U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d) of
The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2000
ANTENNA PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction of incorporation)
0-12866 75-1907070
(Commission File Number) (IRS Employer Identification No.)
1209 Orange Street
Wilmington, Delaware 19801
(Address of Principal Executive Officers) (Zip Code)
Registrant's telephone number, including area code: (940) 325-3301
Item 2. Acquisition or Disposition of Assets.
API Acquisition Corp., a Texas Corporation and 80% owned
subsidiary of Antenna Products, Inc., purchased the assets and
business of The Upholstery Shop, Inc. on January 27, 2000. The
assets purchased included the machinery, equipment and inventory.
No land or buildings were included as part of this acquisition.
The business will continue to operate in the existing facility
at 326 North Highway 377, Roanoke, Texas under a lease agreement.
The assets were purchased for the amount of $2,000,000.
The purchase price was based on the performance of
The Upholstery Shop in the two previous fiscal years and the
potential for future earnings. The transaction was financed by
$2,000,000 in loans from The Frost National Bank, San Antonio,
Texas to API Acquisition Corp. that are guaranteed by Antenna
Products, Inc. and otherwise secured by a pledge of assets of
Antenna Products, Inc. subsidiaries.
Brian Perryman, the principal shareholder of The Upholstery Shop, Inc.,
owns 20 % of API Acquisition Corp. and will stay on
as Vice President and General Manager, responsible for day to day
operations. Prior to the purchase of The Upholstery Shop, there
were no material relationships between Mr. Perryman and Antenna
Products, Inc. or any of its affiliates, any director or officer
of Antenna Products, Inc., or any associate of any such director
or officer.
The Upholstery Shop provides complete refurbishment for a full
range of corporate and executive aircraft interiors. The range
and scope of these services include design and fabrication of
seats, side panels, headliners and cabinets, as well as the
installation of various interior electronics and entertainment
systems. The Upholstery Shop removes existing interiors of
aircraft and installs new interiors designed to customer
specifications and coordinates the refurbishment of exteriors for
customers when required. The Upholstery Shop provides this
service on virtually all executive and corporate class aircraft,
including, but not limited to: Lear, Cessna, Gulfstream, Galaxy,
Dassault, and Bombardier. The refurbishments are diverse with
the lower range being minor upgrading of Lear 25's to total
interior upgrading of the larger aircraft of the Gulfstream and
Falcon family. API Acquisition Corp. intends to continue to
operate said Upholstery Shop business.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
(b) Pro forma financial information
The financial statements for the prior two years for The
Upholstery Shop, Inc. and the pro forma financial
information are not available for inclusion with this
report. The required financial statements will be filed on
an amended Form 8-K no later than May 8,2000.
(c) Exhibits.
2. Asset purchase agreement between The Upholstery Shop,
Inc., Brian Perryman, Pamela Perryman and API Acquisition Corp.
Index. Exhibits to asset purchase agreement *
1. List of fixed assets
2. Backlog
3. List of intangible assets
4. Assumption of liabilities
5. Leases
6. Employees entering employment agreement with purchaser
7. Employment agreements with CESSAC and BRACY
8. Employment agreement Brian Perryman
9. Bill of sale and assignment
10. Work in process procedure
11. Organization and standing of seller
12. Liabilities and obligations of seller
13. Employee benefit plans
14. Certain changes
15. Title to assets
16. Commitments
17. Patents, Trademarks and copyrights
18. Business broker
19. Litigation
20. List of employees
21. Top 20 customers
22. List of customers
23. Pricing
24. Stock
25. Noncompetition agreement Brian Perryman
26. Noncompetition agreement Pamela Perryman
* Copies of the exhibits to the asset purchase agreement
will be provided to the Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
Antenna Products, Inc.
Date: February 10, 2000 s/o/f: Clark D. Wraight, Vice President
and Principal Financial Officer
EXHIBIT I
ASSET PURCHASE AGREEMENT
between
UPHOLSTERY SHOP, INC.,
BRIAN PERRYMAN,
PAMELA PERRYMAN
and
API ACQUISITION CORP.
January 27, 2000
ASSET PURCHASE AGREEMENT
------------------------
This Agreement, dated as of January 27, 2000 ("Effective
Date"), is by and between The Upholstery Shop, Inc., a Texas
corporation ("Seller"), Brian E. Perryman, Pamela J. Perryman
(collectively, "Shareholders") and API ACQUISITION CORP., or its
assigns, a Texas corporation ("Purchaser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller and Shareholders desire to sell, and Purchaser
desires to purchase, certain of Seller's assets;
NOW, THEREFORE, in consideration of the mutual
representations, warranties and covenants herein contained, and on
the terms and subject to the conditions herein set forth, the
parties hereto hereby agree as follows:
ARTICLE I
Purchase and Sale
-----------------
1.1 Sale and Purchase of Assets. Subject to and upon the
terms and conditions contained herein, at the Closing (as
hereinafter defined), Seller shall sell, transfer, assign, convey
and deliver to Purchaser, free and clear of all liens, claims and
encumbrances, and Purchaser shall purchase, accept and acquire from
Seller, the following:
(a) Fixed Assets. All equipment, furniture, fixtures,
furnishings, supplies, telephones and telephone
numbers, and other tangible personal property used
in the business, including those assets listed in
Exhibit 1.1(a) hereto (the "Fixed Assets").
(b) Inventory. All of Seller's inventory of finished
goods, work-in-process and raw materials, provided
that between the date hereof and the Closing Date
(as hereinafter defined) such inventory may be
reasonably increased or decreased in the ordinary
course of business (the "Inventory").
(c) Backlog. All of Seller's backlog, as of the date
hereof, of unfilled firm orders for products
manufactured or sold by Seller, which are listed in
Exhibit 1.1(c) hereto, provided that between the
date hereof and the Closing Date such backlog may
be reasonably increased or decreased in the
ordinary course of business (the "Backlog").
(d) Seller's Names. All of Seller's right, title and
interest in and to the corporate names "The
Upholstery Shop" and "Metroplex Aviation" and any
names derived from or bearing a resemblance thereto
and any related trademarks, trade names, service
marks and other trade rights (collectively, "Trade
Rights").
(e) Intangible Assets. All customer lists, patents,
trademarks, trade names, service marks, copyrights,
processes, formulas, trade secrets, proprietary and
technical information, know-how, other trade rights
and other intangible assets, together with all
right to, and applications, licenses and franchises
for, any of the foregoing, relating to Seller's
business, including, but not limited to, those
listed in Exhibit 1.1(e) hereto (the "Intangible
Assets").
(f) Records. All current and active records, files and
papers pertaining to the assets described in
Subsections (a) through (f) above, including
literature, contract forms, technical data, graphic
materials, pricing and information manuals,
drawings, patterns, fixtures, designs, sales
literature or other sales aids, customer files,
customer credit histories and other data related to
Seller's business (the "Records").
All of the assets described in Subsection (a) through (f)
above are hereinafter collectively referred to as the "Assets".
1.2 Due Diligence. Purchaser shall have until December 31,
1999 to conduct its due diligence (the "Due Diligence Period").
During such Due Diligence Period neither Seller nor any of its
employees or advisors will discuss the proposed transaction with
any other party or otherwise promote, cooperate in or be involved
in or encourage discussions regarding the sale of the assets of
Seller as contemplated herein except as expressly agreed to in
writing by the Purchasers. Purchaser shall have the right to
terminate this Agreement at any time during the Due Diligence
Period. Purchaser agrees to pay to Seller a non-refundable
deposit of $25,000.00 upon execution of this Agreement to be
credited against the Purchase Price at closing.
1.3 Closing. The closing of the transaction contemplated
hereby (the "Closing") shall occur at 10:00 a.m. local time on
January 27, 2000 (the "Closing Date"), in the offices of Kessler
& Collins, 5950 Sherry Lane, Suite 222, Dallas, Texas 75225, or at
such other time and place as shall be mutually agreed to in writing
by the parties hereto.
1.4 Purchase Price.
(a) Cash Portion. The total purchase price for the
Assets (the "Total Purchase Price") shall be Two
Million and No/100 Dollars ($2,000,000.00). The
Total Purchase Price shall be paid at the Closing
in full in cash by certified or cashier's check.
(b) Stock in API ACQUISITION CORP.. At closing, Seller
shall convey to API ACQUISITION CORP., as provided
in Section 1.1 above, the Assets and shall receive
common stock of API ACQUISITION CORP. equal to 20%
of the outstanding shares of API ACQUISITION CORP..
Seller and Shareholders agree, prior to issuance
of such shares in API ACQUISITION CORP., to execute
and deliver to Purchaser a Shareholder Restriction
Agreement in the form attached as Exhibit 1.4(b)
attached hereto.
(c) Allocation of Purchase Price. The Purchase Price
shall be allocated as follows:
$175,000.00 -depreciable personal property
$75,000.00 -noncompetition agreements
$50,000.00- inventory
remainder of purchase price- goodwill
1.5 Assumption of Liabilities. Purchaser shall not assume
or agree to pay, perform or discharge any liabilities or
obligations of Seller, whether accrued, absolute, contingent or
otherwise, including without limitation liabilities based on or
arising out of or in connection with (a) any defects in products
manufactured or sold by Seller, (b) any implied or express
warranties relating to such products, or (c) any pension or other
benefit liability relating to Seller's employees; except, however,
Purchaser shall assume and agree to pay only those liabilities and
obligations of Seller listed in Exhibit 1.5 hereto, and Seller
shall assign its rights associated therewith.
1.6 Physical Inventory. Immediately preceding the Closing
Date, Seller shall cease normal business operations and Seller and
Purchaser shall jointly conduct a physical inventory (the
"Inventory"). Within ten (10) days after the Closing Date,
Purchaser shall determine the value of the Inventory based on the
lower of Seller's cost or realizable market value. Purchaser shall
immediately report such determination in writing the Seller. The
physical inventory shall be deemed complete upon delivery by
Purchaser of its report. There shall be no adjustment to the
Purchase Price in the event the Inventory is equal to or greater
than $50,000.00.
1.7 Leases. Effective as of the Closing Date, Purchaser
shall lease the buildings now in use by the Upholstery Shop, Inc.
at the intersection of Highway 377 and Travis Road in Roanoke,
Texas described in Exhibit 1.7 hereto, in accordance with the terms
and conditions set forth in the Lease attached hereto and
incorporated herein as Exhibit 1.7.
1.8 Employment Agreement. Effective as of the Closing,
Purchaser and each of the persons listed in Exhibit 1.8 (the
"Employees") shall enter into Employment Agreements, the form of
which is attached as Exhibit 1.8(b)(1) hereto. Additionally, Brian
Perryman, effective as of the closing, shall enter into an
Employment Agreement, the form of which is attached hereto as
Exhibit 1.8(b)(2), which agreement provides for an annual salary of
$125,000.00, employment for a two year period as the general
manager of the business being acquired by API ACQUISITION CORP. and
for such employee benefits as are generally offered to other
management employees.
1.9 Instruments of Transfer; Further Assurances. In order to
consummate the transactions contemplated hereby, the following
documents shall be delivered:
(a) At the Closing, Seller shall deliver to Purchaser
(i) a Bill of Sale in the form attached as Exhibit
1.9(a) hereto, and (ii) all documentation
reasonable required by Purchaser to effect the name
change by Seller of its corporate name to a new
name bearing no resemblance to its present name.
(b) At the Closing, Seller and Purchaser shall deliver
to each other (i) an Assignment and Assumption
Agreement in the form attached as Exhibit 1.9(b)(i)
hereto, and (ii) a Lease in the form attached as
Exhibit 1.9(b)(ii) hereto for each property to be
leased by Purchaser in accordance with Section 1.7
hereof.
(c) At the Closing, Purchaser and each of the Employees
shall deliver to each other the Employment
Agreements contemplated by Section 1.8 hereof.
(d) At the Closing, Purchaser shall deliver to Seller
the Total Purchase Price as contemplated by Section
1.4.
(e) At the Closing and at all times thereafter as may be
necessary, Seller shall execute and deliver to
Purchaser such other instruments of transfer as
shall be reasonably necessary or appropriate to
vest in Purchaser good and indefeasible title to
the Assets and to comply with the purposes and
intent of this Agreement. At the Closing and at
all times thereafter as may be necessary, Purchaser
shall execute and deliver to Seller such other
instruments as shall be reasonably necessary or
appropriate to evidence the assumption by Purchaser
of the Assumed Liabilities.
1.10 Work in Process. Purchaser and Seller shall allocate
profit resulting from any orders that are uncompleted but partially
performed as of the date of closing in accordance with the
following procedure. At the time of Closing, all open work orders
will be closed and re-opened with an agreed upon suffix to enable
the parties hereto to distinguish work performed on such orders
following closing from that performed on such orders prior to
closing. Following completion of the job represented by such work
order (which shall mean receipt of final payment and conclusion of
all work effort) the percent complete as of the date and time of
Closing will be calculated based on actual material costs, actual
labor costs determined by applying an hourly rate of twenty-six
dollars and twenty-six cents ($26.26) per hour for each man hour
incurred, actual subcontracting costs, and actual vendor costs.
The profit will be allocated in accordance with percentage of
completion prior to and subsequent to Closing. All warranty work
required to be performed on orders open, as of the date of Closing,
will be shared on a percentage of completion ratio by allocating
costs incurred in such warranty work in the same manner profit was
allocated.
ARTICLE II
----------
Purchaser's Representations and Warranties
Purchaser represents and warrants that the following are true
and correct as of this date and will be true and correct through
the Closing Date as if made on that date:
2.1 Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing
under the laws of the State of its incorporation, with all
requisite power and authority to carry on the business in which it
is engaged, to own the properties it owns, to execute and deliver
this Agreement, and to consummate the transactions contemplated
hereby.
2.2 Authorization and Validity. The execution, delivery and
performance of this Agreement and any other agreements contemplated
hereby by Purchaser, and the consummation of the transaction
contemplated hereby and thereby have been duly authorized by
Purchaser. This Agreement and any other agreement contemplated
hereby have been or will be prior to Closing duly executed and
delivered by Purchaser and constitute or will constitute legal,
valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms.
ARTICLE III
-----------
Representations and Warranties of Seller and Shareholders
Seller and each Shareholder, jointly and severally represent
and warrant that the following are true and correct as of this
date and will be true and correct through the Closing Date as if
made on that date:
3.1 Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the
laws of its State of incorporation, with all requisite power and
authority to carry on the business in which it is engaged and to
won the properties it owns. Seller is duly qualified and licensed
to do business and is in good standing in all jurisdictions where
the nature of its business makes such qualification necessary.
3.2 Subsidiaries. Seller has no subsidiaries nor does it
control any corporation or business entities.
3.3 Corporate Records. The copies of the Articles of
Incorporation and all amendments thereto and the Bylaws of Seller
that have been delivered to Purchaser are true, correct and
complete copies thereof. The minute books of Seller, copies of
which have been delivered to Purchaser, contain accurate minutes of
all meetings of and accurate consents to all actions taken without
meetings by the Board of Directors (and any committee thereof) and
the Shareholders of Seller since the formation of Seller.
3.4 Authorization and Validity. The execution, delivery and
performance of this Agreement and any other agreements contemplated
hereby by Seller and Shareholders, and the consummation of the
transactions contemplated hereby and thereby, have been duly
authorized by Seller. This Agreement and any other agreement
contemplated hereby have been or will be duly executed and
delivered by Seller and Shareholders and constitute or will
constitute legal, valid and binding obligations of Seller and
Shareholders, enforceable against each of them in accordance with
their respective terms.
3.5 Financial Statements. Seller has furnished to Purchaser,
Seller's balance sheet and related statements of income, retained
earnings and changes in financial position for the 12-month periods
ended December 31, 1997 and December 31, 1998 and the year to date
period ended December 31, 1999, including the notes thereto
(collectively, the "Financial Statements"). The Financial
Statements are true, correct and complete and fairly reflect the
financial condition and results of operations of Seller as of the
dates and for the periods indicated and have been prepared in
conformity with generally accepted accounting principles applied on
a consistent basis with prior periods.
3.6 Liabilities and Obligations. Except as set forth in
Exhibit 3.6 hereto, the Financial Statements reflect all
liabilities of Seller, accrued, contingent or otherwise (known or
unknown and asserted or unasserted), arising out of transactions
effected or events occurring on or prior to the date hereof. All
reserves shown in the Financial Statements are appropriate and
reasonable and sufficient to provide for losses thereby
contemplated. Except as set forth in the Financial Statements,
Seller is not liable upon or with respect to, or obligated in any
other way to provide funds in respect of or to guarantee or assume
in any manner, any debt, obligation, or dividend of any person,
corporation, association, partnership, joint venture, trust or
other entity, and Seller and Shareholders know of no basis for the
assertion of any other claims or liabilities of any nature or in
any amount
3.7 Employee Benefit Plans and ERISA. Except as listed in
Exhibit 3.7 hereto, Seller does not maintain or sponsor or make and
is not required to make contributions to any pension, profit-
sharing, stock bonus, stock option, thrift or other retirement
plan, medical, hospitalization, vision, dental, life, disability,
vacation or other insurance or benefit plan, employee stock
ownership plan, deferred compensation, stock ownership, stock
purchase, performance share, bonus, benefit or other incentive
plan, severance plan or other similar plan, agreement, arrangement
or understanding relating to Seller or its employees (the
"Employee Benefit Plans"), whether or not such plan is or is
intended to be qualified under Section 401(a), 404A or any other
section of the Internal Revenue Code (the "Code"), including
without limitation all which constitute employee benefit plans
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) ("ERISA"), whether or not
subject to the provisions of ERISA. Except as set forth in Exhibit
3.7, each Employee Benefit Plan maintained or sponsored by Seller
or to which it makes or is required to make employer contributions
(collectively, the "Plans") is in full force and effect in
accordance with its terms and, each Plans has been administered in
accordance with its terms and is, and each plan administrator and
fiduciary of each Plan is, in compliance with all applicable
requirements of ERISA and other applicable laws, regulations and
rulings. The only Plans which are "pension benefit plans" (within
the meaning of Section 3(2) of ERISA), other than any such plans
which are described in Section 401(a)(1) of ERISA, maintained or
sponsored by Seller or to which it makes or is required to make
employer contributions, are identified on Exhibit 3.7 as such (the
"Pension Benefit Plans"). To the best of the knowledge of Seller
and Shareholders, no Pension Benefit Plan or any trust created
under one of the Pension Benefit Plans or any trustee,
administrator or sponsor thereof, has engaged in a "prohibited
transaction" as that term is defined in Section 4975(c)(1) of the
Code, which could subject the Pension Benefit Plan, trust, trustee,
administrator or sponsor thereof, or any party dealing with the
Pension Benefit Plan or any such trust to the tax or penalty on
prohibited transactions imposed by said Section 4975, nor to the
best of the knowledge of Seller is the fiduciary (as defined in
Section 3 of ERISA) of the Pension Benefit Plan or any employee
benefit plan (as defined in Section 3 of ERISA) maintained by
Seller acting in a manner which constitutes a breach of its
fiduciary duty, as set forth in Section 401, et seq, of ERISA.
Except as set forth in Exhibit 3.7, the Pension Benefit Plans have
not been terminated, nor have contributions thereto been
discontinued, nor have there been any "reportable events", as that
term is defined in Section 4043 of ERISA, since the effective date
of Section 4043 of ERISA. The Pension Benefit Plans have not
incurred any "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA (whether or not waived), since the
effective date of Section 302 of ERISA, or prior thereto, and all
contributions required to be made have been made. Prior to the
Closing Date, all Plans shall be terminated and the participation
of employees of Seller therein will cease. Purchaser is not
assuming and will not assume, any responsibility for, or liability
under, any bonus, incentive, profit sharing, pension, retirement,
deferred compensation or other employee welfare plan or program or
employee benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA") covering any
employee of Seller. Seller has no existing defined benefit
pension plans covering its employees. None of the Pension Benefit
Plans identified on Exhibit 3.7 are multi-employer plans as defined
in Section 3(37) of ERISA. To the best of the knowledge of Seller,
all appropriate administrative actions and required compliance with
appropriate Internal Revenue Service and Department of Labor rules
and regulations have been taken or are in process in a timely
manner. No contributions pursuant to the Pension Benefit Plans
have been made in such amounts as would violate Section 404 of the
Code so as to disqualify the accompanying trust. Seller has in
force sufficient bonding for every fiduciary who is required to be
bonded with respect to the Pension Benefit Plans pursuant to
Section 412 of ERISA. There does not exist any pending or, to the
best of the knowledge of Seller and Shareholders, threatened
litigation against any fiduciary of any Pension Benefit Plan, nor
has any bonding company been called on to defend any such
fiduciary. A true and complete copy of each existing Plan has been
furnished to Purchaser along with the most recent favorable
determination letter issued by the Internal Revenue Service with
respect thereto and the two most recent annual reports (on Form
5500 series) required to be filed with respect thereto.
3.8 Absence of Certain Changes. Except as set forth in
Exhibit 3.8 hereto, since December 31, 1998, Seller has not (a)
suffered any adverse change in its financial condition, assets,
liabilities or business; (b) contracted for or paid any capital
expenditures in excess of $10,000.00; (c) incurred any
indebtedness for borrowed money, issued or sold any debt securities
or discharged any liabilities or obligations; (d) mortgaged,
pledged or subjected to any lien, lease, security interest or other
charge or encumbrance any of their properties or assets; (e) paid
any amount on any indebtedness prior to the due date, forgiven or
cancelled any debts or claims or released or waived any rights or
claims; (f) suffered any damage or destruction to or loss of any
assets (whether or not covered by insurance) that could or does
materially and adversely affect its business; (g) acquired or
disposed of any assets or incurred any liabilities or obligations,
except the sale of inventory in the ordinary course of business;
(h) written up or written down the carrying value of any of its
assets; (i) changed the costing system or depreciation methods of
accounting for its assets; (j) waived any material rights or
forgiven any material claims; (k) lost or terminated employees,
customers or suppliers that could or does materially and adversely
affect its business or assets; (l) deleted; (m) made any payments to or
loaned any money to its affiliates; (n) formed or acquired or disposed of
any interest in any corporation, partnership, joint venture or other entity;
(o) redeemed, purchased, or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital
stock or securities or any rights to acquire such capital stock or
securities, or agreed to change terms and conditions of any such
rights; (p) entered into any employment, compensation, consulting
or collective bargaining agreement with any person or group, or
modified or amended the terms of any such existing agreement; (q)
entered into, adopted or amended any Employee Benefit Plan; or (r)
entered into any other commitment or transaction or experienced any
other event that is material to this Agreement or to any of the
other agreement and documents executed or to be executed pursuant
to this Agreement or to the transactions contemplated hereby or
thereby, or that has affected, or may affect, Seller's business,
operations, assets, liabilities or financial condition.
3.9 Title; Leased Assets.
(a) Except as described in Exhibit 3.9 hereto, Seller
owns its assets, and its real and personal property
leaseholds, free and clear of all liens, claims and
encumbrances.
Such assets and leaseholds are the only ones
necessary for the conduct of Seller's business.
Upon consummation of the transaction contemplated
hereby, Purchaser shall receive good, valid and
marketable title to the Assets, and will be
entitled to use as lessee all leased assets used in
Seller's business, free and clear of all liens,
claims and encumbrances.
(b) Except for those assets acquired since October 1,
1999, all tangible properties and assets material
to the present operations of Seller are reflected
in the Financial Statements and the notes thereto
in a manner and to the extent required by generally
accepted accounting principles. Seller owns or
leases or otherwise possesses a transferable right
to use all assets legally required to conduct, or
used in the conduct of, its business as conducted
immediately before the date of this Agreement.
3.10 Commitments.
(a) Except as set forth in Exhibit 3.10 or any other
exhibit hereto, Seller has not entered into nor are
its assets or business bound by, whether or not in
writing, any (i) partnership or joint venture
agreement; (ii) deed of trust or other security
agreement; (iii) guaranty or suretyship,
indemnification or contribution agreement or
performance bond; (iv) employment, consulting or
compensation agreement or arrangement, including
the election or retention in office of any director
or officer; (v) labor or collective bargaining
agreement; (vi) debt instrument, loan agreement or
other obligation relating to indebtedness for
borrowed money or money lent to another; (vii) deed
or other document evidencing an interest in or
contract to purchase or sell real property; (viii)
agreement with dealers or sales or commission
agents, public relations or advertising agencies,
accountants or attorneys; (ix) lease of real or
personal property, whether as lessor, lessee,
sublessor or sublessee; (x) agreement relating to
any matter or transaction in which an interest is
held by a person or entity which is an affiliate of
seller; (xi) other than in the ordinary course of
business, any agreement for the acquisition of
services, supplies, equipment or other personal
property involving more than $10,000.00 in the
aggregate; (xii) powers of attorney; (xiii)
contracts containing noncompetition covenants;
(xiv) agreement relating to any material matter or
transaction in which an interest is held by a
person or entity which is an "affiliate" of Seller
as that term is defined in Rule 144(a)(i) of the
Securities and Exchange Commission under the
Securities Act of 1922, or any "associate" of any
such affiliate as that term is defined in
Regulation 14A of the general rules and regulations
under the Securities Exchange Act of 1934; (xv) any
other contract or arrangement that involves either
an unperformed commitment in excess of $10,000.00
or that terminates more than one year from the date
hereof; or (xvi) any other agreement or commitment
not made in the ordinary course of business or that
is material to the business or financial condition
of Seller (all of the foregoing are hereinafter
collectively referred to as the "Commitments").
True, correct and complete copies of the written
Commitments, and true, correct and complete written
descriptions of the oral Commitments, have
heretofore been delivered to Purchaser. There are
no existing defaults, events of default or events,
occurrences or acts that, with the giving of notice
or lapse of time or both, would constitute defaults
by Seller, and no penalties have been incurred nor
are amendments pending, with respect to the
Commitments, except as described in Exhibit 3.10 or
any other exhibit hereto. The Commitments are in
full force and effect and are valid and enforceable
obligations of Seller in accordance with their
terms, and no defenses, off-sets or counterclaims
have been asserted or, to the best of the knowledge
of Seller and Shareholders, may be made by any
party thereto, nor has Seller waived any rights
thereunder, except as described in Exhibit 3.10 or
any other exhibit hereto. Seller is not party to,
and none of its assets are subject to or otherwise
affected by, any agreement or instrument, or any
charter or other restriction, or any judgment,
order, writ, injunction, decree, rule or
regulation, that could or does materially adversely
affects its assets or business.
(b) Except as contemplated herein, neither Seller nor
Shareholders have received notice of any plan or
intention of any other party to any Commitment to
exercise any right to cancel or terminate any
Commitment or agreement, and neither Seller nor
Shareholders know of any fact that would justify
the exercise of such right. Neither Seller nor
Shareholders do currently contemplate, or have
reason to believe any other person or entity
currently contemplates any amendment or change to
any Commitment. Except as listed in Exhibit 3.10,
none of the customers or suppliers of Seller has
refused, or communicated that it will or may refuse
to purchase or supply goods or services, as the
case may be, or has communicated that it will or
may substantially reduce the amounts of goods or
services that it is willing to purchase from, or
sell to, Seller.
(c) Seller's entering this Agreement does not constitute
a breach on any contracts, arrangements, or
agreements into which Seller may have entered in
relation to the business.
3.11 Insurance. All the insurable properties of Seller are
insured for its benefit under valid and enforceable policies,
issued by insurers of recognized responsibility in amounts and
against such risks and losses as is customary in Seller's industry.
True, complete and correct copies of all such policies have been
provided to Purchaser prior to the date hereof.
3.12 Patents, Trademarks and Copyrights. Seller owns all
patents, trademarks and copyrights, if any, necessary to conduct
its business, or possesses licenses or other rights, if any
therefore, without conflict with the rights of others. Set forth
in Exhibit 3.12 hereto is a true and correct description of the
following ("Proprietary Rights"):
(a) All trademarks, trade names, service marks and other
trade designations, including common law rights,
registrations and applications therefor, and all
patents, copyrights and applications currently
owned, in whole or in part, by Seller, and all
licenses, royalties, assignments and other similar
agreements relating to the foregoing to which
Seller is a party (including expiration dates if
applicable); and
(b) All agreements relating to technology, know-how or
processes that Seller is licensed or authorized to
use by others, or which it licenses or authorizes
others to use.
(c) All jointly owned Supplemental Type Certificates
("STCs") and all information developed in
conjunction with the applications for STCs
(d) Seller has the sole and exclusive right to use the
Proprietary Rights identified in Exhibit 3.12
without infringing or violating the rights of any
third parties. No consent of third parties will be
required for the use thereof by Purchaser upon
consummation of the transactions contemplated by
this Agreement. No claim has been asserted by any
person to the ownership of or right to use any
Proprietary Right or challenging or questioning the
validity or effectiveness of any such license or
agreement, and neither Seller nor Shareholders do
know of any valid basis for any such claim. Each
of the Proprietary Rights is valid and subsisting,
has not been cancelled, abandoned or otherwise
terminated and, if applicable, has been duly issued
or filed.
(e) Seller and Shareholders have no knowledge of any
claim that, or inquiry as to whether, any product,
activity or operation of Seller infringes upon or
involves, or has resulted in the infringement of,
any Proprietary Right of any other person,
corporation or other entity; and no proceedings
have been instituted, are pending or are threatened
which challenge the rights of Seller with respect
thereto. Seller has not given and is not bound by
any agreement of indemnification for any
Proprietary Right as to any property manufactured,
used or sold by Seller.
3.13 No Violation. Neither the execution and performance of
this Agreement nor the agreement contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby
will (a) result in a violation or breach of the Articles of
Incorporation or Bylaws of Seller or any agreement or other
instrument under which Seller is bound or to which any of the
assets of Seller or of Shareholders are subject, or result in the
creation or imposition of any lien, charge or encumbrance upon any
of such assets, or (b) violate any applicable law or regulation or
any judgment or order of any court or governmental agency. Seller
has complied with all applicable laws, regulations and licensing
requirements, and has filed with the proper authorities all
necessary statements and reports. Seller possesses all necessary
licenses, franchises, permits and governmental authorizations to
conduct its business.
3.14 Taxes.
(a) Seller has duly and timely filed all income, excise,
corporate, franchise, property, sales, payroll,
withholding and other tax returns and reports
required to be filed by it as of the date hereof by
the United States of America or any state or any
political subdivision thereof and has paid or
established adequate reserves for all taxes
(including penalties and interest) which have or
may become due pursuant to such returns and any
assessments which have been received by it or
otherwise. All such tax returns or reports fairly
reflect the taxes of seller for the periods covered
thereby. Seller is not delinquent in the payment
of any tax, assessment or governmental charge,
there is no tax deficiency or delinquency asserted
against Seller and there is no delinquency in the
payment of any of the taxes of Seller that could be
asserted by any taxing authority, nor of any
violation of any federal, state, local or foreign
tax law. No Internal Revenue Service audit of
Seller is pending or threatened, and the results of
any completed audits are properly reflected in the
Financial Statements. Seller has not granted any
extension to any taxing authority of the limitation
period during which any tax liability may be
asserted. Seller has committed no violation of any
federal, state, local or foreign tax laws. All
monies required to be withheld by Seller from
employees or collected from customers for income
taxes, social security and unemployment insurance
taxes and sales, excise and use taxes, and the
portion of any such taxes to be paid by Seller to
governmental agencies, have been collected or
withheld and either paid to the respective
governmental agencies or set aside in accounts for
such purpose, or such monies have been approved,
reserved against and entered upon the books of
Seller.
(b) The liabilities (including deferred taxes) shown in
the Financial Statements and to be accrued on the
books and records of Seller through the Closing
Date for taxes, interest and penalties are and will
be adequate accruals with respect to income from
operations, including any extraordinary items, of
Seller for all periods commencing after January 1,
1999, and ending on the Closing Date, and have been
and will be accrued in a manner consistent with the
practices utilized for accruing tax liabilities in
the tax year ended December 31, 1998, and take or
will take into account net operating losses,
investment credits and other carryovers for period
ended prior to December 31, 1997.
(c) Seller has been a Subchapter "S" corporation since its
inception.
3.15 Consents. No authorization, consent, approval, permit or
license of, or filing with, any governmental or public body or
authority, any lender or lessor or any other person or entity is
required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement or the
agreements contemplated hereby on the part of Seller or
Shareholders.
3.16 Labor Relations. Seller has not experienced and is not
experiencing, nor do Seller or Shareholders know of any reason to
expect, any labor troubles or strikes, work stoppages, slow-downs
or other material interference with or impairment of the business
of Seller by labor, nor has Seller committed any unfair labor
practice. Seller is not experiencing, nor do Seller or
Shareholders know of, any current or contemplated union
organization efforts or negotiations, or requests for negotiations,
for any representation or any labor contract relating to the
employees of Seller.
3.17 Compliance with Laws. There are no existing violations
by Seller of any applicable federal, state or local law or
regulation that could materially affect the property or business of
Seller.
3.18 Finder's Fee. Seller and Shareholders have not incurred
any obligation for any finder's, broker's or agent's fee in
connection with the transactions contemplated hereby except as
disclosed on Exhibit 3.18, and Seller and Shareholders agree to
indemnify, defend and hold harmless Purchaser of and from any and
all obligations, suits, losses, costs and expenses (including court
costs and attorney's fees), liabilities, claims, demands, actions
and judgments of every kind and character, known and unknown,
relating to any such agreement listed on Exhibit 3.18.
3.19 Litigation. Except as described in Exhibit 3.19, neither
Seller nor Shareholders have had any legal action or administrative
proceeding or investigation instituted or threatened against or
affecting, or that could affect any of the assets or business of
Seller. Seller and Shareholders are not (a) subject to any
continuing court or administrative order, writ, injunction or
decree applicable specifically to Seller or to its business,
assets, operations or employees, or (b) in default with respect to
any such order, writ, injunction or decree. Seller and
Shareholders know of no basis for any such action, proceeding or
investigation.
3.20 Employees and Consultants. Set forth in Exhibit 3.20
hereto is a complete and accurate list of all employees of Seller
as of November 15, 1999, together with their positions and their
annual salaries and other compensation, including accruals for
vacations through November 15, 1999. Seller has not granted or
become obligated to grant any increases in the wages or salary of,
or paid or become obligated to pay any bonus or made or become
obligated to make any similar payment to or grant any benefit to or
on behalf of, any officer, employee or agent. Seller has no direct
or indirect, express or implied, obligation to pay severance or
termination pay to any officer or employee of Seller, or to pay any
amounts to any consultant, agent or similar person or entity.
Seller and Shareholders have no knowledge of any facts which would
indicate that any employee of Seller will not accept employment
with Purchaser on a basis no less favorable than that upon which
such employee is currently employed by Seller.
3.21 Accuracy of Information Furnished. All information
furnished to Purchaser by Seller or Shareholders herein or in any
exhibit hereto is true, correct and complete in all material
respects. Such information states all material facts required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements are made,
true, correct and complete.
3.22 Condition of Fixed Assets. All of the fixed assets owned
or leased by Seller are in good condition and repair for their
intended use in the ordinary course of business and conform in all
material respect with all applicable ordinances, regulations and
other laws and there are no known latent defects therein.
3.23 Inventory. All inventory of Seller is in good, current,
standard and merchantable condition and is not obsolete or
defective.
3.24 Books of Account. The books of account of Seller have
been kept accurately in the ordinary course of its business, the
transactions entered therein represent bona fide transactions and
the revenue, expenses, assets and liabilities of Seller have been
properly recorded in such books.
3.25 Corporate Name. There are no actions, suits or
proceedings pending, or to the best of the knowledge of Seller or
Shareholders threatened, against or affecting Seller which may
result in any impairment of the right of Seller to use its
corporate name. The use of the corporate name of Seller does not
infringe the rights of any third party nor is it confusingly
similar with the corporate name of any third party. After the
Closing Date, no person or business entity other than Purchaser
will be authorized, directly or indirectly, to use the corporate
name of Seller, or any name confusingly similar thereto. At
Closing, the corporate names "The Upholstery Shop, Inc." and
"Metroplex Aviation , Inc." shall cease to exist.
3.26 Backlog. The backlog set forth in Exhibit 3.26
represents Seller's internal records of backlog of unfilled firm
orders for products manufactured or sold by Seller as of January
15, 2000, the date hereof, which orders are not cancelable by the
Purchaser.
3.27 Customers. Set forth in Exhibit 3.27(a) hereto is a
complete and accurate list of the top 20 customers in terms of
sales of Seller, together with pricing and annual and monthly sales
records relating to such customers from January 1, 1996, through
November 15, 1999. Attached hereto as Exhibit 3.29(b) is a
complete and accurate list of all customers of Seller as of
November 15, 1999.
3.28 Pricing. Attached hereto as Exhibit 3.28 is a complete
and accurate list of Seller's standard prices and any applicable
discounts by customer name.
3.29 Foreign Corrupt Practices Act. Since the inception of
Seller, there have been no violations of the Foreign Corrupt
Practices Act by Seller or any of its agents.
3.30 Investments in Competitors. None of the Shareholders owns
directly or indirectly any interest or has any investment in any
corporation, business or other person which is a competitor or
potential competitor of, or which otherwise directly or indirectly
does business with, Seller or any of its Subsidiaries.
3.31 Product Warranties. There is no known claim against or
liability of Seller on account of product warranties or with
respect to the manufacture, sale or rental of defective products,
and there is no basis for any such claim on account of defective
products heretofore manufactured, sold or rented which is not fully
covered by insurance.
3.32 Estimated Earnings. There are no facts, circumstances or
conditions known to Seller or any Shareholders which would lead
Seller or any Shareholders to believe that the net income, after
all taxes thereon, of Seller for the fiscal years ending December
31, 1999, and 2000 will be less than $376,000.00 and $415,000.00,
respectively.
3.33 Environmental Matters. The Upholstery Shop, Inc. has not
been and is not currently in violation of or liable under any
Environmental Law (as hereinafter defined) with respect to any
properties presently or previously owned or operated by The
Upholstery Shop, Inc. or with respect to any operations conducted
by The Upholstery Shop, Inc. There are no actions, suits or
proceedings, or demands, claims, notices or investigations
(including notices, demand letters or requests for information from
any environmental agency) instituted, pending or threatened
relating to the violation of any Environmental Law in respect of
any properties presently or previously owned or operated by The
Upholstery Shop, Inc. in any operations conducted by The Upholstery
Shop, Inc. "Environmental Law" means any federal, state or local
law, statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree,
injunction or agreement with any Governmental Entity relating to
(i) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
ground water, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), and/or (ii)
the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of
any substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, whether by type or by quantity, including any material
containing any such substance as a component; and includes, without
limitation, the Resource Conservation Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response,
Compensation and Liability Act.
3.34 Known or Knowledge. The term known or knowledge means
the knowledge that Seller actually has in relation to or otherwise
in respect of , the fact, circumstance or other matter then being
referred to; and the knowledge such Seller would have if Seller
would have conducted a due inquiry in relation to, or otherwise in
respect of, the fact, circumstance or other matter then being
referred to.
ARTICLE IV
----------
Purchaser's Covenants
---------------------
4.1 Consummation of Agreement. Purchaser agrees to use its
best efforts to cause the consummation of the transactions
contemplated by this Agreement in accordance with their terms and
conditions.
4.2 Retention of Records. Purchaser shall retain all books
and records of Seller which Purchaser receives from Seller for the
entire period required by the Internal Revenue Service, the
Department of Labor, or other authorities or agencies for which
Seller is required to retain records. After the Closing, Seller
and its representatives shall have reasonable access to all such
books and records during normal business hours. In addition,
Purchaser shall, upon reasonable request of Seller, furnish to
Seller, without charge, copies of any such books or records.
ARTICLE V
---------
Seller's and Shareholders's Covenants
-------------------------------------
Seller and Shareholders, jointly and severally, agree that on
or prior to the Closing:
5.1 Business Operations. Seller shall operate its business
only in the ordinary course, will not introduce any new method of
management or operation and Seller and Shareholders shall use their
best efforts to preserve the business of Seller intact, to retain
its present customers and suppliers so that they will be available
to Purchaser after the Closing and to cause consummation of the
transactions contemplated by this Agreement in accordance with its
terms and conditions. Seller and Shareholders shall not take any
action that might impair the business or assets of Seller without
the prior consent of Purchaser or take or fail to take any action
that would cause or permit the representations made in Article III
hereof to be inaccurate at the time of Closing or preclude Seller
and Shareholders from making such representations and warranties at
the Closing.
5.2 Access. Seller and Shareholders shall permit Purchaser
and its authorized representatives full access to, and make
available for inspection, all of the assets and business of Seller,
including Seller's employees, customers and suppliers, and furnish
Purchaser all documents, records and information with respect to
the affairs of Seller as Purchaser and its representatives may
reasonably request, all for the sole purpose of permitting
Purchaser to become familiar with the business and assets and
liabilities of Seller.
5.3 Material Change. Prior to the Closing, Seller and
Shareholders shall promptly inform Purchaser in writing of any
material adverse change in the condition of the business of Seller.
Notwithstanding the disclosure to Purchaser of any such material
adverse change, Seller and Shareholders shall not be relieved of
any liability for, nor shall the providing of such information by
Seller and Shareholders to Purchaser be deemed a waiver by
Purchaser of, the breach of any representation or warranty of
Seller and Shareholders contained in this Agreement.
5.4 Approvals of Third Parties. As soon as practicable after
the execution of this Agreement, but in any event prior to the
Closing Date, Seller and Shareholders will secure all necessary
approvals and consents of third parties to the consummation of the
transactions contemplated by this Agreement.
5.5 Hiring Employees. Seller and Shareholders will cooperate
with all requests made by Purchaser for the purpose of allowing
Purchaser to hire those employees of Seller designated by
Purchaser, such employment to be effective as of the closing Date.
5.6 Employee Compensation. Except with Purchaser's prior
written consent, no increase will be made in the compensation or
rate of compensation payable or to become payable to the officers
or employees of Seller, and no bonus, profit sharing, retirement,
insurance, death, fringe benefit or other extraordinary or indirect
compensation shall accrue, be set aside or be paid to, for or on
behalf of any of such officers or employees other than as required
by presently existing pension, profit sharing, bonus and similar
benefit plans as presently constituted, and no agreement or plan
other than those now in effect shall be adopted or committed for.
5.7 Contracts. Except with Purchaser's prior written
consent, Seller shall not waive any right or cancel any contract,
debt or claim nor will it assume or enter into any contract, lease,
license, obligation, indebtedness, commitment, purchase or sale
involving more than $1,000.00 each, other than in the ordinary
course of business.
5.8 Capital Assets; Payments of Liabilities. Except with
Purchaser's prior written consent, and except for the purchase of
the assets of " Metroplex Aviation, Inc.", Seller will not
acquire or dispose of any capital asset having an initial cost of
$1,000.00 or more, nor will Seller discharge or satisfy any lien or
encumbrance or pay or perform any obligation or liability other
than (i) liabilities and obligations reflected in the Financial
Statements, and (ii) current liabilities and obligations incurred
in the usual and ordinary course of business since October 1, 1999,
and, in either such case only as required by the express terms of
the agreement or other instrument pursuant to which the obligation
or liability was incurred.
5.9 Mortgages, Liens. Except with Purchaser's prior written
consent, Seller will not enter into or assume any mortgage, pledge,
conditional sale or other title retention agreement, permit any
lien, encumbrance or claim of any kind to attach to any of its
assets, whether now owned or hereafter acquired or guarantee or
otherwise become contingently liable for any stock or dividends of
any corporation, business or other person or obligations of another
except obligations arising by reason of endorsement for collection
and other similar transactions in the usual and ordinary course of
business, or make any capital contributions or investments in any
corporation, business or other person.
5.10 Changes in Inventory. Seller will not alter the physical
contents or character of any of its inventories so as to affect the
nature of its business or result in a change in the total dollar
valuation thereof.
5.11 No Disclosures or Negotiations with Others. Seller and
Shareholders will prevent the disclosure of any of the terms or
conditions hereof to any other person, other than to its, legal
counsel and accountants, and so long as this Agreement shall remain
effective, Seller will not negotiate with any other person with
respect to the sale of the business of Seller.
ARTICLE VI
----------
Purchaser's Conditions Precedent
--------------------------------
Except as may be waived in writing by Purchaser, the
obligations of Purchaser hereunder are subject to the fulfillment
at or prior to the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of Seller and Shareholders contained herein shall be
true and correct as of the Closing, and Purchaser shall not have
discovered any material error, misstatement or omission therein.
6.2 Covenants. Seller and Shareholders shall have performed
and complied with all covenants or conditions required by this
Agreement to be performed and complied with by them prior to the
Closing.
6.3 Opinion. Counsel to Seller and Shareholders shall have
delivered to Purchaser its opinion, dated the Closing Date, in form
and substance satisfactory to Purchaser, to the effect that (a)
Seller is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation and has
duly qualified to do business and is in good standing in the states
listed in Exhibit 3.1 hereto, (b) Seller and Shareholders have full
corporate power and authority to execute and perform this Agreement
and the other agreement contemplated hereby, (c) this Agreement and
the other agreements contemplated hereby have been duly authorized
by all necessary corporate action on the part of Seller, and have
been duly executed and delivered by Seller and Shareholders and
constitute legal, valid and binding obligations of Seller and
Shareholders, enforceable in accordance with their respective
terms, (d) immediately prior to the Closing, the authorized, issued
and outstanding capital stock of Seller was as set forth in Exhibit
6.3(d), (e) except as disclosed in the exhibits hereto, there is no
action, suit or proceeding at law or in equity or by or before any
governmental instrumentality or other agency now pending,
threatened against or affecting the Assets or Seller's business,
(f) except as disclosed in the exhibits hereto, Seller and
Shareholders are not in default with respect to any judgment, writ,
injunction or decree of any court or governmental instrumentality
or agency or in the performance, observance or fulfillment of any
material obligation, covenant or agreement by which it is bound,
(g) there is no suit, action or other proceeding which is pending
before any court or governmental instrumentality or agency in which
it is sought to restrain or prohibit or to obtain damages or other
relief in connection with this Agreement or the consummation of the
transactions contemplated hereby, (h) immediately prior to the
Closing, Seller had good and marketable title to the Assets, free
and clear of all liens, claims and encumbrances except as disclosed
in this Agreement or the exhibits hereto, (i) neither the execution
and performance of this Agreement nor the consummation of the
transactions contemplated hereby will conflict with, or result in
a breach of the terms, conditions and provisions of, or constitute
a default under, the Articles of Incorporation or Bylaws of Seller,
or any agreement, indenture or other instrument under which Seller
or Shareholders are bound or to which any of the assets of Seller
or Shareholders are subject, or result in the creation or
imposition of any lien, charge or encumbrance upon any such assets,
and (j) no approval of or filing with any federal, state or local
court, authority or administrative agency is necessary to authorize
the execution of this Agreement or the consummation of the
transactions contemplated by this Agreement.
6.4 Proceedings. No action, proceeding or order by any court
or governmental body or agency shall have been threatened in
writing, asserted, instituted or entered to restrain or prohibit
the carrying out of the transactions contemplated by this
Agreement.
6.5 No Material Adverse Change. No material, adverse change
in the assets, business operations or financial condition of Seller
shall have occurred after the date hereof and prior to the Closing.
6.6 Accountant's Comfort Letter. Purchaser shall have been
furnished with a letter from its Accountant, independent certified
public accountants of Seller, dated the date of Closing and in form
and substance satisfactory to Purchaser, to the effect that the
latest available unaudited financial statement of Seller and
inquiries of certain officials of Seller responsible for financial
and accounting matters as to transactions and events did not cause
them to believe that (i) such latest available unaudited financial
statements are not fairly presented in accordance with generally
accepted accounting principles applied on a basis consistent with
that followed in the Financial Statements, (ii) at a specified date
not more than five business days prior to the date of such letter,
there was any change in Seller's long-term debt or any decrease in
the net assets of Seller as compared with the respective amounts
shown in their balance sheets at the date of such latest available
unaudited financial statement, or (iii) for the period from the
date of such latest available unaudited financial statements to a
specified date not more than five business days prior to the date
of such letter there was not a decrease, as compared with the
corresponding period in the preceding fiscal year, in Seller's net
sales, earnings before provisions for taxes on income, or net
income over the amounts in the corresponding period of the
preceding fiscal year.
6.7 Due Diligence. Purchaser, at its sole discretion, shall
be satisfied with the result of its business, financial, and legal
due diligence performed in accordance with this Agreement.
6.8 Integration of Metroplex Aviation, Inc. Purchaser shall
be satisfied with the integration of the business presently
conducted by Metroplex Aviation, Inc., into the business of Seller
in a form and manner acceptable to Purchaser.
6.9 Employment Contracts. Purchaser shall have been
furnished with executed employment contracts with the following
employees of Seller: Brian E. Perryman, Kurt A. Cessac, and Ronald
H. Bracy. Copies of such employment contracts are attached hereto
as Exhibit 1.8(b)(1) and Exhibit 1.8(b) (2).
ARTICLE VII
-----------
Seller's and Shareholder's Conditions Precedent
-----------------------------------------------
Except as may be waived in writing by Seller and Shareholders,
the obligations of Seller and Shareholders hereunder are subject to
fulfillment at or prior to the Closing of each of the following
conditions:
7.1 Representations and Warranties. The representations and
warranties of Purchaser contained herein shall be true and correct
as of the Closing, subject to any changes contemplated by this
Agreement, and Seller and Shareholders shall not have discovered
any material error, misstatement or omission therein.
7.2 Covenants. Purchaser shall have performed and complied
in all material respects with all covenants or conditions required
by this Agreement to be performed and complied with by it prior to
the Closing.
7.3 Opinion. Counsel to Purchaser shall have delivered to
Seller and Shareholders its opinion, dated the Closing Date, in
form and substance reasonably satisfactory to counsel for Seller
and Shareholders, to the effect that (a) Purchaser is a corporation
duly organized, validly existing and in good standing under the
laws of the state of its incorporation, (b) Purchaser has full
corporate power and authority to execute and perform this
Agreement, and (c) this Agreement, and the other agreements
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser, and have been duly
executed and delivered by Purchaser and constitute legal, valid and
binding obligations of Purchaser enforceable in accordance with
their respective terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights
generally or the availability of equitable remedies.
7.4 Proceedings. No action, proceeding or order by any court
or governmental body or agency shall have been threatened in
writing, asserted, instituted or entered to restrain or prohibit
the carrying out of the transactions contemplated by this
Agreement.
ARTICLE VIII
------------
Indemnification
---------------
8.1 Seller's and Shareholder's Indemnity. Subject to the
terms and conditions of this Article VIII, Seller and Shareholders,
jointly and severally, hereby agree to indemnify, defend and hold
Purchaser and its officers, directors, agents, attorneys and
affiliates harmless from and against all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs,
damages, reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against or incurred by Purchaser by reason
of or resulting from:
(a) A breach by Seller or Shareholders of any
representation, warranty or covenant contained
herein or in any agreement executed pursuant
hereto;
(b) Any product liability or breach of warranty claims
relating to products sold by Seller, and all
general liability claims arising out of or relating
to occurrences of any nature relating to Seller's
business prior to the Closing, whether any such
claims are asserted prior to or after the Closing;
(c) Any obligation or liability under or related to any
Employee Benefit Plans or the termination thereof;
or
(d) Any tax filing or return or payment made, or
position taken, by Seller which any governmental
authority challenges and which results in an
assertion of Damages against Purchaser.
8.2 Purchaser's Indemnity. Subject to the terms and
conditions of this Article VIII, Purchaser hereby agrees to
indemnify, defend and hold Seller and Shareholders and his or its
offices, directors, agents, attorneys and affiliates harmless from
and against all Damages asserted against or incurred by any or all
of Seller and Shareholders by reason of or resulting from:
(a) A breach by Purchaser of any representation,
warranty or covenant contained herein or in any
agreement executed pursuant hereto; or
(b) The failure of Purchaser to pay, perform and
discharge when due any Assumed Liabilities.
8.3 Conditions of Indemnification. The respective
obligations and liabilities of Seller and Shareholders and
Purchaser (the "indemnifying party") to the other (the "party to
be indemnified") under Section 8.1 and 8.2 hereof with respect to
claims resulting from the assertion of liability by third parties
shall be subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be
required to avoid prejudicing the indemnifying
party's position) after receipt of notice of
commencement of any action evidenced by service of
process or other legal pleading, or with reasonable
promptness after the assertion in writing of any
claim by a third party, the party to be indemnified
shall give the indemnifying party written notice
thereof together with a copy of such claim, process
or other legal pleading, and the indemnifying party
shall have the right to undertake the defense
thereof by representatives of its own choosing and
at its own expense; provided, however, that the
party to be indemnified may participate in the
defense with counsel of its own choice and at its
own expense.
(b) In the event that the indemnifying party, by the
30th day after receipt of notice of any such claim
(or, if earlier, by the 10th day preceding the day
on which an answer or other pleading must be served
in order to prevent judgment by default in favor of
the person asserting such claim), does not elect to
defend against such claim, the party to be
indemnified will (upon further notice to the
indemnifying party) have the right to undertake the
defense, compromise or settlement of such
indemnifying party and at the indemnifying party's
expense, subject to the right of the indemnifying
party to assume the defense of such claims at any
time prior to settlement, compromise or final
determination thereof.
(c) Anything in this Section 8.3 to the contrary
notwithstanding, the indemnifying party shall not
settle any claim without the consent of the party
to be indemnified unless such settlement involves
only the payment of money and the claimant provides
to the party to be indemnified a release from all
liability in respect of such claim. If the
settlement of the claim involves more than the
payment of money, the indemnifying party shall not
settle the claim without the prior consent of the
party to be indemnified, which consent shall not be
unreasonably withheld.
(d) The party to be indemnified and the indemnifying
party will each cooperate with all reasonable
requests of the other.
(e) The obligations to indemnify provided for herein
shall survive closing.
8.4 Remedies Not Exclusive. The remedies provided in this
Article VIII shall not be exclusive of any other rights or remedies
available by one party against the other, either at law or in
equity.
ARTICLE IX
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Miscellaneous
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9.1 Accounts Receivable. After the Closing, Purchaser shall
cooperate and make its employees available to assist Seller in the
normal manner in the collection of Seller's accounts receivable
existing as of the Closing Date. Purchaser shall be paid a fee for
its services equal to 2% of all of Seller's accounts receivable
collected by Purchaser, which fee may be deducted from such
collection. Seller and Shareholders agree not to use any methods
of collection which could reasonably be expected to adversely
affect Purchaser's business relationships with Seller's account
debtors, and they shall use their best efforts to prevent any third
parties acting on their behalf from acting in a manner inconsistent
with this Section.
9.2 Customer Claims. If any products or services sold by
Seller prior to the Closing are returned to Purchaser, or the
purchase price paid by the customer therefor is deducted from money
owed by the customer to Purchaser, Seller shall be liable to and
reimburse Purchaser promptly after Purchaser's request in an amount
equal to 100% of the purchase price charged by Seller to the
customer for such returned products, plus all Freight Charges.
9.3 Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by the party
against which enforcement of the amendment, modification or
supplement is sought.
9.4 Assignment. Neither this Agreement nor any right created
hereby shall be assignable by either party hereto, except by
Purchaser to a wholly-owned subsidiary of Purchaser.
9.5 Notice. Any notice or communication must be in writing
and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by
delivering the same in person. Such notice shall be deemed
received on the date on which it is hand-delivered or otherwise on
the third business day following the date on which it is so mailed.
For purposes of notice, the addresses of the parties shall be:
If to Seller or Brian E. Perryman
Shareholders: 365 Canyon Oaks
Argyle , Texas 76226
with a copy to: Kelly Jones
Jones & Cannon
440 North Center Street
Arlington, Texas 76011
If to Purchaser: William D. Poulin
Antenna Products, Inc.
101 S.E. 25th Ave.
Mineral Wells, Tx. 76067
with a copy to: Gary Havener
405 West Loop 820 South, Suite 100
Fort Worth, Tx. 76108
with a copy to: Gary S. Kessler
Kessler & Collins
5950 Sherry Ln., Suite 222
Dallas, Tx. 75225
Any party may change its address for notice by written notice given
to the other parties.
9.6 Confidentiality. The parties agree that prior to closing
of the proposed transaction they shall keep this Agreement and
their negotiations in strict and total confidence, including
without limitation obligating the parties to require this strict
degree of confidentiality from their respective advisors.
Purchaser reserves the right to disclose certain information to
prospective lending sources on a limited basis provided these
lending sources are required to adhere to similar standards of
confidentiality. Any party may make such disclosures after the
Closing as it reasonably considers are required by law, but each
party will notify the other parties in advance of any such
disclosure. In the event that the transactions contemplated by
this Agreement are not consummated for any reason whatsoever, the
parties hereto agree not to disclose or use any confidential
information they may have concerning the affairs of the other
parties, except for information which is required by law to be
disclosed. Confidential information includes, but is not limited
to: customer lists and files, prices and costs, business and
financial records, surveys, reports, plans, proposals, financial
information, information relating to personnel contracts, stock
ownership, liabilities and litigation. Should the transactions
contemplated hereby not be consummated, nothing contained in this
Section shall be construed to prohibit the parties hereto from
operating a business in competition with each other.
9.7 Entire Agreement. This agreement and the exhibits hereto
supersede all prior agreements and understanding relating to the
subject matter hereof, except that the obligations of any party
under any agreement executed pursuant to this Agreement shall not
be affected by this Section.
9.8 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto
shall bear its own costs and expenses (including attorneys' fees),
except that each party hereto agrees to pay the costs and expenses,
including reasonable attorneys' fees, incurred by the other parties
in successfully (a) enforcing any of the terms of this Agreement,
or (b) proving that the other parties breached any of the terms of
this Agreement.
9.9 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future
laws effective during the term hereof, such provision shall be
fully severable and this Agreement shall be construed and enforced
as if such illegal, invalid or unenforceable provision never
comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part
of this Agreement, a provision as similar in its terms to such
illegal, invalid or unenforceable provision as may be possible and
be legal, valid and enforceable.
9.10 Specific Performance. Seller and Shareholders
acknowledge that a refusal by Seller and Shareholders to consummate
the transactions contemplated hereby, or a breach by Seller or
Shareholders of the provisions of Section 9.16 below, will cause
irrevocable harm to Purchaser, for which there may be no adequate
remedy at law and for which the ascertainment of damages would be
difficult. Therefore, Purchaser shall be entitled, in addition to,
and without having to prove the inadequacy of, other remedies at
law, to specific performance of this Agreement, as well as
injunctive relief (without being required to post bond or other
security).
9.11 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants contained herein
shall survive the Closing through September 1, 2001 and all
statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of Seller and Shareholders or
Purchaser pursuant to this Agreement shall be deemed to have been
representations and warranties by Seller and Shareholders or
Purchaser, as the case may be, and shall survive the Closing and
any investigation made by any party hereto or on its behalf.
9.12 Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed, construed and
enforced in accordance with the laws of the State of Texas. The
parties agree that any litigation relating directly or indirectly
to this Agreement must be brought before and determined by a court
of competent jurisdiction within the State of Texas, and the
obligations of the parties shall be deemed performable in Tarrant
County, Texas.
9.13 Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect any of the terms or provisions hereof.
9.14 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
9.15 Taxes. Seller shall be liable for and shall indemnify
Purchaser against all sales, use or other taxes resulting from the
transactions contemplated hereby.
9.16 Confidentiality Provisions.
(a) Nondisclosure. Seller and Shareholders have had
access to and become familiar with various trade
secrets consisting of, but not limited to,
financial statements, processes, computer programs,
compilations of information, records, sales
procedures, customer requirements, pricing
techniques, customer lists, methods of doing
business and other confidential information
(collectively referred to as the "Trade Secrets"),
which have been used in the operation of Seller's
business. After the Closing Date, Seller and
Shareholders shall not use in any way or disclose
any of the Trade Secrets, directly or indirectly.
All files, records, documents, information, data
and similar items relating to the business of
Seller shall remain the exclusive property of
Purchasers.
(b) Noncompetition. From and after the Closing Date,
Seller and Shareholders shall not, directly or
indirectly, in any capacity, within the United
States or its territories, (i) invest or engage in
any business that is competitive with that of
Purchaser, (ii) accept employment with or render
services to a competitor of Purchaser as a
director, officer, agent, employee or consultant,
or (iii) contact, solicit or attempt to solicit or
accept business (1) from any of the customers of
Seller or Purchaser as of the Closing Date, or (2)
from any person or entity whose business Seller or
Purchaser were soliciting as of such time, pursuant
to the Noncompetition Agreement attached hereto and
incorporated herein as Exhibit 9.16.
(c) Nonemployment. From and after the Closing Date,
Seller and Shareholders shall not, on their own
behalf or on behalf of any other person,
partnership, association, corporation or other
entity, hire or solicit or in any manner attempt to
influence or induce any employee employed by Seller
or Purchaser prior to the Closing Date to leave the
employment of Purchaser, nor use or disclose to any
person, partnership, association, corporation or
other entity any information concerning the names
and addresses of such employees, pursuant to the
Noncompetition Agreement attached hereto and
incorporated herein as Exhibit 9.16.
(d) Severability. In addition to the provisions of
Section 9.9 hereof, Seller and Shareholders agree
that the agreements set forth in this Section 9.16
each constitute separate agreements independently
supported by good and adequate consideration and
shall be severable from the other provisions of,
and shall survive, this Agreement. The existence
of any claim or cause of action of Seller against
Purchaser, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the
enforcement by Purchaser of the covenants and
agreements of Seller or Shareholders contained in
this Section 9.16.
(e) Acknowledgments. Seller and Shareholders
acknowledge and recognize that the enforcement of
the provisions of this Section 9.16 is necessary to
ensure the preservation and continuity of the
business and good will of Seller purchased by
Purchaser pursuant hereto. Seller further agrees
that due to the nature of such business, the
noncompetition restrictions set forth in this
Section 9.16 are reasonable as to time and
geographic area.
ARTICLE X
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Escrow
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10.1 General. To secure all obligations of Seller, the
parties hereto mutually agree that One Hundred Thousand
($100,000.00) of the Purchase Price shall be held in escrow
pursuant to Paragraph 10.2 in the form of a Certificate of Deposit,
pursuant to the terms of this Article X. The interest on the
Certificate of Deposit shall be credited to Seller.
10.2 Term and Escrow Agent. The escrow funds shall be held
through September 1, 2001. The Purchaser's law firm, Kessler &
Collins, A Professional Corporation, c/o Gary S. Kessler
(hereinafter "Escrow Agent"), shall be the escrow agent. The
escrow funds shall be held by the Escrow Agent pursuant to the
terms of the Escrow Agreement attached hereto as Exhibit 10.2,
which shall be signed by Purchaser, Seller, and Escrow Agent. The
Purchaser shall pay any fee due that Escrow Agent for holding the
funds in escrow. If any claim arises against the escrow fund, the
Escrow Agent, in his sole discretion and without incurring any
liability, may retain the escrow fund and act pursuant to the
Escrow Agreement.
10.3 Seller's Certificate. Prior to delivery of the balance
of the escrow funds to Seller, and as a condition precedent
thereto, Seller shall be required to provide Purchaser and Escrow
Agent a certificate, in the form and substance as set forth on
Exhibit 10.3.
10.4 Escrow Does Not Limit Seller's Liability. Nothing
contained herein shall be deemed to limit any liability of Seller
to the amount held in escrow pursuant to this Article VIII.
PURCHASER
---------
API ACQUISITION CORP.
s/o/f By: Gary W. Havener
President
SELLER
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The Upholstery Shop, Inc.
s/o/f By: Brian Perryman
President
SHAREHOLDERS
------------
s/o/f By: Brian Perryman
s/o/f By: Pamela Perryman
