Asset Purchase Agreement
Exhibit
10.32
This
Asset
Purchase Agreement
(the
“Agreement”) is made and entered into this 3rd
day of
March, 2005, by and between HK
Cast
Products, LLC, formerly
known as HK
Engineered Castings, LLC,
an
Indiana limited liability company (the “Purchaser”) and HK
Castings, Inc.,
a
Washington corporation (“Seller”).
Background:
A. Seller
is
engaged in the business of manufacturing complex alloyed xxxx and ductile
iron
castings for use in large gas, diesel and other engines and other industrial
applications (the “Business”).
B. Seller
desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
substantially all of the assets, properties and rights of the Business, pursuant
to the terms and conditions set forth in this Agreement.
NOW
THEREFORE,
in
consideration of the promises hereinafter made, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
recital provisions above are incorporated into the body of this Agreement
as if
fully set forth therein, and the parties agree as follows:
ARTICLE
I. Purchase
and Sale of Assets
1.01 Purchased
Assets.
On
the
Closing Date (as defined below), Seller shall sell, assign, convey, transfer
and
deliver to Purchaser, and Purchaser shall purchase from Seller, free and
clear
of all mortgages, liens, charges, adverse claims, restrictions, agreements,
encumbrances, security interests and rights of other persons of every nature
and
description whatsoever (“Liens”), all of the assets and properties of every kind
and nature, real and personal, tangible and intangible, whether or not carried
or reflected on the books and records of Seller, which are owned by Seller
and
used in or necessary for the operation of the Business, except for the Excluded
Assets (as defined below) (the “Purchased Assets”). The Purchased Assets shall
include, without limitation, the following:
(a) Equipment.
All of
Seller’s machinery, equipment, tools and dies, hand tools, motor vehicles,
rolling stock, leasehold improvements, furniture, supplies, office equipment,
computers and other data processing hardware, improvements, parts and other
tangible personal property, including, without limitation, all items listed
on
Schedule
1.01(a)
attached
hereto (collectively, the “Equipment”);
(b) Inventory.
All of
Seller’s inventory, wherever located, including, without limitation, supplies,
raw materials, work in progress and finished goods, prepaid inventory and
inventory in transit (collectively, the “Inventory”);
(c) Prepaid
Expenses and Customer Deposits.
All
prepaid expenses, advance payments, deposits and claims for refunds (other
than
refunds pertaining to any liabilities
which
are
not assumed by Purchaser) existing as of Closing (the “Prepaid Expenses”), as
well as any cash advances and/or deposits provided to Seller by any customers
of
the Business (“Customer Deposits”), a schedule of which shall be attached hereto
as Schedule
1.01(c)
at
Closing;
(d) Contract
and Other Rights.
All of
Seller’s rights, title and interest in and to all agreements, contracts, leases
and other agreements relating to the Business (including contracts with
customers, purchase orders and quotations, vendor contracts and equipment
and
vehicle leases) which are listed on Schedule
1.01(d)
(collectively, the “Contracts”), and any and all claims, causes of action,
rights of recovery or refund, rights of set-off and other rights of every
nature, including without limitation, any and all rights against debtors
of
Seller;
(e) Licenses
and Permits.
All of
Seller’s rights and benefits under licenses (including without limitation,
licenses to use computer software), permits, distribution and/or franchise
rights, registrations, all governmental and other licenses, certificates
and
permits relating to the operation of the Business (collectively, the “Licenses
and Permits”);
(f) Records.
All of
Seller’s books and records, customer files, customer lists and records, vendor
files, vendor lists and records, cost files and records, credit information,
distribution records, business records and plans, studies, surveys, reports,
correspondence, sales and promotional literature and materials, advertising
and
advertising copy, and other similar materials, computer and other records,
and
all computer software (collectively, the “Books and Records”);
(g) Intellectual
Property.
All of
Seller’s right, title and interest in and to any copyright, trademark, trade
name, brand name, service xxxx, logo, symbol, trade dress, product or other
design or any expression thereof, and any invention, patent trade secret,
technical information, know-how, proprietary right or intellectual property,
technologies, methods, designs, drawings, software (including documentation
and
source code), processes and other proprietary properties or information
(collectively, “Intellectual Property”); and
(h) Goodwill.
All
goodwill associated with Seller and the Business.
1.02 Excluded
Assets.
The
parties acknowledge and agree that the Purchased Assets shall not include
Seller’s cash or cash equivalents, accounts receivable, minutes book and stock
records, Seller’s deferred and prepaid income tax assets and any assets
specifically listed on Schedule
1.02
(collectively, the “Excluded Assets”).
ARTICLE
II. Liabilities
2.01 Assumption
of Liabilities
At
the
Closing, Purchaser shall assume and agree to discharge and perform when due
only
the
liabilities and obligations of Seller accruing and arising after the Closing
Date under the Contracts (collectively, the “Assumed Liabilities”).
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2.02 Excluded
Liabilities.
Except
for the Assumed Liabilities, Purchaser shall not assume or be responsible
for
any debts, liabilities, obligations, or commitments of Seller or the Business
whatsoever, whether actual, absolute, accrued, fixed, contingent, asserted
or
unasserted, known or unknown, and whether related or unrelated to the Business.
Without in any way limiting the generality of the foregoing, Purchaser shall
not
assume, nor shall Purchaser be responsible for, any obligations or liabilities
arising out of or relating to any pending litigation, third-party claims,
unfunded pension liabilities, taxes, fees or other charges, tort liabilities,
warranty liabilities, environmental liabilities, criminal claims, worker’s
compensation liabilities, or any liabilities arising outside the ordinary
course
of business or otherwise incurred prior to or after the Closing Date. Seller
agrees to pay all liabilities and perform all obligations after the Closing,
other than the Assumed Liabilities, relating to the operation of the Business
prior to Closing, including, but not limited to, all continuation coverage
under
any group health plan or plans pursuant to the relevant provisions of the
federal Consolidated Omnibus Budget Reconciliation Act (COBRA) with respect
to
any employees who do not apply for or accept employment and are otherwise
not
hired by Purchaser after Closing; all costs associated with any employee
pension, profit sharing, 401(k) or similar retirement plans of Seller; and
obligations and liabilities (if any) arising under the Worker Adjustment
and
Retraining Notification Act with respect to any employees not hired by Purchaser
after Closing.
ARTICLE
III. Purchase
Price and Closing
3.01 Purchase
Price.
The
total
purchase price (the “Purchase Price”) for the Purchased Assets shall be (i) Two
Hundred Ten Thousand One Hundred and 00/100 Dollars ($210,100.00) (the “Cash
Price”), and (ii) Thirty Thousand (30,000) shares
of
common stock of
Magnetech Integrated Services Corp. (“MISCOR”), the in-direct parent company of
Purchaser (the “Shares”).
3.02 Payment
of the Purchase Price.
The
Purchase Price shall be payable at the Closing as follows:
(a) Purchaser
shall pay One Hundred Fifty-one Thousand Eight Hundred and 57/100 Dollars
($151,800.57) of the Cash Price to General Electric Capital Corporation (“GE
Capital”) on behalf of Hatch & Xxxx, Inc., the majority shareholder of
Seller (“Hatch & Xxxx”), in
partial payment of the debt and obligations owed to GE Capital by Hatch &
Xxxx (the “GE Indebtedness”);
(b) Purchaser
shall
execute and deliver to Xxxxxxxx Xxxxxxxxx, on behalf of Seller, a promissory
note (the “Minehardt Note”) in the principal amount of Thirty Thousand Dollars
($30,000), which shall be payable, without interest, in three (3) equal annual
installments within thirty (30) days of the end of each twelve (12) month
period
following the Closing Date,
(c) Purchaser
shall reimburse certain vacation pay of Seller pursuant to Section 6.01(a)
in
the amount of Twenty-eight Thousand Two Hundred Ninety-nine and 43/100 Dollars
($28,299.43), and
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(d) Purchaser
shall issue the Shares to Seller.
3.03 Allocation.
The
Purchase Price shall be allocated among the Purchased Assets as set forth
on
Schedule
3.03
attached
hereto. Purchaser and Seller agree to furnish each other and the Internal
Revenue Service with such applicable information as may be required under
Section 1060 of the Internal Revenue Code, as amended (the “Code”), and to
cooperate in the completion and timely filing of IRS Form 8594 (Asset
Acquisition Statement). A party may change the agreed-upon allocations only
in
order to be consistent with any finally-adjudicated adjustments made to the
federal tax returns of the other party.
3.04 The
Closing.
The
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Xxxxxx & Xxxxxxxxx in South Bend, Indiana, on
March 3, 2005, or at such other location or on such other date as the parties
may mutually agree (the “Closing Date”).
3.05 Actions
at the Closing.
At
the
Closing, the Seller and Purchaser shall deliver to each other the various
certificates, instruments and documents as specified in Article VII
below.
ARTICLE
IV. Representations
and Warranties of Seller and Shareholders
As
of the
date hereof and as of the Closing Date, Seller hereby represents and warrants
to
Purchaser as follows:
4.01 Organization;
Power and Authority.
Seller
is
a corporation duly organized, validly existing and in good standing under
the
laws of the State of Washington and is duly qualified to do business and
is in
good standing under the laws all other jurisdictions in which its ownership
or
use of property for the conduct of its Business requires it to qualify,
including, but not limited to, the State of West Virginia. Seller has all
necessary corporate power and authority to own all of its properties and
assets,
to conduct its business as now being conducted, and to make, execute, deliver,
and perform this Agreement and the other documents and instruments contemplated
hereby.
4.02 Execution,
Delivery and Validity.
The
execution, delivery and performance of this Agreement, and the consummation
of
the transactions contemplated hereby, by Seller has been duly authorized
by all
requisite action. This Agreement and all other agreements contemplated hereby
have been duly and validly executed and delivered by Seller, and each
constitutes the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
4.03 Non-contravention.
Except
as
set forth on Schedule
4.03,
the
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby and the consummation of the transactions contemplated
hereby
or thereby or compliance with or fulfillment of the terms and provisions
hereof
or of any other agreement or instrument contemplated hereby or thereby, do
not
and will not: (i) conflict with or result in a breach of any of the provisions
of the Articles of Incorporation or By-Laws of Seller; (ii) contravene any
law,
rule or regulation or any order, writ, award, judgment, decree or other
determination which
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affects
or binds Seller or any of its properties; (iii) conflict with, result in
a
breach of, constitute a default under, or give rise to a right of acceleration,
termination or the imposition of penalties under any contract, deed of trust,
mortgage, trust, lease, governmental or other license, permit or other
authorization, contract, agreement, note or any other agreement, instrument
or
restriction to which Seller is a party or by which any of their properties
may
be affected or bound; or (iv) require the approval, consent or authorization
of,
or the making of any declaration, filing or registration with, any foreign,
federal, state or local court, governmental authority or regulatory body
(“Governmental Authority”) or with any lender, customer or other third
party.
4.04 Capitalization.
The
issued and outstanding capital stock of Seller is owned as of the date hereof
as
set forth on Schedule
4.04.
Other
than as set forth in Schedule
4.04,
there
are no voting trusts or other agreements or understandings related to the
capital stock of Seller. Seller does not own any subsidiaries. No person
or
entity, other than shareholders listed on Schedule
4.04,
owns or
holds, has any interest in, whether legal, equitable or beneficial, or has
the
right to purchase, any capital stock or other security of Seller.
4.05 Financial
Statements.
Attached
as Schedule
4.05
are true
and complete copies of: (a) an audited balance sheet and audited statements
of
operations, stockholders’ equity and cash flows of Seller for the period ended
June 30, 2000 (the “Audited Financials”), (b) unaudited balance sheets and
statements of income, stockholders’ equity and cash flows of Seller for the
periods ended June 30, 2001, 2002, 2003 and 2004 (the “Unaudited Financials”),
and (c) unaudited balance sheets and statements of income for each month-ended
from July 2004 through Closing (the “Monthly Financials”; and together with
Audited Financials and the Unaudited Financials, the “Financial Statements”).
The balance sheet delivered to Purchaser for the month-ended immediately
prior
to the month during which Closing occurs is referred to in this Agreement
as the
“Balance Sheet.” The Financial Statements are true and correct representations
of the financial condition and operating results of Seller with respect to
the
Business as of the dates and for the periods then ended, and are prepared
on a
consistent basis for all periods covered and in accordance in all material
respects with generally accepted accounting principles (“GAAP”). Except as set
forth on Schedule
4.05,
Seller
has no unrecorded liabilities or obligations of any type, nature or description,
known or unknown, asserted or unasserted, direct or indirect, absolute or
contingent with respect to the Business, except as set forth in the Financial
Statements.
4.06 Operations
Since June 30, 2004.
Except
as
set forth in Schedule
4.06,
since
June 30, 2004 and up to and through the Closing Date, Seller has conducted
its
Business in the ordinary course of business, and (except as otherwise
contemplated by this Agreement) has not:
(a) written
off as uncollectible any account receivable, or reduced any reserves, other
than
in the ordinary course of business;
(b) made
any
change in the accounting methods or practices employed by Seller or change
in
depreciation or amortization policies;
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(c) issued
or
sold, or contracted or made any other commitment for the issuance or sale
of any
shares of capital stock or securities convertible into or exchangeable for
capital stock of Seller;
(d) terminated
or amended any material contract or license or other instrument, or suffered
any
loss or termination or threatened loss or termination of any material
contractual or business arrangement;
(e) increased
the compensation or benefits of any employee other than in the ordinary course
of business;
(f) sold,
leased to others, licensed to others, disposed of, or otherwise transferred
any
assets of Seller, including without limitation, the right to use any and
all
secrets or Intellectual Property of Seller;
(g) moved,
removed or caused to be moved or removed, any of the Equipment or Inventory
(other than the sale of Inventory in the ordinary course of business consistent
with past practice) located in or at Seller’s
facility in Weston, West Virginia (the “Facility”);
(h) made
any
loans, advances or capital contributions to or investments in any person
or
entity;
(i) subjected
any assets, tangible or intangible, to any lien, encumbrance or restriction
of
any nature whatsoever;
(j) modified
or amended any relationships with suppliers or customers of the Business,
which
would adversely affect the Business; or
(k) entered
into any agreement to sell or granted any option to any party other than
Purchaser, to purchase any of the Purchased Assets.
4.07 Employment
Compliance.
Seller
has (i) complied with all applicable laws relating to employment or
labor,
including provisions relating to wages, hours, employment benefits, equal
opportunity, occupational safety and health, collective bargaining, and the
payment of Social Security and other taxes; and (ii) fully disclosed in writing
to Purchaser all relevant facts and issues regarding Seller’s labor and
employment matters. There are no policies or practices relating to employment
matters other than those described in the Employee Handbook dated June 1,
2000.
There have been no attempts to organize or unionize employees of Seller within
the last five (5) years.
4.08 Employees.
All
of
Seller’s employees are employees “at-will” and may be legally terminated without
prior notice and without cause at no cost to Seller or the Business, other
than
its obligation to pay employees for wages and unused or unpaid and earned
vacation and other time off, which liabilities are properly recorded on the
Financial Statements. Schedule
4.08
contains
a complete listing of:
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(a) current
employees, their job title, compensation, accrued vacation, and employee
benefits for which the employee qualifies;
(b) retired
employees who receive benefits of any kind from Seller;
(c) any
employee or director who is subject to a confidentiality, non-disclosure
or
proprietary rights contract that in any way adversely affects or will affect
that employee’s performance of his or her duties for Seller or the ability of
Purchaser to conduct the Business in substantially the same manner as currently
conducted; and
(d) any
key
employee or group of employees that have given notice of termination or for
whom
any Seller has reasonable grounds to expect to give notice of termination
4.09 Licenses
and Permits.
The
Licenses and Permits constitute all local, state and federal licenses and
permits necessary for Seller to occupy, operate and conduct its Business,
and
there do not exist any defaults, waivers, investigations or exemptions relating
thereto or which would be caused by the transactions contemplated by this
Agreement. There exists no grounds for revocation, suspension or limitation
of
any of the Licenses and Permits.
4.10 Assets.
Except
as
set forth in Schedule
4.10,
Seller
owns all of the assets reflected on the Financial Statements (including any
patents, copyrights, trade names, service marks and other names and marks
used
in connection with the Business), and Seller owns all Purchased Assets with
good
and marketable title free and clear of all mortgages, security interests,
liens,
leases, covenants, assessments, easements, options, rights of refusal,
restrictions, reservations, defects in title, encroachments, and other
encumbrances.
4.11 Insurance.
Schedule
4.11
includes
a complete and accurate listing of all insurance policies (including
self-insurance) to which Seller is a party related to the Purchased Assets,
which policies are either currently in force or were in force since January
1,
2000, and also any policies for which Seller was denied coverage since January
1, 2000. Schedule
4.11
also
includes a list of all claims made against such insurance policies since
January
1, 2000. Except as set forth on Schedule
4.11,
the
insurance coverage for Seller and all Purchased Assets:
(a) is
valid,
outstanding and enforceable;
(b) is
obtained through policies issued by an insurer that is financially sound
and
reputable;
(c) shall
not
be delinquent as of the Closing Date; and
(d) complies
with any requirements for insurance under any contract to which any Seller
is
bound.
4.12 Intellectual
Property.
Schedule
4.12
lists or
describes all patents, trademarks, trade names, service marks, copyrights
and
applications for such items used in the conduct of the Business. Seller owns
or
has a valid right to use the Intellectual Property, and may transfer the
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Intellectual
Property to Purchaser without the need for third party agreements or consents.
There
is
no claim or proceeding pending or threatened by any third party against or
relating to Seller, nor does Seller know or have reasonable grounds to know
of
any basis for any such action, with respect to the Intellectual
Property.
4.13 Contracts
and Commitments.
Schedule
4.13
lists
all contracts related to the Business to which Seller is a party and which
obligates Seller to pay in excess of $5,000 per year during any one year
period
after Closing. Each contract or agreement listed in Schedule
4.13
is a
valid and binding obligation of Seller and is in full force and effect,
enforceable in accordance with its terms. Seller has performed all obligations
required to be performed by it under each contract or agreement to which
it is a
party. Except as set forth on Schedule
4.13,
neither
Seller nor any other party is in breach or default in any respect under such
any
contract or agreement. Seller has no contracts with any shareholder of Seller
which may not be terminated immediately upon notice by Purchaser following
the
Closing, without cost or penalty. The Contracts are assignable to Buyer without
the consent of any other party.
4.14 Condition
of Inventory and Equipment.
(a) The
Equipment is adequate for the uses for which it is being put. The Equipment
is
sufficient for the continued conduct of the Business after the Closing in
substantially the same manner as conducted prior to the Closing.
(b) All
Inventory, whether or not reflected in the most recent Financial Statements,
consists of a quality and quantity usable and salable in the ordinary course
of
the Business, except for obsolete items and items of below standard quality,
all
of which have been written off or written down to net realizable value in
the
most recent Financial Statements.
4.15 Personal
Property.
Except
as
listed on Schedule
4.15:
(a) All
of
the tangible property used in the Business is located at Seller’s facility in
Weston, West Virginia;
(b) No
person, firm or corporation other than Seller has any right to the use or
possession of any of the Purchased Assets. Except for financing statements
filed
by GE Capital with respect to the GE Indebtedness (which will be terminated
on
or before the Closing), no currently effective financing statement under
the
Uniform Commercial Code with respect to any of the Purchased Assets has been
filed in any jurisdiction and no agent of Seller has signed any financing
statement or security agreement authorizing anyone to file any financing
statement.
4.16 Customers.
Except
as
listed on Schedule
4.16,
Seller
has not received any notice nor has knowledge that any of its customers intends
to terminate or materially reduce its commercial relationship with Seller,
and
no customer has terminated or materially reduced its commercial relationship
with Seller in the last twelve (12) months.
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4.17 Product
Warranty.
Except
as
listed on Schedule
4.17,
Seller
has no liability (whether known or unknown and whether absolute or contingent)
for the replacement of products sold or delivered by the Business or other
damages in connection therewith, and no product sold or delivered by Seller
relating to the Business is subject to any guaranty, express warranty or
other
indemnity.
4.18 Litigation.
No
litigation or claims, governmental or other proceedings or investigations
are
pending or to the best knowledge of Seller, threatened, nor is there any
valid
basis for such claims by or against, or relating to Seller, or against or
affecting the Purchased Assets, except as listed on Schedule
4.18.
4.19 Environment,
Health and Safety.
(a) Except
as
set forth on Schedule
4.19,
to the
best knowledge of Seller, Seller and the Business are, and at all times prior
hereto have been, in compliance with any and all Environmental Laws and Health
and Safety Laws (as defined below), and no Claim (as defined below) relating
to
a violation of any such laws has been made with respect to Seller or the
Business.
(b) Except
as
set forth on Schedule
4.19,
to the
best knowledge of Seller, there is no Environmental or Health and Safety
Circumstance (as defined below) related to past or present operations of
Seller
or the Business on or off any of the properties, facilities or premises on
which
the Business has been operated.
(c) Except
as
set forth on Schedule
4.19,
Seller
has not, either expressly or by operation of law, assumed or undertaken any
liability, including without limitation, any obligation for corrective or
remedial action, of any other person or entity with respect to any Environmental
Law, nor has any Seller caused, permitted or allowed any “release” (as defined
in 42 U.S.C. § 9601(22)) of any Hazardous Substance, Pollutant or
Contaminant (as defined below) on any real property owned, leased, operated
or
used by Seller in connection with the Business.
(d) Except
as
set forth on Schedule
4.19,
Seller
has obtained (or have pending timely filed applications for) any and all
environmental permits legally required to operate the Business and any assets
used in connection therewith.
(e) Seller
has provided Purchaser with copies of any and all environmental reports
conducted with respect to any real property owned, leased, operated or used
by
Seller in connection with its operations and the conduct of the Business.
(f) For
purposes of this Section
4.19:
(i) “Environmental
Law” means any federal, state or local statute, rule, regulation or ordinance
having as its primary purpose the protection of the environment or the
protection of human health from the effects of environmental pollutants and
any
permit, license or authorization required thereunder, as well as common
law.
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(ii) “Health
and Safety Law” means any federal, state or local statute, rule, regulation or
ordinance having as its primary purpose the protection of worker safety or
health in the workplace.
(iii) “Hazardous
Substance, Pollutant or Contaminant” means any “hazardous substance” as defined
in 42 U.S.C. § 9601(14), any “pollutant or contaminant” as defined in 42
U.S.C. § 9601(33), and petroleum, including crude oil or any fraction
thereof.
(iv) “Claim”
means and includes any claim, action, suit, demand, administrative proceeding,
notice of violation, notice of deficiency, or general notice of potential
liability alleging any failure to comply with or any liability under any
Environmental Law or Health and Safety Law, including, without limitation,
any
liability under common law for damages or injury to person or
property.
(v) “Environmental
or Health and Safety Circumstance” means any fact, circumstance, activity,
practice, incident, action, plan or condition which would constitute a failure
to comply with any Environmental Law or Health and Safety Law, or would give
rise to potential liability under any such Law.
4.20 Tax
Matters.
(a) For
purposes of this Agreement, (i) “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
disputed or not, and (ii) “Tax Return” means any return, report, information
return, or other document (including any related or supporting information)
filed or required to be filed with any taxing authority in connection with
its
determination, assessment, collection, administration, or imposition of any
Tax.
(b) Except
as
set forth in Schedule
4.20,
Seller
has duly and timely filed all Tax Returns and have duly and timely paid all
Taxes and other charges (whether or not shown on any Tax Return) due or claimed
to be due from it by federal, foreign, state, or local taxing authorities
or has
set up an adequate reserve on the Financial Statements for all Taxes payable.
True and correct copies of all Tax Returns for the periods ending June 30,
2001
and 2002 have been heretofore delivered to Purchaser. There are no Tax liens
(other than liens for current Taxes not yet due and payable) upon any properties
or assets of Seller (whether real, personal, or mixed, tangible or intangible),
and, except as reflected in the Financial Statements or as set forth in
Schedule
4.20,
there
are no pending or, to Seller’s knowledge, threatened audits or examinations
relating to, or claims asserted for, Taxes or assessments against Seller,
and
the Seller has no knowledge of any basis for
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any
such
claims. Seller has not been granted or been requested to grant any extension
of
the limitation period applicable to any claim for Taxes or assessments with
respect to Taxes. Seller is not a party to any Tax allocation or sharing
agreement. Seller is not liable for the Taxes of any “affiliated group” under
Treasury Regulation 1.1502-6 (or any similar provision of state, local, or
foreign law). Seller has 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, or stockholder.
(c) Schedule
4.20
attached
hereto lists each jurisdiction in which Seller files Tax Returns for each
period
or portion thereof ending on or before the Closing Date.
4.21 Employee
Benefit Plans.
Except
as
identified on Schedule
4.21,
Seller
does not maintain or contribute to (or have the obligation to contribute
to) any
Employee Benefit Plans. For purposes of this Agreement, the term “Employee
Benefit Plan” means (i) any employee benefit plan, as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974 as amended (“ERISA”), and
(ii) any other plan, trust agreement or arrangement for any bonus, severance,
hospitalization, vacation, incentive or deferred compensation, pension or
profit-sharing, retirement, payroll savings, stock option, equity compensation,
group insurance, death benefit, fringe benefit, welfare or any other employee
benefit plan or fringe benefit arrangement of any nature whatsoever, including
those benefiting retirees or former employees. As to any previously terminated
Employee Benefit Plan of Seller, Seller has not incurred, and will not incur,
any withdrawal liability, nor does any Seller have any contingent withdrawal
liability under ERISA to any Multiemployer Plan (as defined in ERISA or the
Code). Except as identified on Schedule
4.21
and with
respect to each Employee Benefit Plan, Seller is in material compliance,
in form
and operation, with the requirements provided by any and all statutes, orders
or
governmental rules or regulations currently in effect, including, but not
limited to, ERISA and the Code, and applicable to such Employee Benefit Plan.
Each Employee Benefit Plan and any related trust intended to qualify under
Section 401(a) and Section 501(a) of the Code is so qualified and nothing
has
occurred to cause the loss of such qualification.
4.22 Compliance
with Laws.
Except
as
identified on Schedule
4.22
Seller
is in material compliance with all laws applicable to it relating to the
Business, and has not received any written notice of any civil, criminal
or
administrative investigation or audit by any governmental entity relating
to
Seller or the Business.
4.23 Broker’s
or Finder’s Fee.
Except
as
identified on Schedule
4.23,
Seller
has not employed, or is liable for the payment of any fee to, any finder,
broker, consultant or similar person in connection with the transactions
contemplated by this Agreement.
4.24 Investment
Matters.
Seller
is
acquiring the Shares for Seller’s own investment and not with a view toward the
distribution or resale thereof; provided,
that
Seller
intends to distribute all of the Shares to Xxxxxxxx Xxxxxxxxx, as Personal
Representative of the Estate of Xxx Xxxxxxxxx (the “Estate”), a shareholder of
Seller, upon the subsequent liquidation or dissolution of Seller. Seller
acknowledges and understands that (i) the transferability of the Shares is
severely limited and Seller must continue to bear the economic risks of Seller’s
ownership of the Shares for an indefinite period of time as the Shares have
not
been registered under the Federal
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Securities
Act of 1933, as amended, or any state securities laws, (ii) the Shares cannot
be
offered or sold unless they are subsequently registered under such laws or
an
exemption from each such registration requirement is available; and (iii)
investment in the Shares involves a high degree of risk and is suitable only
for
sophisticated investors. Seller has had access to or has received all material
facts and information with respect to MISCOR (including an opportunity to
ask
questions and receive answers from MISCOR regarding MISCOR’s business and
operations) which Seller has deemed necessary or desirable in order to make
an
informed decision with respect to its acquisition of the Shares. Seller
has not been solicited to acquire the Shares by means of general advertising
or
general solicitation. Prior to and as a condition of Seller’s distribution of
the Shares to any of its shareholders, Seller will cause such shareholder
to
execute an investment intent letter in favor of MISCOR substantially in the
form
of the letter attached hereto as Exhibit
4.24.
4.25
No Omissions or Misstatements.
None
of
the statements or information contained in any of the representations,
warranties, covenants or agreements of Seller set forth in this Agreement
or any
information or documents delivered or to be delivered to Purchaser prior
to the
execution of this Agreement, contains any untrue statement of a material
fact or
omits a material fact necessary to make the statements contained in this
Agreement or in any exhibit or schedule to this Agreement or in any of the
other
information provided or the documents delivered to Purchaser in connection
with
the transactions contemplated by this Agreement, in light of the circumstances
in which those statements were made, not misleading.
ARTICLE
V. Representations
and Warranties of Purchaser
As
of the
date hereof and as of the Closing Date, Purchaser hereby represents and warrants
to Seller and Shareholders as follows:
5.01 Organization.
Purchaser
is a limited liability company duly organized and validly existing under
the
laws of the State of Indiana. Purchaser has all necessary power and authority
to
own all of its property and assets and to make, execute, deliver, and perform
this Agreement and the other documents and instruments contemplated
hereby.
5.02 Execution,
Delivery and Validity.
The
execution, delivery and performance of this Agreement by Purchaser have been
duly authorized by all requisite action. This Agreement and all other agreements
contemplated hereby have been duly and validly executed and delivered by
Purchaser, and each constitutes the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms.
5.03 Non-contravention.
The
execution, delivery and performance of this Agreement and the other agreements
contemplated hereby and the consummation of the transactions contemplated
hereby
or thereby or compliance with or fulfillment of the terms and provisions
hereof
or of any other agreement or instrument contemplated hereby or thereby, do
not
and will not: (i) conflict with or result in a breach of any of the provisions
of the Articles of Organization of Purchaser; (ii) contravene any law, rule
or
regulation or any order, writ, award, judgment, decree or other determination
which affects or binds Purchaser or any of its properties; (iii) conflict
with,
result in a breach of, constitute a default under, or give rise to a right
of
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acceleration,
termination or the imposition of penalties under any contract, deed of trust,
mortgage, trust, lease, governmental or other license, permit or other
authorization, contract, agreement, note or any other agreement, instrument
or
restriction to which Purchaser is a party or by which any of its properties
may
be affected or bound; or (iv) require the approval, consent or authorization
of,
or the making of any declaration, filing or registration with, any third
party
or any foreign, federal, state or local court, governmental authority or
regulatory body.
5.04 Broker’s
or Finder’s Fee.
Purchaser
has not employed, nor is Purchaser liable for the payment of any fee to any
finder, broker, consultant or similar person in connection with the transactions
contemplated by this Agreement.
ARTICLE
VI. Related
Agreements and Conditions to Closing
6.01 Related
Agreements.
In
addition to any other agreements contemplated hereby or herein:
(a) Employees.
Seller
agrees to use its best efforts to retain the services of all of Seller’s
employees until the Closing Date. Prior to the Closing Date, Seller shall
cooperate with Purchaser to allow Purchaser a reasonable opportunity to
interview Seller’s employees. At or immediately after Closing, Seller will (i)
take such action as may be required to terminate its employment of each employee
hired by Purchaser (without any liability to Purchaser), (ii) 100% vest the
entire account balance of each such employee who is a participant under any
of
Seller’s pension, profit sharing or 401(k) plans, if any, as of the Closing
Date, (iii) make all employer contributions allocable to each such employee
under any such plans for all periods through the Closing Date, and (iv) pay
to
each employee all wages and other benefits owed by Seller in connection with
the
employment and termination of employment of such employee; provided,
however,
Purchaser agrees to reimburse Seller for all earned or accrued but unpaid
vacation pay paid by Seller at the Closing per Schedule
6.01(a).
Effective as of the Closing Date, Purchaser intends to offer at-will employment
to each employee of Seller (other than Xxxxxxxx Xxxxx and Galliano Xxxxxx,
if
applicable) at the same salary or hourly wage rate currently paid by Seller
to
such employee, subject to the employee’s completion of the Purchaser’s
employment application process. All benefits and other terms and conditions
of
employment shall be determined by Purchaser in its discretion; provided,
that
such employees will be entitled to the same or comparable benefits (with
a
maximum of three weeks of vacation per year) as other similarly situated
employees of Purchaser, subject to all applicable eligibility
criteria.
(b) Conduct
of Business.
Between
the date hereof and the Closing Date, except as otherwise approved by Purchaser,
Seller will conduct the Business only in the ordinary course thereof consistent
with past practice and in such a manner that the representations and warranties
contained in Article IV shall be true and correct at and as of the Closing
Date
and so that the conditions to be satisfied by Seller on the Closing Date
shall
have been satisfied.
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(c) Full
Access.
Immediately following the execution of this Agreement by all parties, Seller
shall give Purchaser and its authorized representatives full access to any
and
all premises, properties, contracts, commitments, books, records and affairs
of
Seller, including, without limitation, causing appropriate senior personnel
of
Seller to be made available for interviews by Purchaser and its authorized
representatives. Purchaser shall use its best efforts to conduct any such
inspections and interviews so as to cause minimal disruption to the Business.
If
this Agreement is terminated, Seller and its representatives, and Purchaser
and
its representatives will, upon written request therefor, each return to the
other all documents and records (including all copies made thereof) obtained
from the other at any time in connection with the transactions contemplated
hereby and will keep confidential any such information so obtained. Seller
will
also permit Purchaser at any time after the execution of this Agreement to
make
economic and operational feasibility, engineering and architectural studies,
including soil tests and borings, and studies of estimated costs of clearance
and grading on any real estate used in connection with the Business. All
such
tests, inspections, assessments, audits and studies shall be at Purchaser’s
cost.
(d) Public
Announcements.
Prior
to Closing, the contents of any announcements to employees, customers or
suppliers of Seller or any other public statements shall be mutually agreed
to
by the parties prior to the making of any such announcement; provided,
that
each party hereto may make disclosures that it in good faith believes, based
on
the advice of counsel, is reasonably necessary to comply with any requirement
of
law or regulation or to fulfill a party’s obligations under this
Agreement.
(e) Bulk
Sales.
Purchaser and Seller hereby agree that the parties intend to comply with
any
applicable bulk sales laws and all other statutes, regulations or ordinances
requiring notice to creditors of the Business or others in connection with
the
consummation of the transactions contemplated by this Agreement; provided,
that
nothing herein shall be deemed to release or discharge Seller from its
obligation to pay its creditors except to the extent such obligations constitute
Assumed Liabilities.
6.02 Conditions
to Obligations of Seller.
The
obligations of Seller under this Agreement are subject to the fulfillment,
at or
prior to the Closing, of the following conditions, any one or more of which
may
be waived by Seller:
(a) Representations
and Warranties.
All
representations and warranties of Purchaser contained in or made pursuant
to
this Agreement shall be true and correct on and as of the Closing Date with
the
same force and effect as though made on and as of the Closing Date, and
Purchaser shall have delivered to Seller a certificate, signed and dated
as of
the Closing Date by an officer of Purchaser, to the foregoing
effect.
(b) Performance
of Agreement.
Purchaser shall have delivered all documents and agreements described in
Article
VII and otherwise performed in all respects all obligations required under
this
Agreement and any other agreements referenced herein to be performed by it
on or
prior to the Closing Date.
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(c) Litigation;
Injunctions.
No
order of any court or administrative agency shall be in effect which restrains
or prohibits the transactions contemplated hereby, and there shall not have
been
threatened, nor shall there be pending, any action or proceeding by or before
any court or governmental agency or other regulatory or administrative agency
or
commission, challenging any of the transactions contemplated by this
Agreement.
(d) Consents
and Approvals.
All
consents, approvals, licenses and permits, the granting of which are reasonably
necessary for the consummation of the transactions contemplated hereby, shall
have been obtained.
(e) Corporate
Certificates.
Purchaser shall have delivered to Seller: (i) a copy of Purchaser’s Certificate
and Articles of Organization; (ii) a certificate of existence of Purchaser
issued as of a current date by the Indiana Secretary of State; and (iii)
copies
of resolutions of the sole member of Purchaser authorizing (A) the execution
and
delivery of this Agreement and any other agreements contemplated hereby and
(B)
the taking of all steps necessary to consummate the transactions and fulfill
Purchaser’s obligations under this Agreement.
6.03 Conditions
to Obligations of Purchaser.
All
obligations of Purchaser under this Agreement are subject to the fulfillment,
at
or prior to the Closing, of the following conditions, any one or more of
which
may be waived by Purchaser:
(a) Hatch
& Xxxx Asset Purchase Agreement.
At or
prior to Closing, Purchaser, or a related entity, shall enter into a written
asset purchase agreement with Hatch & Xxxx for the purchase of certain
assets of Hatch & Xxxx located in Hagerstown, Maryland, substantially in the
form of asset purchase agreement attached hereto as Exhibit
6.03(a).
(b) Minehardt
Employment Agreement.
At or
prior to Closing, Purchaser shall enter into a written employment agreement
with
Xxxxxxxx Xxxxxxxxx, substantially in the form of employment agreement attached
hereto as Exhibit
6.03(b).
(c) Representations
and Warranties.
All
representations and warranties of Seller contained in or made pursuant to
this
Agreement shall be true and correct on and as of the Closing Date with the
same
force and effect as though made on and as of the Closing Date, and Seller
shall
have delivered to Purchaser a certificate, signed and dated as of the Closing
Date by an officer of Seller to the foregoing effect.
(d) Due
Diligence.
Purchaser shall have completed such inspections of the Purchased Assets and
such
due diligence investigations of Seller and the Business as Purchaser may
deem
reasonably necessary or advisable, and Purchaser shall be satisfied in its
sole
and absolute discretion with the results of such due diligence
review.
(e) Performance
of Agreement.
Seller
shall have delivered all documents and agreements described in Article VII
and
otherwise performed in all respects all
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obligations
required under this Agreement and any other agreements referenced herein
to be
performed by it on or prior to the Closing Date.
(f) Litigation;
Injunctions.
No
order of any court or administrative agency shall be in effect which restrains
or prohibits the transactions contemplated hereby or which would limit or
affect
Purchaser’s ownership or control of the Purchased Assets or the Business, and
there shall not have been threatened, nor shall there be pending, any action
or
proceeding by or before any court or governmental agency or other regulatory
or
administrative agency or commission challenging any of the transactions
contemplated by this Agreement.
(g) Consents
and Approvals.
All
consents, approvals, licenses and permits, the granting of which are reasonably
necessary for the consummation of the transactions contemplated hereby, shall
have been obtained.
(h) Absence
of Changes.
On or
prior to the Closing Date, there shall have been no loss, damage or destruction
to the Purchased Assets which materially impairs the use or the value of
the
Purchased Assets or the Business. Seller shall not have suffered any material
adverse change in its financial condition, results of operations, assets,
liabilities, or business, nor shall Seller have suffered any significant
employee attrition between the date of execution of this Agreement and the
Closing Date.
(i) Lien
Searches.
Seller
shall have delivered to Purchaser (i) final state and local tax lien and
Uniform
Commercial Code financing statement searches disclosing all liens and
encumbrances on the Purchased Assets; and (ii) written releases from the
holders
of any such security interests, liens or other encumbrances with respect
thereto.
(j) Corporate
Certificates.
Seller
shall have delivered to Purchaser: (i) a copy of Seller’s Articles of
Incorporation, certified by the Washington Secretary of State as of a current
date; (ii) a certificate of good standing of Seller issued as of a current
date
by the Washington Secretary of State; and (iii) copies of resolutions of
the
Boards of Directors of and the shareholders of Seller, authorizing (A) the
execution and delivery of this Agreement and the other agreements contemplated
hereby and (B) the taking of all steps necessary to consummate the transactions
and fulfill Seller’s obligations under this Agreement and all agreements
contemplated hereby.
ARTICLE
VII. Deliveries
at Closing
7.01 Deliveries
by Seller.
Seller
shall execute, acknowledge, deliver and cause to be executed, acknowledged
and
delivered to Purchaser documents conveying title to the Purchased Assets
as
follows:
(a) Seller
shall execute and deliver to Purchaser a xxxx of sale in the form attached
hereto as Exhibit
7.01(a).
(b) Seller
shall execute an assignment and assumption agreement (“Assignment and Assumption
Agreement”) in the form attached hereto as Exhibit
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7.01(b)
together
with such other instruments and specific forms of assignment as may be necessary
to effect the transfer and registration of transfer of the Purchased Assets
and
Assumed Liabilities hereunder.
(c) Seller
shall execute and endorse to Purchaser certificates of title covering all
vehicles, if any, that are part of the Purchased Assets.
(d) Seller
shall deliver originals (to the extent available, and if not, copies) of
the
Contracts, Licenses and Permits, Business Records and other documents in
Seller’s possession constituting part of the Purchased Assets, as well as
Schedule
1.01(a)
and
1.01(d)
updated
as of the Closing Date.
(e) Seller
shall have delivered to Purchaser fully executed documents to Purchaser’s
satisfaction, evidencing Seller’s authority to sign this Agreement and to
consummate the transactions contemplated hereby, as well as corporate
certificates set forth in Section 6.03(j).
7.02 Deliveries
by Purchaser.
Purchaser
shall execute, acknowledge, deliver and cause to be executed, acknowledged
and
delivered to Seller the following items:
(a) Purchaser
shall pay the Cash Price to GE Capital and issue the Shares in accordance
with
Section 3.02.
(b) Purchaser
shall execute and deliver the Assignment and Assumption Agreement.
(c) Purchaser
shall have delivered to Seller fully executed documents to Seller’s
satisfaction, evidencing each such Purchaser’s authority to sign this Agreement
and to consummate the transactions contemplated hereby, as well as corporate
certificates set forth in Section 6.02(e).
7.03 Additionally
Requested Documents; Post-Closing Assistance.
At
the
reasonable request of Purchaser at Closing and at any time or from time to
time
thereafter, Seller shall cooperate with Purchaser to put Purchaser in actual
possession and operating control of the Business operated by Seller and the
Purchased Assets, execute and deliver such further instruments of sale,
conveyance, transfer and assignment as Purchaser may reasonably request in
order
to effectively convey, transfer and assign the same to Purchaser, free and
clear
of all Liens, except the Assumed Liabilities.
ARTICLE
VIII. Survival
of Provisions and Indemnification
8.01 Survival.
The
respective representations, warranties and covenants of each of the parties
to
this Agreement, including all statements contained in any schedule, exhibit
or
other agreement delivered pursuant hereto or contemplated hereby, shall be
deemed to be material and to have been relied upon by the parties hereto
and
shall survive the Closing, and the consummation of the transactions contemplated
hereby, as follows: (a)
the
representations and warranties contained in Sections 4.01, 4.02, 4.04, 4.10,
5.01 and 5.02 shall
survive indefinitely
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and
shall
not terminate; (ii) the representations and warranties contained in Sections
4.07, 4.19, 4.20 and 4.21 shall
survive for the applicable statutes of limitation; and (c) all other
representations and warranties shall survive for a period of twenty-four
(24)
months after the Closing Date; provided,
that
any representation or warranty in respect of which indemnity may be sought
under
this Article VIII, and the indemnity with respect thereto, shall survive
the
time at which it would otherwise terminate pursuant to this Section 8.01
if
notice of the breach thereof giving rise to such right or potential right
of
indemnity shall have been given to the party against whom such indemnity
may be
sought prior to such time. No investigation by the parties made heretofore
or
hereafter shall affect the representations and warranties of the parties
contained in or made pursuant hereto.
8.02 Indemnification
by Seller.
Subject
to the other provisions of this Article, Seller shall promptly indemnify,
defend
and hold harmless Purchaser and its shareholders, directors, officers,
employees, agents, successors and assigns (“Purchaser’s Indemnified Parties”)
against any and all losses, costs, claims, demands and expenses (including
reasonable costs of investigation, court costs and legal fees actually incurred)
and other damages (collectively, the “Losses”) arising out of, relating to or
resulting from: (a) any breach by Seller of, or failure by Seller to perform,
any of the covenants, obligations, representations or warranties contained
in
this Agreement; (b) any and all Excluded Liabilities; (c) any claim relating
to
bulk transfers or other principles of transferee liability by any creditor
or
former creditor of Seller, whether such claim is liquidated or unliquidated,
contingent or disputed; (d) the operation of the Business on and prior to
the
Closing Date; and (e) any claim, action, suit or proceeding relating to any
of
the foregoing.
8.03 Indemnification
by Purchaser.
Subject
to the other provisions of this Article, Purchaser shall promptly indemnify,
defend and hold harmless Seller against any and all Losses arising out of,
relating to or resulting from: (a) any breach by Purchaser of, or failure
of
Purchaser to perform, any of the covenants, obligations, representations
or
warranties contained in this Agreement; (b) any Assumed Liabilities; (c)
the
conduct of the Business by the Purchaser after the Closing Date; and (d)
any
claim, action, suit or proceeding relating to any of the foregoing.
8.04 Cooperation.
Subject
to the provisions of Section 8.05, a party or parties against whom
a claim
for indemnification has been asserted (individually and collectively
“Indemnifying Party”) shall have the right, at its own expense, to defend any
action or proceeding brought by a third party which resulted in said claim
for
indemnification, and if said right is exercised, the party or parties entitled
to indemnification (individually and collectively “Indemnified Party”) and the
Indemnifying Party shall cooperate in the defense of said action or
proceeding.
8.05 Indemnification
Procedure for Third Party Claims Against Indemnified Parties.
(a) In
the
event that subsequent to the Closing Date any Indemnified Party asserts a
claim
for indemnification under this Article VIII, on account of or in connection
with
any claim or the commencement of any action or proceeding against such
Indemnified Party by any person or entity who is not a party to this Agreement
(including
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any
Governmental Authority) (a “Third Party Claim”), the Indemnified Party shall
give written notice thereof together with a summary of any available information
regarding such claim (the “Notice of Claim”) to the Indemnifying Party promptly
after learning of such Third Party Claim. The Indemnifying Party shall have
the
right, upon written notice to the Indemnified Party (the “Defense Notice”)
within 15 days of its receipt from the Indemnified Party of the Notice of
Claim,
to conduct at its expense the defense against such Third Party Claim in its
own
name, or, if necessary, in the name of the Indemnified Party.
(b) In
the
event that the Indemnifying Party shall fail to give the Defense Notice within
the time and as prescribed by Section 8.05(a), the Indemnified Party shall
have
the right to conduct such defense in good faith with counsel reasonably
acceptable to the Indemnifying Party at the Indemnifying Party’s expense, but
the Indemnified Party (or any insurance carrier defending such Third Party
Claim
on the Indemnified Party’s behalf) shall be prohibited from compromising or
settling such claim without the prior written consent of the Indemnifying
Party,
which consent shall not be unreasonably withheld or delayed.
(c) In
the
event that the Indemnifying Party does deliver a Defense Notice and thereby
elects to conduct the defense of such Third Party Claim in accordance with
Section 8.05(a), the Indemnified Party will cooperate with and make available
to
the Indemnifying Party such assistance and materials as it may reasonably
request, all at the expense of the Indemnifying Party. Regardless of which
party
defends such Third Party Claim, the other party shall have the right at its
expense to participate in the defense assisted by counsel of its own choosing.
Without the prior written consent of the Indemnified Party, the Indemnifying
Party (and any insurance carrier defending such Third Party Claim on the
Indemnified Party’s behalf) will not enter into any settlement of any Third
Party Claim if pursuant to or as a result of such settlement, such settlement
would lead to liability or create any financial or other obligation on the
part
of the Indemnified Party. If a firm offer is made to settle a Third Party
Claim,
which offer the Indemnifying Party is permitted to settle under this Section
8.05, and the Indemnifying Party desires to accept and agree to such offer,
the
Indemnifying Party will give written notice to the Indemnified Party to that
effect. If the Indemnified Party objects to such firm offer within 10 days
after
its receipt of such notice, the Indemnified Party may continue to contest
or
defend such Third Party Claim and, in such event, the maximum liability of
the
Indemnifying Party as to such Third Party Claim will not exceed the amount
of
such settlement offer, plus costs and expenses paid or incurred by the
Indemnified Party up to the point such notice had been delivered. Failure
at any
time of the Indemnifying Party to diligently defend a Third Party Claim as
required herein shall entitle the Indemnified Party to assume the defense
and
settlement of said Third Party Claim as if the Indemnifying Party had never
elected to do so as provided in this Section 8.05. Failure by an Indemnified
Party to provide notice on a timely basis of a Third Party Claim shall not
relieve the Indemnifying Party of its obligations hereunder, except that
the
foregoing shall not constitute a waiver by the Indemnifying Party of any
claim
for direct damages caused by such delay.
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(d) Any
judgment entered or settlement agreed upon in the manner provided herein
shall
be binding upon the Indemnifying Party, and shall be conclusively deemed
to be
an obligation with respect to which the Indemnified Party is entitled to
prompt
indemnification hereunder, subject to the Indemnifying Party’s right to appeal
an appealable judgment or order.
8.06 Nature
of Other Liabilities.
In
the
event any Indemnified Party should have a claim against any Indemnifying
Party
hereunder which does not involve a Third Party Claim, the Indemnified Party
shall transmit to the Indemnifying Party a written notice (the “Indemnity
Notice”) describing in detail the nature of the claim and the basis of the
Indemnified Party’s request for indemnification under this Agreement. The
Indemnifying Party shall make all payments pursuant to the indemnification
provisions contained in this Article VIII within ten (10) days after its
receipt
of the Indemnity Notice or, if the Indemnifying Party delivers written notice
to
the Indemnified Party within such 10-day period that it is disputing the
Indemnified Party’s right to indemnification hereunder with respect to such
payments, immediately upon the final determination of the amount of such
indemnification obligation.
8.07 Right
to Set-Off.
Purchaser
shall have the right to directly recoup and set-off any Losses incurred or
suffered by any of the Purchaser Indemnified Parties resulting from any failure
of a Seller to reimburse Purchaser for (i) any amounts due under this Agreement,
and (ii) any claims of the Purchaser Indemnified Parties under this
Article
VIII, against any and all amounts which Purchaser may owe Seller from time
to
time. The parties acknowledge and agree that the rights of recoupment and
set
off set forth in this Section 8.07 are a condition to Purchaser agreeing
to
enter into and perform this Agreement and any other agreements contemplated
hereby.
ARTICLE
IX. Restrictive
Covenants
9.01 Confidentiality.
Seller
acknowledges that the trade secrets and other confidential information acquired
by Purchaser pursuant to this Agreement, including, without limitation, pricing
practices, marketing strategies, technology, manufacturing processes and
know-how are valuable, special and unique assets of Purchaser. Seller agrees
that it will not, and it will cause its shareholders, directors, officers,
employees, agents and Affiliates to not, directly or indirectly, except with
the
prior written consent of Purchaser, use, divulge or disclose or communicate,
or
cause or permit any other person or entity to use, divulge, disclose or
communicate, to any person, firm, corporation or entity, in any manner
whatsoever, any trade secrets or other confidential information conveyed
to
Purchaser pursuant to this Agreement. The foregoing covenants shall remain
in
effect for so long as any such information remains confidential information
of
Purchaser, and, in any event, for a minimum period of five (5) years after
Closing. Notwithstanding anything to the contrary in this Agreement, Seller
will
not, and it will cause its shareholders, directors, officers, employees,
agents
and Affiliates to not, ever disclose or use confidential information which
remains a trade secret of Purchaser. For purposes of this Agreement, “Affiliate”
means a person or entity that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
another person or entity or which any person or entity owns or controls directly
or indirectly 20% or more of the
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voting
shares or of the value of such person or entity or has the ability to control
the management or affairs of such person or entity.
9.02 Covenant
Against Competition and Solicitation.
To
preserve the value of the goodwill purchased by Purchaser, and to reduce
the
cost to Purchaser of monitoring and enforcing the compliance of Seller with
the
confidentiality obligations contained in Section 9.01, Seller covenants and
agrees that, during the five (5) year period from and after Closing, it will
not, and it will cause its shareholders, directors, officers, employees,
agents
and Affiliates to not, without the express written consent of Purchaser and
only
to the extent authorized by Purchaser:
(a) Directly
or indirectly, alone or in concert with others, whether as principal, agent,
representative, partner, lender, consultant, shareholder or otherwise, under
or
through any form of business entity, own, operate, manage, control or actively
participate in any business which competes with or is substantially similar
to
the Business as presently conducted by Seller anywhere in the world (the
“Prohibited Territory”);
(b) Either
for themselves or for any other person, firm, corporation or entity solicit,
divert or accept, or attempt to solicit, divert or accept any persons or
entities which were customers or suppliers of the Business at any time within
two (2) years prior to the Closing; and
(c) Induce
or
solicit or seek to induce or solicit any person who was engaged by Seller
as an
employee, agent or otherwise within the one (1) year period prior to the
Closing
to terminate his or her engagement with Purchaser or otherwise participate
in
any business activity directly or indirectly competitive with the
Business.
The
covenants contained in Sections 9.02(a), (b) and (c) are separate and distinct
covenants of Seller.
9.03 Reasonableness.
Seller
acknowledges and agrees that the customers of the Business are located
throughout the Prohibited Territory and that the territorial, time and other
limitations set forth above are reasonable and properly required for the
adequate protection of the goodwill and other Purchased Assets acquired by
Purchaser pursuant to this Agreement and shall be enforceable to the fullest
extent permitted by law.
9.04 Modification.
In
the
event that any term, provision or covenant contained in this Article IX is
found
to be unreasonable, and therefore unenforceable, by a court of competent
jurisdiction, but would be valid and enforceable if any part thereof were
deleted or otherwise modified, then the parties expressly agree that a court
may
limit the application of, or modify any such term, provision or covenant
and
proceed to enforce such term, provision or covenant as so limited or
modified.
9.05 Remedies.
Seller
acknowledges and agrees that any violation of Section 9.01 or Section 9.02
would
cause Purchaser irreparable damage and that if Seller violates or threatens
to
violate such restrictions, Purchaser shall be entitled to injunctive relief
against Seller, without the
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necessity
of proof of actual damage or the posting of bond, in addition to any other
remedies available under this Agreement at law or in equity.
ARTICLE
X. Miscellaneous
10.01 Termination.
This
Agreement may be terminated at any time prior to Closing: (a) by the mutual
written consent of the parties hereto; (b) by Purchaser in the event that
the
conditions to its obligations set forth in Section 6.03
hereof have not been satisfied or waived at or prior to the Closing Date;
(c) by
Seller in the event that the conditions to its obligations set forth in
Section 6.02
hereof have not been satisfied or waived at or prior to the Closing Date;
or (d)
by either Purchaser or Seller if Closing has not occurred by 11:59 p.m. on
March
15, 2005, without intentional delay. In the event this Agreement is terminated
pursuant to this Section,
all rights and obligations of the parties hereunder shall terminate and no
party
shall have any liability to any other party; provided,
that
nothing herein will relieve any party from liability for any breach of any
representation, warranty, agreement or covenant contained herein prior to
such
termination.
10.02 Risk
of Loss.
Seller
assumes all risks of destruction, loss or damage to any of the Purchased
Assets
due to fire or other casualty up to and including the Closing Date. If any
material portion of the Purchased Assets is so destroyed, lost or damaged
prior
to Closing as to impair Purchaser’s ability to operate the Business, as
determined in Purchaser’s discretion, Purchaser shall have the option to: (i)
terminate this Agreement or (ii) or proceed with the Closing, with the Purchase
Price reduced by the amount of such destruction, loss or damage as mutually
agreed by Seller and Purchaser.
10.03 Definition
of Knowledge.
For
purposes of this Agreement, Seller will be deemed to have “knowledge” of a
particular fact or other matter if any individual who is serving, or who
has at
any time served, as a shareholder, director, officer or trustee of such person
(or in any similar capacity) is, or at any time was, actually aware of such
fact
or other matter or
if a
reasonable inquiry by such person could reasonably be expected to disclose
the
existence of such fact or matter.
10.04 Assignment.
Seller
may not assign any rights or delegate any obligations under this Agreement
without the prior written consent of Purchaser, and any prohibited assignment
or
delegation will be null and void. The parties hereby acknowledge and agree
that
Purchaser may assign this Agreement at any time prior to Closing to any
affiliated third party assignee, provided that such assignee agrees to assume
Purchaser’s obligations hereunder.
10.05 Other
Expenses.
Except
as
otherwise provided in this Agreement, Seller shall pay all of its expenses
incurred in connection with the negotiation, execution, and implementation
of
the transactions contemplated under this Agreement, and Purchaser shall pay
all
of its expenses incurred in connection with the negotiation, execution, and
implementation of the transactions contemplated under this
Agreement.
10.06 Notices.
All
notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and shall
be
deemed to
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have
been
duly given: (a) if delivered personally or sent by facsimile, on the date
received, (b) if delivered by overnight courier, on the day after mailing,
and
(c) if mailed, four days after mailing by first class certified mail, return
receipt requested and with postage prepaid. Any such notice shall be sent
as
follows:
|
To
Seller:
|
To
Purchaser:
|
||
|
HK
Castings, Inc.
|
HK
Cast Products, LLC
|
||
|
0000
Xxxxx Xxx. X.X.
|
0000
X. Xxxxxx
|
||
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
Xxxxx
Xxxx, Xxxxxxx 00000
|
||
|
Attn:
Galliano Xxxxxx
|
Attn:
Xxxx X. Xxxxxxx
|
||
|
Fax:
(000) 000-0000
|
Fax:
(000) 000-0000
|
||
|
with
a copy to:
|
with
a copy to:
|
||
|
Xxxxxxxx,
Xxxxxxx & Xxxxx PLLC
|
Xxxxxx
& Xxxxxxxxx LLP
|
||
|
000
Xxxxx Xxxxxx, Xx. 0000
|
000
0xx
Xxxxxx Xxxx Xxxxxx
|
||
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
000
Xxxxx Xxxxxxxx Xx.
|
||
|
Attn:
Xxxxxx X. Xxxxxx
|
Xxxxx
Xxxx, Xxxxxxx 00000
|
||
|
Fax:
(000) 000-0000
|
Attn:
Xxxxxxx X. Xxxxx
|
||
|
Fax:
(000) 000-0000
|
10.07 Controlling
Law; Jurisdiction.
This
Agreement shall be construed, interpreted and enforced in accordance with
the
laws of the State of Indiana, without giving effect to principles of conflicts
of laws. The parties expressly consent to exclusive personal jurisdiction
and
venue in the federal and state courts of the State of Indiana.
10.08 Headings.
Any
table
of contents and paragraph headings in this Agreement are for convenience
of
reference only and shall not be considered or referred to in resolving questions
of interpretation.
10.09 Benefit.
This
Agreement shall be binding upon and shall inure to the exclusive benefit
of the
parties hereto and their respective heirs, legal representatives, permitted
successors and permitted assigns. This Agreement is not intended to, nor
shall
it, create any rights in any other party.
10.10 Partial
Invalidity.
The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions
were
omitted.
10.11 Waiver.
Neither
the failure nor any delay on the part of any party hereto in exercising any
rights, power or remedy hereunder shall operate as a waiver thereof, or of
any
other right, power or remedy; nor shall any single or partial exercise of
any
right, power or remedy preclude any further or other exercise thereof, or
the
exercise of any other right, power or remedy. No waiver of any of the provisions
of this Agreement shall be void unless it is in writing and signed by the
party
against which it is sought to be enforced.
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10.12 Counterparts
and Facsimiles.
This
Agreement may be executed simultaneously in two or more counterparts each
of
which shall be deemed an original and all of which together shall constitute
but
one and the same instrument. The signature page to this Agreement and all
other
documents required to be executed at Closing may be delivered by facsimile
and
the signatures thereon shall be deemed effective upon receipt by the intended
receiving party.
10.13 Legal
Fees and Costs.
Subject
to the provisions of Article VIII, in the event any party hereto incurs legal
expenses to enforce any provision of this Agreement, the prevailing party
will
be entitled to recover such legal expenses, including, without limitation,
attorneys’ fees, costs and disbursements, in addition to any other relief to
which such party shall be entitled.
10.14 Entire
Agreement.
This
Agreement, including the schedules and exhibits hereto, constitutes the entire
agreement between the parties hereto with regard to the matters contained
herein
and it is understood and agreed that all previous undertakings, negotiations,
letter of intent, term sheets, and agreements between the parties are merged
herein. This Agreement may not be modified orally, but only by an agreement
in
writing signed by Purchaser and Seller.
[Remainder
of Page Intentionally Blank]
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IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement on the date or dates indicated
below, effective as of the date first above written.
|
“SELLER”
|
“PURCHASER”
|
|||||
|
Hatch
& Xxxx, Inc.
|
HK
Cast Products, LLC, formerly
known as HK
Engineered Castings, LLC
|
|||||
|
By:
|
/s/ Galliano Mordin |
By:
|
/s/ Xxxx X. Xxxxxxx | |||
|
Its:
|
Vice President |
Its:
|
Manager | |||
|
Dated:
|
March 4, 2005 |
Dated:
|
March 4, 2005 | |||
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