Buyer on Schedule 7.
ARTICLE 8. Indemnification.
8.1 Indemnification of Buyer. Seller hereby expressly indemnifies and
holds Buyer harmless from and against any and all damages, claims, losses,
expenses, costs, obligations, and liabilities including, without limiting the
generality of the foregoing, liabilities for attorneys' fees (such items
hereinafter collectively referred to as "Loss and Expense"), suffered, directly
or indirectly, by Buyer by reason of, or arising out of, (i) any breach of any
representation or warranty made by Seller pursuant to this Agreement, (ii) any
failure by Seller to perform or fulfill any of its covenants or agreements set
forth in this Agreement or any agreement executed in connection with this
Agreement, or (iii) any litigation, proceeding or claim (including any claim for
warranty repairs) by any
14
third party, insofar as any of the foregoing relate in any way to the
business or operations of Seller on or prior to the Closing Date, provided,
however, that Seller does not indemnify Buyer for any Loss and Expense arising
from Buyer's own misconduct or gross negligence.
8.1.1 Environmental Matters. Within sixty (60) days after the Closing
Date, Buyer shall cause an environmental inspection and audit of the Real
Property (the "Audit") to be performed by an independent qualified environmental
consultant (the "Consultant") approved in writing by Seller in its sole
discretion. Buyer and Seller shall share equally in the cost and expense of such
Audit. If the Audit reveals any matters which would be in violation of Seller's
representations and warranties contained in Section 2.19 hereof or which would
result in indemnification pursuant to Section 8.1.2 hereof, Seller shall, at its
sole cost and expense, remedy such items within 180 days after completion of the
Audit to the satisfaction of Buyer and in accordance with the orders and
directives of all federal, state and local governmental authorities. To the
extent that Seller must perform any remedial work pursuant to this Section after
the Closing, Buyer shall grant Seller and its contractors and Consultants
reasonable access to the Real Property, without cost, in order to perform such
work.
8.1.2 Notwithstanding the Closing and subject to the provisions
hereof, the following provisions shall apply to any claim, liability or
obligation asserted by any third party or required by federal, state or local
laws, ordinances, orders, regulations or governmental authority, which claim,
liability or obligation results from, relates to or arises out of a violation of
Seller's representations and warranties contained in Section 2.19 hereof or the
ownership of or operations associated with the Real Property.
Seller shall indemnify, defend and hold Buyer, its employees, agents,
officers and directors harmless from and against any claim, liability or
obligation asserted by any third party or required by federal, state or local
laws, ordinances, orders, regulations or governmental authority (including,
without limitation, reasonable attorneys' fees and other costs, interest and
expenses incident to any suit, action, investigation or other proceeding) that
Buyer shall incur or suffer which results from, relates to, or arises out of:
(a) Any violation of the representations and warranties of Seller
contained in Section 2.19 hereof;
(b) Any emission, storage, disposal, dispersal, discharge, release,
leak, escape, migration, or concentration of any (i) solid, liquid or gaseous
material, (ii) effluent or pollutant or (iii) "hazardous substance" as that term
is defined in the Federal Comprehensive Environmental Response Compensation and
Liability Act, 42 U. S. C. ss. 9601 et seq., the regulations promulgated from
time to time thereunder, environmental laws administered by the United States
Environmental Protection Agency and similar laws and regulations of the
Commonwealth of Virginia ("Hazardous Substance") and any personal injury
(including wrongful death) or property damage relating to, resulting from or
arising therefrom during the period Seller was in exclusive possession of the
Real Property and exclusive possession of any lease or easement real estate
connected thereunto or arising from or a result of any condition created during
the period Seller was in exclusive possession of the Real Property and exclusive
possession of any lease or easement real estate;
(c) Any use or misuse of any product produced during the period
Seller was in exclusive possession of the Real Property and exclusive possession
of any lease or easement real estate; and
(d) These indemnifications shall apply to all claims relating to,
resulting from or arising out of activities conducted in or on any of the Real
Property prior to the Closing.
8.1.3
(a) Buyer shall indemnify, defend and hold Seller harmless from and
against any claim, liability or obligation asserted by any third party or
required by federal, state or local laws, ordinances, orders, regulations or
governmental authority (including, without limitation, reasonable attorneys'
fees and other costs, interest and expenses incident to any suit, action,
investigation or other proceeding) that Seller shall incur or suffer, which
results from, or relates to or arises out of any condition created by Buyer
after the Closing, or any conduct, act, omission, occurrence, event or
transaction which takes place during the period Buyer shall be in possession of
the Real Property after the Closing Date;
(b) The claims, liabilities and obligations described in Subsection
8.1.3(a) shall include, without limitation, any claim, liability or obligation,
regardless of fault, arising from or a result of:
(1) Any emission, storage, disposal, dispersal, discharge, release,
leak, escape or concentration of (i) any solid, liquid, or gaseous material,
(ii) any effluent or pollutant, or (iii) any Hazardous Substance during the
period Buyer shall be in possession of the Real Property, other than any
emission, dispersal, discharge, release, leak, escape or concentration arising
from or a result of a condition created prior to the period Buyer shall be in
possession of the Real Property; and
15
(2) Any use or misuse of any product produced during the period Buyer
shall be in possession of the Real Property.
8.2 Indemnification of Seller. Buyer hereby expressly indemnifies and
holds Seller harmless from and against any and all Loss and Expense suffered,
directly or indirectly, by Seller by reason of, or arising out of, (i) any
breach of any representation or warranty made by Buyer pursuant to this
Agreement, (ii) any failure by Buyer to perform or fulfill any of its covenants
or agreements set forth in this Agreement or any agreement executed in
connection herewith or any obligations assumed by Buyer pursuant hereto, or
(iii) any litigation, proceeding or claim (including any claim for warranty
repairs) by any third party relating to the business or operations of Seller
after the Balance Sheet Date, provided, however, that buyer does not indemnify
Seller for any Loss and Expense arising from Seller's own misconduct or gross
negligence.
8.3 Notice of Claims. If either Seller or Buyer believes that it has
suffered or incurred any Loss and Expense, such party shall notify the other
promptly in writing describing such Loss and Expense, the amount thereof, if
known, and the method of computation of such Loss and Expense, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such Loss and Expense shall have occurred. If any
action at law or suit in equity is instituted by a third party with respect to
which any of the parties intends to claim any liability or expense as Loss and
Expense under this Article 8, such party shall promptly notify the indemnifying
party of such action or suit.
8.4 Defense of Third-Party Claims. The indemnifying party under this
Article 8 shall have the right to conduct and control, through counsel of its
own choosing, any third-party claim, action or suit, but the indemnified party
may, at its election, participate in the defense of any such claim, action or
suit at its sole cost and expense; provided, however, that if the indemnifying
party shall fail to defend any such third-party claim, action or suit, then the
indemnified party may defend, through counsel of its own choosing, such claim,
action or suit and (so long as it gives the indemnifying party at least fifteen
(15) days written notice of the terms of the proposed settlement thereof and
permits the indemnifying party then to undertake the defense thereof) to settle
such claim, action or suit, and to recover from the indemnifying party the
amount of such settlement or of any judgment and the costs and expenses of such
defense. The indemnifying party shall not compromise or settle any third party
claim, action or suit without the prior written consent of the indemnified
party, which consent will not be unreasonably withheld or delayed.
8.5 Parties in Interest. The provisions of this Article 8 shall be
binding upon, and inure solely to the benefit of, the parties to this Agreement
and their respective successors and assigns. Nothing in this Article 8 is
intended to confer any right or remedy on any other party, including
governmental authorities, to relieve or discharge the obligation or liability of
any third party to any party to this Agreement or to give any third party any
right of subrogation or action over or against any party to this Agreement.
8.6 Minimum for Indemnification Claims. Notwithstanding any provision
in Article 8 to the contrary, neither Buyer nor Seller shall be entitled to
assert any claim for indemnification until such time as all claims of Buyer or
Seller, as the case may be, for indemnification exceed $10,000.00 in the
aggregate, at which time claims for indemnification shall be due for the entire
amount of such claims. Such minimum shall not apply to Seller's obligation to
engage in any environmental remediation pursuant to the Audit described in
Subsection 8.1.1 above.
ARTICLE 9. Treatment of Employee Benefit Plans.
9.1 Pension Plan. Seller maintains a defined benefit pension plan
(the "Pension Plan"). Incident to the sale of the Purchased Assets by Seller to
Buyer pursuant to this Agreement, substantially all of the employees of Seller
at or with respect to Seller will become employees of Buyer on the Balance Sheet
Date. Each such employee who becomes an employee of Buyer on the Balance Sheet
Date is hereinafter referred to as a "Transferred Employee." A substantial
number of the Transferred Employees are participants in the Pension Plan. Each
Transferred Employee who is a participant in the Pension Plan immediately prior
to the Balance Sheet Date is hereinafter referred to as a "Transferred
Participant." The transfer of the Transferred Participants to Buyer pursuant to
the sale of the Purchased Assets as contemplated by this Agreement shall be
deemed a partial termination of the Pension Plan. Consequently, on the Balance
Sheet Date, each Transferred Participant shall become fully vested in his
accrued benefit under the Pension Plan, to the extent such accrued benefit is
then funded. Subject to the requirements of the Internal Revenue Code of 1986,
as amended, Seller will provide each
16
Transferred Participant with the option to receive a distribution of such
Transferred Participant's vested accrued benefit in a lump sum as of the Balance
Sheet Date (or as soon thereafter as is practicable).
9.2 Other Employee Plans. With respect to all employee benefit plans,
other than the Pension Plan, each Transferred Employee shall be treated as any
other terminated employee would be treated under the terms of each such employee
benefit plan.
ARTICLE 10. Miscellaneous.
10.1 Expenses. Each party hereto shall bear all of its own expenses
incurred in connection with the transactions contemplated by this Agreement,
including, without limitation, accounting and legal fees incurred in connection
therewith; provided, however, that any sales or transfer taxes arising from
transfer of the Purchased Assets, including any real estate transfer tax payable
in connection with the transfer to Buyer of any interest in real property, shall
be paid in accordance with local custom, and that ad valorem taxes shall be
prorated between Seller and Buyer as of the Closing Date.
10.2 Employee Information. Seller shall provide or cause an
appropriate affiliate or designee to provide Buyer after the Balance Sheet Date
with such information as Buyer may reasonably request concerning the employees
of Seller in connection with the implementation of any pension, retirement or
profit sharing plan or trust of Buyer or an affiliate of Buyer in which such
employees may become eligible to participate; provided, however, that Seller's
obligation under this paragraph shall not be more than to provide such
information as Seller has on the Balance Sheet Date. Nothing in this Agreement
shall constitute an obligation of Buyer to continue the employment of any
employee.
10.3 Assignments. This Agreement may be assigned by Buyer to any one
or more new corporations to be formed to receive the assets of any of the
subdivisions of Seller and the representations and warranties contained herein
shall run to each such entity with respect to the assets and liabilities
transferred thereto. Responsibility for Buyer's portion of representations and
warranties shall be assumed by any such assignee of Buyer in addition to the
undertakings of Buyer hereunder. Any such assignee shall be jointly and
severally liable with Buyer to Seller with regard to any unpaid balance of the
Purchase Price until such has been paid in full, with regard to the performance
of the obligations of Buyer until such obligations have been fulfilled and with
respect to the representations and warranties contained herein.
10.4 Further Assurances. From time to time prior to, at and after the
Closing Date, Seller and Buyer will execute all such instruments and take all
such actions as Buyer or Seller, being advised by counsel, shall reasonably
request in connection with carrying out and effectuating the intent and purpose
hereof and all transactions and things contemplated by this Agreement,
including, without limitation, the execution and delivery of any and all
confirmatory and other instruments in addition to those to be delivered on the
Closing Date, the obtaining of permanent financing by Buyer, and any and all
actions that may be reasonably necessary or desirable to complete the
transactions contemplated hereby.
10.5 Notices. All notices, demands and other communications that may
be or are required to be given hereunder or with respect hereto shall be in
writing, shall be given either by personal delivery or by certified mail, return
receipt requested, or by telegraph, and shall be deemed to have been given or
made when personally delivered, three (3) days after the date such notice is
deposited in the mail, first class postage prepaid, or when delivered to a
telegraph company, charges prepaid, addressed as follows:
10.5.1
If to Buyer:
819 Naff Rd.
Boones Mill, VA 24065
with a copy (which shall not constitute notice) to:
John F. Hanzel
19425-G Liverpool Parkway
Cornelius, NC 28031
or to such other address as Buyer may from time to time designate.
10.5.2
If to Seller:
819 Naff Rd.
17
Boones Mill, VA 24065
with a copy (which shall not constitute notice) to:
Arthur P. Strickland
23 Franklin Rd.
P. O. Box 2866
Roanoke, VA 24001
or to such other address as Seller may from time to time designate.
10.6 Bulk Sales Indemnity. As an inducement to Buyer to waive
compliance with the provisions of any applicable bulk transfer laws, Seller
expressly covenants that all debts, obligations and liabilities relating to
Seller that are not expressly assumed by Buyer under this Agreement will be
promptly paid and discharged by Seller as and when they become due and payable.
Seller further indemnifies and holds Buyer harmless from all claims made by
creditors with respect to noncompliance with any bulk transfer law, provided
that any such claims of creditors do not arise as a result of Buyer's failure to
satisfy any debts, obligations and liabilities of Seller assumed by Buyer
hereunder.
10.7 Captions. The captions of Articles and sections of this
Agreement are for convenience only and shall not control or affect the meaning
or construction of any of the provisions of this Agreement.
10.8 Law Governing. This Agreement shall be governed by, construed,
and enforced in accordance with the laws of the Commonwealth of Virginia.
10.9 Waiver of Provisions. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same or to
enforce any future compliance with or performance of any of the provisions
hereof. No waiver by any party of any condition or the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
10.10 Counterparts. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.
10.11 Entire Agreement. This Agreement, together with the schedules,
exhibits and agreements executed in connection herewith, constitutes the entire
agreement between the parties and supersedes and cancels any and all prior
agreements between them relating to the subject matter hereof, and may not be
amended except in a writing signed by all of the parties hereto.
10.12 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
10.13 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
10.14 Survival. The representations and warranties of Buyer and
Seller set forth herein shall survive the Closing for a period of two (2) years
following the Balance Sheet Date, except as set forth below:
(a) the representations and warranties pertaining to Seller's title
to that portion of the Purchased Assets consisting of real property shall be
conveyed by and governed by the terms of general warranty deeds;
(b) the representations and warranties respecting environmental
matters (as described in Section 2.19 hereof) shall survive the Closing for a
period of six (6) years following the Balance Sheet Date; and
(c) the representations and warranties respecting contracts assigned
to and assumed by Buyer hereunder shall survive with respect to each such
contract for the duration of the statute of limitations applicable to each such
contract.
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
SELLER: PROVIDENCE ENGINEERING, P.C.
By: _____________________________,
President
ATTEST:
- ----------------------
Secretary
[Corporate Seal]
BUYER: METWOOD, INC.
By: ____________________________,
President
ATTEST:
- -------------------------
Secretary
[Corporate Seal]
19
STATE OF ________________
COUNTY OF _______________
I, _______________________________, a Notary Public, do hereby
certify that ___________________ personally appeared before me this day and
acknowledged that he is the President of Providence Engineering, P.C., a
Virginia professional corporation, and that by authority duly given, and as the
act of the corporation, the foregoing instrument was signed in its name by him
as its President.
WITNESS my hand and official seal this ______day of ____________,
2002.
---------------------
Notary Public
My Commission Expires:
- ---------------------
STATE OF ________________
COUNTY OF _______________
I, _______________________________, a Notary Public, do hereby
certify that ____________________ personally appeared before me this day and
acknowledged that he is the President of Metwood, Inc., a Nevada corporation,
and that by authority duly given, and as the act of the corporation, the
foregoing instrument was signed in its name by him as its President.
WITNESS my hand and official seal this ______day of ______________,
2002.
--------------------
Notary Public
My Commission Expires:
- ---------------------
20