Exhibit 10.1
ASSET PURCHASE AGREEMENT
by and among
SOUTHERN HYDRAULIC CYLINDER, INC.,
F. STEPHEN MILLER,
THE ESTATE OF WILLIAM M. BUCHANAN,
VAC, INC.,
MILLER INDUSTRIES, INC.,
AND THE OTHER PARTIES HERETO
Dated as of May 31, 2023
ASSET PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (“Agreement”), dated as of May 31, 2023, is entered into by and among
VAC, INC., a Tennessee corporation (“Buyer”), and solely for purposes of Section 9.13, MILLER INDUSTRIES, INC.,
a Tennessee corporation (“Parent”), SOUTHERN HYDRAULIC CYLINDER, INC., a Tennessee corporation (“Seller”),
F. STEPHEN MILLER, a resident of the state of Tennessee (“Miller”), THE ESTATE OF WILLIAM M. BUCHANAN (the “Estate”,
together with Miller, each a “Shareholder”, and together, the “Shareholders”, and
together with Miller and Seller, the “Selling Parties”), the WILLIAM MOULTON BUCHANAN REVOCABLE TRUST DATED
DECEMBER 3, 2009 (the “Trust”), and solely for purposes of Article VIII, the beneficiaries of the
Trust (collectively, the “Trust Beneficiaries”, together with the Estate and the Trust, the “Buchanan
Family Group”, and together with the Selling Parties and the Trust, the “Seller Indemnitors”).
WHEREAS,
Seller is engaged in the business of manufacturing and supplying custom-built and replacement hydraulic cylinders and related components,
including single- and double-acting telescopic cylinders, and providing related repair and replacement services, including rod and tube
replacement, head gland and piston replacement and seal repacking services (such products, the “Products” and
such activities, the “Business”);
WHEREAS,
Shareholders are the record and beneficial owners of all of the issued and outstanding capital stock of Seller;
WHEREAS,
Buyer desires to purchase, and Seller desires to sell, substantially all of its assets, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS,
as a material inducement to Seller to enter into the transactions contemplated herein, Seller desires for Parent to guarantee the obligations
of Buyer, and Parent desires to guarantee such obligations upon the terms and subject to the conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the premises, and the mutual representations, warranties, covenants and agreements hereinafter
set forth, the parties hereto agree as follows:
Article I
Definitions
Section 1.1 Definitions.
The following terms, as used herein, have the following meanings:
“Affiliate”
(including the term “affiliated”), whether or not capitalized, means, with respect to any specified Person,
any other Person directly or indirectly Controlling, Controlled by or under direct or indirect common Control with such specified Person.
“Applicable Law”
means any domestic or foreign, federal, state or local statute, law, ordinance, policy, guidance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other legal requirement, of any Governmental Authority (including
any Environmental Law and any Privacy Law) applicable to any relevant Person or its business, assets, Liabilities, operations, officers,
directors, employees, consultants or agents.
“Business Day”
means a day other than a Saturday, Sunday or other day on which commercial banks in Chattanooga, Tennessee are authorized or required
by law to close.
“Business Systems”
means all Software, computer hardware (whether general or special purpose), electronic data processing, information, record keeping, communications,
telecommunications, networks, interfaces, platforms, servers, peripherals, and computer systems, including any outsourced systems and
processes that are owned or used by or for Seller in the conduct of the Business.
“CARES Act”
means the Coronavirus Aid, Relief, and Economic Security (CARES) Act (2020) and the related rules and regulations (including interim
regulations and guidance) promulgated thereunder, whether before or after Closing, in each case as the same may be amended, modified or
replaced from time to time.
“Cash Amount”
means an amount equal to $500,000.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Contracts”
means all contracts, agreements, options, understandings, leases for real or personal property, licenses, sales and accepted purchase
orders, commitments, warranties and other instruments of any kind, including any Material Contracts, whether written or oral, to which
any Person is a party or by which any of its assets are bound, including any option to renew or extend the term of any thereof.
“Control”
(including the terms “controlling,” “controlled by” and “under common
control with”), whether or not capitalized, means, with respect to any specified Person, the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of such Person, through ownership of securities or other
equity interests.
“Covered Employee”
means any (1) director, officer, manager, contractor or Employee of Seller, or any other Person performing services for Seller, (2) former
director, officer, manager, consultant or employee of, or any other Person formerly performing services for, Seller, or (3) beneficiaries
of any Person described in (1) or (2).
“Data Security
Requirements” means, collectively, all of the following to the extent relating to privacy, security, or security breach
notification requirements and applicable to Seller, to the conduct of the Business, or to any of the Business Systems or any business
data: (i) Seller’s own rules, policies, and procedures; (ii) all Applicable Laws; (iii) industry standards applicable
to the industry in which the Business operates (including, if applicable, PCI Standards); and (iv) contracts into which Seller has
entered or by which it is otherwise bound.
“Debt”
means any indebtedness of a Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or
other similar instruments or letters of credit (or reimbursement agreements in respect thereof), banker’s acceptances, interest
swap agreements, capitalized or synthetic lease obligations or the unpaid balance of the purchase price of any assets, or overdrafts,
as well as the amount of all indebtedness of others secured by a Lien on any asset of such Person (whether or not such indebtedness is
assumed by such Person), and all interest, fees and other expenses, including prepayment penalties and breakage costs, owed with respect
to any obligations hereunder and, to the extent not otherwise included, the amount of any indebtedness of any other Person guaranteed
by such Person.
“Employee Benefit
Plan” means any plan, policy, agreement, fund or arrangement providing bonuses, profit sharing benefits, pension benefits,
compensation and incentives, deferred compensation, stock options, stock purchase rights, fringe benefits, severance payments, post-retirement
benefits, scholarships, disability benefits, sick leave pay, vacation pay, commissions, payroll practices, retention payments, or other
similar benefits, including any “employee benefit plan” within the meaning of Section 3(3) of ERISA.
“Equipment”
means all vehicles, machinery, office and computer equipment, furniture, fixtures, trade fixtures, molds, dies and other equipment, together
with all parts, tools, accessories and related supplies.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate”
means any trade or business, whether or not incorporated, other than Seller, that has employees who are or have been at any date of determination
occurring within the preceding six years, treated pursuant to Section 4001(a)(14) of ERISA or Section 414 of the Code, as employees
of a single employer that includes Seller.
“Estimated Purchase
Price” shall mean an amount calculated like the Purchase Price but using the estimated Net Adjustment provided by Seller
to Buyer pursuant to Section 2.4(d).
“Fraud”
means, with respect to a party hereto, such party’s actual and intentional common law fraud in the making of any representation
or warranty made by such party in this Agreement.
“GAAP”
means generally accepted accounting principles in the U.S.
“Governmental
Authority” means any foreign, domestic, federal, territorial, tribal, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization, arbitral tribunal, commission, tribunal or organization
or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of, or any entity owned
(in whole or in party) by, any of the foregoing.
“Improvements”
means all buildings, structures, fixtures and other fixed assets or improvements of any and every nature located on, or annexed, attached
or affixed to, actually or constructively, the Real Property.
“Intellectual
Property” means all patents, patent applications, technology, products, inventions, registered and unregistered trademarks,
trademark applications, trade names, service marks, copyrights, computer programs and other Software, domain names, URLs, websites, trade
secrets, confidential and proprietary business information, unpatented inventions, processes, know-how, engineering, drawings, plans and
product specifications and all other intellectual property and ideas, whether or not registered, used in commerce, fixed in a tangible
medium of expression, reduced to practice or generally known, including all trade dress, promotional displays and materials, price lists,
bid and quote information, literature, catalogs, brochures, advertising material and the like, all telephone numbers, telephone and advertising
listings, customer, supplier and distributor lists and all other information and data relating to, or used or held for use in, the Business,
including information relating to customers or suppliers, intellectual property under development, product development, packaging development,
and any licenses, license agreements and applications related to any of the foregoing.
“Inventory”
means all inventories of raw materials, work-in-process, finished goods, supplies, consumables and the like.
“Key Employee”
means Jeff Zabo.
“Liability”
means any liability or obligation of any kind, character or description, whether known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined,
determinable or otherwise, whether or not required to be accrued, reserved against or otherwise reflected on a Person’s financial
statements disclosed or required to be disclosed on any Schedule to this Agreement.
“Lien”
means any mortgage, deed of trust, title defect or restriction, lien or objection, pledge, security interest, hypothecation, restriction,
covenant, transfer restriction, right of first refusal, adverse claim, conditional sales contract, easement, right-of-way, license, encumbrance,
option, right of other party, or claim or charge of any kind or nature whatsoever.
“Losses”
means all demands, claims, assessments, losses, damages, costs, defense costs, expenses, Liabilities, judgments, awards, fines, interest,
sanctions, penalties, charges (including any amounts paid in settlement), whether or not arising from a third party claim, including reasonable
costs, fees and expenses of attorneys, accountants and other representatives of a Person incurring or suffering such Losses or seeking
to investigate, mitigate or avoid the same.
“Main Transaction
Agreements” means this Agreement, the Escrow Agreement, the Transition Services Agreement, and the Bill of Sale.
“Material Adverse
Effect” means any event, occurrence, fact, condition or change that is materially adverse to (a) the business, results
of operations, financial condition or assets of the Business, taken as a whole, or (b) the ability of Seller to consummate the transactions
contemplated hereby; provided, however, that “Material Adverse Effect” shall not include any event, occurrence,
fact, condition or change, directly or indirectly, first arising or occurring after the date of this Agreement and arising out of or attributable
to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Business operates;
(iii) any changes in financial, banking or securities markets in general, including any disruption thereof and any decline in the
price of any security or any market index or any change in prevailing interest rates; (iv) acts of war (whether or not declared),
armed hostilities or terrorism, or the escalation or worsening thereof; (v) any changes in Applicable Laws or accounting rules after
the date of this Agreement; or (vi) any natural or man-made disaster or acts of God; except, in each case, to the extent that Seller
is disproportionately affected thereby as compared with other participants in the industry in which Seller operates.
“Net Adjustment”
means (i) the Net Working Capital as of the Effective Time, as determined pursuant to Section 3.1, minus (ii) the
Net Working Capital Target. For the avoidance of doubt, the Net Adjustment can be a positive or negative number.
“Net Working Capital”
means, as of any relevant time, for Seller, (x) the sum of (i) net accounts receivable and notes receivable, plus (ii) prepaid
expenses and deposits that are current assets and of which Buyer will get the post-Closing benefit, plus (iii) Inventories, minus
(y) the sum of (i) accounts payable, plus (ii) accrued expenses, all determined in accordance with the Accounting Principles;
provided, that only Purchased Assets and Assumed Obligations shall be included in such calculation. Notwithstanding anything to the contrary
herein, none of the following will be taken into account for purposes of calculating Net Working Capital: (1) tax assets or Liabilities,
or (2) amounts payable to Seller or any of its Related Parties. For the avoidance of doubt, Net Working Capital can be a positive
or negative number. Exhibit A provides an example of the methodology used to compute the Net Working Capital, for illustrative
purposes.
“Net Working Capital
Target” means $4,539,000, determined as set forth on Exhibit A attached hereto.
“Organizational
Documents” means (i) any charter, certificate or articles of incorporation, bylaws, shareholders agreement, certificate
or articles of formation, operating agreement, limited liability company agreement or partnership agreement, or, if a trust, the agreement
or declaration of trust, (ii) any documents comparable to those described in clause (i) as may be applicable pursuant to any
Applicable Law and (iii) any amendment or modification to any of the foregoing.
“Payment Card
Data” means any data associated with a payment card or otherwise protected under the PCI Standards, including: (a) “card
holder data” which includes (i) primary account number; (ii) cardholder name; (iii) service code; and (iv) expiration
date; (b) “sensitive authentication data” which includes (i) magnetic strip data; (ii) CVC2, CVV2, CID;
(iii) PIN and PIN Block information; and (iv) any security-related information; and (c) other information used to authenticate
cardholders and/or authorize payment card transactions.
“Permits”
means all licenses, permits, qualifications, certificates, franchises, approvals, authorizations, exemptions and other registrations necessary
to conduct the Business as currently conducted, or to own or operate any assets of Seller.
“Permitted
Exceptions” means: (i) current city, state, municipal and county ad valorem taxes not yet due and payable; (ii) existing
easements and rights-of-way identified in the Title Policies; (iii) zoning, subdivision, building and use restrictions of record;
and (iv) any other matters identified on Schedule 1.1.
“Permitted Liens”
means as of any relevant time: (i) Liens for Taxes or governmental assessments, charges or claims, the payment of which is not yet
due, but which have been fully reserved; (ii) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen and other
similar Persons imposed by Applicable Law incurred in the ordinary course of business and securing sums not yet delinquent, but which
have been fully reserved; and (iii) with respect to real estate only, Permitted Exceptions; provided, however, that with respect
to each of clauses (i), (ii) and (iii), none thereof interferes with or adversely affects, individually or in the aggregate, the
value, marketability or current use of the affected property by Seller, and further provided, with respect to each of clauses (i) and
(ii), that to the extent that any such Lien arises at or prior to the Effective Time and relates to, or secures the payment of, a Liability,
such Lien shall not be a Permitted Lien unless all Liabilities related thereto or secured thereby are fully accrued as accounts payable
or accrued expenses as of the Effective Time and are taken into account in the calculation of the Net Adjustment pursuant to Section 3.1
(whether or not such Liabilities would be considered accounts payable, accrued expenses or current liabilities).
“Person”
means an individual, corporation, partnership, limited liability company, association, trust, bank, estate or other entity or organization,
including a Governmental Authority.
“Personal Information”
means any information that can identify a person, which may include, but not be limited to, (i) name, address, telephone number,
health information, driver’s license number, government-issued identification number, or any other data that can be used to precisely
identify, contact or locate an individual, (ii) any nonpublic, personally identifiable financial information, such as information
relating to a relationship between an individual person and a financial institution, and/or related to a financial transaction by such
individual person with a financial institution or (iii) Internet Protocol addresses or other persistent device identifiers.
“PPP Lender”
means Simmons Bank.
“PPP Loan”
means that certain paycheck protection program loan in the amount of $645,000 extended by PPP Lender, pursuant to the U.S. Small Business
Administration’s Paycheck Protection Program established by the CARES Act.
“Privacy Laws”
shall mean any Applicable Law related to the protection, privacy or security of Personal Information or other data, including Applicable
Laws relating to (i) protection of Personal Information, (ii) implementation of data privacy policies or data security policies
in effect, including relating to data loss, theft and breach notification policies, and (iii) the transfer, exchange, disclosure,
sharing, use or storage of employee applicant, employee, customer, or website user, student or subscriber information, including the transfer
of Personal Information across national borders.
“Purchase Price”
shall mean $17,525,000, minus the Cash Amount, and plus the Net Adjustment, as finally determined pursuant to Section 3.1.
“Reference Rate”
means the per annum rate of interest announced from time to time by Bank of America N.A. (or any successor) as its prime rate (or reference
rate).
“Real Property”
means the Owned Real Property.
“Related Party”
means, with respect to any specified Person, (x) any Affiliate of such Person, (y) any member, shareholder, partner, trust,
trustee, interest holder, legal guardian, manager, director, officer or executive employee of such specified Person or any of its Affiliates,
or any other Person of which such specified Person is a member, shareholder, partner, beneficiary, trustee, interest holder, legal guardian,
manager, director, officer or executive employee, or (z) any family member or Affiliate of any of the foregoing (including (1) any
spouse or former spouse, of such specified Person, (2) any parent, sibling, child, uncle, aunt, niece, nephew or first or second
cousin of such specified Person or such specified Person’s spouse or former spouse, in each case by blood or adoption, or (3) any
spouse of any individual identified in subclause (2)).
“Seller’s
Knowledge” or any similar terms means the actual knowledge (as opposed to imputed or constructive knowledge) of Miller or
any Key Employee, in each case after reasonable inquiry.
“Software”
means any software, computer instructions, assembly language, object code, source code, routines, configuration files, compilers, development
environments, and application programming interfaces, or to which access to the functionality thereof (for example with “Software
as a Service” or similar arrangements) whether proprietary, “open source,” “copy-left” or any other designations,
used in the conduct of the Business or operations of Seller.
“Tax”
or “Taxes” means all taxes, assessments or impositions imposed of any nature including: (i) federal, state,
provincial, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits,
license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp,
occupation, premium, property (real or personal), real property gains, windfall profits, goods and services tax, customs, duties or other
taxes, fees, assessments, amounts payable to any Governmental Authority in respect of uncashed checks to vendors, customers, or employees,
non-refunded overpayments, or unclaimed subscription balances, that are escheatable or reportable as unclaimed property to any state or
municipality under any applicable escheatment or unclaimed property laws, or charges of any kind whatsoever, together with any interest,
additions or penalties with respect thereto and any interest in respect of such additions or penalties; and (ii) any Liability with
respect to the foregoing as a result of being or formerly having been a member of any affiliated, consolidated, combined, unitary, or
similar group, as a result of any transferee liability in respect of the foregoing, whether arising as a result of any agreement or otherwise
by operation of Applicable Law.
“Tax Return”
means all returns, reports, forms or other information required to be filed with respect to any Tax (including estimated Tax payments,
elections and changes in accounting method), and any claims for refunds of Taxes and any amendments or supplements of any of the foregoing.
“Transaction Agreements”
means, collectively, this Agreement and the other agreements, documents, instruments, and certificates executed or to be executed by any
of the parties hereto in connection with the transactions contemplated this Agreement, including those specified in Article II
to be delivered at or before the Closing.
Section 1.2 Index
of Other Defined Terms. In addition to the terms defined in Section 1.1 above, the following terms shall have the respective
meanings given thereto in the Sections indicated below:
Accounting Principles |
4.5(a) |
|
Miller |
Preamble |
Agreement |
Preamble |
|
Most Recent Financial Statement |
Section 4.5(a) |
Assumed Obligations |
2.2 |
|
Most Recent Fiscal Month End |
Section 4.5(a) |
Assumed Contracts |
2.1(a)(iv) |
|
Most Recent Fiscal Year End |
Section 4.5(a) |
Bill of Sale |
Section 2.5(a) |
|
Orders |
4.11 |
Buchanan Family Group |
Preamble |
|
Owned Real Property |
Section 4.13(a) |
Business |
Recitals |
|
Parent |
Preamble |
Buyer |
Preamble |
|
Pay-off Letter |
2.4(b) |
Buyer Indemnitees |
8.1(a) |
|
PCI Standards |
4.17(i) |
Chosen Courts |
9.11 |
|
Proceeding |
4.7 |
Closing |
2.4(a) |
|
Products |
Recitals |
Closing Date |
2.4(a) |
|
Proposed Allocations |
7.3 |
Closing Date Payment |
Section 2.4(e)(ii) |
|
Proposed Amounts |
3.1(b) |
Confidential Information |
6.1(b) |
|
Purchase Price Allocation |
7.3 |
Debt Holder |
2.4(b) |
|
Purchased Assets |
2.1(a) |
Deductible |
8.4(a) |
|
Receivables |
2.1(a)(ii) |
Discontinued Products Liability Policy |
6.11 |
|
Release |
4.14(j)(v) |
Effective Time |
2.4(g) |
|
Release Date |
Section 8.6(c) |
Employees |
4.15(a) |
|
Restricted Period |
6.2(a) |
Environmental Condition |
4.14(j)(i) |
|
Restrictive Covenant Agreement |
Section 2.5(j) |
Environmental Laws |
4.14(j)(ii) |
|
Seller |
Preamble |
Environmental Liabilities |
4.14(j)(iii) |
|
Seller Agents |
4.17(i) |
Escrow Agent |
2.4(e)(iii) |
|
Seller Indemnitors |
Preamble |
Escrow Agreement |
2.4(e)(iii) |
|
Selling Parties |
Preamble |
Escrow Amount |
2.4(e)(iii) |
|
Settlement Statement |
2.4(e) |
Estate |
Preamble |
|
Shareholder |
Preamble |
Excluded Assets |
2.1(b) |
|
Shareholders |
Preamble |
Excluded Liabilities |
2.3 |
|
Special Endorsements |
6.10 |
Final Allocation Schedule |
7.3 |
|
Standard Endorsement |
6.10 |
Financial Reports |
4.5(a) |
|
Surveys |
6.10 |
Fundamental Representations |
8.3(b) |
|
Territory |
6.2(a)(i) |
Guaranteed Obligations |
9.13(a) |
|
Threat of Release |
4.14(j)(vi) |
Hazardous Substance |
4.14(j)(iv) |
|
Title Company |
6.10 |
Hired Employees |
6.3(a) |
|
Title Policies |
6.10 |
Indemnitee |
8.2(a) |
|
Transition Services Agreement |
Section 2.5(h) |
Indemnitor |
8.2(a) |
|
Trust |
Preamble |
Independent Accounting Firm |
3.1(c) |
|
Trust Beneficiaries |
Preamble |
Insurance Policies |
4.19 |
|
Vehicles |
2.1(b)(ii) |
Material Bids |
4.9(e) |
|
WARN Act |
4.15(d) |
Material Contract |
4.9(d) |
|
|
|
Article II
Purchase and Sale
Section 2.1 Purchase
and Sale of Assets from Seller.
(a) Purchased
Assets. Except as otherwise specifically provided in Section 2.1(b), at the Closing, Seller shall sell, transfer, convey,
assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, free and clear of all Liens, other than Permitted Liens,
all right, title and interest in and to all of the assets, properties and rights of Seller, wherever located, and whether or not reflected
on the books of Seller (collectively, the “Purchased Assets”), including all right, title and interest in and
to the following:
(i) all
Equipment, including the specific assets listed on Schedule 2.1(a)(i);
(ii) all
accounts receivable, trade receivables, notes receivable, and other receivables (other than notes or receivables from any Selling Party),
and the right to bill customers for products sold or services provided prior to the Closing (collectively, the “Receivables”);
(iii) all
Inventory;
(iv) all
Contracts listed on Schedule 2.1(a)(iv), and all bona fide purchase orders issued to and accepted by Seller in the ordinary
course of the Business (collectively, the “Assumed Contracts”);
(v) all
rights to receive vendor rebates accruing in respect of the Business;
(vi) the
Owned Real Property;
(vii) all
prepaid expenses and deposits, deferred charges, advance payments, security deposits and prepaid items relating to the Business or other
Purchased Assets, excluding any such items exclusively relating to Excluded Assets;
(viii) all
Permits, to the extent transferable or assignable;
(ix) all
records and Confidential Information;
(x) all
rights to receive any insurance proceeds payable in respect of any Purchased Asset;
(xi) all
claims, warranties, choses in action, causes of action (including for past infringement or misappropriation), rights of recovery and rights
of set-off of any kind against third parties (including any warranties from contractors, subcontractors, vendors or suppliers regarding
their performance, quality of workmanship or quality of materials) or the Assumed Obligations, and the right to receive and retain mail
and other communications relating to the Business, the Purchased Assets or the Assumed Obligations;
(xii) all
Intellectual Property generated or used or held for use in connection with the Business (including the right to use the name “Southern
Hydraulic Cylinder” or any derivatives thereof as a corporate or trade name); and
(xiii) all
goodwill and going concern rights associated with the Business or the Purchased Assets.
(b) Excluded
Assets. The Purchased Assets shall not include, and Buyer shall not be deemed to purchase or acquire pursuant to this Agreement, any
of the following assets (collectively, the “Excluded Assets”):
(i) bank
accounts of Seller;
(ii) certain
company vehicles, specifically 2022 F-150, 1FTFW1E57NFB77460 (Zabo), 2022 F-150, 1FTFW1E5XNFB90669 (Miller), 2022 F-150, 1FTFW1E58NFB95417
(Buchanan) and 2022 GMC, 1GT49WEY6NF314202 (Whitted) (the “Vehicles”);
(iii) any
Contracts other than Assumed Contracts;
(iv) the
corporate seal, minute books, stock books, blank share certificates, Tax Returns, tax and employer identification numbers, and working
papers and other records relating to the Taxes or corporate formation, maintenance and existence of Seller;
(v) any
assets listed on Schedule 2.1(b)(v);
(vi) the
rights of any Selling Party under this Agreement or any Transaction Agreement; and
(vii) any
Employee Benefit Plan or assets of, or specifically relating to, any Employee Benefit Plan.
Section 2.2 Assumed
Obligations. At the Closing, Buyer shall assume and agree to perform and discharge: (i) all executory obligations of Seller due
to be performed after the Closing under any Assumed Contracts or Permits included in the Purchased Assets and duly assigned to Buyer,
except to the extent arising from any breach or default by Seller at or prior to Closing; and (ii) all accounts payable and accrued
expenses of Seller, in each case solely to the extent arising in the ordinary course of business and taken into account in the final determination
of the Net Working Capital at Closing (collectively, the “Assumed Obligations”).
Section 2.3 Excluded
Liabilities. Other than as expressly provided in Section 2.2 above, Buyer shall assume no Liability whatsoever of Seller,
whether or not arising from or related to the Business or the Purchased Assets (the “Excluded Liabilities”),
and Seller shall pay, perform and discharge, as and when due, each such Excluded Liability. Without limiting the generality of the foregoing,
the Excluded Liabilities shall include any Liability arising out of or relating to:
(a) all
Debt to the extent not taken into account in Section 2.4(e);
(b) any
actual (i) violation of Applicable Law, (ii) breach of contract or warranty, or (iii) tortious conduct by Seller prior
to the Effective Time;
(c) any
claims predicated on strict liability or any similar legal theory, including any product liability claim arising out of any product sold
or service rendered by Seller prior to the Effective Time;
(d) Taxes
of Seller of any kind or character, except as provided in Section 7.2(b);
(e) the
ownership, operation, use or disposal of any Excluded Asset or any business activity other than the Business;
(f) any
employee compensation, employee benefits or Liability, under any collective bargaining agreement or otherwise, including any withdrawal
liability, liability for severance pay, overtime pay, unemployment compensation, vacation, sick leave, termination pay or relating to
any Employee Benefit Plan, change of control, retention, sale of business or similar transaction-related bonus arrangement, whether or
not pursuant to a written agreement for periods prior to the Effective Time; and
(g) any
claims, choses in action, causes of action, rights of recovery, rights of set off of any kind by any third party arising out of the conduct
of the Business or the ownership of the Purchased Assets prior to Closing.
Section 2.4 Closing.
(a) The
closing (the “Closing”) with respect to the transactions contemplated hereby shall take place on the date hereof
immediately following the execution and delivery of this Agreement at the offices of Kilpatrick Townsend & Stockton LLP, 1100
Peachtree Street NE, Suite 2800, Atlanta, Georgia, 30309 (the “Closing Date”). The parties may exchange
all Closing documents by email, facsimile, or other electronic means, with original Closing documents to be promptly exchanged by overnight
courier or personal delivery.
(b) At
least five Business Days prior to Closing, Seller shall deliver to Buyer a letter (a “Pay-off Letter”) from
each holder of any Debt encumbering the Purchased Assets (each a “Debt Holder”), addressed to Seller, Buyer
and its counsel, setting forth (A) the aggregate payments necessary to be made at the Closing in order to satisfy in full all amounts
outstanding, including all principal, interest, fees, prepayment penalties or other amounts due or owing with respect thereto, (B) an
agreement by such Debt Holder to release any Liens securing such Debt, and to file financing termination statements, upon payment of such
stated amount, and (C) wiring or other payment instructions for each such Debt Holder.
(c) For
purposes of determining the Inventory and verifying the Equipment as of the Effective Time, prior to the Closing, the Selling Parties
and Buyer shall jointly conduct (i) an inspection of the Inventory of Seller (focused on raw materials and finished goods, with a
“spot check” of work in progress), and (ii) a review of the Equipment of Seller.
(d) Prior
to the anticipated Closing, the Selling Parties shall prepare and deliver, or cause to be prepared and delivered, to Buyer a good faith
written estimate and calculation of the outstanding Debt of Seller and the Net Working Capital, each as of the Effective Time, and the
resulting estimated Net Adjustment, each calculated in accordance with this Agreement, and based on the results of the pre-Closing Inventory
review agreed with Buyer, together with reasonable supporting documentation.
(e) At
the Closing, Buyer shall pay, in accordance with a settlement statement (the “Settlement Statement”) executed
by Buyer and the Selling Parties:
(i) to
each Debt Holder, the amount set forth in or determined in accordance with such Debt Holder’s Pay-off Letter;
(ii) to
Seller on account of the Purchased Assets, an amount equal to the Estimated Purchase Price, minus all Debt of Seller, minus
the Escrow Amount, minus the Restrictive Covenant Payment (the “Closing Date Payment”);
(iii) to
Citibank, N.A. (the “Escrow Agent”), $1,700,000 (together with any interest or earnings thereon, the “Escrow
Amount”), to be held in escrow and disbursed pursuant an Escrow Agreement entered into on the Closing Date substantially
in the form attached hereto as Exhibit B (the “Escrow Agreement”);
(iv) to
the Key Employee in connection with the Restrictive Covenant Agreement, $25,000, payable by wire transfer to one bank account previously
designated for such payment by the Key Employee to Buyer in writing at least two Business Days prior to Closing; and
(v) to
Seller, one-half of the total amount of the premiums and related fees paid by Seller in connection with the issuance of the Tail Coverage.
(f) The
Closing Date Payment will be paid by wire transfer to one bank account previously designated for such payment by the Shareholders to Buyer
in writing at least two Business Days prior to Closing. All amounts paid by Buyer pursuant to Section 2.4(e) shall be
credited against the Purchase Price. Under no circumstances shall Buyer be liable to any Selling Party or other Person for any action,
omission or delay of any Debt Holder or other Person in dealing with any payment made by Buyer in accordance herewith.
(g) Unless
otherwise agreed by Buyer and Seller, the purchase and sale of the Purchased Assets shall be deemed effective as of 12:01 a.m. Eastern
Time on the Closing Date (the “Effective Time”).
Section 2.5 Seller
Closing Deliveries. At or prior to the Closing, the Selling Parties shall deliver, or cause to be delivered, to Buyer:
(a) the
bill of sale and assignment and assumption agreement in the form attached hereto as Exhibit C (the “Bill of Sale”),
duly executed by Seller;
(b) endorsed
certificates of title with respect to any vehicles included in the Purchased Assets;
(c) a
certificate from the Secretary or comparable official of Seller, dated as of the Closing Date, attesting to the resolutions of such entity
authorizing the execution, delivery and performance of the Transaction Agreements to be executed, performed and delivered by Seller, and
to the incumbency of the Person(s) executing any Transaction Agreement on behalf of such entity;
(d) copies
of the Organizational Documents of Seller, each as in effect on the Closing Date and certified by the appropriate Governmental Authority
or, with respect to any Organizational Documents that are not publicly filed, the Secretary or comparable official of Seller;
(e) a
good standing certificate as to Seller from the Secretary of State (or its equivalent) in its jurisdiction of organization and each state
where Seller is qualified to do business as a foreign entity, in each case dated not earlier than the tenth Business Day prior to the
Closing;
(f) evidence
reasonably satisfactory to Buyer and its counsel that all mortgages, security interests, collateral assignments and other Liens (other
than Permitted Liens) on the Purchased Assets have been released, discharged and terminated in full, and the relevant assets or other
assigned collateral have been returned to the relevant party;
(g) a
counterpart of the Escrow Agreement, duly executed by Seller;
(h) the
transition services agreement in the form attached hereto as Exhibit D (the “Transition Services Agreement”),
duly executed by Seller;
(i) an
offer letter for employment with Buyer signed by the Key Employee;
(j) a
restrictive covenant agreement signed by the Key Employee (the “Restrictive Covenant Agreement”);
(k) all
approvals, consents and waivers that are listed on Schedule 2.5(k);
(l) a
limited warranty deed transferring all of Seller’s right, title and interest in and to the Owned Real Property to Buyer;
(m) originals,
or copies certified by Seller as being complete, of all applicable bills, invoices, fuel readings and other items to be prorated between
Seller and Buyer as of the Closing Date;
(n) an
original Owner’s affidavit and such other documents and state specific documents acceptable to and in a form reasonably acceptable
to the Title Company for issuance of a title policy to Buyer for the Owned Real Property;
(o) all
keys, key cards, and access codes to any portion of the Real Property; and
(p) all
other documents, certificates, agreements or instruments required to be delivered to Buyer at the Closing by Seller pursuant to any other
provision hereof, duly executed by the relevant Person(s).
Section 2.6 Buyer
Closing Deliveries. At or prior to the Closing, the Selling Parties shall deliver, or cause to be delivered, to Buyer:
(a) a
certificate from the Secretary or comparable official of Buyer, dated as of the Closing Date, attesting to the resolutions of such entity
authorizing the execution, delivery and performance of the Transaction Agreements to be executed, performed and delivered by Buyer, and
to the incumbency of the Person(s) executing any Transaction Agreement on behalf of Buyer;
(b) copies
of the Organizational Documents of Buyer, each as in effect on the Closing Date and certified by the Secretary or comparable official
of Buyer;
(c) a
good standing certificate as to Buyer from the Secretary of State (or its equivalent) in its jurisdiction of organization, dated not earlier
than the tenth Business Day prior to the Closing;
(d) a
counterpart to the Transition Services Agreement, duly executed by Buyer;
(e) a
counterpart to the Escrow Agreement, duly executed by Buyer;
(f) a
counterpart to the Bill of Sale, duly executed by Buyer;
(g) a
counterpart to the Restrictive Covenant Agreement, duly executed by Buyer; and
(h) the
Closing Date Payment.
Article III
Calculation and Adjustment of Purchase Price
Section 3.1 Post-Closing
Purchase Price Adjustment.
(a) The
Purchase Price will be subject to post-Closing adjustment as provided in this Section 3.1.
(b) Within
120 days after the Closing Date, Buyer will cause to be prepared and delivered to Seller a written calculation of the Net Working Capital
as of the Effective Time, and the proposed resulting Net Adjustment and proposed resulting Purchase Price (such amounts, collectively,
the “Proposed Amounts”); provided, that, with respect to the calculation of the Net Working Capital
included in the Proposed Amounts, the Inventory shall not include any Inventory attributable to any purchase order listed on Schedule
4.9(a)(i) hereto for which the consent or approval of the customer was, by the terms of or incorporated into such purchase order,
required for such purchase order to be assigned and transferred to Buyer, and with respect to which such customer provided notice of cancellation
on or prior to the date that such Proposed Amounts are delivered to Seller hereunder. The Proposed Amounts shall be binding and conclusive
upon the parties unless Seller gives written notice of disagreement to Buyer within 30 days after receipt of the Proposed Amounts, such
notice to specify in reasonable detail the nature, basis and extent of such disagreement. During such 30-day period, Buyer will make or
cause to be made available to Seller and its representatives such work papers and other supporting documentation used in preparing the
Proposed Amounts as is reasonably requested by Seller. If Buyer and Seller mutually agree upon the resolution of any disputes relating
to the Proposed Amounts within 15 days after Buyer’s receipt of Seller’s notice of disagreement, such agreement shall be binding
and conclusive upon all of the parties hereto.
(c) If
Buyer and Seller are unable to resolve any such disagreements within such period, either Buyer or Seller may refer the accounting matters
remaining in dispute for final determination to BDO USA LLP, or if such firm is unwilling or unable to accept such appointment, then such
other reputable national independent accounting firm as Buyer and Seller may designate by mutual agreement (the firm so designated, the
“Independent Accounting Firm”). The Independent Accounting Firm shall only consider and have authority to resolve
those accounting matters specifically referred to it for resolution. The Independent Accounting Firm shall apply the provisions of Article II
and this Article III in resolving any dispute pursuant hereto. The parties shall use their reasonable commercial efforts to
cause the Independent Accounting Firm to resolve any such disputed accounting matters and to calculate the resulting Net Adjustment within
30 days after such referral. The decision of the Independent Accounting Firm as to any accounting matters in dispute shall be in writing
and shall be final and binding upon all parties hereto for all purposes. Any disagreements among the parties with respect to any matters
of law or the interpretation of this Agreement remain subject to the dispute resolution provisions set forth elsewhere in this Agreement,
and the Independent Accounting Firm shall have no authority to decide such matters unless specifically agreed by Buyer and Seller at the
time, and any dispute as to whether a matter is an accounting matter or a matter of law or interpretation of this Agreement will, unless
otherwise agreed by Buyer and Seller at the time, be resolved pursuant to the dispute resolution procedures set forth elsewhere in this
Agreement. The fees and disbursements of the Independent Accounting Firm shall be borne by Buyer or Seller, in inverse proportion to the
percent (by dollar value) of the total contested matters resolved by the Independent Accounting Firm in its favor; provided, further
that the Independent Accounting Firm shall conclusively determine the parties’ responsibility for its fees and expenses pursuant
to this sentence. The Net Adjustment, as finally determined by agreement of Buyer and Seller or as resolved by the Independent Accounting
Firm, shall be final, binding and conclusive on the parties hereto.
(d) If
the Purchase Price, calculated using the Net Adjustment as finally determined pursuant to this Section 3.1, exceeds the Estimated
Purchase Price, then Buyer shall pay an amount in cash equal to the Net Adjustment to Seller. If the Estimated Purchase Price exceeds
the Purchase Price, calculated using the Net Adjustment as finally determined pursuant to this Section 3.1, then Seller shall,
and Shareholders shall cause Seller to, refund to Buyer an amount in cash equal to the Net Adjustment. Buyer shall have the right to receive
such amount from the Escrow Amount if it is not paid by Seller within thirty (30) days after written request for such payment. Any payment
pursuant to this Section 3.1(d) shall be made by wire transfer of immediately available funds within five Business Days
after the Net Adjustment shall have become final and binding pursuant to this Section 3.1. Notwithstanding any other provision
hereof, if, pursuant to Section 3.1, there is a dispute as to the Net Adjustment, Seller and Shareholders, on the one hand,
or Buyer, on the other, shall promptly pay to Buyer or Seller, as appropriate, such overall net amounts as are not in dispute, pending
final determination of any disputed matters pursuant to this Section 3.1.
Article IV
Representations and Warranties of SELLER AND SHAREHOLDERS
Seller and Shareholders, jointly
and severally, represent and warrant to Buyer, as of the date of this Agreement, the following:
Section 4.1 Organization.
Seller is a corporation, duly organized, validly existing and in good standing under the laws of the State of Tennessee. Seller has all
requisite corporate power and authority to carry on its business as now conducted by it and to own and operate its assets as now owned
and operated by it. Seller is not required to be qualified to conduct business in any state or province other than (a) those states
or provinces set forth on Schedule 4.1, in which states Seller is duly qualified to do business and in good standing; and
(b) such other states where the failure of Seller to be so qualified could not reasonably be expected to have a Material Adverse
Effect. The Selling Parties have delivered to Buyer true and correct copies of the Organizational Documents of Seller.
Section 4.2 Authority;
Enforceability.
(a) Seller
has the right and corporate power and authority to execute and deliver the Transaction Agreements executed or to be executed by it pursuant
to this Agreement, and to perform its obligations thereunder. The Transaction Agreements constitute (or will, when executed and delivered
as contemplated herein, constitute) the legally binding obligations of Seller, enforceable in accordance with their respective terms.
All requisite corporate action has been taken by Seller and its shareholders to authorize and approve the execution and delivery of the
Transaction Agreements, the performance by it of its obligations thereunder and all other acts necessary or appropriate for the consummation
of the transactions contemplated by the Transaction Agreements.
(b) Each
Shareholder has the right and power and authority to execute and deliver the Transaction Agreements executed or to be executed by such
Shareholder pursuant to this Agreement, and to perform such Shareholder’s obligations thereunder. The Transaction Agreements constitute
(or will, when executed and delivered as contemplated herein, constitute) the legally binding obligations of each Shareholder, enforceable
in accordance with their respective terms.
(c) Except
as set forth on Schedule 4.2(c), the execution, delivery and performance of the Transaction Agreements by each Selling Party,
and the consummation of the transactions contemplated thereby, do not and will not: (i) require the consent, waiver, approval, license
or other authorization of any Person (including any spousal consent); (ii) violate any provision of Applicable Law; (iii) contravene,
conflict with, or result in a violation of: (1) any provision of Seller’s Organizational Documents; or (2) any resolution
adopted by the shareholders or board of directors of Seller; or (iv) conflict with, require a consent or waiver under, result in
the termination of any provisions of, constitute a default under, accelerate any obligations arising under, trigger any payment under,
result in the creation of any Lien pursuant to, any Contract to which a Selling Party is a party or by which any Purchased Assets are
bound, in each such case whether with or without the giving of notice, the passage of time or both.
Section 4.3 Capitalization
and Subsidiaries.
(a) All
of the shares of capital stock and other equity securities of Seller are owned beneficially and of record by the Shareholders, and represent
100% of the outstanding capital stock or other ownership interests in Seller. There are no other shares of capital stock, equity securities
or other ownership interests in Seller or outstanding securities convertible or exchangeable into capital stock, equity securities or
other ownership interests in Seller, and there are no options, warrants, purchase rights, subscription rights, conversion rights, exchange
rights, calls, puts, rights of first refusal or other Contracts that could require Seller to issue, sell or otherwise cause to become
outstanding or to acquire, repurchase or redeem capital stock, equity securities or other ownership interests in Seller.
(b) Seller
owns no shares, equity or debt securities or other proprietary or ownership interests, directly or indirectly, in any other Person. Seller
has no Contract to issue or acquire any shares, securities or proprietary or ownership interests in any other Person, including any options,
warrants, rights of first refusal or other rights to purchase, acquire or subscribe for any such interests.
Section 4.4 Affiliate
Transactions. Except as disclosed on Schedule 4.4, (a) neither Seller, nor any of its Related Parties owns (legally
or beneficially) an equity interest or any other financial or profit interest in, a Person that has (i) had business dealings or
a material financial interest in any transaction with Seller (including, but not limited to, as a creditor, debtor, customer, distributor,
supplier or vendor of, or service provider to, Seller), or (ii) engaged in competition with Seller with respect to the Business and
(b) no Related Party of Seller is the counter-party to any Contract with Seller or by which Seller or any of its assets are bound,
and, other than the Transaction Agreements, unless otherwise designated by Buyer, any such Contract shall be terminated at or prior to
the Closing without Liability to Buyer.
Section 4.5 Financial
Reports; No Other Liabilities.
(a) Attached
as Schedule 4.5(a)(i) hereto are copies of the following financial statements of Seller: (i) balance sheets, statements
of income, and changes in stockholders’ equity, as of and for the fiscal years ended December 31, 2021, and December 31,
2022 (the “Most Recent Fiscal Year End”); and (ii) unaudited balance sheet, statements of income, and changes
in stockholders’ equity (the “Most Recent Financial Statements”) as of and for the one-month period ended
January 31, 2023 (the “Most Recent Fiscal Month End”) (collectively, the “Financial Reports”).
Except as set forth on Schedule 4.5(a)(ii), such Financial Reports were prepared in accordance with GAAP, consistently applied
(GAAP, with such exceptions as are set forth on Schedule 4.5(a)(ii), the “Accounting Principles”);
provided, however, that the Most Recent Financial Statements are subject to normal, recurring year-end adjustments (none
of which will be material individually or in the aggregate) and lack notes.
(b) Except
as set forth on Schedule 4.5(b), the Financial Reports (i) are true and correct; (ii) present fairly the financial
condition, results of operations, changes in equity of Seller as of the date(s) and for the period(s) therein indicated; and
(iii) are consistent with the books and records of Seller prepared in the ordinary course of business.
(c) Since
the Most Recent Fiscal Year End, the business of Seller has been conducted in the ordinary course, and there has not been any event that
has had a Material Adverse Effect and no event has occurred which could reasonably be expected to result in a Material Adverse Effect.
Without limiting the generality of the foregoing, except as set forth on Schedule 4.5(c), Seller does not have any Liabilities
other than: (1) as reflected in the Most Recent Financial Statements; (2) Liabilities incurred since the Most Recent Fiscal
Month End in the ordinary course of business consistent with past practice and that are not, in the aggregate, material, and (3) executory
obligations under Contracts (and not arising from any breach thereof or default thereunder).
Section 4.6 Books
and Records. The books and other records of Seller (other than books and records that pertain to Excluded Assets), all of which have
been made available to Buyer, have been maintained in accordance with commercially reasonable business practices, consistently applied,
and fairly and accurately provide the basis for the financial position and results of operations set forth in the Financial Reports. All
of such books and records are in possession of Seller at the Real Property and will be put into Buyer’s possession at the Closing
except those of which are Excluded Assets.
Section 4.7 Legal
Actions. Except as set forth in Schedule 4.7, there is no (and has not been, at any time in the preceding three years,
any) demand, action, suit, claim, proceeding, complaint, grievance, charge, inquiry, hearing, arbitration or governmental investigation
of any nature, public or private (each, a “Proceeding”) pending or to the Knowledge of Seller, threatened by
or against Seller, nor is there, to the Knowledge of Seller, any reasonable basis for any such Proceeding.
Section 4.8 Personal
Property, Inventory, Title and Sufficiency of Assets and Receivables and Payables.
(a) Part I
of Schedule 4.8(a) lists the Equipment and all other material tangible assets owned by Seller (other than Inventory), and
except as disclosed on Part I of Schedule 4.8(a), all such Equipment and tangible assets are located at the Real Property.
Part II of Schedule 4.8(a) lists all Equipment and all other material tangible assets leased by Seller, and except
as disclosed on Part II of Schedule 4.8(a), all such Equipment and tangible assets are located at the Real Property.
(b) All
Inventory of Seller was produced or acquired by Seller in bona fide, arms-length transactions entered into in the ordinary course of business.
Except as set forth on Schedule 4.8(b), no Inventory is held on consignment, or is otherwise subject to any ownership interest
of any third party. Except as set forth on Schedule 4.8(b), no items of Inventory have been held for 360 days or more, or
are held in quantities materially exceeding the amount of such item sold or consumed, as applicable, in the Business during the 12 calendar
months ended prior to the date of this Agreement. Except as set forth on Schedule 4.8(b), Seller does not depend on any single
vendor for any material portion of its Inventory, and Seller has not had any difficulty in obtaining Inventory in the preceding 12 months.
All finished goods Inventories of Seller are of a quality and quantity which are merchantable and saleable as first quality goods without
discounts or allowances (other than generally applicable trade discounts), and all Inventories of raw materials or work-in-process of
Seller are of a quality fully usable in the manufacture of first quality finished goods, except for such obsolete, damaged, defective
or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established,
which items are listed on Schedule 4.8(b) hereto. The values at which such items of Inventory are recorded on the most
recent balance sheet contained in the Financial Reports or, in the case of any Inventories acquired or produced following the date thereof,
on the books and records of Seller, reflect the normal Inventory valuation policies of Seller (which policies are consistently applied
and include the writing down of or reserving against the value of slow moving or obsolete Inventory and stating Inventories at the lower
of cost or market, and in the case of Inventories purchased from third parties, include freight costs).
(c) Seller
owns all right, title and interest in and to the Equipment and tangible assets listed in Part I of Schedule 4.8(a), and
all other assets that it owns or purports to own and that are used or held for use by it in the Business, free and clear of any and all
Liens, other than Permitted Liens. Seller holds a valid leasehold interest in and to, or valid license or other right to use, all of the
Equipment and tangible assets listed in Part II of Schedule 4.8(a), and all other assets of third parties held or used
by Seller.
(d) Except
as set forth on Schedule 4.8(d), the tangible assets of Seller are in good working condition and repair, ordinary wear and
tear excepted, and are adequate for the uses to which they are put, and no such assets are in need of replacement or of material maintenance
or repair, except for routine maintenance and repair and no such routine maintenance and repair has been deferred within the past 12 months.
(e) The
Purchased Assets are all of the properties, assets and rights (tangible and intangible) used in the conduct of the Business as heretofore
conducted by Seller and are sufficient in all material respects for the uninterrupted continuation of the Business (as historically conducted)
after the Closing.
(f) All
accounts and notes receivable of Seller represent bona fide, arms-length sales made or services performed in the ordinary course
of business or valid claims as to which full performance has been rendered by Seller. No claims, defenses, setoffs or other adjustments
with respect to the accounts or notes receivable of Seller are pending or to the Knowledge of Seller threatened, and all such receivables
are collectible in the ordinary course of business, subject to any reserves reflected in the Financial Reports. The reserves against the
accounts receivable for returns, allowances, chargebacks and bad debts are commercially reasonable and have been determined in accordance
with the Accounting Policies.
(g) The
accounts payable of Seller reflected on the Most Recent Financial Statements arose from bona fide transactions in the ordinary
course of business, and all such accounts payable have either been paid, are not yet due and payable in the ordinary course of business,
or are being contested by Seller in good faith.
Section 4.9 Material
Contracts.
(a) The
relevant subsection of Schedule 4.9(a) lists each Material Contract (as defined in Section 4.9(d) below).
The Selling Parties have previously made available to Buyer true, correct and complete copies of all such Material Contracts, each as
currently in effect.
(b) Seller
has neither breached, violated or defaulted under (or taken or failed to take any action that, with the giving of notice, the passage
of time or both would constitute a breach, violation or default under), nor has Seller received notice alleging that it has breached,
violated or defaulted under (or taken or failed to take any action that, with the giving of notice, the passage of time or both would
constitute a breach, violation or default under), any Contract to which it is a party, in each case other than any such breaches, violations
or defaults as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. To Seller’s
Knowledge, no other party obligated to Seller pursuant to a Contract has breached, violated or defaulted under (or taken or failed to
take any action that, with the giving of notice, the passage of time or both would constitute a breach, violation or default under) any
such Material Contract, in each case other than any such breaches, violations or defaults as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(c) Except
as set forth on Schedule 4.9(c), all of the Material Contracts to which Seller is a party or by which Seller or its assets
are bound: (i) were entered into in the ordinary course of business on commercially reasonable terms, with bona fide third
parties in arms-length transactions; (ii) are valid and enforceable against Seller and, to Seller’s Knowledge, any counterparty,
in accordance with their respective terms; (iii) are in full force and effect; and (iv) will continue to be valid and enforceable
and in full force and effect on identical terms following the Effective Time. All such Material Contracts can be fulfilled or performed
in accordance with their respective terms in the ordinary course of the Business without undue or unusual material expenditures of money
or effort.
(d) The
term “Material Contract” means each Contract to which Seller is a party, or by which Seller or its assets are
bound, that:
(i) involves
the expenditure or receipt of more than $50,000 over the remaining term thereof;
(ii) includes
clauses requiring the purchase or sale of minimum quantities (or payment of any amount for failure to purchase or sell any specific quantities)
of goods or services, or containing “most favored nations” or similar pricing arrangements;
(iii) requires
Seller to indemnify or hold harmless any other Person, or provides for a guaranty of or by Seller other than pursuant to its standard
terms and conditions of sale, as previously provided to Buyer;
(iv) imposes
on any Person any confidentiality, non-disclosure or non-compete obligation or restricts any Person from conducting or engaging in any
business or activity in any jurisdiction;
(v) relates
to or provides for the marketing, sale or distribution of products or services (other than bona fide customer purchase orders received
in the ordinary course of business consistent with past practices, not in excess of $50,000);
(vi) relates
to any arrangement, agreement or relationship of any kind with any labor union or association, including any collective bargaining agreement;
(vii) provides
for a partnership, joint venture, teaming or similar arrangement pursuant to which Seller shares in the profits or losses of any business
with any other Person or is jointly liable with any other Person;
(viii) provides
for or relates to any employment (other than at will arrangements) or consulting relationship with any Person;
(ix) is
between Seller and any Related Party;
(x) is
between Seller and any Governmental Authority or with respect to which any Governmental Authority is the ultimate beneficiary of Seller’s
performance;
(xi) pursuant
to which (A) Seller is a lessee or sublessee of or holds, occupies or operates, any real property, or (B) Seller is a lessor
or sublessor of, or makes available for use, occupancy or operation by any Person, any Real Property;
(xii) pursuant
to which Seller grants or is granted a license of any Intellectual Property, or receives or is required to pay any royalty or similar
payment related to the use or exploitation of any Intellectual Property, other than licenses for any non-customized, off-the-shelf third-party
Software which has an annual fee of less than $1,000;
(xiii) provides
for the research, development, design or other creation, discovery or advancement of any Intellectual Property, including any consulting
work related thereto;
(xiv) grants
a Lien on any assets of Seller (including under conditional sales, capital leases or other title retention or security devices);
(xv) grants
or increases any severance, continuation, termination or post-termination pay to any officer, manager, member, interest holder, partner,
shareholder, director, employee of independent contractor of Seller or any Related Party;
(xvi) is
with any customer or supplier listed on Schedule 4.20; or
(xvii) extends
for a term of more than 12 months from the date hereof (unless terminable by Seller without payment or penalty upon no more than 30 days’
notice).
(e) As
used herein, “Material Bids” means any bids, quotes, or proposals issued by Seller which are still open for
acceptance or negotiation and which, if accepted, would result in a Material Contract. Each Material Bid was prepared and submitted by
Seller in the ordinary course of business on arms-length terms. No such Material Bid would result in a loss to Seller if accepted in accordance
with its terms and executed in accordance with Seller’s standard practice. All representations and warranties made by Seller in
connection with any Material Bid were true, correct and complete in all material respects when made and no intervening changes have occurred
that would render any such representations or warranties inaccurate or misleading in any material respect.
Section 4.10 Tax
Matters.
(a) Seller
has duly and timely filed in the prescribed manner all material Tax Returns required to be filed by it under Applicable Law. All such
Tax Returns were true, correct and complete in all material respects. The Selling Parties have heretofore made available to Buyer true,
correct and complete copies of all material Tax Returns filed by Seller during the three years prior to the date hereof. All material
Taxes due and payable by Seller (whether or not shown on any Tax Return) have been paid and Seller has fully reserved the amount of any
Taxes not yet due and payable.
(b) Seller
files Tax Returns solely in the jurisdictions set forth on Schedule 4.10(b). Seller has never received written notice of a
claim made by a Governmental Authority in a jurisdiction where Seller does not file Tax Returns that Seller is or may be subject to taxation
by that jurisdiction.
(c) There
are no Liens on any of the assets of Seller that arose in connection with any failure (or alleged failure) to pay any Tax when due.
(d) All
Taxes that Seller is or was required by Applicable Law to withhold or collect, including from any amounts paid or owed to any employee,
independent contractor, creditor, shareholder, member or other party, have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Authority or other Person or, if not paid, have been appropriately reserved.
(e) Seller
has not entered into any agreements with any Governmental Authority with responsibility for the assessment, imposition or collection of
any Tax.
Section 4.11 Applicable
Laws and Permits. Schedule 4.11 sets forth (a) a list of all Permits held by Seller, and (b) all orders, writs,
injunctions, directives, judgments, decrees, or awards applicable to Seller, its assets, or the Business (collectively, “Orders”).
The Selling Parties have previously made available to Buyer true, correct and complete copies of all such Permits and Orders. Except as
listed on Schedule 4.11:
(a) Seller
holds all Permits necessary for its activities, each of which is in full force and effect;
(b) The
Business is now being, and during the last three years, has been, conducted, and the assets of Seller are, and during the last three years,
have been, owned and operated, in compliance, in all material respects, with all Applicable Laws, Orders and Permits;
(c) Seller
has received no written notice of any alleged violation, breach or default of any Applicable Laws, Orders or Permits. During the last
five years, Seller has neither conducted nor initiated an internal investigation nor made a voluntary disclosure to any Governmental Authority
with respect to any alleged violation of any Applicable Laws, Orders or Permits; and
(d) No
loss or non-renewal of any material Permit is pending or, to Seller’s Knowledge, threatened (including as a result of the transactions
contemplated hereby), and to Seller’s Knowledge, there is no reason to believe any Permit will not be renewed on substantially similar
terms upon expiration.
Section 4.12 Certain
Changes. Since December 31, 2022, Seller has conducted the Business in all material respects in the ordinary course of business
consistent with past practices, and has used commercially reasonable efforts to preserve the Business and its assets. Without limiting
the foregoing, except as specifically listed in the relevant subsection of Schedule 4.12, since December 31, 2022, there
has not been any:
(a) event
or circumstance that has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;
(b) damage,
destruction or loss (whether or not covered by insurance) that resulted in or could reasonably be expected to result in losses, in the
aggregate, of more than $25,000;
(c) revaluation
or write-down of any of assets;
(d) amendment
or termination of any Material Contract other than in the ordinary course of the Business, consistent with past practices;
(e) material
change in accounting principles, methods or practices, or in the manner of keeping books and records, or any change in practices with
regard to receivables, payables, sales, reserves, Inventory, or Inventory valuation;
(f) (i) grant
of any severance, continuation or termination pay to any Covered Employee; (ii) entering into of any employment, deferred compensation
or other similar agreement (or any amendment to any such existing agreement) with any Covered Employee or any associate of the foregoing;
(iii) increase in benefits payable or potentially payable under any severance, continuation or termination pay policies or employment
agreements with any Covered Employee or any associate of any of the foregoing; (iv) increase in compensation, bonus or other benefits
payable or potentially payable to any Covered Employee or any associate of any of the foregoing, other than routine annual increases in
compensation consistent with Seller’s past practices; (v) change in the terms of any bonus, pension, insurance, health or other
benefit plan applicable to Covered Employees in excess of $20,000 individually or $50,000 in the aggregate; (vi) representation made
by Seller outside of the ordinary course of business that Seller would continue to maintain or implement any benefit plan or would continue
to employ any Covered Employee after the Closing, or (vii) representation made by Seller that Buyer would continue to maintain or
implement any benefit plan or would continue to employ any Covered Employee after the Closing;
(g) acquisition
or disposal of assets (except in bona fide, arms-length transactions entered into in the ordinary course of business consistent with past
practice);
(h) capital
expenditures exceeding, individually or for any group of related expenditures, $25,000;
(i) any
initiation, settlement or compromise of any material Proceeding;
(j) any
material change in Seller credit policies, practices or limits, other than changes made with respect to specific customers in the ordinary
course of business; or
(k) agreement
to do, either directly or indirectly, any of the things described in the preceding clauses (c) through (j).
Section 4.13 Real
Property.
(a) Schedule 4.13(a) contains
a complete and correct list, as of the date of this Agreement, of all real property owned by Seller, together with all buildings and other
structures, facilities or improvements located thereon (the “Owned Real Property”). Seller has good and valid
title to all the Owned Real Property, free and clear of any Liens, other than Permitted Liens and Permitted Exceptions. Seller has not
leased or otherwise granted to any person the right to use or occupy such Owned Real Property or any portion thereof; and there are no
outstanding options, rights of first offer or rights of first refusal to purchase such Owned Real Property, any portion thereof or any
interest therein.
(b) There
is no real property leased by Seller or used or held for use by Seller.
(c) The
Real Property constitutes all of the lots, tracts and parcels of real property owned, occupied, used or held for use by Seller.
(d) Except
as set forth on Schedule 4.13(d), Seller has received no written notice of any material non-recurring Taxes, levies, or assessments
with respect to any Real Property or that any thereof is under consideration by any Governmental Authority.
(e) Since
December 31, 2022: (i) no buildings, structures or other Improvements have been erected and no structural additions to existing
buildings, structures or other Improvements have been made on any Real Property; and (ii) there has been no fire, flood or other
casualty affecting any of the buildings, structural additions or other Improvements on any Real Property.
(f) Except
as set forth on Schedule 4.13(f): (A) none of the Real Property is encroached on in any material respect by any other
Person or its operations; (B) to Seller’s Knowledge, there is no basis for any dispute regarding the location of any boundary
line of the Real Property; and (C) there is no material encroachment or alleged encroachment by an Improvement or the Business of
Seller onto any real property of, or any area subject to any easement held by, any other Person, nor has Seller received any written notice
alleging any encroachment or boundary dispute. Seller is not currently, nor has it ever been, in breach in any material respect of the
terms of an easement with respect to the Real Property or the conduct of the Business.
(g) None
of the Real Property is subject to any pending or, to Seller’s Knowledge, threatened, condemnation, eminent domain, expropriation
or rezoning proceeding. Except as set forth on Schedule 4.13(g), the Real Property and the current use thereof complies with
all restrictive covenants and Applicable Laws, including subdivision, municipal, zoning or building ordinances or codes, use and occupancy
restrictions, in each case, without reliance on any “grandfather” clauses or exceptions for permitted, non-conforming uses,
except where any such non-compliances would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect,
and Seller has received no written notice alleging the contrary. All of the Real Property has permanent and direct access to a dedicated
public right of way, and to Seller’s Knowledge there is no pending or threatened termination of such access.
(h) Seller
is not indebted to any contractor, laborer, mechanic, materialman, architect, engineer or any other Person for work, labor or services
performed or rendered, or for materials supplied or furnished, in connection with the Real Property for which any such Person could claim
a Lien against the Real Property or any Purchased Assets.
(i) No
portion of the Real Property is located within any Special Flood Hazard Area designated by the U.S. Federal Emergency Management Agency,
or in any area designated as a flood plain or in a similar designation by any Governmental Authority; no portion of the Real Property
meets the definition of “wetlands” codified at 40 C.F.R. part 230.3(t), or has been similarly designated by any Governmental
Authority; and no portion of the Real Property constitutes “wetlands” that have been filled, whether or not pursuant
to appropriate Permits.
(j) No
portion of the Real Property is subject to any classification, designation or preliminary determination of any Governmental Authority,
or pursuant to any Applicable Law, which would materially restrict the use, development, occupancy or operation of the Real Property in
connection with the Business, including any designation or classification as an archeological site, any classification or determination
under the U.S. Endangered Species Act or any comparable Applicable Law, or any designation as a historical, heritage or cultural site.
(k) (i) The
Improvements are in good order and repair, ordinary wear and tear expected, and are in good and safe condition, free from material defects;
(ii) the Improvements were constructed and completed in compliance with accepted standards of materials and workmanship; (iii) all
electrical, plumbing, heating and air conditioning (to the extent existing as of the Effective Time) and exterior drainage systems and
equipment, in or on the Real Property are in good condition and working order, and to Seller’s Knowledge, all such services are
adequate in accordance with Applicable Laws; (iv) there is no termite or other pest infestation, dry-rot or similar damage affecting
any of the Real Property that will require material repairs to any of the Real Property; and (v) there is no subsidence or other
soil condition that does or is reasonably likely in the future to materially and adversely affect the use of any of the Real Property
in the Business.
(l) None
of the Real Property is subject to any material use, development or occupancy restrictions (except those imposed by applicable zoning
and subdivision laws and regulations), Taxes or utility “tap-in” fees (except those generally applicable throughout
the tax district in which such Real Property is located), or charges or restrictions, whether existing of record or arising by operation
of law, unrecorded or unregistered agreement or the passage of time or otherwise (other than the Permitted Exceptions).
(m) Seller
has previously made available to Buyer true, correct and complete copies of any documents relating to the Real Property reasonably requested
by Buyer in Seller’s possession relating to the Real Property.
(n) Seller
has not entered into any service, maintenance, supply, leasing, brokerage, and listing and/or other contracts relating to the Real Property
which will be binding upon the Buyer after the Closing, unless otherwise assumed by the Buyer at Closing.
(o) To
Seller’s Knowledge, the Real Property was constructed pursuant to validly issued building permits and fully comply with all applicable
zoning, building, fire, health, safety, handicapped persons, environmental, pollution, and use laws, codes, and ordinances, and that certificates
of occupancy have been issued for any building and for all leased or leasable areas of the Real Property and there is no actual or, to
Seller’s Knowledge, threatened, cancellation or suspension of any certificates of occupancy for any portion of the Real Property.
Section 4.14 Environmental
Matters.
(a) Except
as set forth on Schedule 4.14(a), Seller has not, in the last three years: (i) entered into or been subject to any consent
decree, compliance order, or administrative order pursuant to applicable Environmental Laws (as hereafter defined) or relating to any
Environmental Condition (as hereafter defined); (ii) received any written request for information, notice, demand letter, administrative
inquiry, or formal or informal complaint or claim with respect to any Environmental Condition (including under the citizen suit provision
of any Environmental Law); or (iii) been the subject of, or threatened with, any governmental enforcement action or third party claim
under any Environmental Law, and to Seller’s Knowledge there is no basis to believe that any of the above is reasonably likely to
be forthcoming.
(b) Except
as set forth on Schedule 4.14(b), Seller has complied, in the last three years, and is presently in compliance with all applicable
Environmental Laws, except for any non-compliances that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(c) Except
as set forth on Schedule 4.14(c), Seller has not generated, manufactured, refined, transported, treated, stored, handled,
disposed, transferred, produced, recycled, or processed any Hazardous Substances or wastes except, in each case, in compliance in all
material respects with all applicable Environmental Laws, and there has been no Release or Threat of Release of any Hazardous Substances
(as hereinafter defined) at or in the vicinity of the Real Property (including any location at which Seller previously conducted business).
(d) Except
as set forth on Schedule 4.14(d), in the last three years, Seller has received no written notice of, and to Seller’s
Knowledge there is no basis to believe that there is, any Environmental Condition at any off-site location.
(e) Except
as set forth on Schedule 4.14(e), there are no, and have never been any, underground storage tanks present on the Real Property,
except for such storage tanks as have been properly closed in accordance with Environmental Laws.
(f) Except
as set forth on Schedule 4.14(f), there are no past or present events, conditions, circumstances, activities, practices, incidents,
actions, omissions or plans that could reasonably be expected to: (i) interfere with or prevent continued material compliance with
any Environmental Law with respect to the operation of the Real Property or the Business, (ii) give rise to any material Environmental
Liability in respect of the Real Property or any location at which Seller previously conducted business, or (iii) otherwise form
the basis of any Proceeding against Seller (A) under any Environmental Laws, (B) based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, Release or Threat of Release, of any
Hazardous Substance, or (C) resulting from exposure to work place hazards.
(g) Except
as set forth on Schedule 4.14(g), Seller is not required or obligated to make any capital or other expenditure in excess of
$25,000 to achieve or remain in material compliance with any Environmental Law nor to Seller’s Knowledge is there any reasonable
basis on which any Governmental Authority would take any action that would require any such capital or other expenditure.
(h) Schedule 4.14(h) lists
all reports or tests with respect to compliance of the Real Property or the Business with Environmental Laws or the presence of Hazardous
Substances prepared within the preceding five years that are in the possession, custody or control of Seller. The Selling Parties have
previously made available to Buyer true, correct and complete copies of all such reports and tests.
(i) At
no time has Seller produced, manufactured, sold or otherwise placed in commerce any product containing asbestos or asbestos-containing
material. There are no, and to Seller’s Knowledge, there never have been any, asbestos or asbestos-containing materials present
on the Real Property.
(j) For
purposes of this Section 4.14, the following terms shall have the respective meanings set forth below:
(i) “Environmental
Condition” means any condition with respect to the environment (including the air, water, groundwater, surface water and
land), whether or not yet discovered, which is likely to or does result in any damage, loss, cost, expense, claim, demand, order or liability
to or against any Person by any third party or Governmental Authority, including any condition resulting from the ownership or operation
of any asset or real property, the conduct of the Business or any activity or operation formerly conducted by any Person on or off the
Real Property or any other location where Seller has conducted business.
(ii) “Environmental
Laws” means any Applicable Law relating to the protection of human health, safety or the environment including: (A) all
requirements pertaining to reporting, licensing, permitting, controlling, investigating or remediating emissions, discharges, Releases
or threatened Releases of Hazardous Substances, whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Substances, whether solid, liquid or gaseous in nature; and (B) all requirements pertaining to the protection of the health and safety
of employees or the public from exposure to Hazardous Substances or workplace hazards.
(iii) “Environmental
Liabilities” means all Liabilities of a Person, whether such Liabilities are owed to Governmental Authorities, private third
parties or otherwise, arising under or relating to any Environmental Law or Environmental Condition.
(iv) “Hazardous
Substance” means any substance: (A) the presence of which requires investigation or remediation under any Environmental
Laws; (B) which is defined as a “pollutant,” “hazardous waste” or “hazardous substance”
under any Environmental Laws; (C) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic or mutagenic
or otherwise hazardous and is regulated under Environmental Laws; or (D) that is gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs) or asbestos.
(v) “Release”
means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping into the environment.
(vi) “Threat
of Release” means a substantial likelihood of Release that requires action to prevent or mitigate damage to the environment
that may result from such Release.
Section 4.15 Employment
Matters.
(a) Schedule 4.15(a) sets
forth: (i) all present employees (including any leased or temporary employees) of Seller (the “Employees”)
and independent contractors providing services to Seller; (ii) each Employee’s or independent contractor’s current rate
of compensation (including bonus opportunity and most recent bonus) and their exempt/non-exempt status; and (iii) each Employee’s
accrued vacation, sick leave or personal leave if applicable. Schedule 4.15(a) also names any Employee who is absent
from work due to a work-related injury, is receiving workers’ compensation or is receiving disability compensation. Except as set
forth on Schedule 4.15(a), there are no unpaid wages, bonuses or commissions (other than those not yet due and which have
been accrued in the financial books and records of Seller, and which will be paid as of the Effective Time) owed to any Employee.
(b) Except
as set forth on Schedule 4.15(b), Seller: (i) has not, in the past three years, experienced any organized slowdown, organized
work interruption, strike or work stoppage by its employees; (ii) is not a party to, or obligated by, any Contract or otherwise,
regarding the rates of pay, working conditions or other terms of employment of any employees; and (iii) is not obligated under any
Contract or otherwise to recognize or bargain with any labor organization or union on behalf of any employees.
(c) In
the last three years, (i) neither Seller nor any of its officers, directors, shareholders, or employees has been charged, or threatened
with the charge of, any unfair labor practice; (ii) Seller is, and has been, in compliance in all material respects with all Applicable
Laws concerning the employer-employee relationship and with all agreements relating to the employment of the Employees, including applicable
wage and hour laws, workers’ compensation laws, occupational safety laws, worker eligibility laws, unemployment laws and social
security laws; and (iii) no allegations of sexual harassment have been made against any employee, officer, shareholder, or director
of Seller, and Seller has not entered into any settlement agreements related to allegations of sexual harassment or misconduct by an employee,
officer, shareholder or director of Seller.
(d) (i) All
Employees are employees at-will, terminable on one-month’s notice or less without penalty; and (ii) there are no outstanding
agreements or arrangements with respect to severance payments to current Employees or former employees of Seller. Schedule 4.15(d) identifies
all former employees of Seller that have suffered an employment loss within the preceding 90 days. No notice required under the Federal
Workers Adjustment and Retraining Notification Act (“WARN Act”), or any similar state law has been or will be
required of Seller to its employees or former employees by reason of any acts prior to the Closing or by reason of the consummation of
the Closing.
(e) Seller’s
records accurately reflect the employment or service histories of its employees, independent contractors, contingent workers and leased
employees, including their hours of service, and all such records are maintained in a usable electronic form, and each Person who is classified
on such records as an employee or independent contractor is properly classified.
Section 4.16 Employee
Benefit Plans.
(a) Schedule 4.16(a) lists
each material Employee Benefit Plan (x) that Seller sponsors, maintains, administers, or has Liability with respect to, or contributes
to, or has any obligation to contribute to for the benefit of any Covered Employee, or (y) with respect to which Seller or any ERISA
Affiliate has or has had any obligation. Each Employee Benefit Plan has been maintained and operated in compliance with Applicable Laws
and with the documents and instruments governing such plan, except where any such non-compliances would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There exists no material employment, consulting, severance, retention, termination,
indemnification, change of control, bonus or similar agreements, arrangements or understandings between Seller and any Covered Employee.
(b) The
consummation of the transactions contemplated by this Agreement will not give rise to any Liability for any employee benefits, including
Liability for severance pay, termination pay or withdrawal liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any Covered Employee. There have been no previous events or occurrences that have given rise to any
Liability for withdrawal liability, including partial withdrawal liability, in respect of the Employee Benefit Plans.
(c) The
Selling Parties have made available to Buyer, with respect to each Employee Benefit Plan, true, correct and complete copies of: (i) the
documents embodying the plan, including the current plan documents and documents creating any trust maintained pursuant thereto, all amendments,
investment management agreements, administrative service contracts, group annuity contracts, insurance contracts, collective bargaining
agreements, the most recent summary plan description with each summary of material modification, if any, and employee handbooks; and (ii) annual
reports including Forms 5500, 990 and 1041 for the last three years for the plan or any related trust.
(d) Each
current Employee Benefit Plan that is intended to be tax qualified under Section 401(a) of the Code is so qualified and any
trust maintained pursuant thereto is exempt from federal income taxation under Section 501 of the Code, and to Seller’s Knowledge,
nothing has occurred or is expected to occur that caused or would reasonably be expected to cause the loss of such qualification or exemption
or the imposition of any material penalty or Tax Liability.
(e) Neither
Seller, nor any of its ERISA Affiliates, currently maintains, contributes to or participates in, or has at any time, maintained, contributed
to, participated in, or had an obligation to maintain, contribute to, or otherwise participate in, any employee pension benefit plan that
is a “multiemployer plan” (within the meaning of Section 3(37) of ERISA) or that is subject to the provisions
of Title IV of ERISA.
Section 4.17 Intellectual
Property.
(a) Neither
the current use of any Intellectual Property by Seller nor the operation of the Business conflicts with, infringes upon, misappropriates
or violates in any material respect any rights of any third party, and Seller has no Liability for past infringement. Seller neither currently
is, nor has been during the previous three years, a party to any Proceeding or, to Seller’s Knowledge, threatened Proceeding involving
a claim of infringement in connection with any Intellectual Property rights used in or relating to the Business or Seller. There are no
facts which indicate a material likelihood of any infringement, misappropriation or violation by, or conflict with, any Person with respect
to any Intellectual Property, including any demand or request that Seller license rights from, make royalty payments to, or provide any
monetary or non-monetary consideration to any Person in exchange for the use of any Intellectual Property.
(b) Seller
owns the entire right, title and interest in and to, or has a valid license to use (or in connection with the acquisition of Equipment
or Inventory, has an implied license to use) the material Intellectual Property used by it, free and clear of all Liens and without payment
of any royalty or similar amount or other Liability to any third party, and such Intellectual Property is sufficient for the unimpaired
continued operation of the Business by Buyer following the Closing as heretofore conducted by Seller. None of the Intellectual Property
owned or used by Seller was developed under any grant associated with, or equipment provided by, any federal, state and/or local Governmental
Authority (including any public university). The consummation of the transactions contemplated hereunder will not result in the loss or
impairment of, or obligation to pay any additional amounts with respect to, nor require the consent of any other Person in respect of,
Buyer’s right to own, use, hold for use, or license any material Intellectual Property as heretofore owned, used, held for use or
licensed by Seller in the conduct of the Business.
(c) Schedule 4.17(c) lists
each (i) patent (including any U.S. and non-U.S. patent, utility model, industrial design, design patent, continuation, continuation-in-part,
divisional, reissue and reexamination), patent application or invention identified in an invention disclosure, (ii) registered or
material unregistered trademark, trade name, service mark or corporate name, and any application to register any of the foregoing, (iii) copyright
registration or application for copyright registration, and (iv) domain name registration held by or on behalf of Seller. Schedule 4.17(c) lists
all licenses related to the foregoing.
(d) Except
as listed in Schedule 4.17(d), Seller has not used, and does not currently use, any Software for the conduct of the Business,
except for such off-the-shelf, non-customized, third party Software as may be readily obtained by license from third party vendors of
such Software on reasonable commercial terms at costs similar to those reflected in the Financial Reports.
(e) No
current or former employee or contractor of Seller has any right to payment with respect to Seller’s use of any Intellectual Property.
No current or former employee or contractor of Seller has contributed to the conception or development of any Intellectual Property used
by Seller.
(f) Seller
has taken reasonable measures to protect the confidentiality of its Intellectual Property and other proprietary information, the value
of which is contingent upon maintaining the confidentiality thereof, and of third party confidential information provided to Seller under
an obligation of confidentiality, which measures are commercially reasonable in the industry and jurisdictions in which Seller operates.
With respect to any trade secret or other proprietary know-how of Seller: (i) the documentation relating to such trade secret or
know-how is current, accurate and is sufficient in detail and content to identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any individual; and (ii) such trade secret or know-how has not been used, divulged
or appropriated either for the benefit of any Person or to the detriment of the Business.
(g) Seller
has implemented and currently maintain a commercially reasonable security plan which complies in all material respects with all Applicable
Laws, including Privacy Laws. Seller is and has been in material compliance with the foregoing security plan.
(h) Seller
has Business Systems sufficient to operate its business as presently conducted. Seller has commercially appropriate disaster recovery
plans, procedures and facilities for the Business and Seller has taken all reasonable steps to safeguard and maintain the Business Systems
utilized in the operation of the Business as presently conducted. In the last three years, there has not been any unauthorized intrusion,
material failure or breakdown, or continued substandard performance with respect to any of the Business Systems that have caused any substantial
disruption of or interruption in or to the use of such Business Systems.
(i) Seller
and its employees, agents, Affiliates, independent contractors, subcontractors, suppliers and other representatives (together the “Seller
Agents”) and the services they provide (including the software, systems, servers, computers and related equipment used to
provide the services) comply in all material respects with the requirements of any agreement between Seller and processors of Payment
Card Data and the Payment Card Industry Data Security Standards (including the payment application data security standards) as amended,
updated, superseded or replaced from time to time by the PCI Security Standards Counsel (the “PCI Standards”),
including with respect to the collection, storage, retention, processing, usage, transmission and destruction of Payment Card Data. Seller
uses, and causes Seller Agents to use, Payment Card Data only for assisting in completing card transactions, for fraud control services,
or as otherwise specifically permitted in writing by a duly authorized representative of the owner of such Payment Card Data. Seller maintains
appropriate business continuity procedures and systems to ensure the security of Payment Card Data and other proprietary information in
the event of a disruption, disaster or failure of Seller’s primary data systems that involve a risk to Payment Card Data.
(j) Seller
and the conduct of the Business are in compliance with, and have been in compliance with all Data Security Requirements, in all material
respects and there have not been any actual or alleged incidents of data security breaches, unauthorized access or use of any of the Business
Systems, or unauthorized acquisition, destruction, damage, disclosure, loss, corruption, alteration, or use of any information related
to the Business or Personal Information (whether of employees, contractors, consultants, customers, consumers, or other Persons and whether
in electronic or any other form or medium) that is accessed, collected, used, processed, stored, shared, distributed, displayed, transferred,
disclosed, destroyed, or disposed of by any of the Business Systems, and Seller has not been subject to any claims or received any notices,
complaints or investigations relating to any of the foregoing.
Section 4.18 Brokers.
Neither Seller, nor any Person acting on behalf of Seller, has incurred any Liability to any Person for any brokerage fees, agent’s
commissions or finder’s fees in connection with the execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby.
Section 4.19 Insurance.
Schedule 4.19 sets forth a complete and correct list of all insurance policies of any kind currently in force wherein Seller
is an insured or beneficiary (the “Insurance Policies”), as well as the type of coverage, the name of the insureds,
the insurer, the premium, the expiration date, the period to which it relates, the deductibles and loss retention amounts and the amounts
of coverage. Seller has made available to Buyer true, correct and complete copies of such Insurance Policies to Buyer, and all related
“loss runs” for the three preceding years. None of the insurers under any of the Insurance Policies has rejected the defense
or coverage of any claim purported to be covered by such insurer or has reserved the right to reject the defense or coverage of any claim
purported to be covered by such insurer. Seller has no Liability for any retrospective premium adjustments under any present or past insurance
policies.
Section 4.20 Significant
Customers and Suppliers. Schedule 4.20 lists the twenty (20) largest customers and twenty (20) largest suppliers of Seller,
in the aggregate (measured by value of net sales or purchases in each such period, respectively) during the 12-month period ended December 31,
2022, together with the dollar value of sales or purchases, as applicable. Except as set forth on Schedule 4.20, none of such
customers or suppliers has terminated, canceled or limited or made any material modification or change in, or diminished the scope of,
its business relationship with Seller or threatened to take any of the foregoing actions. Except as set forth in Schedule 4.20,
to Seller’s Knowledge, there exists no condition or state of facts involving customers or suppliers of Seller which could reasonably
be expected to have a Material Adverse Effect.
Section 4.21 Certain
Payments. Neither Seller nor any of its officers, directors, shareholders, or employees, nor any other Person acting on behalf of
any of them, has directly or indirectly: (a) made, promised or offered any contribution, gift, bribe, rebate, payoff, influence payment,
kickback, or other payment to any Person, private or public, regardless of form, whether in money, property or services (i) to obtain
favorable treatment or an improper advantage in securing business, (ii) to pay for favorable treatment or an improper advantage for
business secured, (iii) to obtain special concessions or for special concessions already obtained, or (iv) in violation of any
Applicable Law; (b) established or maintained any fund or asset or caused a payment that has not been accurately and fairly recorded
in the books and records of Seller maintained in the ordinary course; or (c) circumvented or breached the internal controls of Seller.
Section 4.22 Products
and Services.
(a) Seller
has made available to Buyer true, correct and complete copies of the standard terms and conditions of sale for each of the products or
services of the Business (containing applicable guaranty, warranty and indemnity provisions). Except as required by Applicable Law or
as described in the Material Contracts, no product manufactured, sold, delivered, designed or produced by, and no service rendered by
or on behalf of, Seller is subject to any guaranty, warranty or other indemnity, express or implied, beyond such standard terms and conditions.
(b) Each
product manufactured, sold, leased, delivered, designed or produced, and all services rendered by Seller have been in conformity in all
material respects with all Applicable Laws and applicable contractual commitments, regulatory requirements and all express written warranties
of Seller. Except as set forth in Schedule 4.22(b), in the past five years there has been no, and there is no currently pending
or, to Seller’s Knowledge, threatened, Proceeding against Seller: (i) for replacement or repair of any such product, component,
or other item manufactured, sold, leased, delivered, designed or produced prior to the Closing by, or service rendered prior to the Closing
by or on behalf of, Seller, or other damages in connection therewith, or (ii) arising out of any injury to any individuals or property
as a result of the ownership, possession, or use of any product, component, other item or service, and Seller has no Liability (and there
is no valid basis for any present or future Proceeding giving rise to any Liability) in connection therewith.
Section 4.23 Performance
Bonds. No Contract or project of Seller requires Seller to provide, performance, surety or similar bonds or similar third party assurances.
Section 4.24 PPP
Loan. All information submitted to the PPP Lender by Seller in connection with Seller’s application for its PPP Loan, including
any borrower application form (and any use of proceeds certification(s) contained therein), Seller’s application for forgiveness
of its PPP Loan, and any other supplemental information, were true and correct in all material respects as of the date such information
was provided to the PPP Lender, and no such information has changed in any material respect since such date. Except for the PPP Loan,
Seller has not applied for, received, claimed or invoked any tax deferral, tax credit, loan, grant or other benefit made available under
the CARES Act, including but not limited to any other loan under the Paycheck Protection Program, any Economic Injury Disaster Loan or
any Economic Injury Disaster Loan Emergency Advance. Seller’s application for, receipt of, use of its PPP Loan and the forgiveness
thereof comply in all material respects with the applicable requirements of the CARES Act.
Section 4.25 Except
as set forth on Schedule 4.25, Seller does not have any Debt nor is Seller liable for any Debt of any other Person. There are no
personal guaranties provided by either Shareholder for the benefit of any unaffiliated third party to secure or guaranty the Debt, performance
or other obligations of Seller, which guaranties are in effect as of the Closing Date.
Article V
Representations and Warranties of BUYER
Buyer represents and warrants
to the Selling Parties, as of the date of this Agreement, the following:
Section 5.1 Organization.
Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Tennessee.
Section 5.2 Authority;
Enforceability. Buyer has the right, corporate power and authority to execute and deliver the Transaction Agreements to which Buyer
is, or will be, a party, and to perform its obligations thereunder. The Transaction Agreements to which Buyer is a party constitute the
legally binding obligations of Buyer, enforceable in accordance with their respective terms. The execution, delivery and performance of
the Transaction Agreements by Buyer, and the consummation of the transactions contemplated thereby, do not and will not: (a) require
the consent, waiver, approval, license or other authorization of any Person; (b) violate any provision of Applicable Law applicable
to Buyer; (c) contravene, conflict with, or result in a violation of: (i) any provision of the Organizational Documents of Buyer;
or (ii) any resolution adopted by the board of directors of Buyer; or (d) conflict with, result in the termination of any provisions
of, constitute a default under, accelerate any obligations arising under, trigger any payment under, or otherwise adversely affect, any
material contract to which Buyer is a party, which, as to each of (a) through (d), would materially and adversely affect Buyer’s
ability to consummate the transactions contemplated herein or to perform its obligations under the Transaction Agreements to which Buyer
is a party. All requisite corporate action has been taken by Buyer authorizing and approving the execution and delivery by Buyer of the
Transaction Agreements to which Buyer is or will be a party, the performance by Buyer of its duties and obligations thereunder, and the
taking of all other acts necessary and appropriate for the consummation of the transactions contemplated thereby.
Section 5.3 Financing;
Non-Contravention; Litigation.
(a) Buyer
has adequate financial resources to consummate the transaction contemplated hereunder.
(b) The
execution, delivery and performance by Buyer of this Agreement and of the other Transaction Agreements to which Buyer is or will be a
party and the consummation of the transactions contemplated hereby require no material action by or in respect of, or material filing
with, any Governmental Authority.
(c) There
is no action, suit, proceeding, arbitration or investigation pending or, to the knowledge of Buyer, threatened against Buyer that would
reasonably be expected to materially and adversely affect Buyer’s ability to timely perform its obligations under this Agreement.
Section 5.4 Brokers.
Buyer has not incurred any Liability to any Person for any brokerage fees, agent’s commissions or finder’s fees in connection
with the execution or delivery of this Agreement or the transactions contemplated hereby.
Article VI
Covenants of the Parties
Section 6.1 Confidentiality.
(a) From
and after the Closing, the Selling Parties shall not, and each will cause its respective representatives not to, directly or indirectly,
use or disclose (other than to or on behalf of Buyer) any Confidential Information of or relating to the Purchased Assets or the Business.
This Section 6.1(a) shall survive the Closing and shall continue indefinitely; provided, however, that
the restrictions in this Section 6.1(a) shall terminate on the fifth (5th) anniversary of the Closing with
respect to any Confidential Information that does not then constitute a trade secret under Applicable Law. Nothing in this Section 7.1
shall be construed to limit or supersede the common law of torts or statutory or other protection of trade secrets where such law provides
Buyer with greater or longer protection than provided in this Section 6.1.
(b) For
purposes of this Agreement, “Confidential Information” means any and all technical, business and other information
of or relating to the Purchased Assets or the Business that derives value, actual, potential, economic or otherwise, from not being generally
known to other Persons, including technical or non-technical data, compositions, devices, methods, techniques, drawings, inventions, processes,
financial data, financial plans, product plans, lists of, or information relating to, actual or potential customers or suppliers, acquisition
and investment plans and strategies, marketing plans, business plans or operations of the Business. Confidential Information includes
(i) information of third parties relating to the Business that Seller is obligated to or does keep or treat as confidential; and
(ii) any information or records made available to either Shareholder pursuant to Section 3.1.
(c) The
obligations set forth in Section 6.1(a) shall not apply to any information that the Selling Parties can demonstrate:
(i) has become generally available after the Closing Date to the public through no act or omission of any Selling Party and without
violation of this Agreement, or any other confidentiality obligation of any Selling Party; (ii) was independently developed by the
Selling Parties after the Closing without the use of or reference to Confidential Information; or (iii) is required to be disclosed
by subpoena or other mandatory legal process, provided that the Selling Parties shall promptly give Buyer notice of any request
or demand for disclosure of such Confidential Information upon receipt of such request or demand along with a copy of any written correspondence,
pleading or other communications concerning the request or demand, and shall use reasonable efforts to obtain, and upon request, provide
reasonable cooperation should Buyer seek to obtain, an appropriate protective order.
Section 6.2 Covenant
Not to Compete.
(a) Each
of the Selling Parties, during the period beginning on the Closing Date and ending on the fifth (5th) anniversary of the Closing
Date (the “Restricted Period”), hereby agrees that he shall not, and shall not permit any entity that is directly
or indirectly controlled by him to, directly or indirectly, except on behalf of Buyer, for any reason, for his or its own account, or
on behalf of, or together with or through, any other Person, directly or indirectly:
(i) own,
control, manage, or participate in the ownership, control or management of, or render services or advice to, or lend its or his name to,
any business that is engaged in, or that it or he reasonably should know is undertaking to become engaged in, in whole or in part, the
manufacture, distribution, sale or servicing, in each case in or into North America (the “Territory”), of any
Product sold or offered for sale, or serviced, by Seller as of the date hereof or any other product that is identical to or a reasonable
substitute for any such Product;
(ii) solicit
or assist in the solicitation of, any Person having an office or conducting business anywhere within the Territory, and to which Seller
sold, provided, or solicited to sell any Product, in each case during the two-year period ending on the Closing Date, for the purposes
of selling or soliciting to sell any Product or any other product that is identical to or a reasonable substitute for any such Product,
or otherwise interfere with the relationship between Buyer and any such Person to which Seller sold, provided, or solicited to sell any
Product during the two-year period ending on the Closing Date;
(iii) solicit
or assist in the solicitation of, any Person employed or engaged by Seller prior to the Effective Time and employed or engaged by Buyer
following the Closing in any capacity (as an employee, independent contractor or otherwise) to terminate such employment or other engagement,
whether or not such employment or engagement is pursuant to a contract and whether or not such employment or engagement is at will, or
otherwise interfere with the relationship between Buyer and any Person employed or engaged by Buyer in the Business; or
(iv) knowingly
or intentionally damage or destroy the goodwill and esteem of Buyer in the Business, with any suppliers, employees, patrons, customers,
or others who may at any time have or have had relations with Buyer or Seller in the Business.
(b) The
parties agree that, notwithstanding the foregoing, it shall not be a breach of this Section 6.2(a)(i) for a Selling Party
to own, directly or indirectly, up to an aggregate of two percent (2%) of any class of publicly traded securities of any Person engaged
in any of the activities described in Section 6.2(a)(i), so long as such securities are held as a passive investment.
(c) Although
the parties have, in good faith, used their best efforts to make the provisions of Section 6.1 and Section 6.2 reasonable
in terms of geographic area, duration and scope of restricted activities in light of Seller’s business activities, and it is not
anticipated, nor is it intended, by any party hereto that a court of competent jurisdiction or arbitral tribunal would find it necessary
to reform the provisions hereof to make them reasonable in terms of geographic area, duration or otherwise, the parties understand and
agree that if a court of competent jurisdiction or arbitral tribunal determines it necessary to reform the scope of Section 6.1
and Section 6.2 or any part thereof in order to make it binding and enforceable, such provision shall be considered divisible
in all respects and such lesser scope as any such court or arbitral tribunal shall determine to be reasonable shall be effective, binding
and enforceable.
(d) Because
of the difficulty in measuring economic losses that may be incurred by Buyer as a result of any breach by any Selling Party of any of
the covenants contained in Section 6.1 or Section 6.2(a), and because of the immediate and irreparable damage
that would be caused to Buyer for which it would have no other adequate remedy, the Selling Parties agree that, without limiting any other
remedies available at law or in equity, Buyer shall be entitled to an injunction or restraining order to enforce the provisions of Section 6.1
or Section 6.2(a) against any Selling Party that breaches or threatens to breach any provisions of Section 6.1
or Section 6.2(a), in each case without the need to post a bond or other security. In the event
of any violation of the provisions of Section 6.1 or Section 6.2(a), each Selling Party acknowledges and agrees
that the Restricted Period shall be extended by a period of time equal to the period of such violation; it being the intention of the
parties hereto that the running of the Restricted Period shall be tolled during any period of such violation.
(e) The
parties hereto each agree that Section 6.1 and Section 6.2(a) impose reasonable restraints on the Selling
Parties in light of the activities and the Business as conducted and planned to be conducted on the date hereof, the current business
and future business plans of Buyer, and the consideration to be received by the Selling Parties pursuant to this Agreement.
(f) The
parties hereby agree that Section 6.1 and Section 6.2 are material and substantial parts of the transactions contemplated
hereby.
Section 6.3 Employees
of the Business.
(a) At
the Closing, all Employees of shall be made available by Seller under and pursuant to the Transition Services Agreement. On or prior to
the Transfer Date (as defined in the Transition Services Agreement), Buyer shall make offers of employment to all Employees pursuant to
and in accordance with the terms of the Transition Services Agreement, for such positions to be determined by Buyer and pursuant to terms
and conditions determined by Buyer. The active participation by all Hired Employees (as defined in the Transition Services Agreement)
in the Employee Benefit Plans of Seller will cease as of their separation from employment with Seller. Buyer will not assume or continue,
and will have no Liability to the Hired Employees or any other Person under or with respect to, any of the Employee Benefit Plans of Seller.
(b) Seller
shall pay or shall cause to be paid all Hired Employees or their dependents for all amounts due to such employees or their dependents,
through the Closing Date, including amounts due as wages or salary, on account of severance, health claims, bonus, retirement plan contributions,
accrued vacation or personal leave, and other benefits through the Closing Date, when and as the same become due, and Seller shall cause
to be made all required contributions to any Employee Benefits Plan on behalf of the employees of the Business in respect of all periods
through the Closing Date.
(c) “Continuation
Coverage” shall be provided by the parties hereto pursuant to the requirements of Section 4980B of the Code and the regulations
thereunder.
Section 6.4 Consents;
Failure to Obtain Consents. Notwithstanding anything to the contrary set forth herein, this Agreement shall not constitute an assignment
or attempt to assign or transfer any interest in any Contract or Permit otherwise included in the Purchased Assets, or any claim, right
or benefit arising thereunder or resulting therefrom, if such assignment or transfer is without the consent of a third party and would
constitute a breach or violation thereof or materially adversely affect the rights of Buyer, the Purchased Assets or the Business. Until
all such consents are obtained, Seller and Buyer shall cooperate and shall use their respective commercially reasonable efforts to enter
into such arrangements designed to fulfill Seller’s obligations thereunder and to afford Buyer the continued full benefits thereof.
Seller shall hold in trust for and pay to Buyer promptly upon receipt thereof, such Purchased Asset and all income, proceeds and other
monies received by Seller to the extent related to such Purchased Asset in connection with the arrangements under this Section 6.4.
Section 6.5 Transition
Cooperation.
(a) Seller
agrees to cooperate with Buyer to facilitate the transfer of all utilities servicing the Business or the Real Property into Buyer’s
name, including the transfer of any telephone numbers, electrical service, water and sewage.
(b) Following
the Closing, Buyer may receive and open all mail addressed to Seller received at the Real Property, and, to the extent that such mail
and the contents thereof relate to the Business, the Purchased Assets or the Assumed Obligations, deal with the contents thereof at its
discretion. From and after the Closing, Seller shall promptly forward or cause to be forwarded to Buyer any mail received by Seller that
relates to the Business, the Purchased Assets, or the Assumed Obligations. From and after the Closing, Buyer shall promptly forward or
cause to be forwarded to Seller any mail received by Buyer that relates to the Excluded Assets or the Excluded Liabilities.
(c) Promptly
following the Closing, Seller shall take all actions reasonably requested by Buyer or any registrar or social media platform to transfer
ownership and full control of the domain names and any social media accounts included in the Purchased Assets (including https://southhydcyl.com)
to Buyer. Seller shall from time to time, and without cost to Buyer, reasonably cooperate in facilitating the transfer to Buyer of the
domain names and social media accounts with such registrar(s) or social media platform(s) and will follow the rules designated
thereby to effect such transfer, including reasonably responding to any communications from such registrar(s) or social media platform(s) confirming
the transfer of the domain names or social media accounts to Buyer’s ownership and administrative control.
(d) As
promptly as reasonably practicable following the Closing, and in any event not later than 30 days following the Closing, Seller shall
take all actions reasonably necessary to: (i) change the corporate name of Seller to delete the name “Southern Hydraulic
Cylinder” or any derivative thereof, (ii) change Seller’s registered office addresses and principal place of business
to a location other than the Real Property, and (iii) to file appropriate notices of such changes with any applicable Governmental
Authorities.
Section 6.6 Waiver
of Bulk Sales Compliance. The parties hereby waive compliance with the bulk sales or similar laws of any applicable jurisdiction.
Section 6.7 Further
Assurances. From time to time, after the Closing, the parties will execute and deliver such other documents, certificates, agreements
and other writings and take such other actions as may reasonably be necessary or requested by another party in order to consummate, evidence
or implement expeditiously the transactions contemplated by this Agreement.
Section 6.8 Public
Announcements. Unless otherwise required by applicable Law or stock exchange rule (which requirements with respect to Buyer shall
be determined by Buyer in consultation with its counsel), no party to this Agreement shall make any public announcements in respect of
this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent
of the other party (which consent shall not be unreasonably withheld, conditioned or delayed), and the parties shall cooperate as to the
timing and contents of any such announcement; provided that, for the avoidance of doubt, following the date of this Agreement,
routine notifications by Buyer or Seller to customers, suppliers and other third parties having dealings with Seller or the Business will
not require prior consent of the other party.
Section 6.9 Accounts
Receivable. Seller hereby grants to Buyer, from and after the Closing, the power, right and authority, coupled with an interest, to
receive, endorse, cash, deposit, and otherwise deal with, in the name of Seller, any checks, drafts, documents and instruments evidencing
payment of any notes, accounts receivable or other payment rights included in the Purchased Assets and that are payable to, payable to
the order of, or endorsed in favor of Seller or any agent thereof. Seller agrees promptly to endorse and pay over or cause to be endorsed
and paid over to Buyer, without deduction or offset, the full amount of any payment received by it after the Closing in respect of goods
sold or services rendered as part of the Business or other payment rights included in the Purchased Assets, and shall hold any such amount
in trust for Buyer pending such payment.
Section 6.10 Surveys
and Title Insurance. As a condition of its obligation to proceed with the Closing, Buyer shall have received ALTA policies of title
insurance issued by Hatcher Title and Escrow Agency, Inc. (the “Title Company”) with respect to each parcel
of Real Property, or irrevocable or unconditional binders to issue the same (“Title Policies”), in the amount
of the value of such insured Real Property that (a) is dated, or updated to, the Closing Date, (b) insures, or commits to insure,
Buyer’s good and indefeasible title in fee simple to each parcel of Real Property, with extended coverage over the standard exceptions
(“Standard Endorsement”), (c) free and clear of all Liens except Permitted Liens, and (d) contains,
at Buyer’s option, such other endorsements and affirmative coverages as required by Buyer (“Special Endorsements”),
including to the extent available, zoning, access, single assessed parcel, and comprehensive endorsements. Each updated survey for each
parcel of Real Property (collectively, the “Surveys”) shall be prepared in accordance with the 2005 Minimum
Standard Detail Requirements for ALTA/ASCM Land Title Surveys by a surveyor acceptable to Buyer. The premium for each of the Title Policies,
with the Standard Endorsement and any Special Endorsements and the cost of the Surveys, shall be paid by Buyer. Seller agrees to provide
such documentation or other information as the title insurance companies may require to (i) satisfy all the requirements set forth
on Schedule B, Section I of the title commitments issued in connection with the Title Policies, and (ii) remove all standard
exceptions set forth on Schedule B, Section II of the title commitments issued in connection with the Title Policies.
Section 6.11 Tail
Policies. Prior to the date hereof, Seller has purchased discontinued products liability insurance coverage for a period of three
years after the Closing Date, in effect immediately prior to the Closing Date, and has amended Seller’s existing product liability
policies to provide that (a) all premiums paid under such policies are deemed to be “fully earned”, and (b) Buyer
and Parent are named as additional insureds thereunder (such insurance coverage, the “Discontinued Products Liability Policy”).
At the Closing, Buyer shall reimburse Seller for one-half of the total amount of the premiums and related fees paid by Seller in connection
with the issuance of the Discontinued Products Liability Policy. Following the Closing, neither Seller nor any of the Seller Indemnitors
shall amend, modify, terminate or waive any provision in or of the Discontinued Products Liability Policy Coverage without the prior written
consent of Buyer.
Article VII
Taxes and Related Matters
Section 7.1 Books
and Records; Access. The parties agree to retain or cause to be retained all books and records pertinent to the Purchased Assets or
the Business until the applicable period for assessment of Taxes under Applicable Law has expired, and to furnish each other access thereto
as is reasonably necessary for the filing of any Tax Return, the preparation for any Tax audit, the prosecution or defense of any claim,
suit or proceeding relating to any proposed Tax adjustment relating to the Purchased Assets or the Business. For a period of seven years
after Closing, the parties agree to give each other reasonable notice prior to transferring, discarding or destroying any such books and
records relating to Tax matters and, if so requested, shall allow another party to take possession of such books and records.
Section 7.2 Additional
Tax Matters.
(a) Buyer
will pay all transfer, documentary, sales, use, stamp, registration, recording, vehicle registration, title, real estate transfer and
other such Taxes and governmental fees (including any penalties and interest), as applicable, incurred in connection with the transactions
contemplated by this Agreement. The parties will cooperate to the extent reasonably necessary to make such filings or returns as may be
required. The parties will cooperate with each other and use their reasonable commercial efforts to minimize the Taxes attributable to
the transfer of the Purchased Assets, subject to Applicable Law.
(b) Notwithstanding
anything herein to the contrary and without duplication of amounts reflected in the Net Working Capital at Closing, any ad valorem Taxes
imposed on the Purchased Assets and other periodic expense items such as utilities and similar expenses with respect to the Purchased
Assets that relate to a period beginning before the Closing Date and ending after the Closing Date shall be apportioned as of Closing
such that Seller shall be liable for (and shall reimburse Buyer to the extent that Buyer shall pay) that portion of such Taxes and other
expense items relating to, or arising in respect of, periods through the Closing Date and Buyer shall be liable for (and shall reimburse
Seller to the extent Seller shall have paid) that portion of such Taxes and other expense items relating to, or arising in respect to,
periods after the Closing Date. All amounts to be prorated will, to the extent reasonably feasible, be taken into account on the Settlement
Statement. To the extent the amounts of any such proratable items are not finally known at the Closing, appropriate settlement will be
made within 30 days after the amount of any such item is finally known.
Section 7.3 Allocation
of Purchase Price. The parties agree that the Purchase Price and the Assumed Obligations (plus any other relevant items) will be allocated
to the Purchased Assets in a manner consistent with Section 1060 of the Code and the regulations promulgated thereunder, based upon
the fair market values of such assets (the “Purchase Price Allocation”) as set forth in Schedule 7.3
hereof. Buyer shall, within 30 days after the final determination of the Net Adjustment pursuant to Section 3.1, provide Seller
with a proposed adjustment to the allocation (the “Proposed Allocations”) of the Purchase Price and the Assumed
Obligations (and other relevant items). The Proposed Allocations will be prepared in accordance with the applicable provisions of the
Code. The Proposed Allocations will become final and binding on the parties unless Seller gives Buyer written notice of objection to the
Proposed Allocations within 30 days after Buyer gives Seller the Proposed Allocations. If Seller timely objects to the Proposed Allocations
then Buyer and Seller shall negotiate in good faith to agree on any changes to the Purchase Price Allocations, and if they are unable
to agree on final Purchase Price Allocations within 30 days, the Independent Accounting Firm shall resolve the dispute. The fees and expenses
of such accounting firm shall be borne equally by Seller and Buyer. Once finally determined pursuant to the above, the Proposed Allocations
shall be the “Final Allocation Schedule”. Seller and Buyer agree to file their respective IRS Forms 8594 and
all federal, state and local Tax Returns in accordance with the Final Allocation Schedule, and no party shall take any position (whether
in audits, Tax Returns or otherwise) that is inconsistent with the Final Allocation Schedule pursuant to this Section, unless required
to do so by Applicable Laws.
Article VIII
Indemnification
Section 8.1 Agreement
to Indemnify.
(a) Subject
to this Article VIII, the Seller Indemnitors, jointly and severally, agree to indemnify, defend and hold harmless Buyer and
its Affiliates and their respective successors, officers, directors, employees, representatives and agents (collectively, the “Buyer
Indemnitees”) from, against and in respect of any and all Losses incurred by any Buyer Indemnitee arising out of or as a
result of:
(i) any
inaccuracy or misrepresentation in or breach of any representation or warranty made in Article IV or the corresponding Schedules;
(ii) any
breach by any Selling Party of any covenant contained in this Agreement or in any other Main Transaction Agreement;
(iii) any
Excluded Liabilities; or
(iv) any
and all Proceedings, fees and expenses incident to any of the foregoing or incurred in investigating or attempting to avoid the same or
to oppose the imposition thereof, or in enforcing this indemnification.
(b) Buyer
agrees to indemnify, defend and hold harmless the Seller Indemnitors from, against and in respect of any and all Losses incurred by them:
(i) arising
out of or as a result of any inaccuracy or misrepresentation in or breach of any representation or warranty made in Article V
of this Agreement or the corresponding Schedules;
(ii) arising
out of or as a result of any breach by Buyer of any covenant contained in this Agreement or in any other Main Transaction Agreement;
(iii) arising
out of or as a result of the failure of Buyer to perform or discharge any Assumed Obligations;
(iv) to
the extent arising solely out of, or solely as a result of, the conduct of the Business or the ownership of the Purchased Assets by Buyer
after the Effective Time; or
(v) arising
out of or as a result of any and all Proceedings, fees and expenses incident to any of the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in enforcing this indemnification.
Section 8.2 Indemnification
Procedures.
(a) If
any Buyer Indemnitee or Seller Indemnitor (each, an “Indemnitee”) learns of a potential claim with respect to
any matter for which the Indemnitee intends to seek indemnification against the Selling Indemnitors or Buyer (each, an “Indemnitor”)
under this Article VIII, then such Indemnitee will notify Seller (on behalf of the Selling Parties) or Buyer thereof, as applicable,
pursuant to Section 9.1, in each case within 30 days thereafter, such notice to state the nature and basis of any claim made
by the third party; provided that, no delay on the part of an Indemnitee in giving such notice will relieve the applicable Indemnitor
from any obligation hereunder unless, and then solely to the extent that, the Indemnitor is demonstrably prejudiced thereby. In the event
the Indemnitor notifies the Indemnitee within 30 days after the date such Indemnitee has given notice of the matter that the Indemnitor
will indemnify the Indemnitee in respect of such matter, then the Indemnitor may, at the Indemnitor’s sole cost and expense, by
notice to the Indemnitee within such 30-day period, assume the defense of such matter on behalf of the Indemnitee. If the Indemnitor assumes
the defense of such matter, (i) Indemnitor will defend the Indemnitee against the matter with counsel of the Indemnitor’s choice
reasonably satisfactory to the Indemnitee, (ii) the Indemnitee may retain separate counsel at its sole cost and expense, and (iii) the
Indemnitor will not consent to the entry of a judgment or consent order with respect to the matter, or enter into any settlement, without
the written consent of the Indemnitee, not to be unreasonably withheld, conditioned or delayed. If the Indemnitor does not assume the
defense of such matter, (1) the Indemnitee may defend against the matter in any manner it reasonably may deem appropriate, and with
counsel of its choice, and without prejudice to its indemnification rights hereunder, and (2) the Indemnitor may retain separate
counsel and participate in such matter at its sole cost and expense. Notwithstanding anything to the contrary in the foregoing, if defendants
in any action include any Indemnitee and any Indemnitor, and any Indemnitee shall have been advised by its counsel that there may be material
legal defenses available to such Indemnitee inconsistent with those available to any Indemnitor, or if a conflict of interest exists between
any Indemnitee and any Indemnitor with respect to such claim or the defense thereof, or if Seller’s control of such defense would
reasonably be expected to have a material adverse effect on the Business, then in any such case, the Indemnitee shall have the right to
control or re-assume such defense through its own counsel, and in such event (or in the event that the Indemnitor does not timely assume
or diligently pursue the defense of such matter as provided above) the reasonable fees and expenses of the Indemnitee’s counsel
shall be borne by the Indemnitors and shall be paid by them from time to time within 20 days of receipt of appropriate invoices therefor.
(b) In
the event that an Indemnitee notifies the Indemnitor, of any claim for indemnification hereunder that does not involve a third party claim,
such Indemnitor shall, within 30 days after the date of such notice, pay to the Indemnitee the amount of Losses payable pursuant to this
Section 8.2 and shall thereafter pay any other Losses payable pursuant to this Section 8.2 and arising out of
the same matter on demand, unless the Indemnitor disputes in writing such Indemnitor’s Liability for, or the amount of, any such
Losses within such 30-day period, in which case such payment shall be made as provided above in respect of any matters or amounts not
so disputed and any Losses in respect of the matters so disputed shall be paid within five Business Days after any determination (by agreement
of such Indemnitee and the Indemnitor) that such Indemnitor is liable therefor pursuant to this Section 8.2.
(c) For
purposes of determining the amount of Losses to which an Indemnitee is entitled under this Article VIII, each of the representations
and warranties that contain any qualifications as to materiality or “Material Adverse Effect” (or any correlative terms) shall
be deemed to have been given as though there were no such qualifications.
Section 8.3 Survival
of Representations, Warranties and Covenants.
(a) Except
as otherwise provided in this Section 8.3, all representations and warranties contained herein, and the right to assert claims
hereunder in respect thereof, shall survive the Closing (and the delivery of any other Transaction Agreement) and shall expire on the
18-month anniversary of the Closing Date.
(b) Notwithstanding
Section 8.3(a) above, the representations and warranties made in Sections 4.1 (Organization), 4.2
(Authority; Enforceability), 4.3 (Capitalization and Subsidiaries), 4.8(c) (Title to Assets), 4.10 (Tax Matters),
4.11 (Applicable Laws and Permits), 4.14 (Environmental Matters), 4.16 (Employee Benefit Plans), 4.18 (Brokers),
5.1 (Organization) and 5.2 (Authority; Enforceability), and 5.4 (Brokers) (collectively, the “Fundamental
Representations”), and claims for Fraud, and the right to assert claims hereunder in respect thereof, shall survive the
Closing (and the delivery of any other Transaction Agreement) and shall survive for the longest period allowed by Applicable Law.
(c) Notwithstanding
anything to the contrary herein, the survival period in respect of any alleged or actual breach of a representation or warranty in this
Agreement, or any related claim, shall be extended automatically to include any time period necessary to resolve a claim for indemnification
that was asserted by the giving of notice in accordance with Section 9.1 and this Article VIII before expiration
of such survival period, but not resolved and shall not expire unless otherwise specifically provided prior to its expiration. Liability
for any such item shall continue until such claim shall have been finally settled, decided or adjudicated, and the parties waive any defense
based on any statute of limitations or repose with respect to any such matter. Under no circumstances shall the fact that Losses are still
being or may in the future be incurred be a basis for postponing or delaying satisfaction of any Indemnitee’s right to be indemnified
in respect of indemnifiable Losses that have already been incurred.
(d) Notwithstanding
anything herein to the contrary, all covenants, agreements or obligations contained in this Agreement shall survive the Closing (and the
delivery of any other Transaction Agreement) in accordance with their respective terms and conditions, or if not so stated, indefinitely.
Section 8.4 Limitations.
(a) The
Seller Indemnitors shall not have any obligation to indemnify any Buyer Indemnitee with respect to Losses pursuant to Section 8.1(a)(i) unless
the aggregate amount of all such Losses exceeds $75,000.00 (the “Deductible”), at which point the Seller Indemnitors
will indemnify the Buyer Indemnitees for all such amounts in excess of such Deductible. The maximum aggregate liability of the Seller
Indemnitors with respect to Losses pursuant to Section 8.1(a)(i) shall not exceed ten percent (10%) of the Purchase Price,
and the aggregate amount of all Losses for which the Seller Indemnitors shall be liable pursuant to Section 8.1(a) shall
not exceed the Purchase Price. Notwithstanding the foregoing, this Section 8.4(a) shall not apply to (i) inaccuracies
or misrepresentations in or breaches of the Fundamental Representations (other than the representations and warranties contained in Section 4.14
(Environmental Matters) and Section 4.16 (Employee Benefit Plans)), or (ii) Fraud.
(b) Buyer
shall not have any obligation to indemnify Seller with respect to Losses pursuant to Section 8.1(b)(i) unless the aggregate
amount of all such Losses exceeds the Deductible, at which point Buyer will indemnify Seller for all such amounts in excess of the Deductible.
Notwithstanding the foregoing, this Section 8.4(b) shall not apply to (i) inaccuracies or misrepresentations in
or breaches of the Fundamental Representations or (ii) Fraud.
(c) The
Indemnitees shall not be entitled to indemnification under this Agreement to the extent such Loss was taken into account in the determination
of the Net Adjustment hereunder if doing so would result in double counting, but only to the extent of the amount so taken into account.
(d) Notwithstanding
anything contained herein to the contrary, each Shareholder shall only be liable under Section 8.1(a) up to and including
such Shareholder’s pro-rata portion based on such Shareholder’s ownership in the Seller immediately prior to the Closing.
(e) In
no event shall any Indemnitor be liable to any Indemnitee for any punitive, incidental, consequential, special, or indirect damages, including
loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement,
or diminution of value or any damages based on any type of multiple, except to the extent any such damages or other amounts are awarded
to a third party.
(f) Payments
by an Indemnitor in respect of any Loss shall be limited to the amount of any liability or damage that remains after deducting therefrom
any insurance proceeds and any indemnity, contribution or other similar payment received by the Indemnitee in respect of any such claim,
less any costs incurred related to premiums or expenses in connection with obtaining such insurance proceeds. The Indemnitor shall use
its commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar agreements for any
indemnifiable Losses.
(g) Notwithstanding
anything herein to the contrary, any claim by a Buyer Indemnitee for indemnification under Section 8.1(a) against or
with respect to any of the Buchanan Family Group shall be made as follows:
(i) The
Buyer Indemnitees shall first seek indemnification from the Co-Personal Representatives of the Estate.
(ii) If
the Estate has been closed, the Buyer Indemnitees shall seek indemnification from the Co-Trustees of the Trust. If the Estate is closed
during the pendency of such claim, the claim shall, without the need for further action on the part of the Buyer Indemnitees, and effective
immediately upon the closing of the Estate, be transferred to and made against the Trust.
(iii) If
the Trust has been terminated, the Buyer Indemnitees shall seek indemnification from the Trust Beneficiaries: namely, Barbara Jennings
Buchanan, John William Buchanan, and Stephanie Paige Buchanan Zabo. If the Trust is terminated during the pendency of such claim, the
claim shall, without the need for further action on the part of the Buyer Indemnitees, and effective immediately upon the termination
of the Trust, be transferred to and made against the Trust Beneficiaries (namely, Barbara Jennings Buchanan, John William Buchanan, and
Stephanie Paige Buchanan Zabo).
(h) Notwithstanding
anything herein to the contrary, payment due hereunder for any claim by a Buyer Indemnitee for indemnification under Section 8.1(a) against
or with respect to any the Buchanan Family Group shall be made as follows:
(i) If
the Estate has not been closed, the Co-Personal Representatives of the Estate shall cause such payment to be made by the Estate.
(ii) If
the Estate has been closed, the Estate has insufficient assets for such payment, or such payment is not made by the Estate within five
(5) Business Days after such payment is due, the Co-Trustees of the Trust shall cause such payment to be made by the Trust.
(iii) If
the Trust has been terminated, the Trust has insufficient assets for such payment, or such payment is not made by the Trust within five
(5) Business Days after such payment is due from the Trust, the Trust Beneficiaries (namely, Barbara Jennings Buchanan, John William
Buchanan, and Stephanie Paige Buchanan Zabo), shall make or cause such payment to be made to the Buyer Indemnitee.
Section 8.5 Tax
Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an
adjustment to the Purchase Price for Tax purposes, unless otherwise required by Applicable Law.
Section 8.6 Escrow.
(a) Subject
to the limitations set forth in this Article VIII, within three Business Days after a Buyer Indemnitee becomes entitled to
payment of indemnification for any claim for indemnification under Section 8.1: (i) if there are funds remaining in the
Escrow Account, Buyer and Seller shall execute and deliver a joint written instruction to the Escrow Agent to make such payment to the
Buyer Indemnitee out of the Escrow Amount; and (ii) if the Escrow Amount has been fully reserved in respect of pending claims, exhausted
or otherwise released in accordance with this Agreement and the Escrow Agreement, any Losses not otherwise satisfied pursuant to Section 8.6(a)(i),
shall be satisfied by payment of all sums due and owing from the Selling Parties to the Buyer Indemnitee by wire transfer of immediately
available funds to an account or accounts designated in writing by the Buyer Indemnitee.
(b) Except
as otherwise provided in this Article VIII, payment for any Losses suffered by any Buyer Indemnitee or the Seller Parties
pursuant to this Article VIII shall be made (i) when the Buyer Indemnitee and Seller (if the Indemnitee is a Buyer Indemnitee),
or Buyer and the Seller Parties (if the Indemnitee is a Seller Party) resolve the related claim for indemnification and agree on the amount
of such Losses, or (ii) when the amount of Losses is finally adjudicated.
(c) On
the date that is three Business Days after the 12-month anniversary of the Closing Date (the “Release Date”),
Buyer and Seller shall, by joint written instruction, direct the Escrow Agent to release to Seller the remaining amounts in the Escrow
Account minus the aggregate amount of Losses that are the subject of unresolved claims made by Buyer Indemnitees pursuant to this Article VIII.
To the extent that any amount has been reserved and withheld from distribution from the Escrow Account on the Release Date on account
of an unresolved claim for indemnification and, subsequent to the Release Date, such claim is resolved, Buyer and Seller shall, within
three Business Days thereafter, by joint written instruction, direct the Escrow Agent to release (i) to the Buyer Indemnitee(s) the
amount of Losses, if any, due in respect of such claim as finally resolved, and (ii) to Seller an amount equal to the excess, if
any, of the amount theretofore reserved and withheld from distribution in respect to such claim over the payment, if any, made pursuant
to the foregoing clause (i).
Section 8.7 Exclusive
Remedy. Buyer and the Selling Parties acknowledge and agree that, after the Closing, except in cases of Fraud, the indemnification
provisions in this Article VIII shall be the sole and exclusive remedy of Buyer and the Selling Parties with respect to the
transactions contemplated by this Agreement regardless of the legal theory under which such liability or obligation may be sought to be
imposed. Nothing in this Section 8.7 shall prevent or prohibit a party from seeking and/or obtaining specific performance,
injunctive or other equitable relief.
Article IX
Miscellaneous
Section 9.1 Notices.
All notices, requests, demands, claims and other communications hereunder shall be in writing and shall be deemed duly given: (i) if
personally delivered, when so delivered; (ii) if mailed, five Business Days after having been sent by first class, registered or
certified U.S. mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below; (iii) if
given by email, once such notice or other communication is transmitted to the email address specified below, provided that (A) no
“delivery failure” notification is received, and (B) if such email is sent after 5:00 p.m. local time at the physical
location of the intended recipient as shown below, or is sent on a day other than a Business Day, such notice or communication shall be
deemed given as of 9:00 a.m. local time at such location on the next succeeding Business Day; or (iv) if sent through a nationally-recognized
overnight delivery service that guarantees next day delivery, the Business Day following its delivery to such service in time for next
day delivery:
If to Seller or Miller:
F. Stephen Miller
P.O. Box 56
Decatur, Tennessee 37322
with a copy, which shall not constitute notice,
to:
Miller & Martin PLLC
The Volunteer Building
832 Georgia Avenue, Suite 1200
Chattanooga, Tennessee 37402
| Attn: | W. Scott McGinness, Esq.
April F. Holland, Esq. |
| Email: | scott.mcginness@millermartin.com
april.holland@millermartin.com |
If to the Buchanan Family Group:
John Buchanan
295 Goodwin Road NW
Cleveland, TN 37312
jwilbuc675@yahoo.com
Paige Buchanan Zabo
2919 Kensington Street
Athens, TN 37303
paige@unitedwaymm.com
with a copy, which shall not constitute notice,
to:
Ginger Wilson Buchanan Law Office
423 Broad Street NW
P.O. Box 1083
Cleveland, Tennessee 37364-1083
Attn: Ginger Wilson Buchanan, Esq.
gbuchanan@gwblo.com
If to Buyer:
VAC, Inc.
c/o Miller Industries, Inc.
8503 Hilltop Drive
Ooltewah, Tennessee 37363-6841
Attn: General Counsel
Email: fmadonia@millerind.com
with a copy, which shall not constitute notice,
to:
Kilpatrick Townsend & Stockton
LLP
Suite 2800
1100 Peachtree Street, N.E.
Atlanta, Georgia 30309-4530
| Attn: | David A. Stockton, Esq.
Justin B. Heineman, Esq. |
| Email: | dstockton@kilpatricktownsend.com
jheineman@kilpatricktownsend.com |
Any Person entitled to notice may change the address
to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth, provided such notice shall be effective only upon actual receipt.
Section 9.2 Amendments;
No Waivers.
(a) Any
provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by Buyer and Shareholders, or in the case of a waiver, by the party against whom the waiver is to be effective.
(b) No
waiver by a party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent occurrence. No failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
Section 9.3 Expenses.
Except as otherwise expressly provided herein, all costs and expenses incurred in connection with the negotiation and execution of this
Agreement and in closing and carrying out the transactions contemplated hereby shall be paid by the party incurring such cost or expense;
provided that any administration fees and expenses of the Escrow Agent shall be paid one-half by Buyer and one-half by Seller.
This Section 9.3 shall survive any termination of this Agreement.
Section 9.4 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No Selling Party may assign or delegate this Agreement or any of its respective rights, interests or obligations hereunder
without the prior written approval of Buyer. Buyer may assign or delegate its rights under this Agreement (including the right to acquire
the Purchased Assets at the Closing) to (a) one or more Affiliates of Buyer, (b) any purchaser of all or substantially all or
any substantial part of Buyer’s business or a specific line of Buyer’s business (by merger, sale or assets or otherwise),
or (c) collaterally to a lender in connection with any bona fide financing. Any assignment or delegation in breach of this Section 9.4
shall be null and void; provided, however, that the Estate will transfer the proceeds from the sale of the Purchased Assets
to the Trust and upon such transfer the Estate shall assign its rights and obligations under this Agreement to the Trust (including its
obligations under Article VIII hereof, which shall, by executing an appropriate joinder to this Agreement, assume said rights
and obligations; thereupon, the Estate shall be fully released from all obligations, liabilities, rights and responsibilities arising
out of or related to this Agreement.
Section 9.5 Counterparts;
Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument and delivered in person. Signatures transmitted electronically by
portable document format (pdf) file or facsimile shall be binding for all purposes hereof.
Section 9.6 Entire
Agreement. This Agreement (including the Schedules referred to herein that are hereby incorporated by reference and the other Transaction
Agreements) constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement.
Section 9.7 Severability.
If any provision of this Agreement, or the application thereof to any Person, place or circumstance, shall be held by an arbitral tribunal
or court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied
to other Persons, places and circumstances shall remain in full force and effect if, but only if, after excluding the portion deemed to
be unenforceable, the remaining terms shall provide for the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of the date this Agreement was executed or last amended.
Section 9.8 Construction.
The parties hereto intend that each representation, warranty, and covenant contained herein shall have independent significance. If any
party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation,
warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached
shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant. A disclosure
on one Schedule relates only to the Sections of the Agreement that reference such Schedule, and not to any other Schedule or Section of
the Agreement, unless expressly so stated, or a cross-reference is made from one Schedule to another Schedule, or to the extent the content
or context of such disclosure makes the relevance of such disclosure to another Section of the Schedules apparent on its face. Each
party having participated in the negotiation and preparation of this Agreement and having been represented by counsel of its choosing,
there shall be no presumption that any ambiguities herein be construed against any particular party. The relationship of the parties hereunder
shall be that of independent contractors, and not of fiduciaries, joint venturers, partners or agents. Whenever this Agreement refers
to the delivery of a copy of a document, such reference shall be construed to refer to a true, correct and complete copy of such document,
as the same may have been extended, amended or supplemented. The word “extent” in the phrase “to the extent” means
the degree to which a subject or other thing extends, and such phrase will not simply mean “if”. References to Sections or
Schedules, refer to Sections of, or Schedules to, this Agreement unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,”
“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.” Any reference in this Agreement to gender shall include all genders including the neuter, and words imparting the singular
number only shall include the plural and vice versa.
Section 9.9 Third
Party Beneficiaries. Except with respect to indemnification of the Indemnitees, no provision of this Agreement shall be deemed to
create any third party beneficiary rights in any Person, including any employee or former employee of Seller or any beneficiary or dependent
thereof.
Section 9.10 Governing
Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the Schedules
and Exhibits hereto shall be governed by, and construed in accordance with, the laws of the State of Tennessee without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State of Tennessee or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of Tennessee. In furtherance of the foregoing, the internal
law of the State of Tennessee shall control the interpretation and construction of this Agreement (and all Schedules and Exhibits hereto),
even though under that jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
Section 9.11 Consent
to Jurisdiction. SUBJECT TO THE PROVISIONS OF SECTION 3.1 (WHICH SHALL GOVERN ANY DISPUTE ARISING THEREUNDER), EACH PARTY
HERETO AGREES THAT IT SHALL BRING ANY ACTION BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATED TO THIS AGREEMENT EXCLUSIVELY IN THE
STATE AND FEDERAL COURTS LOCATED IN THE STATE OF TENNESSEE (THE “CHOSEN COURTS”), AND, SOLELY WITH RESPECT TO
ANY SUCH ACTION (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II) WAIVES ANY OBJECTION TO LAYING
VENUE IN ANY SUCH ACTION IN THE CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO
NOT HAVE JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH ACTION SHALL BE EFFECTIVE
IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 9.1.
Section 9.12 Waiver
of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
Section 9.13 Guaranty
by Parent.
(a) Parent
hereby unconditionally and irrevocably guarantees to Seller Parties the punctual payment of all payment obligations and punctual performance
of all of (i) Buyer’s covenants and agreements under this Agreement and each Transaction Agreement to which Buyer is a party,
in each case when and if such payment obligations, covenants, and agreements shall become due and performable according to the terms of
this Agreement, or any Transaction Agreement (the “Guaranteed Obligations”). If Buyer fails to perform or pay
when due any Guaranteed Obligation, after any applicable cure periods, as and when provided for in this Agreement or any Transaction Agreement,
then, without the necessity or the requirement for any Seller Party to pursue or exhaust its recourse against Buyer, Parent will perform
or pay or cause to be performed or paid such Guaranteed Obligation promptly upon written demand. Parent shall cause Buyer to comply with
its obligations this Agreement and any Transaction Agreement to which it is a party, as applicable.
(b) The
liability and obligations of Parent under this Section 9.13 will not be released, discharged, limited or otherwise affected
by: (i) any assignment of this Agreement or any other Transaction Agreement; (ii) any renewal, extension, substitution or other
change in, or discontinuance of, the terms relating to the Guaranteed Obligations, or by any agreement to grant any extensions of time
or any other indulgences or concessions to Buyer; (iii) any limitation of status or power, incapacity or other circumstance relating
to Buyer, including any bankruptcy, insolvency, winding-up, dissolution, liquidation, arrangement, restructuring or other creditors’
proceedings involving or affecting Buyer; or (iv) any reorganization, amalgamation or other change in the existence of Buyer.
[Signature Page Follows]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
|
BUYER: |
|
|
|
VAC, INC. |
|
|
|
By: |
/s/ William G. Miller II |
|
Name: William G. Miller II |
|
Title: President |
|
|
|
PARENT: |
|
|
|
MILLER INDUSTRIES, INC. |
|
|
|
By: |
/s/ William G. Miller II |
|
Name: William G. Miller II |
|
Title: President and Chief Executive Officer |
[Signature Page to Asset Purchase Agreement]
|
SELLER: |
|
|
|
SOUTHERN HYDRAULIC CYLINDER, INC. |
|
|
|
By: |
/s/ F. Stephen Miller |
|
Name: F. Stephen Miller |
|
Title: President |
|
|
|
SHAREHOLDERS: |
|
|
|
/s/ F. Stephen Miller |
|
F. Stephen Miller |
|
|
|
THE ESTATE OF WILLIAM M. BUCHANAN |
|
|
|
By: |
/s/ Stephanie Paige Buchanan Zabo |
|
|
Co-Personal Representative |
|
|
|
By: |
/s/ John William Buchanan |
|
|
Co-Personal Representative |
|
|
|
TRUST: |
|
|
|
WILLIAM MOULTON BUCHANAN REVOCABLE TRUST DATED DECEMBER 3, 2009 |
|
|
|
By: |
/s/ Stephanie Paige Buchanan Zabo |
|
|
Co-Trustee |
|
|
|
By: |
/s/ John William Buchanan |
|
|
Co-Trustee |
|
|
|
TRUST BENEFICIARIES: |
|
|
|
/s/ Barbara Jennings Buchanan |
|
Barbara Jennings Buchanan |
|
|
|
/s/ John William Buchanan |
|
John William Buchanan |
|
|
|
/s/ Stephanie Paige Buchanan Zabo |
|
Stephanie Paige Buchanan Zabo |
[Signature Page to Asset Purchase Agreement]