================================================================================
ASSET PURCHASE AGREEMENT
By and Among
STELLEX PRECISION MACHINING, INC.
as Purchaser
and
PRECISION MACHINING, INC.,
BK METALS, INC.,
XXXXX XXXX XXXXXXXX
and
THE XXXXX XXXX XXXXXXXX TRUST
as Sellers
Dated April 22, 1999
================================================================================
TABLE OF CONTENTS Page
ARTICLE 1 DEFINITIONS ................................................... 1
ARTICLE 2 BUSINESS AND ASSETS BEING SOLD ................................ 12
2.1 Purchase and Sale of Assets .................................... 12
2.2 Excluded Assets ................................................ 14
ARTICLE 3 PURCHASE PRICE AND PAYMENT TERMS .............................. 14
3.1 Purchase of the Assets by Purchaser; Total Purchase Price ...... 14
3.2 Payment of Purchase Price ...................................... 14
3.3 Purchase Price Adjustment ...................................... 16
3.4 Allocation of Purchase Price ................................... 18
3.5 Escrow Agreement and Escrow Amount ............................. 19
3.6 Taxes .......................................................... 19
ARTICLE 4 ASSUMPTION OF LIABILITIES ..................................... 20
4.1 Assumed Liabilities ............................................ 20
4.2 Excluded Liabilities ........................................... 21
4.3 Contested Obligations .......................................... 23
ARTICLE 5 THE CLOSING ................................................... 24
5.1 Closing Date ................................................... 24
5.2 Relinquishment of Control ...................................... 24
5.3 Closing Date Deliveries......................................... 24
5.4 Further Assurances ............................................. 24
ARTICLE 6 CERTAIN COVENANTS ............................................. 25
6.1 Access to Books and Records and Personnel ...................... 25
6.2 Post-Closing Access ............................................ 25
6.3 Notice of Certain Events ....................................... 25
6.4 Conduct of Business by the Sellers ............................. 26
6.5 HSR Act Filing; Regulatory Matters ............................. 29
6.6 Updated Financial Information .................................. 30
6.7 Transaction Proposals .......................................... 31
6.8 Customers and Suppliers ........................................ 31
6.9 Backlog ........................................................ 31
6.10 Arrangements with Employees .................................... 31
6.11 Transfer of Licenses and Permits ............................... 32
6.12 Purchaser's Licenses and Permits ............................... 32
6.13 Transfer of Certain Contracts .................................. 32
i
6.14 COBRA .......................................................... 32
6.15 Sellers Representative Agreement ............................... 32
6.16 Provisions Respecting Government Contracts ..................... 33
ARTICLE 7 ADDITIONAL CONTINUING COVENANTS ............................... 34
7.1 Noncompetition ................................................. 34
7.2 Nondisclosure of Proprietary Data .............................. 36
7.3 Refund Claims and Warranty Claims .............................. 36
7.4 Satisfaction of Warranty and Refund Claims ..................... 37
7.5 Change Orders .................................................. 37
ARTICLE 8 REPRESENTATIONS AND WARRANTIES OF THE SELLERS ................. 37
8.1 Organization and Standing of the Sellers ....................... 37
8.2 Authorization and Binding Obligation of the Sellers ............ 38
8.3 Non-Contravention .............................................. 38
8.4 Ability to Perform Obligations ................................. 38
8.5 Financial Statements; Changes; Contingencies ................... 39
8.6 The Assets ..................................................... 40
8.7 Accounts Receivable ............................................ 40
8.8 Inventory ...................................................... 40
8.9 Intangible Personal Property ................................... 41
8.10 Kansas Facility ................................................ 42
8.11 Tangible Personal Property ..................................... 43
8.12 Necessary Properties ........................................... 44
8.13 Insurance ...................................................... 44
8.14 Accounts Payable ............................................... 44
8.15 Tax Matters .................................................... 44
8.16 Litigation ..................................................... 46
8.17 Labor Relations ................................................ 47
8.18 Employee Benefits .............................................. 47
8.19 Governmental Approvals; Compliance with Laws ................... 48
8.20 Customer Lists ................................................. 48
8.21 Environmental Matters .......................................... 49
8.22 Suppliers ...................................................... 51
8.23 Brokers, Finders ............................................... 51
8.24 Material Contracts ............................................. 51
8.25 Customer Warranties ............................................ 53
8.26 Products Liability ............................................. 53
8.27 Federal Reserve Board Regulations .............................. 54
8.28 Restrictions on Transfer of Assets ............................. 54
8.29 Consents and Governmental Approvals ............................ 54
ii
8.30 Government Contracts ........................................... 55
8.31 Clearances ..................................................... 57
8.32 Disclosure; Due Diligence ...................................... 57
ARTICLE 9 REPRESENTATIONS AND WARRANTIES OF PURCHASER .................. 57
9.1 Organization and Standing of Purchaser ........................ 57
9.2 Authorization and Binding Obligation of Purchaser ............. 57
9.3 Ability to Perform Obligations ................................ 57
9.4 Brokers, Finders .............................................. 57
9.5 Non-Contravention ............................................. 58
9.6 Litigation .................................................... 58
9.7 Plant Closings and Mass Layoffs ............................... 58
ARTICLE 10 TERMINATION .................................................. 59
10.1 Termination of Agreement ...................................... 59
10.2 Effect of Termination ......................................... 59
10.3 Expenses ...................................................... 60
ARTICLE 11 EMPLOYMENT MATTERS ........................................... 60
11.1 Employees ..................................................... 60
11.2 Termination of the Profit Sharing Plan ........................ 61
11.3 Consulting and Non-Competition Agreement ...................... 61
ARTICLE 12 CLOSING CONDITIONS OF PURCHASER .............................. 61
12.1 Representations, Warranties and Covenants of the Sellers ...... 61
12.2 Deliveries to Be Made by Each Seller at the Closing ........... 62
12.3 Third Party Consents .......................................... 63
12.4 Absence of Investigations and Proceedings ..................... 63
12.5 Governmental Approvals ........................................ 63
12.6 Absence of Certain Changes .................................... 63
12.7 Financing ..................................................... 63
12.8 Lease ......................................................... 63
12.9 Consulting Agreement .......................................... 64
12.10 Release of Liens .............................................. 64
12.11 IRB Termination ............................................... 64
12.12 Guaranty by Xxxxxxxx .......................................... 64
12.13 Sellers Representative Agreement ............................. 64
12.14 Escrow Agreement .............................................. 64
12.15 Audit ......................................................... 64
12.16 Working Capital Components and Inventory Levels ............... 64
12.17 Retention of Key Employees .................................... 64
iii
ARTICLE 13 CLOSING CONDITIONS OF SELLERS .................................. 65
13.1 Representations, Warranties and Covenants of Purchaser ........... 65
13.2 Deliveries to be Made by Purchaser at the Closing ................ 65
13.3 HSR Act .......................................................... 66
13.4 Consulting Agreement ............................................. 66
13.5 Escrow Agreement ................................................. 66
13.6 Stock Option Plan ................................................ 66
13.7 Lease ............................................................ 66
ARTICLE 14 INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
AND WARRANTIES ................................................... 67
14.1 Indemnification by the Sellers ................................... 67
14.2 Indemnification by Purchaser ..................................... 67
14.3 Cooperation ...................................................... 68
14.4 Limitations on Indemnification ................................... 68
14.5 Notice to Indemnifying Party ..................................... 68
14.6 Defense by Indemnifying Party .................................... 69
14.7 Indemnity Escrow Arrangement ..................................... 70
14.8 Offset ........................................................... 71
14.9 Survival of Representations and Warranties ....................... 71
14.10 Survival of Representations and Covenants of Purchaser ........... 72
ARTICLE 15 CONFIDENTIALITY ................................................ 72
15.1 Confidentiality of the Sellers ................................... 72
15.2 Confidentiality of Purchaser ..................................... 73
ARTICLE 16 MISCELLANEOUS .................................................. 74
16.1 Change Corporate Name ............................................ 74
16.2 Expenses ......................................................... 74
16.3 Notices and Other Communications ................................. 74
16.4 Counterparts ..................................................... 74
16.5 Written Agreement to Govern ...................................... 74
16.6 Assignability .................................................... 75
16.7 No Waiver of Rights .............................................. 75
16.8 Subject Headings ................................................. 75
16.9 Further Assurances ............................................... 75
16.10 Schedules and Exhibits ........................................... 75
16.11 Severability ..................................................... 75
16.12 Publicity and Reports ............................................ 76
16.13 Parties in Interest; Joint and Several Liability of the Sellers .. 76
iv
16.14 Specific Performance ............................................. 76
16.15 GOVERNING LAW; CONSENT TO JURISDICTION ........................... 76
v
SCHEDULES AND EXHIBITS
--------------------------------------------------------------------------------
Schedule 1.1 Cash Equivalents
Schedule 1.2 Permitted Encumbrances
Schedule 2.2 Excluded Assets
Schedule 6.4 Compensation
Schedule 8.3 Non-Contravention
Schedule 8.8 Inventory
Schedule 8.9 Intangible Personal Property
Schedule 8.11 Tangible Personal Property
Schedule 8.13 Insurance
Schedule 8.15 Tax Matters
Schedule 8.16 Litigation
Schedule 8.17 Labor Relations
Schedule 8.18 Employee Benefits; ERISA
Schedule 8.19 Governmental Approvals
Schedule 8.20 Customer Lists
Schedule 8.21 Environmental Matters
Schedule 8.21.4 Environmental Permits
Schedule 8.21.8 Disposal Facilities
Schedule 8.21.9 Environmental Reports
Schedule 8.24 Material Contracts
Schedule 8.25 Customer Warranties and Return Policies
Schedule 8.26 Products Liability and Occurrences
Schedule 8.29 Consents and Governmental Approvals
Schedule 8.30 Government Contracts
Schedule 16.3 Notice Addresses
--------------------------------------------------------------------------------
Exhibit A Form of Escrow Agreement
Exhibit B Form of Stock Option Plan; Option Grants
Exhibit C Form of Assignment and Assumption Agreement
Exhibit D Form of Sellers Representative Agreement
Exhibit E Form of Consulting Agreement
Exhibit F Form of Opinion of Sellers' Counsel
Exhibit G-1 Form of Affidavit of Non-Foreign Status (Entity)
Exhibit G-2 Form of Affidavit of Non-Foreign Status (Individual)
Exhibit H Form of Xxxxxxxx Guaranty
Exhibit I Form of Opinion of Purchaser's Counsel
--------------------------------------------------------------------------------
vi
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made this 22nd day
of April, 1999, by and between STELLEX PRECISION MACHINING, INC., a Delaware
corporation ("Purchaser"), and PRECISION MACHINING, INC., a Kansas corporation
("PMI"), BK METALS, INC., a Kansas corporation ("BK Metals"), XXXXX XXXX
XXXXXXXX ("Xxxxxxxx") and THE XXXXX XXXX XXXXXXXX TRUST (the "Trust"), a
revocable trust organized under the laws of the State of Kansas (each is
individually referred to herein as a "Seller" and are collectively referred to
herein as the "Sellers").
RECITALS
1. The Sellers are engaged in or own assets relating to the design,
development, manufacture and sale of aerospace structural parts, including,
without limitation, wing skins, spars, landing gear components, bulkheads,
window frames, wing components and other parts used in the manufacture of
commercial, military or private aircraft (the "Business").
2. Purchaser wishes to purchase and the Sellers wish to sell all of
their respective assets related to the Business.
NOW, THEREFORE, in consideration of and subject to the mutual
undertakings and agreements hereinafter set forth, Purchaser and each Seller
agree as follows:
ARTICLE 1
DEFINITIONS
"Additional Accounting Firm" shall have the meaning set forth in
Section 3.3.3.
"Additional Accounting Report" shall have the meaning set forth in
Section 3.3.3.
"Adjustment Amount" shall mean the excess of the Interim Net Asset
Value over the Closing Date Net Asset Value. In the event that the Interim Net
Asset Value is less than the Closing Date Net Asset Value, the Adjustment Amount
shall be zero.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, directly or indirectly controlled by, or
under direct or indirect
1
common control with, such first Person; or if such Person is a partnership, any
general partner of such Person or a Person controlling any such general partner.
For purposes of this definition, "control" (including "controlled by" and "under
common control with") shall mean the power, directly or indirectly, to direct or
cause the direction of the management and policies of such Person whether
through the ownership of voting securities or by contract or otherwise.
"Agreed Adjustments" shall have the meaning set forth in Section 3.3.2.
"Agreed Rate" shall mean, as of the date of any payment of interest to
be made by reference thereto, the "prime rate" listed on such date in the Wall
Street Journal as the base rate on corporate loans posted by at least 75% of the
nation's thirty (30) largest banks, or, if that rate is no longer established or
published, a comparable interest rate.
"Agreement" shall mean this Asset Purchase Agreement, as the same may
be amended or otherwise modified from time to time in accordance with its terms.
"Assets" shall have the meaning set forth in Section 2.1.
" Associate" of a Person shall mean: (i) a corporation or organization
(other than PMI, BK Metals or any other party to this Agreement) of which such
Person is an officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities; (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar capacity; and (iii) any relative
or spouse of such Person or any relative of such spouse.
"Assumed Liabilities" shall have the meaning set forth in Section 4.1.
"Audit Report" shall have the meaning set forth in Section 3.3.1.
"Audited Adjustment Amount" shall have the meaning set forth in Section
3.3.1.
"Audited Balance Sheet" shall mean the audited consolidated balance
sheet of the Business as of September 30, 1998 included in the Seller Financial
Statements.
"BK Metals" shall have the meaning set forth in the preamble to this
Agreement.
2
"Balance Sheet Date" shall mean September 30, 1998.
"Base Purchase Price" shall have the meaning set forth in Section 3.1.
"Best Efforts" shall mean the reasonable commercial efforts that a
person desirous of achieving a result would use in similar circumstances to
insure that such result is achieved as reasonably expeditiously as possible.
"Business" shall have the meaning set forth in the Recitals hereto.
"Cash Equivalents" shall mean funds contained as of the Closing in the
demand deposit accounts, savings accounts and time deposit accounts of the
Business described on Schedule 1.1.
"Cessna Citation Jet" shall mean a Cessna Citation Jet, Model Number
525, Serial Number 253.
"Closing" shall have the meaning set forth in Section 5.1.
"Closing Date" shall have the meaning set forth in Section 5.1.
"Closing Date Balance Sheet" shall have the meaning set forth in
Section 3.2.1.
"Closing Date Net Asset Value" shall mean the book value of the Assets
(excluding any value attributable to intangibles that are not reflected on the
Audited Balance Sheet and excluding any accrual for prospective property taxes
payable in connection with the termination of the IRBs) minus the book value of
the Assumed Liabilities, in each case as determined in accordance with GAAP in a
manner consistent with the practices, policies, procedures, methodologies and
conventions used by the Independent Accountants in their audit of the Seller
Financial Statements referred to in Section 8.5.1.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Company" shall mean PMI and BK Metals, collectively.
"Company Documents" shall mean this Agreement and all other agreements,
instruments, certificates and other documents to be delivered by any Seller, the
Sellers or the Representative in connection with this Agreement.
3
"Confidentiality Agreement" shall have the meaning set forth in Section
15.2.
"Consulting Agreement" shall have the meaning set forth in Section
11.3.
"Contracts" shall mean all contracts, agreements, enforceable
commitments and understandings of each Seller that relate to the conduct or
operation of the Business whether oral or written, including, but not limited
to, purchase, sale or other commitments, Customer Contracts, distributorship,
franchise or similar agreements, patent or trademark licensing agreements
(either as licensor or licensee), lease or sublease agreements (either as lessor
or lessee), equipment leases, employment agreements (including, but not limited
to, agreements entered into by employees of a Seller relating to the transfer
and/or safeguarding of intellectual property rights), consulting agreements and
union or collective bargaining agreements, guarantees, loan agreements,
non-competition agreements, severance agreements, letters of credit, joint
venture or partnership agreements and supply or requirements contracts.
"Credit Agreement" shall mean the Credit Agreement dated as of May 1,
1998, by and among NationsBank, N.A., the Trust, and PMI, and Xxxxxxxx and BK
Metals, as amended on May 1, 1998, July 1, 1998 and July 27, 1998.
" Customer Contracts" shall mean all agreements, purchase orders, sales
confirmations or similar commitments entered into by any Seller, which provide
for obligations to deliver Products, the rights to be paid for those Products
and the obligations and rights that are ancillary to those obligations and
rights.
"Customer Lists" shall mean all lists (including name, and to the
extent known to any Seller, current address and telephone number) of Persons
which have purchased Products from the Business since January 1, 1996.
"Dollars" or "$" shall mean United States dollars.
"Encumbrance" in respect of any property or assets, shall mean any
encumbrance or title defect of whatever kind or nature, regardless of form,
whether or not registered or registrable and whether or not consensual or
arising by Law, including any lien, mortgage, charge, pledge, security interest,
assignment, lease, option, easement, servitude, right-of-way, conditional sales
contract, encroachment, restrictive covenant, right of first refusal, right of
use or any other right or claim of any kind or nature whatsoever (or any
agreement to grant or furnish any of the foregoing) which affects ownership or
possession of, or title to, or any interest in, or the right to use or occupy
such property or assets.
4
"Environmental Law" shall mean any federal, state or local law, rule,
regulation, order, treaty, statute or permit of or issued by any governmental
authority, as amended from time to time, relating to the protection of human
health, safety, the environment, natural resources and wildlife, including, but
not limited to those relating to (i) the protection or use of surface water,
groundwater, rivers and other bodies of water; (ii) the protection of ambient
air quality; (iii) the management, manufacture, possession, presence, use,
generation, transportation, distribution, treatment, storage, disposal, release,
threatened release, abatement, removal, remediation of, or exposure to, any
Hazardous Substance; or (iv) the prevention, mitigation, or remediation of
environmental pollution in any form.
"Environmental Liabilities" shall include any and all Liabilities and
Costs of any kind imposed or incurred by, under, or pursuant to Environmental
Laws, including without limitation those related to compliance, remediation,
removal, response, restoration, mitigation, abatement, investigation, testing,
monitoring, personal injury and property damage.
"Environmental Permits" shall mean the permits and authorizations
required under applicable Environmental Laws to conduct the Business.
"Environmental Reports" shall have the meaning set forth in Section
8.21.9.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as the Sellers, (ii) partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with the Sellers, or (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
the Sellers, any corporation described in clause (i) above or any partnership or
trade or business described in clause (ii) above.
"Escrow Agent" shall mean the escrow agent set forth in the Escrow
Agreement.
"Escrow Agreement" shall mean the Escrow Agreement described in Section
3.5 to be entered into by Purchaser, the Representative, and the Escrow Agent,
substantially in the form of Exhibit A hereto.
"Escrow Amount" shall mean $6,000,000, which shall be deposited with
the Escrow Agent pursuant to Section 3.2.
5
"Escrow Fund" shall mean the Escrow Amount and all interest and
earnings thereon.
"Escrow Step Down Date" shall have the meaning set forth in Section
14.7.3.
"Escrow Termination Date" shall have the meaning set forth in Section
14.7.4.
"Estimated Adjustment Amount" shall have the meaning set forth in
Section 3.2.1.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 4.2.
"Final Audited Adjustment Amount" shall have the meaning set forth in
Section 3.3.3.
"GAAP" shall mean United States generally accepted accounting
principles.
"Goodwill" shall have the meaning set forth in Section 2.1.
"Government Bid" shall have the meaning set forth in Section 8.30.1.
"Government Contract" means any prime contract, subcontract, teaming
agreement or arrangement, joint venture, basic ordering agreement, letter
contract, purchase order, delivery order, Government Bid, change order, or other
contractual commitment of any kind relating to the Business including, but not
limited to, any Contract between any Seller and (i) any Governmental Authority,
(ii) any prime contractor of any Governmental Authority, or (iii) any
subcontractor with respect to any contract described in clauses (i) or (ii)
above.
"Governmental Approval" shall mean any authorization, certificate,
consent, approval, waiver, exception, variance, franchise, permission, permit,
exception, filing, publication, declaration, notice, license, right or other
form of required permission from, of or with any Governmental Authority, and
shall include, without limitation, each environmental and operating permit and
license that is required for the ownership, current use and operation of any
facility owned or leased by the Sellers, or the conduct by the Sellers of the
Business.
"Governmental Authority" shall mean any federal, state, regional,
municipal, or local government, or other political subdivision thereof, U.S. or
foreign, or any
6
entity, authority, agency, court, representative or person exercising executive,
legislative, judicial, regulatory or administrative functions on behalf of such
governmental entity or structure.
"Ground Lease" shall mean (i) the Ground Lease dated October 2, 1967,
by and between the Port Authority of the City of Wellington, Kansas and PMI, as
amended on July 22, 1981, (ii) the Airport Ground Lease dated October 25, 1984,
by and between the Port Authority of the City of Wellington, Kansas and PMI
and/or (iii) the Airport Ground Lease dated April 1, 1999, by and between the
Port Authority of the City of Wellington, Kansas and PMI, which supersedes (i)
and (ii) above.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as the same has been and may hereafter be amended from time to time.
"Hazardous Substance" shall mean all substances, wastes, pollutants,
contaminants and materials regulated, or defined or designated as hazardous,
dangerous, or toxic, pursuant to any applicable Environmental Law or any other
law, rule, regulation, order, decree, or ordinance having the force of law, of
any Governmental Authority, including, without limitation, all hazardous
substances, oils, pollutants or contaminants as such terms are defined in the
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
Section 300.5.
"Indemnifiable Claim" shall mean any Loss for or against which any
party is entitled to indemnification under this Agreement.
"Indemnified Party" shall have the meaning set forth in Section 14.5.
"Indemnifying Party" shall have the meaning set forth in Section 14.5.
"Independent Accountants" shall have the meaning set forth in Section
3.3.1.
" Intangible Personal Property" shall have the meaning set forth in
Section 2.1.5.
"Interim Net Asset Value" shall mean (i) $26,280,857, plus (ii) capital
expenditures made by the Sellers with respect to the Business from October 1,
1998 through the Closing Date, minus (iii) depreciation expense incurred by the
Sellers with respect to the Assets from October 1, 1998 through the Closing
Date, determined in accordance with GAAP applied on a consistent basis with the
Seller Financial Statements.
7
"Inventory" shall mean all inventories, including, without limitation,
inventories of raw materials, scrap metal, work in progress, materials,
supplies, finished goods and consigned goods, relating to the Business, whether
located on the premises of the Business, in transit to or from such premises, in
storage facilities or otherwise, other than those, if any, which constitute
Excluded Assets or relate exclusively to the Excluded Assets.
"IRB" shall mean the $7,000,000 Taxable Industrial Revenue Bonds,
Series 1998 (Precision Machining, Inc. Project), issued pursuant to the Trust
Indenture, dated as of July 1, 1998, between Xxxxxx County, Kansas, as issuer,
and The Southwest National Bank of Wichita, Wichita, Kansas, as trustee,
together with all guarantees, leases and other documents and instruments entered
into or delivered in connection therewith.
"IRB Lease" shall mean (i) the Lease Agreement dated as of July 1,
1998, by and between Xxxxxx County, Kansas and the Trust and (ii) the Sublease
Agreement dated as of August 3, 1998, by and between the Trust and PMI,
collectively.
"IRS" shall mean the Internal Revenue Service.
"Kansas Facility" shall mean (i) 000 X. Xxxx Xxxx, Xxxxxxxxxx, Xxxxxx
and (ii) 000 X. Xxxx Xxxx, Xxxxxxxxxx, Xxxxxx.
"Knowledge of the Sellers" shall mean the actual knowledge of Xxxxx
Xxxx Xxxxxxxx, Xxxxx Xxxx Xxxxxxxx, Xxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxx or
Xxxx Xxxxx.
"Labor Agreements" shall mean, collectively, (i) all employment
agreements, collective bargaining agreements or other labor agreements to which
any Seller is a party or by which it or any of its properties is bound; (ii) all
pension, profit sharing, deferred compensation, bonus, stock option, stock
purchase, savings, retainer, consulting, retirement, welfare or incentive plans
or contracts (including ERISA Plans) to which any Seller is a party or by which
it or any of its properties is bound; and (iii) all plans or agreements under
which "fringe benefits" (including, but not limited to, hospitalization plans or
programs, medical insurance, vacation plans or programs, sick plans or programs
and related benefits) are afforded to any employees of a Seller; in each case,
other than those, if any, which constitute Excluded Assets or relate exclusively
to employees who are employed with respect to the Excluded Assets.
"Law" or "Laws" shall mean all constitutions, treaties, laws, statutes,
codes, regulations, rules, ordinances or other binding actions or requirements
of any Governmental Authority, whether domestic, foreign or international.
8
"Liabilities and Costs" shall mean all indebtedness, claims,
liabilities, obligations, responsibilities, losses, diminutions in value,
damages, judgments, personal injury, death, punitive damages, economic damages,
treble damages, intentional, willful or wanton injury, damage or threat to the
environment, natural resources or public health or welfare, costs and expenses
(including, without limitation, reasonable out-of-pocket attorney, expert,
engineering and consulting fees and costs and any fees and costs associated with
any investigation, feasibility, or remedial action studies), fines, penalties
and monetary sanctions, and interest, whether accrued, absolute or contingent,
and whether or not of a kind required by GAAP to be set forth on a financial
statement or in notes thereto.
"Licenses and Permits" shall have the meaning set forth in Section
2.1.8.
"Loss" or "Losses" shall mean all damages, awards, judgments, payments,
diminutions in value and other liabilities, however suffered or characterized,
all interest thereon, all out-of-pocket costs and expenses of investigating any
claim, lawsuit or arbitration and any appeal therefrom, all actual out-of-pocket
attorneys' fees incurred in connection therewith, whether or not such claim,
lawsuit or arbitration is ultimately defeated and, subject to Article 14 hereof,
all amounts paid incident to any compromise or settlement of any such claim,
lawsuit or arbitration.
"Machines" shall mean the two sheet metal cutting (gantry) machines,
machine numbers 534 and 551, together with the insulation and other equipment
relating thereto, which are the subject of the IRB Lease.
"Material Adverse Effect" shall mean any change in or effect that,
either individually or in the aggregate with all other changes or effects, (i)
is or would be materially adverse to (x) the business, results of operations or
condition (financial or otherwise) of the Business, taken as a whole, or (y) the
value or utility of the Assets, taken as a whole, or (ii) would materially
impair the ability of any Seller or Purchaser to consummate the transactions
contemplated by this Agreement.
"Material Contract" shall have the meaning set forth in Section 8.24.1.
"Material Customers" shall have the meaning set forth in Section 8.20.
"Material Suppliers" shall have the meaning set forth in Section 8.22.
"Material Tangible Personal Property" shall have the meaning set forth
in Section 8.11.
9
"Xxxxxxxx" shall have the meaning set forth in the preamble to this
Agreement.
"Monthly Financial Statements" shall have the meaning set forth in
Section 6.6.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
years was, contributed to by the Sellers or an ERISA Affiliate.
"Occurrence" shall have the meaning set forth in Section 8.26.3.
"Order" shall mean any decree, order, judgment, writ, award,
injunction, rule or consent of or by a Governmental Authority.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PMI" shall have the meaning set forth in the preamble to this
Agreement.
"Permitted Encumbrances" shall mean (i) Encumbrances for Taxes on
property not yet due and payable or which are being diligently contested in good
faith and by appropriate proceedings diligently conducted, and for which the
Sellers have set aside full and adequate reserves on their books as required by
GAAP; (ii) Encumbrances imposed by Law, such as worker's, supplier's, carrier's,
warehousemen's and mechanic's liens and other similar liens, which arise in the
ordinary course of business with respect to obligations not yet due or being
diligently contested in good faith by appropriate proceedings and for which the
Sellers shall have set aside full and adequate reserves on their books as
required by GAAP; (iii) Encumbrances arising out of pledges or deposits under
workmen's compensation laws, unemployment insurance, old age pensions, other
social security benefits or, with respect to the foregoing, similar legislation,
other than any lien imposed by ERISA; (iv) Encumbrances incurred or deposits
made in the ordinary course of business to secure surety bonds provided that
such Encumbrances shall extend only to cash collateral for such surety bonds and
such cash collateral is included in the Assets being conveyed to Purchaser
pursuant to this Agreement; (v) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Seller is a party as lessee made in the ordinary course of the Business,
provided that any such bid, tender, contract or lease is included in the Assets
being conveyed to Purchaser pursuant to this Agreement; (vi) zoning restrictions
and minor irregularities in title applicable to any real property currently used
in the operation of the Business that do not, individually or in the aggregate,
materially interfere with or impair the present, intended and
10
continued use of any such property; and (vii) Encumbrances set forth on Schedule
1.2.
"Person" shall mean any individual, corporation, partnership, joint
venture, trust, bank, unincorporated organization or government or any
department, agency or political subdivision thereof.
"Plan" shall have the meaning given in ERISA Section 3(3) (other than a
Multiemployer Plan) in respect of which any Seller or any ERISA Affiliate is, or
within the immediately preceding six years was, an "employer" as defined in
Section 3(5) of ERISA.
"Post-Closing Balance Sheet" shall mean the consolidated balance sheet
of the Business as of the Closing Date included in the Audit Report, after
giving effect to any Agreed Adjustments and the adjustments contained in the
Additional Accounting Report, if any.
"Prepaid Items" shall have the meaning set forth in Section 2.1.6.
" Products" shall mean products, technology and services manufactured,
sold, licensed, under development or otherwise exploited or provided by a Seller
in connection with the Business, or proposed in a Seller's business plans or
projections to be exploited in connection with the Business, including
replacement parts or components sold by a Seller for other products.
"Profit Sharing Plan" shall mean the Precision Machining, Inc. Employee
Profit Sharing Plan.
"Purchased Contracts" shall have the meaning set forth in
Section 2.1.3.
"Purchased Records" shall have the meaning set forth in Section 2.1.4.
"Purchaser" shall have the meaning set forth in the Recitals hereto.
"Purchaser Documents" shall mean this Agreement and all other
agreements, instruments and certificates to be executed and delivered by
Purchaser in connection with this Agreement.
"Purchaser's Obligations" shall have the meaning set forth in Section
14.7.
11
"Purchaser's Plan" shall mean the defined contribution savings plan
established pursuant to section 401(k) of the Code by Purchaser for employees of
the Business.
"Real Property Lease" shall have the meaning set forth in Section 12.8.
"Recalls" shall have the meaning set forth in Section 8.26.1.
"Receivables" shall have the meaning set forth in Section 2.1.2.
"Refund Claim" shall have the meaning set forth in Section 7.3.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA.
"Representative" shall mean Xxxxx Xxxx Xxxxxxxx, as representative of
the Sellers under the Sellers Representative Agreement, or any successor
representative or representatives appointed under the Sellers Representative
Agreement.
"Restrictive Covenants" shall mean the covenants and agreements of the
Sellers contained in Sections 7.1 and 7.2.
"Seller" or "Sellers" shall have the respective meanings set forth in
the Recitals hereto.
"Seller Financial Statements" shall have the meaning set forth in
Section 8.5.1.
"Sellers Representative Agreement" shall have the meaning set forth in
Section 6.15.
"Stock Option Plan" shall mean the Stellex Precision Machining, Inc.
1999 Stock Option Plan, substantially in the form of Exhibit B hereto.
"Tangible Personal Property" shall have the meaning set forth in
Section 2.1.1.
"Tax Returns" shall mean, collectively, all Federal, state, foreign and
local tax reports, returns, information returns and other related documents
required to be filed by any relevant taxing authority.
"Taxes" shall have the meaning set forth in Section 4.2.
12
"Termination Event" shall mean (i) a Reportable Event with respect to
any Plan; (ii) the withdrawal of the Sellers or any ERISA Affiliate from a Plan
during a plan year in which the Sellers or such ERISA Affiliate was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
imposition of an obligation on the Sellers or any ERISA Affiliate under Section
4041 of ERISA to provide affected parties written notice of intent to terminate
a Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Plan; (v) any event or
condition which would constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; or (vi)
the partial or complete withdrawal of the Sellers or any ERISA Affiliate from a
Multiemployer Plan.
"Total Purchase Price" shall have the meaning set forth in Section 3.1.
"Transaction Proposal" shall have the meaning set forth in Section 6.7.
"Trust" shall have the meaning set forth in the preamble hereto.
"Warranty Claim" shall have the meaning set forth in Section 7.3.
"Warranty Work" shall have the meaning set forth in Section 7.4.
ARTICLE 2
BUSINESS AND ASSETS BEING SOLD
Section 2.1 Purchase and Sale of Assets. Subject to the terms and
conditions set forth in this Agreement and in reliance upon the representations
and warranties of the Sellers and Purchaser herein set forth, at the Closing,
the Sellers shall sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser shall purchase from the Sellers, all of the Sellers' right, title and
interest, as of the Closing Date, in and to the Assets. The Assets shall be
conveyed free and clear of all liabilities, obligations and Encumbrances, other
than the Assumed Liabilities and Permitted Encumbrances. For purposes of this
Agreement, the term "Assets" shall mean all of the goodwill, assets, properties
and rights of every nature, kind and description, whether tangible or
intangible, real, personal or mixed, wherever located and whether or not carried
or reflected on the books and records of the Sellers, which are used in, or
which were acquired in connection with, the operation of the Business, excepting
only the Excluded Assets and any of the foregoing which relate exclusively to
the Excluded Assets. The Assets shall include, but not be limited to, the
following:
13
2.1.1 all furniture, fixtures, equipment, machinery, trucks,
tooling, automobiles, tools, supplies, spare parts, computer
hardware, construction in progress and other tangible assets
used in, or which were acquired in connection with, the
operation of the Business, including, without limitation, any
equipment or other tangible assets subject to a lease between
a Seller and any other Seller (the "Tangible Personal
Property");
2.1.2 all accounts, notes, accounts receivable, contract rights,
drafts and other forms of claims, demands, instruments,
receivables and rights to the payment of money or other forms
of consideration relating to the Business, whether for goods
sold or leased, services performed or to be performed, or
otherwise, together with all guarantees, security agreements
and rights and interests securing the same (the
"Receivables");
2.1.3 all of the rights and benefits accruing under all Contracts
relating to the Business, including all Contracts entered into
by each Seller after the date hereof and until the Closing
Date in compliance with the terms of this Agreement (the
"Purchased Contracts");
2.1.4 all operating data, files, general records, Customer Lists,
employee records, correspondence and other written records of
each Seller, to the extent relating to the Business and/or the
Assets, wherever located (the "Purchased Records");
2.1.5 all of the intellectual property rights, marketing rights,
proprietary rights and other intangible properties, to the
extent relating to the Business, including, without
limitation, (i) the rights to the corporate name of PMI and
those set forth in Section 16.1; (ii) trademarks, service
marks, trade names, and each registration and application for
any of the foregoing; (iii) statutory, common law and
registered copyrights, and each registration and application
therefor; (iv) patents and associated inventions, industrial
models, processes and designs, technical information, know-how
and operating, maintenance or other manuals and each
registration and application for any of the foregoing; (v)
14
"software" and associated documentation; (vi) trade secrets,
including related processes or items of know-how or other
technical data and (vii) those items described on Schedule 8.9
(the "Intangible Personal Property");
2.1.6 all prepaid and deferred items, to the extent relating to the
Business, including all prepaid rentals and unbilled charges,
fees and deposits (the "Prepaid Items");
2.1.7 all of the goodwill of the Business as a going concern (the
"Goodwill");
2.1.8 all of the rights to the licenses, permits, approvals,
clearances and authorizations desirable or required to conduct
the Business, including all Environmental Permits (the
"Licenses and Permits");
2.1.9 all of the Inventory relating to the Business;
2.1.10 all rights and claims against third parties arising out of,
relating to or in respect of the Business or the Assets,
including, without limitation, all causes of action, rights of
recovery and rights of set-off of any kind, all rights under
express or implied warranties from suppliers to any Seller and
all other interests in or claims, rebates, refunds or payments
from or against vendors; and
2.1.11 all other properties, tangible or intangible, not otherwise
referred to above, to the extent relating in any manner to the
Business, other than those, if any, which constitute Excluded
Assets or relate exclusively to the Excluded Assets.
Section 2.2 Excluded Assets. Anything to the contrary set
forth in Section notwithstanding, the Assets shall exclude: (i) the Total
Purchase Price and each Seller's respective rights under this Agreement and the
other Purchaser Documents; (ii) any shares of capital stock of PMI and BK
Metals; (iii) the corporate minute books and stock records of PMI and BK Metals;
(iv) the land and building comprising the Kansas Facility; (v) the interests of
the Sellers in the corporate name "BK Metals;" (vi) cash and Cash Equivalents
held by the Sellers; (vii) the Cessna Citation Jet; and (viii) the assets
described on Schedule (collectively "Excluded Assets").
15
ARTICLE 3
PURCHASE PRICE AND PAYMENT TERMS
Section 3.1 Purchase of the Assets by Purchaser; Total
Purchase Price. Subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase the Assets from the Sellers and to pay to the
Representative, on behalf of the Sellers, the Total Purchase Price. The "Total
Purchase Price" shall consist of $85,568,000 (the "Base Purchase Price"), minus
the Adjustment Amount, if any.
Section 3.2 Payment of Purchase Price.
3.2.1 Not later than one day prior to the Closing Date, the Sellers
shall prepare and deliver to Purchaser an estimated balance
sheet for the Business as of the Closing Date (the "Closing
Date Balance Sheet"), which balance sheet shall have been
prepared in conformity with GAAP applied on a basis consistent
with the Audited Balance Sheet (provided that in the event of
any conflict between those principles required under GAAP and
those principles required for consistency, the principles
required under GAAP shall control) and shall not reflect the
results of or otherwise give effect to Purchaser's purchase of
the Assets under this Agreement and the accounting treatment
thereof and a notice setting forth the Sellers' good faith
estimate of the Adjustment Amount (the "Estimated Adjustment
Amount"), together with a schedule setting forth in detail the
calculations supporting the Sellers' computation thereof.
3.2.2 At the Closing, Purchaser shall deliver:
(a) an amount equal to the Base Purchase Price, minus the
Estimated Adjustment Amount, if any, minus the
$6,000,000 Escrow Amount, to the Representative, on
behalf of the Sellers, by wire transfer of
immediately available funds in the City of New York
to an account specified by the Representative not
later than 5 days prior to the Closing Date; and
(b) to the Escrow Agent, the Escrow Amount.
16
3.2.3 Promptly, but in any event not later than 5 days after the
final determination of the Adjustment Amount pursuant to
Section 3.3, (i) in the event that the Estimated Adjustment
Amount exceeds the Adjustment Amount, Purchaser shall pay to
the Representative, on behalf of the Sellers, by wire transfer
of immediately available funds in the City of New York an
amount equal to such excess plus interest thereon from the
Closing Date to the date of payment thereof at the Agreed
Rate, or (ii) in the event the Adjustment Amount exceeds the
Estimated Adjustment Amount, the Representative, on behalf of
the Sellers, shall take all action necessary to cause the
Escrow Agent to pay to Purchaser, from the Escrow Fund, in
immediately available funds in the City of New York an amount
equal to such excess plus interest thereon from the Closing
Date to the date of payment thereof at the Agreed Rate. The
Representative and each of the Sellers, shall be liable,
jointly and severally, to Purchaser to the extent the Escrow
Fund is insufficient to cover the payment referred to in
clause (ii) above. Any amount owing from the Representative
and the Sellers pursuant to the preceding sentence shall bear
interest from the Closing Date to the date of payment thereof
at the Agreed Rate and be payable by wire transfer of
immediately available funds in the City of New York.
Section 3.3 Purchase Price Adjustment.
3.3.1 Physical Inventory; Closing of Books; Purchaser's Audit. On
the day after the Closing Date, Purchaser shall direct
Deloitte & Touche LLP (the "Independent Accountants") to
conduct a physical inventory (in accordance with GAAP) of all
of the Inventory of the Business (including, without
limitation, all "offshore" inventory), such physical inventory
to be completed as promptly as practicable but in any event
not later than 10 days after the Closing Date. Each Seller
shall, and shall cause its representatives to, cooperate with
Purchaser and/or its representative and provide all
information necessary to facilitate such physical inventory.
The Sellers shall initiate and shall take all actions
necessary to effect a closing (effective as of the Closing
Date) of the books of account of the Business. Promptly (and,
in any event, within 30 days) following the Closing Date,
Purchaser
17
shall prepare a consolidated balance sheet of the Business as
of the Closing Date, which balance sheet shall have been
prepared in conformity with GAAP applied on a consistent basis
with the Audited Balance Sheet (provided that in the event of
any conflict between those principles required under GAAP and
those principles required for consistency, the principles
required under GAAP shall control) and shall not reflect the
results of or otherwise give effect to Purchaser's purchase of
the Assets and the accounting treatment thereof. Purchaser
shall direct the Independent Accountants to audit such balance
sheet in accordance with the standards of the American
Institute of Certified Public Accountants, such audit to be
completed as promptly as practicable but in any event not
later than 90 days following the Closing Date. Within such
90-day period, Purchaser shall deliver to the Representative
the audit report (the "Audit Report") with respect to such
balance sheet and a notice setting forth Purchaser's good
faith calculation of the Adjustment Amount (the "Audited
Adjustment Amount"), together with a schedule setting forth in
detail the calculations supporting Purchaser's computation
thereof.
3.3.2 Review by Representative. Promptly following receipt of the
Audit Report and the Audited Adjustment Amount, the
Representative shall review the same and, as promptly as
practicable, but in any event not later than 30 days
thereafter, shall deliver to Purchaser either (i) a written
notice stating that the Audit Report and the Audited
Adjustment Amount are accepted by the Representative, on
behalf of the Sellers, or (ii) a written notice stating that
the Audit Report and the Audited Adjustment Amount are not
accepted by the Representative, on behalf of the Sellers. In
the event the Representative delivers to Purchaser such a
written notice stating that the Audit Report and the Audited
Adjustment Amount are accepted by the Representative or does
not deliver such a certificate of objection within such 30-day
period, the Audited Adjustment Amount shall, upon the earlier
of such delivery or the end of such 30-day period be final and
binding as the Adjustment Amount under this Agreement. In the
event the Representative so objects within such 30-day period,
the Representative and Purchaser shall endeavor to resolve by
written agreement (the "Agreed
18
Adjustments") any differences in the Audited Adjustment Amount
and, in the event the Representative and Purchaser so resolve
any such differences, the Audited Adjustment Amount, as
adjusted by the Agreed Adjustments, shall be final and binding
as the Adjustment Amount under this Agreement.
3.3.3 Audit by Additional Accounting Firm. In the event any
objections lodged by the Representative in accordance with
Section 3.3.2 above are not resolved by Agreed Adjustments
within the 30-day period next following the 30-day period
referred to in Section 3.3.2, then Purchaser and the
Representative shall jointly select a national accounting firm
acceptable to both Purchaser and the Representative (or, if
they cannot agree on such selection, they shall select a
national (big-five) accounting firm by lot after eliminating
the Independent Accountants and any firm that has had a
business relationship with any Seller or any of their
respective Affiliates within the past three years) and shall
direct the firm so selected (the "Additional Accounting Firm")
to conduct, as promptly as practicable, but in any event not
later than 30 days after such direction, such audit of the
Audited Adjustment Amount as they believe to be necessary to
resolve the objections (it being understood that under no
circumstances shall the Additional Accounting Firm be charged
with reconsidering or conducting an audit of any elements of
the Audited Adjustment Amount as to which no objection has
been lodged by the Representative and which do not bear
directly on the matters or conclusions objected to by the
Representative), and to deliver a written notice (the
"Additional Accounting Report") to each of Purchaser and the
Representative setting forth what adjustments, if any, to the
Audited Adjustment Amount the Additional Accounting Firm
believes to be required under GAAP, applied on a basis
consistent with the Audited Balance Sheet, and this Agreement
to resolve such objections, and the amount of the Adjustment
Amount after giving effect to such adjustments (such Audited
Adjustment Amount if and as so adjusted being the "Final
Audited Adjustment Amount"). In such event, the Final Audited
Adjustment Amount shall be final and binding as the Adjustment
Amount under this Agreement.
19
3.3.4 Access to Information; Fees and Expenses. The parties hereto
shall make available to Purchaser, the Representative, the
Independent Accountants and, if applicable, the Additional
Accounting Firm, such books, records and other information
(including all work papers, summary memoranda and summary
conclusions of the Independent Accountants) as any of them may
reasonably request to prepare and review the Audit Report or
the Additional Accounting Report in accordance with the terms
of this Section 3.3. The fees and expenses of the Additional
Accounting Firm, if any, shall be paid 50% by Purchaser and
50% by the Representative, on behalf of the Sellers.
Section 3.4 Allocation of Purchase Price. It is understood
that the total consideration to be received by the Sellers for the transfer of
the Assets to Purchaser and the Restrictive Covenants shall be the Total
Purchase Price, plus Purchaser's assumption of the Assumed Liabilities. Such
total consideration, including the Total Purchase Price, shall be reported on
IRS Form 8594 and allocated as follows:
----------------------------------------------------------------
Inventory The book value
thereof reflected
on Purchaser's
Post-Closing
Balance Sheet, as
adjusted to reflect
the Adjustment
Amount.
----------------------------------------------------------------
Tangible Personal Property
Computer hardware $3,500,000
and software
systems
Other Tangible Personal
Property $24,068,000
----------------------------------------------------------------
Receivables The book value
thereof reflected
on Purchaser's
Post-Closing
Balance Sheet, as
adjusted to reflect
the Adjustment
Amount.
----------------------------------------------------------------
Intangible Personal Property $0
----------------------------------------------------------------
Contracts $0
20
----------------------------------------------------------------
Licenses and Permits $0
----------------------------------------------------------------
Prepaid Items The book
value thereof
reflected on
Purchaser's
Post-Closing
Balance Sheet, as
adjusted to reflect
the Adjustment
Amount.
----------------------------------------------------------------
Restrictive Covenants $10,000
----------------------------------------------------------------
Goodwill The balance of the
Total Purchase
Price
Each party hereto further agrees that said party shall not
file any Tax Return (or treat any item or items thereon) nor make any other
statement or submission to the IRS, any comparable state agency, or any other
Governmental Authority, which Tax Return, item, statement or submission is
inconsistent in whole or in part with the foregoing allocation.
Section 3.5 Escrow Agreement and Escrow Amount.
3.5.1 Purchaser shall deposit the Escrow Amount in escrow with the
Escrow Agent, in an account bearing Xxxxxxxx'x social security
number, for the purposes of (i) satisfying any liabilities of
the Representative or any Seller to Purchaser pursuant to
Section 3.2.3 in connection with the determination of the
Adjustment Amount and (ii) satisfying any liabilities of the
Representative or any Seller to Purchaser pursuant to Article
14 whereby the Representative and the Sellers have agreed to
indemnify Purchaser against certain losses, damages and
expenses.
3.5.2 The Escrow Amount and any interest or earnings thereon shall
be disbursed by the Escrow Agent in accordance with the
provisions of Section 3.2.3, Section 14.7 and the Escrow
Agreement.
Section 3.6 Taxes. All Taxes and other governmental charges
(including, without limitation, charges for or in connection with the recording
of any instrument or document as provided in this Agreement) payable in
connection with the transfer of the Assets as contemplated by this Agreement
shall be paid by the Sellers.
21
ARTICLE 4
ASSUMPTION OF LIABILITIES
Section 4.1 Assumed Liabilities. Pursuant to an Assignment
and Assumption Agreement, substantially in the form attached hereto as Exhibit
C, and as further consideration for the purchase and sale of the Assets,
Purchaser shall, from and after the Closing Date, assume, perform, discharge and
pay when due those obligations and liabilities of the Sellers relating to the
Business which are specifically set forth in this Section 4.1, but only to the
extent specifically set forth in this Section 4.1 and subject to any contrary
provisions which may be contained in Section 4.2:
4.1.1 all unpaid or unperformed obligations or liabilities of each
Seller under the Purchased Contracts assigned to Purchaser
hereunder arising from and after the Closing, but not arising
out of any breach or default thereof prior to the Closing.
4.1.2 all unpaid or unperformed obligations or liabilities of the
Sellers under the Licenses and Permits assigned to Purchaser
hereunder arising from and after the Closing, but not arising
out of any breach or default thereof prior to the Closing;
4.1.3 all trade payables of the Sellers with respect to the Business
existing as of the Closing, but only to the extent (i)
reflected on the Closing Date Balance Sheet and included in
the calculation of the Adjustment Amount and (ii) also
reflected on the face of the Audited Balance Sheet (excluding
the notes thereto) or knowingly and intentionally incurred by
the Sellers in the ordinary course of the Business after the
Balance Sheet Date consistent with past practices and in
conformity with the Sellers' representations, warranties and
covenants contained in this Agreement and not as a result of
any breach of contract, breach of warranty, tort or
infringement of the rights of another by any Seller;
4.1.4 all unpaid or unperformed wages, salaries, payroll taxes, sick
pay, vacation pay, fringe benefits, other employee benefits
(including accrued retirement
22
benefits of $90,000) and "PIE" bonus for April, 1999 accrued
as of the Closing (except those constituting Excluded
Liabilities), but only to the extent (i) reflected on the
Closing Date Balance Sheet and included in the calculation of
the Adjustment Amount and (ii) also reflected on the face of
the Audited Balance Sheet (excluding the notes thereof) or
knowingly and intentionally incurred by the Sellers in the
ordinary course of the Business after the Balance Sheet Date
consistent with past practices and in conformity with the
Sellers' representations, warranties and covenants contained
in this Agreement and not as a result of any breach of
contract, breach of warranty, tort or infringement of the
rights of another by the Sellers, and only with respect to
employees of the Sellers who continue in the employ of
Purchaser and who do not request payment thereof in cash from
the Sellers as of the Closing Date; and
4.1.5 The performance of all warranty work arising from and after
the Closing, but only to the extent such warranty work relates
to Products of the Sellers manufactured and sold by the
Sellers prior to the Closing and any potential liability is
reflected on the Closing Date Balance Sheet and included in
the calculation of the Adjustment Amount.
The items listed above in Sections 4.1.1 through 4.1.5, together with
any other obligations or liabilities to the extent reflected on the
Closing Date Balance Sheet and included in the calculation of the
Adjustment Amount, are collectively referred to as the "Assumed
Liabilities".
Section 4.2 Excluded Liabilities. Except to the extent
expressly assumed by Purchaser pursuant to Section 4.1, Purchaser shall not
assume or be liable for any liabilities or obligations of any Seller, whether
the same are direct or indirect, fixed, contingent or otherwise, known or
unknown, whether existing on the Closing Date or arising thereafter as a result
of any act, omission or circumstance taking place prior to the Closing. The
liabilities not specifically assumed by Purchaser pursuant to Section 4.1 hereof
shall be referred to herein collectively as the "Excluded Liabilities." Excluded
Liabilities shall include, without limitation, the following:
23
4.2.1 the obligations and any liabilities of each Seller arising
under this Agreement;
4.2.2 the obligations of any Seller for any and all taxes imposed by
any United States federal, state, or local, or any foreign,
taxing authority, including, without limitation, all income,
gross receipts, sales, capital gains, windfall profits,
severance, stamp, use, personal property, use and occupancy,
business occupation, mercantile, ad valorem, value added,
transfer, license, withholding, payroll, employment, excise,
real estate, environmental, capital stock, franchise,
alternative or add-on, minimum, estimated or other tax of any
kind whatsoever (including interest, penalties and other
additions thereto) (collectively, "Taxes") arising from the
operations of any Seller or the Business on or prior to the
Closing, including those set forth on Schedule 8.15;
4.2.3 the obligations of any Seller for Taxes imposed by any
Governmental Authority on or arising out of the sale or
transfer of the Assets pursuant to this Agreement;
4.2.4 the obligations of any Seller for fees or expenses incurred in
connection with the negotiation, preparation or approval of
this Agreement and/or the sale of the Assets pursuant hereto,
including, without limitation, the fees and expenses of
counsel, independent auditors, brokers, bankers, investment
bankers and other advisers;
4.2.5 any obligation or liability of the Sellers relating to the
Ground Lease;
4.2.6 all liabilities or obligations of any nature to any past or
present shareholder of any Seller or other Affiliate of any
Seller or any severance, "parachute" or similar payment to any
officer, director or employee of any Seller arising by virtue
of the transactions contemplated by this Agreement;
4.2.7 all liabilities arising from the ownership and operations of
the Business prior to the Closing, including, without
limitation, all liabilities in respect of indebtedness for
borrowed money in whatever form or manner incurred, whether
secured or unsecured, matured or unmatured and regardless of
the
24
terms and conditions of any notes, instruments, mortgages or
other agreements evidencing, relating to or securing such
indebtedness, and all liabilities in respect of the deferred
portion of the purchase price for any Assets;
4.2.8 all liabilities arising from the operation of any successor
liability Laws, including, without limitation, "bulk sales"
statutes, to the extent that non-compliance therewith or the
failure to obtain necessary clearances would subject Purchaser
or the Assets to the claims of any creditors of a Seller, or
would subject any of the Assets to any Encumbrances or other
restrictions;
4.2.9 any liabilities or obligations of any Seller not related to
the operation of the Business;
4.2.10 all liabilities or obligations of each Seller which pertain to
the Excluded Assets;
4.2.11 all liabilities or obligations of any Seller in respect of
litigation of any kind or nature, including, without
limitation, any adverse claim, dispute, governmental
investigation, suit, action (including, without limitation,
nonjudicial real or personal property foreclosure actions),
arbitration, legal, administrative or other proceeding of any
nature, domestic or foreign, criminal or civil, at law or in
equity, by or against or otherwise affecting any Seller, the
Business or the Assets, including, without limitation, all
liabilities, costs and other obligations arising in connection
with the litigation styled "Xxxxxxxxx Xxxxxxxxx, Plaintiff vs.
Precision Machining, Inc., Defendant" filed in the United
States District Court for the District of Kansas and those
matters set forth on Schedule 8.16;
4.2.12 all liabilities or obligations of any Seller arising in
connection with the adoption, maintenance or termination of
any Plan, including, without limitation, any Plan listed on
Schedule 8.18.
4.2.13 all liabilities or obligations of any Seller relating to the
IRB Lease, the IRBs or the Credit Agreement; and
25
4.2.14 all liabilities or obligations of any Seller relating to the
accrual of employee bonuses or other compensation, or
compensation payable as a result of the transactions
contemplated by this Agreement, provided, however, the
Sellers' "PIE" bonus payable with respect to April, 1999 and
$90,000 in accrued retirement benefits will not constitute an
Excluded Liability.
Section 4.3 Contested Obligations. Nothing contained in
this Agreement shall require Purchaser to pay or discharge any debts,
obligations or liabilities expressly assumed hereby so long as Purchaser shall
in good faith contest the amount or validity thereof.
ARTICLE 5
THE CLOSING
Section 5.1 Closing Date. The closing date (the "Closing
Date") shall be April 22, 1999, provided, however, that Purchaser or the
Sellers, in their sole discretion, may extend the Closing Date to any business
day on or before April 30, 1999 to permit the satisfaction of the conditions to
their respective obligations to consummate the transactions contemplated by this
Agreement as set forth in Article 12 and 13, as applicable. The closing
("Closing") shall take place at the offices of Winston & Xxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx beginning at 9:00 a.m., on the Closing Date or at
such other place as the parties shall agree to in writing in advance thereof.
Section 5.2 Relinquishment of Control. At the Closing, the
Sellers shall turn over actual possession and control of all of their respective
Assets to Purchaser by delivering the keys to the Kansas Facility and taking
such other action that may be required or reasonably requested by Purchaser to
effect such transfer of possession and control.
Section 5.3 Closing Date Deliveries. At the Closing, Purchaser and the
Sellers shall deliver or cause to be delivered to each other the deliveries
required by Articles 12 and 13 hereof.
Section 5.4 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its Best Efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Law to consummate and
make effective the transactions contemplated by this Agreement, including using
its Best
26
Efforts to defend any lawsuits or other legal proceedings, whether judicial or
administrative, whether brought derivatively or on behalf of third parties
(including any Governmental Authority), challenging this Agreement. In addition,
each Seller shall provide such information and assistance as Purchaser shall
reasonably request or require in connection with the financing of the
transactions contemplated by this Agreement. Without limiting the generality of
the foregoing, the Sellers shall use their Best Efforts to cause their
accountants, attorneys, advisors, employees and other representatives to
cooperate with Purchaser in order to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, the
financing of such transactions. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action, subject to the reimbursement of their
related out-of-pocket costs.
ARTICLE 6
CERTAIN COVENANTS
Section 6.1 Access to Books and Records and Personnel. Upon reasonable
prior notice during business hours, each Seller shall at all times prior to the
Closing Date make the books, accounts, inventory, equipment, records (financial
and other), technical information, Contracts and such other documents and
information regarding the Business or Assets available for examination, audit
and inspection, including access for the purposes of conducting environmental
audits, by Purchaser and its officers, employees, financial advisors, financing
sources, consultants, accountants, attorneys and authorized representatives.
Each Seller shall furnish Purchaser as promptly as practicable with such
documents or copies thereof, and other information concerning the Business or
Assets, including, without limitation, any financial and operating data or other
periodic financial information, as Purchaser shall, from time to time,
reasonably request. In addition, each Seller shall give Purchaser access at
mutually agreed upon times and places to such officers, managers, employees,
accountants, advisors and other representatives of such Seller as Purchaser
shall reasonably request. No investigation by Purchaser shall, however, diminish
or obviate in any way, or affect Purchaser's right to rely upon, any of the
representations, warranties, covenants or agreements of the Sellers contained in
this Agreement or any other Company Documents. Purchaser hereby agrees that any
such access provided hereunder shall not unreasonably interfere with the normal
operations of the Business.
Section 6.2 Post-Closing Access. It is recognized that the Sellers may
need tax, financial or other data after the Closing Date with respect to the
27
Assets or the Business (or any combination thereof) covering fiscal periods
prior to the Closing Date for the purpose of preparing tax returns for such
periods. Purchaser will render reasonable cooperation and will afford reasonable
access during normal business hours to all books, records, data and personnel
concerning the Assets and the Business with respect to periods prior to and
including the Closing Date to the Sellers and their auditors, accountants,
counsel or other authorized representatives for such purpose.
Section 6.3 Notice of Certain Events. On or prior to the
Closing Date, each Seller shall give Purchaser prompt notice of its knowledge of
the occurrence of any of the following relating to the Business:
6.3.1 the commencement of any proceeding or litigation at law or in
equity or before any Governmental Authority;
6.3.2 any violation by a Seller (or notice of potential violation)
of any Environmental Law or other Law;
6.3.3 the commencement or threat of any actions, suits, claims,
investigations or proceedings against, relating to or
involving or otherwise affecting any party hereto;
6.3.4 any fact or circumstance which would make any representation
or warranty set forth herein untrue or inaccurate in any
material respect as of the Closing Date or as of the date of
this Agreement;
6.3.5 any condition set forth in this Agreement to be unsatisfied as
of the Closing Date;
6.3.6 any Transaction Proposal, including, without limitation, the
terms proposed and the identity of such offeror;
6.3.7 material damage to any of the Assets in an amount in excess of
$50,000;
6.3.8 any notice or other communication from any Person alleging
that the consent of such Person is or may be required in
connection with the transactions contemplated by this
Agreement; or
28
6.3.9 any occurrence, event or circumstance affecting or relating to
the Assets or the Business that is outside the ordinary course
of the Business.
Section 6.4 Conduct of Business by the Sellers. Between the
date of this Agreement and the Closing Date, the Sellers will cause the Business
to be operated only in the ordinary course and consistent with past practices.
Each Seller will use its Best Efforts to do the following in the ordinary course
of the Business: (i) preserve intact the Business and the business organizations
of PMI and BK Metals; (ii) maintain in effect all material licenses, permits,
and approvals of Governmental Authorities which are necessary for the conduct of
the Business; (iii) maintain, preserve and keep the Assets in good condition and
repair; (iv) keep available to Purchaser the services of the Business' present
management and workforce; and (v) maintain the existing business relationships
with suppliers, customers and distributors and others having business dealings
with it. Except as otherwise contemplated by or permitted by this Agreement, or
as otherwise consented to or approved by Purchaser in writing, the Sellers, with
respect to the Business and/or the Assets, shall not (to the extent applicable):
6.4.1 amend their respective Articles of Incorporation, Bylaws or
other organizational documents or take any corporate or other
action if any such amendment or action would have an adverse
effect on the ability of any Seller to consummate the
transactions contemplated by this Agreement or otherwise
adversely affect the value, utility or transferability of the
Assets;
6.4.2 except as set forth on Schedule 6.4, increase the compensation
or rate of compensation payable or to become payable to any of
the present or former employees, directors, consultants or
officers of any Seller, nor make any increase in compensation
or rate of compensation or benefits payable or to become
payable to employees, directors, consultants or officers of
any Seller who are parties to separation, severance, or
employment agreements with a Seller, nor enter into any
separation, severance, or "change in control" agreements with
any of their present or former employees, officers,
consultants or directors, nor enter into any written or oral
employment agreement;
6.4.3 except as set forth on Schedule 6.4, set aside, or pay to any
present or former officer, director, consultant or employee of
29
any Seller any bonus, profit-sharing, severance, retirement,
insurance, death, fringe benefit, or other extraordinary
compensation, nor adopt, amend, fund or commit itself to fund
any employee benefit plan or account related to any Plan with
or for the benefit of any of the present or former employees,
consultants, directors or officers of any Seller;
6.4.4 acquire any business entity or all or substantially
all of the assets of a business entity or make any
other investment outside the ordinary course of
business;
6.4.5 except as set forth on Schedule 6.4, make any capital
expenditures, the aggregate amount of which are in
excess of $100,000, other than (i) emergency repairs,
or (ii) those required in the ordinary course of
business;
6.4.6 create or incur any Liabilities and Costs (absolute
or contingent) that would constitute an Assumed
Liability outside the ordinary course of the
Business;
6.4.7 create or incur any Encumbrance on any Asset, or fail
to take action to discharge any involuntary
Encumbrance on any Asset, in each case except for
Permitted Encumbrances;
6.4.8 amend, terminate, fail to renew or renegotiate any
Material Contract or default (or take or omit to take
any action that, with or without the giving of notice
or passage of time, would constitute a default) in
any of their respective obligations under any
Material Contract or enter into any new Material
Contract or take any action that would jeopardize the
continuance of its relationships with any Material
Supplier or Material Customer;
6.4.9 pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in
the ordinary course of business consistent with past
practices of the Business or in accordance with their
terms, of liabilities reflected or reserved against
in the Audited Balance Sheet, or incurred since the
Balance Sheet Date in the ordinary course of business
consistent with past practices and in accordance with
the Sellers'
30
representations, warranties and covenants contained
in this Agreement;
6.4.10 institute, settle, or agree to settle any claim,
action, or proceeding involving an expenditure in
excess of $100,000, or involving any contingent or
non-monetary obligation having value in excess of
$100,000, before any court or other Governmental
Authority;
6.4.11 dispose of or permit to lapse any rights to the use
of any Intangible Personal Property or disclose any
Intangible Personal Property not a matter of public
knowledge;
6.4.12 fail to maintain such liability, casualty, property,
loss, and other insurance coverage upon the Assets
and Products relating to the Business and with
respect to the conduct of the Business, on such
terms, in such amounts, and with such insurance
carriers and to such extent and covering such risks
as are maintained on the date hereof;
6.4.13 dispose of any Assets, except for dispositions of
obsolete property and the sale of Inventory in the
ordinary course of the Business;
6.4.14 compromise or otherwise settle any claims, or adjust
any assertion or claim of a deficiency in Taxes (or
interest thereon or penalties in connection
therewith), or file any appeal from an asserted
deficiency, except in a form previously approved by
Purchaser in writing, or file or amend any Tax
Return, in any case before furnishing a copy to
Purchaser and affording Purchaser an opportunity to
consult with respect thereto;
6.4.15 make any Tax election or make any change in any
method or period of accounting or in any accounting
policy, practice or procedure;
6.4.16 terminate or fail to renew or preserve any Licenses
or Permits used in, or necessary for, the operation
of the Business;
31
6.4.17 fail to collect Receivables and pay accounts payable
in the ordinary course of business consistent with
past practices of the Business;
6.4.18 deviate from past practice in the ordinary course
with respect to maintenance of Inventory;
6.4.19 fail to maintain and comply, in all material
respects, with all applicable Laws and Orders,
including, without limitation, all Governmental
Approvals;
6.4.20 fail to maintain working capital components at such
levels as are consistent with past practice and
appropriate in connection with the financing of the
Business' operations;
6.4.21 fail to maintain Inventory levels as are consistent
with past practice and appropriate in connection with
the operation of the Business;
6.4.22 make special or extraordinary payments to any Person;
or
6.4.23 authorize any of, or commit or agree to take any of,
the foregoing actions.
In addition to the foregoing, the Sellers shall not take any action that would
reasonably be expected to result in (i) any of the representations and
warranties of the Sellers set forth in this Agreement becoming untrue in any
material respect or (ii) any of the conditions to the consummation of the
transactions contemplated by and set forth in this Agreement not being satisfied
in any material respect.
Section 6.5 HSR Act Filing; Regulatory Matters.
6.5.1 Unless the same has been completed prior to the date
hereof, the parties shall, as soon as practicable
after the date hereof, file Notification and Report
Forms under the HSR Act with the Federal Trade
Commission and the Antitrust Division of the
Department of Justice with respect to the
transactions contemplated herein, shall file requests
for early termination and shall use their respective
Best Efforts to respond as promptly as practicable to
all inquiries received from the Federal Trade
Commission or the Antitrust Division of the
Department of Justice for additional information or
32
documentation. To the extent permitted by Law, the
parties shall request such government agencies to
treat as confidential all information submitted to
them. Purchaser shall pay the entire cost of the
$45,000 HSR Act filing fee.
6.5.2 The Sellers and Purchaser will make, or cause to be
made, all other necessary governmental and regulatory
filings, as soon as practicable after the date
hereof, in order to facilitate prompt consummation of
the transactions contemplated by this Agreement. In
addition, each of the Sellers and Purchaser will use
its Best Efforts, and will cooperate fully with each
other (i) to comply as promptly as practicable with
all governmental requirements applicable to the
transactions contemplated by this Agreement and (ii)
to obtain as promptly as practicable all necessary
Governmental Approvals and consents of all third
parties necessary for the consummation of the
transactions contemplated by this Agreement. Except
as provided in Section 6.4.1, each of the Sellers and
Purchaser shall use its Best Efforts to provide such
information and communications to Governmental
Authorities as such Governmental Authorities may
request.
Section 6.6 Updated Financial Information. The Sellers have
delivered to Purchaser complete copies of internal unaudited monthly statements
of earnings and balance sheets ("Monthly Financial Statements") of the Business
for the period from October 1, 1998 through March 31, 1999. From the date hereof
until the Closing Date (or the earlier termination of this Agreement), as soon
as internally available and in any event within 25 days after the end of each
calendar month, the Sellers shall deliver to Purchaser complete copies of the
Monthly Financial Statements for the previous calendar month. Each Seller
represents and covenants that, except for normal interim and year-end audit
adjustments, the Monthly Financial Statements referred to in the preceding two
sentences have been or shall be prepared in accordance with GAAP consistently
applied (except for changes required by GAAP), and do or shall fairly present in
all material respects the consolidated financial condition and results of
operations of the Business as of the dates indicated and for the periods then
ended.
Section 6.7 Transaction Proposals. From the date hereof
until the Closing Date (or the earlier termination of this Agreement), the
Sellers shall not authorize, encourage or direct any of their respective
officers, directors, consultants, employees, shareholders, Affiliates (over
which they exercise control), investment bankers, attorneys, advisors, auditors,
representatives or agents to, directly or
33
indirectly, (i) solicit, initiate or encourage the submission of inquiries,
proposals or offers from any Person or group of Persons relating to any
acquisition or purchase of assets of, or any equity interest in, any Seller, the
Business or the Assets or any tender or exchange offer, merger, consolidation,
business combination, recapitalization, restructuring, spin-off, liquidation,
dissolution or similar transaction involving, directly or indirectly, any
Seller, the Business or the Assets (each a "Transaction Proposal"), (ii)
participate in any discussions or negotiations regarding any Transaction
Proposal or furnish information about any Seller, the Business or the Assets to
any Person except to (x) lenders and other parties to agreements with any Seller
(for the specific purpose set forth in such agreements, which in no event shall
include a Transaction Proposal) and (y) Purchaser or its representatives, (iii)
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to make or enter into a
Transaction Proposal, or (iv) accept, approve or authorize, or enter into any
agreement concerning any Transaction Proposal or dispose of any equity interest
in any Seller, the Business or the Assets. The Sellers shall use their
respective Best Efforts to cause their shareholders, Affiliates, agents,
officers, directors, investment bankers, advisors, representatives and
Affiliates to abide by the terms of this Section 6.7. In the event that any
Seller receives or becomes aware of any Transaction Proposal, it shall promptly
notify Purchaser in writing of such communication and keep Purchaser informed of
any subsequent developments in connection therewith.
Section 6.8 Customers and Suppliers. Each Seller shall, as
promptly as practicable after the date hereof, seek and use its Best Efforts to
arrange such meetings and telephone conferences with all Material Customers and
Material Suppliers of the Business as may be necessary and appropriate for
Purchaser to conduct a comprehensive review of such Seller's relations with the
Material Customers and Material Suppliers of the Business.
Section 6.9 Backlog. On the Closing Date, the Sellers shall
deliver to Purchaser a list of Contracts constituting the customer backlog of
the Business as of the most recent practicable date prior to the Closing Date,
which list shall be true, correct and complete.
Section 6.10 Arrangements with Employees. From the date
hereof until the Closing Date, the Sellers shall use their respective Best
Efforts to retain employees of the Business and permit Purchaser to approach and
negotiate with any or all employees of the Sellers, including, without
limitation, managerial personnel, in an effort to persuade them to continue in
the employ of the Sellers pending the Closing and thereafter to become employees
of Purchaser.
34
Section 6.11 Transfer of Licenses and Permits. From and
after the date hereof, the Sellers shall use their respective Best Efforts to
obtain all necessary governmental approvals to the assignment to Purchaser of
those of the Licenses and Permits which are by Law or by their terms assignable
to Purchaser. Any transfer, processing or other fees and expenses incurred to a
governmental entity (whether paid before or after the Closing) on or prior to
the date hereof in connection with any such assignments shall be borne by the
Sellers.
Section 6.12 Purchaser's Licenses and Permits. From and
after the date hereof, the Sellers shall use their respective Best Efforts to
enable Purchaser to obtain from the relevant Governmental Authorities all
non-assignable licenses and permits needed by Purchaser to own the Assets and
operate the Business. Each party shall bear its own costs and expenses incurred
in connection with the administrative processing of any such applications, and
any such license or permit application processing fees shall be borne by the
Sellers.
Section 6.13 Transfer of Certain Contracts. From and after
the date hereof, the Sellers shall use their respective Best Efforts to obtain
the necessary consents to the assignment of each Purchased Contract which by its
terms requires the consent of any of the other contracting parties thereto to an
assignment thereof to Purchaser. All costs, transfer fees and other expenses
incurred by the parties in the process of obtaining such consents, whether
incurred before or after the Closing Date, shall be borne by the Sellers.
Section 6.14 COBRA. Each Seller shall have the
responsibility for providing health care continuation coverage to any of its
employees terminated before the Closing, any of its employees who decline offers
of employment by Purchaser following the Closing and to former employees
presently receiving continuation coverage. If any Seller ceases to maintain any
group health plan it shall reimburse Purchaser for costs incurred by Purchaser
in providing continuation coverage to persons described in the preceding
sentence.
Section 6.15 Sellers Representative Agreement. Each Seller
has executed the Sellers Representative Agreement, substantially in the form of
Exhibit D (the "Sellers Representative Agreement"), irrevocably appointing the
Representative to act on its behalf in connection with the transactions
contemplated by this Agreement, including, without limitation, the execution and
delivery of all bills of sale, tax certifications and other certificates and
documents to be delivered to Purchaser in connection herewith, and a
fully-executed copy of such Sellers Representative Agreement has been delivered
to Purchaser. Each Seller shall indemnify and hold harmless each other Seller,
the Representative and
35
Purchaser for any actions taken by such Seller that are in violation of or
inconsistent with the terms of the Sellers Representative Agreement.
Section 6.16 Provisions Respecting Government Contracts.
6.16.1 This Section 6.16 sets forth the procedures that the
parties will use with respect to the assignment of
all Government Contracts and any claim, right or
benefit arising thereunder or resulting therefrom.
6.16.2 Except as set forth on Schedule 8.29, with respect to
any Government Contract or any claim, right and
benefit arising thereunder or resulting therefrom,
each of the Sellers and Purchaser will use its Best
Efforts to obtain the written consent of the other
parties to such Government Contract for the
assignment or novation thereof to Purchaser, or
written confirmation from such parties reasonably
satisfactory in form and substance to Purchaser that
such consent is not required. As soon as practicable
following the date hereof, with respect to each
Government Contract, the Seller party thereto shall
submit to the other parties thereto documentation
reasonably satisfactory in form and substance to
Purchaser and such Seller shall seek the written
waiver or approval of the other contracting party or
parties thereto to the transfer and assignment of all
of such Seller's claims, rights, benefits and
liabilities thereunder to Purchaser at the Closing.
In this regard, each Seller and Purchaser shall take
all actions required or customary under the
applicable Federal Acquisition Regulations (as
supplemented by any individual agency regulation) and
each Seller shall continue to participate fully in,
and cooperate fully with, such efforts following the
Closing Date.
6.16.3 Except as set forth on Schedule 8.29, If such
novation, consent, waiver or confirmation is not
obtained with respect to any such Government
Contract, each of the Sellers and Purchaser will
cooperate in an arrangement reasonably satisfactory
to Purchaser and each Seller under which Purchaser
would obtain, to the extent practicable, the claims,
rights and benefits and assume the corresponding
obligations thereunder in accordance with this
Agreement, including subcontracting, sublicensing or
subleasing to
36
Purchaser, or under which the Sellers would enforce
for the benefit of Purchaser, with Purchaser assuming
such Sellers' obligations, any and all claims, rights
and benefits of such Seller against a third party
thereto. Each Seller will promptly pay to Purchaser
when received all monies received by such Seller in
connection with any such arrangement.
6.16.4 No instrument that any Governmental Authority
requires any Seller or Purchaser to execute in
connection with any novation or assignment
contemplated by this Section 6.16 (including, without
limitation, a novation agreement as contemplated by
Federal Acquisition Regulation 42.1204) shall alter
the provisions of this Agreement concerning the
allocation of assets and liabilities between
Purchaser and the Sellers. As to any liability
allocated by the provisions of this Agreement to a
Seller, the Sellers shall, jointly and severally,
indemnify Purchaser against, and hold Purchaser
harmless from any claims by any Governmental
Authority against Purchaser for satisfaction of such
liabilities pursuant to any such novation instrument.
As to any liability allocated by the provisions of
this Agreement to Purchaser, Purchaser shall
indemnify each Seller against, and hold each Seller
harmless from, any claims by any Governmental
Authority against such Seller for satisfaction of
such liabilities pursuant to such novation
instrument.
37
ARTICLE 7
ADDITIONAL CONTINUING COVENANTS
Section 7.1 Noncompetition.
7.1.1 Restrictions on Competitive Activities. Each Seller,
on behalf of itself and its Affiliates, agrees that
after the Closing Purchaser shall be entitled to the
goodwill and going concern value of the Business. For
these and other reasons and as an inducement to
Purchaser to enter into this Agreement, each Seller
agrees that for a period of three years after the
date hereof neither such Seller nor any of its
Affiliates will, directly or indirectly, for its own
benefit or as agent for another, carry on or
participate in the ownership, management or control
of, or the financing of, or be employed by, or
consult for or otherwise render services to, or allow
its name or reputation to be used in or by any other
present or future business enterprise in the
aerospace components industry or that otherwise
competes with the Products or the Business as of the
Closing Date in each state of the United States and
in each foreign jurisdiction in which the Business is
conducted or the Products are sold as of the Closing
Date.
7.1.2 Exceptions. Nothing contained herein shall limit the
right of a Seller (or any of its Affiliates) as an
investor to hold and make investments in securities
of any corporation or other Person that is registered
on a national securities exchange or admitted to
trading privileges thereon or actively traded on the
National Association of Securities Dealers Automated
Quotation System or in a generally recognized
over-the-counter market, provided that the equity
interest therein held by such Seller and its
Affiliates does not exceed in the aggregate 5% of the
outstanding shares or interests in such corporation
or other Person.
38
7.1.3 Restrictions on Interference with Employees,
Customers and Suppliers. To protect Purchaser against
any efforts by any Seller to cause its (i) employees
to terminate their employment with Purchaser, each
Seller agrees that for a period of three years
following the Closing Date, such Seller and its
Affiliates will not directly or indirectly (a) induce
any employees (other than Associates of such Seller)
of the Business to leave Purchaser's employ or to
accept any other employment or position, or (b)
assist any other entity in hiring any such employee,
(ii) customers to terminate their relationship with
Purchaser, each Seller agrees that for a period of
three years following the Closing Date, such Seller
and its Affiliates will not directly or indirectly
(a) induce any customers of the Business to cease
doing business with Purchaser, or (b) assist any
other entity in selling to such customers, and (iii)
suppliers to terminate their relationship with
Purchaser, each Seller agrees that for a period of
three years following the Closing Date, such Seller
and its Affiliates will not directly or indirectly
(a) induce any suppliers of the Business to stop
supplying Purchaser, or (b) assist any other entity
in using such suppliers.
7.1.4 Special Remedies and Enforcement. The Sellers
recognize and agree that a breach by any of them of
any of the covenants set forth in Sections 7.1.1,
7.1.2 and 7.1.3 could cause irreparable harm to
Purchaser, that remedies at law in the event of such
breach would be inadequate, and that, accordingly, in
the event of any such breach a restraining order or
injunction or both may be issued against them, in
addition to any other rights and remedies which are
available. If any provision of Sections 7.1.1, 7.1.2
or 7.1.3 is more restrictive than permitted by the
Laws of the jurisdiction in which enforcement thereof
is sought, such provision shall be limited to the
extent required to permit enforcement under such
Laws. Without limiting the generality of the
foregoing, the parties intend that the covenants
contained in Sections 7.1.1, 7.1.2 and 7.1.3 shall be
construed as a series of separate covenants, one for
each state or jurisdiction referred to therein.
Except for geographic coverage, each such separate
covenant shall be deemed identical in terms. If, in
any judicial proceeding, a court shall refuse to
enforce any of the separate covenants deemed included
in this
39
Section 7.1, then such unenforceable covenant shall
be deemed eliminated from these provisions for the
purpose of those proceedings to the extent necessary
to permit the remaining separate covenants to be
enforced.
Section 7.2 Nondisclosure of Proprietary Data. From the
date hereof until the seventh anniversary of the Closing Date, none of the
Sellers nor any of their Affiliates or representatives shall, at any time, make
use of, divulge or otherwise disclose, directly or indirectly, any Intangible
Personal Property or other proprietary or confidential data (including, but not
limited to, any Customer List, record or financial information) concerning the
Business or the Assets that any such Seller or any Affiliate or representative
of such Seller may have learned as a shareholder, employee, officer, director or
representative of such Seller, except to the extent (i) any such Intangible
Personal Property or other proprietary or confidential data (including, but not
limited to, any Customer List, record or financial information) concerning the
Business or the Assets is or becomes generally available to the public or
industry other than as a result of a disclosure by any Seller or its Affiliates
or representatives or (ii) any Seller or any agent, representative or Affiliate
thereof becomes legally compelled to disclose any such Intangible Personal
Property or other proprietary or confidential data (including, but not limited
to, any Customer List, record or financial information) concerning the Business
or the Assets, provided that such Seller provides Purchaser prompt written
notice of such requirement and cooperates with Purchaser so that Purchaser may,
at its own expense, seek a protective order or other remedy. The provisions of
this Section 7.2 shall be in addition to, and not in lieu of, the terms and
provisions of Section 15.1.
40
Section 7.3 Refund Claims and Warranty Claims. Certain of
the Customer Contracts grant or will grant the customer or another Person a
right to reduce the contract price or receive a refund for Products sold and
shipped. Such claims by customers and other Persons under Contracts that
constitute or include the Customer Contracts are referred to in this Agreement
as "Refund Claims." Certain of the Customer Contracts also confer warranty and
similar rights on customers or other Persons. Such claims under such rights are
referred to in this Agreement as "Warranty Claims." Subject to Section 7.4, from
and after the Closing, (a) the Sellers shall have full responsibility for all
Refund Claims, Warranty Claims, product liability claims and other claims (i)
under all Customer Contracts that were or are completed or performed before the
Closing and (ii) with respect to all Products shipped by any Seller before the
Closing and (b) Purchaser shall have full responsibility for all Refund Claims,
Warranty Claims, product liability claims and other claims (i) under all
Customer Contracts entered into or performed by Purchaser on or after the
Closing and (ii) with respect to all Products shipped by Purchaser on or after
the Closing.
Section 7.4 Satisfaction of Warranty and Refund Claims.
Purchaser shall perform, at its actual cost, as an independent contractor for
the Sellers, all warranty work necessary to satisfy all valid Warranty Claims
for which any Seller is responsible pursuant to Section 7.3 ("Warranty Work").
The Sellers shall jointly and severally bear the costs of Warranty Work to the
extent such costs exceed the reserve established therefor, if any, in the
Closing Date Balance Sheet. In addition, the Sellers shall jointly and severally
bear the full amount of any Refund Claims to the extent that such Refund Claims
exceed the reserve established therefor, if any, in the Closing Date Balance
Sheet. Purchaser shall use its Best Efforts to consult with the Representative
prior to honoring any Refund Claim for which it intends to seek reimbursement
from the Representative or any Seller. The Representative shall be given
reasonable access to Purchaser's relevant records and personnel to enable him to
verify the costs of Warranty Work and the amount of any Refund Claims. Within 30
days of receipt thereof, the Representative, on behalf of the Sellers, shall pay
any invoice issued by Purchaser in respect of Warranty Claims or Refund Claims.
Purchaser shall perform the Warranty Work competently and in a timely manner and
shall bear full responsibility for any defects or claimed defects in any
Warranty Work. Following the Closing, Purchaser shall in general respond to and
deal with customers bringing any Warranty Claims or Refund Claims for which any
Seller is responsible pursuant to Section 7.3 in a manner consistent with the
practices of the Company prior to the Closing.
Section 7.5 Change Orders. Notwithstanding Sections 7.3 and
7.4, if Purchaser authorizes any change orders or amendments to any Contract
that affect the obligations of Purchaser or any Seller under that Contract, the
Sellers shall
41
not be required to participate in or bear any cost respecting any Refund Claim
or Warranty Claim connected with that change order or amendment.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Sellers, jointly and severally, hereby represent, warrant and agree
for the benefit of Purchaser as follows:
Section 8.1 Organization and Standing of the Sellers. Each
of PMI and BK Metals is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own its properties and assets and to carry
on the Business as the same has been and is currently conducted. Each of PMI and
BK Metals is duly qualified to transact business in all jurisdictions where the
nature of its business or the ownership or leasing of its property requires such
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect.
Section 8.2 Authorization and Binding Obligation of the
Sellers. Each of the Sellers has full power, authority and/or capacity to enter
into and perform this Agreement and each of the other Company Documents to be
delivered by it pursuant hereto. All corporate or other action on the part of
each of the Sellers (as applicable) and the directors, officers, trustees and
stockholders of each of the Sellers (as applicable) necessary for the
authorization, execution and delivery of this Agreement and the other Company
Documents and for the performance of their respective obligations hereunder and
thereunder, as the case may be, have been taken. Each of this Agreement and the
other Company Documents to be delivered by the Sellers pursuant hereto, when
executed and delivered, shall constitute a valid and legally binding obligation
of each Seller, enforceable against each Seller in accordance with its terms,
except as may be limited by (i) bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditors' rights generally and (ii) general
principles of equity (whether enforcement is sought at law or in equity).
Section 8.3 Non-Contravention. Neither the execution and
the delivery by any Seller of this Agreement or the other Company Documents, the
performance by any Seller of its obligations hereunder or thereunder, nor the
performance or consummation by any Seller of the transactions contemplated
hereby or thereby will (i) violate or conflict with any provision of the
Articles of Incorporation, By-laws or other organizational documents of any
Seller, (ii) violate or conflict with any Law or Order to which any Seller, any
Asset or the Business is
42
subject or bound, (iii) require the approval of or a filing or registration with
any Governmental Authority (other than any filings under the HSR Act), (iv)
except as set forth on Schedule 8.3, whether after notice or lapse of time or
both, violate or breach any provision of, result in the loss of a material
benefit under, or permit the termination or acceleration of any Material
Contract, (v) except as set forth on Schedule 8.3, require any authorization,
consent or approval of, exemption or other action by, or notice to, any party to
any Material Contract or (vi) result in the creation or imposition of any
Encumbrance upon any of the Assets (other than Permitted Encumbrances). On or
prior to the Closing, the Sellers will have obtained all consents, waivers and
approvals required under the Material Contracts listed on Schedule 8.3 as a
result of the transactions contemplated by this Agreement, and the same shall be
in full force and effect.
Section 8.4 Ability to Perform Obligations. None of the
Sellers is a party to, subject to, or bound by any agreement, Law or Order that
would reasonably be expected to prevent or materially impair (i) the performance
of its obligations under this Agreement, (ii) the value or utility of any of the
Assets to be conveyed hereunder, (iii) the sale, conveyance, transfer and
delivery of, or the right to sell, convey, transfer and deliver, any of the
Assets, or (iv) the carrying on of or the right to carry on the Business as
currently constituted and conducted.
43
Section 8.5 Financial Statements; Changes; Contingencies.
8.5.1 Audited Financial Statements. Copies of the audited
consolidated balance sheets of the Business as of
September 30, 1998 and December 31, 1997, and the
related consolidated statements of income and cash
flow for the nine months ended September 30, 1998 and
the fiscal year ended December 31, 1997, and the
notes thereto (collectively, the "Seller Financial
Statements"), duly certified by the President of PMI
and BK Metals, have been furnished to Purchaser. The
Seller Financial Statements include all Assets of the
Business as of the dates set forth therein and
reflect all operations of the Business for the
periods covered thereby. The Seller Financial
Statements (a) have been prepared in accordance with
GAAP applied on a consistent basis during the periods
covered thereby, (b) fairly present the consolidated
financial condition of the Business as of such dates
and the consolidated results of the operations of the
Business for the periods covered thereby, (c) contain
and reflect all necessary adjustments and accruals
for a fair presentation of the Business' consolidated
financial condition and the consolidated results of
operations of the Business for the periods covered by
the Seller Financial Statements, (d) contain and
reflect adequate provisions for all reasonably
anticipated liabilities for all Taxes, with respect
to the periods covered thereby and all prior periods,
(e) with respect to Contracts and commitments for the
sale of goods or the provision of services by the
Sellers (including, without limitation, all Customer
Contracts), contain and reflect adequate reserves for
all anticipated losses, returns and allowances and
costs in excess of anticipated receipts, and (f) do
not reflect items resulting directly from the
transactions contemplated by this Agreement.
8.5.2 No Material Adverse Changes. Since September 30,
1998, whether or not in the ordinary course of
business, there has not been, occurred or arisen: (i)
any change in or event affecting the Business or the
Assets that has had or would reasonably be expected
to have a Material Adverse Effect; (ii) any strike or
other labor dispute affecting the Business or any
Seller; (iii) any casualty, loss, damage or
destruction (whether or not covered by insurance) of
any material Asset;
44
or (iv) any agreement, condition, action, omission or
event which would be prohibited (or require consent)
under Section 6.4 had it existed, occurred or arisen
after the date of this Agreement.
8.5.3 Absence of Undisclosed Liabilities. As of September
30, 1998, none of the Sellers had any Liabilities and
Costs which were required by GAAP to be but were not
reflected on the Audited Balance Sheet. Since
September 30, 1998, none of the Sellers has incurred
any Liabilities and Costs which were required by GAAP
to be but were not reflected on the Monthly Financial
Statements.
Section 8.6 The Assets. All of the Assets used or required
in connection with the operation of the Business are either owned by a Seller or
are used by a Seller pursuant to a valid and enforceable leasehold interest, in
each case free and clear of all Encumbrances other than Permitted Encumbrances
and Encumbrances that will be released as of the Closing. This Agreement will at
the Closing vest good and marketable title to, or the valid and enforceable
right to receive and/or use, each such Asset in Purchaser, free and clear of all
Encumbrances other than Permitted Encumbrances.
Section 8.7 Accounts Receivable. All Receivables accrued on
the Audited Balance Sheet and all Receivables that have arisen since the Balance
Sheet Date (i) resulted from valid sales in the ordinary course of the Business
and represent fully completed bona fide transactions that require no further act
on the part of the Sellers to make such Receivables payable by the account
debtors; (ii) were, and are, not subject to any claim, counterclaim, offset or
deduction; (iii) represent valid obligations owing to the Sellers by account
debtors that are not Affiliates of the Sellers, which are enforceable in
accordance with their respective terms; (iv) are not more than 60 days' past
due; and (v) were, and are, owned by one or more of the Sellers free and clear
of all Encumbrances (other than Permitted Encumbrances and Encumbrances that
will be released as of the Closing). This Agreement will at the Closing vest
good and marketable title to the Receivables in Purchaser, free and clear of all
Encumbrances other than Permitted Encumbrances.
Section 8.8 Inventory. All Inventory of the Sellers
reflected on the Closing Date Balance Sheet consists of items of a quality and
quantity useable and saleable in the ordinary course of the Business without
xxxx-down or discount (other than a $200,000 reserve for losses projected on
uncompleted inventory), is of good merchantable quality and is fit for the
particular purpose for which it is
45
intended. The value of obsolete, damaged or excess Inventory and of Inventory
below standard quality has been written down on the Audited Balance Sheet or,
with respect to Inventory purchased since the Balance Sheet Date, on the books
and records of the Business, on the Monthly Financial Statements and on the
Closing Date Balance Sheet, to ascertainable market value, or adequate reserves
have been provided therefor, in accordance with GAAP. All such Inventory is
owned by the Sellers free and clear of any Encumbrances, other than Permitted
Encumbrances and Encumbrances that will be released as of the Closing, and is
located on property owned or leased by the Company (each such location being
listed on Schedule 8.8) or is in transit to one of such locations. No items
included in such Inventory are held by the Sellers on consignment from others or
held by others on consignment from the Sellers. This Agreement will at the
Closing vest good and marketable title to the Inventory in Purchaser, free and
clear of all Encumbrances other than Permitted Encumbrances.
Section 8.9 Intangible Personal Property. Schedule 8.9 sets
forth, as of the date hereof, (i) a true and accurate list of each registered
and each unregistered fictitious business name, trademark, service xxxx, trade
name, Internet domain name and slogan, and each registration and application for
any of the foregoing, constituting a part of the Intangible Personal Property;
(ii) a true and complete schedule of each registered copyright, and each
registration and application therefor constituting a part of the Intangible
Personal Property; (iii) a true and complete schedule of each registered patent
and patent application, constituting a part of the Intangible Personal Property;
(iv) each item of "software" and associated documentation constituting a part of
the Intangible Personal Property; (v) a true and complete list, without
extensive or revealing descriptions, of each trade secret constituting a part of
the Intangible Personal Property, including each related process or item of
know-how or other technical data, and including as to each such trade secret,
the specific location of each writing, computer program or other tangible medium
containing its complete description, specifications, source codes, charts,
procedures, manuals and other descriptive material relating to it; and (vi) a
true and complete list of each Contract to which any of the Sellers is a party
either as licensee or licensor relating to any item of the Intangible Personal
Property. Except as indicated on Schedule 8.9, the Sellers' transfer to
Purchaser of all of their right, title and interest in and to all items of the
Intangible Personal Property will not adversely affect in any material respect
the current value or usefulness thereof in the hands of Purchaser. Without
representation as to title, the Sellers shall provide to Purchaser the practical
benefits of any Intangible Personal Property that is currently used in the
operation of the Business but is not included in the Assets being conveyed to
Purchaser pursuant to this Agreement. Except as indicated on Schedule 8.9, as of
the date hereof:
46
8.9.1 the Sellers are the owners of all right, title and
interest in and to each item of the Intangible
Personal Property, free and clear of all Encumbrances
(other than Permitted Encumbrances and Encumbrances
that will be released as of the Closing);
8.9.2 all patents, copyrights and other state and federal
registrations and all applications therefor listed on
Schedule 8.9 are valid and in full force and effect
and are not subject to any Taxes, maintenance fees or
actions falling due within 120 days after the date
hereof;
8.9.3 there are no pending claims, actions, judicial or
other adversary proceedings, disputes or
disagreements involving the Sellers concerning any
item of the Intangible Personal Property, and, to the
Knowledge of the Sellers, no such action, proceeding,
dispute or disagreement is threatened;
8.9.4 the Sellers have the right and authority to use each
item of the Intangible Personal Property in
connection with the current conduct of the Business;
to the Knowledge of the Sellers, such use does not
conflict with, infringe upon, or violate any patent
or other proprietary right of any other Person, and,
to the Knowledge of the Sellers, the Sellers have not
infringed and are not now infringing upon any
proprietary right belonging to any other Person;
8.9.5 none of the Sellers have any trade secrets relating
to the Business.
Section 8.10 Kansas Facility.
8.10.1 PMI and the Trust, together, have good, marketable
and indefeasible title to the Kansas Facility except
statutory liens for amounts not yet delinquent, such
Encumbrances that are not material to the value of
such properties, and which do not materially
interfere with or impair the present, intended and
continued use of any such property and (iii)
Permitted Encumbrances and Encumbrances that will be
released as of the Closing. The Sellers represent
that (i) they have done nothing to impair the state
of title to the Kansas Facility, and (ii) to the
Knowledge of the Sellers, there are no
47
Encumbrances affecting the parcels comprising the
Kansas Facility other than Permitted Encumbrances and
Encumbrances that will be released as of the Closing.
8.10.2 None of the buildings, structures or improvements
located at the Kansas Facility encroaches upon or
over any adjoining real estate or any easement or
right-of-way or "setback" line and, all such
buildings, structures and improvements are located
and constructed in material conformity with all Laws
(including, without limitation, zoning ordinances and
building codes) applicable to such buildings,
structures and improvements. The use, operation and
maintenance by the Sellers of the Kansas Facility as
currently used, operated and maintained by the
Sellers, and the conduct of the Business as currently
conducted by the Sellers, do not violate and have not
violated any local zoning or similar land use laws or
any other applicable Law or Order.
8.10.3 The Kansas Facility is adequately serviced by all
utilities necessary for the effective operations of
the Business as currently conducted and has not,
during the last two years, experienced any material
interruption in the delivery of adequate quantities
of any utilities (including, without limitation,
electricity, natural gas, potable water, water for
cooling or similar purposes and fuel oil, but
excluding any electricity interruption due to storm
damage) or other public services, including, without
limitation, sanitary and industrial sewer services,
required by the Sellers in the operation of the
Business.
8.10.4 No condemnation or eminent domain proceedings have
been initiated by service of process on any Seller
which relate to the Kansas Facility, and no such
proceedings are, to the Knowledge of the Sellers,
threatened or have been filed by any relevant
Governmental Authority with respect to the Kansas
Facility.
Section 8.11 Tangible Personal Property. Schedule 8.11 sets
forth, as of the date hereof, (i) a description, including the location, of each
item of the Tangible Personal Property owned by any Seller having either a
depreciated book value or estimated fair market value in excess of $75,000, or
not owned by any Seller but in the possession of or used in the Business and
having rental payments therefor or an economic value to the Business in excess
of $75,000 per year
48
("Material Tangible Personal Property"); and (ii) a description of the owner of,
and any Contract relating to the use of, each such item of Material Tangible
Personal Property not owned by any Seller and the circumstances under which such
property is used. Except as disclosed on Schedule 8.11, as of the date hereof:
8.11.1 the Sellers have good and marketable title to, or a
valid and enforceable leasehold interest in, each
item of Material Tangible Personal Property, free and
clear of all Encumbrances other than Permitted
Encumbrances and Encumbrances that will be released
as of the Closing; each item of Material Tangible
Personal Property is in good operating condition and
repair, usable in the ordinary course of business,
and the operation thereof as conducted during the
twelve-month period prior to the date hereof and as
presently conducted is not in any material respect in
violation of any applicable building code, zoning
ordinance or other Law including, without limitation,
applicable Environmental Laws;
8.11.2 no item of the Tangible Personal Property has been
furnished to the Sellers by a customer or other
Person other than in connection with a bona fide sale
or lease transaction; and
8.11.3 during the past three years, there has not been any
significant interruption in the operations of the
Business due to inadequate maintenance of any item of
the Tangible Personal Property.
Section 8.12 Necessary Properties. The Assets include all
of the assets, real properties, tangible personal properties and intangible
properties necessary for the conduct of the Business as conducted during the
twelve-month period prior to the date hereof, as presently conducted and, other
than the Excluded Assets, include substantially all of those properties actually
used in the conduct of the Business during the twelve-month period prior to the
date hereof.
Section 8.13 Insurance. The Sellers (with respect to the
Business) are, and at all times during the past two years have been, insured
with reputable insurers, and all of the insurance policies and bonds maintained
by them are in full force and effect. Schedule 8.13 lists all insurance policies
and bonds that are material to the Business. None of the Sellers is in default
under any such policy or bond. The Sellers have timely filed claims with
insurers with respect to all material matters and occurrences for which they
have coverage. Schedule 8.13
49
summarizes all insurance claims made by the Sellers relating to the Business
during the past three years. The Sellers have complied with and implemented in
all material respects all outstanding (i) requirements of any insurance company
that has issued a policy with respect to any of the Material Tangible Property
and (ii) requirements of any Governmental Authority with respect to any such
insurance policy. The Company has never maintained a product liability insurance
policy.
Section 8.14 Accounts Payable. All of the accounts payable
on the Audited Balance Sheet and all accounts payable that have arisen since the
Balance Sheet Date arose from bona fide purchases of goods and services in the
ordinary course of the Business.
Section 8.15 Tax Matters. Except as indicated on Schedule
8.15:
For the purposes of this Section 8.15 and Section 4.2.2, the
Sellers shall be deemed to include any predecessor of any of the Sellers or any
person or entity from which any Seller incurs a liability for Taxes as a result
of transferee liability. Except as stated in Schedule 8.15:
8.15.1 Each Seller has duly and timely filed (and prior to
the Closing Date will duly and timely file) all Tax
Returns due on or prior to the Closing in all
jurisdictions (whether federal, state, local or
foreign) in which any such returns were due. All such
Tax Returns were prepared in accordance with
applicable Law and were true, complete and correct in
all material respects. All Taxes shown as due and
payable on such Tax Returns have been paid (or will
be), and there is no current liability for any Taxes
due and payable in connection with any such Tax
Returns. Any charges, accruals and reserves for Taxes
provided for on the financial statements delivered or
to be delivered pursuant to Section 8.5.1 are
adequate. There are no existing Encumbrances for
Taxes upon any of the Assets, except for Permitted
Encumbrances and Encumbrances that will be released
as of the Closing. PMI and BK Metals have provided
Purchaser with a copy of all Tax Returns filed by
such Seller with respect to the Business for the past
three years. All applicable sales Taxes, to the
extent due, were paid by PMI and BK Metals when the
Assets were acquired by such Seller;
8.15.2 PMI and BK Metals have (with respect to the Business)
(i) withheld all required amounts from its employees,
agents,
50
contractors and nonresidents and remitted such
amounts to the proper agencies; (ii) paid all
employer contributions and premiums and (iii) filed
all federal, state, local and foreign Tax Returns
with respect to employee income tax withholding, and
social security and unemployment taxes and premiums,
all in compliance with the withholding tax provisions
of the Code and other applicable Laws;
8.15.3 None of the Assets is tax exempt use property under
Code Section 168(h). None of the Assets is property
that PMI and BK Metals is required to treat as being
owned by any other person pursuant to the safe harbor
lease provision of former Code Section 168(f)(8);
8.15.4 No portion of the cost of any of the Assets was
financed directly or indirectly from the proceeds of
any tax exempt state or local government obligation
described in Code Section 103 (a);
8.15.5 PMI and BK Metals do not have (and have not
previously had) any permanent establishment in any
foreign country and none of PMI and BK Metals do not
engage (and have not previously engaged) in a trade
or business within the meaning of the Code relating
to the creation of a permanent establishment in any
foreign country;
8.15.6 None of the Sellers is a foreign person within the
meaning of Code Section 1445;
8.15.7 Neither the Code nor any other provision of Law
requires Purchaser to withhold any portion of the
Purchase Price;
8.15.8 The Sellers have delivered to Purchaser true and
correct copies of all Federal and state income Tax
Returns of PMI and BK Metals for the last three
completed fiscal years;
8.15.9 There is no Tax sharing or other Tax-related
agreement in effect among or between the Sellers
and/or any other Person. PMI and BK Metals are not
subject to any partnership, joint venture or other
arrangement which is treated as a partnership for
Federal or state income Tax purposes; and
51
8.15.10 None of the Sellers is a "United States real property
holding corporation" as defined in Section 879(c)(1)
of the Code.
Section 8.16 Litigation. Schedule 8.16 sets forth an
accurate and complete description of every pending or, to the Knowledge of the
Sellers, threatened adverse claim, dispute, governmental investigation, suit,
action (including, without limitation, nonjudicial real or personal property
foreclosure actions), arbitration, legal, administrative or other proceeding of
any nature, domestic or foreign, criminal or civil, at law or in equity, by or
against or otherwise affecting or relating to any Seller, the Business, the
Assets or the transactions contemplated by this Agreement. The Sellers have
delivered to Purchaser copies of all relevant court papers and other documents
relating to the matters referred to on Schedule 8.16. Except as disclosed on
Schedule 8.16:
8.16.1 no such matter or matters, if decided adversely to
any Seller, would reasonably be expected to result in
a liability or have an adverse effect on the Business
or the Assets in an amount in excess of $150,000 or
impair the ability of any party to consummate the
transactions contemplated by this Agreement;
8.16.2 none of the Sellers is in default with respect to any
Order by which it is bound or to which its property
or any Assets is subject and there exists no Order
enjoining or requiring any of the Sellers to take any
action of any kind with respect to the Business or
the Assets;
8.16.3 neither the Sellers nor, to the Knowledge of the
Sellers, any officer, director or employee of any
Seller, has been permanently or temporarily enjoined
by any Order from engaging in or continuing any
conduct or practice in connection with the Business
or the Assets; and
8.16.4 to the Knowledge of the Sellers, no basis exists for
any claim, investigation, suit or proceeding which,
if decided adversely to the Sellers, would reasonably
be expected to result in a liability or have an
adverse effect on the Business or the Assets in an
amount in excess of $150,000 or impair the ability of
any party to consummate the transactions contemplated
by this Agreement.
52
Section 8.17 Labor Relations. None of the Sellers is a
party to or is subject to any collective bargaining agreement, and there are no
strikes or other labor disputes against the Sellers pending or, to the Knowledge
of the Sellers, threatened. The Sellers have complied in all material respects
with all Labor Agreements and all Laws relating to the employment of labor,
including those related to wages, hours, collective bargaining, occupational
safety, and the payment of social security and other payroll related Taxes, and
none of the Sellers has received any notice alleging a failure to comply in any
material respect with any Law or Order relating to the employment of labor. No
material controversies, disputes or proceedings are pending or, to the Knowledge
of the Sellers, threatened against the Sellers with respect to their employees.
As of the date hereof, to the Knowledge of the Sellers, there are no activities
or proceedings of any labor union to organize non-unionized employees. All
payments due from the Sellers for which any claim may be made against the
Sellers on account of wages and employee health and welfare insurance and other
benefits have been paid or accrued as a liability on the financial statements of
the Business. Except as disclosed on Schedule 8.17 or to the extent reflected on
the Closing Date Balance Sheet and included in the calculation of the Adjustment
Amount, no present or former employee, officer, consultant or director of any
Seller will have as of the Closing Date any claim against any Seller or
Purchaser for any matter, including without limitation (i) overtime pay for work
done through the Closing Date, (ii) wages or salary for work done through the
Closing Date, (iii) vacation time off or pay in lieu of vacation time off for
the period through the Closing Date; (iv) any violation of any Law relating to
minimum wages or maximum hours, workplace conditions, or any other matter, or
(v) injuries or other damages which are not fully covered by the Sellers'
insurance policies. Except as disclosed on Schedule 8.17, there are no
employment agreements, severance agreements, change of control agreements or
similar agreements covering the employees, officers, directors or consultants of
any Seller with respect to the Business.
Section 8.18 Employee Benefits.
8.18.1 Neither the Sellers nor any ERISA Affiliate maintains
or contributes to any Plan other than the Plans
listed on Schedule 8.18 hereto, and neither the
Sellers nor any ERISA Affiliate maintains or
contributes to any Multiemployer Plan or to any Plan
subject to Part 3 of Title I of ERISA (concerning
"funding") or to Section 412 of the Code.
8.18.2 Each Plan which is intended to be qualified under
Section 401(a) of the Code has been determined by the
IRS to be so qualified, and each trust related to any
such Plan
53
has been determined to be exempt from federal income
tax under Section 501(a) of the Code. Except as
disclosed on Schedule 8.18, neither the Sellers nor
any ERISA Affiliate maintains or contributes to any
employee welfare benefit plan within the meaning of
Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than
as required by Section 601 of ERISA.
8.18.3 Neither the Sellers nor any ERISA Affiliate has
materially breached any of the responsibilities,
obligations or duties imposed on it by ERISA or
regulations promulgated thereunder with respect to
any Plan.
8.18.4 No Seller has incurred Liabilities and Costs with
respect to post-retirement health care benefits for
employees or former employees of the Business other
than as required by Section 601 of ERISA.
8.19 Section Governmental Approvals; Compliance with Laws.
The Sellers possess all Governmental Approvals, including, without limitation,
all Environmental Permits, necessary for the operation of the Business as
currently conducted. To the Knowledge of the Sellers, all such Governmental
Approvals are in full force and effect, the Sellers are in compliance, in all
material respects, with their requirements, and no proceeding is pending or, to
the Knowledge of the Sellers, threatened to revoke or amend any of them.
Schedule hereto contains a complete list of all such Governmental Approvals. The
operations of the Business comply in all material respects with all applicable
Laws, including, without limitation, all Environmental Laws. To the Knowledge of
the Sellers, neither any Seller (with respect to the Business) nor the Business
is subject to any investigation, judicial or administrative proceeding, or Order
of or by a Governmental Authority.
8.20 Section Customer Lists. Schedule 8.20 contains a
correct and current list of each customer of the Business who has purchased more
than $500,000 of Products from the Sellers in any calendar year since January 1,
1997 ("Material Customers"), together with the sales made to each such customer
since January 1, 1997. Schedule 8.20 contains a full and complete list of the
current and former customers of the Business. Except as set forth on Schedule
8.20, no Material Customer has decreased or, to the Knowledge of the Sellers,
has threatened or expressed an intention to decrease its purchases of Products
of the Business since January 1, 1997. Except as set forth on Schedule 8.20,
since January 1, 1997, to the Knowledge of the Sellers there has been no
termination, cancellation, or limitation of, or any adverse material
modification or adverse change in, the business
54
relationship of the Sellers with any Material Customer. The consummation of the
transactions contemplated hereby will not, to the Knowledge of the Sellers,
adversely affect the relationship between the Business and any Material
Customer, subject to obtaining the consents set forth on Schedule 8.29.
Section 8.21 Environmental Matters. For purposes of Section
8.21.1 through 8.21.9, inclusive, the term "Business" shall be deemed to include
any predecessor to the Business and any Persons from which the Business has
assumed liabilities by contract, operation of Law, or otherwise. Except as
disclosed on Schedule 8.21:
8.21.1 The Sellers, with respect to the Business, are in
compliance with all applicable Environmental Laws and
none of the Sellers has received a notice, demand,
letter, claim or request for information indicating
that any Seller or the Business is or may be in
violation of or liable under any Environmental Law;
8.21.2 There is no civil, criminal, or administrative
action, suit, demand, claim, notice of violation,
investigation, or proceeding pending relating to the
Assets or the Business or, to the Knowledge of the
Sellers, threatened against the Assets or the
Business relating in any way to Environmental Laws;
8.21.3 To the Knowledge of the Sellers, there are no facts
or circumstances that material capital expenditures
will likely be required within two years of the
Closing Date to conduct the Business as it is
currently conducted and to maintain compliance with
all current and any currently pending or proposed
Environmental Laws. None of the Sellers has actual or
potential liability for indemnity or similar
obligations with respect to any third party under any
Environmental Law;
8.21.4 The Sellers possess all permits, licenses,
authorizations, and approvals required under
applicable Environmental Laws ("Environmental
Permits") to operate the Business in compliance with
such Environmental Laws, and all such Environmental
Permits are currently maintained in full force and
effect. None of the Sellers has received notice or
other communication, and to the Knowledge of the
Sellers, there are
55
no facts or circumstances, that any such
Environmental Permits may be suspended, revoked or
modified by any Governmental Authority. Schedule
8.21.4 contains a true and complete listing of all
such Environmental Permits;
8.21.5 No Hazardous Substances handled during the operation
of the Business have been placed, stored, buried,
released, dumped or disposed of on the properties of
the Business, nor to the Knowledge of each of the
Sellers, at any off-site location, including any
storage, treatment or disposal facility in quantities
that could result in a material liability with
respect to the Business. No cleanup has occurred at
any property owned or operated by any Seller with
respect to the Business that would reasonably be
expected to result in the assertion or creation of an
Encumbrance on such property by any Governmental
Authority with respect thereto, nor has any such
assertion of an Encumbrance been made by any
Governmental Authority;
8.21.6 None of the Sellers has received a written notice or
other written communication from any Governmental
Authority or other Person seeking information in
connection with, or advising it that it is
responsible for, or potentially responsible for,
costs with respect to a release, a threatened release
or a clean-up of Hazardous Substances generated,
stored, treated, disposed of or transported by or for
the Business;
8.21.7 There is not at, on or in any property owned or
operated by any Seller (with respect to the Business)
(i) any friable asbestos-containing material; (ii)
any poly-chlorinated biphenyls or lead-based paint in
concentrations that would impose regulatory
obligations on any Seller; or (iii) other than
naturally occurring radioactive materials that are
present at the property such as radon, any
radioactive material including but not limited to,
any source, special nuclear or byproduct material as
defined in 42 X.X.X.xx. 2011 et seq., as amended or
hereafter amended;
8.21.8 There are no underground storage tanks or regulated
surface impoundments at, on or in any property owned
or operated by the Sellers with respect to the
Business. Schedule 8.21.8
56
contains a true and complete list of any such tanks
or impoundments; and
8.21.9 The Sellers have provided Purchaser copies of all
environmental reports, studies, assessments, and
sampling data ("Environmental Reports") within their
possession that have been issued within the past five
years by or for the Sellers, or by any Governmental
Authority, relating to the Business. Schedule 8.21.9
contains a true and complete list of all such
Environmental Reports.
Section 8.22 Suppliers. No supplier of materials or services to any
Seller (with respect to the Business) who has had sales to the Sellers in excess
of $200,000 since January 1, 1997 or whose materials or services are material to
the operation of the Business ("Material Suppliers") has since January 1, 1997
materially decreased or, to the Knowledge of the Sellers, has threatened or
expressed an intention to materially decrease or limit, except upon a Seller's
request, its provision of such materials or services. To the Knowledge of the
Sellers, there has not occurred any termination, cancellation, or limitation of,
or any material modification or change in, the business relationships of any
Seller with any Material Supplier since January 1, 1997. The consummation of the
transactions contemplated hereby will not, to the Knowledge of the Sellers,
adversely affect the relationships between the Business and any Material
Supplier, subject to obtaining the consents set forth on Schedule 8.29.
Section 8.23 Brokers, Finders. Neither this Agreement nor the sale and
purchase of the Assets or any other transactions contemplated by this Agreement
was induced by or procured through or otherwise involved in any way any Person
acting on behalf of or representing any Seller as broker, finder, investment
banker, financial advisor or in any similar capacity.
Section 8.24 Material Contracts.
57
8.24.1 Schedule 8.24 lists each Purchased Contract to which
any Seller (with respect to the Business) is a party
or to which any Seller or any of the Assets is
subject or bound that (a) is a Customer Contract that
provides for payments to or performance by the
Sellers, individually or collectively, in excess of
$100,000 in the aggregate, (b) represents a Contract
the absence of which could have a Material Adverse
Effect, (c) is a supplier, vendor or other Contract
that provides for payments by the Sellers,
individually or collectively, in excess of $50,000
per annum and which cannot be terminated by Purchaser
after the Closing in accordance with its terms upon
not more than 30 days' notice without penalty or
cost, (d) limits or restricts the ability of any
Seller (with respect to the Business) to compete or
otherwise to conduct its business in any manner or
place, (e) provides for a guaranty or indemnity by
any Seller (with respect to the Business), (f) grants
a power of attorney, agency or similar authority to
another Person, (g) is a prime Government Contract,
(h) provides for the sale of assets outside the
ordinary course of the Business, (i) grants any
preferential right to purchase any assets, (j)
relates to a joint venture or partnership involving
the Business or any Assets, (k) represents a Contract
for the employment of any director, officer,
consultant or employee or a Contract, program or
policy providing for benefits or compensation to any
director, officer, consultant or employee or (l) is a
Contract relating to the Business to which any
Seller, Affiliate of any Seller or any Associate of
any such Person is directly or indirectly, a party
(each of the Contracts described under clauses (a)
through (l) being a "Material Contract"). True copies
of each Material Contract, including all amendments
and supplements thereto, have been furnished to
Purchaser. Except as set forth on Schedule 8.24, each
Material Contract is valid and enforceable; each
Seller has duly performed in all material respects
all of its obligations thereunder to the extent that
such obligations to perform have accrued; and no
material breach or default, alleged material breach
or default, or event which would (with the passage of
time, notice or both) constitute a material breach or
default thereunder by any Seller or, to the Knowledge
of the Sellers, any other party or obligor with
respect thereto, has occurred or as a result of this
Agreement or the performance hereof
58
will occur. No Material Contract requires any Seller
to buy or sell goods or services with respect to
which there is expected to be costs and expenses in
excess of currently expected receipts for which
adequate reserves in accordance with GAAP have not
been established on the Closing Date Balance Sheet.
Subject to obtaining the consents set forth on
Schedule 8.29, the consummation of the transactions
contemplated by this Agreement will not (and will not
give any Person a right to) terminate or modify any
rights of, or accelerate or augment any obligation
of, any Seller or Purchaser under the terms of any
Material Contract.
8.24.2 With respect to each Material Contract (a) each
Seller party thereto has complied with all
requirements of all material Laws or agreements
pertaining to such Material Contract; (b) all
representations and certifications executed,
acknowledged or set forth in such Material Contract
were complete and correct in all material respects as
of their effective date, and each Seller party
thereto has complied in all material respects with
all such representations and certifications; (c)
neither any party with whom any Seller has contracted
nor any other Person has notified any Seller, either
in writing or, to the Knowledge of the Sellers,
orally, that such Seller has breached or violated any
Law, Order, certification, representation, clause,
provision or requirement pertaining to such Material
Contract; (d) no Seller or, to the Knowledge of the
Sellers, any third party has terminated or threatened
termination of any such Material Contract for any
reason; (e) no material cost incurred by any Seller
pertaining to such Material Contract has been
formally questioned or challenged or, is the subject
of any investigation; and (f) no money due to any
Seller pertaining to such Material Contract has been
withheld or offset nor has any claim been made to
withhold or offset money.
8.24.3 With respect to the Business, there exist (i) no
outstanding material claims against any of the
Sellers, either by any party with whom any Seller has
contracted or by any prime contractor, subcontractor,
vendor or other third party, arising under or
relating to any Purchased Contract; and (ii) no
material disputes between any of the Sellers and any
party with whom any Seller has contracted, any prime
contractor,
59
subcontractor or vendor arising under or
relating to any Purchased Contract. None of
the Sellers has any interest in any pending
or potential claim against any party with
whom any Seller has contracted or any prime
contractor, subcontractor or vendor arising
under or relating to any Purchased Contract.
Section 8.25 Customer Warranties and Return Policies. Set
forth on Schedule 8.25 are warranties given and return policies offered by the
Sellers to any customers of the Business, together with an historical summary of
all warranty and return claims made against any Seller since January 1, 1997,
and a description of their status or disposition. There are not pending, or, to
the Knowledge of the Sellers, threatened, any claims under or pursuant to any
warranty or return policy, whether expressed or implied, on Products sold prior
to the date of this Agreement by any of the Sellers that are not disclosed or
referred to in the Audited Balance Sheet and which are not fully reserved
against.
Section 8.26 Products Liability.
8.26.1 Claims. Except as disclosed on Schedule 8.26 (i)
there is no claim now pending or, to the Knowledge of
the Sellers, threatened by or before any Governmental
Authority alleging any defect in any Product
manufactured, shipped, sold or delivered by the
Business or alleging, with respect thereto, the
failure of any Seller to warn or any breach by any
Seller of any express or implied warranties or
representations, nor is there any valid basis for any
such claim; (ii) to the Knowledge of the Sellers,
there has not within the last five years been any
product recall or post-sale warning or similar action
(collectively "Recalls") conducted with respect to
any Product manufactured, shipped, sold or delivered
by the Business, or any investigation by any
Governmental Authority concerning whether to
undertake or not undertake any Recalls; and (iii)
within the last five years there have been no
material defects in, failures to warn, or breaches of
express or implied warranties or representations with
respect to, any Product manufactured, shipped, sold
or delivered by any of the Sellers with respect to
the Business.
8.26.2 Compliance With Standards. All manufacturing
standards applied, testing procedures used, and
product specifications
60
disclosed to customers by the Sellers comply in all
material respects with all applicable Laws and
Orders.
8.26.3 Occurrences. To the Knowledge of the Sellers, except
as disclosed on Schedule 8.26, there have been no
Occurrences within the last five years. For purposes
of this Section 8.26.3, "Occurrence" shall mean any
occurrence which is caused or allegedly caused by any
defect in, or failure to warn or any breach of
express or implied warranties or representations with
respect to, a Product manufactured, shipped, sold or
delivered by any of the Sellers with respect to the
Business which results or is alleged to have resulted
in injury or death to any Person or damage to or
destruction of property (including damage to or
destruction of the Product itself) or other
consequential damages.
Section 8.27 Federal Reserve Board Regulations. None of the
Sellers owns any "margin security," as such term is defined in Regulation U of
the Board of Governors of the Federal Reserve System.
Section 8.28 Restrictions on Transfer of Assets. None of
the Sellers is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940 or any
other Law or Order restricting the transfer of the Assets.
Section 8.29 Consents and Governmental Approvals. Except as
set forth on Schedule 8.29, no consent, authorization, license, permit,
registration, Governmental Approval or exemption or other action by any
Governmental Authority or any other Person (including, without limitation, any
parties to Purchased Contracts) is required in connection with the Sellers'
execution and delivery of this Agreement or the performance by each Seller of
its obligations hereunder.
61
Section 8.30 Government Contracts.
8.30.1 In addition to the representations and warranties in
Section 8.24, with respect to each and every
Government Contract or bid which, if accepted, would
result in a Government Contract (a "Government Bid"):
(i) each Seller has complied with all material terms
and conditions of such Government Contract or
Government Bid, including all clauses, provisions and
requirements incorporated expressly, by reference or
by operation of Law therein; (ii) each Seller has
complied with all requirements of all material Laws
or agreements pertaining to such Government Contract
or Government Bid; (iii) all representations and
certifications executed, acknowledged or set forth in
or pertaining to such Government Contract or
Government Bid were complete and correct in all
material respects as of their effective date, and
each Seller has complied in all material respects
with all such representations and certifications;
(iv) neither the U.S. Government nor any prime
contractor, subcontractor or other Person has
notified any Seller, either in writing or, to the
Knowledge of the Sellers, orally, that such Seller
has breached or violated any Law, Order,
certification, representation, clause, provision or
requirement pertaining to such Government Contract or
Government Bid; (v) the Sellers have not terminated
any Government Contract nor have they been notified
by the U.S. Government, any prime contractor,
subcontractor or any other Person that any Government
Contract has been terminated for any reason; (vi) no
material cost incurred by each Seller pertaining to
such Government Contract or Government Bid has been
formally questioned or challenged or, to the
Knowledge of the Sellers, is the subject of any
investigation or has been disallowed by the U.S.
Government; and (vii) no money due to any Seller
pertaining to such Government Contract or Government
Bid has been withheld or set off nor has any claim
been made to withhold or set off money and such
Seller is entitled to all progress payments received
with respect thereto.
8.30.2 With respect to the Business: (i) none of the Sellers
nor, to the Knowledge of the Sellers, any of their
directors, officers, employees, consultants or agents
is (or during the last three
62
years has been) under administrative, civil or
criminal investigation, indictment or information by
any Governmental Authority, or any audit or
investigation of any Seller with respect to any
alleged irregularity, misstatement or omission
arising under or relating to any Government Contract
or Government Bid; and (ii) during the last three
years, the Sellers have not conducted or initiated
any internal investigation or made a voluntary
disclosure to the U.S. Government with respect to any
alleged irregularity, misstatement or omission
arising under or relating to a Government Contract or
Government Bid. There exists no irregularity,
misstatement or omission arising under or relating to
any Government Contract or Government Bid that has
led to any of the consequences set forth in clause
(i) or (ii) of the immediately preceding sentence or
any other damage, penalty assessment, recoupment of
payment or disallowance of cost.
8.30.3 With respect to the Business, there exist (i) no
outstanding material claims against any of the
Sellers, either by the U.S. Government or by any
prime contractor, subcontractor, vendor or other
third party, arising under or relating to any
Government Contract or Government Bid; and (ii) no
material disputes between any of the Sellers and the
U.S. Government under the Contract Disputes Act or
any other Federal statute or between any of the
Sellers and any prime contractor, subcontractor or
vendor arising under or relating to any Government
Contract or Government Bid. None of the Sellers has
any interest in any pending or potential claim
against the U.S. Government or any prime contractor,
subcontractor or vendor arising under or relating to
any Government Contract or Government Bid. To the
knowledge of the Sellers, Schedule 8.30 identifies
each Government Contract which is currently under
audit by the U.S. Government or any other Person that
is a party to such Government Contract.
8.30.4 All material test and inspection results provided by
any Seller to the U.S. Government pursuant to any
Government Contract or to any other Person pursuant
to a Government Contract or as a part of the delivery
to the U.S. Government or to any other Person
pursuant to a Government Contract
63
of any article designed, engineered or manufactured
in the Business were complete and correct in all
material respects as of the date so provided. The
Sellers have provided all material test and
inspection results to the U.S. Government and each
other Person who is required to receive such
information under applicable Law and the terms of the
Government Contracts.
Section 8.31 Clearances. There are no facility security
clearances or personnel security clearances required under applicable Law in
connection with the operation of the Business.
Section 8.32 Disclosure; Due Diligence. No representation
or warranty by any Seller contained in this Agreement, nor any writing,
certificate, exhibit, list or other instrument required to be furnished by any
Seller to Purchaser pursuant hereto, contains or will contain any material
untrue statement of fact or omits or will omit any fact necessary in order to
make the statements and information contained herein or therein not materially
misleading.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents, warrants and agrees for the benefit of
each of the Sellers as follows:
9.1 Section Organization and Standing of Purchaser.
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all the corporate power and
authority to execute this Agreement and consummate the transactions contemplated
hereby.
9.2 Section Authorization and Binding Obligation of
Purchaser. Purchaser has full corporate power and authority to enter into and
perform this Agreement and all other Purchaser Documents. All corporate action
on the part of Purchaser and the directors, officers and stockholders of
Purchaser necessary for the authorization, execution and delivery of this
Agreement and the other Purchaser Documents and for the performance of all of
Purchaser's obligations hereunder and thereunder, as the case may be, have been
taken, and each of this Agreement and each of the other Purchaser Documents to
be delivered by it pursuant hereto, when executed and delivered, shall
constitute a valid and legally binding obligation of Purchaser, enforceable
against Purchaser in accordance with their respective terms, except as may be
limited by (i) bankruptcy, insolvency, or
64
other similar laws affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (whether enforcement is sought at law or in
equity).
Section 9.3 Ability to Perform Obligations. Purchaser is
not a party to, subject to, or bound by any agreement, Law or Order that would
reasonably be expected to prevent or materially impair (i) the performance of
its obligations under this Agreement, or (ii) the purchase and receipt of, or
the right to purchase or receive any of the Assets.
Section 9.4 Brokers, Finders. Other then Mentmore Holdings
Corporation (whose fees will be paid by Purchaser), neither this Agreement nor
the sale and purchase of the Assets or any other transaction contemplated by
this Agreement was induced by or procured through or otherwise involved in any
way any Person acting on behalf of or representing Purchaser as broker, finder,
investment banker, financial advisor or in any similar capacity.
Section 9.5 Non-Contravention. Neither the execution nor
the delivery by Purchaser of this Agreement or the other Purchaser Documents,
the performance by Purchaser of its obligations hereunder or thereunder, nor the
performance or consummation by Purchaser of the transactions contemplated hereby
or thereby will (i) violate or conflict with any provision of the Certificate of
Incorporation, By-laws or other organizational documents of Purchaser, (ii)
violate or conflict with any Law or Order to which Purchaser is subject or
bound, (iii) require the approval of or a filing or registration with any
Governmental Authority (other than any filings under the HSR Act), (iv) whether
after notice or lapse of time or both, violate or conflict with any provision of
any contract, agreement or understanding, whether oral or written, to which
Purchaser is a party, except where such violation or breach would not adversely
impact the ability of Purchaser to consummate the transactions contemplated
herein or in the other Purchaser Documents, (v) require any authorization,
consent or approval of, exemption or other action by, or notice to, any party to
any contract, agreement or understanding, whether oral or written, to which
Purchaser is a party, where the failure to obtain any such authorization,
consent, approval, execution or other action or the failure to provide such
notice would adversely impact the ability of Purchaser to consummate the
transactions contemplated herein or in the other Purchaser Documents or (vi)
result in the creation or imposition of an Encumbrance upon any moneys or
instruments received by any of the Sellers in consideration for the sale of the
Assets pursuant to this Agreement.
Section 9.6 Litigation. As of the date hereof, to Purchaser's
knowledge, there is no suit, investigation, action or other proceeding pending,
threatened before any Governmental Authority, against Purchaser which would
65
materially impair the ability of Purchaser to perform its obligations hereunder
or which seeks to prevent the consummation of the transactions contemplated
herein.
Section 9.7 Plant Closings and Mass Layoffs. Purchaser does
not currently plan or contemplate initiating within six months after the Closing
any plant closings, reductions in force or terminations that, in the aggregate,
would constitute a "mass layoff" of the employees of the Business for purposes
of the Worker Adjustment Retraining Notification Act.
ARTICLE 10
TERMINATION
Section 10.1 Termination Agreement. Anything herein to the
contrary notwithstanding, this Agreement and the transactions contemplated
hereby shall terminate if the Closing does not occur on or before the close of
business on April 30, 1999. In addition, this Agreement and the transactions
contemplated hereby may be terminated at any time before the Closing as follows:
10.1.1 Mutual Consent. By mutual consent in writing of
Purchaser and the Representative, on behalf of the
Sellers.
10.1.2 Conditions to Purchaser's Performance Not Met. By
Purchaser by written notice to the Representative if
any event occurs or condition exists which would
render impossible the satisfaction of one or more
conditions to the obligations of Purchaser to
consummate the transactions contemplated by this
Agreement as set forth in Article 12.
10.1.3 Conditions to the Sellers' Performance Not Met. By
the Representative by written notice to Purchaser if
any event occurs or condition exists which would
render impossible the satisfaction of one or more
conditions to the obligation of the Sellers to
consummate the transactions contemplated by this
Agreement as set forth in Article 13.
10.1.4 Material Breach. By Purchaser or the Representative
if there has been a material misrepresentation or
other material breach by the Sellers (in the case of
Purchaser) or Purchaser (in the case of the
Representative) in its representations,
66
warranties and covenants set forth herein; provided,
however, that if such breach is susceptible to cure,
the breaching party or parties shall have twenty
calendar days after receipt of written notice from
the other party of its intention to terminate this
Agreement if such breach continues in which to cure
such breach.
Section 10.2 Effect of Termination. In the event that this
Agreement shall be terminated pursuant to Section 10.1, all further obligations
of the parties under this Agreement shall terminate; provided that the
obligations of the parties contained in Sections 10.3 and 16.2 and Articles 14
and 15 shall survive any such termination. Except for a termination pursuant to
Section 10.1.1, a termination under Section 10.1 shall not relieve any party of
any liability for a breach of, or for any misrepresentation under this
Agreement, or be deemed to constitute a waiver of any available remedy
(including specific performance if available) for any such breach or
misrepresentation.
10.3 Section Expenses. In the event the transactions
contemplated by this Agreement shall not be consummated, the parties hereto
shall bear their own respective expenses, as provided in Section 16.2.
ARTICLE 11
EMPLOYMENT MATTERS
Section 11.1 Employees.
11.1.1 During the period between the date hereof and the
Closing Date, Purchaser shall determine those
employees of the Business to whom Purchaser will
offer employment as of the Closing. Purchaser will
use its Best Efforts to provide notice to the Company
at least five (5) days prior to the Closing Date of
those employees of the Business to whom Purchaser
will not offer employment as of the Closing. With
respect to those employees of the Business whom
Purchaser decides to hire, the initial terms of
employment shall be substantially similar to the
terms of employment maintained by the Sellers with
such employees prior to the Closing Date. Except to
the extent that they constitute Assumed Liabilities
under Section 4.1.4, all costs and liabilities
associated with any Seller's employment of its
employees or former employees, or with the
termination or resignation of such Seller's
employees,
67
including liabilities with respect to any employment
agreement, bonuses, severance pay or the Plans, shall
be the obligation of such Seller. Each Seller shall
have the responsibility for providing health care
continuation coverage to any of its employees
terminated before the Closing, any of its employees
who decline offers of employment by Purchaser
following the Closing and to former employees
presently receiving continuation coverage. If any
Seller ceases to maintain any group health plan it
shall reimburse Purchaser for costs incurred by
Purchaser in providing continuation coverage to
persons described in the preceding sentence.
Purchaser shall not be liable to any Seller or any
employee for costs or liabilities relating to an
employee's employment with such Seller except to the
extent of any such costs or liabilities are Assumed
Liabilities. Purchaser shall have no obligation to
recognize the service with any Seller of any former
employee of such Seller for any purpose, including
retirement or severance benefits.
11.1.2 On or promptly following the Closing Date, the
Sellers and Purchaser shall use their respective Best
Efforts to effect the merger of the 401(k) portion of
the Profit Sharing Plan into Purchaser's Plan,
effective as promptly thereafter as is practicable.
Section 11.2 Termination of the Profit Sharing Plan. The
Sellers shall commence the termination of the Profit Sharing Plan no later than
the date of the merger of the 401(k) portion of the Profit Sharing Plan into
Purchaser's Plan pursuant to Section 11.1.2. The Sellers shall complete the
termination of the Profit Sharing Plan as soon as practicable after the Sellers'
receipt of any Governmental Approval that the Sellers reasonably deem necessary
or prudent.
Section 11.3 Consulting and Non-Competition Agreement. At
Closing, Xxxxxxxx shall enter into a Consulting and Non-Competition Agreement
with Purchaser (the "Consulting Agreement"), substantially in the form of
Exhibit E.
ARTICLE 12
CLOSING CONDITIONS OF PURCHASER
68
The obligations of Purchaser to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions, any one or more of which
may be waived (but only in writing) by Purchaser (provided that no such waiver
shall be deemed to have cured any breach of any representation, warranty or
covenant made under this Agreement):
Section 12.1 Representations, Warranties and Covenants of
the Sellers. (i) All of the representations and warranties made by each of the
Sellers in this Agreement and the other Company Documents, or otherwise in
connection with the transactions contemplated hereby, shall be true and correct,
provided, however, that (i) in the case of any representation or warranty
contained in Section 8.2 or 8.4 or any representation or warranty that is
qualified as to materiality, such representation and warranty shall be true and
correct in all respects, and (ii) in the case of any other representation or
warranty, such representation and warranty shall be true and correct in all
material respects, in each case as of the date hereof and as of the Closing Date
as though made at and as of the Closing Date, except to the extent such
representations and warranties speak as of an earlier date; (ii) the Sellers
shall have performed and complied, in all material respects, with all
agreements, covenants and conditions required by this Agreement to be performed
by them on or prior to the Closing Date; and (iii) with respect to clauses (i)
and (ii), at the Closing there shall be delivered to Purchaser a certificate
signed by or on behalf of each Seller to the foregoing effect.
Section 12.2 Deliveries to Be Made by Each Seller at the
Closing. At the Closing, each Seller shall deliver or cause to be delivered to
Purchaser the following in form and substance reasonably satisfactory to
Purchaser:
12.2.1 All bills of sale and other documents and instruments
of sale, assignment, conveyance and transfer as
Purchaser or its counsel may reasonably deem
necessary or desirable to sell, assign, convey and
transfer to, and to vest, perfect and confirm in
Purchaser good, marketable and indefeasible title in
and to the Assets;
12.2.2 The Assets;
12.2.3 Copies of resolutions of the board of directors of
each corporate Seller authorizing and approving the
execution and delivery of this Agreement and the
performance by each corporate Seller of its
respective obligations hereunder, certified by the
Secretary of such Seller;
69
12.2.4 An incumbency certificate dated the Closing Date for
(i) each corporate Seller executed by the Secretary
of each Seller which shall identify the name and
title and bear the signature of each officer of such
Seller individually authorized to execute and deliver
this Agreement and related documents and (ii) the
Trust executed by the trustee of the Trust which
shall identify the name and title and bear the
signature of each person authorized under the Trust
to execute and deliver this Agreement and related
documents;
12.2.5 An opinion of counsel to the Sellers, dated as of the
Closing Date, in the form of Exhibit F hereto;
12.2.6 Good standing certificates for each corporate Seller,
dated as of a date within three (3) business days of
the Closing Date, from the jurisdiction of its
incorporation and each other jurisdiction in which it
is required to be qualified to do business;
12.2.7 Copies of the articles of incorporation and by-laws
of each corporate Seller and the organizational
documents of the Trust, in each case certified by a
duly appointed officer or other representative of the
applicable Seller;
12.2.8 Each Seller shall have delivered to Purchaser an
affidavit of non-foreign status, in the form of
Exhibit G hereto; and
12.2.9 All other documents, assurances and other matters
required by this Agreement to be delivered to
Purchaser by any Seller at or before the Closing and
not delivered to Purchaser before the Closing.
Section 12.3 Third Party Consents. There shall have been
obtained all consents, approvals and waivers from parties to Purchased Contracts
and others that are required in connection with the transactions contemplated by
this Agreement, and the same shall be in full force and effect.
Section 12.4 Absence of Investigations and Proceedings.
There shall be no decree, judgment, Order or litigation at law or in equity, no
arbitration proceedings, and no proceeding before or by any Governmental
Authority pending, or to the Knowledge of the Sellers, threatened, to which any
of the Sellers is or may be a party that would reasonably be expected to
adversely affect, in any
70
material respect, the Business or the Assets. No proceeding or formal
investigation by any Governmental Authority shall be pending, or to Knowledge of
the Sellers, threatened, with the object of challenging or preventing
consummation of the transactions contemplated by this Agreement and no other
proceedings shall be pending with such object or to collect damages from
Purchaser on account thereof.
Section 12.5 Governmental Approvals. All Governmental
Approvals necessary in connection with the consummation of the transactions
contemplated by this Agreement shall have been obtained and shall be in full
force and effect. Without limiting the foregoing, the waiting period applicable
to the transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated.
Section 12.6 Absence of Certain Changes. Between the date
of this Agreement and the Closing Date, there shall have been no events,
occurrences or conditions that have had or would reasonably be expected to have
a Material Adverse Effect.
Section 12.7 Financing. Purchaser shall have obtained
financing necessary to permit Purchaser to consummate the acquisition of the
Assets, which financing shall be upon terms and conditions acceptable to
Purchaser in its sole discretion.
Section 12.8 Lease. At the Closing, Purchaser shall enter
into a long-term lease agreement with respect to the Kansas Facility (the "Real
Property Lease"). The Real Property Lease shall (i) provide for a base rent of
$560,000 per annum and a ten (10) year term, (ii) provide for an option to renew
for two additional five (5) year terms, (iii) provide for, among other things, a
right of first refusal and an option to purchase at fair market value the Kansas
Facility and (iv) contain such other terms and conditions as shall be
satisfactory to Purchaser and the Sellers.
Section 12.9 Consulting Agreement. Xxxxxxxx shall have
entered into the Consulting Agreement.
Section 12.10 Release of Liens. The Sellers shall also have
received Uniform Commercial Code termination statements and mortgage releases
sufficient to release all Encumbrances and security interests (except for
Permitted Encumbrances) on the Assets and shall have transmitted the same for
filing and/or recordation or delivered such documents to Purchaser.
71
Section 12.11 IRB Termination. PMI shall have exercised its
option to purchase the Machines under the IRB Lease, and taken all action
necessary to consummate such purchase on or prior to the Closing Date, such that
the Machines will be included in the Assets being transferred to Purchaser
pursuant to this Agreement. On or prior to the Closing Date, the Sellers shall
have provided Purchaser with evidence, reasonably satisfactory to Purchaser,
demonstrating that the IRB Lease has been terminated, the IRBs and the Credit
Agreement have been paid in full, and the Machines will be transferred to
Purchaser at the Closing free and clear of all Encumbrances (other than
Permitted Encumbrances).
Section 12.12 Guaranty by Xxxxxxxx. Xxxxxxxx shall have
delivered to Purchaser a full and unconditional guaranty of performance of each
of the Seller's obligations under this Agreement, substantially in the form of
Exhibit H hereto.
Section 12.13 Sellers Representative Agreement. Each Seller
shall have executed and delivered the Sellers Representative Agreement, and a
fully-executed copy thereof shall have been furnished to Purchaser.
Section 12.14 Escrow Agreement. The Representative and the
Escrow Agent shall have executed and delivered the Escrow Agreement.
Section 12.15 Audit. Management of the Business shall have
delivered to the Independent Accountants and Purchaser, as of the day preceding
the Closing Date, reaffirmations of all representation letters and other
documents and information that were necessary to allow the Independent
Accountants to issue an unqualified audit opinion with respect to the Seller
Financial Statements.
Section 12.16 Working Capital Components and Inventory
Levels. The Assets shall include working capital components and inventory
levels as are consistent with the past practices of the Business and appropriate
in connection with the operation of the Business.
Section 12.17 Retention of Key Employees. Purchaser shall
have been given the opportunity to approach and negotiate with all employees of
the Business in an effort to persuade them to continue in the employ of the
Business following the Closing, and Purchaser, in its reasonable discretion,
shall be satisfied with the arrangements made to ensure that following the
Closing the Business will retain the services of its key employees.
ARTICLE 13
CLOSING CONDITIONS OF SELLERS
72
The obligations of the Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of each of the following conditions, any one or more of which
may be waived (but only in writing) by the Representative, on behalf of the
Sellers (provided that no such waiver shall be deemed to have cured any breach
of any representation, warranty or covenant made under this Agreement):
Section 13.1 Representations, Warranties and Covenants of
Purchaser. (i) All of the representations and warranties made by Purchaser in
this Agreement and in the other Purchaser Documents, or otherwise in connection
with the transactions contemplated hereby, shall be true and correct, in the
case of any representation or warranty that is qualified as to materiality, in
all respects, and in the case of any representation or warranty that is not so
qualified, in all material respects, as of the date hereof and as of the Closing
Date as though made at and as of the Closing Date, except to the extent such
representations and warranties speak as of an earlier date; (ii) Purchaser shall
each have performed and complied, in all material respects, with all agreements,
covenants and conditions required by this Agreement to be performed by it on or
prior to the Closing Date; and (iii) with respect to clauses (i) and (ii), at
the Closing there shall be delivered to the Sellers a certificate signed by a
duly authorized officer of Purchaser to the foregoing effect.
Section 13.2 Deliveries to be Made by Purchaser at the
Closing. At the Closing, Purchaser shall deliver or cause to be delivered to
the Representative the following:
13.2.1 The cash portion of the Total Purchase Price due at
Closing, as provided in
Section 3.2;
13.2.2 An opinion of Purchaser's counsel, dated as of the
Closing Date, in the form of Exhibit I hereto;
13.2.3 A copy of a resolutions of the Board of Directors of
Purchaser authorizing the execution and delivery of
this Agreement and the performance by Purchaser of
its obligations hereunder, certified by the Secretary
or any Assistant Secretary of Purchaser;
13.2.4 An incumbency certificate dated the Closing Date for
Purchaser executed by the Secretary of Purchaser
which shall identify the name and title and bear the
signature of
73
each officer of Purchaser individually authorized to
execute and deliver this Agreement and related
documents;
13.2.5 Good standing certificates for Purchaser, dated as of
a date within 10 days of the Closing Date, from the
State of Delaware and each other jurisdiction in
which it is required to be qualified to do business,
and "bring-down" certificates from each such
jurisdiction dated the Closing Date;
13.2.6 Copies of the certificate of incorporation and
by-laws of Purchaser, certified by the Secretary or
any Assistant Secretary and Purchaser; and
13.2.7 All other documents, assurances and other matters
provided in this Agreement to be delivered to the
Sellers by Purchaser at or before the Closing and not
delivered to the Sellers before the Closing.
Section 13.3 HSR Act. The waiting period applicable to the
transactions contemplated by this Agreement under the HSR Act, including any
extensions thereof, shall have expired or been terminated.
Section 13.4 Consulting Agreement. Purchaser shall have
entered into the Consulting Agreement.
Section 13.5 Escrow Agreement. Purchaser and the Escrow
Agent shall have executed and delivered the Escrow Agreement.
Section 13.6 Stock Option Plan. Purchaser shall deliver to
the Representative a certified copy of the Board of Director resolutions of
Purchaser approving (i) Purchaser's Stock Option Plan (which Stock Option Plan
will be substantially in the form of Exhibit B hereto); (ii) the option grant to
Xxxxxxxx and the corresponding Option Agreement set forth on Exhibit B; and
(iii) the issuance of additional options representing 250 shares of the common
stock of Purchaser to the individuals and in the amounts set forth on Exhibit
B-1 hereto by a date no later than October 1, 1999. Options covering an
additional 250 shares of the common stock of Purchaser shall be awarded by April
22, 2000 by Purchaser after good faith consultation by Xxxxxxx X. Xxxxxx with
Xxxxxxxx regarding the identity of the participating optionees and the amount of
their related options. If after such good faith consultation no agreement is
reached between Xxxxxxxx and Xxxxxxx X. Xxxxxx, to the extent there are
unawarded options, these options shall be divided among those individuals on
Exhibit B-1 in portion to the option grants they received
74
pursuant to clause (iii) hereof. Purchaser shall deliver to the Representative
the executed Xxxxxxxx Option Agreement.
Section 13.7 Lease. Purchaser shall have entered into the
Real Property Lease.
ARTICLE 14
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 14.1 Indemnification by the Sellers. The Sellers,
jointly and severally, agree to indemnify and hold harmless Purchaser, its
Affiliates and their respective shareholders, directors, officers, employees,
agents, successors in interest, assigns and representatives from and against any
and all Losses which may be incurred or suffered by any such party and which,
directly or indirectly, arise out of or result from any of the following:
14.1.1 any inaccuracy in or breach of any of the
representations and warranties made by any Seller in
or pursuant to this Agreement or in the other Company
Documents;
14.1.2 the Excluded Liabilities;
14.1.3 any breach or nonperformance of any of the covenants
or agreements made by any Seller in or pursuant to
this Agreement or in the other Company Documents;
14.1.4 any third party claim or demand regarding the conduct
of the Business prior to the Closing Date;
14.1.5 Environmental Liabilities arising from the Sellers'
arrangement for the off-site disposal of waste water
and coolant mixture; and
14.1.6 the failure of the Sellers to pay the costs of any
Warranty Work and the amount of any Warranty Claims
or Refund Claims for which any Seller is responsible
pursuant to Sections 7.3 and 7.4.
Purchaser hereby acknowledges and agrees that to the extent any single or
related event, omission or occurrence: (i) constitutes a breach or inaccuracy of
more than one representation and warranty made by any Seller, (ii) constitutes a
breach or nonperformance of more than one covenant or agreement made by any
Seller, (iii)
75
arises out of more than one Excluded Liability, or (iv) constitutes an Excluded
Liability or a breach, inaccuracy or nonperformance of any representation,
warranty, covenant or agreement in combination of any of parts (i) through (iii)
above, Purchaser shall not be entitled to indemnification in excess of its
actual Losses, regardless of whether it pursues multiple claims in any single
action or multiple actions for indemnification.
Section 14.2 Indemnification by Purchaser. Purchaser agrees
to indemnify and hold harmless each of the Sellers from and against any Losses
of the Sellers, directly or indirectly, as a result of, or based upon or arising
from:
14.2.1 any inaccuracy in or breach of any of the
representations and warranties made by Purchaser in
or pursuant to this Agreement or in the other
Purchaser Documents;
14.2.2 the Assumed Liabilities;
14.2.3 any breach or nonperformance of any of the covenants
or agreements made by Purchaser in or pursuant to
this Agreement or in the other Purchaser Documents;
and
14.2.4 any third party claim or demand regarding the conduct
of the Business following the Closing.
Section 14.3 Cooperation. The parties shall cooperate in
the defense of all third party claims which may give rise to Indemnifiable
Claims hereunder. In connection with the defense of any claim, each party shall
make available to the party controlling such defense any books, records or other
documents within its control and access to employees that are reasonably
requested in the course of such defense.
Section 14.4 Limitations on Indemnification. Sellers shall
not be required to indemnify any Person under Section 14.1 unless the aggregate
of all amounts for which indemnity would otherwise be payable by the Sellers
exceeds $200,000, and, in such event, the Sellers shall be responsible for the
amount in excess of $200,000. Purchaser shall not be required to indemnify any
Person under Section 14.2 unless the aggregate of all amounts for which
indemnity would otherwise be payable by Purchaser exceeds $200,000, and in such
event, Purchaser shall be responsible for the amount in excess of $200,000. The
Sellers' indemnity obligations under Sections 14.1.1 and 14.1.2 shall be limited
to $20,000,000 (except with respect to (i) any inaccuracy in or breach of any of
the representations and warranties contained in Sections 8.2, 8.4, 8.15, 8.18,
8.21 and 8.23, (ii) any inaccuracy in or breach of any of the representations
and warranties with respect to title and the absence of any Encumbrances (other
than Permitted
76
Encumbrances) contained in Sections 8.6, 8.7, 8.8, 8.9, 8.10 and 8.11, (iii) any
Excluded Liabilities with respect to any of the matters contemplated by the
foregoing clauses (i) and (ii), and (iv) the Excluded Liabilities referred to in
Sections 4.2.1 through 4.2.14, which shall be limited, in the aggregate, to an
amount equal to the Total Purchase Price). Purchaser's indemnity obligations
under Section 14.2 shall be limited, in the aggregate, to an amount equal to
$20,000,000.
Section 14.5 Notice to Indemnifying Party. If any party
(the "Indemnified Party") receives notice of any claim or other commencement of
any action or proceeding with respect to which any other party (or parties) (the
"Indemnifying Party") is obligated to provide indemnification pursuant to
Sections 14.1 or 14.2 or pursuant to any other specific indemnification covenant
contained in this Agreement, the Indemnified Party shall promptly give the
Indemnifying Party written notice thereof which notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom. The
failure of a party to give notice under this Section 14.5 shall not relieve any
party from liability, unless and to the extent the other party has been
materially prejudiced thereby. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder, without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed) unless a suit shall
have been instituted against it and the Indemnifying Party either (i) shall not
have undertaken the defense of such suit after notification thereof as provided
in Section 14.6 or (ii) is demonstrably unable to undertake the defense of such
suit or satisfy the claims arising thereunder.
Section 14.6 Defense by Indemnifying Party. In connection with any
claim giving rise to indemnity hereunder resulting from or arising out of any
claim or legal proceeding by a person who is not a party to this Agreement, the
Indemnifying Party at its sole cost and expense may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding
using counsel of its choice (subject to the approval of the Indemnified Party,
which approval may not be unreasonably withheld or delayed) if it (i)
acknowledges to the Indemnified Party in writing its obligations to indemnify
the Indemnified Party with respect to all elements of such claim and (ii)
demonstrates its ability to undertake the defense of such claim or proceeding
and satisfy any liabilities resulting therefrom. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense; provided, however, that if the
Indemnified Party, in its reasonable discretion, determines that there exists a
conflict of interest between the Indemnifying Party (or any constituent party
thereof) and the Indemnified Party, the Indemnified Party (or such constituent
party thereof) shall have the right to engage separate counsel reasonably
acceptable to the Indemnifying Party, the reasonable costs and expenses of which
shall
77
be paid by the Indemnifying Party, but in no event shall the Indemnifying Party
be liable to pay for the costs and expenses of more than one separate firm of
attorneys (in addition to any local counsel). If the Indemnifying Party does not
assume the defense of any such claim or litigation resulting therefrom, the
Indemnified Party may settle or defend against such claim or litigation, after
giving notice of the same to the Indemnifying Party, on such terms as the
Indemnified Party may deem appropriate, and the Indemnifying Party shall be
entitled to participate in (but not control) the defense of such action, with
its counsel and at its own expense. If the Indemnifying Party thereafter seeks
to question the manner in which the Indemnified Party defended such third-party
claim or the amount or nature of any such settlement, the Indemnifying Party
shall have the burden to prove by a preponderance of the evidence that the
Indemnified Party did not defend or settle such third-party claim in a
reasonably prudent manner. Notwithstanding the foregoing, however, Purchaser
shall in all cases be entitled to control of the defense of any such action if
it (i) may result in injunctions or other equitable remedies in respect of
Purchaser or the Business; (ii) may result in liabilities which, taken with
other then-existing claims by Purchaser under this Article 14, would not be
fully indemnified hereunder; or (iii) may, in the reasonable determination of
Purchaser, have an adverse impact on the Business or the financial condition of
Purchaser that could be material (including an effect on the Tax liabilities,
earnings or ongoing business relationships of Purchaser) even if the Sellers pay
all indemnification amounts in full. In the event Purchaser shall assume the
defense of any action pursuant to the preceding sentence, it shall provide
notice to any party from whom indemnification pursuant to this Article 14 may be
sought of any proposed settlement of such action; provided, however the failure
to provide such notice shall not affect any party's obligations hereunder,
except to the extent such party shall prove, by a preponderance of the evidence,
that it has been materially prejudiced by the failure to receive such notice.
Section 14.7 Indemnity Escrow Arrangement.
14.7.1 Pursuant to Section 3.2.2, on the Closing Date,
Purchaser shall deposit the $6,000,000 Escrow Amount with the Escrow
Agent to be held and disbursed by the Escrow Agent in accordance with
the terms of this Agreement and the Escrow Agreement.
14.7.2 (i) In the event Purchaser becomes entitled to
indemnification under Section 14.1 hereof with respect to any Losses
incurred by it or makes a claim for any such indemnification against
the Representative or any Seller, or (ii) in the event the
Representative, the Sellers, or any one of
78
them, becomes liable to Purchaser for any other amounts under this Agreement,
the Representative, on behalf of the Sellers, shall take all action necessary to
cause the Escrow Agent to pay to Purchaser, from the Escrow Fund, in immediately
available funds in the City of New York, an amount equal to such Losses (it
being understood that if amounts in the Escrow Fund are not sufficient to
satisfy such Losses and other liabilities, Purchaser shall be entitled to
exercise any other remedies available to it).
14.7.3 On the first anniversary of the Closing Date (the
"Escrow Step Down Date"), pursuant to the terms of
the Escrow Agreement, the Representative and the
Sellers shall cause the Escrow Agent to release to
the Representative from the Escrow Fund an amount (if
positive) equal to the Escrow Amount plus the
interest and earnings that have accrued since the
Closing Date on the funds contained in the Escrow
Fund (net of Escrow Agent fees and expenses payable
from the Escrow Fund), minus the sum of the
following: (x) $3,000,000, plus (y) the aggregate
amount of any claims paid to Purchaser from the
Escrow Fund on or prior to the Escrow Step Down Date
(including, without limitation, any claims in
connection with the determination of the Adjustment
Amount) and (z) the aggregate amount of all pending
claims made by Purchaser against the Escrow Fund as
of the Escrow Step Down Date.
14.7.4 On the second anniversary of the Closing Date (the
"Escrow Termination Date"), any remaining portion of
the Escrow Fund in excess of any pending claims by
Purchaser for indemnification shall be disbursed by
the Escrow Agent to the Representative, for the
benefit of the Sellers, and thereafter any remaining
portion of the Escrow Fund shall be disbursed by the
Escrow Agent as the pending claims to which they
relate are resolved.
Section 14.8 Offset. In the event Purchaser becomes
entitled to indemnification under Section 14.1 hereof with respect to any Losses
incurred by it, or in the event the Representative or the Sellers, or any one of
them, become liable to Purchaser for any other Losses under this Agreement, the
Real Property Lease or otherwise, Purchaser may, in its sole and absolute
discretion, elect to offset such Losses against any amounts (whether principal,
interest, rental payments,
79
reimbursements or otherwise) thereafter due under the Real Property Lease, and
any other amounts owed by Purchaser to any Seller from time to time (the
"Purchaser's Obligations"). The parties hereby acknowledge that Purchaser has
not hereby made an election of remedies in reserving such offset rights, or in
exercising any such offset rights from time to time; that the Representative and
the Sellers are and shall remain liable for any and all of their respective
obligations pursuant to this Agreement; and that Purchaser may, with respect to
any Losses or claimed Losses, pursue any other remedy at law or equity directly
against the Representative or the Sellers or any one of them. Purchaser's offset
rights herein set forth represent neither a liquidation of damages nor a
limitation of liability, but a source of funds which may, but need not, be
utilized in satisfaction of any Loss or claimed Loss or any other obligation or
claimed obligation of the Representative or any Seller to Purchaser.
Section 14.9 Survival of Representations and Warranties.
Notwithstanding any right of Purchaser to fully investigate the affairs of the
Sellers and notwithstanding any knowledge of facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation, Purchaser
shall have the right to rely fully upon the representations, warranties,
covenants and agreements of the Sellers contained in this Agreement. Except as
otherwise provided herein, each representation, warranty, covenant and agreement
of the Sellers contained herein, or in any instrument or document furnished in
connection with this Agreement or the transactions contemplated hereby, shall
survive the execution and delivery of this Agreement and the Closing and any
investigation at any time made by or on behalf of Purchaser indefinitely.
Notwithstanding the foregoing, (i) the representations and warranties of the
Sellers contained in Sections 8.12, 8.18 and 8.21 and any inaccuracy in or
breach of any of the representations and warranties with respect to title and
the absence of any Encumbrances (other than Permitted Encumbrances) contained in
Sections 8.6, 8.7, 8.8, 8.9, 8.10 and 8.11 shall terminate and expire on the
fourth anniversary of the Closing Date, unless on prior to such date Purchaser
has delivered to the Representative a written notice of a claim with respect to
any such representation or warranty, (ii) the representations and warranties of
the Sellers contained in Section 8.15 shall terminate and expire 60 days after
the expiration of the statute of limitations applicable to claims by third
parties against Purchaser in respect of the matter or matters which are the
subject of said representations and warranties, unless on prior to such date
Purchaser has delivered to the Representative a written notice of a claim with
respect to any such representation or warranty and (iii) all other
representations and warranties contained in Article 8 (other than those
contained in Sections 8.2, 8.4 and 8.23, which shall survive the execution and
delivery of this Agreement and the Closing and any investigation at any time
made by or on behalf of Purchaser indefinitely) shall terminate and expire on
the Escrow
80
Termination Date, unless on prior to such date Purchaser has delivered to the
Representative a written notice of a claim with respect to any such
representation or warranty.
Section 14.10 Survival of Representations and Covenants of
Purchaser. With the sole exception of those covenants which are to be performed
by Purchaser after the Closing and the representations and warranties contained
in Sections 9.2 and 9.3 (which shall survive until a claim thereon is barred by
the applicable statute of limitations), each representation, warranty, covenant
and agreement of Purchaser contained herein shall survive the execution and
delivery of this Agreement and the Closing and shall thereafter terminate and
expire on the second anniversary of the Closing Date, unless, on or before such
date, the Representative has delivered to Purchaser a written notice of claim
with respect to such representation, warranty, covenant or agreement.
ARTICLE 15
CONFIDENTIALITY
Section 15.1 Confidentiality of the Sellers. Unless this
Agreement shall have been terminated pursuant to Article 10, each of the Sellers
agrees to, and agrees to use its Best Efforts to cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat and
hold as confidential (and not disclose or provide access to any Person) all
confidential, proprietary or restricted information of the Business and
Purchaser, including, but not limited to, financial information, projections,
forecasts, budgets, lists of or information concerning actual or prospective
personnel, customers or suppliers, pricing, methods of business or operations,
Intangible Personal Property, technical data, technology, processes,
applications for patents, trade secrets and know-how, in whatever form, manner
or medium recorded, including any and all copies thereof, as well as any notes,
analyses and compilations related to any of the aforementioned, in which event
each Seller agrees to, and agrees to use its Best Efforts to cause its agents,
representatives, Affiliates, employees, officers and directors to, furnish only
that portion of such confidential information which they reasonably believe is
legally required to be provided and exercise their reasonable efforts to obtain
assurances that confidential treatment will be afforded such information, and
(ii) in the event that any Seller or any such agent, representative, Affiliate,
employee, officer or director becomes legally compelled to disclose any such
information, provide Purchaser with prompt written notice of such requirement so
that Purchaser may, at the expense of Purchaser, seek a protective order or
other remedy. This Section 15.1 shall not apply to any information that, at the
time of disclosure, is known to the receiving party before disclosure thereof,
is independently developed by the
81
receiving party, is or becomes publicly available through no fault of the
receiving party, is obtained by the receiving party from a third party not known
by the receiving party to be under any obligation not to disclose such
information and which the receiving party has no reason to believe is not
otherwise publicly available (provided, however, that once any Seller is advised
that information obtained under such circumstance is indeed confidential
hereunder, this Section 15.1 shall thereafter apply to such information) or is
reasonably necessary in order for any Seller to litigate any claim against
Purchaser pursuant to this Agreement. Each Seller agrees and acknowledges that
remedies at law for any breach of its obligations under this Section 15.1 are
inadequate and that in addition thereto Purchaser shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach. Notwithstanding the foregoing, (x) any Seller may make such
disclosures to the independent public accountants of such Seller as may be
necessary in connection with their auditing of the books and records of such
Seller and its Affiliates; provided, however, that such independent public
accountants shall enter into a confidentiality and nondisclosure agreement on
substantially the same terms as set forth in this Section 15.1, and (y) any
Seller, with the consent of Purchaser (which consent shall not be unreasonably
withheld), may make such disclosures in connection with defending any claim
brought against such Seller or any of its Affiliates by any third person as may
be reasonably necessary in order for such Seller to conduct its defense thereof;
provided, however, that each Seller agrees to, and agrees to cause its agents,
representatives, Affiliates, employees, officers and directors to, exercise
their respective Best Efforts to obtain assurances that confidential treatment
will be afforded such information and to seek a protective order or other remedy
to preserve the confidentiality of such information.
Section 15.2 Confidentiality of Purchaser. The
Confidentiality Agreement, dated August 24, 1998, by and between Mentmore
Holdings Corporation and PMI (the "Confidentiality Agreement") shall survive the
execution of this Agreement and terminate on the earlier of (A) the Closing Date
or (B) March 31, 2002.
ARTICLE 16
MISCELLANEOUS
Section 16.1 Change Corporate Name. Each Seller shall
execute such documents and promptly take such action as is necessary to allow
Purchaser and its Affiliates to use and register all trademarks, trade names,
corporate names and other Intangible Personal Property being conveyed to
Purchaser pursuant to the terms of this Agreement. Within thirty days of the
Closing, PMI shall change its
82
corporate name so as to not include "PreMac", "Precision Machining",
"Precision", or any other trade names or trademarks being purchased by Purchaser
hereunder.
Section 16.2 Expenses. The Sellers and Purchaser shall pay
their own expenses incident to the negotiation, preparation and performance of
this Agreement and the transactions contemplated hereby, including, without
limitation, expenses and disbursements of their respective financial advisors,
accountants and counsel; provided, however that Purchaser shall pay all costs
relating to the audit of the Seller Financial Statements referred to in Section
8.5 that were audited by the Independent Accountants and the $45,000 filing fee
under the HSR Act. The expenses of the Sellers referred to in this Section 16.2
shall not be Assumed Liabilities.
Section 16.3 Notices and Other Communications. Every notice
or other communication required or contemplated by this Agreement by any party
shall be delivered by personal delivery, postage prepaid return receipt
requested certified mail, or by facsimile, addressed to the party for whom
intended as set forth on Schedule , or at such other address as the intended
recipient previously shall have designated by written notice to the other
parties. Notice by certified mail shall be effective on the date it is
officially recorded as delivered to the intended recipient by return receipt or
equivalent. All notices and other communication required or contemplated by this
Agreement delivered in person or sent by facsimile with answer back receipt
shall be deemed to have been delivered to and received by the addressee and
shall be effective on the date of personal delivery or on the date sent if
answer back receipt received. Notice not given in writing shall be effective
only if acknowledged in writing by a duly authorized representative of the party
to whom it was given.
Section 16.4 Counterparts. This Agreement may be executed
in any number of counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute only one and the
same instrument.
Section 16.5 Written Agreement to Govern. This Agreement
and the Confidentiality Agreement constitute the entire understanding between
the parties as to the subject matter hereof, except as may be explicitly set
forth in writing in any agreement, certificate or document specifically
referenced herein, and cancels any and all previous contracts or agreements
between the parties with respect to the subject matter hereof. This Agreement
may not be altered, amended, or modified except by a written instrument executed
by or on behalf of each of the parties hereto. This Agreement shall become
binding only after the same is signed and delivered by or on behalf of each of
the parties hereto.
83
Section 16.6 Assignability. Neither this Agreement nor any
right or obligation hereunder is assignable in whole or in part, whether by
operation of law or otherwise, by any party without the express written consent
of the other parties hereto and any such attempted assignment shall be void and
unenforceable; provided, however, that Purchaser may transfer or assign this
Agreement or any right or obligation hereunder to any lender or other financing
source, subsidiary or Affiliate at any time prior to or after the Closing and
Purchaser may transfer or assign its rights and obligations under this Agreement
to any transferee of the Business or the Assets. This Agreement and the rights
and obligations hereunder shall be binding upon, and shall inure to the benefit
of, the parties hereto and their respective successors or assignees, and no
other person shall acquire or have any rights under or by virtue of this
Agreement.
Section 16.7 No Waiver of Rights. All waivers hereunder
must be made in writing, and failure of any party at any time to require another
party's performance of any obligation under this Agreement shall not affect the
right subsequently to require performance of that obligation. Any waiver of any
breach of any provision of this Agreement shall not be construed as a waiver of
any continuing or succeeding breach of such provision or a waiver or
modification of any other provision.
Section 16.8 Subject Headings. The subject headings of the
Articles and Sections of this Agreement are included for the purposes of
convenience only, and shall not affect the construction or interpretation of any
of the provisions of this Agreement.
Section 16.9 Further Assurances. At all times before and
after the Closing, the parties hereto shall each perform such acts, execute and
deliver such instruments and documents and do all such other things consistent
with the terms of this Agreement as may be reasonably necessary to accomplish
the transactions contemplated in this Agreement or to otherwise carry out the
purpose of this Agreement.
Section 16.10 Schedules and Exhibits. All Schedules and
Exhibits referred to in and attached to this Agreement are incorporated herein
by such reference as if fully set forth in the text hereof. Any capitalized and
undefined term used in any Schedule attached hereto shall have the same meaning
assigned to such term herein.
Section 16.11 Severability. Whenever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under
84
applicable Law, but if any provision of this Agreement should be prohibited or
invalid under applicable Law, such provision shall be ineffective to the extent
of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 16.12 Publicity and Reports. The Sellers and
Purchaser shall coordinate all publicity relating to the transactions
contemplated by this Agreement and, except to the extent required by Law or
applicable stock exchange rules or required in connection with Purchaser's
financing of the transactions contemplated hereby, no party shall issue any
press release, publicity statement or other public notice relating to this
Agreement, or the transactions contemplated by this Agreement, without obtaining
the prior consent of the other parties hereto. Purchaser and each Seller shall
each consult with the others with respect to the form and content of any
application or report made to any Governmental Authority which relates to this
Agreement or the transactions contemplated hereby.
Section 16.13 Parties in Interest; Joint and Several
Liability of the Sellers. This Agreement shall be binding upon and inure to the
benefit of each party, and nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third Person to (or to
confer any right of subrogation or action over against) any party to this
Agreement. The obligations of the Sellers under this Agreement shall be joint
and several and, unless expressly stated in this Agreement, all actions to be
taken by the Sellers hereunder shall be taken jointly.
Section 16.14 Specific Performance. The Sellers acknowledge
that, in view of the uniqueness of the Business and the transactions
contemplated by this Agreement, Purchaser would not have an adequate remedy at
law for money damages in the event that this Agreement has not been performed in
accordance with its terms, and therefore agrees that Purchaser shall be entitled
to specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled, at law or in equity.
Section 16.15 GOVERNING LAW; CONSENT TO JURISDICTION. THE
VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED IN
ALL RESPECTS BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICT PROVISIONS) OF THE
STATE OF NEW YORK. EACH PARTY TO THIS AGREEMENT, ON BEHALF OF ITSELF AND ITS
SUCCESSORS IN INTEREST AND ASSIGNS, HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE CITY OF NEW YORK,
STATE OF NEW YORK, AND KANSAS CITY, STATE OF
85
KANSAS, IN CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY OF THE
MATTERS CONTEMPLATED HEREBY.
[Signature Page Follows]
86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
written above.
PURCHASER:
STELLEX PRECISION MACHINING, INC.
By:
-------------------------------
Name:
Title:
SELLERS:
PRECISION MACHINING, INC.
By:
-------------------------------
Name: Xxxxx Xxxx Xxxxxxxx
Title: President
BK METALS,
By:
-------------------------------
Name: Xxxxx Xxxx Xxxxxxxx
Title: President
XXXXX XXXX XXXXXXXX, Individually
and as the Representative
By:
-------------------------------
Name: Xxxxx Xxxx Xxxxxxxx
Title: President
THE XXXXX XXXX XXXXXXXX TRUST
By:
-------------------------------
Name: Xxxxx Xxxx Xxxxxxxx
Title: Trustee
87
EXHIBIT B-1
Xxxx Xxxxx 100 shares
Xxxxx Xxxx 50 shares
Xxx Xxxxx 50 shares
Xxxx Xxxxxx 50 shares
EXHIBIT G-1
The undersigned hereby certifies the following on behalf of
-----------------------:
1. ___________________________ is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);
2. _____________________'s U.S. employer
identification number is _______________; and
3. ________________________'s office address is
________________________
________________________
_____________________ understands that this certification may be
disclosed to the Internal Revenue Service.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief that it is true,
correct and complete, and I further declare that I have authority to sign this
document on behalf of __________________________.
By:___________________________
Its:__________________________
Date:_________________________
89
EXHIBIT G-2
I, ______________________, hereby certify the following:
1. I am not a nonresident alien for purposes
of U.S. income taxation;
2. My U.S. taxpayer identification number (Social Security number) is
__________________; and
3. My home address is
________________________
________________________
I understand that this certification may be disclosed to the Internal
Revenue Service.
Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete.
--------------------------- [Name]
--------------------------- Date
