EXHIBIT 2
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
BY AND AMONG
THE XXXXXX-XXXX COMPANY,
AMERICAN MACHINE AND TOOL CO., INC. OF PENNSYLVANIA ("AMT")
AND
THE STOCKHOLDERS OF AMT
EFFECTIVE AS OF JANUARY 1, 2002
TABLE OF CONTENTS
STOCK PURCHASE AGREEMENT.........................................................................................1
Recitals.........................................................................................................1
Agreement........................................................................................................1
DEFINITIONS......................................................................................................1
PURCHASE AND SALE OF THE SHARES..................................................................................5
1. Basic Transaction..................................................................................5
(a) Conveyance of the Shares With No Liens................................................5
(b) Share Certificates....................................................................5
2. Consideration for the Shares.......................................................................5
(a) Purchase Price........................................................................5
(b) Adjustment to Purchase Price..........................................................5
(c) Escrow Amount.........................................................................5
3. Payment Method.....................................................................................6
4. Closing............................................................................................6
REPRESENTATIONS AND WARRANTIES...................................................................................6
5. Representations and Warranties of the Stockholders.................................................6
(a) Authorization of Transaction..........................................................6
(b) Noncontravention......................................................................6
(c) The Shares............................................................................7
(d) Broker's Fees.........................................................................7
(e) AMT Corporate Matters.................................................................7
(f) Binding Agreement of AMT..............................................................7
(g) No Conflicts or Defaults of AMT.......................................................8
(h) Capitalization of AMT.................................................................8
(i) Realty Interests of AMT...............................................................9
(j) Tangible Personal Property of AMT.....................................................9
(k) Environmental Matters Pertaining to AMT..............................................10
(l) AMT Financial Statements.............................................................11
(m) Accounts Receivable of AMT...........................................................11
(n) Inventories of AMT...................................................................11
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TABLE OF CONTENTS
(continued)
(o) Changes in Circumstances Regarding AMT...............................................12
(p) Tax Matters of AMT...................................................................12
(q) Intellectual Property Rights of AMT..................................................13
(r) Litigation of AMT....................................................................14
(s) Labor Relations of AMT...............................................................14
(t) Insurance Policies of AMT............................................................14
(u) Employee Benefit Plans of AMT........................................................15
(v) Product Liability of AMT.............................................................17
(w) Contracts of AMT.....................................................................18
(x) Brokers, Finders or Agents of AMT....................................................18
(y) Accuracy of Information Furnished....................................................18
6. Representations and Warranties of G-R.............................................................18
(a) Authorization of Transaction.........................................................18
(b) Noncontravention.....................................................................19
(c) Investment in the Shares.............................................................19
(d) Brokers' Fees........................................................................19
COVENANTS AND AGREEMENTS........................................................................................19
7. Covenants of the Parties..........................................................................19
(a) Tax Matters..........................................................................19
(b) Warranty Obligations.................................................................21
(c) Insurance Policies...................................................................23
(d) Certified copies of Insurance Policies...............................................23
(e) Certain Foreign-Sourced Products.....................................................23
CONDITIONS......................................................................................................23
8. Conditions to Closing.............................................................................23
(a) Condition to the Obligations of the Parties..........................................23
(b) Conditions to the Obligation of G-R..................................................24
(c) Conditions to the Obligations of the Stockholders....................................25
REMEDIES........................................................................................................26
9. Remedies for Breaches of this Agreement...........................................................26
GENERAL PROVISIONS..............................................................................................29
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TABLE OF CONTENTS
(continued)
10. Stockholders' Representative......................................................................30
11. Press Releases and Public Announcements...........................................................30
12. Assignment and Third Party Beneficiaries..........................................................30
13. Amendments and Waivers............................................................................29
14. Headings..........................................................................................30
15. Severability......................................................................................30
16. Schedules and Exhibits............................................................................30
17. Construction......................................................................................31
18. Notices...........................................................................................31
19. Entire Agreement..................................................................................32
20. Governing Law.....................................................................................32
21. Resolution of Claims..............................................................................32
22. Counterparts......................................................................................33
SIGNATURES......................................................................................................34
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TABLE OF SCHEDULES
Schedule 2 -- Proportional Ownership of the Shares
Schedule 2(b)(i) -- Methodology for Preparation of the Closing
Balance Sheet and the Calculation of the
Adjusted Unaudited Net Asset Value of AMT
(as of December 31, 2001)
Schedule 5(a) -- Authorization of the Stockholders
Schedule 5(b) -- Noncontravention
Schedule 5(c) Part 1 -- Ownership of the Shares Prior to
Recapitalization
Schedule 5(c) Part 2 -- Ownership of the Shares After
Recapitalization
Schedule 5(e) -- AMT Corporate Matters
Schedule 5(f) -- Consents
Schedule 5(g) -- No Conflicts
Schedule 5(h)(ii) -- Subsidiaries
Schedule 5(i) -- Realty Interests of AMT (Parts 1, 2 and 3)
Schedule 5(j) -- Tangible Personal Property of AMT
Schedule 5(k) -- Environmental Matters Pertaining to AMT
Schedule 5(o) -- Changes in Circumstances Regarding AMT
Schedule 5(p) -- Tax Matters of AMT
Schedule 5(q) -- Intellectual Property Rights of AMT
Schedule 5(r) -- Litigation of AMT
Schedule 5(t) -- Insurance Policies of AMT
Schedule 5(u) -- Employee Benefit Plans of AMT
Schedule 5(w) -- Contracts of AMT
Schedule 5(x) -- Brokers, Finders or Agents of AMT
Schedule 5(y) -- Certain Furnished Information
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TABLE OF EXHIBITS
Exhibit A -- Joint Escrow Account Agreement
Exhibit B -- Certificate of the Stockholders
Exhibit C -- Release of the Stockholders
Exhibit D -- Release of Xxxxx X. Xxxxxx
Exhibit E -- Release of Xxxxxx Xxxxxx
Exhibit F -- Assignment of Xxxxx X. Xxxxxx
Exhibit G -- Noncompetition Agreement
Exhibit H -- Certificate of G-R
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STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT, effective as of January 1, 2002 (this
"Agreement"), is by and among THE XXXXXX-XXXX COMPANY, an Ohio corporation
("G-R"), AMERICAN MACHINE AND TOOL CO., INC. OF PENNSYLVANIA, a Delaware
corporation ("AMT"), and each of the stockholders of AMT listed on the signature
pages of this Agreement (a "Stockholder" or collectively, the "Stockholders").
G-R, AMT and the Stockholders are referred to collectively herein as the
"Parties" and each is referred to as a "Party".
RECITALS
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A. The Stockholders are the only legal and beneficial owners
of all of the issued and outstanding capital stock of AMT (the "Shares").
B. The Stockholders desire to sell to G-R, and G-R desires to
purchase from the Stockholders, all of the Shares, subject to the terms and
conditions of this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the respective covenants
and agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, and
based upon the respective representations and warranties set forth herein, the
Parties hereby agree as follows:
DEFINITIONS
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The terms defined in this section shall have the meanings
herein specified for all purposes of this Agreement.
"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, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Code" means the Internal Revenue Code of 1986, as amended.
"Environment" means soil, surface waters, groundwater, land,
stream sediments, surface or subsurface strata, ambient air, indoor air or
indoor air quality, interior and/or exterior, including, without limitation, any
material or substance used in the physical structure, of any building or
improvement and any environmental medium.
"Environmental Condition" means any condition of the
Environment with respect to the Real Property, or with respect to any other real
property at which any Hazardous Material generated by the operation of the
business of AMT has been treated, stored or disposed of, which violates any
Environmental Law, or even though not violative of any Environmental Law,
nevertheless (i) results in any Release or Threat of Release and (ii) such
Release or Threat of Release results in damage, loss, cost, expense, claim,
demand, order or liability, alleged to any Person.
"Environmental Insurance Policy" means the policy obtained by
AMT and G-R (effective as of the Closing Date) that covers certain environmental
matters.
"Environmental Law" means any federal, state and local law,
regulation, rule, ordinance, policy or guideline relating to the Environment or
implementing or otherwise dealing with the subject matter thereof.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Hazardous Material" means any pollutant, toxic substance,
including asbestos and asbestos-containing materials, hazardous waste, hazardous
material, hazardous substance, contaminant, petroleum, or petroleum-containing
materials, as defined in or the subject of any Environmental Law.
"Knowledge of Stockholders," including the terms "Know,"
"Known" and other derivatives thereof, means the knowledge of each of Xxxxx X.
Xxxxxxx and Xxxxxx Xxxxxx after reasonable inquiry of AMT's officers,
supervisory employees or outside professional advisors having responsibility for
relevant matters.
"Liability" means any liability or obligation (whether known
or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and due or to become due), including any
liability or obligation for Taxes.
"Material Adverse Effect" means an item will be deemed to have
a Material Adverse Effect if it reduces, or reasonably can be expected to
reduce, either (i) the net worth or earnings (for the current and preceding
twelve-month periods) of AMT by more than one percent, (ii) the total assets
(for the current and preceding twelve-month periods) of AMT by more than one
percent or (iii) the total sales (for the current and preceding twelve-month
periods) of AMT by more than one percent.
"Ordinary Course of Business" means, with regard to a Party,
the ordinary course of such Party's business consistent with past custom and
practice (including with respect to quantity and frequency).
"Permit" means any environmental permit, license, approval,
consent, or authorization issued by a federal, state or local governmental
authority.
"Person" means any individual, sole proprietorship,
partnership, corporation, limited liability company, unincorporated society or
association, joint venture, trust, or other business entity, or a governmental
entity (or any department, agency or political subdivision thereof).
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"Real Property" means any and all real property and interests
in real property of AMT including, without limitation, any real property
leaseholds and subleaseholds, purchase options, easements, licenses, rights to
access and rights of way.
"Release" means any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing, or dumping of a Hazardous Material into the Environment.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge or other security interest, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due and payable or
for the Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"Selling Expenses" means all costs, fees and expenses of
outside professionals for services provided to AMT after January 1, 2002
relating to the process of selling AMT, whether incurred in connection with this
Agreement or otherwise, but not paid on or prior to the Closing Date, including,
without limitation, all legal, accounting, tax and broker fees and expenses.
"Subsidiary" of a Person means any corporation, partnership,
association of other business entity at least 50% of the outstanding voting
power of which is at the time owned or controlled directly or indirectly by such
Person or by one or more of such Subsidiary entities, or both.
"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 Section 59A of
the Code), 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 or not disputed.
"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.
"Threat of Release" means a substantial likelihood of a
Release that requires action to prevent or mitigate damage to the Environment
that might result from such Release.
ADDITIONAL DEFINITIONS IN AGREEMENT. Each of the following
terms is defined in the Section set forth opposite such term.
TERM SECTION
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"AAA" Section 21(a)
"Adjusted Unaudited Net Asset Value of AMT" Section 2(b)
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"Agreement" Introductory Paragraph
"AMT" Introductory Paragraph
"AMT Warranty Costs" Section 7(b)(i)
"Audited 2001 Balance Sheet" Section 5(1)
"Cap" Section 9(d)(i)
"Closing" Section 4
"Closing Balance Sheet" Section 2(b)
"Closing Date" Section 4
"Controlled Group" Section 5(u)(i)
"Contracts" Section 5(w)
"Current Customer Warranty Cost Percentage" Section 7(b)(i)
"Deductible" Section 9(d)(i)
"E&Y" Section 2(b)
"Employee Plan" or "Employee Plans" Section 5(u)(i)
"ERISA" Section 5(u)(i)
"Escrow Amount" Section 2(a)
"Excess Significant Customer Current Warranty Cost" Section 7(b)(i)
"Financial Statements" Section 5(1)
"Foreign Plan" Section 5(u)(xx)
"G-R" Introductory Paragraph
"G-R Indemnified Parties" Section 9(b)
"Historical Warranty Cost Percentage" Section 7(b)(i)
"Indemnified Party" Section 9(e)(i)
"Indemnifying Party" Section 9(e)(i)
"Intellectual Property" Section 5(q)
"IRS" Section 5(u)(ii)
"Joint Escrow Account Agreement" Section 2(c)
"Liens" Section 1(a)
"Litigation of AMT" Section 5(v)
"M&P" Section 2(b)
"Other Customer" Section 7(b)(ii)
"Other Customer Warranty Cost" Section 7(b)(ii)
"Parties" or "Party" Introductory Paragraph
"Purchase Price" Section 2(a)
"Recapitalization Plan" Section 5(c)
"Shares" Recitals
"Significant Customer" Section 7(b)(i)
"Significant Customer Warranty Cost" Section 7(b)(i)
"Stockholder" or "Stockholders" Introductory Paragraph
"Stockholder Indemnified Parties" Section 9(c)
"Stockholders' Representative" Section 10
"Third Party Claim" Section 9(e)(i)
"Warranty Period" Section 7(b)(i)
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PURCHASE AND SALE OF THE SHARES
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1. BASIC TRANSACTION.
(a) CONVEYANCE OF THE SHARES WITH NO LIENS. At the Closing (as
defined in Section 4), G-R shall purchase from the Stockholders, and the
Stockholders shall sell, transfer, assign, convey and deliver to G-R, all of the
Shares, free and clear of any mortgage, pledge, hypothecation, rights of others,
claim, security interest, encumbrance, taxes, title defect, title retention
agreement, voting trust agreement, interest, option, lien, charge or similar
restrictions or limitations, including any restriction on the right to vote,
sell or otherwise dispose of the Shares ("Liens").
(b) SHARE CERTIFICATES. The Stockholders shall deliver to G-R
at the Closing their stock certificates representing all of the Shares, duly
endorsed in blank or accompanied by duly executed assignment documents.
2. CONSIDERATION FOR THE SHARES.
(a) PURCHASE PRICE. In full consideration for the sale,
transfer, assignment, conveyance and delivery of the Shares by the Stockholders
to G-R, on the Closing Date (as defined in Section 4) G-R shall pay to the
Stockholders' Representative, subject to adjustment pursuant to Section 2(b),
$16,092,840 (the "Purchase Price"), minus (i) an amount equal to $1,000,000 (the
"Escrow Amount"), (ii) an amount equal to the Selling Expenses, and (iii) an
amount equal to $65,623.50, which amount represents one-half of the cost of the
premium of the Environmental Insurance Policy. The Purchase Price shall be paid
by the Stockholders' Representative to the Stockholders in the proportions
reflecting their ownership of the Shares as set forth on SCHEDULE 2.
(b) ADJUSTMENT TO PURCHASE PRICE. Prior to the Closing,
McGladrey & Xxxxxx, LLP ("M&P") shall have prepared and delivered to the G-R and
Ernst & Young LLP ("E&Y") an unaudited balance sheet of AMT as of December 31,
2001 (the "Closing Balance Sheet") and a corresponding calculation of the net
asset value of AMT as of December 31, 2001 (the "Adjusted Unaudited Net Asset
Value of AMT"). The Closing Balance Sheet and the calculation of the Adjusted
Unaudited Net Asset Value of AMT shall be prepared in accordance with the
methods set forth on SCHEDULE 2(B). E&Y and G-R shall have agreed to M&P's
calculation of the Adjusted Unaudited Net Asset Value of AMT as set forth on the
Closing Balance Sheet. The Purchase Price paid at Closing will be (i) increased
dollar for dollar by the amount the Adjusted Unaudited Net Asset Value of AMT
exceeds $16,092,840 or (ii) decreased dollar for dollar by the amount the
Adjusted Unaudited Net Asset Value of AMT is below $16,092,840.
(c) ESCROW AMOUNT. On the Closing Date, G-R shall pay or cause
to be paid an aggregate amount equal to the Escrow Amount into an escrow account
pursuant to the terms of the agreement, attached hereto as EXHIBIT A (the "Joint
Escrow Account Agreement").
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3. PAYMENT METHOD. All amounts of Purchase Price payable to
the Stockholders' Representative or the escrow account under Section 2 shall be
paid by wire transfer of immediately available funds to an account designated in
writing to G-R at least 48 hours prior to the scheduled payment date, or
otherwise by official bank check.
4. CLOSING. The consummation of the transactions contemplated
by this Agreement (the "Closing") shall take place on February 26, 2002 (the
"Closing Date") or at such other date and at such other time as the Parties may
agree. The Closing shall take place at the offices of Blank, Rome, Xxxxxxx &
XxXxxxxx LLP in Philadelphia. All proceedings to take place at the Closing shall
take place simultaneously, and no delivery shall be considered to have been made
until all such proceedings have been completed.
REPRESENTATIONS AND WARRANTIES
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5. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. The
Stockholders, jointly and severally, represent and warrant to G-R that the
statements contained in this Section 5 are correct and complete as of the date
of the Closing. Subject to Section 9(a), all such representations and warranties
shall survive the execution and delivery of this Agreement and the Closing.
(a) AUTHORIZATION OF TRANSACTION. Each of the Stockholders has
the full capacity, power and authority to execute and deliver this Agreement and
to perform his or its obligations hereunder. The execution, delivery and
performance of this Agreement by each of the Stockholders have been duly
authorized by all necessary action on the part of, or on behalf of, each of the
Stockholders. This Agreement has been duly executed and delivered by each of the
Stockholders and, assuming due authorization, execution and delivery by AMT and
G-R, constitutes the valid and legally binding obligation of each of the
Stockholders, enforceable against each of the Stockholders in accordance with
its terms except as (i) such enforcement may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Except as set forth on SCHEDULE 5(A), none of the Stockholders is required to
give any notice to, make any filing with, or obtain any authorization, consent
or approval of, any Person in connection with the execution, delivery and
performance of this Agreement.
(b) NONCONTRAVENTION. Except as set forth on SCHEDULE 5(B),
neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will (i) violate any charter or bylaw
provision, constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency or court, to which any of the Stockholders 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 any of the Stockholders is a party or
by which he or it is bound or to which any of his or its assets is subject,
except, with respect to the
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foregoing clause (ii) where the conflict, breach, default, acceleration,
termination, modification or cancellation would not have a Material Adverse
Effect on AMT or on the ability of the Stockholders to consummate the
transactions contemplated by this Agreement.
(c) THE SHARES. Immediately prior to the effectiveness of the
Closing (prior to the effectiveness of the Recapitalization Plan), all of the
issued and outstanding capital stock of AMT was owned of record and beneficially
as set forth on Part 1 of SCHEDULE 5(c). On February 8, 2002, the Stockholders
adopted a proposal authorized and approved by AMT's Board of Directors to amend
AMT's Certificate of Incorporation for the purpose of recapitalizing AMT (the
"Recapitalization Plan"). After giving effect to the Recapitalization Plan, on
the Closing Date the Stockholders own the Shares of record and beneficially as
set forth on Part 2 of SCHEDULE 5(c), and each Stockholder has good and
marketable title to such Shares free and clear of all Liens. None of the
Stockholders is a party to any contract or commitment that could require any
such Stockholder to sell, transfer or otherwise dispose of his or its Shares
other than pursuant to this Agreement. Upon consummation of the transactions
contemplated by this Agreement, G-R will acquire good and marketable title to
the Shares free and clear of all Liens.
(d) BROKER'S FEES. No Stockholder has any Liability to pay any
fees, expenses or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which AMT or G-R could become
liable or obligated.
(e) AMT CORPORATE MATTERS. Each of AMT and its Subsidiaries is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, as set forth on SCHEDULE 5(e). Each of
AMT and its Subsidiaries is duly qualified or subsisting as a foreign
corporation in each jurisdiction in which the nature of its business or location
of its properties requires such qualification, as set forth on SCHEDULE 5(e),
except for other jurisdictions where the failure to so qualify would have a
Material Adverse Effect. AMT and each of its Subsidiaries have all requisite
power and authority to own or lease its properties and assets, and to conduct
its business as it has been and is now being conducted.
(f) BINDING AGREEMENT OF AMT. AMT has the full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by AMT have
been duly authorized by all necessary action on the part of AMT. This Agreement
has been duly executed and delivered by AMT and, assuming due authorization,
execution and delivery by the Stockholders and G-R, constitutes the valid and
legally binding obligation of AMT, enforceable against AMT in accordance with
its terms except as (i) such enforcement may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Except as set forth on SCHEDULE 5(f), AMT is not required to give any notice to,
make any filing with, or obtain any authorization, consent or approval of any
Person in connection with the execution, delivery and performance of this
Agreement. All corporate action on the part of AMT, the Stockholders, and the
officers and directors of AMT necessary for the authorization of the
Recapitalization Plan has been taken.
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(g) NO CONFLICTS OR DEFAULTS OF AMT. Except as set forth on
SCHEDULE 5(g), neither the execution and delivery of this Agreement by AMT, nor
the performance by AMT of the transactions contemplated hereby, will (i)
violate, conflict with, or constitute a default under, any of the terms of the
Certificate of Incorporation, as amended, or By-Laws of AMT or any of its
Subsidiaries, (ii) violate, conflict with or constitute a default under any
provisions of, or result in the acceleration of any obligation under, any
contract, sales commitment, license, purchase order, security agreement,
mortgage, note, deed, lien, lease, agreement, instrument, order, judgment or
decree relating to AMT's or any of its Subsidiaries' business or assets, or by
which AMT or any of its Subsidiaries or any of their respective business or
assets are bound, (iii) result in the creation or imposition of any Security
Interests in favor of any Person, (iv) violate any law, statute, judgment,
decree, order, rule or regulation of any governmental authority applicable to
AMT or any of its Subsidiaries, or (v) constitute an event which, after notice
or lapse of time or both, would result in such violation, conflict, default,
acceleration or creation or imposition of a Security Interest, except, with
respect to the foregoing clauses (ii), (iii), (iv) and (v), where the violation,
conflict, default, acceleration, termination or imposition would not have a
Material Adverse Effect on AMT or on the ability of the Parties to consummate
the transactions contemplated by this Agreement. AMT has not been notified that
it is in violation of or in default under any provision of any contract, sales
commitment, license, purchase order, security agreement, mortgage, note, deed,
lien, lease, agreement, instrument, order, judgment or decree relating to AMT's
or any of its Subsidiaries' business or assets, or by which AMT, any of its
Subsidiaries or any of their respective business or assets are bound, or in the
payment of any monetary obligations or debts of AMT or any of its Subsidiaries,
and, to the Stockholders' Knowledge, there exists no condition or event which,
after notice or lapse of time or both, would result in any such violation or
default.
(h) CAPITALIZATION OF AMT.
(i) After giving effect to the Recapitalization Plan, on the
Closing Date the authorized capital stock of AMT consists solely of one class of
5,000 shares of common stock without par value. After giving effect to the
Recapitalization Plan, on the Closing Date, of the 5,000 shares of common stock
that are authorized, 5,000 shares are issued and outstanding, and all of such
issued and outstanding shares have been duly authorized and validly issued and
are fully paid and nonassessable. After giving effect to the Recapitalization
Plan, on the Closing Date, the 5,000 shares of issued and outstanding common
stock are the Shares that the Stockholders shall sell to G-R pursuant to this
Agreement. After giving effect to the Recapitalization Plan, on the Closing Date
the Shares represent the only issued and outstanding shares of capital stock of
AMT. There are no outstanding options, warrants, rights, calls, subscriptions,
claims of any character, agreements, obligations, convertible or exchangeable
securities, or other commitments, contingent or otherwise, of any kind
obligating AMT to issue, directly or indirectly, any additional shares of its
capital stock or other securities. There are no agreements, commitments or
contracts relating to the issuance, sale, transfer or voting of any securities
of AMT.
(ii)SCHEDULE 5(h)(ii) sets forth all of the Subsidiaries of
AMT and the authorized, issued and outstanding capital stock of each of the
Subsidiaries. The outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued and are
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fully paid and nonassessable. Except as set forth on SCHEDULE 5(h)(ii), AMT does
not own an equity interest in any other Person. American Pump and Machine Corp.
has never conducted, nor currently conducts, business and has never had, nor
currently has, any assets or liabilities.
(i) REALTY INTERESTS OF AMT. Set forth on Part 1 of SCHEDULE
5(i) is a complete and correct list and description of all real property owned
by AMT and any of its Subsidiaries or in which AMT or any of its Subsidiaries
has an equity interest, in each case together with a general description of the
buildings and other structures and improvements located thereon and any and all
Security Interests granted by AMT and any of its Subsidiaries, affecting or
relating thereto. AMT and its Subsidiaries have good and marketable fee simple
title to all real property and interests in real property listed and described
on Part 1 of SCHEDULE 5(i), free and clear of all Security Interests, except as
otherwise listed and described on Part 1 of SCHEDULE 5(i). AMT has heretofore
delivered to G-R true and complete copies of all deeds and other documents
evidencing the ownership of the real property owned by AMT or any of its
Subsidiaries. Set forth on Part 2 of SCHEDULE 5(i) is a complete and correct
list and description of all realty leases or similar contracts under or pursuant
to which AMT or any of its Subsidiaries leases or rents (as lessee or sublessee)
any land, building, factory, warehouse or other interest in realty. The
leasehold interests described on Part 2 of SCHEDULE 5(i) are subject to leases
enforceable against the landlords thereunder, and neither AMT nor any of its
Subsidiaries has mortgaged its leasehold interest thereunder. AMT has heretofore
delivered to G-R true and complete copies of all leases set forth on Part 2 of
SCHEDULE 5(i). Set forth on Part 3 of SCHEDULE 5(i) is a complete and correct
list and description of all realty interests or similar contracts under or
pursuant to which AMT or any of its Subsidiaries leases or rents (or lessor or
sublessor) any land, building, factory, warehouse or other interest in realty.
AMT or any of its Subsidiaries has good and marketable leasehold interests in
all real property and interests in real property listed and described on Part 3
of SCHEDULE 5(i), free and clear of all Security Interests, except as otherwise
listed and described on Part 3 of SCHEDULE 5(i). AMT has heretofore delivered to
G-R true and complete copies of all leases or other documents evidencing the
realty leasehold interests (as lessor or sublessor) or other realty interests of
AMT or any of its Subsidiaries. None of the operations of AMT or any of its
Subsidiaries on the real property referred to in this paragraph (i) violates any
applicable material zoning classification, (ii) any applicable pollution control
ordinance or statute relating to the particular property or such operations, or
(iii) any other law, regulation or order applicable to the operation of AMT's or
any of its Subsidiaries' business.
(j) TANGIBLE PERSONAL PROPERTY OF AMT. Set forth on SCHEDULE
5(j) is a complete and correct list and description of each of the following
items of tangible personal property of AMT or any of its Subsidiaries, in each
case that has a cost in excess of $5,000 (i) all machinery, equipment and
patterns, all spare and replacement parts, and all manufacturing and production
tools, tooling and supplies used or held for use by AMT or any of its
Subsidiaries in the operation of the business of AMT or any of its Subsidiaries;
(ii) all office furniture and equipment and all office and administrative
supplies (including packaging material and sales literature) used or held for
use by AMT or any of its Subsidiaries in the operation of the business of AMT or
any of its Subsidiaries, and (iii) all motor vehicles and trailers used or held
for use by AMT or any of its Subsidiaries in the operation of the business of
AMT or any of its Subsidiaries. AMT has heretofore delivered to G-R true and
complete copies of the titles or leases evidencing the ownership or right to
lease the motor vehicles and trailers used or held for
9
use by AMT or any of its Subsidiaries in the operation of the business of AMT or
any of its Subsidiaries. Except as set forth on SCHEDULE 5(j), AMT has lawful
record and good and marketable or valid title (as the case may be) to all of the
items of tangible personal property listed on SCHEDULE 5(j), free and clear of
all Security Interests (except in the case of tangible personal property that
may be leased by AMT or any of its Subsidiaries, in which case AMT or any of its
Subsidiaries has valid and subsisting leasehold interests free and clear of any
other Security Interests).
(k) ENVIRONMENTAL MATTERS PERTAINING TO AMT. Except as set
forth on SCHEDULE 5(k):
(i) There are no underground tanks and related pipes, pumps
and other facilities regardless of their use or purpose whether active or
abandoned at the Real Property.
(ii) There is no asbestos nor any asbestos-containing
materials used in, applied to or in any way incorporated in any building,
structure or other form of improvement on the Real Property.
(iii) There are no polychlorinated biphenyl compounds or
lead-based paint present at the Real Property that present a health or
environmental hazard or that require reporting, investigation, assessment,
removal, cleanup, remediation or any other type of response or action under any
Environmental Law.
(iv) AMT and each of its Subsidiaries is presently and for the
past ten years has been in compliance with all Environmental Laws applicable to
the Real Property or its business, and there exist no Environmental Conditions
that require reporting, investigation, assessment, cleanup, remediation or any
other type of response action pursuant to any Environmental Law or that could be
the basis for any liability of any kind pursuant to any Environmental Law.
(v) Neither AMT nor any of its Subsidiaries has generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced, or processed any Hazardous Materials at or upon the Real
Property, except in compliance with all applicable Environmental Laws, and there
has been no Release or Threat of Release of any Hazardous Material at, under or
upon the Real Property, or at any other real property at which any Hazardous
Material generated by the operation of the business of AMT or any of its
Subsidiaries has come to be located, that requires or may require reporting,
investigation, assessment, cleanup, remediation or any other type of response
action pursuant to any Environmental Law.
(vi) Neither AMT nor any of its Subsidiaries has (A) entered
into or been subject to any consent decree, compliance order, or administrative
order with respect to the Real Property or any facilities or operations thereon;
(B) received notice under the citizen suit provisions of any Environmental Law
in connection with the Real Property; (C) received any request for information,
notice, demand letter, administrative inquiry, or formal or informal complaint
or claim with respect to any Environmental Condition; or (D) been subject to or
threatened with any governmental or citizen enforcement action with respect to
the Real Property.
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(vii) There currently are effective all Permits required under
any Environmental Law which are necessary for AMT's and its Subsidiaries'
activities and operations at the Real Property and for any past or ongoing
alterations or improvements at the Real Property; and any applications for
renewal of such Permits have been submitted on a timely basis; and the
transactions contemplated by this Agreement do not require consent or similar
action by the issuer or any such Permits.
(viii) AMT has heretofore delivered to G-R true and complete
copies of all documents, records, and information in its possession or control
concerning Environmental Conditions, including, without limitation, previously
conducted environmental audits and documents regarding any disposal of Hazardous
Materials at or from the Real Property, spill control plans, and environmental
agency reports and correspondence.
(l) AMT FINANCIAL STATEMENTS. AMT has heretofore delivered to
G-R true and complete copies of AMT's audited balance sheets as of October 31,
2001 and 2000, and the related audited statements of income and retained
earnings, and cash flows for the years then ended, together with the notes
thereto and the other financial information included therewith (collectively,
the "Financial Statements"). The Financial Statements present fairly, in all
material respects, the financial position of AMT, and the results of its
operations and cash flows of AMT, as of the dates and for the periods indicated
thereon and have been prepared in conformity with GAAP, consistently applied
throughout the periods indicated. AMT has no material Liability not reflected in
the Financial Statements, except to the extent (i) incurred since October 31,
2001 in the Ordinary Course of Business, (ii) listed or described in this
Agreement or in the Schedules to this Agreement or (iii) such Liability was not
required to be disclosed or provided for under GAAP. The audited balance sheet
of AMT as of October 31, 2001 may be referred to as the "Audited 2001 Balance
Sheet." For purposes of this Section 5(l), the term material shall mean any
matters amounting to more than 1% of total assets, as set forth in the Audited
2001 Balance Sheet.
(m) ACCOUNTS RECEIVABLE OF AMT. Except (i) as listed and
described on the Closing Balance Sheet (or footnote(s) thereto) or (ii) where
the aggregate amount of the write-offs as uncollectible of any accounts
receivable of AMT would not exceed 0.5% of the total value of the accounts
receivable of AMT shown on the Closing Balance Sheet, all accounts receivable of
AMT shown on the Closing Balance Sheet will be valid receivables and will be
fully collectible, net of any reserves therefor on the Closing Balance Sheet,
within 60 days of the date of the Closing Balance Sheet or the agreed-upon date
for such payments, whichever is later.
(n) INVENTORIES OF AMT. The inventories of raw materials,
work-in-process and finished goods of AMT reflected in the Financial Statements,
and the inventories acquired since October 31, 2001, less those inventories used
or disposed of since October 31, 2001 and reflected on the Closing Balance
Sheet, are useable and saleable in the Ordinary Course of Business, except for
slow-moving, damaged or obsolete items, all of which have been written down to
net realizable market value or adequate reserves provided therefore. The value
at which such inventories are carried in the Financial Statements and in the
Closing Balance Sheet reflects the normal inventory valuation policy of AMT in
accordance with GAAP, except where the
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aggregate value of any write-downs of the inventories would be less than 0.5% of
the total value of the inventory shown on the Closing Balance Sheet.
(o) CHANGES IN CIRCUMSTANCES REGARDING AMT. Except as listed
and described on SCHEDULE 5(o), since October 31, 2001, the business and
operations of AMT and its Subsidiaries have been conducted only in the Ordinary
Course of Business, and since October 31, 2001, neither AMT nor any of its
Subsidiaries has: (i) issued any stocks, bonds, notes or other corporate
securities (other than in connection with the Recapitalization Plan); (ii)
suffered any loss of a supplier or distributor; (iii) increased in any manner
the rate of compensation of any of its officers or other employees; (iv) paid or
agreed to pay any employee benefit or severance not required by any existing
Employee Plan (as defined in Section 5(u)); (v) committed itself to any new
Employee Plan or amended any existing Employee Plan; (vi) declared or made any
dividend or other payment or distribution to the Stockholders (other than in
connection with the redemption of the preferred stock of AMT); (vii) entered
into any transaction with a third party other than in the Ordinary Course of
Business or in connection with this Agreement; or (viii) sustained any damage,
destruction or loss by reason of fire, explosion, earthquake, accident,
casualty, labor trouble, requisition or taking of property by any Person, flood,
windstorm, embargo, riot, act of God, act by any enemy of the United States, or
other similar or dissimilar casualty or event (regardless of whether the same
has been insured against).
(p) TAX MATTERS OF AMT.
(i) All Tax Returns required to be filed by AMT or any of its
Subsidiaries prior to the Closing Date have been timely and properly filed, and
when filed were correct and complete and correctly reflected the facts regarding
the income, business, assets, operations, activities and status of AMT and its
Subsidiaries. All Taxes shown on such Tax Returns have been timely paid or
deposited or reserved for in accordance with GAAP. Neither AMT nor any of its
Subsidiaries will have any liability for Taxes for periods through the Closing
in excess of the amounts paid in respect of Tax Returns filed prior to the
Closing Date or pursuant to the provisions for Taxes shown on the Audited 2001
Balance Sheet and the Closing Balance Sheet. The provisions for Taxes shown on
the Audited 2001 Balance Sheet and the Closing Balance Sheet are sufficient to
cover all liabilities or obligations of AMT for Taxes (including, without
limitation, interest, any additions to Taxes or penalties) that may be due in
respect of periods through the dates of the Audited 2001 Balance Sheet and the
Closing Balance Sheet for which returns or reports as of such dates are not yet
due. Neither AMT nor any of its Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return. No claim is pending by
any authority in a jurisdiction where AMT or any of its Subsidiaries does not
file Tax Returns that it is or may be subject to taxation by such jurisdiction.
There are no Security Interests on any of the assets of AMT or any of its
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Taxes.
(ii) Except as set forth on SCHEDULE 5(p), AMT and its
Subsidiaries have withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
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(iii) Neither AMT, any of its Subsidiaries nor any Stockholder
has received written notice from any authority to assess any additional taxes
for any period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax Liability of AMT or any of its Subsidiaries claimed or
raised by any authority in writing. SCHEDULE 5(p) lists all federal, state,
local, and foreign income Tax Returns filed with respect to AMT and its
Subsidiaries for taxable periods ended on or after October 31, 1997, indicates
those Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Stockholders have delivered, or caused
AMT to deliver, to G-R correct and complete copies of all federal and
Pennsylvania income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by AMT and its Subsidiaries since
October 31, 1997.
(iv) Neither AMT nor any of its Subsidiaries has waived any
statute of limitations with respect to Taxes which has a continuing effect or
agreed to any extension of time with respect to a Tax assessment or deficiency
which has not expired.
(v) Neither AMT nor any of its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
Neither AMT nor any of its Subsidiaries has made any payments, nor been
obligated to make any payments, nor is a party to any agreement that under
certain circumstances could obligate it to make any payments, that would not be
deductible under Section 280G of the Code. Neither AMT nor any of its
Subsidiaries has been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. AMT and its Subsidiaries have
disclosed on its federal income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the
meaning of Section 6662 of the Code. Neither AMT nor any of its Subsidiaries is
a party to any Tax allocation or sharing agreement. Neither AMT nor any of its
Subsidiaries (A) has been a member of an affiliated group (as defined by Section
1504 of the Code) filing a consolidated federal income Tax Return or any similar
group defined under a comparable provision of state, local or foreign law (other
than a group the common parent of which was AMT), or (B) has Liability for the
Taxes of any Person (other than AMT or its Subsidiaries) under Treas. Reg. ss.
1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(q) INTELLECTUAL PROPERTY RIGHTS OF AMT. Set forth on SCHEDULE
5(q) is a complete and correct list and description of all patents, patent
applications, trade names, trademarks, trademark registrations and trademark
applications, service marks, service xxxx registrations and service xxxx
applications, copyrights, copyright registrations and copyright applications,
licenses (including licenses of computer programs, software, patents, technology
or other proprietary rights, but excepting prepackaged off-the-shelf office
productivity software), and Internet domain names, both domestic and foreign,
owned or licensed (as licensor or licensee) by AMT or any of its Subsidiaries
and presently used or held for use in its business (collectively, the
"Intellectual Property"). As set forth on SCHEDULE 5(q), AMT is the sole and
exclusive owner of, or possesses valid licenses or other sufficient rights to
use, all of the Intellectual Property and is current in the payment of any
maintenance fees in respect thereof. Except as set forth on SCHEDULE 5(q),
neither AMT nor any of its Subsidiaries is required to pay any royalty, license
fee or similar type of compensation in connection with the conduct of AMT's or
any of its Subsidiaries' business as it is now conducted. Any Intellectual
Property owned or held by an officer, director or employee of AMT or any of its
Subsidiaries relating to AMT's or any of its
13
Subsidiaries' business in any manner, and which AMT or any of its Subsidiaries
is entitled to use, has been duly and effectively transferred to AMT or any of
its Subsidiaries. Except as set forth on SCHEDULE 5(q), no Person has asserted
in writing that AMT's or any of its Subsidiaries' business and operations
infringe, and AMT's or any of its Subsidiaries' business and operations do not
infringe, the Intellectual Property or other intellectual property of any
Person. The Intellectual Property comprises all of the intellectual property
rights necessary for the operation of AMT's or any of its Subsidiaries' business
as currently conducted by AMT or any of its Subsidiaries.
(r) LITIGATION OF AMT. Except as set forth on SCHEDULE 5(r),
there is no litigation, suit, proceeding, action, claim, demand or
investigation, at law or in equity, pending or to the Knowledge of the
Stockholders, threatened against or affecting AMT or any of its Subsidiaries or
involving any of their respective properties, assets or capital stock before any
court, agency, or authority, and to the Knowledge of the Stockholders, there are
no facts that would result in such litigation, suit, proceeding, action, claim,
demand or investigation. Neither AMT nor any of its Subsidiaries is subject to
or in default with respect to any notice, order, writ, injunction or decree of
any court, agency or authority.
(s) LABOR RELATIONS OF AMT. There are no collective bargaining
or other labor union contracts applicable to any of AMT's or any of its
Subsidiaries' employees. During the most recent two-year period, neither AMT nor
any of its Subsidiaries has received any notice of any unfair labor practice
complaints pending before the National Labor Relations Board or any other agency
having jurisdiction thereof. During the most recent two-year period, neither AMT
nor any of its Subsidiaries has received any notice of any activities or
proceedings of any labor union (or representatives thereof) to organize any
employees of AMT or any of its Subsidiaries. During the most recent two-year
period, there have not been any strikes, slowdowns, work stoppages, lockouts or
threats thereof, by or involving any of AMT's or any of its Subsidiaries'
employees.
(t) INSURANCE POLICIES OF AMT. Set forth on SCHEDULE 5(t) is a
complete and correct list and description of all policies of insurance covering
AMT's or any of its Subsidiaries' assets, operations or business. AMT has
heretofore delivered to G-R true and complete copies of all policies of
insurance listed on SCHEDULE 5(t). The Stockholders have obtained a written
commitment from Erie Insurance Group in a letter dated December 31, 2001 to
continue to provide Commercial Property and General Liability Coverages for AMT.
14
(u) EMPLOYEE BENEFIT PLANS OF AMT.
(i) SCHEDULE 5(u) sets forth a complete list of (A) all
"employee benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (B) all other severance pay,
salary continuation, bonus, incentive, stock option, retirement, pension, profit
sharing or deferred compensation plans, contracts, programs, funds, or
arrangements of any kind, and (C) all other employee benefit plans, contracts,
programs, funds, or arrangements (whether written or oral, qualified or
nonqualified, funded or unfunded, foreign or domestic, currently effective or
terminated) and any trust, escrow, or similar agreement related thereto, whether
or not funded, in respect of any present or former employees, directors,
officers, stockholders, consultants, or independent contractors of AMT and its
Subsidiaries (or, where indicated below, any trade or business (whether or not
incorporated) (x) under common control within the meaning of Section 4001(b)(1)
of ERISA with AMT or any of its Subsidiaries or (y) which together with AMT and
its Subsidiaries is treated as a single employer under Section 414(t) of the
Code (the "Controlled Group")) or with respect to which AMT and its Subsidiaries
(or, where indicated below, the Controlled Group) has made or is required to
make payments, transfers, or contributions (all of the above being hereinafter
individually or collectively referred to as "Employee Plan" or "Employee Plans,"
respectively). Neither AMT nor any of its Subsidiaries has liability with
respect to any plan, arrangement or practice of the type described in the
preceding sentence other than the Employee Plans.
(ii) AMT has heretofore delivered to G-R true and complete
copies of: (A) all current and prior plan documents for each Employee Plan or,
in the case of an unwritten Employee Plan, a written description thereof, (B)
all determination letters from the Internal Revenue Service ("IRS") with respect
to any of the Employee Plans, (C) all current and prior summary plan
descriptions, summaries of material modifications, annual reports, and summary
annual reports, (D) all current and prior trust agreements, insurance contracts,
and other documents relating to the funding or payment of benefits under any
Employee Plan, and (E) any other documents, forms or other instruments relating
to any Employee Plan reasonably requested by G-R.
(iii) Each Employee Plan has been maintained, operated, and
administered in compliance with its terms and any related documents or
agreements and in compliance with all applicable laws. There have been no
prohibited transactions or breaches of any of the duties imposed on
"fiduciaries" (within the meaning of Section 3(21) of ERISA) by ERISA with
respect to the Employee Plans that could result in any liability or excise tax
under ERISA or the Code being imposed on AMT or any of its Subsidiaries.
(iv) Each Employee Plan intended to be qualified under Section
401(a) of the Code is so qualified and has heretofore been determined by the IRS
to be so qualified, and each trust created thereunder has heretofore been
determined by the IRS to be exempt from tax under the provisions of Section
501(a) of the Code, and nothing has occurred since the date of any such
determination that could reasonably be expected to give the IRS grounds to
revoke such determination.
15
(v) Except as set forth on SCHEDULE 5(u), neither AMT nor any
of its Subsidiaries does currently have and at no time in the past has had an
obligation to contribute to a "defined benefit plan" as defined in Section 3(35)
of ERISA, a pension plan subject to the funding standards of Section 302 of
ERISA or Section 412 of the Code, a "multiemployer plan" as defined in Section
3(37) of ERISA or Section 414(f) of the Code, or a "multiple employer plan"
within the meaning of Section 210(a) of ERISA or Section 413(c) of the Code.
(vi) With respect to each group health plan benefiting any
current or former employee of AMT or any Subsidiary of AMT or any member of the
Controlled Group that is subject to Section 4980B of the Code, or was subject to
Section 162(k) of the Code, AMT, its Subsidiaries and each member of the
Controlled Group has complied with (A) the continuation coverage requirements of
Section 4980B of the Code and Section 162(k) of the Code, as applicable, and
Part 6 of Subtitle B of Title I of ERISA, and (B) the Health Insurance
Portability and Accountability Act of 1996, as amended.
(vii) With respect to each group health plan that is subject
to Section 1862(b)(1) of the Social Security Act (42 U.S.C. ss. 1395y(b)), AMT
and its Subsidiaries have complied with the secondary payer requirements of
Section 1862(b)(1) of such Act.
(viii) No Employee Plan is or at any time was funded through a
"welfare benefit fund" as defined in Section 419(e) of the Code, and no benefits
under any Employee Plan are or at any time have been provided through a
voluntary employees' beneficiary association (within the meaning of subsection
501(c)(9) of the Code) or a supplemental unemployment benefit plan (within the
meaning of Section 501(c)(17) of the Code).
(ix) All contributions, transfers, and payments in respect of
any Employee Plan, other than transfers incident to an incentive stock option
plan within the meaning of Section 422 of the Code, have been or are fully
deductible under the Code.
(x) There is no pending or, to the Knowledge of the
Stockholders, threatened assessment, complaint, proceeding, or investigation of
any kind in any court or government agency with respect to any Employee Plan
(other than routine claims for benefits), nor, to the Knowledge of the
Stockholders, is there any basis for one.
(xi) All (A) insurance premiums required to be paid with
respect to, (B) benefits, expenses, and other amounts due and payable under, and
(C) contributions, transfers, or payments required to be made to, any Employee
Plan prior to the Closing will have been paid, made or accrued on or before the
Closing.
(xii) With respect to any insurance policy providing funding
for benefits under any Employee Plan, (A) there is no liability of AMT or any of
its Subsidiaries, in the nature of a retroactive rate adjustment, loss sharing
arrangement, or other actual or contingent liability, nor would there be any
such liability if such insurance policy was terminated on the date of the
Closing, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
Knowledge of the Stockholders, no such proceedings with respect to any insurer
are imminent.
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(xiii) No Employee Plan provides benefits, including, without
limitation, death or medical benefits, beyond termination of service or
retirement other than (A) coverage mandated by law, (B) death or retirement
benefits under any qualified Employee Plan, or (C) deferred compensation
benefits reflected on the books of AMT or any of its Subsidiaries.
(xiv) The execution, delivery and performance of this
Agreement will not (A) constitute a stated triggering event under any Employee
Plan that will result in any payment (whether of severance pay or otherwise)
becoming due from AMT or any of its Subsidiaries to any officer, employee or
former employee (or dependents of any such officer or employee), or (B)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any employee, officer or director of AMT or any of its
Subsidiaries.
(xv) Neither AMT nor any of its Subsidiaries has agreed or
committed to institute any plan, program, arrangement or agreement for the
benefit of employees or former employees of AMT or any of its Subsidiaries other
than the Employee Plans, or to make any amendments to any of the Employee Plans.
(xvi) AMT and its Subsidiaries have reserved all rights
necessary to amend or terminate each of the Employee Plans without the consent
of any other person.
(xvii) No Employee Plan provides benefits to any individual
who is not a current or former employee of AMT or any of its Subsidiaries, or
the dependents or other beneficiaries of any such current or former employee.
(xviii) All contributions required to be paid with respect to
workers' compensation arrangements of AMT or any of its Subsidiaries have been
made or accrued as a liability on AMT's audited financial statements (as of
October 31, 2001).
(xix) No amount that could be received (whether in cash or
property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer or director of AMT or
any of its Subsidiaries or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Employee Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code). The disallowance of a deduction under Section
162(m) of the Code for employee remuneration will not apply to any amount paid
or payable by AMT or any of its Subsidiaries under any contract, Employee Plan,
program, arrangement or understanding currently in effect.
(xx) The term "Foreign Plan" shall mean any Employee Plan that
is maintained outside of the United States. Neither AMT nor any Subsidiary of
AMT has a Foreign Plan.
(v) PRODUCT LIABILITY OF AMT. Except as set forth on SCHEDULE
5(r) ("Litigation of AMT"), neither AMT nor any of its Subsidiaries has received
any written notice of any claim or demand against AMT or any of its Subsidiaries
(and to the Knowledge of the Stockholders there are no facts or circumstances
for any present or future action, suit, proceeding, hearing,
17
investigation, charge, complaint, claim or demand against AMT or any of its
Subsidiaries giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession or use of any
product manufactured, sold, leased or delivered by AMT or any of its
Subsidiaries.
(w) CONTRACTS OF AMT. Except as otherwise listed or described
in another Schedule to this Agreement, set forth on SCHEDULE 5(w) is a complete
and correct list of each contract, agreement, lease, option, commitment, course
of conduct or dealing, power of attorney, arrangement, understanding and
undertaking, whether oral or written, which involve payments in excess of $1,000
per month or $12,000 in the aggregate annually and to which AMT or any
Subsidiary of AMT is a party or by which any of their respective assets are
bound (collectively, the "Contracts"). AMT has heretofore delivered to G-R a
copy of each of the written Contracts and a written summary of the terms and
conditions of each of the oral Contracts. Except as identified on SCHEDULE 5(w),
each of the written and executed Contracts is in full force and effect, is a
valid and legally binding obligation of AMT or any Subsidiary of AMT and no
event has occurred which constitutes or, with the giving of notice or passage of
time, or both, would constitute a default thereunder or a breach thereof by any
party thereto, or which would result in the acceleration of the performance of
an obligation thereunder. To the Knowledge of the Stockholders, no customer or
supplier plans to terminate its course of conduct or dealing or other unwritten
or unexecuted Contract with AMT after the Closing Date. After the Closing Date,
neither AMT, any Subsidiary of AMT nor G-R will have any obligations for sales
of power tools or parts under the Sears contract described on SCHEDULE 5(W).
(x) BROKERS, FINDERS OR AGENTS OF AMT. Except as set forth on
SCHEDULE 5(x), neither AMT nor any of its Subsidiaries has expressly or
impliedly engaged any broker, finder, agent or other intermediary with respect
to any transaction contemplated by this Agreement.
(y) ACCURACY OF INFORMATION FURNISHED. Any information
contained in this Agreement or the Schedules to this Agreement does not contain
any untrue statement of a material fact and does not omit to state any material
fact required to be stated herein or therein or necessary to make any statement
herein or therein, in light of the circumstances under which such statement is
made, not misleading. Set forth on SCHEDULE 5(y) is certain information
furnished prior to or on the Closing Date to G-R or its representatives by any
of the Stockholders, AMT or their respective representatives or advisors. At the
time of delivery, when taken as a whole with all of the information referenced
on SCHEDULE 5(y) and the information set forth on the Schedules to this
Agreement, such information did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated therein
or necessary to make any statement therein, in light of the circumstances under
which such statement was made, not misleading.
6. REPRESENTATIONS AND WARRANTIES OF G-R. G-R represents and
warrants to the Stockholders that the statements contained in this Section 6 are
complete and correct as of the date of the Closing.
(a) AUTHORIZATION OF TRANSACTION. G-R is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Ohio. G-R has the full power and
18
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by G-R have
been duly authorized by all necessary action on the part of G-R. This Agreement
has been duly executed and delivered by G-R and, assuming due authorization,
execution and delivery by AMT and the Stockholders, constitutes the valid and
legally binding obligation of G-R, enforceable against G-R in accordance with
its terms except as (i) such enforcement may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. G-R
is not required to give any notice to, make any filing with, or obtain any
authorization, consent or approval of (except for the authorization and approval
of its Board of Directors which has been obtained), any Person in connection
with the execution, delivery and performance of this Agreement.
(b) NONCONTRAVENTION. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any charter or bylaw provision, constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency or court, to which G-R 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
G-R is a party or by which it is bound or to which any of its assets is subject.
(c) INVESTMENT IN THE SHARES. G-R is not purchasing the Shares
with a view to, or for sale in connection with, any distribution thereof within
the meaning of the Securities Act of 1933, as amended.
(d) BROKERS' FEES. G-R has no Liability to pay any fees,
expenses or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Stockholders could
become liable or obligated.
COVENANTS AND AGREEMENTS
------------------------
7. COVENANTS OF THE PARTIES. The Parties agree as follows with
respect to the period of time after the Closing.
(a) TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between G-R and the Stockholders for certain tax
matters following the Closing:
(i) TAX PERIODS ENDING ON OR BEFORE THE CLOSING. The
Stockholders shall prepare or cause to be prepared all Tax Returns for AMT for
all periods ending on or prior to the Closing which are filed after the Closing.
The Stockholders shall permit AMT and G-R to review and comment on each such Tax
Return described in the preceding sentence prior to filing. AMT and G-R shall
file such Tax Returns as prepared by the Stockholders (subject to any changes
agreed
19
upon by the Stockholders and AMT and G-R) on or before the due date for filing
such Tax Returns (including any applicable extension periods thereof) and shall
also file any requests for any extensions to file such Tax Returns if so
requested in writing by the Stockholders. The Stockholders shall reimburse G-R
for Taxes of AMT with respect to such periods within 15 days after payment by
G-R or AMT of such Taxes to the extent such Taxes are not accrued on the Closing
Balance Sheet.
(ii) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE
CLOSING. G-R shall prepare or cause to be prepared and timely file or cause to
be timely filed any Tax Returns of AMT for Tax periods which begin before the
Closing and end after the Closing. The Stockholders shall pay to G-R within 15
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing. For purposes of this Section, in the case
of any Taxes that are imposed on a periodic basis and are payable for a Taxable
period that includes (but does not end on) the Closing, the portion of such Tax
which relates to the portion of such Taxable period ending on the Closing shall
(A) in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Taxable period
multiplied by a fraction the numerator of which is the number of days in the
Taxable period ending on the Closing and the denominator of which is the number
of days in the entire Taxable period, and (B) in the case of any Tax based upon
or related to income or receipts be deemed equal to the amount which would be
payable if the relevant Taxable period ended on the Closing. Any credits
relating to a Taxable period that begins before and ends after the Closing shall
be taken into account as though the relevant Taxable period ended on the
Closing. All determinations necessary to give effect to the foregoing
allocations shall be made in a manner consistent with prior practices of AMT.
(iii) PREPARATION OF TAX RETURNS. All Tax Returns for periods
(i) ending on or before the Closing Date and filed after the Closing Date or
(ii) starting before the Closing Date and ending after the Closing Date shall be
prepared in a manner that is substantially consistent with the historical
practices of AMT.
(iv) COOPERATION ON TAX MATTERS. G-R, AMT and the Stockholders
shall cooperate fully, as and to the extent reasonably requested by one or more
of the other Parties, in connection with the filing of Tax Returns pursuant to
this Section and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. G-R, AMT and the Stockholders agree (A) to
retain all books and records with respect to Tax matters pertinent to AMT
relating to any taxable period beginning before the Closing until the expiration
of the statute of limitations (and, to the extent notified by G-R or the
Stockholders, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any taxing authority,
and (B) to give the other parties reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if any of
the other parties so request, G-R, AMT or the Stockholders, as the case may be,
shall allow the other party to take possession of such books and records.
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(v) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements with respect to or involving AMT shall be terminated as of
the Closing and, after the Closing, AMT shall not be bound thereby or have any
liability thereunder.
(vi) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Stockholders when due, and the Stockholders will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, G-R will, and will cause its affiliates to, join in
the execution of any such Tax Returns and other documentation.
(vii) TAX REFUNDS OR CREDITS. If AMT or G-R receives any tax
refund or credit with respect to AMT that was not shown or reflected on the face
of the Closing Balance Sheet and which is attributable to any period prior to
the Closing, AMT or G-R shall within 5 days of AMT's receipt of such refund or
credit pay to the Stockholders 100% of any such refund or credit after deducting
all reasonable out-of-pocket costs of AMT and G-R incurred to obtain the refund
or credit.
(b) WARRANTY OBLIGATIONS. Subject to Section 7(e), below:
(i) If, during the twelve-month period after the Closing Date
(the "Warranty Period"), the Current Customer Warranty Cost Percentage for
product shipped to a Significant Customer exceeds the Historical Warranty Cost
Percentage, then the Stockholders, on a joint and several basis, shall indemnify
AMT (or G-R as the case may be) for the Excess Significant Customer Current
Warranty Cost with regard to any such Significant Customer. Notwithstanding
anything contained in this Agreement, the Stockholders' indemnification
obligation under this Section 7(b)(i) shall be subject to the limitations
described in Section 9 of this Agreement, including but not limited to, Section
9(d)(i).
The following definitions shall apply to this Section 7(b)(i):
"Current Customer Warranty Cost Percentage" shall mean the amount of
the Significant Customer Warranty Cost with respect to a Significant
Customer during the Warranty Period, divided by the gross sales
invoiced to such Significant Customer during the Warranty Period.
"Historical Warranty Cost Percentage" shall mean the amount of the
Significant Customer Warranty Cost with respect to a Significant
Customer during the preceding calendar year, divided by the gross sales
invoiced to such Significant Customer during the preceding calendar
year.
"Significant Customer Warranty Cost" shall mean the amount that AMT
credits or refunds to a Significant Customer for products warranted
including adjustments due to product damage occurring in shipment and
all other adjustments, refunds and/or credits mutually agreed between
the Significant Customer and AMT,
21
determined in accordance with GAAP consistent with AMT's past
practice; PROVIDED, HOWEVER, that any such amounts described above
associated with a warranty claim that is not within the scope of AMT's
warranty and adjustment practices to such Significant Customer or is
not consistent with AMT's warranty practices during the one-year
period prior to the Closing, shall be excluded from the definition of
Significant Customer Warranty Cost.
"Excess Significant Customer Current Warranty Cost" shall mean, with
regard to a Significant Customer, the dollar amount calculated with the
following formula, (i) the Current Customer Warranty Cost Percentage
during the Warranty Period minus the Historical Warranty Cost
Percentage, (ii) multiplied by the gross sales invoiced to that
Significant Customer for the Warranty Period; PROVIDED, HOWEVER, if the
resulting calculation of (i) above is a negative number, then the
Excess Significant Customer Current Warranty Cost shall be deemed to be
zero.
"Significant Customer" shall mean Grainger, MSC or McMaster Xxxx.
(ii) If, at the end of each of the first two-twelve-month
periods after the Closing Date (each of the two twelve-month periods being an
"Extended Warranty Period"), AMT incurs (i) any Other Customer Warranty Cost for
product manufactured for an Other Customer prior to the Closing Date or (ii) any
Significant Customer Recall Cost for any product shipped to a Significant
Customer prior to the Closing Date, then the Stockholders, on a joint and
several basis, shall indemnify AMT (or G-R as the case may be) for such Other
Customer Warranty Cost and/or such Significant Customer Recall Cost.
Notwithstanding anything in this Agreement, the Stockholders' indemnification
obligation under this Section 7(b)(ii) shall be subject to the limitations
described in Section 9 of this Agreement, including but not limited to, Section
9(d)(i).
The following definition shall apply to this Section 7(b)(ii):
"Other Customer Warranty Cost" shall mean the lesser of (i) the dollar
amount that AMT credits or refunds to an Other Customer for products
warranted and (ii) the standard manufacturing cost to AMT for producing
the replacement product determined in accordance with GAAP consistent
with AMT's past practices, but shall not include any costs for use of
AMT's personnel other than direct shop labor costs; PROVIDED, HOWEVER,
that any such amounts described in (i) or (ii) above associated with a
warranty claim that is not within the scope of AMT's warranty to such
Other Customer or is not consistent with AMT's warranty practices
during the one-year period prior to the Closing, shall be excluded from
the definition of Other Customer Warranty Cost; PROVIDED FURTHER,
HOWEVER, that with respect to the current twelve-month Extended
Warranty Period, any amounts described in (i) or (ii) above associated
with products manufactured after the Closing shall be excluded from the
definition of Other Customer Warranty Cost.
"Other Customer" shall mean any customer other than a "Significant
Customer" as defined under section 7(b)(i).
22
"Significant Customer Recall Cost" shall mean the actual cost incurred
by AMT during either Extended Warranty Period with respect to any
products shipped prior to Closing to any Significant Customer that are
recalled after the Closing Date.
(c) INSURANCE POLICIES. For a period of two years after the
Closing, G-R will use its best efforts to cause AMT to continue to be covered
under its current insurance policies (as of the Closing Date) or comparable
policies (with respect to the amount and type of coverage), to the extent such
current policies or comparable policies can be obtained at the same or
substantially the same cost or are otherwise available.
(d) CERTIFIED COPIES OF INSURANCE POLICIES. The Stockholders'
Representative shall cause AMT to obtain and deliver to G-R certified copies of
the insurance policies listed on SCHEDULE 5(t) as soon as practicable after
Closing, but in no event later than 14 business days after the Closing Date.
(e) CERTAIN FOREIGN-SOURCED PRODUCTS.
(i) Notwithstanding anything to the contrary in this
Agreement, if AMT (or G-R as the case may be) incurs Adverse Consequences during
the period beginning on the Closing Date and ending two years after the Closing
Date in connection with products that AMT imported from outside the United
States and distributed in the United States that are surface-coated with
Hazardous Materials ("Affected Foreign Products"), then the Stockholders, on a
joint and several basis, shall indemnify AMT (or G-R as the case may be) for
such Adverse Consequences. Notwithstanding anything in this Agreement, the
Stockholders' indemnification obligation under this Section 7(e) shall be
subject to the limitations described in Section 9 of this Agreement.
(ii) Notwithstanding anything to the contrary contained in
Section 7(b) hereof, any Adverse Consequences related to the Affected Foreign
Products, as described in Section 7(e)(i), (A) shall not be taken into account
when evaluating matters covered by Section 7(b), including but not limited to
the calculation of the Current Customer Warranty Cost Percentage, the Historical
Warranty Cost Percentage, the Significant Customer Warranty Cost, the Excess
Significant Customer Warranty Cost, the Other Customer Warranty Cost and the
Significant Customer Recall Cost and (B) shall instead be governed by the remedy
provided in Section 7(e)(i).
CONDITIONS
----------
8. CONDITIONS TO CLOSING.
(a) CONDITION TO THE OBLIGATIONS OF THE PARTIES. The
obligations of each of the Parties to effect the transactions contemplated by
this Agreement are subject to the satisfaction or waiver of the following
condition: 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,
23
ruling, or charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation; (iii) affect adversely
the right of G-R to own the Shares and to control AMT; or (iv) affect adversely
the right of AMT to own its assets and to operate its business (and no such
injunction, judgment, order, decree, ruling or change shall be in effect).
(b) CONDITIONS TO THE OBLIGATION OF G-R. The obligation of G-R
to effect the transactions to be performed by it in connection with the Closing
is subject to the satisfaction or G-R's waiver of the following conditions:
(i) The representations and warranties of the Stockholders set
forth in Section 5 shall be true and correct at and as of the Closing, and the
Stockholders shall have delivered to G-R a certificate to that effect in the
form of EXHIBIT B.
(ii) Each of the Stockholders that is a corporation or a trust
shall have delivered to G-R written evidence that such Stockholder has
authorized and approved the execution, delivery and performance by it of this
Agreement.
(iii) Each of the Stockholders that intends to sign this
Agreement by a power of attorney shall have delivered to G-R a signed power of
attorney in a form acceptable to G-R.
(iv) AMT shall have delivered to G-R resolutions of its
directors and stockholders unanimously authorizing and approving AMT's
execution, delivery and performance of this Agreement.
(v) AMT shall have delivered to G-R a Certificate of Good
Standing relating to AMT from the Secretary of State of Delaware and the
Secretary of the Commonwealth of Pennsylvania dated as of a date not more than
five business days prior to the Closing Date.
(vi) G-R shall have received written resignations, effective
as of the Closing, from each of the directors and officers of AMT.
(vii) G-R shall have received a duly executed Release, in the
form of EXHIBIT C, from each of the Stockholders.
(viii) G-R shall have received a duly executed Release, in the
form of EXHIBIT D, from Xxxxx X. Xxxxxx with respect to him having been a
director and officer of AMT.
(ix) G-R shall have received a duly executed Release, in the
form of EXHIBIT E, from Xxxxxx Xxxxxx with respect to him having been a director
and officer of AMT.
(x) G-R shall have received the stock certificates
representing the Shares from the Stockholders as contemplated by Section 1(b).
(xi) G-R shall have received a receipt from the Stockholders
evidencing the payment of the Purchase Price as contemplated by Section 2(a).
24
(xii) G-R shall have received a duly executed Assignment, in
the form of EXHIBIT F, from Xxxxx X. Xxxxxx to AMT with respect to intellectual
property rights and interests.
(xiii) The Stockholders, AMT and G-R shall have entered into a
Noncompetition Agreement, in the form of EXHIBIT G.
(xiv) The Stockholders' Representative shall have entered into
the Joint Escrow Account Agreement.
(xv) AMT shall have delivered to G-R the original copies of
(A) the deeds of title pertaining to all real property owned by AMT and the
leases pertaining to all real property of which AMT is a lessor or a lessee; (B)
the certificates of title to all motor vehicles and trailers owned by AMT and
the leases pertaining to all motor vehicles and trailers leased by AMT; (C) (i)
original patents and governmental registration certificates for such patents and
(ii) certificates of registration for tradenames and trademarks, all of which
reflect the ownership of all of the Intellectual Property set forth on SCHEDULE
5(q); and (D) all corporate record books and all stock record books of AMT.
(xvi) AMT shall have delivered to G-R a letter from Xxxxx X.
Xxxxxx to G-R, in form and substance reasonably satisfactory to G-R, which
letter shall include the last dates that replacement parts and tools were
manufactured and sold by AMT to Sears.
(c) CONDITIONS TO THE OBLIGATIONS OF THE STOCKHOLDERS. The
obligations of the Stockholders to effect the transactions to be performed by
them in connection with the Closing is subject to the satisfaction or their
waiver of the following conditions:
(i) The representations and warranties of G-R set forth in
Section 6 shall be true and correct as of the Closing, and G-R shall have
delivered to the Stockholders a certificate to that effect in the form of
EXHIBIT H.
(ii) The Stockholders shall have received the Purchase Price
as contemplated by Section 2(a).
(iii) G-R and Xxxxxxx Xxxxxx shall have entered into the Joint
Escrow Account Agreement.
(iv) G-R shall have furnished the Stockholders with a receipt
confirming delivery to G-R of the certificates representing the Shares.
(v) G-R shall have delivered to the Stockholders'
Representative resolutions of its directors authorizing and approving G-R's
execution, delivery and performance of this Agreement.
(vi) G-R shall have delivered to the Stockholders'
Representative a Certificate of Good Standing relating to G-R from the Secretary
of State of Ohio dated as of a date not more than 30 business days prior to the
Closing Date.
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REMEDIES
--------
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Parties contained in this Agreement shall
survive the Closing (unless the damaged Party had actual knowledge of any
misrepresentation or breach of warranty at the time of the Closing) and continue
in full force and effect for the following periods:
(i) The representations and warranties of the Stockholders in
Sections 5(c) ("The Shares") and 5(h) ("Capitalization of AMT") shall survive
forever.
(ii) The representations and warranties of the Stockholders in
Section 5(p) ("Tax Matters of AMT") shall survive the Closing for the period of
any applicable statutes of limitations (taking into account any extensions or
waivers thereof).
(iii) All other representations and warranties of the
Stockholders in this Agreement shall survive for two years after the Closing and
thereafter terminate and be of no further force or effect.
(iv) The covenants and agreements of the Stockholders in this
Agreement shall survive the Closing in accordance with their terms.
Time shall be deemed of the essence with regard to the
survival periods set forth in this Section 9.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF G-R. Subject to
the terms and conditions of this Section 9, after the Closing Date, the
Stockholders shall indemnify, defend and hold harmless AMT, G-R, its affiliates
and their respective officers, directors, agents and employees (collectively,
the "G-R Indemnified Parties") from and against, and reimburse any G-R
Indemnified Party for, any and all Adverse Consequences that any G-R Indemnified
Party may at any time suffer or incur or become subject to resulting from or
arising out of (i) any inaccuracy in any representation or warranty made by the
Stockholders in this Agreement, (ii) any failure by the Stockholders to perform
any of their covenants or agreements contained in this Agreement, and (iii) any
liability of AMT for any Selling Expenses.
For purposes of Section 9(b), in determining whether there has been a breach of
a representation or warranty made by the Stockholders in this Agreement or in
determining the amount of any Adverse Consequences in connection therewith, each
representation and warranty of the Stockholders shall be deemed to have been
made without any "materiality" qualification (including "Material Adverse
Effect," "material," "in all material respects," or other formulations)
contained in such representation or warranty or with respect to the specific
dollar or percentage limitations in the representations and warranties in
Sections 5(j), 5(l), 5(m), 5(n) and 5(y).
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF STOCKHOLDERS.
Subject to the terms and conditions of this Section 9, after the Closing Date,
G-R shall indemnify, defend and hold
26
harmless the Stockholders and each of their respective successors, assigns,
heirs, executors and personal representatives (collectively, the "Stockholder
Indemnified Parties") from and against, and reimburse any Stockholder
Indemnified Party for, any and all Adverse Consequences that any Stockholder
Indemnified Party may at any time suffer or incur or become subject to resulting
from or arising out of (i) any inaccuracy in any representation or warranty made
by G-R in this Agreement, or (ii) any failure by G-R to perform any of its
covenants or agreements contained in this Agreement.
For purposes of Section 9(c), in determining whether there has
been a breach of a representation or warranty made by G-R in this Agreement or
in determining the amount of any Adverse Consequences in connection therewith,
each representation and warranty of G-R shall be deemed to have been made
without any "materiality" qualification (including "Material Adverse Effect,"
"material" and "in all material respects," or other formulations) contained in
such representation or warranty.
(d) LIMITATIONS ON G-R'S RIGHT TO INDEMNIFICATION.
(i) Subject to Section 9(d)(ii) below, no Stockholder shall
have any liability under Section 9(b), (A) unless and until the amount of all
Adverse Consequences affecting the G-R Indemnified Parties (in the aggregate)
exceeds $50,000 (the "Deductible"), in which event the Stockholders shall
indemnify the G-R Indemnified Parties solely to the extent such Adverse
Consequences exceed the Deductible (subject to clause (B)) and (B) to the extent
the aggregate amount of such payments for Adverse Consequences to the G-R
Indemnified Parties (in the aggregate) would exceed a $1,000,000 aggregate
ceiling (the "Cap") (after which point no Stockholder will have any further
obligation to indemnify any G-R Indemnified Party from and against further such
Adverse Consequences).
(ii) The Deductible provided for in Section 9(d)(i) shall not
apply to any claim for Adverse Consequences made pursuant to Section 9(b)(iii),
to any claim for Adverse Consequences resulting from breach of those
representations and warranties contained in Sections 5(c), 5(h), 5(k) and 5(p)
or to any claim for Adverse Consequences resulting from Stockholders'
indemnification obligations under Section 7(e). The Cap provided for in Section
9(d)(i) shall not apply to any claim for Adverse Consequences made pursuant to
Section 9(b)(iii) or to any claim for Adverse Consequences resulting from
breaches of those representations and warranties contained in Sections 5(c),
5(h) and 5(p).
(e) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") which
may give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 9, then the Indemnified Party shall
promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any indemnifying
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced; provided further that notwithstanding the foregoing, the Parties
acknowledge and agree that any Third Party Claim which may give rise to an
27
indemnification claim shall be barred in the event that written notice of such
claim to the Indemnifying Party occurs after the survival periods described in
Section 9(a) hereof.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will assume the defense of the Third Party Claim and, (B) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 9(e)(ii) above, (A)
the Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party, which shall not be withheld unreasonably, and
(C) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party, which shall not be withheld
unreasonably.
(iv) In the event any of the conditions in Section 9(e)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim, provided that the Indemnified Party
obtains the consent of the Indemnifying Party to such judgment or settlement,
which shall not be withheld unreasonably, (B) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (C) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 9.
(f) PROCESS FOR RECOVERY BY G-R INDEMNIFIED PARTIES. If any
G-R Indemnified Party is entitled to indemnification under this Agreement, such
G-R Indemnified Party shall seek to collect the amount for such claim from the
Escrow Amount and the Stockholders as follows: (i) first, by submitting a claim
therefor against the Escrow Amount, if any, then being held pursuant to the
Joint Escrow Account Agreement, and (ii) second, subject to Section 9(d), if the
Escrow Amount has been depleted and any G-R Indemnified Party is entitled to
indemnification, directly against the Stockholders.
(g) CALCULATION OF ADVERSE CONSEQUENCES. The amount of any
Adverse Consequences under this Section 9 shall be reduced by any recovery under
any insurance policy (including, without limitation, the Environmental Insurance
Policy) if and when actually received in respect of such Adverse Consequences.
Any G-R Indemnified Party or Stockholder Indemnified Party, as the case may be,
shall use commercially reasonable efforts to collect any amounts available under
any such insurance policy and from such other party alleged to have
responsibility. If a G-R Indemnified Party or Stockholder Indemnified Party
receives an amount
28
under insurance coverage with respect to Adverse Consequences at any time
subsequent to any indemnification provided by an indemnitor pursuant to this
Section 9, then such G-R Indemnified Party or Stockholder Indemnified Party
shall promptly reimburse the indemnitor for any payment made or expense incurred
by such indemnitor in connection with providing such indemnification up to such
amount actually received by the G-R Indemnified Party or Stockholder Indemnified
Party. The Parties agree that the foregoing shall not affect the subrogation
rights of any insurance companies making payment thereunder.
(h) EXCLUSIVE REMEDY. The Stockholders and G-R hereby
acknowledge and agree that, after the Closing, the foregoing indemnification
provisions in this Section 9 shall be the exclusive remedy of the Stockholders
and G-R with respect to the Stockholders and the transactions contemplated by
this Agreement, except that the limitations set forth in this Section 9(h) shall
not apply to (i) fraud by any Party, (ii) any claim made pursuant to Section
9(b)(iii) or (iii) any claim resulting from breaches of those representations
and warranties contained in Sections 5(c), 5(h) and 5(p). In such instances, the
foregoing indemnification provisions are in addition to, and not in derogation
of, any statutory, equitable or common law remedy any Party may have for any
such claims. Notwithstanding anything to the contrary contained herein, the
Parties acknowledge and agree that any matter that may give rise to an
indemnification claim by any party under this Section 9 shall be barred in the
event that written notice of such claim to the indemnitor occurs after the
survival periods described in Section 9(a) hereof.
GENERAL PROVISIONS
------------------
10. STOCKHOLDERS' REPRESENTATIVE. For purposes of payment due
to the Stockholders, amendments, notice and other requirements under this
Agreement and the Joint Escrow Account Agreement, the Stockholders hereby
appoint Xxxxx X. Xxxxxx (the "Stockholders' Representative") to serve as their
agent and attorney-in-fact with full power and authority (including power of
substitution), in the name of and for and on behalf of each of the Stockholders,
or in their own names as Stockholders' Representative, to take all actions
required or permitted under this Agreement and the Joint Escrow Account
Agreement, including the giving and receiving of all service of process,
reports, notices and consents and the signing of all certificates, notices,
instructions and other documents and the making of all determinations
thereunder. In the event Xxxxx X. Xxxxxxx dies, becomes incapacitated or is
otherwise unable to serve as Stockholders' Representative, his successor shall
be Xxxxxx Xxxxxx. In the event Xxxxxx Xxxxxx dies, becomes incapacitated or is
otherwise unable to serve as Stockholders' Representative, his successor shall
be designated by a majority of the remaining Stockholders; PROVIDED, HOWEVER, if
such person so designated as Stockholders' Representative is not a Stockholder,
such person shall also be subject to the prior consent of G-R, such consent not
to be unreasonably withheld. The authority conferred by this Section 10 shall be
deemed an agency coupled with an interest, and all authority conferred hereby is
irrevocable and not subject to termination by any of the Stockholders, or by
operation of law, whether by the death or incapacity of any of the Stockholders,
or the occurrence of any other event. If any of the Stockholders should die or
become incapacitated, or if any other such event should occur, any action taken
by the Stockholders' Representative shall be as valid as if such death or
incapacity, termination or other event had not occurred regardless or whether or
not the Stockholders'
29
Representative, AMT, G-R or any of the Stockholders shall have received notice
of such death, incapacity, termination or other event. Any notice given to the
Stockholders' Representative under this Agreement shall constitute effective
notice to the Stockholders, and G-R may rely on any notice, consent, election or
other communication received from the Stockholders' Representative as if such
notice, consent, election or other communication had been received from each of
the Stockholders. G-R shall not be liable to the Stockholders for any action
taken or omitted to be taken by the Stockholders' Representative under this
Agreement or in connection therewith.
11. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. Neither the
Stockholders nor AMT shall issue any press release or make any public
announcement relating to the subject matter of this Agreement without the prior
written approval of G-R.
12. ASSIGNMENT AND THIRD PARTY BENEFICIARIES. This Agreement
shall inure to the benefit of and be binding upon the Parties. This Agreement
shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns. No Party may make any
assignment of this Agreement or any of its rights or interests herein without
the prior written consent of the others; provided, however, that G-R may assign
this Agreement or any of its rights or interests herein to one or more entities
controlled by, controlling or under common control with G-R.
13. AMENDMENTS AND WAIVERS. This Agreement may be amended at
any time or from time to time by a writing which refers to this Agreement and is
signed by the Stockholders' Representative on behalf of all of the Stockholders,
AMT and G-R. Any waiver by the Stockholders, AMT or G-R of any breach of or
failure to comply with any provision of this Agreement by one of the other
Parties shall be in writing and shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement.
14. HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
15. SEVERABILITY. Each Section, subsection, paragraph and
subparagraph of this Agreement constitutes a separate and distinct undertaking,
covenant and/or provision hereof. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. In the event that any provision of this Agreement shall be
determined to be unlawful, such provision shall be deemed severed from this
Agreement, but every other provision of this Agreement shall remain in full
force and effect, and in substitution for any such provision held unlawful there
shall be substituted a provision of similar import reflecting the original
intent of the Parties to the extent permissible under applicable law.
16. SCHEDULES AND EXHIBITS. The Schedules and Exhibits
identified in this Agreement are incorporated herein by reference and made a
part of this Agreement for all purposes.
30
17. CONSTRUCTION. The definitions in this Agreement shall
apply equally to both the singular and plural of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. 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 of the Parties by virtue of the
authorship of any of the provisions of this Agreement.
18. NOTICES. All notices and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have
been duly given when delivered in person or when dispatched by electronic
facsimile transfer (if confirmed in writing by mail simultaneously dispatched)
or one business day after having been dispatched by a nationally recognized
overnight courier service to the appropriate individual at the address or
facsimile number specified below:
If to the Stockholders, to:
Xx. Xxxxx X. Xxxxxx
President
American Machine and Tool Co., Inc. of
Pennsylvania
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
with a copy to:
Xxxxx X. Xxxxxxxxxx, Esq.
Blank, Rome, Xxxxxxx & XxXxxxxx LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
31
If to AMT or G-R, to:
Xx. Xxxxxx X. Xxxxxxxxxx
Vice President, Corporate Development and
Secretary
The Xxxxxx-Xxxx Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Corporate Counsel and Assistant Corporate
Secretary
The Xxxxxx-Xxxx Company
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
(000) 000-0000 (phone)
(000) 000-0000 (fax)
19. ENTIRE AGREEMENT. This Agreement, including the Schedules
and Exhibits referred to herein, embodies the entire agreement among the Parties
in relation to the subject matter hereof, and supersedes all prior letters of
intent, representations, warranties, covenants, understandings or agreements,
whether oral or written, relating to the subject matter hereof.
20. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.
21. RESOLUTION OF CLAIMS.
(a) Except as provided in Section 21(c), any dispute arising
out of or relating to this Agreement, the breach, termination or validity of
this Agreement, or the transactions contemplated by this Agreement shall be
finally settled by arbitration conducted expeditiously in accordance with the
American Arbitration Association (the "AAA") Commercial Arbitration Rules. The
arbitration shall be conducted by three arbitrators, one of whom shall be
selected by G-R, one of whom shall be selected by the Stockholders'
Representative and the third of whom shall be selected by the first two
arbitrators. The arbitrators shall be selected within 15 days after the date
either Party hereto receives from the other a written demand for arbitration.
Should a Party fail to name their choice of arbitrator as provided herein within
such 15 day period, such arbitrator shall be appointed by the AAA. All decisions
shall be made by a majority of the arbitrators. The arbitration shall be
governed by the United States Arbitration Act 9, U.S.C. 1-16, and judgment upon
the award rendered by the arbitrators may be entered by any court having
jurisdiction thereof. The arbitrators are not empowered to award damages in
excess of compensatory damages, and each Party hereby irrevocably waives any
damages in excess of compensatory damages.
32
(b) Arbitration proceedings shall be commenced by either G-R
or the Stockholders' Representative by delivering to the other a written notice
requesting arbitration. All of the costs and expenses of the Parties in
connection with the arbitration, including the arbitrators fees and expenses,
shall be borne by the Party or Parties against which an award is rendered in the
dispute. Notwithstanding the foregoing, if the arbitrators determine that one
Party acted unreasonably and not in good faith, the arbitrators shall have
authority to assess the costs and expenses of the arbitration, including the
arbitrators fee and reasonable attorneys fees, against such Party. In the event
that G-R makes a written demand for arbitration as provided herein, the
arbitration shall take place at a location in Pennsylvania designated by the
Stockholders' Representative. In the event that the Stockholders' Representative
makes a written demand for arbitration as provided herein, the arbitration shall
take place at a location in Ohio designated by G-R. Any award rendered by
arbitration shall be final and binding on the Parties, and judgment thereon may
be entered in any court of competent jurisdiction. Notwithstanding any
arbitration rules to the contrary, the award of the arbitrators must be made no
later than three months following the date on which the arbitrators are
appointed, unless the issue is the subject of litigation brought by a third
party and the arbitrators deem it appropriate to defer its award until the
litigation is resolved.
(c) Notwithstanding the foregoing, if G-R asserts any claim
(i) under Section 9(b)(iii) or (ii) resulting from breaches of those
representations and warranties contained in Sections 5(c), 5(h) and 5(p), G-R,
in its sole discretion, may elect to bring such claim in any court or courts in
the United States or arbitrate such claim pursuant to this Section 20.
22. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original but all of which
shall constitute the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
33
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of
the day and year first above written.
SIGNATURES
----------
AMERICAN MACHINE AND TOOL CO., THE XXXXXX-XXXX COMPANY
INC. OF PENNSYLVANIA
By:/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------- --------------------------------------
Xxxxx X. Xxxxxx, President Xxxxxxx X. Xxxxxx, President and Chief
Executive Officer
THE STOCKHOLDERS OF AMT
SCF INVESTMENTS, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxxxx
----------------------------- -------------------------------------
Xxxxx X. Xxxxxx Xxxxxx Xxxxxx, President
TRUST UNDER THE WILL OF XXXXXX X.
XXXXXX, DATED MAY 2, 1979, F/B/O
XXXXX XXXXXX, XXXXXX XXXXXX AND
XXXX XXXXXX
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx Xxxxxx (By Xxxxx X. Xxxxxx,
Attorney-in-Fact) By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxx, Trustee Under the Will
of Xxxxxx X. Xxxxxx, dated May 2, 1979,
F/B/O Xxxxx Xxxxxx, Xxxxxx Xxxxxx and
Xxxx Xxxxxx
[SIGNATURE PAGE - STOCK PURCHASE AGREEMENT]
34
TRUST DATED JULY 23, 1996, F/B/O
XXXXXX XXXXXX, XXXXX X. XXXXXX,
SETTLOR
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------- -------------------------------------
Xxxxxx Xxxxxx (By Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Trustee U/A/T dated
Attorney in-Fact) July 23, 1996, F/B/O Xxxxxx Xxxxxx,
Xxxxx X. Xxxxxx, Settlor (By Xxxxx X.
Xxxxxx, Attorney-in-Fact)
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxxx Xxxxxx, Trustee U/A/T dated
July 23, 1996, F/B/O Xxxxxx Xxxxxx,
Xxxxx X. Xxxxxx, Settlor (By Xxxxx X.
Xxxxxx, Attorney-in-Fact)
TRUST DATED JULY 23, 1996, F/B/O OF
XXXX XXXXXX, XXXXX X. XXXXXX,
SETTLOR
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------------- -------------------------------------
Xxxx Xxxxxx (By Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Trustee U/A/T dated
Attorney-in-Fact) July 23, 1996, F/B/O Xxxx Xxxxxx,
Xxxxx X. Xxxxxx, Settlor (By Xxxxx X.
Xxxxxx, Attorney-in-Fact)
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxx Xxxxxx, Trustee U/A/T dated
July 23, 1996, F/B/O Xxxx Xxxxxx,
Xxxxx X. Xxxxxx, Settlor (By Xxxxx X.
Xxxxxx, Attorney-in-Fact)
[SIGNATURE PAGE - STOCK PURCHASE AGREEMENT]
35
