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Exhibit 2.a
AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of ____________,
1997, by and between Kennametal Inc., a Pennsylvania corporation ("Company"),
JLK Direct Distribution Inc., a Pennsylvania corporation ("JLK"), and J&L
America, Inc., a Michigan corporation ("J&L").
WITNESSETH:
WHEREAS, Company owns and operates integrated industrial supply
programs which provide to large industrial manufacturers needs assessment, cost
analysis, procurement planning, supplier selection, "just-in-time" restocking
of supplies and ongoing technical support ("FSS Programs"); and
WHEREAS, J&L is a wholly-owned subsidiary of Company which engages in
the distribution of a broad range of metalworking tooling and related products
such as cutting tools, carbide and other tool inserts, abrasives, drills,
machine tool accessories, hand tools and other industrial supplies through
J&L's master catalog, monthly promotional sales flyer, telemarketing, direct
sales and showrooms; and
WHEREAS, Company owns all of the Class B Common Stock, par value $.01
per share, of JLK and JLK intends to effect an initial public offering (the
"Offering") of shares of the Class A Common Stock, par value $.01 per share, of
JLK and upon completion of the Offering, JLK will cease to be a wholly-owned
subsidiary of Company; and
WHEREAS, in connection with the Offering, Company intends to
contribute the FSS Programs to J&L and thereafter contribute all of the issued
and outstanding capital stock of J&L to JLK; and
WHEREAS, the Boards of Directors of Company and JLK have approved the
transactions contemplated herein and the parties hereto desire to enter into
and carry out the transactions contemplated by this Agreement in accordance
with the terms hereof;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements set forth in this Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
covenant and agree as follows:
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ARTICLE I
THE TRANSACTION
Subject to the terms, upon the conditions, at the time and in the
manner set forth herein, (a) Company covenants and agrees to assign, transfer,
convey and deliver to J&L the FSS Programs (as defined in Section 3.1 hereof)
subject to the Assumed Liabilities (as defined in Section 4.1 hereof); (b) J&L
covenants and agrees to assume and to pay, perform and satisfy, or otherwise
discharge, as and when they become due, the Assumed Liabilities; and (c)
Company covenants and agrees to assign, transfer, convey and deliver to JLK all
of the issued and outstanding capital stock of J&L.
ARTICLE II
CLOSING, CLOSING DATE AND EFFECTIVE TIME
2.1 THE CLOSING AND CLOSING DATE. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of JLK,
Xxxxx Xxxxx 000 Xxxxx, Xxxxxxx, XX 00000, at 10:00 a.m. local time on the
earlier of: (a) June 30, 1997; or (b) immediately prior to the closing of the
Offering, or on such other date or at such other place as the parties may agree
(the "Closing Date").
2.2 THE EFFECTIVE TIME. The effective time of the transactions
contemplated herein (the "Effective Time") shall be on the Closing Date.
ARTICLE III
TRANSFER OF FSS PROGRAMS AND J&L STOCK
3.1 FSS PROGRAMS ASSETS. At the Closing, Company shall assign,
transfer, convey and deliver to J&L, and J&L shall accept all right, title and
interest of Company in all of the assets of Company as the same relate
exclusively and solely to the FSS Programs (the "FSS Programs Assets").
The "FSS Programs Assets" shall be the following assets of Company:
(a) The machinery, equipment, vehicles, furniture, fixtures,
computer hardware and other capital assets used in connection
with the FSS Programs (the "Capital Assets");
(b) All customer accounts, customer notes and other receivables
of Company which represent amounts earned by or owed to
Company on account of the FSS Programs (the "Receivables");
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(c) The agreements, contracts, unfilled purchase and sales orders
and commitments in connection with the FSS Programs (the
"Contracts");
(d) All inventories of Company held for use in the FSS Programs,
including, without limitation, finished goods, supplies and
inventories (the "Inventories");
(e) All outstanding proposals and bids under which benefits
accrue or will accrue to the FSS Programs (the "Proposals and
Bids");
(f) The licenses, franchises, permits and other authorizations
from federal, state, local and other governmental or
administrative authorities (the "Permits");
(g) The inventions, patents, applications for patents, trade
names, trade dress, know-how, inventions, processes,
formulas, compositions, designs and background technology,
trademarks, service marks, registrations of trademarks and
service marks, applications for registration of trademarks
and service marks, copyrights, registrations of copyrights,
applications for registrations of copyrights, mask works,
registrations of mask works, applications for registration of
mask works, computer software programs, manufacturing,
engineering and other drawings, schematics, blueprints and
designs, licenses and agreements used in and/or developed for
the FSS Programs (the "Intellectual Property Assets");
(h) The business and goodwill of the FSS Programs;
(i) The books and records of Company relating primarily to the
FSS Programs; and
(j) All other assets of Company used in or necessary to conduct
the FSS Programs.
3.2 J&L STOCK. At the Closing, Company shall assign, transfer, convey,
and deliver to JLK and JLK shall accept all right, title and interest of
Company in and to all of the issued and outstanding capital stock of J&L (the
"J&L Stock"). The assignment, transfer, conveyance and delivery of the FSS
Programs Assets hereunder to J&L and the subsequent assignment, transfer,
conveyance and delivery of the J&L Stock hereunder to JLK are herein
collectively called the "Transfers."
3.3 EFFECTING TRANSFERS. To effect the Transfers, Company shall, on
the Closing Date, execute and deliver to J&L a General Assignment and such
other documents of conveyance that are reasonably necessary to effect the
transfer of the FSS Programs Assets, in accordance with the terms and
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conditions of this Agreement. Similarly, the Company shall on the Closing Date
deliver to JLK the J&L Stock duly endorsed for transfer thereof to JLK. The
Transfers shall be effected by Company to J&L and JLK, as applicable, as is and
where is as of the Closing Date.
ARTICLE IV
ASSUMPTION OF ASSUMED LIABILITIES
4.1 ASSUMED LIABILITIES. At the Closing, J&L shall assume, and on and
after the Closing shall pay, perform and satisfy, or otherwise discharge, as
and when they become due, all liabilities and obligations of Company as they
relate to the FSS Programs (the "Assumed Liabilities"). The term "liability" as
used in this Article IV shall include, without limitation, claims, indentures,
pledges, mortgages, security interests, collateral assignments, conditional
sales agreements or other title retention agreements, restrictions, liens,
charges, royalties, other claims of ownership by third parties or encumbrances
of any kind or nature whatsoever. J&L expressly acknowledges that the Assumed
Liabilities include, without limitation, the following:
(a) Any and all tax liabilities of Company arising out of the
transfer of the FSS Programs;
(b) All liability in respect of the Receivables and the
Inventories;
(c) All liability to perform under, and with regard to, the
Contracts and the Accounts;
(d) All liability to perform under, and with regard to, the
Proposals and Bids;
(e) All liabilities in respect of employees and employee benefit
matters as the same relate to the FSS Programs;
(f) All liability under product warranty obligations and product
liabilities, each with respect to products or services
provided in respect thereof sold, performed or delivered by
Company prior to the Closing Date as the same relate to,
arise from or are otherwise in connection with the FSS
Programs;
(g) All liability under, and with regard to, the Permits;
(h) All liability accruing prior to, on or after the Closing Date
as concerns the Intellectual Property Assets; and
(i) All other liabilities arising out of or in connection with
the FSS Programs.
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ARTICLE V
ACCESS TO INFORMATION
5.1 DELIVERY OF RECORDS. As soon as practicable after the Closing
Date, Company, JLK and J&L shall each deliver to the other party all books,
contracts, accounts and records relating to the other party's business and
employees and not then in such other party's possession to the extent Company,
JLK or J&L, as the case may be, knows or is made aware that such items are not
then in such other party's possession, and provided that Company, JLK or J&L,
as the case may be, may make photocopies of any such item prior to delivery.
5.2 INSPECTION OF INFORMATION. Company, JLK and J&L and each of its
officers, directors, agents, lenders, employees, attorneys, accountants and
other representatives shall have the right at any time during normal business
hours (in a manner that does not unreasonably interfere with the other party's
business operations) with reasonable advance notice, to inspect and examine,
make copies of or excerpts from (with copying costs to be borne by the
inspecting party) and have access to the books, contracts, accounts, records,
documents, communications, knowledgeable personnel, items or matters existing
or relating to periods prior to the Closing Date within each other's knowledge,
possession or control (and shall use reasonable efforts to cause its employees
and other persons or entities in possession of such to give similar access) in
respect of the inspecting party's business and not otherwise transferred to the
inspecting party.
5.3 CONFIDENTIALITY. Company, JLK and J&L shall hold confidential, and
shall cause their directors, officers, employees, auditors, attorneys,
financial advisors, banks, accountants and other agents, consultants and
advisors to hold confidential all confidential information concerning the other
party furnished to it by such other party or such other party's representatives
or otherwise received or obtained by it (the "Confidential Information"),
except to the extent that such Confidential Information (a) is or becomes
available to such party on a non-confidential basis prior to its disclosure by
the other party; (b) is or becomes available to the public other than as a
result of a disclosure by such party; (c) is or becomes available to such party
on a non-confidential basis from another source; (d) is disclosed in connection
with the preparation of tax returns or reports concerning any audit or other
proceeding concerning taxes; or (e) is requested by a governmental authority
other than through a voluntary act or omission of the party seeking to make
such disclosure, in which case the party requested to disclose such
Confidential Information shall use reasonable efforts to give the other party
advance written notice in order to allow the other party the opportunity to
obtain a protective order or other appropriate relief. Each party shall
exercise the same degree of care to protect such Confidential Information as it
takes to preserve confidentiality for its own similar information.
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5.4 ATTORNEY-CLIENT RELATIONSHIP. Each of Company, JLK and J&L will
use reasonable efforts to maintain, preserve and assert all privileges arising
under or relating to the attorney-client relationship, including, but not
limited to, the attorney-client privilege and work product doctrine. Company,
JLK and J&L shall not (and shall use reasonable efforts to cause its employees
not to) knowingly waive any privilege which could be asserted under applicable
law without the prior consultation with the other, and none of the parties
shall have the right to assert any such privilege as between them.
5.5 THIRD-PARTY REQUESTS FOR INFORMATION. Upon receipt by any party of
a subpoena, discovery or other request which calls for the production or
disclosure of privileged information or if any party obtains knowledge that any
current or former employee has received any subpoena, discovery or other
request which calls for the production or disclosure of privileged information,
the receiving party shall promptly notify the other party of the existence of
the request and shall provide a reasonable opportunity to review the requested
information and to assert any rights the other party may have under this
Article V or otherwise to prevent the production or disclosure of privileged
information. No party will produce or disclose any privileged information
unless (i) the other party has provided its express written consent to such
production or disclosure; or (ii) a governmental authority has requested such
information other than through a voluntary act or omission of the party seeking
to make such disclosure, in which case the party requested to produce or
disclose the information shall use reasonable efforts to give advance written
notice to the other party in order to allow the other party the opportunity to
obtain a protective order or other appropriate relief.
ARTICLE VI
COOPERATION; FURTHER ASSURANCES
6.1 GENERAL UNDERTAKINGS. Each party to this Agreement agrees to
cooperate fully with the other party hereto and its counsel and accountants and
other representatives, will use its best efforts to cause satisfaction of the
terms of this Agreement. The parties shall, upon request of the other parties
hereto, at any time and from time to time, execute, acknowledge, deliver and
perform all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and instruments of further assurances as may be necessary or
reasonably appropriate to carry out the provisions and intent of this
Agreement. Without limiting the generality of the foregoing, at and after the
Effective Time, Company will cooperate with J&L as J&L shall reasonably request
(and at J&L's expense to the extent Company incurs more than routine or nominal
administrative or ministerial costs) so that J&L has good and marketable title
to the FSS Programs Assets.
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6.2 CONTRACTS AND CONSENTS.
(a) Company and J&L shall use their reasonable efforts to secure
any and all consents, approvals or the expiration of any time
periods required for the consummation of the transactions
provided hereunder. All such consents or approvals shall be
in writing and shall be in form and substance reasonably
satisfactory to the parties to effect the consummation of the
transactions contemplated hereby. To the extent that the
transfer or assumption of any agreement, lease, contract or
other document or instrument or any other asset constituting
a FSS Programs Asset or an Assumed Liability requires the
consent of any person other than J&L or Company, this
Agreement shall not constitute a transfer or attempted
transfer, or assumption or attempted assumption, thereof
unless and until the consent or waiver of such person has
been obtained.
(b) If any such consent or waiver is not obtained, as of and from
the Effective Time until such waiver or consent is obtained,
on the request of J&L, Company shall (i) use its best efforts
to provide or cause to be provided to J&L the benefits of any
such agreement, lease, contract or other document or
instrument constituting an FSS Programs Asset for which such
consent or waiver has not been obtained, including, without
limitation, enforcing rights of Company arising from any such
agreement, lease, contract or other document or instrument
constituting an FSS Programs Asset; or (ii) shall authorize
J&L to act, and shall provide reasonable cooperation
necessary to enable J&L to do so, in Company's place pursuant
to such agreement, lease, contract or other document
constituting an FSS Programs Asset.
(c) With respect to any FSS Programs Asset or Assumed Liability
for which the consent or waiver necessary to effect the
transfer or the assumption has not been obtained, J&L shall
(i) use its best efforts to perform all obligations and
satisfy all liabilities of Company arising under any
agreement, lease, contract or other document or instrument
relating to such FSS Programs Asset; and (ii) use its best
efforts to pay, perform and satisfy or otherwise discharge in
full, as and when it becomes due, any such Assumed Liability.
(d) All costs of Company incurred after the Effective Time, other
than the routine or nominal administrative or ministerial
expenses of Company, arising out of or relating to the
performance by Company of its obligations pursuant to this
Section 6.2 or as a result of a breach by J&L of its
obligations under Section 6.2(c) shall be for the account of
J&L.
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ARTICLE VII
TERMINATION
This Agreement may be terminated at any time prior to the Closing by
and in the sole discretion of Company without the approval or consent of JLK or
J&L. In the event of such termination, each party to this Agreement shall not
have any liability of any kind whatsoever to the other party.
ARTICLE VIII
NOTICES
Any notice, request, demand or other communication given by any party
under this Agreement (each a "notice") shall be in writing, may be given by a
party or its legal counsel and shall be deemed to be duly given (i) when
personally delivered; (ii) upon delivery by United States Express Mail or
similar overnight courier service which provides evidence of delivery; (iii)
when five (5) days have elapsed after its transmittal by registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party to whom directed at that party's address as it appears below or another
address of which that party has given notice; (iv) when transmitted by telex
(or equivalent service), the sender having received the answer back of the
addressee; or (v) the next business day when delivered by facsimile
transmission if a copy thereof is also delivered in person or by overnight
courier in the manner provided above. Notices of address change shall be
effective only upon receipt notwithstanding the provisions of the foregoing
sentence.
Notice to Company, JLK and J&L shall be sufficient if given to:
AS TO COMPANY: Kennametal Inc.
Xxxxx Xxxxx 000 Xxxxx
P. O. Xxx 000
Xxxxxxx, XX 00000
Attn: X. X. XxXxxxxx, President & CEO
Fax No.: 412/000-0000
AS TO J&L & JLK: JLK Direct Distribution Inc.
Xxxxx Xxxxx 000 Xxxxx
X. X. Xxx 000
Xxxxxxx, XX 00000
Attn: X. X. Xxxxxxx, President & CEO
Fax No.: 412/000-0000
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ARTICLE IX
MISCELLANEOUS
9.1 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania
without regard to any jurisdiction's conflicts of laws provisions, as to all
matters, including, without limitation, matters of validity, construction,
effect, performance and remedies.
9.2 TITLES, HEADINGS AND CAPTIONS. The titles, headings or captions of
articles and sections in this Agreement and the various headings in the
schedules attached hereto are provided for convenient reference only, and shall
not be considered a part hereof for purposes of interpreting, construing or
applying this Agreement, and such titles, headings or captions shall not
define, limit, extend, explain or describe the meaning, scope or extent of this
Agreement or any of its terms or conditions.
9.3 GENDER AND NUMBER. Words and phrases herein shall be construed in
the singular or plural number and as masculine, feminine or neuter gender,
according to the context.
9.4 COUNTERPARTS; USE OF FACSIMILES. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one and the same instrument. The
reproduction of signatures by means of a telecopying device shall be treated as
though such reproductions are executed originals and each party hereto
covenants and agrees to provide the other parties with a copy of this Agreement
bearing original signatures within five (5) days following transmittal by
facsimile.
9.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties hereto respecting its subject matter and supersedes all
negotiations, preliminary agreements and prior or contemporaneous discussions
and understandings of the parties hereto in connection with the subject matter
hereof. This Agreement may be amended, modified or supplemented only by a
writing signed by both parties by their duly authorized representatives.
9.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by either party hereto without the prior written
consent of the other party.
9.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and is not intended to confer upon any other
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person except the parties hereto any rights or remedies hereunder. There are no
third-party beneficiaries to this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its duly authorized officer as of the date first
above written.
J&L AMERICA, INC. KENNAMETAL INC.
By_______________________ By_______________________
Name____________________ Name____________________
Title_____________________ Title_____________________
JLK DIRECT DISTRIBUTION INC.
By_______________________
Name____________________
Title_____________________
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