SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) January 19, 2000
IMPERIAL INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
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<CAPTION>
DELAWARE 1-7190 65-0854631
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<S> <C> <C>
(State or other jurisdiction of incorporation) (Commission File No.) (IRS Employer Identification No.)
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1259 Northwest 21st Street, Pompano Beach, Florida 33069
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(Address of principal executive office and Zip Code)
Registrant's telephone number, including area code: (954) 917-4114
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
Exhibit Index on Page 5
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Item 2. Acquisition or Disposition of Assets.
On January 19, 2000, Imperial Industries, Inc., a Delaware
corporation, (the "Company"), through a wholly owned subsidiary Just-Rite
Supply, Inc. ("Just-Rite") purchased certain of the assets and business of A & R
Supply, Inc., a Florida corporation, A & R of Foley, Inc., a Florida corporation
and A & R of Destin, Inc., a Florida corporation ("A & R"), effective January 1,
2000 pursuant to an Asset Purchase Agreement dated December 31, 1999 (the
"Agreement"). A copy of the Agreement is attached hereto as Exhibit 2.1 and
incorporated hereby by this reference. The summary of the terms of the Agreement
contained in this Form 8-K is qualified in its entirety by the more detailed
information contained in the Agreement.
The assets purchased by the Company from A & R consist primarily
of real estate, inventory, equipment, vehicles, machinery, furniture, fixtures,
leasehold improvements and intangible assets used in connection with the
distribution of building materials in North Florida and Alabama (the
"Business").
The purchase price for the Business amounted to $798,000 in cash,
notes payable to A & R in the aggregate amount of $250,000.00, assumed
liabilities of $372,000 and 225,000 shares of Company common stock, $.01 par
value. In connection with the purchase price, Just-Rite executed $100,000 and
$150,000 notes dated January 19, 2000 in favor of A & R. The $150,000 Note is
payable without interest on April 19, 2000. The $100,000 note is payable
principal and accrued interest at eight (8%) per annum on January 19, 2001.
The consideration paid by the Company for A & R's assets and
Business was determined in arms-length negotiations between representatives of
the Company and A & R. The cash portion of the purchase price was paid from the
cash on hand and available borrowings under the Company's revolving credit
facility with a financial institution.
Following the closing, Ronald A. Johnson entered into an
employment agreement with Just-Rite, whereby Mr. Johnson serves as a Just-Rite
Vice President and General Manager.
Prior to the transaction, there was no material relationship
between A & R, Mr. Johnson, their affiliates and the Company or affiliates
thereof, except that A & R was a customer of the Company and its subsidiaries
and a distributor of their products.
The Company intends to operate the assets acquired in a similar
manner as A & R utilized such assets prior to the transaction described herein.
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Item 7. Financial Statements and Exhibits:
(a) It is impractical to provide the required financial
statements of A & R at the time this Current Report on Form 8-K is being filed.
The required financial statements will be filed at such time as the financial
statements became available, but in no event later than sixty (60) days
following the date that this Form 8-K is required to be filed.
(b) It is impracticable to provide the pro forma consolidated
financial statements of Imperial Industries, Inc. and A & R at the time this
Current Report on Form 8-K is being filed. The required pro forma consolidated
financial statements of Imperial Industries, Inc. and A & R will be filed at
such time as the pro forma financial statements become available, but in no
event later than sixty (60) days following the date that this Form 8-K is
required to be filed.
(c) Exhibits.
2.1 Asset Purchase Agreement entered into as of the 31st
day of December, 1999 between Just-Rite Supply, Inc., a Florida corporation,
Imperial Industries, Inc., a Delaware corporation, A & R Supply, Inc., a Florida
corporation, A & R Supply of Foley, Inc., an Alabama corporation, A & R of
Destin, Inc., a Florida corporation, Ronald A. Johnson, Rita E. Ward and Jaime
E. Granat.
2.2 Amendment to Asset Purchase Agreement entered into as
of the 31st day of December, 1999 between Just-Rite Supply, Inc., a Florida
corporation, Imperial Industries, Inc., a Delaware corporation, A & R Supply,
Inc., a Florida corporation, A & R of Foley, Inc., a Florida corporation, A & R
of Destin, Inc., a Florida corporation, Ronald A. Johnson, Rita E. Ward and
Jaime E. Granat.
Certain related transaction documents attached to the Asset Purchase Agreement
between the parties are not being filed herewith. The Company undertakes to
furnish a copy of any omitted exhibit or schedule to the Commission upon
request, pursuant to Item 601(b)(2) of Regulation S-X. The following is a list
of the omitted exhibits and schedules to the Asset Purchase Agreement:
Disclosure Schedule
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Exhibits
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Allocation of Purchase Price.....................................................3.4
Schedules
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Assumed Liabilities..............................................................2.5
Corporate documents..............................................................5.3
Financial Statements.............................................................5.5
Title to Assets..................................................................5.6
Liabilities......................................................................5.7
Business.........................................................................5.8
Obligations to Affiliates........................................................5.9
Title to Real Property..........................................................5.10
Leased Properties...............................................................5.11
Employee Benefit Plans..........................................................5.12
Insurance Policies..............................................................5.15
Contracts and Commitments.......................................................5.16
Equipment, Furniture and Fixtures...............................................5.19
Permits.........................................................................5.20
Intangible Rights...............................................................5.21
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
IMPERIAL INDUSTRIES, INC., Delaware
corporation
DATE: February 3, 2000 By: /s/ Howard L. Ehler, Jr.
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HOWARD L. EHLER, JR.
Executive Vice President
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EXHIBIT INDEX
2.1 Asset Purchase Agreement entered into as of the 31st day of
December, 1999 between Just-Rite Supply, Inc., a Florida corporation, Imperial
Industries, Inc., a Delaware corporation, A & R Supply, Inc., a Florida
corporation, A & R Supply of Foley, Inc., an Alabama corporation, A & R of
Destin, Inc., a Florida corporation, Ronald A. Johnson, Rita E. Ward and Jaime
E. Granat.
2.2 Amendment to Asset Purchase Agreement entered into as of the 31st
day of December, 1999 between Just-Rite Supply, Inc., a Florida corporation,
Imperial Industries, Inc., a Delaware corporation, A & R Supply, Inc., a Florida
corporation, A & R of Foley, Inc., a Florida corporation, A & R of Destin, Inc.,
a Florida corporation, Ronald A. Johnson, Rita E. Ward and Jaime E. Granat.
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") entered into as
of the 31st day of December, 1999 between JUST-RITE SUPPLY, INC.,a Florida
corporation, IMPERIAL INDUSTRIES, INC., a Delaware corporation, A & R SUPPLY,
INC., a Florida corporation, A & R SUPPLY OF FOLEY, INC., an Alabama
corporation, A & R OF DESTIN, INC., a Florida corporation, RONALD A. JOHNSON,
RITA E. WARD and JAIME E. GRANAT.
R E C I T A L S
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A. The Companies are distributors of building materials for sale
to building materials dealers and others located primarily in Florida and
Alabama;
B. Buyer desires to purchase certain of the Companies' assets and
the Companies desire to sell such assets, upon the terms and subject to the
conditions set forth herein.
C. Shareholders, in the aggregate own 100% of the outstanding
capital stock of the Companies, and will receive a direct benefit from the
consummation of the transactions contemplated herein;
D. Shareholders and the Companies desire to make certain
representations, warranties and agreements in connection with this Agreement and
also to prescribe various conditions to the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived therefrom and of the respective mutual covenants and
agreements hereinafter set forth and such other good and valuable consideration,
the adequacy and receipt of which is hereby acknowledged, the parties hereto do
hereby agree as follows:
ARTICLE I - DEFINITIONS
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All capitalized terms used in this Agreement are used as defined
in this Article I or elsewhere in this Agreement.
1.1 Affiliate - shall mean with respect to any party to this
Agreement, any entity or individual directly or indirectly controlling or
controlled by or under the direct or indirect common control with such party.
For purposes of this Agreement "control" means the power to direct the
management and policies of such entity or individual, directly or indirectly,
whether through ownership of voting securities or otherwise.
1.2 Acquired Assets - shall have the meaning set forth in Section
2.1.
1.3 Assumed Liabilities - shall have the meaning set forth in
Section 2.5 herein.
1.4 Buyer - shall mean JUST-RITE SUPPLY, INC.,a Florida
corporation.
1.5 Code - shall mean the Internal Revenue Code of 1986, as
amended and the rules and regulations promulgated thereunder.
1.6 Closing Date - shall mean January 19, 2000, or such other
date as may be agreed upon in writing by all parties hereto.
1.7 Collateral Agreements - shall mean and include any and all
agreements, instruments, certificates or documents required or expressly
provided for in this Agreement to be executed and delivered in connection with
the transaction contemplated by this Agreement.
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1.8 Companies - shall mean A & R SUPPLY, INC., a Florida
corporation, A & R SUPPLY OF FOLEY, INC., an Alabama corporation and A & R OF
DESTIN, INC., a Florida corporation.
1.9 Contracts - shall mean and include any and all contracts,
agreements, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals, or other instruments or undertaking
to which such person is a party or to which or by which such person or the
property of such person is subject or bound.
1.10 Damages - shall mean any and all damages, liabilities,
obligations, penalties, fines, judgments, claims, deficiencies, losses, costs,
expenses and assessments, including all attorneys' fees and costs, and interest
accruing on such Damages.
1.11 Disclosure Schedule - - shall mean the Disclosure Schedule
prepared by Shareholders and the Companies in accordance with the provisions of
this Agreement.
1.12 Effective Date - shall mean January 1, 2000.
1.13 Environmental Claim - shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment, order,
consent, decree, penalty, fine, lien, proceeding, or claim (whether
administrative, judicial or private in nature) arising (a) pursuant to, or in
connection with, an actual or alleged violation of any Environmental Law, (b) in
connection with any Medical Waste, (c) in connection with any Hazardous
Material, Medical Waste or actual or alleged Hazardous Material Activity, (d)
from any abatement, removal, remedial, corrective or other response action in
connection with a Hazardous Material or Medical Waste, Environmental law or
other order of a Governmental Authority, or (e) from any actual or alleged
damage, injury, threat or harm to health, safety, natural resources or the
environment.
1.14 Environmental Law - shall mean any current or future legal
requirement pertaining to (a) the protection of health, safety and the indoor or
outdoor environment, (b) the conservation, management or use of natural
resources and wildlife, (c) the protection or use of surface water and
groundwater, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Material, (e) the management, treatment, disposal or handling of
Medical Waste, or (f) pollution (including any Release to air, land, surface
water, and groundwater), and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq., Solid Waste Disposal Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section 6901, et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section 1251,
et seq., Clean Air Act of 1966, as amended, 42 U.S.C. Section 7401, et seq.,
Toxic Substance Control Act of 1976, 15 U.S.C. Section 2601, et seq., Hazardous
material Transportation Act, 49 U.S.C. App. Section 1801, et seq., Occupational
Safety and Health Act of 1970, as amended, 29 U.S.C. Section 651, et seq., Oil
Pollution act of 1990, 33 U.S.C. Section 2701, et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001, et seq., National
Environmental Policy Act of 1969, 42 U.S.C. Section 4321, et seq., Safe Drinking
Water Act of 1974, as amended, 42 U.S.C. Section 300(f), et seq., any similar,
implementation or successor law, and any amendment, rule, regulation, order or
directive issued thereunder.
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1.15 ERISA - shall mean the Federal Employment Retirement Income
Security Act of 1974, as amended.
1.16 Excluded Assets - shall have the meaning set forth in
Section 2.4.
1.17 Financial Statements - shall mean (a) as to A & R Supply of
Foley, Inc. and A & R Supply of Destin, Inc., unaudited consolidated Financial
Statements consisting of balance sheets as of December 31, 1998 and statements
of income, cash flow and stockholders' equity for the year ended December 31,
1998, the notes to the financial statements thereto, and the unaudited
consolidated financial statement as at September 30, 1999 and for the nine
months ended September 30 1999, respectively and (b) as to A & R Supply, Inc.
unaudited consolidated Financial Statements consisting of balance sheets as of
November 30, 1998 and statements of income, cash flow and stockholders' equity
for the fiscal year ended November 30, 1998 and the notes to the financial
statements thereto the unaudited consolidated financial statement as at
September 30, 1999 and for the nine months ended September 30 1999, all as
attached to the Disclosure Schedule.
1.18 GAAP - shall mean generally accepted accounting principles,
consistently applied for financial statements prepared in the United States, as
recognized by the American Institute of Certified Public Accountants and the
Financial Accounting Standards Board, consistently applied and maintained on a
consistent basis throughout the periods indicated.
1.19 Governmental Authority - shall mean and include any nation,
country (including, but not limited to the United States of America)
commonwealth, state, territory or possession thereof and any political
subdivision of any of the foregoing, including, but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
1.20 Hazardous Material - shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant,
or material which is hazardous or toxic, and includes, without limitation, (a)
any medical waste, (b) asbestos, polychlorinated biphyenls and petroleum
(including crude oil or any fraction thereof) and (c) any such material
classified or regulated as "hazardous" or "toxic" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund amendments and Reauthorization Act of 1986, 42 U.S.C. Section
9601, et seq., Solid Waste Disposal Act, as amended by the Resource Conservation
and Recovery Act of 1976 and Hazardous an Solid Waste Amendments of 1984, 42
U.S.C. Section 6901, et seq., Federal Water Pollution Control Act, as amended by
the Clean Water Act of 1977, 33 U.S.C. Section 1251, et seq., Clean Air Act of
1966, as amended, 42 U.S.C. Section 7401, et seq., Toxic substances Control Act
of 1976, 15 U.S.C. Section 2601, et seq., or Hazardous Materials Transportation
Act, 49 U.S.C. App. Section 1801, et seq.
1.21 Hazardous Material Activity - shall mean any activity, event
or occurrence involving a Hazardous Material, including, without limitation, the
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation,
handling of or corrective or response action to any Hazardous Material.
1.22 Imperial - shall mean IMPERIAL INDUSTRIES, INC., a Delaware
corporation.
1.23 Imperial Common Stock - shall mean the Common Stock, $.01
par value of Imperial as described in Imperial's Certificate of Incorporation,
as presently amended.
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1.24 Intangible Rights - shall mean and include any and all
information, trade secrets, patents, copyrights, trademarks, trade names and
other intangible properties that are necessary or customarily used by the
Companies in the operation of its Business.
1.25 Material Adverse Effect - shall mean an effect (or
circumstance involving a prospective effect) on the business, operations,
assets, liabilities, results of operations, cash flows, conditions (financial or
otherwise) or prospects of the Companies which is materially adverse to the
Business.
1.26 Ordinary Course of Business - shall mean the conduct and
operation of the business of the Companies only in the manner in which it
conducted and operated such Business during the nine months ended September 30,
1999, following its usual and ordinary accounting practices, making ordinary
accruals, incurring ordinary liabilities and expenditures, and making ordinary
commitments for merchandise, insurance, rentals, and other ordinary Business
purposes as reflected in the Financial Statements.
1.27 Permits - shall mean and include any and all permits,
certificates of need, licenses, agencies, orders or contracts granted by any
Governmental Authority necessary or used in the operation of the Business as
presently conducted.
1.28 Purchase Price - shall mean the consideration paid by Buyer
for the Acquired Assets as specifically set forth in Section 3.1 herein.
1.29 Real Property - shall mean the parcels of real property,
together with the improvements located thereon, which are more particularly
described in the Disclosure Schedule.
1.30 Release - shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the indoor or outdoor environment, including, without
limitation, the abandonment or discarding of barrels, drums, containers, tanks
and other receptacles containing or previously containing any Hazardous Material
or Medical Waste.
1.31 Shareholders - shall mean RONALD A. JOHNSON, RITA E. WARD
and JAIME E. GRANAT.
1.32 Tax or Taxes - shall mean any federal, state, local or
foreign, income, gross receipt, license, payroll, employment, excise,
communications, severance, stamp, occupation, premium, windfall profits,
environmental, customs, duties, capital stock, franchise profits, withholding,
social security, unemployment, disability, real property, personal property,
sales, use, transaction, transfer, registration, value added, alternative,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto.
ARTICLE II - SALE AND PURCHASE OF ASSETS
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2.1 Sale and Purchase of Assets - On the terms and subject to the
conditions of this Agreement, on the Closing Date the Companies shall sell,
convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase,
acquire, and accept delivery of, the following assets and properties owned by
the Companies as of the Closing Date and used by the Companies in its Business:
(a) The Real Property and the improvements thereon
located in Pensacola Florida;
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(b) All inventories and other materials, including all
inventory in transit or on order and not yet delivered;
(c) All supplies, equipment, vehicles, machinery,
furniture, fixtures, leasehold improvements and other tangible personal property
used by the Companies in the Business, together with any leasehold interest in
such personal property;
(d) All proprietary knowledge, trade secrets, customer
lists, referral lists, contracts, technical information, quality control data,
processes (whether secret or not), methods and other similar know how or rights
used in the conduct of the Business;
(e) The Business as a going concern, together with its
franchises, permits, insurance policies, interest in real property leases,
licenses, telephone numbers, customer lists, vendor lists, contracts,
advertising material and data, restrictive covenants and similar obligations
owing to the Companies concerning the Business, together with all books,
computer software, files, papers, records, and other data relating to the
Business;
(f) All other tangible and intangible property used by
the Business not included in the Excluded Assets.
The aforesaid assets and properties to be transferred to Buyer hereunder are
hereinafter collectively referred to as the "Acquired Assets."
2.2 Method of Conveyance - The sale, transfer, conveyance,
assignment, and delivery by the Companies of the Acquired Assets to the Buyer in
accordance with Section 2.1 hereof shall be through the delivery of a duly
executed Bill of Sale in form and substance satisfactory to the Buyer conveying
title to the personal property included in the Acquired Assets, a Warranty Deed
in form and substance satisfactory to Buyer conveying title to the Real
Property, as well as various assignments of leases, contracts and other matters.
2.3 No Liens - The Companies shall transfer good and marketable
title to the Acquired Assets to Buyer free and clear of all liens, charges,
claims, security interests, adverse interests, and encumbrances of any kind
whatsoever owed to, owed by, accrued to, or in favor of any person or party
whatsoever, except such liens or encumbrances associated with the Assumed
Liabilities.
2.4 Excluded Assets - Notwithstanding anything in this Agreement
to the contrary, the following assets shall not be included within the
definition of Acquired Assets (collectively, the "Excluded Assets"):
(a) Minute books and similar corporate records relating
to the existence, structure or equity ownership of the Companies;
(b) Shares of capital stock in the Companies;
(c) the Companies' accounts receivables;
(d) Any and all rights of the Companies created in this
Agreement;
(e) All claims, refunds, rights of recovery, rights of
setoff and rights of recoupment, of any kind with respect to (i) Taxes incurred
prior the Closing Date, and (ii) insurance proceeds with respect to Excluded
Assets; and
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(f) all rights to receive mail and other communications
addressed to the Companies relating to any of the Excluded Assets or Excluded
Liabilities.
2.5 Assumed Liabilities - On and subject to the terms and
conditions of this Agreement, Buyer shall assume the following liabilities of
the Companies:
(a) that certain note and mortgage secured by the Real
Property in Pensacola, Florida in the approximate principal balance of $235,000
bearing interest at 8.5% per annum and identified on the Disclosure Schedule;
and
(b) various notes and other obligations secured by the
Company's equipment and vehicles in the approximate principal balance of
$145,000, all of which are identified on the Disclosure Schedule.
2.6 Retained Liabilities - Notwithstanding anything herein to the
contrary in this Agreement, Buyer shall not assume or be liable for the
following (collectively, the "Retained Liabilities") liabilities of the Business
including: (a) the Companies' payroll expenses; (b) the Companies' indebtedness
for borrowed money (other than the Assumed Liabilities); (c) any liability of
the Companies for Taxes; (d) any liability of the Companies in connection with
any employee benefit plan or program including, without limitation, any
liability of the Companies under ERISA; (e) any liability of the Companies under
any Federal, state or local law, rule, regulation, ordinance, program or permit
relating to health, safety, Hazardous Waste and other Environmental Matters; (f)
any breach of warranty, product liabilities or other claims pertaining to any
products sold, manufactured or otherwise performed or services rendered prior to
the Closing Date, (g) any claims by any Governmental Authority; (h) Any of the
Companies' or Shareholders' liabilities under this Agreement or any Collateral
Agreements; or (i) any liability for services provided by the Companies, under
any Contract or otherwise, arising prior to the Closing Date. The Companies and
Shareholders agree to satisfy and discharge, as the same shall become due, all
Retained Liabilities.
ARTICLE III - PURCHASE PRICE AND METHOD OF PAYMENT
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3.1 Purchase Price - As consideration for the Acquired Assets
purchased by the Buyer, and subject to compliance by the Companies and
Shareholders with their warranties and undertakings contained in this Agreement
and any adjustment which may otherwise be required pursuant to the terms of this
Agreement, Buyer shall pay the purchase price set forth below (the "Purchase
Price"):
(a) Cash - Buyer shall pay to the Companies $735,000 in
cash on the Closing Date, subject to adjustment as provided below; and
(b) Imperial Common Stock - Imperial shall cause to be
issued to the Companies on the Closing Date an aggregate of 225,000 shares of
unregistered and previously unissued Imperial Common Stock, all on the terms and
the conditions described below.
(c) Promissory Notes. - issue to the Companies promissory
notes (the "Promissory Notes") as follows:
(i) an unsecured promissory note without
interest in the principal amount of $150,000, payable at the end of ninety (90)
days following the Closing;
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(ii) an unsecured promissory note in the
principal amount of $100,000, bearing interest at the rate of eight (8%) percent
per annum, payable principal and accrued interest at the end of one (1) year
following the Closing.
The Promissory Notes would be in substantially in the form attached to the
Disclosure Schedule. Buyer would have the right to prepay the principal on the
Promissory Notes, in full or in part at any time without penalty.
3.2 Adjustment to Purchase Price The cash portion of the Purchase
Price shall be adjusted in accordance with the provisions contained herein. In
the event that the Assumed Liabilities exceed $380,000 as of the Effective Date,
the difference between the Assumed Liabilities and $380,000 shall be deducted
from the Purchase Price and shall reduce the cash portion. The Purchase Price
shall be further adjusted based upon the value of the inventory. Buyer and the
Companies shall conduct a physical inventory immediately prior to the Effective
Date. The inventory shall be valued at the lesser of cost or market. To the
extent that the value of the good and saleable inventory as of the Effective
Date is less than $465,000, the difference shall be deducted from the Purchase
Price and shall reduce the cash portion. In the event that the value of the good
and saleable inventory is greater than $465,000, the Purchase Price shall be
increased by the excess and shall be paid to the Companies in cash. The parties
agree that any inventory that is not judged to be good and salable or obsolete
by the Buyer in its reasonable judgement, shall not be sold to the Buyer and
will not be calculated in the value of the inventory above.
3.3 Effective Date - The operation of the Acquired Assets, the
cash income and expenses attributable thereto up to 12:01 A.M. on the Effective
Date shall, except as otherwise expressly provided elsewhere in this Agreement,
be for the account of the Companies and after 12:01 A.M. on the Effective Date
shall be for the account of Buyer. Expenses such as power and utility charges,
lease rents, prepaid expenses, and similar prepaid and deferred items together
with payroll expenses for employees, shall be prorated between the Company and
Buyer as of the Effective Date. All prorations and adjustments shall be made and
paid insofar as feasible on the Closing Date, and if not feasible, no later than
thirty (30) days following the Closing Date.
3.4 Allocation of Purchase Price. The Companies and Buyer shall
allocate the Purchase Price among the Acquired Assets and the Assumed
Liabilities in accordance with an allocation schedule substantially in the form
set forth on Exhibit 3.4. As soon as may be practicable after the Closing,
Companies and Buyer shall amend Exhibit 3.4 to reflect any adjustments to the
Purchase Price made pursuant to Section 3.4. As soon as may be practicable after
the Closing and prior to filing any tax return which includes information
related to the transaction contemplated in this Agreement, the Companies and
Buyer employing the allocation of the Purchase Price made pursuant to this
Section 3.4 shall prepare mutually acceptable IRS Forms 8594 which they shall
use to report the transaction contemplated in this Agreement to the Internal
Revenue Service and to all other taxing authorities. Neither the Companies nor
Buyer shall take a position in any return, Tax proceeding, tax audit or
otherwise inconsistent with such allocation; provided, however, that nothing
contained herein shall require the Companies and Buyer to contest any proposed
deficiency or adjustment by any taxing authority or agency which challenges such
allocation of the Purchase Price, or exhaust administrative remedies before any
taxing authority or agency in connection therewith, and the Companies and Buyer
shall not be required to litigate before any court (including without limitation
the United States Tax Court), any proposed deficiency or adjustment by any
taxing authority or agency which challenges such allocation of the Purchase
Price. The Companies and Buyer shall give prompt notice to the other of the
commencement of
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any tax audit or the written assertion of any proposed deficiency or adjustment
by any taxing authority or agency which challenges such allocation of the
Purchase Price.
3.5 Distribution of Purchase Price among Companies. - Prior to
the Closing, the Companies and Buyer shall mutually determine the proportionate
distribution of the Purchase Price among the Companies. The various portions of
the Purchase Price shall then be paid to the Companies based upon such
allocation. If the parties are unable to mutually determine a proper allocation,
the Buyer shall make such determination in its discretion.
3.6 Tax Prorations. Real and personal property taxes shall be
prorated based on the current year's taxes with due allowance being made to the
maximum allowable discount. If Closing occurs at a date when the current year's
assessment is not available, then taxes shall be prorated based on the prior
year's tax. However, if there are completed improvements on the Property by
January 1 of the year of Closing, which improvements were not in existence on
January 1 of the prior year, then taxes shall be prorated based upon the prior
year's millage and add an equitable assessment to be agreed upon by the parties.
However, any tax proration based on an estimate may, at the request of either
party be subsequently readjusted upon receipt of the tax bill.
3.7 Imperial Receivable. The Companies represents that at
December 31, 1999, they owe Imperial and its subsidiaries approximately
$326,718.01 for the purchase of products. At the closing, Imperial shall have
the right to apply the cash portion of the Purchase Price to payment of any
obligations that the Companies owe to Imperial or its subsidiaries as of the
closing.
3.8 Expenses. State documentary stamps on the Warranty Deed and
the cost of recording any corrective instruments shall be paid by the Companies.
The cost of recording the deed shall be paid by Buyer.
3.9 Accounts Receivables Collection - Buyer shall use its
reasonable efforts to collect all accounts receivables included within the
Excluded Assets. To the extent that any such receivables are collected, such
amounts shall be payable to the Companies at the end of each month in which
collected. The Companies shall have the right to have an independent certified
public accountant review the books and records pertaining to the accounts
receivables. In the event it is determined from such review that Buyer owes in
excess of $10,000 in additional collected accounts receivables , the Buyer shall
pay the cost of such review.
3.10 Right of Set-off. The Promissory Notes will be subject to a
right of set-off for any adjustments required to be made to the Purchase Price
or in the event the Companies and the Shareholders are required to provide
indemnification pursuant to Section 9.5 of this Agreement. The right of set off
herein shall not be deemed the exclusive remedy for any breach or claim for
indemnification, it being expressly provided that the Buyer and Imperial shall
have available to it all rights and remedies available to it under applicable
law.
3.11 Investment Restrictions - All Imperial Common Stock to be
acquired by the Companies shall be "Restricted Securities" as that term is
defined pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "1933 Act"). The Companies hereby
represent that the Imperial Common Stock is being acquired for investment
purposes only and not with a view to the distribution thereof except as may be
permitted by the 1933 Act. Certificates representing Imperial Common Stock when
issued shall contain a restrictive legend to the effect that the imperial Common
Stock have not been registered pursuant to the 1933 Act or any state having
jurisdiction thereof and may not be sold, transferred or otherwise disposed
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of except in compliance with the 1933 Act or unless Imperial receives an opinion
of counsel reasonably satisfactory to it that an exemption from registration is
available. A stop transfer order shall be placed on the Imperial Common Stock
with Imperial's transfer agent. The Companies agrees that for a one year period
following the Closing Date, they will not transfer, sell, hypothecate or pledge
the Imperial Common Stock received as part of the Purchase Price other than to
Shareholders and only upon receipt from Shareholders of an acknowledgment and
agreement of the restrictions on transfer set forth herein.
ARTICLE IV - CLOSING
--------------------
4.1 Closing - Subject to the terms and conditions of this
Agreement, the Closing shall take place at 9:30 a.m. on the Closing Date, or
such other date as is mutually agreed between the parties. The Closing shall
take place at the offices of Wallace, Bauman, Legon, Fodiman & Shannon, P.A.,
1200 Brickell Avenue, Suite 1720, Miami, Florida 33131.
4.2 Shareholders and Companies Performance at Closing - At or
prior to the Closing, Shareholders and the Companies shall deliver, or cause to
be delivered, to Buyer:
(a) duly executed Bills of Sale;
(b) a duly executed General Warranty Deed for the Real
Property;
(c) a certificate duly executed by the Shareholders and
the president of the Companies to the effect that:
(i) all of the representations and warranties
made by the Shareholders and the Companies in this Agreement are true and
correct in all material respects as of the Closing Date;
(ii) none of the covenants made by the
Shareholders and the Companies in this Agreement have been breached in any
material respect as of the Closing Date;
(iii) there have been no material adverse
changes in the condition of the Companies since the date of the Financial
Statements, whether financial or otherwise, through the Closing Date;
(d) mechanic's lien, FIRPTA and other affidavits as may
be required by any title insurance company insuring title to the Real Property;
(e) all appropriate consents to the transactions
contemplated herein, without conditions or limitations,
(f) all approvals and consents of all appropriate state
regulatory agencies, if any, including all consents to the transfer of ownership
of the Acquired Assets;
(g) a certified copy of the corporate actions taken by
the Companies and their respective shareholders authorizing and approving this
Agreement and the transactions contemplated by it;
(h) The articles of incorporation of each Company,
certified as of a recent date by the Secretary of State of the state under the
laws of which such Company is incorporated, and copies of the bylaws of each
Company certified as of the Closing Date by the secretary of such Company;
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(i) Certificates of status or good standing of each
Company from the Secretary of State of the states under the laws of which each
Company is incorporated, and of each state or other jurisdiction in which each
Company is qualified to do business, dated as of a recent date;
(j) a certificate of incumbency duly executed by the
Companies's secretary;
(k) An investment letter in a form acceptable to counsel
for Buyer signed by the Companies pertaining to the Imperial Common Stock;
(l) execution by Ronald Johnson of a mutually acceptable
employment agreement, whereby Ronald Johnson shall agree to be employed by
Buyer, following the Closing;
(m) an opinion of counsel in form and substance
satisfactory to Buyer and its counsel that:
(i) The Companies have been duly incorporated
and is validly existing and in good standing under the laws of their respective
states of incorporations and are duly qualified to do business and are in good
standing in each jurisdiction in which the character and location of the
properties owned by them or the nature of the business transacted by them makes
such qualification necessary.
(ii) The Companies and Shareholders have the
full power to conduct their business as presently conducted and to execute and
deliver this Agreement and to perform its obligations hereunder;
(iii) The Companies and Shareholders, have
authorized the execution, delivery and performance of the Agreement by all
necessary corporate and shareholder action.
(iv) The execution and delivery of the
Agreement, performance by the Companies and Shareholders of their obligations
under the Agreement and the exercise by the Companies and the Shareholders of
the rights created by the Agreement do not (i) violate the Companies' respective
Articles of Incorporation or by-laws; (ii) constitute a breach of or a default
under any agreement or instrument to which the Companies or Shareholders are a
party or by which they or their assets are bound, or result in the creation of a
mortgage, security interest or other encumbrance upon the assets of the
Companies; (iii) violate any judgment, decree or order of any court or
administrative tribunal, which judgment, decree or order is binding on the
Companies, the Shareholders or their assets; or (iv) violate any Federal or
state law, rule or regulation;
(v) No further notice, report or other filing or
registration with, and no further consent, approval or authorization of, any
Governmental Authority is required to be submitted, made or obtained by the
Companies in connection with the execution, delivery and performance of the
Agreement;
(vi) The Agreement is a valid and binding
obligation of the Companies and the Shareholders enforceable against the
Companies and Shareholders;
(vii) There are no pending or threatened legal
proceedings, actions, claims, investigations or other proceedings against the
Companies or the Shareholders;
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(viii) The Companies have good and marketable
title to all of the Acquired Assets, free and clear of all liens, mortgages,
pledges, conditional sales agreements, security interests, restrictions,
judgments, options, charges, claims or encumbrances of any kind.
(ix) The instruments of conveyance and
assignment delivered by the Companies to Buyer in accordance with their terms
will have vested in Buyer all right, title, and interest to the Acquired Assets;
(x) The Companies are in compliance with all
federal, state and local laws regarding the operation of the Business;
(xi) The transfer of the Acquired Assets as
contemplated by this Agreement does not require compliance with any statutory
provisions relating to the transfer of assets in bulk under any applicable bulk
sales laws.
(n) Possession of the Acquired Assets and all originals
and copies of all agreements, instruments, documents, deeds, books, records,
files, tax returns, and other data and information within the possession of the
Companies pertaining to the Companies and the Acquired Assets;
(o) Any and all assignments or other instruments of
conveyance necessary to vest good, marketable and complete title in and to the
Acquired Assets in Buyer;
4.3 Buyer's Performance at Closing - At or prior to Closing,
Buyer and Imperial, as the case may be, shall deliver or cause to be delivered
to the Companies the following:
(a) The cash to close as required in Section 3.1(a)
herein, subject to the provisions of Section 3.3 herein;
(b) Certificates representing the Imperial Common Stock
issued in the name of the Companies, as required in Section 3.1(b) herein;
(c) The promissory Notes, as required in Section 3.1(c);
(d) a certificate executed by an officer of Buyer to the
effect that all of the representations and warranties made by Buyer in this
Agreement are true and correct as of the Closing Date;
(e) written evidence that Buyer's board of directors
approved consummation of the transaction; and
(f) execution by Buyer of a mutually acceptable
employment agreement, whereby Buyer shall agree to employ Ronald Johnson,
following the Closing;
4.4 Termination in Absence of Closing -
(a) Termination. If by the close of business on the
Closing Date, the Closing has not occurred, then any party may thereafter
terminate this Agreement by written notice to the other parties hereto, without
liability of or to any other party to this Agreement, unless the reason for
closing having not occurred is (i) such party's breach of any of its
obligations, representations, warranties or covenants or other provisions of
this Agreement; or (ii) the failure of such party to perform its obligations
hereunder. In such event, the defaulting party shall be liable to all other
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parties for all Damages incurred by the non-defaulting parties, including but
not limited to all expenses, costs and attorney fees incurred in due diligence,
negotiation of this Agreement, the drafting of this Agreement and all Collateral
Agreements and otherwise representing such non-defaulting parties.
(b) Termination by Buyer. This Agreement and the
transaction contemplated herein may be terminated and abandoned at any time on
or prior to the Closing Date by Buyer, if:
(i) any representation or warranty made herein
for the benefit of Buyer or any certificate, schedule or document furnished to
Buyer pursuant to this Agreement is untrue; or
(ii) the Companies or Shareholders shall have
defaulted in any respect in the performance of any obligation under this
Agreement; or
(iii) a material adverse change has occurred to
the Companies' financial or business condition.
In the event that Buyer terminates this Agreement in accordance with the
provisions contained in this Section 4.4(b), then the Shareholders and the
Companies shall be liable to Buyer for all Damages incurred by Buyer including,
but not limited to, all expenses, costs and attorney's and accounting fees
incurred in the due diligence, negotiation and drafting of this Agreement in
contemplation of the transaction contained herein.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF
---------------------------------------------
THE COMPANIES AND SHAREHOLDERS
------------------------------
The Shareholders and the Companies represent and warrant to Buyer
and Imperial that the representations and warranties contained in this Article 5
are true and correct as of the date hereof and as of the Closing Date:
5.1 Organization of Companies - A & R Supply, Inc. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. A & R Supply of Foley, Inc. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Alabama. A & R of Destin, Inc. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The Companies have
the corporate power to own, manage, lease and hold their assets and engage in
their businesses where such assets are located, are duly qualified to do
business and are in good standing in each jurisdiction in which the character
and location of the properties owned by them or the nature of the business
transacted by them make such qualification necessary.
5.2 Capitalization - The Shareholders are the sole shareholders
of the Companies as follows:
<TABLE>
<CAPTION>
Supply Destin Foley
Capital Capital Capital
Name Stock Stock Stock
- -------------------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
Ronald Johnson 75% 100% 51%
Rita E. Ward 25% --- --
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Jaime E. Granat -- 49%
-- --- ---
</TABLE>
There is no other capital stock authorized or issued by the Companies. All
shares of common stock presently validly issued and outstanding, are validly
issued, fully paid and non-assessable. There are no stockholder agreements,
voting trust agreement or any other agreements restricting the common stock. The
Companies have not authorized and there is not outstanding at the date hereof,
any preferred stock, options, warrants or other rights to purchase any capital
stock of the Companies.
5.3 Corporate Documents - The respective Articles of
Incorporation and Bylaws of the Companies attached to the Disclosure Schedule
are true and correct as of the Closing Date. The stock and minute books of the
Companies that have been made available to Buyer for review contain a complete
and accurate record of all shareholders of the Companies and all actions of the
shareholders and directors (and any committees thereof) of the Companies.
5.4 Authority - The Companies and Shareholders have full power
and authority to enter into this Agreement and to consummate the transaction
contemplated hereby. This Agreement and any Collateral Agreement executed in
connection with the Closing constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligations of such parties enforceable
in accordance with their terms. No consent of any Federal, state, municipal or
other Governmental Authority is required for the execution, delivery or
performance of this Agreement.
5.5 Financial Statements - The Financial Statements attached to
the Disclosure Statement are correct and complete and present fairly the
consolidated financial condition of the Companies as of the date of such balance
sheets and the results of its operations for the periods of such statements of
operations and have been prepared on a consistent basis with all prior periods
and in accordance with generally accepted accounting principles ("GAAP"). Since
the date of the Financial Statements, there has been no material adverse change
in the assets, liabilities, business, operations or condition, financial or
otherwise, of the Companies from that shown on the Financial Statements. The
Companies and Shareholders represent that the unaudited Financial Statements and
books and records can be audited in accordance with GAAP, without extended
auditing procedures and following such audit, would not have any change to the
assets, liabilities, net worth or net income as stated in the Financial
Statements.
5.6 Title to Assets - The Disclosure Schedule contains a list of
all tangible assets owned by the Companies and related to the Business. The
Companies have good and marketable title to all of the personal property
included in the Acquired Assets, free and clear of any and all liens, mortgages,
pledges, conditional sales assignments, security interests, judgments, options,
adverse claims, encumbrances or other restrictions or limitations whatsoever,
except as provided in the Disclosure Schedule. The Acquired Assets listed on the
Disclosure Schedule represent all of the assets necessary to operate the
Business in the same manner as operated prior to the date hereof and for the
balance of their estimated useful lives will be suitable and sufficient for the
conduct of the Business in the same manner as presently conducted.
5.7 Liabilities - As of the date hereof, the Companies had no
liabilities, fixed or contingent, which are not fully shown or provided for in
the Financial Statements or as listed in the Disclosure Schedule. All
liabilities of the Companies were incurred in the Ordinary Course of Business.
5.8 Business - Neither the Companies nor Shareholders have any
direct or indirect interest, investment or commitment to purchase any interest
or make an investment in any other
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corporation, partnership, joint venture or other business in which a portion of
such operations are in the same industry as the Business.
5.9 Obligations to Affiliates - Except as set forth on the
Disclosure Schedule, the Companies are not a party to any agreement with, and do
not owe any amount or have any commitment to the Shareholders, any Affiliate or
any of their respective directors, officers, employees, consultants or
affiliates, and none of such persons owe any amounts to the Companies.
5.10 Title to Real Property - The Companies have good, marketable
and insurable title to the Real Property, free and clear of any and all liens,
mortgages, pledges, adverse claims, encumbrances or other restrictions or
limitations whatsoever, except as set forth on the Disclosure Schedule. The
Companies represent that there are no parties in possession of the Real Property
other than the Companies. The Companies shall deliver possession of the Real
Property at the Closing Date. There is ingress and egress from and to public
rights of ways for the Real Property. The Real Property is in material
compliance with all fire, zoning, health, building code, orders regulations,
rules and statutes pertaining to the Real Property. The Companies have not
received any notice of any pending or threatened condemnation or similar
proceeding affecting the Real Property or any portion thereof. There are no
easements or encroachments affecting the Real Property.
5.11 Leased Properties -. The Disclosure Schedule identifies each
lease (the "Leases") devising to the Companies all leasehold interests in all
property (real and personal), entered into by the Companies (the "Leased
Properties"). Each Lease so listed is valid, subsisting and fully enforceable in
accordance with its terms, and there exists no default thereunder. The Companies
have not received any notice, and have no knowledge, of any defaults by the
Companies under any lease. The Leased Properties are free and clear of any and
all liens, mortgages or restrictions other than as noted in the Disclosure
Schedule. No person other than the Companies is in actual possession of any of
such Leased Property. The Leased Properties are not subject to any pending or
threatened special assessments or threatened condemnation or eminent domain
proceedings. All of the buildings, structures, improvements and appurtenances
situated on the Leased Properties are in substantially good operating condition
and in substantially a good state of repair, ordinary wear and tear excepted. No
Hazardous Materials are located on any portion of the Leased Properties. The
Leased Properties comply in all material respects with all applicable building
and zoning laws, ordinances, codes and regulations and all applicable
restrictions or covenants thereby. There are no claims by any Governmental
Authority pending or threatened against the Companies or the Leased Properties
or pending or threatened against third parties, alleging a violation of any law
or any building, zoning or other ordinance, code or regulation affecting the
Leased Properties. The Leased Properties are not subject to any pending or
threatened special assessments or threatened condemnation or eminent domain
proceedings.
5.12 Employee Benefits Plans -
(a) the Companies do not sponsor, maintain or contribute
for the benefit of the Companies' employees or has sponsored, maintained or
contributed to at any time during the Companies' existence, any employee benefit
plan including:
(i) any employee benefit plan as such term is
defined in Section 3(3) of ERISA, including but not limited to employee benefit
plans which are not subject to the provisions of ERISA;
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<PAGE>
(ii) any personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay policy or agreement, deferred
compensation agreement or arrangement or any other employee benefit plan,
agreement, arrangement, program, practice or understanding.
(iii) any multi-employer plan with the meaning
of Section 3(37) of ERISA, or a multiple employer plan within the meaning of
Section 413(b) and (c) of the Internal Revenue Code of 1986, as amended.
(b) The Disclosure Schedule contains a list of all
employee benefit plans, to which the Companies is a party, including health
insurance, disability insurance, life insurance or other fringe benefit plans.
All premiums or payments required thereunder have been paid through the date
hereof and cancellation of any such policies will not cause the Companies to
incur any penalty as a result thereof.
(c) Neither the execution or delivery of this Agreement
or the consummation of the transaction contemplated hereby will:
(i) entitle any current or former employee of
the Companies to severance pay, unemployment compensation or any similar
payment;
(ii) accelerate the time of payment or vesting
or cause any increase in the amount of any compensation due to any such employee
or former employee; or
(iii) directly or indirectly result in any
payment made to or on behalf of any person to constitute a parachute payment
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended.
5.13 Employee Matters -
(a) Except as set forth on the Disclosure Schedule, the
Companies are not a party to any collective bargaining agreement pertaining to
their employees. The Companies are presently, and have all times been, in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation the following: The Fair Labor Standards Act ("FLSA"), the
Comprehensive Omnibus Budget Reconciliation Act ("COBRA"), the Immigration and
Control Act ("IRCA"), the Workers Adjustment and Retraining Notification Act
("WARN"), the Americans with Disabilities Act ("ADA") and such laws respecting
employment discrimination, equal opportunity, affirmative action, workers
compensation, occupational safety and health requirements and unemployment
insurance and related matters.
(b) The Companies do not have any (i) controversies
between them and their employees, (ii) unresolved labor liens, grievances or
organization efforts; or (iii) unfair labor practices or labor arbitration
proceedings pending or threatened.
(c) None of the Companies are a party to any agreement
and have not established any policy or practice requiring the Companies to make
a payment or provide any other form of compensation or benefit to any person
performing services for the Companies upon termination of such services.
(d) The Disclosure Schedule sets forth by number and
employment classification the number of employees of the Companies as of the
date hereof.
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<PAGE>
5.14 Employment Practices - The Companies have paid in full to
their employees all wages, salaries, commissions, bonuses and other direct
compensation for all services performed by them, other than amounts which have
not yet become payable in accordance with the Companies's customary practices.
5.15 Insurance - The Disclosure Schedule contains a list of all
policies of insurance owned by the Companies, and the amounts of such coverage
of each policy, all premiums on such policies or renewals thereof having been
paid. The Companies have previously delivered copies of all such insurance
policies and proof of payment of such premiums to the Buyer.
5.16 Contracts and Commitments - Except as set forth on the
Disclosure Schedule, the Companies are not a party to, or bound or affected by
any contract, lease, agreement, covenant, license, instrument or commitment
(whether written or oral) of any type, including the following:
(a) contracts for the employment or compensation of any
officer or individual employee, not terminable without further liability at any
time:
(b) contracts with any labor union;
(c) continuing contracts for the future purchase of
materials, supplies or equipment, at a cost of $1,000 or more, or to be
delivered more than thirty (30) days after the date hereof;
(d) continuing contracts for the future provision of
their services;
(e) distribution or agency contracts, franchise
contracts, or advertising commitments, which cannot be terminated without
further liability to the Companies upon no more than thirty (30) days' notice;
(f) pension, profit sharing, deferred compensation,
retirement or stock option or stock purchase plans in effect with respect to
officers, employees or others;
(g) leases under which they are lessor or lessee;
(h) underwriting agreements or agreements with a broker
or finder;
(i) consulting agreements;
(j) contracts for the acquisition of a business, or
substantially all of the property, assets, or stock of a business under which
there are any continuing or unperformed obligations on the part of any of the
parties thereto; or
(k) Any other contract, agreement, or commitment
involving $1,000 or more or which is not terminable without further liability to
the Companies upon no more than thirty (30) days' notice.
There have been delivered to Buyer true and correct copies of each of the
Contracts listed in the Disclosure Schedule. All Contracts are valid, binding
and in full force and effect and are enforceable in accordance with their terms
against all other parties to such Contracts. The Companies have performed all
obligations required to be performed by them to date and are not in default in
any material respect under any Contract to which they are a party. None of the
Contracts were arrived at, or otherwise reflect, less than arms length
negotiations or bargaining.
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<PAGE>
5.17 Inspection of Records - The Companies have made, or will
make, available for inspection by Buyer full and complete information concerning
the Companies' customers, suppliers, vendors and all aspects of the Companies'
Business, including complete copies of any customer, vendor, or supplier
contracts.
5.18 Inventories - The inventory of the Companies as of the
Closing Date shall, in all material respects, consist of items of a quality,
condition and quantity consistent with normal inventory levels of the Companies
and be useable and saleable in the Ordinary Course of Business for the purposes
for which intended. Such inventory is carried on the Companies' books of account
in accordance with GAAP, consistently applied. The parties agree that the Buyer
shall not purchase any inventory which is not good and saleable or obsolete, as
determined in the reasonable judgement by the Buyer.
5.19 Equipment and Other Tangible Property - The Companies'
equipment, furniture, machinery, vehicles, structures, fixtures and other
tangible property related to the Business and included in the Financial
Statements or as listed in the Disclosure Schedule shall, as of the Closing
Date, be in all material respects suitable for the purposes for which intended
and in good operating condition and repair consistent with normal industry
standards, except for reasonable and ordinary wear and tear.
5.20 Permits - The Companies have all material Permits necessary
to construct, own, operate, use and/or maintain their assets and the Business in
all locations where the Companies conduct such Business, all of which are listed
on the Disclosure Schedule. Such Permits are valid and subsisting and all fees
required to be paid thereon have been paid. No proceeding is pending or
threatened to modify, suspend, revoke, withdraw, terminate or otherwise limit
any Permit which could adversely affect the ability of the Companies to own,
operate, use or conduct the Business as currently operated.
5.21 Intangible Rights - Listed on the Disclosure Schedule is all
of the Intangible Rights owned or used by the Companies and them in the
Business. The Companies are the legal and equitable owners or have the right to
use all of the Intangible Rights listed on the Disclosure Schedule. The conduct
of the Business does not infringe or conflict with, and has not in the past
infringed or conflicted with, and the Companies are not in receipt of any notice
or complaint of conflict with or infringement of, the asserted rights of others
in any Intangible Rights of others.
5.22 Year 2000 Compliance. Each of the Acquired Assets
transferred herein are Year 2000 compliant. As used herein, the term "Year 2000
compliance" includes the ability to perform any of the following functions: (a)
to consistently handle date information before, at or after January 1, 2000,
including accepting date input, provide date output and performing calculations
on dates or portions of dates; (b) to function accurately without interruption
(or disruption of software or systems) before, at or after January 1, 2000,
without any change in operations associated with the advent of a new century;
(c) to respond to two-digit date input in a way that resolves any ambiguity as
to century; and (d) to store and provide output of date information in ways that
are unambiguous as to the century.
5.23 Unregistered Securities - The Companies (i) understand that
the Imperial Common Stock which they will receive have not been, and will not be
registered under the Securities Act of 1933, as amended (the "Act") or under any
state securities laws and is being offered and sold in reliance upon federal and
state exemptions for transactions not involving a public offering; (ii) The
Companies do not, and will not, have any right to require Imperial to register
the Imperial Common Stock, either pursuant to or under the Act or any state
securities laws; (iii)
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are acquiring the Imperial Common Stock solely for their own account for
investment purposes and not with a view to the distribution thereof; (iv) have
received certain information concerning Imperial, including without limitation,
(A) Imperial's Annual Report on Form 10-K for the fiscal year ended December 31,
1998; and (B) Imperial's latest Quarterly Report on Form 10-Q for the three
months ended September 30, 1999; (v) has had the opportunity to obtain
additional information as desired to evaluate the risks and merits inherent in
owning and holding the Imperial Common Stock; (vi) has sufficient knowledge and
experience in financial business matters that he is capable of evaluating the
merits and risks of an investment in Imperial, and (vii) understands that the
certificates representing the Imperial Common Stock will be stamped or otherwise
imprinted with a legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN ANY MANNER UNLESS THEY ARE REGISTERED UNDER THE ACT AND THE
SECURITIES LAWS OF ANY APPLICABLE JURISDICTION, OR UNLESS
PURSUANT TO AN EXEMPTION THEREFROM.
5.24 Litigation - There are no actions, suits, proceedings or
investigations, either administrative or judicial (whether or not on behalf of
the Companies) pending or, threatened against or affecting the Companies, their
properties or which involve the possibility of any judgment or liability not
fully covered by insurance. The Companies are not in default with respect to any
order, writ, injunction or decree of any court or Governmental Authority.
5.25 Compliance with Laws - The Companies are, and have been, in
compliance in all respects with any and all laws, regulations, ordinances,
rules, orders or decrees applicable to the Companies , including, but not
limited to all Environmental Laws and regulations. The Companies have not
received or entered into any citation, complaints, consent order, compliance
agreements or other similar enforcement order or received written notice from
any Governmental Authority that would indicate that the Companies are not
currently in compliance with all such laws, regulations, ordinances, rules,
orders or decrees.
5.26 Absence of Material Changes - Except as set forth in the
Disclosure Schedule, from the date of the Financial Statements to the date
hereof, the Companies have not:
(a) issued any capital stock or other corporate
securities or granted any option to any person for the acquisition of any
capital stock or other corporate securities;
(b) incurred any obligations or liabilities (absolute or
contingent) except current liabilities incurred, and obligations under Contracts
entered into, in the Ordinary Course of Business;
(c) discharged or satisfied any lien or encumbrance or
paid any obligation or liability (absolute or contingent) other than obligations
or liabilities discharged or satisfied in the Ordinary Course of Business;
(d) declared or made any payment or distribution to
stockholders, or purchased or redeemed any shares of its capital stock;
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(e) mortgaged, pledged, or subjected to any lien, charge,
or other encumbrance, any of their assets, tangible or intangible, other than
liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings;
(f) sold or transferred any of their tangible assets or
canceled any debts or claims, except in each case in the Ordinary Course of
Business;
(g) sold, assigned, or transferred any Intangible Rights;
(h) suffered any material operating or extraordinary loss
or waived any right of substantial value;
(i) made any loan to, borrowed money from, or entered
into any contract or understanding with, any Affiliate, employee, officer, or
director of the Companies;
(j) made any payment or contracted for payment of any
bonus, gratuity, or other compensation to employees, other than wages and
salaries in effect as of the date of the Financial Statements, except wage and
salary adjustments made in the Ordinary Course of Business for employees who are
not officers or directors of the Companies;
(k) had any union or labor difficulties or work stoppage;
(l) entered into any transaction other than in the
Ordinary Course of Business;
(m) entered into any leases of real or personal property;
(n) received any notice of termination of any contract,
lease or other agreement; or
(o) entered into any Contracts for which the Companies
expects to incur a loss from the provision of services.
5.27 Tax Returns - The Companies have duly filed, or duly
received extensions for the filing, of all Federal, state and local Tax returns
(including but not limited to income, franchise, payroll, sales and use taxes),
required to have been filed by them and have paid the Tax shown to be due on any
such returns filed and no waivers or extension of the statutory period of
limitation within which assessments may be made have been granted with respect
to any such Tax return. Federal income Tax returns of the Companies have never
been examined by the Internal Revenue Service. The Companies are not a party to
any action or proceeding by any governmental authority for assessment or
collection of taxes nor have any claims for assessment and collection been
asserted against the Companies. The reserves made for taxes, governmental
charges and duties on the Companies' balance sheets are sufficient in all
material respects for the payment of all unpaid taxes, governmental charges and
duties payable by the Companies, attributable to all periods on or before the
date of the Companies' balance sheet and there is no basis or claim for any
penalties or interest through the Closing Date. The Companies shall (i) make
adequate provision on their books for all taxes accruable and (ii) timely remit
all withholding, 1099's, 1120's, employment, sales, ad valorem, personal
property and estimated income taxes due and payable to date and which becomes
due prior to, or on, the Closing Date. The Companies have made available copies
of all the Companies' federal, state and local Tax returns.
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5.28 Accounts Receivable - The accounts receivable and other
receivables shown on the Financial Statements or thereafter acquired prior to
the Effective Date hereof, have been collected or are collectible in amounts not
less in the aggregate than the net book amount thereof. All such accounts
receivable arose from bona fide transactions in the Ordinary Course of Business
and the goods and services involved have been sold, delivered and performed for
the Companies' customers as covered by the account obligor. No further goods are
required to be provided and no services are required to be rendered in order to
complete the sales and to entitle the Companies to collect the account
receivables. None of the accounts receivable are subject to set-off or
counterclaim. Since the date of the Financial Statements, there has been no
reduction in the accounts receivable and other receivables of the Companies. The
Companies' accounts receivable as of the date herein are listed on the
Disclosure Schedule.
5.29 Compliance with Instruments - The consummation of the
transaction contemplated by this Agreement will not result in a breach or
violation of any of the terms, provisions or conditions of, or constitute a
default under, or result in the creation of any lien, charge or encumbrance on
any property or assets of the Companies pursuant to their respective Articles of
Incorporation, all amendments thereto, By-Laws, any provision of law, judgment,
decree, indenture, agreement or instrument to which the Companies are a party or
by which they are bound.
5.30 Bulk Sales - The transfer of the Acquired Assets as
contemplated by this Agreement shall not require compliance with any statutory
provisions relating to the transfer of goods in bulk under applicable bulk sales
laws.
5.31 Brokers' Commissions - The Companies have not entered into
any agreement or understanding with any person, firm or entity or have become
indirectly a party to any agreement for the payment or any commission, finders
or brokerage fee in connection with this Agreement and the transaction
contemplated hereof. The Companies and Shareholders hereby agree to indemnify
and hold harmless the Buyer and Imperial from any claims for a commission,
finder's or broker's fee.
5.32 Books and Records - The books of account and other records
of the Companies are materially complete and correct and in the aggregate
present and reflect all of the transactions entered into by it or to which it is
a party. The Companies have no knowledge of any condition whether pending or
threatened which would have a material adverse effect upon the Business of the
Companies or prevent such Business from being carried on in substantially the
same manner in which it is presently carried on.
5.33 Accuracy of Information - All information provided to Buyer
by the Companies and Shareholders as an inducement to Buyer and Imperial to
enter into this Agreement or in compliance with the provisions of this Agreement
are accurate and complete and do not contain any untrue statement of a material
fact or omit any material fact necessary to make the information provided not
misleading. All information relating to the Companies or the Business which is
known to, or would on reasonable inquiry be known to the Companies and which may
be material to an intending purchaser for value, has been disclosed to Buyer and
imperial.
5.34 Environmental Matters - The Companies and the Real and
Leased Property have been, and presently are, in compliance with all applicable
Environmental Laws. The Companies and Shareholders have not, and have no
knowledge of any other person who has, caused any Release, threatened Release,
or disposal of any Hazardous Material at the Real and Leased Property; the Real
and Leased Property are not adversely affected by any Release,
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threatened Release or disposal of a Hazardous Material originating or emanating
from any other property, except where any such Release has been remediated in
compliance with the Environmental Laws in all material respects. The Real and
Leased Properties do not contain any: (a) underground storage tank, (b) landfill
or dump, (c) a hazardous waste management facility as defined pursuant to RCRA
or any comparable state law, or (d) site on, or nominated for, the national
priority list promulgated pursuant to CERCLA or any state remedial priority list
promulgated or published pursuant to any comparable state law. The Companies,
have, with respect to the Business, no liability for response or corrective
action, natural resource damage or other harm pursuant to CERCLA, RCRA, or any
comparable federal or state law. The Companies are not subject to, have no
notice or knowledge of, and are not required to give any notice of, any
Environmental Claim involving the Business or the Real or Leased Property; there
are no conditions or occurrences at the Real or Leased Property which could form
the basis for an Environmental Claim against the Companies or any Real or Leased
Property. The Real and Leased Property are not subject to any, and the Companies
and Shareholders have no knowledge of any imminent restriction on the ownership,
occupancy, use or transferability of the Real or Leased Property in connection
with any (a) Environmental Law, or (b) Release, threatened Release or disposal
of a Hazardous Material. There are no conditions or circumstances at the Real or
Leased Property which pose a substantial risk to the environmental or the health
or safety of persons. The Companies have provided or otherwise made available to
Buyer all material environmental records prepared during the three years prior
to the Closing and required by the Environmental Laws concerning the Real and
Leased Property which the Companies possesses or could reasonably have attained.
The Companies are in compliance with all orders, directives, notices, approvals,
certificates, licenses and permits which have been issued to them and hold all
approvals, certificates, licenses and permits or other consents which they are
required to hold pursuant to any Environmental Law; correct and complete copies
of all currently in effect orders, directives, notices, approvals, certificates,
licenses, permits and consents have been delivered to Buyer. The Business and
the Companies are in compliance with all applicable federal, state and local
laws and regulations governing the public health and safety and employee health
and safety (including all provisions of the Occupational Safety and Health Act)
and no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand or notice has been filed or commenced against the Companies
alleging any failure to comply with any such law or regulation.
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF BUYER AND IMPERIAL
-----------------------------------------------------------------
Buyer and imperial represent and warrant to the Companies and
Shareholders that:
6.1 Organization - Buyer is duly organized and validly existing
as a corporation in good standing under the laws of the State of Florida and has
full corporate power to carry on its business as now conducted and is entitled
to own or lease its properties and to carry on its business as now conducted in
the places where such properties are now leased, owned or operated or such
business is now conducted.
6.2 Organization - Imperial is duly organized and validly
existing as a corporation in good standing under the laws of the State of
Delaware and has full corporate power to carry on its business as now conducted
and is entitled to own or lease its properties and to carry on its business as
now conducted in the places where such properties are now leased, owned or
operated or such business is now conducted.
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6.3 Authority - Buyer and Imperial have full power and authority
to enter into this Agreement and the consummation of the transaction
contemplated by this Agreement will not result in any breach of any of the
terms, provisions, or conditions of, or constitute a default under, or result in
the creation of, any lien, charge, or encumbrance of any property or assets of
Buyer or Imperial pursuant to their respective Articles of Incorporation,
By-Laws or any indenture, agreement, instrument, order, judgment, or decree to
which they are a party or by which they are bound.
ARTICLE VII - OBLIGATIONS PRIOR TO CLOSING
------------------------------------------
7.1 Operation of Business - The Companies and Shareholders agree
that, from the date hereof to the Closing Date, the Companies shall conduct
their Business and affairs only in the Ordinary Course of Business.
7.2 Access to Books and Records - From and after the date hereof,
the Companies shall (a) afford to the officers, employees and representatives of
Buyer and Imperial full and free access to theirs assets, personnel, properties,
records and books of account at all reasonable times during business hours, (b)
furnish to such officers, employees and representatives such other information
as Buyer and imperial may reasonably request, and (c) authorize its accountants
and auditors to permit Buyer's and Imperial's independent public accountants and
representatives to examine all records pertaining to the Companies' Financial
Statements and other books and records of the Companies. Buyer and Imperial
agree to treat all such material as confidential and not make use of such
materials except for the purposes expressed in this Agreement unless such use
comes into the public domain.
7.3 Evidence of Title. Within twenty (20) days following the date
of this Agreement, the Companies shall deliver to Buyer evidence of title to the
Real Property ("Evidence of Title") as follows:
(a) An existing abstract of title prepared by a reputable
and existing abstract firm, purporting to be an accurate synopsis of the
instruments affecting the title to the Real Property recorded in the public
records of the County where the Real Property is located, which shall commence
with the earliest public records updated to a date after the date hereof
("Abstract"); or
(b) An existing or prior owner's title insurance policy
qualified for use as a title base for reissuance of coverage on the Real
Property ("Prior Policy"), together with copies of all exceptions thereto and at
the Company's option either (i) an abstract continuation from the effective date
of the Prior Policy through the date hereof; or (ii) a computer title search
printout and name search printout from the effective date of the Prior Policy
through the date hereof and certified to Buyer's Closing Agent, together with
copies of all documents recited in the Prior Policy and computer search all at
the expense of Buyer.
7.4 Appraisal. Within twenty (20) days following the full
execution of this Agreement, the Companies, at the Companies' expense, shall
deliver an appraisal of the Real Property appraisal by an MAI certified
appraisal updated through at least the date of execution of this Agreement.
7.5 Survey. If the Companies have an existing survey of the Real
Property, it will deliver such survey to the Buyer promptly after the date
herein. Buyer may elect to update the survey or if the Companies do not have a
survey, to obtain a new survey certified to Buyer at Buyer's expense. If the
survey shows any encroachments onto the Real Property or that
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improvements on the Real Property materially encroach on set back lines,
easements, lands of others or violate any restrictive, contract, covenants or
applicable government regulations, the same shall constitute a title defect.
7.6 Negative Covenants - The Companies and Shareholders covenant
that from and after the date hereof and through the Closing Date, without the
prior written consent of Buyer and Imperial, the Companies will not:
(a) enter into any written or oral contract, agreement,
or commitment of any type, relating to:
(i) contracts for the employment or compensation
of any officer, director, or individual employee;
(ii) contracts with any labor union;
(iii) continuing contracts for the future
purchase of inventory, materials, supplies, or equipment at a cost of $1,000 or
more;
(iv) continuing contracts for future services;
(v) distribution or agency contracts, franchise
contracts, or advertising commitments;
(vi) pension, profit sharing, deferred
compensation retirement, stock option, stock purchase plans, group health
insurance, or similar plans with respect to officers, directors, employees, or
others;
(vii) leases under which any of the Companies is
a lessor or lessee;
(viii) underwriting agreements or agreements
with a broker or finder;
(ix) consulting agreements;
(x) contracts for the acquisition of a business
or substantially all of the property, assets or capital stock of a business;
(xi) any other contract, agreement, or
commitment involving $1,000 or more.
(b) declare or pay any dividend, or make any distribution
of their properties or assets to their respective stockholders, or allow the
issuance of any of their respective securities.
(c) discharge or satisfy any lien or encumbrance or pay
any obligation or liability except in the Ordinary Course of Business;
(d) make any change in their respective Articles of
Incorporation or By-Laws;
(e) issue any capital stock or other corporate securities
or grant options, warrants or rights of any kind to purchase any of their
respective capital stock or corporate securities;
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(f) mortgage, pledge or subject to any lien, charge or
other encumbrance any of their tangible or intangible assets;
(g) make any payment, or enter into any contract for
payment of any bonus, gratuity or other compensation, or increase the rate or
form of compensation payable to any agent or employee, except salary adjustments
in the Ordinary Course of Business for employees who are not officers, directors
or stockholders of the Companies;
(h) dispose of any of their properties or assets except
in the Ordinary Course of Business;
(i) incur any indebtedness, except for operating expenses
in the Ordinary Course of Business, nor allow any material adverse change to be
made in their financial affairs, nor allow any tax or other liability to be
extended by waiver of the statutes of limitation or otherwise;
(j) make any loan to, borrow any money from, or entered
into any contract or understanding with, any officer, director or stockholder of
the Companies; or
(k) enter into any other transaction, other than in the
Ordinary Course of Business.
7.7 Affirmative Covenants - The Companies and Shareholders
covenant that from and after the date hereof and through the Closing Date, the
Companies will:
(a) keep their properties and assets insured consistent
with prior practices in respect thereto;
(b) perform in the Ordinary Course of Business all of
their obligations under Contracts and documents relating to or affecting their
assets, properties and the Business;
(c) materially preserve intact the Business,
organization, and goodwill, to the end that the Buyer shall continue to operate
the Acquired Assets as a going business as now constituted, after the
consummation of the transaction contemplated hereunder.
7.8 Consummation of Transactions - Upon the terms and subject to
the conditions of this Agreement, each of the parties hereto shall use their
best efforts to take, or cause to be taken, all such actions and to do, or cause
to be done, all other things necessary to carry out its obligations hereunder
and to consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including satisfying the conditions
to the obligations of the other parties and obtaining all waivers, permits,
consents and approvals and effecting all registrations, filings and notices with
or to third parties or governmental or public bodies or authorities which are
necessary in connection with the transactions contemplated by this Agreement;
provided that this Section 7.8 shall not require either party to waive any
condition for its benefit or any performance hereunder by the other party or to
make any payment to any third party, whether private or governmental, or to
expend any funds or incur any economic burden in connection with obtaining the
consent of any third party, whether private or governmental; and provided
further that this Section 7.8 shall not require any party to take any action the
result of which, in its reasonable judgment, would be to impose material
limitations on its ability to consummate and retain the full benefits of the
transactions contemplated hereby. The Companies and the Shareholders shall
assist Buyer in securing assignments of any Contracts included in the Assets
assigned hereunder.
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7.9 No Negotiations - Except in the furtherance of the
transactions contemplated hereby, prior to the Closing Date, the Companies and
the Shareholders, on their own behalf and on behalf of their officers,
directors, shareholders and affiliates each agree that (a) neither of them nor
any of their respective affiliates shall, and each of them shall direct and use
its best efforts to cause its respective directors, officers, employees,
representatives or agents (including, without limitation, any investment banker,
attorney or accountant retained by it or any of its affiliates) not to, directly
or indirectly, initiate, solicit or encourage any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its stockholders), with respect to any merger, acquisition,
consolidation, share exchange, business combination or other transaction
involving, or which would result in, (i) the acquisition of a majority of the
outstanding ownership interest in the Companies, or (ii) the acquisition of a
majority of the assets of the Companies (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person or entity relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) they shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, and it shall take the
necessary steps to inform any such parties of the obligations undertaken in this
Section 7.9; and (c) they shall notify Buyer immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
them.
7.10 Damage or Destruction of Assets - In the event that any loss
or damage to, or destruction of, any of the Assets shall occur prior to the
Closing, Buyer shall have the option of either (a) accepting any insurance
proceeds, awards, or compensation in respect of such loss, damage or destruction
and proceeding with the Closing, or (b) terminating this Agreement, in which
case neither Buyer nor the Companies or Shareholders shall have any further
obligations or rights hereunder.
7.11 Companies Employees - Prior to the Closing, Buyer shall
advise the Companies of those employees of the Companies that Buyer intends to
hire following the Closing (the "Designated Employees"). The Companies and the
Shareholders agree to use their best efforts to encourage the Designated
Employees to accept employment with the Buyer. Any Designated Employee that
accepts employment with the Buyer and is thereafter employed by the Buyer on the
date immediately following the Closing Date shall be referred to as a
"Transferred Employee" for purposes of this Agreement. No employee of the
Companies shall be deemed a third party beneficiary of any portion of this
Agreement. Any employee of the Companies who is on short or long term disability
leave as of the Closing Date shall remain the sole responsibility of the
Companies , unless and until such time as that employee commences and continues
to work for Buyer on a consistent basis. Concurrently with the Closing, the
Companies shall terminate all Transferred Employees of the Business. The
Companies shall provide notice, if any, required under the Workers Adjustment
and Retraining Notification Act ("WARN") and any state law notice requirements.
All claims of the employees arising out of their employment with the Companies
before the Closing Date or termination thereof whether or not hired by Buyer
shall be the sole liability of the Companies and the Companies and Shareholders
will jointly and severally indemnify and hold the Buyer harmless from all claims
or damages arising therefrom. The Companies will directly pay all terminated
employees, including any employees thereafter hired by the Buyer for earned and
unused vacation if applicable, in accordance with the Companies' prior
practices.
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ARTICLE VIII - CONDITIONS PRECEDENT TO THE CLOSING
--------------------------------------------------
8.1 Conditions to Obligations of Buyer and Imperial- The
obligations of Buyer and Imperial to consummate this Agreement shall be subject
to, and be conditioned upon, each of the following conditions:
(a) Properties Intact - No properties or assets of the
Companies shall have suffered any destruction or damage by fire, accident or
other casualty or act of God not fully covered by insurance or affecting in a
material and adverse way the conduct of the Business of the Companies.
(b) Representations and Warranties - The representations
and warranties made by the Companies and Shareholders in Article V hereof shall
be correct in all respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date; none of the covenants of the Companies and Shareholders
contained in this Agreement shall have been breached in any respect as of the
Closing Date; and all conditions precedent to the Buyer's and Imperial's
performance shall have been performed.
(c) No Adverse Changes - That since the date of the
Financial Statements there has been no adverse change in the condition of the
Companies, financial or otherwise, from that set forth in the Financial
Statements.
(d) Approvals and Consents - All consents, approvals,
authorizations or orders of any individual, entity, court or Governmental
Authority or administrative body, if any, shall have been obtained and in effect
on the Closing Date, which are required for the consummation of the transaction
be contemplated by this Agreement.
(e) Authorization of Agreement by the Companies - All
actions of the Companies' Board of Directors and their shareholders, necessary
to authorize the execution, delivery and performance of this Agreement by the
Companies shall have been duly and validly taken.
(f) No Litigation - No claim, proceeding, investigation,
or litigation, either administrative or judicial, shall be threatened or be
pending against the Buyer, Imperial, the Companies or Shareholders which, in the
opinion of counsel for Buyer, presents a reasonable probability that the
transaction contemplated by this Agreement would be enjoined or prevented or
that the right of Buyer to continue the operations of the property, assets and
Business of the Companies would be materially affected.
(g) Due Diligence - Buyer shall have completed its due
diligence investigation and the results thereof shall not have revealed that any
of the representations, warranties or covenants made by the Companies or
Shareholders in this Agreement are untrue or incorrect in any material respect
or otherwise be unsatisfactory to Buyer.
(h) No Change in Law - There shall have not been proposed
or enacted (including without limitation, any threatened proposal or enactment
of) any statute, rule, regulation, policy, guideline, or official
interpretation, or any modification in or to any existing statute, rule,
regulation, policy or guideline, which prohibits or delays or threatens to
prohibit or delay, the performance of the transaction contemplated by this
Agreement or which changes, or threatens to change, in an adverse manner, the
Business, financial condition, revenues, income, liabilities
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(whether absolute, contingent or otherwise) reserves or prospects of the
Companies from that reflected in the Financial Statements.
(i) No Liens - Buyer shall have received written evidence
in form and substance satisfactory to it of the termination of any and all liens
that encumber any of the assets or other properties of the Companies, other than
liens for the Assumed Liabilities.
(j) No Violations of Law - At the Closing Date, there
shall exist no violations of any Federal, state or local law, ordinance or
regulation affecting the assets, properties or Business of the Companies.
(k) Performance by Shareholders and the Companies - All
of the terms and conditions of this Agreement to be complied with and performed
by the Companies and Shareholders on or before the Closing Date shall have been
complied with and performed.
(l) Proceedings and Instruments Satisfactory - All
proceedings, corporate or other to be taken in connection with the transaction
contemplated by the Agreement and all documents incident thereto, including any
Collateral Agreement, shall be satisfactory in form and substantive to Buyer and
Buyer's counsel.
(m) Employment Agreement - Ronald Johnson shall have
entered into an employment agreement with the Buyer as required in Section 4.2
herein.
(n) Financial Statements - The Buyer shall have received
the following financial Statements prepared by independent certified public
accountants (a) as to A & R Supply of Foley, Inc. and A & R Supply of Destin,
Inc., unaudited consolidated Financial Statements consisting of balance sheets
as of December 31, 1999 and statements of income, cash flow and stockholders'
equity for the year ended December 31, 1999, the notes to the financial
statements thereto and (b) as to A & R Supply, Inc. unaudited consolidated
Financial Statements consisting of a balance sheet as of November 30, 1999 and
statements of income, cash flow and stockholders' equity for the fiscal year
ended November 30, 1999 and the notes to the financial statements thereto Such
Financial Statements in comparison to Imperial's financial statements shall not
require Imperial to file any of the Companies' audited Financial Statements with
the U. S. Securities and Exchange Commission (the"SEC") on a Current Report on
Form 8-K pursuant to the Securities Exchange Act of 1934, as amended, in
connection with the consummation of the transaction contemplated hereby. All of
the Companies' Financial Statements shall comply with the requirements of
Regulation S-X as promulgated by the SEC. In the event that the Companies'
Financial Statements establish that Imperial will be required to file with the
SEC audited Financial Statements of the Companies on Current Report on Form 8-K,
the Companies shall, at the Companies' expense, cause their Financial Statements
to be audited in accordance with the requirements of Regulation S-X, and the
Companies shall, prior to or at Closing, deliver to the Buyer such audited
Financial Statements, together with the reports of the Companies' independent
auditors.
8.2 Conditions to Obligations of the Companies and Shareholders -
The obligations of the Companies and the Shareholders to consummate this
Agreement are subject to and shall be conditioned upon each of the following
conditions:
(a) Representations and Warranties - The representations
and warranties made by Buyer and Imperial herein shall be correct in all
material respects on and as of the Closing Date with the same force and effect
as though such representations had been made on and as of
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the Closing Date. The covenants of Buyer and Imperial contained herein shall not
have been breached in any material respects as of the Closing Date, and Buyer
and Imperial shall have delivered to the Companies and the Shareholders
certificates to such effect signed by duly authorized officers of Buyer and
Imperial.
(b) Performance by Buyer and Imperial - All of the terms,
covenants and conditions of this Agreement to be complied with and performed by
Buyer and Imperial on or before the Closing Date shall have been complied with
and performed.
(c) Consents and Approvals - No consent, approval,
authorization or order of any individual, entity, court or governmental agency
or administrative body not obtained and in effect on the Closing Date shall be
required for the consummation of the transaction contemplated by this Agreement.
ARTICLE IX - POST-CLOSING OBLIGATIONS
-------------------------------------
9.1 Survival of the Closing - All covenants, agreements,
representations, and warranties made hereunder and in any certificates delivered
at the Closing pursuant hereto shall be deemed to have been relied upon by
Buyer, Imperial, Shareholders and the Companies, and shall survive the Closing
for the applicable statute of limitation period.
9.2 Taxes - The Companies and the Shareholders shall be solely
responsible for any and all Federal, state and local income, sales, use,
transfer, documentary stamp, recording and other similar taxes arising from and
with respect to the sale and purchase of the Acquired Assets and Assumed
Liabilities.
9.3 Further Assurances - Following the Closing, each of the
Companies, Shareholders, Imperial and Buyer shall execute and deliver such
documents, and take such other action as shall be reasonably requested by any
other party hereto to carry out the transaction contemplated by this Agreement.
9.4 Pay-Off of Retained Liabilities - Concurrently with the
Closing, the Companies and the Shareholders shall pay or satisfy any Retained
Liabilities immediately as and when such Retained Liabilities become due.
9.5 Indemnification by the Companies and Shareholders - The
Companies and the Shareholders agree to indemnify, reimburse and hold Buyer and
Imperial harmless against and from:
(a) All Damages suffered, incurred, or sustained by Buyer
or Imperial as a result of (i) the existence on or before the Closing Date of
any liabilities, absolute or contingent, of the Companies which were not paid by
the Companies; (ii) the untruth of any representation or the breach of any
warranty made in this Agreement; (iii) the untruth of any certificate required
under this Agreement to be delivered by the Shareholders or the Companies to
Buyer or Imperial on the Closing Date; (iv) the breach of this Agreement by the
Companies or Shareholders; (v) the failure to pay when due any Retained
Liability; or (vi) the failure to comply with any appropriate bulk sales laws.
(b) If a claim for Damages (a "Claim") is to be made by
Buyer or Imperial, Buyer or Imperial shall give written notice (a "Claim
Notice") to the Shareholders and the Companies as soon as practicable after the
Buyer or Imperial becomes aware of any fact, condition
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or event which may give rise to Damages for which indemnification may be sought
under this Section 9.5. In the case of a Claim involving the assertion of a
claim by a third party (whether pursuant to a lawsuit or other legal action or
otherwise, a "Third-Party Claim"), (i) the Shareholders and the Companies shall
be entitled, if they so elect, at their own cost, risk and expense, (A) to take
control of the defense and investigation of such Third-Party Claim and (B) to
pursue the defense thereof by appropriate actions or proceedings, including,
without limitation, to employ and engage attorneys of their own choice
reasonably acceptable to the Buyer and Imperial to handle and defend the same,
and (ii) the Shareholders and the Companies shall be entitled (but not
obligated), if it so elects, to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of the
Buyer and Imperial, such consent not to be unreasonably withheld. In the event
the Shareholders and Companies elect to assume control of the defense and
investigation of such lawsuit or other legal action in accordance with this
Section 9.5, the Buyer and Imperial may, at their own cost and expense,
participate in the investigation, trial and defense of such Third-Party Claim.
If the Shareholders and the Companies fail to assume the defense of such
Third-Party Claim in accordance with this Section 9.5 within fifteen (15)
calendar days after receipt of the Claim Notice, the Buyer and Imperial shall
(upon delivering notice to such effect to the Shareholders and the Companies)
have the right to undertake, at the Shareholders' and the Companies' cost, risk
and expense, the defense, compromise and settlement of such Third-Party Claim on
behalf of and for the account of the Shareholders and the Companies; provided
that such Third-Party Claim shall not be compromised or settled without the
written consent of the Shareholders and the Companies, which consent shall not
be unreasonably withheld. In the event the Shareholders and the Companies assume
the defense of the claim, the Shareholders and the Companies shall keep the
Buyer and Imperial reasonably informed of the progress of any such defense,
compromise or settlement, and in the event the Buyer and Imperial assume the
defense of the claim, the Buyer and Imperial shall keep the Shareholders and the
Companies reasonably informed of the progress of any such defense, compromise or
settlement. The Shareholders and the Companies shall be liable for any
settlement of any Third-Party Claim effected pursuant to and in accordance with
this Section 9.5 and for any final judgment (subject to any right of appeal),
and the Shareholders and the Companies agree to indemnify and hold harmless
Buyer and Imperial from and against any and all Damages by reason of such
settlement or judgment.
(c) Upon the payment to Buyer or Imperial by the
Companies and Shareholders of any amount which Buyer or Imperial is entitled to
receive by way of indemnification under this Section 9.5, Buyer and Imperial
shall forthwith assign to the Companies and Shareholders all of its right,
title, and interest in any item for which indemnification shall so be made,
including claims against third parties relating therewith.
(d) In the event that the Companies and Shareholders
shall dispute the right of Buyer or Imperial to be indemnified under this
Section 9.5, or any item with respect to which Buyer or Imperial shall so
request indemnification, or if the Companies and Shareholders shall dispute the
amount which Buyer or Imperial shall be entitled to receive with respect to such
item by way of indemnification, such dispute shall be submitted to arbitration
in the City of Miami, in accordance with the rules then in effect of the
American Arbitration Association.
(e) Buyer or Imperial shall have the right to set-off any
amounts due it pursuant to a claim for indemnification against the Promissory
Notes.
9.6 Non-Competition Agreement. The Companies and Shareholders
hereby agree as follows:
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<PAGE>
(a) The Companies and Shareholders will not, for a period
of five (5) years from the Closing Date without the prior written consent of
Buyer, be an, independent contractor, agent, director, stockholder or owner
(except of not more than one percent (1%) of the securities of a publicly traded
entity), partner, consultant, financial backer, creditor or be otherwise
directly or indirectly connected with or participate in the management,
operation or control of any business, firm, proprietorship, corporation,
partnership, association, entity or venture engaged in a business similar to the
Business within the States of Florida, Georgia, Alabama, Mississippi and
Louisiana [TO BE DISCUSSED].
(b) The Companies and Shareholders covenant and agree
that for a period of five (5) years from the Closing Date without the prior
written consent of Buyer, they will not contact, call upon, solicit business
from, sell or render services to any customer of the Buyer or the Companies with
respect to the provision of any services or supplies similar to the Business or
otherwise directly or indirectly aid or assist any other person, firm or entity
to do any of the aforesaid acts, except on behalf of the Buyer or its
subsidiaries or affiliates.
(c) The Companies and Shareholders covenant and agree
that for a period of five (5) years from the Closing Date without the prior
written consent of Buyer, they will not directly or indirectly as principal,
agent, owner, partner, stockholder, officer, director, employee, independent
contractor or consultant or in any individual or representative capacity for
itself or on behalf of any business firm, corporation, partnership, association
or proprietorship enter into any agreements with or solicit, or directly or
indirectly cause others to solicit, the employment of any officer or other
employee of the Buyer or any of its subsidiaries and affiliates for the purpose
of causing said officer or employee to terminate employment with the Buyer or
its subsidiaries and affiliates.
(d) The Companies and Shareholders agree that they shall
not at any time disclose directly or indirectly to any person, firm or entity
any confidential information about the Business or any information concerning
their respective financial condition, customers, sources of patients and methods
of obtaining business or any other methods generally of doing and operating the
Business.
(e) It is recognized and acknowledged by the parties
hereto that a breach, threatened breach, or violation by the Companies and/or
Shareholders of any of the covenants and agreements contained in Section 9.6 may
cause irreparable harm and Damage to the Buyer and the Business in a monetary
amount which may be impossible to ascertain. The Companies and Shareholders
agree that the Buyer and Imperial shall be entitled to an injunction from any
court of competent jurisdiction enjoining or restraining any breach or violation
of any or all of the covenants and agreements contained in this Section 9.6
without having to show irreparable harm and that such right to injunction shall
be cumulative and in addition to whatever other rights or remedies the Buyer or
Imperial may possess hereunder at law or in equity.
9.7 Publicity - Neither the Companies or Shareholders shall issue
or make, or cause to have made, any public release or announcement concerning
this Agreement or the transaction contemplated hereby, without the advance
written approval of the form and substance by Buyer.
9.8 Access to Records - From and after the Closing Date, the
Companies and Shareholders shall (i) permit Buyer, Imperial and their employees,
agents, officers, accountants, legal counsel and other representatives to have
access to the books, records, files, agreements and other information in the
possession of the Companies and (ii) use its best efforts to permit
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<PAGE>
Buyer, Imperial, their employees, agents, officers, accountants, legal counsel
and other representatives to have access to the Companies's employees, officers,
counsel, accountants and representatives; at all times as reasonably requested
by Buyer or Imperial for the purpose of investigating or defending any claim
made against the Assets or Business.
ARTICLE X - MISCELLANEOUS
-------------------------
10.1 Costs and Expenses - Except as otherwise provided herein in
this Agreement, if this Agreement is terminated in accordance with Section 4.4,
each of the parties to this Agreement shall bear their own expenses incurred in
connection with the negotiation, preparation, execution and closing of this
Agreement and the transaction contemplated hereby, including but not limited to,
transfer taxes, legal fees and accounting fees.
10.2 Remedies - The right and remedies provided by this Agreement
are cumulative, and the use of any one right or remedy by any party hereto shall
not preclude or constitute a waiver of its right to use any and all other
remedies. Such rights and remedies are given in addition to any other rights and
remedies a party may have by law, statute or otherwise.
10.3 Disclosure Schedule - The Disclosure Schedule shall in each
instance, include the Schedules and the Exhibits referred to herein and therein.
The Disclosure Schedule shall be deemed an integral part hereof and is
incorporated herein by this reference.
10.4 Attorneys' Fees - In the event of any litigation or
arbitration arising out of this Agreement, the prevailing party shall be
entitled to an award of its attorneys' fees and costs (including any fees and
costs incurred in Appellate proceedings) against the losing party.
10.5 Risk of Loss - Prior to the Closing, the risk of loss,
damage to, or destruction of any assets of the Companies shall remain with the
Companies and the Shareholders.
10.6 Assignment - This Agreement shall not be assignable by any
of the parties hereto except with the written consent of the other party.
10.7 Amendment of Agreement This Agreement may not be amended
except by written agreement executed by all of the parties hereto.
10.8 Notices - Any notice or communication given pursuant hereto
by either party to the other party shall be in writing and delivered or mailed
by certified mail, return receipt requested, postage prepaid, as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
If to Buyer 1259 N. W. 21st Street
and Imperial: Pompano Beach, Florida
Attention: Mr. Howard Ehler, Executive Vice President
Copy to: Wallace, Bauman, Legon, Fodiman & Shannon, P.A.
1200 Brickell Avenue, Suite 1720
Miami, Florida 33131
Attention: Bryan W. Bauman, Esq.
If to the Companies and A & R Supply, Inc.
Shareholders: A & R Supply of Foley, Inc.
A & R of Destin, Inc.
400 West Herman Street
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<PAGE>
Pensacola, Florida 32505
Attention: Mr. Ronald A. Johnson
Copy to: _____________________________________
_____________________________________
_____________________________________
Attention:
</TABLE>
or at such other address as hereafter shall be furnished in writing by any party
hereto to the other parties.
10.9 Entire Agreement - This Agreement, together with the
Disclosure Schedule and Collateral Agreements, is the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written of the parties. No other agreement not specifically referred to herein,
oral or otherwise, shall be deemed to exist or to bind any of the parties. No
officer or employee of any party has any authority to make any representation or
promise not contained in this Agreement and each of the parties agrees that it
has not executed this agreement in reliance upon any such representation or
promise.
10.10 Waiver - Any forbearance, failure or delay by any of the
parties hereto to exercise any right, power or remedy hereunder shall not be
deemed a waiver of such right, power or remedy and any single or partial
exercise of any such right, power or remedy hereunder shall not preclude the
further exercise thereof and every right, power or remedy of either party shall
continue in full force and effect unless waived specifically by an instrument in
writing executed by such party.
10.11 Governing Law - This Agreement shall be construed in
accordance with the laws of the State of Florida.
10.12 Jurisdiction and Venue. The parties acknowledge that a
substantial portion of the negotiations, anticipated performance and execution
of this Agreement occurred or shall occur in Miami-Dade County, Florida and
that, therefore, each party irrevocably and unconditionally agree that: (a) any
suit, action or legal proceeding arising out of or relating to this Agreement
and the subject matter thereof shall be brought in the courts of record of the
State of Florida in Miami-Dade County or the United States District Court
Southern District of Florida; (b) consents to the jurisdiction of each such
court in any suit, action or proceeding, and (c) waives any objection to the
venue of any suit, action or proceeding in any such court.
10.13 Counterparts - This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
10.14 Captions - The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
10.15 Successors and Assigns - All of the terms of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by and
against the parties and their respective successors and assigns.
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<PAGE>
10.16 Interpretation - Handwritten provisions inserted in this
Agreement, initialed in ink, shall control all typewritten provisions in
conflict therewith. Buyer, Imperial, the Companies and Shareholders have
participated jointly in the negotiation and drafting of the Agreement and each
Collateral Agreement. No presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement or any collateral Agreement. This Agreement shall not be
construed more strongly against or in favor of any party, regardless of who is
responsible for its preparation.
10.17 Severability - In the event any provision of this Agreement
or the application of such provision to any part shall be held by a court of
competent jurisdiction to be contrary to any rule of law or public policy, the
remaining provisions of this Agreement shall remain in full force and effect.
10.18 Rights of Third Parties - Except as may otherwise be
specifically provided in this Agreement, nothing expressed or implied in this
Agreement is intended, or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
shareholders, any rights or remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date set forth above.
JUST-RITE SUPPLY, INC.,a Florida
corporation
By: /s/ HOWARD EHLER
--------------------
HOWARD EHLER
Executive Vice President
IMPERIAL INDUSTRIES, INC., a Delaware
corporation
By: /S/ HOWARD EHLER
--------------------
HOWARD EHLER
Executive Vice President
A & R SUPPLY, INC., a Florida corporation
By: /s/ RONALD A. JOHNSON
-------------------------
RONALD A. JOHNSON, President
A & R SUPPLY OF FOLEY, INC., an Alabama
corporation
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<PAGE>
By:/s/ RONALD A. JOHNSON
-------------------------
RONALD A. JOHNSON, President
A & R OF DESTIN, INC., a Florida
corporation
By:/s/ RONALD A. JOHNSON
-------------------------
RONALD A. JOHNSON, President
SHAREHOLDERS:
/s/ RONALD A. JOHNSON
------------------------
RONALD A. JOHNSON
/s/ RITA E. WARD
------------------
RITA E. WARD
/s/ JAIME E. GRANAT
--------------------
JAIME E. GRANAT
- 34 -
FIRST AMENDMENT TO
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment")
entered into as of the 31st day of December, 1999 by and between JUST-RITE
SUPPLY, INC.,a Florida corporation, IMPERIAL INDUSTRIES, INC., a Delaware
corporation, A & R SUPPLY, INC., a Florida corporation, A & R OF FOLEY, INC., a
Florida corporation, A & R OF DESTIN, INC., a Florida corporation, RONALD A.
JOHNSON, RITA E. WARD and JAIME E. GRANAT.
R E C I T A L S
---------------
A. Buyer, the Company and the Shareholders entered into a Asset
Purchase Agreement dated as of December 31, 1999 (the "Agreement") whereby Buyer
agreed to acquire certain of the Assets of the Companies (the "Transaction");
B. The parties hereto desire to amend the Agreement on the terms
and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual benefits to be
derived therefrom and of the respective mutual covenants and agreements
hereinafter set forth, the parties hereto do hereby agree as follows:
1. Recitations. The above recitations are true and correct and
are incorporated herein by this reference.
2. Definitions. All capitalized terms used herein shall have the
meaning ascribed to them in the Agreement.
3. Amendment. All references in the Agreement to A & R Supply of
Foley, Inc., an Alabama corporation shall be amended to refer to A & R of Foley,
Inc. a Florida corporation.
4. Remaining Terms and Conditions. Except as modified herein, the
terms and conditions of the Agreement and Plan of Dissolution are to remain in
full force and effect.
IN WITNESS WHEREOF the undersigned parties have executed this
Amendment as of the date set forth above.
JUST-RITE SUPPLY, INC.,a Florida
corporation,
By: /s/ HOWARD EHLER
--------------------
HOWARD EHLER
Executive Vice President
IMPERIAL INDUSTRIES, INC., a Delaware
corporation
By: /s/ HOWARD EHLER
--------------------
HOWARD EHLER
Executive Vice President
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<PAGE>
A & R SUPPLY, INC., a Florida corporation,
By: /s/ RONALD A. JOHNSON
-------------------------
RONALD A. JOHNSON, President
A & R OF FOLEY, INC., a Florida
corporation,
By: /s/ RONALD A. JOHNSON
--------------------------
RONALD A. JOHNSON, President
A & R OF DESTIN, INC., a Florida
corporation
By: /s/ RONALD A. JOHNSON
--------------------------
RONALD A. JOHNSON, President
/s/ RONALD A. JOHNSON
--------------------------
RONALD A. JOHNSON
/s/ RITA E. WARD
--------------------------
RITA E. WARD
/s/ JAIME E. GRANAT
--------------------------
JAIME E. GRANAT
-2-
