1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AQUA-CHEM, INC.,
NATIONAL DYNAMICS CORPORATION
AND
THE SHAREHOLDERS OF
NATIONAL DYNAMICS CORPORATION
MAY 28, 1998
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EXHIBITS TO ASSET PURCHASE AGREEMENT BY AND AMONG AQUA-CHEM, INC., NATIONAL
DYNAMICS CORPORATION AND THE SHAREHOLDERS OF NATIONAL DYNAMICS CORPORATION
DATED MAY 28, 1998
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SCHEDULES TO ASSET PURCHASE AGREEMENT BY AND AMONG AQUA-CHEM, INC. ("BUYER")
AND NATIONAL DYNAMICS CORPORATION ("SELLER"), XXXXXX X. XXXXXX, XXXXX X. XXXXXXX
AND XXXXXX X. XXXXXX (THE "SHAREHOLDERS") DATED MAY 28, 1998
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2
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AQUA-CHEM, INC.,
NATIONAL DYNAMICS CORPORATION
AND
THE SHAREHOLDERS OF
NATIONAL DYNAMICS CORPORATION
MAY 28, 1998
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EXHIBIT 2.1
TABLE OF CONTENTS
Tab No.
1. Asset Purchase Agreement By and Among Aqua-Chem, Inc., National
Dynamics Corporation And The Shareholders of National Dynamics
Corporation Dated May 28, 1998
*Letter dated May 28, 1998 to Xxxxx X. Xxxxxxx from J. Xxxxx
Xxxxxx at Aqua-Chem, Inc.*
2. Exhibits to Asset Purchase Agreement By and Among Aqua-Chem, Inc.,
National Dynamics Corporation And The Shareholders of National
Dynamics Corporation Dated May 28, 1998
Exhibit A: Assumed Liabilities
Exhibit B: Liability
Exhibit C: Excluded Assets in Addition to
Those Identified as "Excluded
Assets" in Section 1 of the Asset
Purchase Agreement
Exhibit D: Purchase Price Escrow Agreement
Exhibit E: Warranty and Start Up Escrow
Agreement
Exhibit F: Closing Balance Sheet Example
Exhibit G: Assignments, Bills of Sale and Deeds
Exhibit H: Assumption Agreement
Exhibit I: Allocation of Purchase Price
Exhibit J: Financial Statements
Exhibit K: Schedule of Title Insurance Amounts
Exhibit L: Opinion of Seller's Legal Counsel
Exhibit M: Xxxxx X. Xxxxxxx Consulting
Agreement
Exhibit N: Xxxxxx X. Xxxxxx Consulting
Agreement
Exhibit O: Opinion of Buyer's Legal Counsel
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EXHIBIT 2.1
TABLE OF CONTENTS
(Continued)
3. Schedules to Asset Purchase Agreement By And Among Aqua-Chem,
Inc., ("Buyer") And National Dynamics Corporation ("Seller"),
Xxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx And Xxxxxx X. Xxxxxx (The
"Shareholders")
Schedule 1 Acquired Assets
Schedule 3(a) Organization of the Seller
Schedule 3(b) Authorization of Transaction
Schedule 3(c) Noncontravention
Schedule 3(d) Brokers' Fees
Schedule 3(e) Title to Assets
Schedule 3(f) Subsidiaries
Schedule 3(g) Financial Statements
Schedule 3(h) Events Subsequent to Most Recent
Fiscal Year End
Schedule 3(i) Undisclosed Liabilities
Schedule 3(j) Legal Compliance
Schedule 3(k) Real Property
Schedule 3(l) Intellectual Property
Schedule 3(m) Tangible Assets
Schedule 3(n) Inventory
Schedule 3(o) Contracts
Schedule 3(p) Notes and Accounts Receivable
Schedule 3(q) Accounts and Powers of Attorney
Schedule 3(r) Insurance
Schedule 3(s) Litigation
Schedule 3(t) Employees
Schedule 3(u) Employee Benefits
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EXHIBIT 2.1
TABLE OF CONTENTS
(Continued)
Schedule 3(v) Guaranties
Schedule 3(w) Environment, Health and Safety
Schedule 3(x) Taxes
Schedule 3(y) Product Warranty
Schedule 3(z) Shareholder Authorization
Schedule 3(aa) Noncontravention
Schedule 3(ab) Seller shares
Schedule 3(ac) Certain Business Relationships with
the Seller
Schedule 3(ad) Disclosure
Schedule 5.2(f) Confidentiality Agreement
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EXHIBIT 2.1
TABLE OF CONTENTS
1. Definitions............................................................ -1-
2. Basic Transaction...................................................... -6-
(a) Purchase and Sale of Assets....................................... -6-
(b) Assumption of Liabilities......................................... -6-
(c) Purchase Price.................................................... -6-
(d) The Closing....................................................... -8-
(e) Deliveries at the Closing......................................... -8-
(f) Allocation........................................................ -8-
3. Representations and Warranties of the Shareholders..................... -8-
(a) Organization of the Seller........................................ -9-
(b) Authorization of Transaction...................................... -9-
(c) Noncontravention.................................................. -9-
(d) Brokers' Fees..................................................... -9-
(e) Title to Assets................................................... -9-
(f) Subsidiaries...................................................... -10-
(g) Financial Statements.............................................. -10-
(h) Events Subsequent to Most Recent Fiscal Year End.................. -10-
(i) Undisclosed Liabilities........................................... -12-
(j) Legal Compliance.................................................. -12-
(k) Real Property..................................................... -12-
(l) Intellectual property............................................. -13-
(m) Tangible Assets........................................... -15-
(n) Inventory......................................................... -16-
(o) Contracts......................................................... -16-
(p) Notes and Accounts Receivable..................................... -17-
(q) Accounts, Letters of Credit, Bonds and Powers of Attorney......... -17-
(r) Insurance......................................................... -17-
(s) Litigation........................................................ -17-
(t) Employees......................................................... -18-
(u) Employee Benefits................................................. -18-
(v) Guaranties........................................................ -20-
(w) Environment, Health and Safety............................ -20-
(x) Taxes............................................................. -20-
(y) Product Warranty............................................. -20-
(z) Shareholder Authorization......................................... -20-
(aa) Noncontravention............................................. -21-
(ab) Seller Shares............................................. -21-
(ac) Certain Business Relationships With the Seller............ -21-
(ad) Disclosure................................................ -21-
(ae) Disclaimer of Other Representations and Warranties........ -21-
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EXHIBIT 2.1
4. Representations and Warranties of the Buyer............................ -21-
(a) Organization of the Buyer......................................... -22-
(b) Authorization of Transaction...................................... -22-
(c) Noncontravention.................................................. -22-
(d) Brokers' Fees..................................................... -22-
(e) Disclosure........................................................ -22-
(f) Disclaimer of Other Representations and Warranties................ -22-
5.1 Pre-Closing Covenants.................................................. -23-
(a) General........................................................... -23-
(b) Financing......................................................... -23-
(c) Notices and Consents.............................................. -23-
(d) Operation of Business Section..................................... -23-
(e) Preservation of Business Section.................................. -23-
(f) Full Access Section............................................... -24-
(g) Exclusivity....................................................... -24-
(h) Title Insurance................................................... -24-
(i) Surveys........................................................... -24-
(j) Effect of Disclosure.............................................. -25-
5.2 Other Covenants....................................................... -26-
(a) General........................................................... -26-
(b) Litigation Support................................................ -26-
(c) Seller and Shareholder Confidentiality............................ -26-
(d) Covenant Not to Compete........................................... -27-
(e) Non Assignable Contracts.......................................... -27-
(f) Buyer Confidentiality............................................. -28-
(g) Warranty, Make Good and Start Up Liability and Work............... -28-
(i) Liability for Warranty, Make-Good and Startup............. -28-
(ii) Performance of Warranty, Make-Good and Startup Work...... -28-
(iii) Payment for Warranty Work, Make-Good Work and Startup
Performed for Seller by Buyer..................................... -29-
(iv) Warranty, Startup, Accounts and Notes Receivable Escrow
Account .......................................................... -29-
(h) Accounts and Notes Receivable..................................... -30-
(i) Product Liability................................................. -31-
(j) Surety Bonds and Letters of Credit................................ -31-
(k) Certain Employment Related Matters............................... -31-
(l) Certain Environmental Matters..................................... -33-
(m) Tax Returns and Employee Benefit Plan Returns and Reports. -33-
6. Conditions to Obligation to Close...................................... -34-
(a) Conditions to Obligation of the Buyer............................. -34-
(b) Conditions to Obligation of the Seller............................ -35-
7. Termination............................................................ -36-
(a) Mutual Consent.................................................... -36-
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EXHIBIT 2.1
(b) Passage of Time................................................... -36-
(c) Non-Satisfaction of Section6(a) Conditions........................ -36-
(d) Non-Satisfaction of Section6(b) Conditions........................ -36-
(e) Failure to Obtain Financing...................................... -36-
(f) Matters Disclosed in Updates to Disclosure Schedule............... -36-
(g) Title Insurance and Survey........................................ -37-
(h) Further Due Diligence............................................. -37-
8. Remedies.............................................................. -37-
(a) Survival of Representations and Warranties........................ -37-
(b) Indemnification Provisions for Benefit of the Buyer............... -37-
(c) Indemnification Provisions for Benefit of the Seller and the
Shareholders...........................................................
-38-
(d) Limitations....................................................... -39-
(e) Indemnification Procedures........................................ -40-
(f) Recoupment........................................................ -41-
(g) Payment........................................................... -41-
(h) General........................................................... -42-
9. Miscellaneous.......................................................... -43-
(a) Bulk Transfer Laws................................................ -43-
(b) Press Releases and Public Announcements........................... -43-
(c) No Third Party Beneficiaries...................................... -43-
(d) Entire Agreement.................................................. -43-
(e) Succession and Assignment......................................... -43-
(f) Counterparts...................................................... -43-
(g) Headings.......................................................... -43-
(h) Notices........................................................... -43-
(i) Governing Law..................................................... -44-
(j) Amendments and Waivers............................................ -44-
(k) Severability...................................................... -45-
(l) Expenses.......................................................... -45-
(m) Incorporation of Exhibits and Schedules................... -45-
(n) Construction...................................................... -45-
(o) Submission to Jurisdiction........................................ -45-
(p) Specific Performance.............................................. -45-
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
AGREEMENT made and entered into as of May ____,1998, by and among
AQUA-CHEM, INC., a Delaware corporation (the "Buyer"), NATIONAL DYNAMICS
CORPORATION, a Nebraska corporation (the "Seller") and XXXXXX X. XXXXXX, XXXXX
X. XXXXXXX, and XXXXXX X. XXXXXX, the holders of eighty-three and 25/100 percent
(83.25%) of the issued and outstanding shares of the Seller (the
"Shareholders"). The Buyer, the Seller and the Shareholders are referred to
collectively herein as the "Parties."
WITNESSETH:
WHEREAS, the Buyer desires to purchase and acquire the Seller's assets
and business as a going concern and assume certain liabilities of Seller on the
terms and conditions hereinafter set forth and
WHEREAS, the Seller and the Shareholders desire that the Seller sell
its assets and business as a going concern to the Buyer on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquired Assets" means all right, title, and interest in and to all of
the assets of the Seller as of the Closing Date as hereinafter defined,
including, without limitation, all of its (a) real property, leaseholds and
subleaseholds therein, improvements, fixtures, and fittings thereon, and
easements, rights-of-way, and other appurtenants thereto (such as appurtenant
rights in and to public streets), (b) tangible personal property (such as
machinery, equipment, inventories of raw materials and supplies, manufactured
and purchased parts, goods in process and finished goods, furniture,
automobiles, trucks, tractors, trailers, tools, jigs, and dies), (c)
Intellectual Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of interests therein
under the laws of all jurisdictions, (d) leases, subleases, and rights
thereunder, (e) those agreements, contracts, indentures, mortgages, instruments,
Security Interests, guaranties, other similar arrangements, and rights
thereunder as listed in Section 1 of the Disclosure Schedule (as hereinafter
defined), (f) accounts, notes, and other receivables, (g) claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery,
rights of set off, and rights of recoupment, excluding any of the foregoing
items which relate to Taxes paid by Seller, Excluded Assets and/or obligations
or liabilities of Seller which are not Assumed Liabilities, (h) franchises,
approvals, permits, licenses, orders, registrations, certificates, variances,
and similar rights obtained from governments and governmental agencies, (i)
books, records, ledgers, files, documents, correspondence, lists, plats,
architectural plans, drawings, and specifications, creative
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EXHIBIT 2.1
materials, advertising and promotional materials, studies, reports, and
other printed or written materials, and (j) Cash; provided, however, that the
Acquired Assets shall not include the "Excluded Assets" (as hereinafter
defined).
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest announced
from time to time in the Midwest Edition of the Wall Street Journal or any
successor publication.
"Assumed Liabilities" means, as of the Closing Date, (a) all
Liabilities of the Seller to the extent of the dollar amount reflected on the
Closing Balance Sheet (as hereinafter defined) and taken into account in the
calculation of the Closing Net Asset Value (as hereinafter defined), (b) all
obligations of the Seller under the agreements, contracts, leases, licenses, and
other arrangements referred to in the definition of Acquired Assets either (i)
to furnish goods, services, and other non-Cash benefits to another party after
the Closing or (ii) to pay for goods, services, and other non-Cash benefits that
another party will furnish to it after the Closing, and (c) those other
Liabilities and obligations of the Seller set forth in Exhibit A attached
hereto, provided, however, that the Assumed Liabilities shall not include (i)
any Liability of the Seller for Taxes, except to the extent of the dollar amount
of those Taxes reflected on the Closing Balance Sheet which relate to tax
returns the Buyer is required to file pursuant to Section 5.2(m) of this
Agreement, (ii) any Liability of the Seller for the unpaid Taxes of any Person,
as a transferee or successor, by contract, or otherwise, (iii) any obligation of
the Seller to indemnify any Person (including any of the Shareholders) by reason
of the fact that such Person was a director, officer, employee, or agent of the
Seller or was serving at the request of any such entity as a partner, trustee,
director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses, or otherwise and whether such indemnification
is pursuant to any statute, charter document, bylaw, agreement, or otherwise),
(iv) any Liability or obligation of the Seller under this Agreement; (v) any
Liabilities or obligations directly or indirectly relating to or arising in
connection with the EGT Projects (as hereinafter defined), (vi) any Liabilities
or obligations (including, without limitation liabilities for personal injury
and property damage) directly or indirectly relating to or arising in connection
with Products Sold (as hereinafter defined) on or before the Closing Date (as
hereinafter defined), except for the obligation of Buyer to perform product
warranty, make-good and startup work for the Seller as hereinafter specifically
set forth in Section 5.2(g) of this Agreement, or any Liability listed on
Exhibit B attached hereto and/or (vii) any Liabilities under the Seller's VEBA.
"Buyer" has the meaning set forth in the preface above.
"Cash" means cash excluding marketable securities and short term
investments
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EXHIBIT 2.1
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Balance Sheet" has the meaning set forth in Section 2(c)(2)
below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Buyer and/or the Seller that is not already
available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Environmental, Health and Safety Requirements" means all applicable
federal, state, local, administrative and foreign statutes, rules, regulations,
and ordinances concerning public health and safety, worker health and safety,
and pollution or protection of the environment, including without limitation,
all those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
industrial, chemical, toxic or hazardous materials, substances or wastes (as
such terms are defined under any applicable federal, state, local or foreign
statute, rule, regulation or ordinance), as such requirements are enacted and in
effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means the following assets owned by the Seller: (i)
life insurance policies (including any cash surrender values) on the lives of
Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx; (ii) product liability
insurance policies; (iii) art work and bronzes, which have previously been
removed from the Seller's Premises; (iv) accounts receivable (all of which have
previously been written off) or liabilities relating to the European Gas
Turbines on projects identified as Xxxxxxxx Xxxxxx Gas Services, Inc. ("BFGSI")
Pine Bend, MN Project, BFGSI Arbor Hills, MI Project, Anheuser Xxxxx Newark
Brewery Project and Princeton University Project as more fully described in the
Disclosure Schedule (collectively the "EGT Projects"); (v) any and all other
insurance policies other than the policies of life insurance on the lives of
Xxxxx X. Bouquet, Xxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx (the
"Executives") which serve as the funding vehicle for the
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EXHIBIT 2.1
Seller's deferred compensation obligations to the Executives (the "Deferred
Compensation Obligations"); (vi) the corporate charter, qualifications to
conduct business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
documents relating to the organization, maintenance, and existence of the Seller
as a corporation, or any of the rights of the Seller under this Agreement; (vii)
marketable securities, short-term investments and/or tax deposits; (viii) those
prepaid expenses and other items specifically listed in Exhibit C attached
hereto and (ix) any assets related to the Seller's VEBA.
"Extremely Hazardous Substance" has the meaning set forth in Section
302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section 3(g) below.
"GAAP" means generally accepted accounting principles as in effect in
the United States as of the date of this Agreement.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
bills of material, customer and supplier lists, customer job files, pricing and
cost information, and business and marketing plans and proposals), (f) all
computer software (including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" means that which is actually known or, after reasonable
investigation, should have been known by the Shareholders.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
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EXHIBIT 2.1
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section
3(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Real Estate Encumberances" means those defects,
encroachments, easements, covenants and other restrictions set forth in the
title commitments or the surveys referenced in Section 3(k) of the Disclosure
Schedule and approved by the Buyer in accordance with Section 3(k) of the
Disclosure Schedule.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Products Sold" means those products which under GAAP, applied on a
basis consistent with prior years, the Seller is permitted or required to
regard, under the completed contract method of accounting, as having been sold
on or before the Closing Date and with respect to which Seller has, accordingly,
been required or permitted to recognize profit or loss Section
"Prohibited Transaction" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, adverse claim, deed of trust or other security interest, other than (a)
mechanic's, materialmen's, and similar liens arising in connection with the
Assumed Liabilities, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business which arise in
connection with an Assumed Liability and were not incurred in connection with
the borrowing of money.
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EXHIBIT 2.1
other liens arising in the Ordinary Course of Business which arise in connection
with an Assumed Liability and were no incurred in connection with the borrowing
of money.
"Subsidiary" means any partnership, corporation, limited liability
company, business trust, or any other entity with respect to which Seller has an
equity interest or has the power to vote or direct the voting of equity
securities.
"Survey" has the meaning set forth in Section 5.1(i) below.
"Seller" has the meaning set forth in the preface above.
"Shareholder" shall have the meaning set forth in the preface above.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all of
the Acquired Assets at the Closing for the consideration specified below in this
Section 2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer covenants and agrees at the Closing to
assume and become solely responsible for all of the Assumed Liabilities. From
and after Closing, the Buyer shall pay and perform all amounts and obligations
arising out of or in connection with the Assumed Liabilities promptly as the
same become due and shall not suffer or permit the same to become delinquent or
in default. The Buyer will not assume or have any responsibility, however, with
respect to any obligation or Liability of the Seller not specifically included
within the definition of Assumed Liabilities.
(c) Purchase Price.
(1) The Purchase Price, subject to adjustment as set forth below, shall
be Forty-Seven Million Dollars ($47,000,000), Thirty Eight Million
Dollars ($38,000,000) of which shall be paid to the Seller by wire
transfer of immediately available funds on the Closing Date, Five
Million Dollars ($5,000,000) of which shall be deposited by wire
transfer of immediately available
15
EXHIBIT 2.1
funds in an escrow account (the "Purchase Price Escrow Account") with
Bank One Trust Company, N.A.(the "Escrow Agent") to be held in
accordance with a Purchase Price Escrow Agreement substantially in the
form of Exhibit D and disbursed as set forth in Section 2(c)(3) and
Section 2(e) below and Four Million Dollars ($4,000,000) of which shall
be deposited by wire transfer of immediately available funds in an
escrow account (the "Warranty, Startup, Accounts and Notes Receivable
Escrow Account") with the Escrow Agent to be held in accordance with a
Warranty and Startup Escrow Agreement substantially in the form of
Exhibit E and disbursed as set forth in Section 5.2(g) and
Section 5.2(h) below. The Buyer and the Seller shall each pay one-half
of the fees and expenses of the Escrow Agent.
(2) A physical inventory shall be jointly conducted by the Seller and
the Buyer as of the close of business on the Closing Date subject to
the provisions of Section 2(c)(4) below. As promptly as possible, but
not later than 60 days after the Closing, the Buyer shall prepare and
deliver to the Seller an audited balance sheet certified by Xxxxxx
Xxxxxxxx (the "Closing Balance Sheet"), dated as of the Closing Date,
prepared from the Company's books and records in accordance with the
accounting conventions set forth in Section 2(c)(4) below and a
calculation of the Closing Net Asset Value (as hereinafter defined).
The Parties hereby acknowledge and agree that the Closing Net Asset
Value shall be calculated in the manner and utilizing the methodology
set forth on Exhibit F attached hereto. In the event the Seller
disagrees with any items set forth on the Closing Balance Sheet or the
calculation of the Closing Net Asset Value, the Seller shall by
written notice to the Buyer within 30 days of receipt of the Closing
Balance Sheet specify the disputed items and the basis for
disagreement (the "Seller's Notice") and the Buyer and the Seller
shall thereafter attempt to resolve any such differences. The Buyer
shall permit the Seller and its representatives to observe the
processes used and to review any work papers prepared by Xxxxxx
Xxxxxxxx in connection with the audit of the Closing Balance Sheet.
Buyer shall pay all of the fees of Xxxxxx Xxxxxxxx in connection
herewith. In the event that all disputed items have not been resolved
by the Seller and the Buyer within 30 days after the Buyer's receipt
of the Seller's Notice, upon the written request of either the Seller
or the Buyer, any unresolved disputed items shall be submitted to the
independent accounting firm of Coopers & Xxxxxxx (the "Accountants"),
whose decision, which shall be made within thirty (30) days after
submission of the disputed items, shall be final and binding upon the
Buyer, the Seller and the Shareholders. The Buyer and the Seller shall
cooperate with the Accountants and make available to the Accountants
all work papers, records and other information as may be requested. If
Seller's Notice is given, the Buyer and the Seller shall each pay
one-half (1/2) of the reasonable fees and expenses of the Accountants
and shall execute such agreements as the Accountants may reasonably
request in connection with such services.
(3) In the event that (i) the book value of the Acquired Assets (net of
depreciation and amortization) as set forth on the Closing Balance
Sheet, minus (ii) the sum of (A) the "Agreed Upon Reserve" (as
hereinafter defined), plus (B) the book value of the Assumed
Liabilities as set forth on the Closing Balance Sheet (the "Closing Net
Asset Value"), is less than $17,125,160, the Purchase Price shall be
reduced by the amount of such deficiency. The Purchase Price, as
reduced by any adjustment required under the preceding sentence, or the
original Purchase Price of Forty Seven Million Dollars ($47,000,000),
if no adjustment is
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EXHIBIT 2.1
required under the preceding sentence, is hereinafter referred to as
the "Final Purchase Price". If the Final Purchase Price is more than
Forty Two Million Dollars ($42,000,000), the Escrow Agent will pay the
Seller by wire transfer of immediately available funds an amount equal
to (a) the Final Purchase Price, minus (b) Forty Two Million Dollars
($42,000,000) and return the balance, if any, of the original principal
amount of the Purchase Price Escrow Account to the Buyer. If the Final
Purchase Price is less than Forty Two Million Dollars ($42,000,000),
(a) the Escrow Agent will return all funds in the Purchase Price Escrow
Account to the Buyer and (b) the Seller will pay the Buyer by wire
transfer of immediately available funds an amount equal to (a) Forty
Two Million Dollars ($42,000,000), minus (b) the Final Purchase Price.
Any earnings on the Purchase Price Escrow Account shall be distributed
to the Seller and/or the Buyer on a basis proportionate with the
distribution of the principal distributions to the Seller and/or the
Buyer from the Escrow Account.
(4) Each accounting term used herein shall have the meaning that is
applied thereto in accordance with GAAP and each account included in
the Closing Balance Sheet shall be calculated in accordance with GAAP
and shall be consistent with the books and records of the Company;
provided, that all known arithmetic errors shall be taken into account
in the calculation of each account set forth above, regardless of their
materiality and with respect to the calculation of the levels of the
accounts set forth above and, provided further, that in determining the
Closing Net Asset Value there shall be no reserves for: vacation pay,
product warranty, make good and start-up liability and work, excess,
obsolete, damaged or defective inventory, product liability, bad debts,
the Seller's VEBA, or any unfunded liabilities associated with either
the Defined Benefit Plan (except for the Agreed Upon Reserve) or the
Deferred Compensation Obligations. As used in this Agreement, the term
"Agreed Upon Reserve" shall mean an amount equal to (i) the sum of (A)
the reserve for the Defined Benefit Plan (as hereinafter defined) as
set forth in Most Recent Fiscal Year End Financial Statements, plus (B)
the addition thereto for current service costs for the period from
November 1, 1997 through the Closing Date, minus (ii) contributions
made by the Seller on or after November 1, 1997 to the Defined Benefit
Plan.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxx Xxxxxxxxxxx
Xxxxx SC, 2100 Bank Xxx Xxxxx, Xxxxxxxxx, XX 00000, commencing at 10:00 a.m.
local time on such date as the Buyer and the Seller may agree upon, but not
later than the fifth business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself), (the "Closing Date").
However, in no event shall Closing occur later than July 18, 1998.
(e) Deliveries at the Closing. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 6(a) below; (ii) the Buyer will deliver to the Seller
the various certificates, instruments, and documents referred to in
Section 6(b) below; (iii) the Seller will execute, acknowledge, and deliver to
the Buyer (A) assignments, bills of sale, deeds in the forms attached hereto as
Xxxxxxxx X0, X0 and G3 and (B) such other instruments of sale, transfer,
conveyance, and assignment (including motor vehicle and Intellectual Property
transfer documents)
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EXHIBIT 2.1
as the Buyer and its counsel reasonably may request; (iv) the Buyer will
execute and deliver to the Seller (A) an assumption agreement in the form
attached hereto as Exhibit H and (B) such other instruments of assumption as
the Seller and its counsel reasonably may request; (v) the Seller, the
Shareholders, the Buyer and the Escrow Agent will execute and deliver the
Purchase Price Escrow Agreement in the form of Exhibit B and the Warranty and
Startup Escrow Agreement in the form of Exhibit C; (vi) the Buyer will
deliver to the Seller and the Escrow Agent an aggregate amount of Forty-Seven
Million Dollars ($47,000,000) as provided in Section 2(c) above; (vii) the
Buyer and Xxxxx X. Xxxxxxx will execute the Xxxxxxx Consulting Agreement (as
hereinafter defined); the Buyer and Xxxxxx X. Xxxxxx will execute the Xxxxxx
Consulting Agreement (as hereinafter defined)
(f) Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets in accordance with the
allocation attached hereto as Exhibit I, and to use such allocation for all tax
reporting purposes connected herewith.
3. Representations and Warranties of the Shareholders. The Seller and
the Shareholders jointly and severally represent and warrant to the Buyer that,
notwithstanding any investigation by the Buyer, the statements contained in this
Section 3 are true, correct and complete as of the date of this Agreement and
will be true, correct and complete as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3), except as set forth in the disclosure schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3. Any matter reasonably
disclosed in one section of the Disclosure Schedule shall be deemed to be
disclosed for purposes of other sections of the Disclosure Schedule without the
necessity of specific cross reference. The Seller or any Shareholder may
periodically update the Disclosure Schedule as necessary between the date
hereof and the Closing Date by delivery of a copy of such update to Buyer as
provided in Section 9(h). Matters reasonably disclosed in the Disclosure
Schedule or in such updates shall constitute express exceptions to and
limitations of the representations and warranties of the Seller and the
Shareholders as hereinafter set forth.
(a) Organization of the Seller. The Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nebraska.
(b) Authorization of Transaction. The Seller has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of the Seller and the
Shareholders have duly authorized the execution, delivery, and performance of
this Agreement by the Seller. This Agreement constitutes the valid and legally
binding obligation of the Seller, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Seller is subject or any
provision of the articles of incorporation or bylaws of the Seller
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EXHIBIT 2.1
or (ii) except for any required third party consents or approvals, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets). The Seller does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above) other than as required pursuant to the Xxxx-Xxxxx-Xxxxxx Act, and such
authorizations, consents or approvals as may be required to assign the
agreements, contracts, leases, instruments and other arrangements included in
the Acquired Assets to Buyer as contemplated herein.
(d) Brokers' Fees. The Seller has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated, except to extent accrued on the Closing Balance Sheet.
(e) Title to Assets. Subject to the exceptions set forth in
Section 3(k)(i)(A), Section 5.1(h) and Section 5.1(i) relating to real
property, the Seller has, or will at Closing have, good and marketable title
to, or a valid leasehold interest in, the Acquired Assets free and clear of all
Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet.
(f) Subsidiaries. The Seller has no Subsidiaries and has had no
Subsidiaries for the prior eight years.
(g) Financial Statements. Attached hereto as Exhibit J are the
following financial statements (collectively the "Financial Statements"): (i)
audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended October 31, 1995,
1996, and 1997 (the "Most Recent Fiscal Year End") for the Seller; and (ii)
unaudited balance sheets and statements of income, changes in stockholders'
equity, and cash flow (the "Most Recent Financial Statements") as of and for the
five (5) months ended March 31, 1998 (the "Most Recent Fiscal Month End") for
the Seller. The Financial Statements (including the Notes thereto) have been
prepared in accordance with GAAP applied on a basis consistent with Seller's
prior year end audited Financial Statements, and present fairly the financial
condition of the Seller as of such dates and the results of operations of the
Seller for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be
material individually or in the aggregate) and lack footnotes and other
presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any occurrence, event, incident,
action, failure to act, or transaction outside the ordinary course of business
involving the Seller which would have a material adverse effect on the business
or financial results of Seller or a material adverse effect on the Acquired
Assets. Without limiting the generality of the foregoing, since that date:
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EXHIBIT 2.1
(i) the Seller has not sold, leased, transferred, or assigned any
of the Acquired Assets, other than for a fair consideration in the
Ordinary Course of Business;
(ii) the Seller has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $10,000 or outside the
Ordinary Course of Business;
(iii) no party (including the Seller) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which
the Seller is a party or by which it is bound;
(iv) the Seller has not had imposed any Security Interest upon any
of the Acquired Assets;
(v) the Seller has not made any capital expenditure (or series of
related capital expenditures) either involving more than $10,000 or
outside the Ordinary Course of Business;
(vi) the Seller has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person
(or series of related capital investments, loans, and acquisitions)
outside the Ordinary Course of Business;
(vii) the Seller has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation;
(viii) the Seller has not delayed and/or postponed the payment of
accounts payable or other Liabilities outside the Ordinary Course of
Business;
(ix) the Seller has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) outside the
Ordinary Course of Business;
(x) the Seller has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) the Seller has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in
cash or in kind) which will result in the Closing Net Asset Value being
less than $15,031,850, or redeemed, purchased, or otherwise acquired
any of its capital stock;
(xii) the Seller has not experienced any material damage,
destruction, or loss (whether or not covered by insurance) to the
Acquired Assets;
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EXHIBIT 2.1
(xiii) the Seller has not made any loan to, or entered into any
other transaction with, any of its directors, officers, employees or
any other Person outside the Ordinary Course of Business;
(xiv) the Seller has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms
of any existing such contract or agreement;
(xv) the Seller has not granted any increase in the base
compensation of any of its directors, officers, and/or employees;
(xvi) the Seller has not adopted, amended, modified or terminated
any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors,
officers, and/or employees (or taken any such action with respect to
any other Employee Benefit Plan);
(xvii) the Seller has not made any other change in employment
terms for any of its directors, officers, and/or employees;
(xviii) the Seller has not made or pledged to make any charitable
or other capital contribution;
(xix) except for market or economic conditions which are matters
of general knowledge in the industry, there has not been any other
occurrence, event, incident, action, failure to act, or transaction
outside the Ordinary Course of Business involving the Seller which
would have a material adverse effect on the business or financial
results of Seller or a material adverse effect on the Acquired Assets;
and
(xx) the Seller has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Seller has no Liabilities (and there
are no pending or threatened actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, or demands against Seller which
could reasonably be expected to give rise to any Liability), except for (i)
Liabilities to the extent reflected in the Most Recent Balance Sheet; (ii)
Liabilities which have arisen after the date of the Most Recent Fiscal Month End
Balance Sheet in the Ordinary Course of Business (none of which results from,
arises out of, relates to, or was caused by any material breach of contract,
breach of warranty, tort, infringement, or violation of law); and (iii)
Liabilities arising under this Agreement or in connection with agreements,
contracts, leases, licenses and other arrangements which are included in the
Assumed Liabilities as to which Seller is not in default.
(j) Legal Compliance. Each of the Seller and its predecessors have
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
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EXHIBIT 2.1
(k) Real Property.
(i) Section 3(k)(i) of the Disclosure Schedule contains the legal
description of all real property that the Seller owns. With respect to
each such parcel of owned real property:
(A) the Seller has good and marketable title to the parcel
of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for Permitted
Real Estate Encumberances, real estate taxes and installments of
special assessments not yet delinquent and applicable zoning laws
and building restrictions
(B) To the Knowledge of the Seller, there are no pending
or threatened condemnation proceedings, lawsuits, or
administrative actions relating to the property or other matters
having an adverse effect on its current use, or Seller's occupancy
thereof;
(C) Seller has received all approvals of governmental
authorities (including licenses and permits) required in
connection with the ownership or operation of the real property as
currently used by Seller, and has operated and maintained the same
in accordance with applicable laws, rules, and regulations;
(D) there are no leases, subleases, licenses, concessions,
or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the real
property;
(E) there are no outstanding options or rights of first
refusal to purchase the real property, or any portion thereof or
interest therein; and
(F) there are no parties (other than the Seller) in
possession of the real property, other than tenants under any
leases disclosed in the Disclosure Schedule who are in possession
of space to which they are entitled.
(ii) Section 3(k)(ii) of the Disclosure Schedule sets forth the
legal description of all real property leased or subleased to the
Seller, and contains a true and correct copy of each lease and
sublease of real property to the Seller. With respect to each lease
and sublease listed in Section 3(k)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect, except that such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other
similar laws now or hereafter in effect relating to creditors'
rights generally and to general principles of equity;
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EXHIBIT 2.1
(B) except for any required third party consents or
approvals, the lease or sublease will continue to be legal, valid,
binding, enforceable in accordance with its terms, and in full
force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), except that such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or other
similar laws now or hereafter in effect relating to creditors'
rights generally and to general principles of equity;
(C) no party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or lapse
of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(D) no party to the lease or sublease has repudiated
any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, the
representations and warranties set forth in subsections (A)
through (E) above are true and correct with respect to the
underlying lease;
(G) the Seller has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or subleasehold; and
(H) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof as currently used by Seller, and have been operated and
maintained in accordance with applicable laws, rules, and
regulations.
(l) Intellectual property.
(i) The Seller owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of the Seller as
presently conducted. Each item of Intellectual Property owned or used
by the Seller immediately prior to the Closing hereunder, except for
required third party approvals or consents, will be owned or available
for use by the Buyer on identical terms and conditions immediately
subsequent to the Closing hereunder. The Seller has taken all necessary
action to maintain and protect each item of Intellectual Property that
it owns or uses, including, without limitation, maintaining all
engineering drawings, bills of material and other documentation
necessary to manufacture the products of the Seller's business.
(ii) The Seller has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and the Seller has never
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EXHIBIT 2.1
received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation
(including any claim that the Seller must license or refrain from
using any Intellectual Property rights of any third party). To the
Knowledge of the Seller, no third party has interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Seller.
(iii) Section 3(l)(iii) of the Disclosure Schedule identifies
each patent or registration which has been issued to the Seller with
respect to any of its Intellectual Property, identifies each pending
patent application or application for registration which the Seller
has made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which the
Seller has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). Except for the
terms of licenses or restrictions which are set forth in the body of
pre-packaged or off-the-shelf software, the Seller has delivered to
the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer correct and
complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item.
Section 3(l)(iii) of the Disclosure Schedule also identifies each trade
name or unregistered trademark used by the Seller in connection with
any of its businesses. With respect to each item of Intellectual
Property required to be identified in Section 3(l)(iii) of the
Disclosure Schedule:
(A) the Seller possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or,
to the Knowledge of the Seller, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
and
(D) the Seller has not ever agreed to indemnify any
Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 3(l)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that the
Seller uses pursuant to license, sublicense, agreement, or permission,
except any pre-packaged or off-the-shelf software. Except for licenses
or restrictions contained in the body of pre-packaged or off-the-shelf
software, the Seller has delivered to the Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of Intellectual
Property required to be identified in Section 3(l)(iv) of the
Disclosure Schedule;
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EXHIBIT 2.1
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding,
enforceable, and in full force and effect, except that such
enforceability may be subject to bankruptcy, insolvency,
reorganization, moratorium (whether general or specific) or the
similar laws now or hereafter in effect relating to creditors'
rights generally and to general principles of equity;
(B) except for any required third party consents or
approvals, the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable in accordance
with their terms, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to in
Section 2 above), except that such enforceability may be subject
to bankruptcy, insolvency, reorganization, moratorium (whether
general or specific) or the similar laws now or hereafter in
effect relating to creditors' rights generally and to general
principles of equity;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event
has occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(D) no party to the license, sublicense, agreement,
or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) the underlying item of Intellectual Property is
not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or,
to the Knowledge of the Seller, is threatened which challenges the
legality, validity, or enforceability of the underlying item of
Intellectual Property; and
(H) the Seller has not granted any sublicense or
similar right with respect to the license, sublicense, agreement,
or permission.
(M) Tangible Assets. The Seller owns or leases all
buildings, machinery, equipment, and other tangible assets used in the conduct
of its businesses as presently conducted. Each such tangible asset has been
maintained in accordance with normal industry practice, is in good operating
condition (subject to normal wear and tear), and as currently used by Seller is
suitable for the purposes for which it is presently used and is free from known
defects,
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EXHIBIT 2.1
(n) Inventory. The inventory of the Seller consists of raw materials and
supplies, manufactured and purchased parts, goods in process, and finished
goods, all of which is free from damage or defects and merchantable and fit for
the purpose for which it was procured or manufactured.
(o) Contracts. To the extent the same are included in the Assumed
Liabilities, Section 3(o) of the Disclosure Schedule lists the following
contracts and other agreements to which the Seller is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year or
involves consideration in excess of $10,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis or providing severance
benefits;
(ix) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees; or
(x) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $10,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement (as amended to date) listed in Section 3(o) of the Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect, except that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or other similar laws now or hereafter
in effect relating to creditors' rights generally and
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EXHIBIT 2.1
to general principles of equity; (B) except for third party consents or
approvals, the agreement will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms following the consummation of
the transactions contemplated hereby (including the assignments and assumptions
referred to in Section 2 above), except that such enforceability may be
subject to bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or hereafter in effect relating to
creditors' rights generally and to general principles of equity; (C) no party
is in breach or default, and no event has occurred which with notice or lapse
of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts receivable of
the Seller are reflected properly on its books and records, are valid
receivables, properly aged and the result of bona fide sales.
(q) Accounts, Letters of Credit, Bonds and Powers of Attorney. The Seller
has no outstanding powers of attorney, bank accounts, brokerage or similar
accounts or letters of credit or bonds.
(r) Insurance. With respect to each insurance policy included in the
Acquired Assets, Section 3(r) of the Disclosure Schedule sets forth the
following information:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured; and
(iii) the policy number and the period of coverage.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect, except that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or other similar laws now or hereafter
in effect relating to creditors' rights generally or to general principles of
equity; (B) subject to necessary consents and approvals, each policy, if any, to
be included among the Acquired Assets will continue, subject to Buyer's
compliance with all terms of the policy, to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above) except that such
enforceability may be subject to bankruptcy, insolvency, reorganization,
moratorium (whether general or specific) or other similar laws now or hereafter
in effect relating to creditors' rights generally or to general principles of
equity; (C) neither the Seller nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has
repudiated any provision thereof.
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EXHIBIT 2.1
(s) Litigation. Section 3(s) of the Disclosure Schedule sets forth each
instance in which the Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. The Seller has no Knowledge that any such
action, suit, proceeding, hearing, or investigation may be brought or threatened
against the Seller. Section 3(s) of the Disclosure Schedule also lists and
describes all litigation the Seller has been involved in or, to the Seller's
Knowledge, threatened with during the preceding five years in which the
plaintiff sought either equitable relief or the recovery of more than $25,000.
(t) Employees. To the actual knowledge of the Shareholders (without any
investigation), except for Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx, no executive,
key employee, or group of employees has any plans to terminate employment with
the Seller. The Seller is not party to or bound by any collective bargaining
agreement, nor since November 1, 1994, has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. Since November 1, 1994, the Seller has not committed any unfair labor
practice. The Seller does not have any Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Seller.
(u) Employee Benefits.
(i) Section 3(u) of the Disclosure Schedule lists each Employee
Benefit Plan that the Seller maintains or to which the Seller contributes.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in
all respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(B) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part
6 of Subtitle B of Title I of ERISA and of Code Section 4980B have
been met with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or
before the Closing Date which are not yet due have been paid to each
such Employee Pension Benefit Plan or accrued in accordance with the
past custom and practice of the Seller . All premiums or other
payments for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan which is
an Employee Welfare Benefit Plan.
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EXHIBIT 2.1
(D) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Section 401(a) and a favorable determination letter
regarding the Defined Benefit Plan was received from the Internal
Revenue Service in January of 1996.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than
any Multiemployer Plan) equals or exceeds the present value of all
vested and nonvested Liabilities thereunder determined in accordance
with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan as provided in the report of the
Principal Financial Group prepared as of November 1, 1997, a copy of
which is included in Section 3(u) of the Disclosure Schedule.
(F) The Seller has delivered to the Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Seller ever
has maintained or to which it contributes, ever has contributed, or ever
has been required to contribute:
(A) No such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted
or, to the Knowledge of any of the Shareholders, threatened.
(B) There have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of
any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge
any of the Shareholders, threatened. None of the Shareholders has
any Knowledge of any Basis for any such action, suit, proceeding,
hearing, or investigation.
(C) The Seller has not incurred, and none of the Shareholders
has any reason to expect that the Seller will incur; any Liability
to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under the
Code with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
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EXHIBIT 2.1
(iii) The Seller has never contributed to, or ever has been required
to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iv) The Seller does not maintain and never has maintained or
contributed, or ever has been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance
with Code Section 4980B).
(v) Guaranties. The Seller is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
(w) Environment, Health and Safety.
(i) The Seller and its predecessors have complied with all
Environmental, Health, and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against any of them alleging any failure so to
comply or asserting that the Seller or its predecessors have any Liability
under any Environmental, Health, and Safety Laws nor do any of the
Shareholders have any Knowledge of any basis for any of the foregoing.
Without limiting the generality of the preceding sentence, each of the
Seller and its predecessors has obtained and been in compliance with all
of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all Environmental, Health, and Safety Laws.
(ii) The Seller has no Liability (and the Seller and its
predecessors have not handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or facility
in any manner that could form the Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any Liability) for damage to any
site, location, or body of water (surface or subsurface), for any illness
of or personal injury to any employee or other individual, or for any
reason under any Environmental, Health, and Safety Law.
(iii) All properties and equipment used in the business of the
Seller and its predecessors have been free of asbestos, PCB's, methylene
chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(x) Taxes. The Seller has timely filed all Tax returns required to be
filed by it and timely paid all Taxes owed by it. To the extent the same are
related to Taxes which are included in the Assumed Liabilities, the reserve for
Taxes set forth on the Closing Balance Sheet is adequate to cover all Taxes
which may be assessed in the future relating to periods ending on or before the
Closing Date including, without limitation, prorated real estate and personal
property taxes.
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EXHIBIT 2.1
(y) Product Warranty. To the Knowledge of the Shareholders, no product
manufactured, sold, leased, or delivered by the Seller or any predecessor is
subject to any guaranty, warranty, or other indemnity beyond the applicable
standard terms and conditions of sale or lease. Section 3(y) of the Disclosure
Schedule includes copies of the standard terms and conditions of sale or lease
for the Seller (containing all applicable guaranty, warranty, and indemnity
provisions).
(z) Shareholder Authorization. Each Shareholder has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of each Shareholder, enforceable in accordance with its terms and conditions.
(aa) Noncontravention. Neither the execution and the delivery of this
Agreement by any Shareholder, nor the performance by any Shareholder of his
obligations hereunder, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, stipulation, ruling, or other
restriction of any government, governmental agency, or court to which the
Shareholder is subject or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Shareholder is a party or by which he is bound or to which any of his assets
is subject.
(ab) Seller Shares. The names of each of the stockholders of the Seller
and the number of shares of stock of the Seller owned by each stockholder are as
set forth in Section 3(ab) of the Disclosure Schedule
(ac) Certain Business Relationships With the Seller. None of the
Shareholders and/or their families has been involved in any business arrangement
or relationship with the Seller within the past 12 months, and none of the
Shareholders and/or their families owns any asset, tangible or intangible, which
is used in the business of the Seller.
(ad) Disclosure. The representations and warranties contained in this
Section 3, as modified by the Disclosure Schedule and any updates thereto, do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
(ae) Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 3, THE SELLER AND THE SHAREHOLDERS MAKE NO
REPRESENTATION OR WARRANTY, EXPRESS OF IMPLIED, AT LAW OR IN EQUITY, IN RESPECT
OF ANY OF THE SELLER'S ASSETS (INCLUDING, WITHOUT LIMITATION, THE ACQUIRED
ASSETS), LIABILITIES (INCLUDING, WITHOUT LIMITATION THE ASSUMED LIABILITIES) OR
OPERATIONS AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT
SPECIFICALLY SET
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EXHIBIT 2.1
FORTH IN THIS SECTION 3, THE BUYER IS PURCHASING THE ACQUIRED ASSETS
ON AN "AS-IS" "WHERE-IS" BASIS.
4. Representations and Warranties of the Buyer. The Buyer represents,
warrants and covenant to and with the Seller that, notwithstanding any
investigation by the Seller, the statements contained in this Section 4 are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4. Any matter fairly disclosed
in one section of the Disclosure Schedule shall be deemed to be disclosed for
purposes of other sections of the Disclosure Schedule without the necessity of
specific cross reference. The Buyer shall periodically update the Disclosure
Schedule as necessary between the date hereof and the Closing Date. If any
matters disclosed in such updates by the Buyer are not acceptable to the
Seller, the Seller shall, notwithstanding anything to the contrary in this
Agreement, have the right to unilaterally terminate this Agreement without
liability to the Buyer. If the matters disclosed in such updates by the Buyer
are acceptable to the Seller, such updates shall be initialed by the Buyer and
the Seller and the same shall constitute exceptions to the representations and
warranties hereinafter set forth.
(a) Organization of the Buyer. The Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
(b) Authorization of Transaction. The Buyer, subject to the fulfilment of
the Buyer's financing contingency, has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in accordance with its
terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above),
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Buyer is subject or any
provision of the articles of incorporation or bylaws of the Buyer or (ii)
subject to the fulfillment of the Buyer's financing contingency, conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Buyer is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). The Buyer does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties
to consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above) other than as
required pursuant to the Xxxx-Xxxxx-Xxxxxx Act, and such authorizations,
consents or approvals as may be required in connection with the Buyer's
financing and to assign the
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EXHIBIT 2.1
contracts, leases and agreements included in the Acquired Assets to Buyer as
contemplated herein all of which shall unless waived by the Buyer be obtained
by the Seller prior to Closing.
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller or the
Shareholders could become liable or obligated.
(e) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
(f) Disclaimer of Other Representations and Warranties. EXCEPT AS
EXPRESSLY SET FORTH IN THIS SECTION 4, THE BUYER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OF IMPLIED, AT LAW OR IN EQUITY, AND ANY SUCH OTHER
REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.
5.1 Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will, commencing as of the date of this
Agreement and continuing until the close of business on July 18,1998, use its
best efforts consistent with commercial reasonableness to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, performing all acts required by this Agreement to be performed by
such Party at or before Closing and all acts necessary to make such Party's
representations and warranties true and correct at and as of the Closing Date.
However, nothing herein shall be deemed or construed to require either party to
extend the Closing Date beyond July 18, 1998, or agree to pay any cost or
expense referred to in Section 5.1(c) in excess of $25,000.
(b) Financing. The Buyer shall use its best efforts to obtain, on a
commercially reasonable basis, the financing it needs in order to refinance its
existing debt, consummate the transactions contemplated hereby and meet its
future capital requirements. In the event that the Buyer becomes aware of any
material adverse development that is reasonably likely to jeopardize its ability
to obtain such financing, Buyer shall promptly provide written notice to Seller
describing in detail such material adverse development.
(c) Notices and Consents. The Seller will give any notices to third
parties, and the Seller will use its best efforts consistent with a standard of
commercial reasonableness to obtain any third party approvals or consents that
may be necessary to transfer any agreement, contract, lease, license, instrument
or other arrangement included in the Acquired Assets to Buyer at Closing. Each
of the Parties will give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred
to in Section 3(c) and Section 4(c) above. Without limiting the generality of
the foregoing, each of the Parties will file any Notification and Report Forms
and related material that it may be required to file with the Federal Trade
Commission and the Antitrust Division of the United States Department
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EXHIBIT 2.1
of Justice under the Xxxx-Xxxxx-Xxxxxx Act, and will make any further filings
pursuant thereto that may be necessary, proper, or advisable in connection
therewith, provided that any extension of the applicable waiting period shall be
approved in writing by Seller unless such extension would cause the closing to
be delayed beyond July 18, 1998.. The Buyer agrees to pay any filing fees
required in connection with such filings under the Xxxx-Xxxxx-Xxxxxx Act. The
Parties have retained the services of Xxxxxxx, Xxxxxxx, Xxxx & Xxxxx, PLLC to
act as their legal counsel in connection with such filings, and have agreed to
divide the legal fees and expenses of such firm in connection with such filings
on a 50-50 basis up to total legal fees of $50,000.00, after which amount the
fee and expense division shall be subject to re-negotiation by the Parties.
(d) Operation of Business. The Seller will operate its business in the
Ordinary Course of Business consistent with prior custom and practice. Without
limiting the generality of the foregoing, the Seller will not (i) declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock to the extent the same could reasonably be expected to reduce the Closing
Net Asset Value below $15,031,850 or (ii) redeem, purchase, or otherwise acquire
any of its capital stock
(e) Preservation of Business. The Seller will use its best efforts
consistent with commercially reasonable practice to keep its business and
properties substantially intact, including its present operations, physical
facilities, and relationships with lessors, licensors, suppliers, customers, and
employees.
(f) Full Access. The Seller will permit representatives of the Buyer to
have full access at all reasonable times, and in a manner so as not to interfere
with the normal business operations of the Seller , to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to the Seller.
(g) Exclusivity. Neither the Seller nor any of the Shareholders will (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
Person relating to the acquisition of any capital stock or other voting
securities, or any substantial portion of the assets of the Seller (including
any acquisition structured as a merger, consolidation, or share exchange) or
(ii) participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) Title Insurance. The Seller will use its best efforts consistent with
a standard of commercial reasonableness to obtain the following title insurance
commitments, policies, and riders at standard rates in preparation for the
Closing. With respect to each parcel of real estate that the Seller owns, an
ALTA Owner's Policy of Title Insurance Form B-1987 (or equivalent policy
reasonably acceptable to the Buyer if the real property is located in a state in
which an ALTA Owner's Policy of Title Insurance Form B-1987 is not available)
from Chicago Title Company issued through Nebraska Title Co. (with respect to
real estate located in Nebraska) and from Xxxxxxx Title Guarantee Company issued
through Xxxxxxxx Abstract Corporation (with respect to real estate located in
Texas) as the land title insurance agencies, in the amounts shown in Exhibit K
hereto, in each instance insuring title to
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EXHIBIT 2.1
such real property in the Buyer as of the Closing (subject only to the title
exceptions described above in Section 3(k)(i)(A) of this Agreement. Each title
insurance policy delivered under Section 5(h) above shall (A) insure title to
the real property and all recorded easements benefitting such real property,
(B) contain GAP and "extended coverage" endorsements insuring over the general
exceptions contained customarily in such policies, (C) contain an ALTA Zoning
Endorsement 3.1 (or equivalent), (D) contain an endorsement insuring that the
real property described in the title insurance policy is the same real estate
as shown on the Survey delivered with respect to such property, (E) contain an
endorsement insuring that each street adjacent to the real property is a public
street and that there is direct and unencumbered pedestrian and vehicular
access to such street from the real property, (F) if the real property consists
of more than one record parcel, contain a "contiguity" endorsement insuring
that all of the record parcels are contiguous to one another, (G) contain a
"non-imputation" endorsement to the effect that title defects known to the
officers, directors, and stockholders of the owner prior to the Closing shall
not be deemed "facts known to the insured" for purposes of the policy and (H)
contain a "Comprehensive" endorsement for improved land. The cost of such
policy or policies and the endorsements shall be divided equally between Buyer
and Seller. In the event Seller is unable to obtain such title insurance or any
one or more of the foregoing endorsements at standard rates, Buyer's sole
remedy with respect to such failure shall be to terminate this Agreement,
unless Seller elects to share equally with Buyer the increased costs thereof.
(i) Surveys. With respect to each parcel of real property as to which a
title insurance policy is to be procured pursuant to Section 5(h) above, the
Seller will procure in preparation for the Closing a current survey of the
real property certified to the Buyer, prepared by a licensed surveyor and (A)
with respect to real estate located in Nebraska, conforming to current ALTA
Minimum Standard Detail Requirements for Land Title Surveys and the Accuracy
Standards of an Urban Survey, and (B) with respect to real estate located in
Texas, conforming to boundary survey requirements customarily imposed for the
preparation of commercial surveys in Texas for commercial real estate
transactions, with all of the foregoing surveys disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, water
courses, drains and sewers, applicable set back lines, and other matters shown
customarily on such surveys, and showing access affirmatively to public streets
and roads (the "Survey").The cost of such Surveys shall be divided equally
between Buyer and Seller. In the event that the Survey discloses any defect or
encroachment from, onto or otherwise affecting the real property, then unless
the same is waived by Buyer, the Seller shall have the option, but not the
obligation, to correct such defect to Buyer's reasonable satisfaction. In the
event such defect is not cured, Buyer's sole remedy with respect to such defect
shall be to terminate this Agreement.
(j) Effect of Disclosure
(i) To the extent that any state of fact, item or information
reasonably disclosed in the Disclosure Schedule as of the date of this
Agreement is contrary to any representation or warranty of the Seller
and/or the Shareholders herein or in any certificate or document furnished
by the Seller and/or one or more of the Shareholders to Buyer hereunder,
Buyer's execution of this Agreement shall constitute an acceptance of such
state of fact, item or information as an express exception to and
limitation of such representation or warranty and shall be conclusively
deemed to constitute an irrevocable agreement by Buyer to waive and
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EXHIBIT 2.1
forego the right to seek indemnification pursuant to Section
8(b)(i)(A) of this Agreement from either the Seller or any one or more of
the Shareholders with respect to any Adverse Consequence which any Buyer
Indemnified Party (as hereinafter defined) may suffer in connection
therewith.The provisions of this subparagraph (i) shall not apply to any
Liability of the Seller which is not an Assumed Liability and the
disclosure of a Liability of the Seller, which does not otherwise
constitute an Assumed Liability, in the Disclosure Schedule shall not
cause such Liability of the Seller to become an Assumed Liability.
(ii) To the extent any updates to the Disclosure Schedule are made
by the Seller and/or any one or more of the Shareholders and reasonably
disclose any state of fact, item or information which is/are contrary to
any representation or warranty of the Seller and/or the Shareholders
herein or in any certificate or document furnished by the Seller or any
one or more of the Shareholders to Buyer hereunder or in the event such
update reasonably discloses that the Seller cannot, after the exertion of
commercially reasonable efforts, obtain any approval, consent or
authorization required hereunder then, in such event, the Buyer's sole and
exclusive remedy with respect to the information set forth in such update
shall be to (A) waive such item, information, state of facts or such
authorization, consent or approval and proceed to Closing, in which event
Buyer shall be conclusively deemed to have agreed to irrevocably waive and
forego its right to seek indemnification from either the Seller or any one
or more of the Shareholders with respect to any Adverse Consequences which
Buyer may suffer in connection therewith; or (B) terminate this Agreement
prior to Closing in accordance with Section 7 hereof.The provisions of
this subparagraph (ii) shall not apply to any Liability of the Seller
which is not an Assumed Liability and the disclosure of a Liability of
the Seller, which does not otherwise constitute an Assumed Liability, in
any update ot the Disclosure Schedule shall not cause such Liability of
the Seller to become an Assumed Liability.
5.2 Other Covenants. In addition to the covenants and agreements set forth
elsewhere in this Agreement, the Parties agree as follows:
(a) General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Asset Purchase
Agreement, each of the Parties will use commercially reasonable efforts to take
such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Asset Purchase Agreement specifically
including, but not limited to the collection of any account receivable or note
Seller or Shareholders repurchase pursuant to Section 5.2(h) hereof, or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate with the contesting or defending Party and his or its counsel in the
contest or defense, make available his or its personnel, and provide such
testimony and access to his or its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or
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EXHIBIT 2.1
defending Party (unless the contesting or defending Party is
entitled to indemnification as hereinafter provided).
(c) Seller and Shareholder Confidentiality. Following the Closing, the
Seller and each of the Shareholders will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in his or its possession.
In the event that the Seller or any of the Shareholders is requested or required
(by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, the Seller or that
Shareholder will notify the Buyer promptly of the request or requirement so that
the Buyer may seek an appropriate protective order or waive compliance with the
provisions of this section. If, in the absence of a protective order or the
receipt of a waiver hereunder, the Seller or any of the Shareholders is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, the Seller or that Shareholder may
disclose the Confidential Information to the tribunal; provided, however, that
the disclosing Party shall use his or its reasonable best efforts to obtain, at
the reasonable request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate. Any costs or
expenses incurred by Seller or the Shareholders in connection with the foregoing
shall be paid by Buyer. Until Closing or in the event the transactions
contemplated by this Agreement do not close on or before July 18, 1998, or such
later date as may be agreed to by the Parties, thereafter, the Confidentiality
and Non-Disclosure Agreement between Buyer and Seller dated March 26, 1998 (the
"Confidentiality Agreement") shall continue in full force and effect.
(d) Covenant Not to Compete. For a period of four years from and after the
Closing Date, neither the Seller nor any of the Shareholders will in any
capacity whatsoever engage directly or indirectly in:
(i) the design, manufacture, sale or repair of industrial watertube
boilers, ducts, stacks, and/or waste heat boilers which compete with those
sold, offered for sale or under design by the Seller during the one year
period preceding the Closing Date and which are destined for use in the
United States or any foreign country within which the Seller sold or
offered to sell the same during the one year period preceding the Closing
Date;
(ii) the design, manufacture, sale or repair of fabricated metal products
which are of a type similar to those fabricated metal products designed,
manufactured, sold or repaired by the Seller during the one year period
preceding the Closing Date (specifically including, but not limited to,
guard rails, motorcycle jacks, tire repair equipment and/or ovens) and
which are destined for use in the United States or any foreign country
within which the Seller sold or offered to sell the same during the one
period preceding the Closing Date;
(iii) the solicitation or attempted solicitation of business (of the type
engaged in by the Seller during the one year period preceding the Closing
Date) from any Person who was a customer
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EXHIBIT 2.1
of the Seller (or from whom the Seller solicited business) during the one
year period preceding the Closing Date;
(iv) any action that is intended or designed to have the effect of
discouraging any Person who was an employee, agent, lessor, licensor,
customer, supplier, or other business associate of the Seller during the
twelve month period preceding the Closing Date from maintaining the same
business relationships with the Buyer as were maintained with the Seller;
and/or
(v) any effort to attempt to hire or otherwise obtain the services of any
person who was employed by the Seller during the one year period preceding
the Closing Date.
The ownership of less than 5% of the outstanding stock of any publicly traded
corporation shall not be deemed to violate the foregoing provisions. The Parties
hereby acknowledge and agree that (a) the Seller's business is international in
scope, (b) the Seller's most significant asset is its goodwill, as is evidenced
by the allocation of the Purchase Price as set forth in Exhibit I attached
hereto, (c) the foregoing restrictions are reasonable and necessary to protect
such goodwill, (d) without such restrictions the Seller and the Shareholders
would by virtue of their prior experience and contacts be in a position to
unfairly compete with the Buyer and destroy the value of the goodwill which the
Buyer is purchasing, (e) the Buyer would suffer irreparable harm in the event of
a breach of the foregoing restrictions and, accordingly (f) the Buyer, in
addition to any other remedies available to it, shall be entitled to injunctive
relief without the posting of a bond or other collateral. The Parties also agree
that the term of the foregoing restrictions shall without further action by the
Parties be automatically extended by any period the Seller and/or any of the
Shareholders are determined to have been in violation of any such restrictions.
(e) Non Assignable Contracts In the event that the Seller is unable to
obtain any required third party consents to the assignment of any contract and
the Buyer waives the condition to its obligation to close in connection
therewith and proceeds with the Closing, the Seller and the Buyer agree to
cooperate with each other and take any and all commercially reasonable actions
necessary or desirable, including without limitation sucontracting where
appropriate, to accomplish the intended economic result that would have been
obtained from the assignment of such contract.
(f) Buyer Confidentiality. Prior to the Closing, except as may be
otherwise required by law or the final non-appealable order of a court of
competent jurisdiction, the Buyer shall continue to be bound by the
Confidentiality Agreement (a copy of which is included in the Disclosure
Schedule); provided, however, that (i) the Buyer may incorporate information
concerning the Seller in preliminary drafts of offering documents being prepared
by the Buyer and its underwriters in connection with the Buyer's high yield
offering if all Persons provided such preliminary drafts acknowledge and agree
to maintain the confidentiality of all such information, and (ii) upon the
expiration of the HSR waiting period , the Buyer may make such disclosures to
any Persons as are necessary or desirable in connection with the Buyer's high
yield offering. Except with respect to the foregoing, the Confidentiality
Agreement shall continue in effect (i) in the event that Closing does not occur,
and (ii) with regard to matters relating to the Shareholders.
(g),Warranty, Make Good and Start Up Liability and Work
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EXHIBIT 2.1
(i) Liability for Warranty, Make-Good and Startup . The Seller and the
Shareholders shall jointly and severally be responsible for all express
and/or implied warranty, make good and/or startup (which shall include all
work necessary to complete a contract in accordance with it s express
terms) obligations relating to Products Sold. The Buyer shall be
responsible for all other express and/or implied warranty, make good and/
or startup obligations relating to products sold after the Closing Date.
(ii) Performance of Warranty, Make-Good and Startup Work. With respect to
Products Sold, the Buyer shall perform for the Seller product warranty,
make good and startup work to the extent the (A) startup work is required
by the contract with the customer, (B) warranty work is required as the
result of a defect or failure that first occurs within the express
warranty period as set forth in the sales contract with the customer, (C)
make-good work which is approved in advance by the Seller (which approval
will not unreasonably be withheld in light of the Seller's past practices)
and arises in connection with product sales which are part of a turn key
project and arises from a defect or failure that first occurs after the
expiration of the express warranty period as set forth in the contract
with the customer but prior to 18 months after startup, unless the Seller
has contracted for an extended express warranty period and/or (D)
make-good work which is approved in advance by the Seller (in its sole
discretion) and arises in connection with product sales which are not part
of a turn key project and arises from a defect or failure that first
occurs after the expiration of the express warranty period as set forth in
the contract with the customer but prior to 18 months after startup,
unless the Seller has contracted for an extended express warranty period.
Buyer shall use commercially reasonable efforts to promptly and thoroughly
investigate all startup, warranty and make-good claims relating to
Products Sold. To the extent such startup or warranty work is determined,
in the Buyer's reasonable discretion, to be required by the terms of this
paragraph (g)(ii) or to the extent that the Seller approves such make good
work, Buyer shall use commercially reasonable efforts to promptly
undertake and diligently pursue to completion the performance of such
startup, warranty or make-good work on behalf of the Seller. In its
performance of such startup, warranty work or make-good work, the Buyer
shall use its best efforts, consistent with a standard of commercial
reasonableness and the prior customs and practices of the Seller, to
perform such work as efficiently and in as economic a manner as is
reasonably possible under the circumstances then existing.
(iii) Payment for Warranty Work, Make-Good Work and Startup Performed for
Seller by Buyer. The Seller and the Shareholders jointly and severally
agree to pay and reimburse Buyer for the costs actually incurred by Buyer
in connection with performing the startup, warranty and make-good work
(provided that, with respect to make good work the required approval of
the Seller under paragraph (g)(ii) above is obtained) which Buyer performs
on behalf of the Seller pursuant to paragraph (g)(ii) above. For purposes
of this Agreement, Buyer's costs shall mean only those costs which are
reasonably and necessarily incurred by Buyer in the performance of such
work as provided in paragraph (g)(ii) above and shall include only Buyer's
cost for labor (including the burden associated with the Service
Department but excluding any other charges for sales, general or
administration expenses), Buyer's costs (labor, material and burden) for
parts and materials, and Buyer's other out-of-pocket expenses. Buyer shall
xxxx Seller and the Shareholders, for the cost of warranty work, make-good
work and/or startup which Buyer performs on behalf of Seller as provided
in paragraph (g)(ii) above,
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EXHIBIT 2.1
and Seller and the Shareholders jointly and severally agree to pay or
cause such invoices to be paid to Buyer on a net basis within thirty (30)
days of receipt.
(iv) Warranty, Startup, Accounts and Notes Receivable Escrow Account. To
the extent that adequate funds are available in the Warranty, Startup,
Accounts and Notes Receivable Escrow Account, the obligation of the Seller
and the Shareholders to pay and reimburse the Buyer as set forth in
paragraph (g)(iii) above and Section 5.2(h) below shall be satisfied by
payment from the Warranty and Startup Escrow Account. In the event the
balance in the Warranty, Startup, Accounts and Notes Receivable Escrow
Account should at any time or times fall below $250,000, the Seller and
the Shareholders jointly and severally agree within five (5) days of
written notice thereof to wire transfer sufficient funds to restore the
balance of the Warranty, Startup, Accounts and Notes Receivable Escrow
Account to $500,000. At such time as all warranty periods (pursuant to the
terms of the Seller's express warranty provisions) for all Products Sold
have expired and all amounts due to the Buyer at such date pursuant to
paragraph (g)(ii) above have been paid, the Buyer and the Seller shall (A)
if there are as of such date no pending claims for work within the scope
of paragraph (g)(ii) above and no accounts or notes receivable which are
included among the Acquired Assets which have not been paid in full,
notify the Escrow Agent that the Warranty, Startup, Accounts and Notes
Receivable Escrow is to be terminated and all funds distributed to the
Seller, or (B) if there are as of such date pending claims for work within
the scope of paragraph (g)(ii) above and/or uncollected accounts or notes
receivable which are within the scope of Section 5.2(h), attempt in good
faith to estimate the amount reasonably likely to be become due the Buyer
under paragraph (g)(iii) for completing such work and/or Section 5.2(h)
with respect the uncollected accounts and/or notes receivable and notify
the Escrow Agent and instruct it to distribute to the Seller all funds in
the Warranty, Startup, Accounts and Notes Receivable Escrow Account that
are in excess thereof. At such time as all warranty periods (pursuant to
the terms of the Seller's express warranty provisions) for all Products
Sold have expired, all amounts due to the Buyer at such date pursuant to
paragraph (g)(ii) above have been paid, there remain no pending claims for
work within the scope of paragraph (g)(ii) above, and all accounts and
notes receivable which are within the scope of Section 5.2(h) have been
collected in full or repurchased by the Seller, the Buyer and the Seller
shall notify the Escrow Agent and instruct it that the Warranty, Startup,
Accounts and Notes Receivable Escrow is to be terminated and all funds
therein distributed to the Seller. The fact that there are insufficient
funds in the Warranty , Startup, Accounts and Notes Receivable Escrow
Account or that such account has been terminated shall not alter or
diminish the obligations of the Seller and the Shareholders to make any
payments otherwise due to the Buyer pursuant to paragraph (g)(iii) above
and/or Section 5.2(h) or the obligation of the Buyer to perform warranty,
startup or make good work on behalf of the Seller or the Shareholders
pursuant to paragraph (g)(ii) above.
(h) Accounts and Notes Receivable. Following Closing, Buyer shall use
reasonable efforts to collect all accounts receivable or notes which are
included in the Acquired Assets. To the extent any accounts receivable or note
included in the Acquired Assets remains uncollected as of the twelve (12) month
anniversary of the Closing Date, then, unless the reason for nonpayment is on
account of a bona fide claim by the customer that startup, warranty and or make
good work which is within the scope of work the Buyer is required to perform
pursuant to Section 5.2(g)(ii) above has not been performed, the Seller and
Shareholders jointly and severally agree to repurchase such account
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EXHIBIT 2.1
receivable or note from Buyer at a price equal to the remaining unpaid face
amount of such account receivable or note. If any accounts receivable or notes
included in the Acquired Assets which remain uncollectible on the twelve (12)
month anniversary of the Closing have not been collected at that time due to a
bona fide claim by the customer that startup, warranty and or make good work
which is within the scope of work the Buyer is required to perform pursuant to
Section 5.2(g)(ii) above has not been performed, then the Seller and the
Shareholders, jointly and severally agree to repurchase such account receivable
or note from the Buyer at a price equal to unpaid face amount of such account
receivable or note at the earlier of (A) 30 days after the time at which all
such work required under Section 5.2(g)(ii) has been performed, or (B) eighteen
(18) months after startup. Notwithstanding anything to the contrary in this
Agreement, in the event the Seller refuses to approve product make-good work
pursuant to Section 5.1(g)(ii) above (with respect to which there is an unpaid
account receivable or note which has not been paid due to a bona fide claim by
the customer that it is entitled to have such work performed), the Seller and
Shareholders jointly and severally agree to repurchase such account receivable
or note from Buyer within 30 days after the date on which the Buyer requested
such approval at a price equal to the remaining unpaid face amount of such
account receivable or note. The fact that an account or note receivable has been
repurchased pursuant to this Section 5.2(h) shall not alter or diminish any
obligation of the Buyer to perform startup, warranty and/or make good work
required pursuant to Section 5.2(g)(ii) hereof. As used in this Section 5.2(h),
reasonable business efforts shall include but not be limited to, the following
actions to be taken by Buyer in connection with the collection of accounts
receivable or notes:
(i) Buyer shall issue statements with respect to the accounts receivable
and notes on a monthly basis, and pursue such other collection efforts,
including personal contact by phone or in person with the debtor, as may
be consistent with Buyer's normal and customary business practice, but
excluding the commencement of litigation; provided, however, that if the
Seller notifies the Buyer that the Seller, due to the expiration of the
statute of limitations or any tolling agreement entered into in connection
therewith, desires that litigation be commenced, the Buyer shall either
itself commence such litigation or assign such account receivable or note
back to the Seller so as to enable the Seller to commence such litigation,
in either of which events the Seller and the Shareholders shall jointly
and severally indemnify the Buyer from all Liabilities, costs and
expenses, including reasonable attorneys' fees, in connection with such
litigation
(ii) Buyer shall take commercially reasonable efforts, consistent with the
Seller's prior normal and customary business practices, to (A) perfect
and/or preserve any and all material claims, rights or causes of action
against the debtor or any third party and (B) avoid having the same lapse,
expire or otherwise become unenforceable because of lack of notice,
passage of time or otherwise
(iii) Buyer shall promptly undertake and diligently pursue to completion
all warranty work or make good work required to be performed by the Buyer
pursuant to Section 5(g)(ii) to the extent that such work may be necessary
or appropriate to address and resolve any defect or failure in any
Products Sold to the account or note debtor which constitutes the basis in
whole or in part for nonpayment of any such account receivable or note.
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EXHIBIT 2.1
(i) Product Liability. Seller shall retain all Liabilities and
obligations with respect to Products Sold, including, without limitation,
Liability for personal injury or property damage occurring at any time caused by
Products Sold. Seller shall purchase and cause to remain in force for a period
of at least (10) ten years product liability insurance providing coverage of at
least $10,000,000 (subject to standard exceptions and limitations) for personal
injury and property damage occurring at any time caused by Products Sold on or
prior to the Closing Date. To the extent the same is available, the Seller shall
cause the Buyer to be named as an additional insured on such policy; provided
that if such endorsement involves an additional cost, the Buyer, if it desires
to be added as an additional insured, shall pay the cost of such endorsement.
Buyer shall be solely responsible for all other Liabilities and obligations with
respect to products other than Products Sold, including, without limitation,
Liability for personal injury or property damage caused by products other than
Products Sold.
(j) Surety Bonds and Letters of Credit. From and after the Closing Date,
the Buyer shall either assume all surety bonds and letters of credit which are
listed in Section (3)(q) of the Disclosure Schedule or shall provide substitute
surety bonds and letters of credit, acceptable to the beneficiaries thereof, in
order that Seller's surety bonds and letters of credit are released and any
liabilities thereunder are extinguished. The foregoing requirement, or any
action in fulfilment thereof, shall not, however, convert any underlying
obligation of the Seller to the beneficiary of such surety bond or letter of
credit, which is not expressly assumed by the Buyer pursuant to the other terms
of this Agreement, to become an Assumed Liability.
(k) Certain Employment Related Matters
(i) The Seller shall use reasonable efforts to obtain a one year
extension (upon terms which are satisfactory to the Buyer) to the
existing Labor Agreement between Nebraska Boiler Company and the
International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers, Lodge No. 83 ( the "Union" and the
"CBA"). If the CBA is so extended, the Buyer will assume the CBA as of
the Closing Date and the Seller will obtain the Union's written consent
and approval to such assumption. If the CBA is not so extended, the
Buyer, at its option, may elect to assume the CBA as of the Closing Date
and the Seller will obtain the Union's written consent and approval to
such assumption. In either of such events, except for the Unfunded
Liability (as hereinafter defined), the Buyer will only be responsible
for the liabilities and responsibilities of the Seller under the CBA
which accrue and are based upon acts or occurrences which take place
after the Closing Date and the same shall constitute Assumed Liabilities.
Except as hereinafter specifically provided to the contrary with respect
to the Unfunded Liability, the Buyer shall have no responsibility for any
liabilities or responsibilities under the CBA which accrued or are based
upon acts or occurrences which took place on or prior to the Closing
Date. The written consent and agreement of the Union shall incorporate
the foregoing division of responsibility between the Buyer and the Seller
and acknowledge that the assumption of the CBA by the Buyer is contingent
upon the consummation of the transactions contemplated by this Agreement.
The Buyer acknowledges that the Seller has not given any WARN Act notice
to its employees and the Buyer shall be solely responsible for any and
all obligations and liabilities as a result thereof and the same shall
constitute Assumed Liabilities.
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EXHIBIT 2.1
(ii) The Buyer, provided that it assumes the CBA as set forth above and
the Seller obtains the Union's consent and approval in connection with the
Buyer's assumption of the CBA, shall also assume (A) those obligations of
the Seller, which accrue or are based upon acts or occurrences which take
place after the Closing Date, as sponsor of the National Dynamics
Corporation Pension Plan, a/k/a Nebraska Boiler Company, Inc. Defined
Benefit Plan, for the benefit of the employees covered by the CBA, which
has been in effect since November 1, 1981 and which is currently
administered under a prototype plan document of Principal Financial Group
(the "Defined Benefit Plan") and (B) all of he Seller's unfunded
liabilities under the Defined Benefit Plan (the "Unfunded Liability") and
the same shall constitute Assumed Liabilities. Except for the Unfunded
Liability, the Buyer shall have no responsibility for any liabilities or
responsibilities under the Defined Benefit Plan which accrued or are based
upon acts or occurrences which took place on or prior to the Closing Date
except for the processing and coordinating the payment by The Principal
Group of benefit claims which have not been completed as of the Closing
Date.
(iii) The Buyer shall not assume any of the Seller's obligations under the
Seller's existing VEBA but will provide health insurance coverage and
other benefits similar in all material respects to those provided under
the VEBA; provided, however, that the preceding commitment shall not
prevent the Buyer from making such future changes as it deems appropriate
and which are in all material respects similar to fringe benefit programs
at one or more of Buyer's other locations
(iv) Until such time as Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxx, respectively, reach age 65, the Buyer shall, at its sole cost and
expense, cause health insurance to be provided to Xxxxxx X. Xxxxxx, Xxxxx
X. Xxxxxxx and Xxxxxx X. Xxxxxx and their spouses under the Buyer's group
health insurance programs with coverage and at levels which the Buyer
provides or otherwise makes available to the executives of the Buyer who
are employed at or who have primary responsibility for the Buyer's
Lincoln, Nebraska facility. At such time as Xxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxx attain age 65, the Buyer shall permit each
such individual's spouse to make a COBRA election and continue coverage
for 18 months thereafter provided that such spouse reimburses the Buyer
for the cost of such insurance.
(l) Certain Environmental Matters. The Buyer shall initially pay all costs
associated with any work recommended in the draft Xxxxxxx Environmental Report,
a copy of which has been furnished to the Seller ( "Recommended Environmental
Work"). The Buyer, the Seller and the Shareholders hereby agree that the further
testing recommended in the aforementioned draft Xxxxxxx Environmental Report
shall not constitute Required Environmental Work (as hereinafter defined). The
Seller and the Shareholders jointly and severally agree to promptly reimburse
the Buyer for one-half of the cost of Recommended Environmental Work that is
required to comply with Environmental, Health and Safety Requirements ("Required
Environmental Work"). The The Seller and the Shareholders shall not be required
to reimburse the Buyer for any Recommended Environmental Work that is not
Required Environmental Work and the maximum amount that the Sellers and the
Shareholders shall be required to reimburse the Buyer for Required Environmental
Work under the preceding sentence shall be $100,000. Notwithstanding anything to
the contrary in this Agreement, in the event that all of the costs initially
paid (and not taking into account any reimbursement from the
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EXHIBIT 2.1
Seller and the Shareholders) by the Buyer for Required Environmental Work exceed
$200,000, then an amount equal to such excess shall be deemed to be Adverse
Consequences for which the Buyer is entitled to indemnification pursuant to
Section 8(b)(i)(A). For purposes of the limitations of Section 8(d) in
connection with determining whether the $500,000 limitation has been exceeded,
only one $10,000 limitation shall be applied to all costs incurred by the Buyer
in performing Required Environmental Work. Prior to the Closing, the Seller, at
its expense, shall cause all drums and barrels located on any property owned or
occupied by the Seller to be properly disposed of in accordance with all
applicable Environmental, Health and Safety Requirements and the disposal cost
incurred by the Seller in connection therewith shall reduce on a dollar for
dollar basis the $100,000 maximum reimbursement requirement as set forth above,
(m) Tax Returns and Employee Benefit Plan Returns and Reports. The Buyer
shall prepare and file or cause to be filed at its expense on or prior to the
due date thereof (including extensions) all Tax returns and reports and all
other returns and reports relating to the Defined Benefit Plan which the Buyer
is required by law to file and which are due after the Closing Date and shall
include therein, as appropriate to the particular form or report, the results of
the Seller's operations on or before the Closing Date, to the extent such
reflection of the Seller's operations on or before the Closing Date is required
or permitted under applicable reporting laws, rules and/or regulations. The
Seller shall prepare and file or cause to be filed at its expense on or prior to
the due date thereof (including extensions) all other Tax returns and reports
relating to the Seller's operations on or before the Closing Date and all other
returns and reports relating to the Seller's Employee Benefit Plans (other than
the Defined Benefit Plan) which the Seller is required by law to file. The
preceding allocation of responsibility for the filing of Tax returns and reports
and other returns and reports relating to Employee Benefit Plans shall not alter
the definition of Acquired Assets, Excluded Assets or Assumed Liabilities and
any Party receiving a Tax refund check shall promptly deliver the same to the
Party entitled to the same pursuant to such definitions and the responsibility
for any Taxes determined to be due at any time shall be determined pursuant to
such definitions. The Buyer will provide the Seller and its representatives,
upon reasonable notice and during normal working hours, access to records,
information and personnel at no expense to the Seller as necessary to permit the
Seller to prepare the returns and reports it is required to prepare and file.
The Buyer will retain and maintain such records and information for the periods
of statutes of limitation applicable to the state and federal income tax returns
of the Seller and the Shareholders.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
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EXHIBIT 2.1
(iii) the Seller shall have procured all of the third party consents
specified in Section 5.1(c) above, all of the title insurance
commitments, policies, riders and surveys specified in Section 5.1(i)
and (j) above;
(iv) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C)
materially affect adversely the right of the Buyer to own the Acquired
Assets, to operate the former businesses of the Seller, (and no such
injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(v) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section
6(a)(i)-(iv) is satisfied in all respects;
(vi) all applicable waiting periods (and any extensions thereof,
provided that Seller has consented in writing to any such extensions)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Seller and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(vii) the Buyer shall have received from counsel to the Seller an
opinion substantially in the form of Exhibit L attached hereto, addressed
to the Buyer, and dated as of the Closing Date;
(viii) the Buyer shall have obtained on terms and conditions
reasonably satisfactory to it all of the financing it needs in order to
refinance its existing debt, consummate the transactions contemplated
hereby and fund its future capital requirements;
(ix) the Buyer shall have entered into consulting arrangements with
Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx in the form of Exhibits M (the
"Xxxxxxx Consulting Agreement) and N (the "Xxxxxx Consulting Agreement")
attached hereto, the Seller shall have made reasonable efforts to assist
the Buyer to obtain satisfactory employment arrangements with certain of
the Seller's other management employees and the Buyer shall have arrived
at satisfactory arrangements with the Seller's employees who are covered
by the Seller's existing collective bargaining agreement; and
(x) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in form
and substance to the Buyer.
The Buyer may waive any condition specified in this Section 6(a) if it
executes a writing so stating at or prior to the Closing; provided, however,
that if the Seller is unable to obtain the Union's consent to either a one year
extension of the CBA (upon terms which are reasonably satisfactory to the
Buyer) or the
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EXHIBIT 2.1
Buyer's assumption of the existing CBA as set forth in Section 5.2(k)(i) and the
Buyer waives such condition to closing and consummates the transactions
contemplated by this Agreement, then in such event and notwithstanding anything
to the contrary in this Agreement, the Buyer shall assume the Seller's
obligations under the Defined Benefit Plan as described in Section 5.2(k)(ii)
and the same shall constitute an Assumed Liability.
(b) Conditions to Obligation of the Seller. The obligation of the Seller
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in Section 6(b)
(i)-(iii) is satisfied in all respects;
(v) all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise been
terminated and the Seller and the Buyer shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(vi) the Seller shall have received from counsel to the Buyer an
opinion substantially in the form of Exhibit O attached hereto, addressed
to the Seller, and dated as of the Closing Date; and
(vii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby specifically
including, but not limited to, the payment of the Purchase Price as
provided in Section 2 shall have been taken and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Seller.
The Seller may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
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EXHIBIT 2.1
7. Termination. This Agreement may be terminated and the sale and purchase
of the Acquired Assets may be abandoned at any time prior to Closing as follows:
(a) Mutual Consent. By mutual consent of the Seller, the Shareholders
and Buyer;
(b) Passage of Time. By either the Seller and the Shareholders on the one
hand or the Buyer on the other hand (the "Terminating Party"), if the Closing
has not occurred on or before July 18, 1998 (the "Termination Date") other than
as the result of a material breach of any covenant or agreement contained in
this Agreement by the Terminating Party;
(c) Non-Satisfaction of Section 6(a) Conditions. By the Buyer, in the
event that the conditions to its obligations set forth in Section 6(a) hereof
have not been satisfied or waived at or prior to the Termination Date, unless
the Buyer is then in material breach of any covenant contained in this
Agreement
(d) Non-Satisfaction of Section 6(b) Conditions. By the Seller, in the
event that the conditions to its obligations set forth in Section 6(b) hereof
have not been satisfied or waived at or prior to the Termination Date unless
the Seller or the Shareholders are then in material breach of any covenant
contained in this Agreement;
(e) Failure to Obtain Financing By the Seller or the Shareholders, in
the event that Buyer provides Seller any notice as required pursuant to
Section 5.1(b) above.
(f) Matters Disclosed in Updates to Disclosure Schedule. By the Buyer,
upon 5 days prior written notice to Seller and the Shareholders following the
Buyer's receipt of any update to the Disclosure Schedule, or within such shorter
period as may be reasonable if the update is received by Buyer less than 5 days
prior to Closing, in the event Buyer is not willing to accept the state of
fact(s), item(s) or information set forth in such update as an express exception
to and limitation of the representations and warranties of Seller and the
Shareholders hereunder or under any certificate or document furnished to Buyer
by the Seller or any Shareholders hereunder or waive any authorization, consent
or approval identified therein as not having been obtained, whichever may be
appropriate under the circumstances, and in the further event that the Buyer is
not willing to waive and agree to forego its right to indemnification in respect
thereto as contemplated by Section 5.1(j) hereof.
(g) Title Insurance and Survey. By Buyer in the event Seller does not
obtain title insurance which is required by Section 5.1(h) or in the event the
survey required by Section 5.1(i) shall disclose defects or encroachments
which are not cured by Seller prior to Closing and which Buyer is not willing
to waive.
(h) Further Due Diligence. By the Buyer within ten days after the date of
the signing of this Agreement by all of the Parties, if the results of the
further due diligence to be conducted by the Buyer after such signing of this
Agreement (which shall be limited to reviewing and analyzing (i) the Seller's
order backlog, (ii) the Seller's outstanding proposals to customers and (iii)
the warranty and Liability exposure relating to products manufactured by the
Seller) are not, in the sole discretion of the Buyer, satisfactory to the Buyer.
If this Agreement is terminated pursuant to this Section 7 all rights,
obligations and liabilities of the Parties hereunder shall terminate and be of
no further force or effect whatsoever except for (i) the
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EXHIBIT 2.1
respective right and obligation of the Parties set forth in Section 5.2(f),
9(b) and 9(l), which shall survive termination of this Agreement and shall
continue to be enforceable in accordance with their terms, and (ii) the
liability of any party which is in material breach of any covenant or agreement
of this Agreement prior to the effective date of such termination, which shall
also survive termination of this Agreement.
8. Remedies.
(a) Survival of Representations and Warranties. The respective
representations and warranties of the Seller, the Shareholders and the Buyer as
contained herein or in any certificates or other documents delivered at the
Closing shall survive the Closing for a period of twenty four months, except
that the representations and warranties set forth in Section 3(a), (b), (d),
(e), (z) and (ab) and Section 4(a), (b), (c) and (d) shall survive for the
period of the applicable statute of limitations. The provisions of this
Section 8(a) shall not otherwise limit any covenant or agreement of the Parties
hereto which, by its terms, contemplates performance after the Closing Date.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) the Seller and the Shareholders jointly and severally agree to
defend. indemnify and hold the Buyer and its officers, directors,
employees, shareholders, subsidiaries, successors and assigns (the "Buyer
Indemnified Parties") harmless from and against any Adverse Consequences
the Buyer Indemnified Parties may incur as a result of, without
duplication:
(A) subject to the limitations set forth in Section 8(d)
and (h) hereof, the breach of any representation or warranty given
to Buyer by the Seller or the Shareholders pursuant to this
Agreement or any certificate or other document furnished to Buyer
by the Seller or any one or more of the Shareholders hereunder
(provided that the Seller and the Shareholders are given written
notice of such breach during the survival period specified in
Section 8(a) above);
(B) subject to the limitations in Section 8(h), the breach
of any covenant or agreement of the Seller or any Shareholder as
set forth in this Agreement; and
(C) subject to the limitations in Section 8(h), any
Liability of the Seller other than the Assumed Liabilities.
For purposes of this Section 8(b) any claim for indemnification made
after the Closing Date by a Buyer Indemnified Party on the basis that the
Seller and/or the Shareholders violated the provisions of Section 5.1(a)
by failing to perform all acts necessary to make their representations
and warranties true and correct at and as of the Closing Date shall be
recoverable only under and subject to the limitations of Section
8(b)(i)(A) above and no amount shall be recoverable under Section
8(b)(i)(B) above. Notwithstanding anything to the contrary in this
Agreement, the right of any Buyer Indemnified Party to be indemnified for
any Liability of the Seller which is not an Assumed Liability shall be
governed solely by subparagraph (C) above and shall not be subject to any
of the limitations of Section 8(d) of this Agreement.
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EXHIBIT 2.1
(c) Indemnification Provisions for Benefit of the Seller and the
Shareholders.
(i) the Buyer agrees to defend. indemnify and hold the Seller and
its officers, directors, employees, shareholders, successors and assigns
(the "Seller Indemnified Parties") harmless from and against any Adverse
Consequences the Seller Indemnified Parties may suffer as a result of,
without duplication,
(A) subject to the limitations in Section 8(d) and (h), the
breach of any representation or warranty given to Seller or any
Shareholder by the Buyer pursuant to this Agreement or any
certificate or other document furnished to Seller or any
Shareholder by the Buyer (provided that the Buyer is given written
notice of such breach during the survival period specified in
Section 8(a) above);
(B) subject to the limitations in Section 8(h), the breach
of any covenant or agreement of the Buyer as set forth in this
Agreement;
(C) subject to the limitations in Section 8(h), the failure
of the Buyer to timely pay, perform and discharge any of the
Assumed Liabilities, including its obligations under Section
5.2(g)(ii) hereof, or any Liabilities arising from the Buyer's
operation of the Seller's business after the Closing Date, and
(D) subject to the limitations in Section 8(h), the Buyer's
financing as contemplated pursuant to Section 5.1(b) hereof to the
extent that the same is not the result of or attributable to the
breach of a representation or warranty set forth in Section 3
hereof.
For purposes of this Section 8(c) any claim for indemnification made
after the Closing Date by a Seller Indemnified Party on the basis that
the Buyer violated the provisions of Section 5.1(a) by failing to
perform all acts necessary to make its representations and warranties
true and correct at and as of the Closing Date shall be recoverable only
under and subject to the limitations of Section 8(c)(i)(A) above and no
amount shall be recoverable under Section 8(c)(i)(B) above.
Notwithstanding anything to the contrary in this Agreement, the right of
any Seller Indemnified Party to be indemnified for any Liability which is
an Assumed Liability, including the Buyer's obligations under Section
5.2(g)(ii) hereof, or any Liabilities arising from the Buyer's operation
of the Seller's business after the Closing Date shall be governed solely
by subparagraph (C) above and shall not be subject to any of the
limitations of Section 8(d) of this Agreement
(d) Limitations.
(i) Neither the Seller nor any Shareholder shall be required to
indemnify any Buyer Indemnified Party for any Adverse Consequence which
any Buyer Indemnified Party may incur as a result of any occurrence
referred to in and governed by Section 8(b)(i)(A) above (other than
Adverse Consequences arising out of any breach under Sections 3(a), (b),
(d), (e), (z) and (ab), which shall be subject to no limitations
whatsoever), unless (i) the Buyer Indemnified Party seeking
indemnification delivers written notice of the claim for breach of
representation or
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EXHIBIT 2.1
warranty to the Seller and the Shareholders prior to the expiration of the
survival period for such representation and warranty as set forth in
Section 8(a) above and (ii) the aggregate of all Adverse Consequences
incurred by all Buyer Indemnified Parties with respect to all occurrences
referred to in Section 8(b)(i)(A) above exceed $500,000, in which event
the Buyer Indemnified Parties shall be entitled to indemnification for
all Adverse Consequences (i.e., back to the first dollar). For purposes
of determining whether the preceding $500,000 threshold has been exceeded
the Adverse Consequences arising from any single breach of a
representation or warranty shall not be included unless the total Adverse
Consequences arising from such single breach of representation or
warranty exceed $10,000.00. However, in the event that the Adverse
Consequences arising from such breach exceed $10,000, then all Adverse
Consequences (i.e., back to the first dollar) arising from such breach
shall be included in such determination. For purposes of determining
whether the preceding $10,000 and $500,000 thresholds have been exceeded,
Adverse Consequences shall not be reduced by the amount of any Insurance
Benefit (as hereinafter defined) derived from an insurance policy owned
by any Buyer Indemnified Party or Tax Benefit (as hereinafter defined).
Further, (except for Adverse Consequences arising out of any breach under
Sections 3(a), (b), (d) , (e), (z) and (ab) which shall be subject to no
limitations whatsoever) the obligation of the Seller and the Shareholders
to indemnify any Buyer Indemnified Party for all occurrences referred to
in and governed Section 8(b)(i)(A) above shall in total be subject to a
maximum aggregate cap of $14,665,160.
(ii) The Buyer shall not be required to indemnify any Seller
Indemnified Party for any Adverse Consequence which any Seller Indemnified
Party may incur as a result of any occurrence referred to in and governed
by Section 8(c)(i)(A) above (other than Adverse Consequences arising out
of any breach under Sections 4(a), (b) or (d), which shall be subject to
no limitations whatsoever), unless (i) the Seller Indemnified Party
seeking indemnification delivers written notice of the claim for breach
of representation or warranty to the Buyer prior to the expiration of the
survival period for such representation and warranty as set forth in
Section 8(a) above and (ii) the aggregate of all Adverse Consequences
incurred by all Seller Indemnified Parties with respect to all
occurrences referred to in and governed by Section 8(c)(i)(A) above
exceed $500,000, in which event the Seller Indemnified Parties shall be
entitled to indemnification for all Adverse Consequences (i.e., back to
the first dollar). For purposes of determining whether the preceding
$500,000 threshold has been exceeded, the Adverse Consequences arising
from a single breach of a representation or warranty shall not be
included unless the total Adverse Consequences arising from such breach
of representation or warranty exceed $10,000.00. However, in the event
that the Adverse Consequences arising from such breach exceed $10,000,
then all Adverse Consequences arising from such breach shall be included
in such determination (i.e., back to the first dollar). For purposes of
determining whether the preceding $10,000 and $500,000 thresholds have
been exceeded, Adverse Consequences shall not be reduced by the amount of
any Insurance Benefit (as hereinafter defined) derived from any insurance
policy owned by any Seller Indemnified Party or Tax Benefit (as
hereinafter defined). Further, (except for Adverse Consequences arising
out of any breach under Sections 4(a), (b) or (d), which shall be subject
to no limitations whatsoever) the obligation of the Buyer to indemnify
any Seller Indemnified Party for all occurrences referred to in and
governed by Section 8(c)(i)(A) above shall in total be subject to a
maximum aggregate cap of $14,665,160.
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EXHIBIT 2.1
(e) Indemnification Procedures.
(i) Any person making a claim for indemnification pursuant to
Section 8(b) or 8(c) above (each, an "Indemnified Party") must give the
party from whom indemnification is sought (an "Indemnifying Party")
written notice of such claim promptly after the Indemnified Party
receives any written notice of any action, lawsuit, proceeding,
investigation or other claim (a "Proceeding") against or involving the
Indemnified Party by any person or otherwise discovers the liability,
obligation or facts giving rise to such claim for indemnification;
provided, that the failure to notify or delay in notifying an
Indemnifying Party will not relieve the Indemnifying Party of its or
their obligations pursuant to Section 8(b) or 8(c) above, as applicable,
except to the extent that such failure actually and materially xxxxx the
Indemnifying Party.
(ii) With respect to the defense of any Proceeding brought by any
Person who is not a party to this Agreement against or involving an
Indemnified Party in which any Person in question seeks only the recovery
of a sum of money (and not for injunctive or equitable relief) for which
indemnification is provided in Section 8(b) or 8(c) above, at its option
an Indemnifying Party may appoint as lead counsel of such defense any
legal counsel selected by the Indemnifying Party and reasonably
acceptable to the Indemnified Party; provided, that before the
Indemnifying Party assumes control of such defense it must first:
(A) enter into an agreement with the Indemnified Party (in form and
substance satisfactory to the Indemnified Party) pursuant to which
the Indemnifying Party agrees to be fully responsible (with no
reservation of any rights other than the right to be subrogated to
the rights of the Indemnified Party) for all Adverse Consequences
relating to such Proceeding and unconditionally guarantees the
payment and performance of any liability or obligation which may
arise with respect to such Proceeding or the facts giving rise to
such claim for indemnification; and
(B) furnish the Indemnified Party with evidence that the
Indemnifying Party, in the Indemnified Party's sole judgment, is and
will be able to satisfy any such liability.
(iii) Notwithstanding Section 8(e)(ii) above: (A) the Indemnified
Party will be entitled to participate in the defense of such claim and to
employ counsel of its choice for such purpose at its own expense
(provided that the Indemnifying Party will bear the reasonable fees and
expenses of such separate counsel incurred prior to the date upon which
the Indemnifying Party effectively assumes control of such defense), and
(B) the Indemnifying Party will not be entitled to assume control of the
defense of such claim, and will pay the reasonable fees and expenses of
legal counsel retained by the Indemnified Party if:
(A) the Indemnified Party reasonably believes that an adverse
determination of such Proceeding could be detrimental to or injure
the Indemnified Party's reputation or future business prospects;
(B) the Indemnified Party reasonably believes that there exists or
could arise a conflict of interest which, under applicable
principles of legal ethics, could prohibit a single legal
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EXHIBIT 2.1
counsel from representing both the Indemnified Party and the
Indemnifying Party in such Proceeding; or
(C) a court of competent jurisdiction rules that the Indemnifying
Party has failed or is failing to prosecute or defend vigorously
such claim.
(iv) the Indemnifying Party shall not enter into any settlement of
such claim or Proceeding or cease to defend such claim or Proceeding,
without first obtaining the prior written consent of the Indemnified Party
(which the Indemnified Party will not unreasonably withhold) provided that
any such settlement shall provide for the full release of all claims
against each Indemnified Party.
(f) Recoupment. Each of the Parties acknowledges that the agreement
contained in this Section 8 is an integral part of the transactions
contemplated by this Agreement and that, without such agreement, they would not
have entered into this Agreement. Accordingly, if any Indemnifying Parties fail
to pay promptly the amounts due pursuant to either Section 8(b) or 8(c) such
Indemnifying Parties shall also be jointly and severally obligated to pay
interest at the Applicable Rate from the original due date of the payment to
the actual date of payment. In addition, if in order to obtain such amounts,
the Indemnified Party commences a suit to collect the amounts provided for
herein, the Indemnifying Parties shall also be jointly and severally liable to
pay to Indemnified Party its costs and expenses (including attorneys' fees)
reasonably incurred in connection with such.
(g) Payment. Upon the determination of the liability under Section 8, or
otherwise between the parties, by judicial proceeding from which no appeal is
possible or taken, the appropriate party shall pay to the other, as the case may
be, within ten (10) days after such determination, the amount of any claim for
indemnification made hereunder. In the event that the Indemnified Party is not
paid in full for any such claim pursuant to the foregoing provisions promptly
after the other party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other Person, to set off the unpaid amount of any
such claim against any amounts owed by it under any instrument or agreement
entered into pursuant to this Agreement or otherwise, including the Purchase
Price Escrow Account. Upon the payment in full of any claim, either by set off
or otherwise, the entity making payment shall be subrogated to the rights of the
Indemnified Party against any Person with respect to the subject matter of such
claim. Any indemnification payment made hereunder shall be deemed to be an
adjustment to the Purchase Price.
(h) General.
(i) Except to the extent the same would result in an increase of
insurance premiums on a prospective basis or a retroactive premium
adjustment or result in the inability to obtain future insurance coverage,
the dollar amount of indemnification due any party shall be reduced to the
extent that such claim has been reimbursed by the Indemnified Party's
actual receipt of insurance proceeds net of any Taxes payable on account
of the receipt of such proceeds ("Insurance Benefit") unless any of the
Indemnifying Parties have insurance coverage, in which event such coverage
shall be primary and the coverage of the Indemnified Party shall be
secondary. Notwithstanding anything to the contrary herein, neither the
Seller nor the
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EXHIBIT 2.1
Shareholders shall be entitled to the benefit of this subparagraph (i) if
the provisions of Section 5.2(i) of this Agreement have been violated.
(ii) The amounts for which an Indemnifying Party shall be liable to
an Indemnified Party hereunder with respect to breach of representation or
warranty shall be net of any Tax deduction, credit, refund or other
benefit realized during the then current tax year by the Indemnified Party
or the discounted present value (computed at the Indemnified Party's
interest rate on long term debt then outstanding or, if none is
outstanding, at the then current Applicable Rate) to be realized by the
Indemnified party in a future tax year as a result of the facts and
circumstances giving rise to the claim for indemnification.("Tax
Benefit"). The foregoing shall not apply to any Adverse Consequences
arising from the breach by any Party of its obligations under Section
2(c), 5.1(h) or (i), 5.2(g)(iii) or (iv), 5.2(h), (k)(iv) or (l). For
purposes of computing the Tax Benefit that the Buyer may derive from any
Liability other than an Assumed Liability, the Parties hereby acknowledge
and agree that such Liability will for Tax purposes be deemed to increase
the Buyer's tax basis in the Acquired Assets and be allocated to goodwill
and amortized over a 15 year period on a straight line basis.
(iii) The indemnification provisions contained in this Section 8
shall be the exclusive remedy any party hereto may have for monetary
damages for any breach of any representations or warranties under this
Agreement, provided, however, that the foregoing limitation shall not in
any way derogate any party's remedies for fraud under common law or
federal securities laws; and provided, further, that nothing contained
herein shall limit the rights of any party hereto to seek or obtain any
non-monetary relief to which it may be entitled at law or in equity. The
covenants and agreements in this Section 8 shall survive until such time
as any claim for indemnification is fully settled in accordance with the
terms thereof.
(v) Notwithstanding anything in the contrary in this Agreement,
neither the Seller nor any Shareholder shall be required to indemnify any
Buyer Indemnified Party in respect to: (i) any Adverse Consequences
arising from the alleged breach of any representation or warranty set
forth in Section 3 of this Agreement which the Buyer Indemnified Party
may incur as a result of any state of fact, item or information
reasonably disclosed in the Disclosure Schedule or in any update thereto;
(ii) any Adverse Consequence which results from Seller's inability to
obtain any consent, approval or permission to the extent the same is
communicated to Buyer prior to Closing; (iii) any Liability which is
included in the Assumed Liabilities; (iv) any accounts or notes
receivable which have been repurchased in accordance with the provisions
of Section 5.2(h) hereof and/or (v) any product warranty, make good or
start up costs incurred by the Buyer for which it has been reimbursed
pursuant to the provisions of Section 5.2(g)(iii) hereof. The provisions
of this subparagraph (v) shall not apply to any Liability of the Seller
which is not an Assumed Liability and the disclosure of a Liability of
the Seller, which does not otherwise constitute an Assumed Liability, in
the Disclosure Schedule shall not cause such Liability of the Seller to
become an Assumed Liability.
9. Miscellaneous.
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EXHIBIT 2.1
(a) Bulk Transfer Laws. The Buyer acknowledges that the Seller will not
comply with the provisions of any bulk transfer laws of any jurisdiction that
may be applicable in connection with the transactions contemplated by this
Agreement.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective, personal
representatives, executors, heirs, legatees, successors and permitted assigns.
No Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Party;
provided, however, that the Buyer may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates and/or to a subsequent
purchaser of the Business being acquired and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
the Buyer nonetheless shall remain responsible for the performance of all of its
obligations hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Buyer: Aqua-Chem, Inc. Copy to: Xxxxx X. Xxxxxxxxx, Esq.
0000 X. 000xx Xx. Xxxxx 0000,
P. O. Box 421 111 E. Wisconsin Ave.
Milwaukee, WI 53224 Xxxxxxxxx, XX 00000
Fax (000)000-0000 Fax (000)000-0000
If to the Seller: National Dynamics Corp. Copy to: Xxxx X. Xxxxxxx, Esq.
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EXHIBIT 2.1
P. O. Xxx 00000 Xxxxx 0000, 000 X. 00xx Xx.
Xxxxxxx, XX 000000 Xxxxxxx, XX 00000
Fax (000)000-0000 Fax (000)000-0000
If to Shareholders: Xxxxx X. Xxxxxxx Copy to: Xxxx X. Xxxxxxxxx, Esq.
2485 Woodscrest 0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxx, XX 00000-0000
Fax (000)000-0000
Xxxxxx X. Xxxxxx Xxxx X. Xxxxxxxxx, Esq.
0000 X. Xxxxxxx Xx. 0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxx, XX 00000-0000
Xxxxxx X. Xxxxxx L. Xxxxx Xxxxxx, Esq.
0000 Xxxxxxxxx Xx. 0000 XX Xxxx Xxxx.
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Fax (000)000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Wisconsin without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Wisconsin or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Wisconsin.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. The Seller may consent to any such amendment at any time
prior to the Closing with the prior authorization of its board of directors. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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EXHIBIT 2.1
(l) Expenses. Except as otherwise provided herein, each of the Buyer, the
Seller and the Shareholders will bear his or its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules,
including the Disclosure Schedule, identified in this Agreement are incorporated
herein by reference and made a part hereof.
(n) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity and describes
the relevant facts in reasonable detail. Subject to the exclusive remedy
provisions set forth in Section 8(h)(iii): (A) the Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance and (B) if any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant.
(o) Submission to Jurisdiction. Each of the Parties hereby submits to the
jurisdiction of and agrees that suit will only be brought in the state or
federal court sitting in Milwaukee, Wisconsin (the "Wisconsin Court") in any
action or proceeding arising out of or relating to this Agreement and/or the
transactions contemplated hereby. Each party also agrees not to bring any action
or proceeding arising out of or relating to this Agreement in any other court
except as may be necessary to enforce any judgment or order of the Wisconsin
Court. Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other Party with respect
thereto.
(p) Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled, without the posting of a bond or other collateral, to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in the Wisconsin Court, in addition
to any other remedy to which it may be entitled, at law or in equity.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
-47-
56
EXHIBIT 2.1
AQUA-CHEM, INC.
By: /s/ X. X. Xxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxx, President
NATIONAL DYNAMICS CORPORATION
By: /s/ Xxxxx X. Xxxxxxx, President
----------------------------------------
Xxxxx X. Xxxxxxx, President
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx, Individually
/s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Xxxxx X. Xxxxxxx, Individually
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx, Individually
