AGREEMENT OF SALE OF MEMBERSHIP INTEREST
This Agreement of Sale of Membership Interest (this "Agreement") is
made as of June 24, 2000, by and between CC INDUSTRIES, INC. ("Buyer") and
ALLIED PRODUCTS CORPORATION ("Seller").
RECITALS
Xxxx Hog, L.L.C., a Delaware limited liability company (the
"Company") was formed pursuant to that certain Amended and Restated Limited
Liability Company Agreement dated as of March 7, 2000 (the "Operating
Agreement") by and between Seller, and Xxxx Hog Investors, L.L.C. ("BHI").
Seller owns 19.9% of the membership interests of the Company (the "Transferred
Interests").
Pursuant to a Membership Interest Pledge and Security Agreement dated
March 7, 2000 as amended by a First Amendment to Membership Interest Pledge and
Security Agreement dated June 24, 2000 (as amended, the "Security Assignment"),
Seller assigned the Transferred Interests to BHI as collateral to secure payment
of certain obligations of Seller under that certain Limited Liability Company
Interest Purchase and Asset Contribution Agreement dated October 21, 1999
between Seller, BHI and the Company, as amended ("Purchase Agreement").
The Company has also pledged the Transferred Interests (i) to secure
certain indebtedness to LaSalle Bank National Association pursuant to a Loan and
Security Agreement dated March 7, 2000 between Seller and LaSalle Bank National
Association ("LaSalle Collateral Assignment") and (ii) to secure certain
obligations to Foothill Capital Corporation pursuant to a Collateral Assignment
of Membership Interest dated March __, 2000 ("Foothill Collateral Assignment").
The liens secured by the Security Agreement, the LaSalle Collateral Assignment
and the Foothill Collateral Assignment are herein called (the "Prior Liens").
Seller desires to sell the Transferred Interests to Purchaser and
Purchaser desires to purchase such interests on the terms and conditions set
forth herein.
Now therefore, in consideration of the representations, warranties,
covenants and conditions hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. ASSIGNMENT OF TRANSFERRED INTERESTS. On the terms and subject to
the conditions set forth in this Agreement, Seller agrees that simultaneously
with the execution hereof, it will sell and assign to Buyer, and Buyer hereby
purchases and accepts from Seller, the Transferred Interests, free and clear of
all liens, claims, security interests and encumbrances of any kind other than
those created under the Operating Agreement. The Transferred Interests include
all of Seller's rights, benefits, privileges, title, interest and power in, to,
under and with respect to the Company, including, without limitation, (1) all of
Seller's rights, benefits, privileges, title, interest and power in, to, under
and with respect to the capital, capital accounts, income, profits (whether
distributed or undistributed), net cash receipts, proceeds of sale and
refinancing, gains, losses, credits, distributions and property of the Company,
and all proceeds, products, avails or realizations of any kind or character of
or from any of the foregoing, and (2) all of Seller's rights,
benefits, privileges, title interest and powers in, to, under and with
respect to, the Company pursuant to the Operating Agreement or applicable
law. To effect such assignment, Seller and Buyer shall execute the Membership
Interest Assignment and Assumption Agreement substantially in the form
attached as Exhibit A. Simultaneously with the execution of this Agreement,
Seller shall deliver to Buyer, a release of the Prior Liens, in a form
reasonably acceptable to Buyer.
2. PURCHASE PRICE.
(a) The purchase price (the "Purchase Price") for the
Transferred Interests shall be Thirty One Million Four Hundred Twenty
Six Thousand One Hundred Thirty-Four Dollars ($31,426,134) adjusted
as follows: (i) minus the net amount paid by Seller pursuant to
Section 1.5(a)(iv)(D) of the Purchase Agreement ("Purchase Agreement
Price Adjustment") multiplied by 19.9/80.1, (ii) plus 19.9% of the
cash of the Company on June 24, 2000 (the "Closing Date"), (iii)
minus 19.9% of the bank debt of the Company as of the Closing Date,
(iv) plus (or minus) 19.9% of the increase (or decrease) in the June
Closing Date Adjusted Working Capital, as defined below, over the
Final Adjusted Working Capital under the Purchase Agreement, (v) plus
(or minus) 19.9% of any increase (or decrease) in the June Closing
Date Adjusted Net Tangible Investment, as defined below, over the
Final Adjusted Net Tangible Investment under the Purchase Agreement,
and (vi) minus (or plus) 19.9% of any increase (or decrease) in the
June Closing Date Long Term Liabilities, as defined below, over the
total capitalized lease obligations as shown on the Closing Date
Balance Sheet, as defined in the Purchase Agreement, adjusted to
reflect any changes in such obligations made in determining the
Purchase Agreement Price Adjustments.
(b) For purposes of this Section 2, June Closing Date
Adjusted Working Capital, June Closing Date Adjusted Net Tangible
Investment and June Closing Date Long Term Assumed Liabilities shall
be calculated and determined as follows:
(i) CALCULATION OF JUNE CLOSING DATE ADJUSTED
WORKING CAPITAL. The "June Closing Date Adjusted Working
Capital" shall be equal to the excess of the June Adjusted
Current Assets as set forth in the June Closing Date
Balance Sheet over June Adjusted Current Liabilities as set
forth in the June Closing Date Balance Sheet.
(A) The term "June Adjusted Current
Assets" shall mean the categories of current
assets included in the Final Adjusted Working
Capital under the Purchase Agreement and shall be
computed on a basis consistent with the
computation of such assets in the Final Adjusted
Working Capital;
(B) "June Adjusted Current
Liabilities" shall be computed on a basis
consistent with the computation of such
liabilities in the Final Adjusted Working Capital
but shall include all liabilities which would be
included in current liabilities under GAAP other
than the current portion of capitalized lease
obligations included in the determination of the
June Closing Date Long Term Liabilities.
(ii) CALCULATION OF JUNE CLOSING DATE ADJUSTED
NET TANGIBLE INVESTMENT. The "June Closing Date Adjusted
Net Tangible Investment" shall mean the amount of the
Company's plant and equipment, net of accumulated
depreciation as set forth in the June Closing Date Balance
Sheet. The June Closing Date Adjusted Net Tangible
Investment attributable to plant and equipment included in
the Final Adjusted Net Tangible Investment, as such term is
used in the Purchase Agreement, shall be determined
utilizing the value assigned to such plant and equipment
net of depreciation in the Final Adjusted Net Tangible
Investment and the method of depreciation utilized in
determining such Final Adjusted Net Tangible Investment.
(iii) CALCULATION OF JUNE CLOSING DATE LONG TERM
ASSUMED LIABILITIES. The June Closing Date Long Term
Assumed Liabilities shall be the sum of the June Closing
Date Capitalized Lease Obligations. The June Closing Date
Capitalized Lease Obligations shall be determined in the
same manner as the Closing Date Capitalized Tractor Lease
Obligations were determined for purposes of the Final Long
Term Assumed Liabilities under the Purchase Agreement.
(iv) POST-CLOSING PAYMENT OF PURCHASE PRICE
ADJUSTMENTS.
(A) Within forty-five (45) days after
the later of (x) the Closing Date and (y) the
date the Purchase Agreement Price Adjustment is
determined, Buyer will prepare, and deliver to
Seller, the balance sheet of the Company as of
the close of business on the Closing Date (the
"June Closing Date Balance Sheet") and a report
(the "June Adjustment Report"), showing the
computation of June Closing Date Adjusted Working
Capital, June Closing Date Adjusted Net Tangible
Investment and June Closing Date Long Term
Assumed Liabilities, computed in accordance with
the definitions of June Closing Date Adjusted
Working Capital, June Closing Date Adjusted Net
Tangible Investment and June Closing Date Long
Term Assumed Liabilities set forth herein, and
which shall set forth the adjustments to the
Purchase Price in Section 2(a). Such June Closing
Date Balance Sheet will be prepared in accordance
with GAAP and the June Adjustment Report will be
prepared in accordance with this Section 2(b).
The June Closing Date Balance Sheet shall include
and reflect information related to the business
of the Company which becomes available after the
Closing (other than subsequent events), through
the date the June Closing Date Balance Sheet is
prepared, and which according to GAAP should be
reflected in the June Closing Date Balance Sheet.
(B) At Seller's request, Buyer shall
promptly provide Seller and its accountants with
access to the Company's books, records and
workpapers supporting the preparation of the June
Closing Date Balance Sheet and the June
Adjustment Report. Within thirty (30) days after
receipt of the June Closing Date Balance Sheet
and the June Adjustment Report, Seller may, by
written notice to Buyer, object to the June
Closing
Date Balance Sheet and June Adjustment
Report (the "Objection Notice"). Within
twenty-one (21) days following delivery of the
Objection Notice, Seller and Buyer shall attempt
in good faith to resolve all disputes between
them regarding these items. If Seller and Buyer
cannot resolve all such disputes within such
twenty-one (21) day period, the matters in
dispute shall be determined by an Arbiter.
Promptly, but not later than twenty-one (21) days
after the acceptance of its appointment, the
Arbiter will determine (based solely on
presentations by Seller and Buyer to the Arbiter
and not by independent review) only those items
in dispute and will render a report as to its
resolution of such items and the resulting
calculation of such items in dispute. In
resolving any disputed item, the Arbiter may not
assign a value to such item greater than the
greatest value for such item claimed by either
party or less than the lowest value for such item
claimed by either party, in each case as
presented to the Arbiter. For purposes of
Arbiter's calculation of the June Closing Date
Adjusted Working Capital, June Closing Date
Adjusted Net Tangible Investment and/or June
Closing Date Long Term Assumed Liabilities the
amounts to be included will be the appropriate
amounts from the June Closing Date Balance Sheet
and the June Adjustment Report, as the case may
be, as to items that are not in dispute and the
amounts determined by the Arbiter, as to items
that are submitted for resolution by the Arbiter.
Seller and Buyer shall cooperate with the Arbiter
in making its determination and such
determination shall be conclusive and binding
upon Seller and Buyer. Any fees or expenses
payable to the Arbiter shall be paid by the party
that does not substantially prevail on the
disputed issues (as determined by the Arbiter).
(C) If Seller does not timely deliver
an Objection Notice, Seller shall be deemed to
have accepted the June Closing Date Adjusted
Working Capital, June Closing Date Adjusted Net
Tangible Investment and/or June Closing Date Long
Term Assumed Liabilities, as the case may be. If
Seller timely delivers an Objection Notice, the
June Closing Date Adjusted Working Capital, the
June Closing Date Adjusted Net Tangible
Investment and June Closing Date Long Term
Assumed Liabilities, shall be the applicable
amounts determined pursuant to Section
2(b)(iv)(B).
(D) Each of the adjustments to the
Purchase Price required pursuant to Section 2(a)
shall be set off against the others so that only
one party shall make one net payment ("Net
Adjustment Payment") to the other. Within five
days after determination of the June Closing Date
Working Capital, June Closing Date Adjusted Net
Tangible Investment, and June Closing Date Long
Term Assumed Liabilities, the party owing the Net
Adjustment Payment shall pay such amount to the
other party to this Agreement. Such payment shall
include interest on such payments calculated at
an annual rate of eight percent (8%) from the
Closing Date to the date of payment. Any payment
pursuant to this Section (excluding payments
attributable to interest) will be treated by the
parties as an
increase or decrease in the Purchase Price and
shall be appropriately adjusted to reflect any
Estimated Adjustments paid at the Closing Date.
(E) Notwithstanding the foregoing, on
or prior to the Closing Date Seller and Buyer
shall in good faith attempt to agree on an
estimate of the adjustments to the Purchase Price
pursuant to Section 2(a) (any such agreement
herein, the "Estimated Adjustments").
(c) INVENTORY. The Inventory as of the Closing Date shall
be determined in accordance with the inventory valuation principles
used to determine the Final Adjusted Working Capital under the
Purchase Agreement and in conformity with GAAP on a basis consistent
with past practices of Seller but there shall not be a physical count
of the inventory. The inventory shall be priced in accordance with
such principles with appropriate adjustment for obsolete, used,
slow-moving, overstock, damaged or defective goods in accordance with
the valuation principles used to determine the Final Adjusted Working
Capital. Any disputes under this section shall be resolved by the
Arbiter in accordance with Section 2(b)(iv)(B).
(d) PAYMENT. On the Closing Date, an amount ("Estimated
Purchase Price") equal to Thirty One Million Four Hundred Twenty-Six
Thousand One Hundred Thirty Four Dollars ($31,426,134) reduced by an
Estimated Adjustment of Two Million Nine Hundred Seventy-Four
Thousand Eight Hundred Five Dollars ($2,974,805) shall be paid by
Buyer to or on behalf of Seller as follows:
(i) One Million Five Hundred Thirteen Thousand
Four Hundred Seventy Three Dollar ($1,513,473) plus
interest of Thirty Six Thousand Eight Hundred Twenty One
Dollars ($36,821) (such interest calculated at the rate of
8% per annum on such amount from March 7, 2000 to the date
of payment) shall be paid to BHI, as a partial payment on
the adjustment to the Purchase Price under the Purchase
Agreement;
(ii) Five Million Three Hundred Seventy Five
Thousand Five Hundred Twenty One Dollars ($5,375,521) shall
be paid to BHI to be held by it pursuant to the Security
Assignment;
(iii) Two Hundred Thousand Dollars ($200,000)
shall be retained by Buyer pending final determination of
the Purchase Price;
(iv) Twenty Two Thousand Dollars ($22,000) shall
be paid to Xxxxx & Xxxxxx for its legal fees in connection
with the prior $5 million loan from Xxxxx Crown & Company
(Not Incorporated) to Seller; and
(v) The remaining balance shall be paid to Seller
by wire transfer of immediately available funds.
The amount retained by Buyer pursuant to clause (iii) above shall be
paid to Seller simultaneously with payment of the Net Adjustment
Payment pursuant to
Section 2(b)(iv)(D) and may be applied by Buyer against any Net
Adjustment Amount owed by Seller to Buyer.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller hereby
represents, warrants and covenants to Buyer that:
(a) Seller has the full legal authority to enter into this
Agreement and to carry out and perform the transactions contemplated
hereby. This Agreement is the legal, valid and binding obligation of
Seller, enforceable in accordance with its terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights or remedies of creditors' generally
and general equitable principles.
(b) Seller is the owner of the Transferred Interests free
and clear of all liens, claims, pledges, encumbrances and security
interests of any kind, nature and description except the Prior Liens.
(c) Seller has not at any time prior to the date hereof
assigned, sold, transferred or otherwise disposed of any interest in
the Company except pursuant to the Security Agreement, LaSalle
Collateral Assignment and Foothill Collateral Assignment.
(d) Seller has not taken any action as a member, officer or
manager of the Company, or otherwise which has resulted or may result
in a debt or other obligation of the Company to any person
("Undisclosed Creditor") and the Company, Buyer and the Other Member
have no outstanding obligations to Seller or any affiliate of Seller
except those obligations set forth in the Purchase Agreement.
(e) Seller acknowledges and agrees that it has been given
the opportunity to receive and review all information regarding the
Company and its assets and business necessary to make an independent
determination of the value of the Company and the Purchase Price,
that it has received independent counseling as to such value, and
that, based upon such review and counseling, the Purchase Price is
fair and equitable.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. Buyer
represents, warrants and covenants to Seller that Buyer has full legal authority
to enter into this Agreement and to carry out and perform the transactions
contemplated hereby. This Agreement is the legal, valid and binding obligation
of Buyer, enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights or remedies of creditors' generally and general equitable
principles.
5. INDEMNIFICATION.
(a) Seller hereby indemnifies and agrees to hold Buyer
harmless from and against any and all claims, suits, actions,
judgments, liabilities, losses, damages, fines, penalties, costs and
expenses, including, without limitation, reasonable attorneys' fees
and costs arising out of or relating to any breach of the terms of
this Agreement by Seller, or arising out of or relating to a breach
or misrepresentation of any warranty of Seller
contained herein, including without limitation any claim by an
Undisclosed Creditor, or with respect to the fulfillment of any of
the terms of this Agreement by Seller.
(b) Buyer hereby indemnifies and agrees to hold Seller
harmless from and against any and all claims, suits, actions,
judgments, liabilities, losses, damages, fines, penalties, costs and
expenses, including, without limitation, reasonable attorneys' fees
and costs arising out of or relating to any breach of the terms of
this Agreement by Buyer, or arising out of or relating to a breach or
misrepresentation of any warranty of Buyer contained herein, or with
respect to the fulfillment of any of the terms of this Agreement by
Buyer.
6. SELLER'S RELEASES. Seller, on behalf of himself and his successors
and assigns, hereby releases and forever discharges the Company, its members,
and managers, their direct and indirect owners, officers, directors and
employees and their respective successors and assigns of and from any and all
claims, causes of action, suits, covenants, damages and demands, whatsoever, in
law or in equity, which Seller, its successors and assigns, may have or which
may arise in the future against the Company, its members, managers, their direct
and indirect owners, officers, directors and employees and their respective
successors or assigns in connection with the Transferred Interests, the Company,
or any position Seller may have had with the Company. Expressly excluded from
the foregoing release are any rights Seller may have arising out of the Purchase
Agreement or this Agreement.
7. NOTICES. All notices for which provision is made in this Agreement
shall be in writing and shall be deemed properly served if delivered in person,
by facsimile transmission, by prepaid overnight courier or by registered or
certified U.S. mail, postage prepaid, return receipt requested, to the
following:
If to Seller, to: Allied Products Corporation
00 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Corporate Secretary
Facsimile: 312/454-9608
with a copy to: Xxxxxxx, Carton & Xxxxxxx
Quaker Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx, Esq./Xxxxx
X. Xxxxxxxxxx, Esq.
Facsimile: 312/644-3381
If to Buyer, to: CC Industries, Inc.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Crown
Facsimile: 312/984-1490
with a copy to: Xxxxx & Xxxxxx
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile: 312/236-3241
Or to such other address as such party may indicate by notice
delivered to the other parties hereto. All notices properly given as aforesaid
shall be deemed to be received by the addressee on the date of delivery if
delivered in person, by facsimile transmission or overnight courier and three
(3) days after the date of the postmark if mailed.
8. MISCELLANEOUS.
(a) The terms and provisions hereof shall inure to the
benefit of and be binding upon the undersigned and their respective
successors and assigns.
(b) The invalidity or unenforceability of any of the
provisions hereof shall not affect the validity or enforceability of
the remainder hereof.
(c) This Agreement constitutes the entire agreement between
the parties with reference to the subject matter hereof and may not
be changed or modified orally, and unless expressly contained herein,
no warranties, representations or covenants shall be implied.
(d) All of the representations, warranties, covenants,
agreements, terms and provisions of this Agreement shall survive the
sale of the Transferred Interests.
(e) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois.
(f) From time to time, if requested by Buyer, and without
further consideration, Seller will execute and deliver such further
instruments, conveyances, or documents of title, and take such other
action as Buyer may reasonably request in order to more effectively
and fully convey and transfer to Buyer the Transferred Interests.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
SELLER:
ALLIED PRODUCTS CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Its: Senior Vice President
------------------------------
BUYER:
CC INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Its: Vice President
------------------------------
CONSENT
BHI hereby consents to the foregoing Agreement of Sale of Membership
Interest.
XXXX HOG INVESTORS, L.L.C.
by Xxxxx Crown & Company (Not Incorporated), its
manager
By: /s/ Xxxx X. Xxxxxx
------------------------------------
a general partner
EXHIBIT A
MEMBERSHIP INTEREST ASSIGNMENT AGREEMENT
This MEMBERSHIP INTEREST ASSIGNMENT AGREEMENT ("Assignment") is made
this 26th day of June, 2000, by and between Allied products Corporation
("Assignor") and CC Industries, Inc. ("Assignee").
W I T N E S S E T H:
WHEREAS, Assignor and Assignee are parties to a certain Agreement of
Sale of Membership Interests ("Agreement") dated as of June 26, 2000; and
WHEREAS, in accordance with the terms of the Agreement, Assignor
desires to assign and deliver to Assignee, and Assignee desires to accept from
Assignor, membership interests constituting Nineteen and 9/10 percent (19.9%) of
the Membership Interests ("Transferred Interests") of Xxxx Hog, L.L.C., a
Delaware limited liability company (the "Company").
NOW, THEREFORE, for such good and valuable consideration as set forth
in the Agreement, the receipt and sufficiency of which is hereby acknowledged,
and pursuant to the terms of the Agreement, Assignor and Assignee agree as
follows:
1. Assignor hereby assigns and transfers to Assignee the Transferred
Interests, and Assignee hereby accepts such assignment and assumes all of
Assignor's obligations to the Company accruing from and after the date hereof
(except as set forth in the Agreement); and Assignee hereby becomes a Member
owning a Nineteen and 9/10 percent (19.9%) interest in the Company, in addition
to all other interests in the Company owned by Assignee.
2. Assignor hereby warrants to Assignee that he has full power and
authority to make this Assignment and that Assignor has good title to the
Transferred Interests free and clear of all liens, claims, security interests
and encumbrances.
3. In the event of any conflict between the terms and provisions of
this Assignment and the Agreement, the terms and provisions of the Agreement
shall control.
IN WITNESS WHEREOF, the undersigned have executed this Membership
Interest Assignment Agreement this 26th day of June, 2000.
ASSIGNOR:
Allied products Corporation
By:
------------------------------
Its:
-------------------------
ASSIGNEE:
CC Industries, Inc.
By:
------------------------------
Its:
-------------------------
10
