PURCHASE AGREEMENT
AGREEMENT dated as of June 30, 1997 by and between
GW ACQUISITION CORP., a Delaware corporation with its
principal office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ("Purchaser") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇ GRASS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, all residents of
Illinois (sometimes referred to herein collectively as
"Individual Sellers") and DWG L.L.C., an Illinois limited
liability company ("DWG"). (The Individual Sellers and
DWG are sometimes referred to herein collectively as
"Sellers".)
RECITALS
PFAUTER/▇▇▇▇ CUTTING TOOLS Limited Partnership is
an Illinois limited partnership with offices at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("PMCT"). PMCT
has two general partners: (i) Pfauter Cutting Tools,
Inc. an Illinois corporation with offices at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("PCTI"), all of the
issued and outstanding stock of which is owned by ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ GmbH & Co., a German limited partnership
("Pfauter"), PCTI being the Managing General Partner and
owning 1/67th of the outstanding partnership interests of
PMCT; and (ii) DWG which owns 7/67ths of the outstanding
partnership interests of PMCT. The remaining 59/67ths
outstanding partnership interests of PMCT are owned as
follows: (i) 50/67ths by Pfauter; and (ii) 9/67ths by
the Individual Sellers collectively; Sellers collectively
owning 16/67ths, or approximately 23.88%, of the
outstanding partnership interests of PMCT.
Pursuant to an agreement between Purchaser and
▇▇▇▇▇▇▇ Maschinenfabrik GmbH ("GMG") and ▇▇▇▇▇▇▇-▇▇▇▇▇
Maschinen und Werkzeuge Gmbh ("GHM"), affiliates of
Purchaser, as purchasers, and all the limited partners of
Pfauter, Purchaser, GMG and GHM have agreed to purchase
all of the limited partnership interests of Pfauter
("Pfauter Agreement"). It is a condition of the
obligations of Purchaser and GMG and GHM to consummate
the acquisition of the Pfauter partnership interests
pursuant to the Pfauter Agreement that Purchaser purchase
all of the partnership interests of Sellers in PMCT
pursuant to this Agreement, consummation of the purchases
under the Pfauter Agreement and this Agreement to occur
simultaneously, and Sellers wish to sell, and Purchaser
wishes to purchase, all of their partnership interests in
PMCT, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing,
and the representations, warranties and covenants
contained herein, the parties, intending to be legally
bound hereby, agree as follows:
1. Sale and Purchase
1.1 Sellers shall sell, assign, transfer and deliver to
Purchaser, and Purchaser shall purchase from
Sellers, on the Closing Date, as hereinafter
defined, all of Sellers' respective partnership
interests in PMCT, both general and limited, and
Purchaser shall as of the Closing Date be entitled
to all rights, and subject to all obligations,
arising from such partnership interests, including
without limitation the right to receive profits and
the obligation to assume losses, as well as all
balances on Sellers' individual accounts with PMCT,
but Purchaser will not assume any obligations of
Sellers with respect to third parties, including,
but not limited to, tax obligations, except for non-
tax obligations of PMCT for which DWG is liable in
its capacity as a general partner of PMCT.
2. Consideration
2.1 The total purchase price payable by Purchaser to
Sellers for such partnership interests in PMCT
shall be Nine Million Seven Hundred Thousand
Dollars ($9,700,000).
2.1.1 The purchase price shall be allocated among Sellers
as indicated in column 3 of Schedule 3.1.2 to this
Agreement.
2.2 The purchase price is payable by way of bank-
guaranteed check to be delivered on the Closing
Date. Said bank guaranteed check shall be payable
to and delivered to the Sellers' Representative
designated in Section 11.1 of this Agreement
("Sellers' Representative"). With the delivery of
such bank guaranteed check Purchaser shall have
complied with all its obligations with respect to
the payment of the purchase price.
2.3 From the purchase price paid to them, each of the
Sellers will on the Closing Date pay in full any
and all loans to it or him from, or guaranteed by,
PMCT, including, without limitation, those listed
on Schedule 3.1 22.a.
3. Representations and Warranties of the Seller/Remedies
of Purchaser
3.1 Sellers jointly and severally (except for 3.1.2 and
3.1.3 which are made severally) represent and
warrant to Purchaser as follows (All references to
Schedules in this Section 3 are to the Schedules to
the Disclosure Letter dated the date of this
Agreement and delivered to Purchaser by the Sellers
simultaneously with the execution of this Agreement
which, to the extent specifically referenced on
such Schedules, will be deemed to include and
incorporate by reference matters regarding PMCT
disclosed in the corresponding Schedules to the
Disclosure Letter delivered to Purchaser and GMG by
the limited partners of Pfauter pursuant to the
Pfauter Agreement):
3.1.1 The statements in the recitals with respect to PMCT
are correct. PMCT is a duly organized validly
existing limited partnership under the laws of
Illinois with full power to own its properties and
conduct its business. It is not licensed to do
business in any other jurisdiction and the location
of its assets and nature of its activities does not
require that it be licensed in any such
jurisdiction. Complete and correct copies of
PMCT's Limited Partnership Agreement as presently
in force are set forth in Schedule 3.1.1. PMCT
owns sixty percent (60%) of the issued and
outstanding quotas of Mecup S.r.l., a limited
liability company duly organized and validly
existing under the laws of Italy ("Mecup").
3.1.2 The Sellers respectively own the partnership shares
of PMCT in the amounts indicated on Schedule 3.1.2
to this Agreement, free and clear of any liens or
encumbrances or any third party rights, except for
the pledge of DWG's partnership interest to PMCT as
security for the loan from PMCT to DWG referenced
in Schedule 3.1.22.a.
3.1.3 The Sellers' power of disposal of their respective
partnership interests in PMCT is not limited in any
way except for the requirement of consent hereto by
PCTI as Managing General Partner of the partnership
pursuant to the PMCT Partnership Agreement, and by
PMCT as the holder of a pledge of the DWG
partnership interest.
3.1.4 The partnership capital contributions of the
Sellers in PMCT have been fully paid in and, apart
from any exceptions set forth in Schedule 3.1.4,
have not been repaid in whole or in part.
3.1.5 The financial statements as of December 28, 1996 of
PMCT and as of December 31, 1996 of Mecup set forth
in Schedule 3.1.5, when taken as a part of the
audited consolidated financial statements of
Pfauter for the year ended December 31, 1996 (the
"Pfauter Statements"), fairly present the financial
position and the results of operations for PMCT and
Mecup, when taken as a part of the Pfauter
Statements, with respect to that date and the
periods covered by those financial statements, with
the exception of those liabilities that are set
forth in Schedule 3.1.5. a. Said financial
statements of PMCT were prepared on the basis of
the books and records of PMCT and, when taken as
part of the Pfauter Statements, were prepared in
accordance with generally accepted accounting
principles in the United States.
3.1.6 Neither PMCT nor Mecup has paid, or incurred any
obligation to pay, and they will not pay or incur
any obligation to pay, any legal, accounting or
consulting fees or any other costs of the Sellers
in connection with the transactions contemplated by
this Agreement. With the exception of the events
set forth in Schedule 3.1.6, none of the following
events has occurred with respect to PMCT or Mecup
since December 28, 1996:
(i) payments of dividends or withdrawals or other
transfer of assets of any kind to the Sellers or
other partners;
(ii) transactions outside the ordinary course
of business;
(iii) any material changes in the financial
condition, assets, liabilities or business
operations; and to the best knowledge and belief
of the Sellers no such material changes are
likely to occur;
(iv) substantial amendments, supplements or
terminations of material agreements to which it
is a party;
(v) the grant of any increase in the compensation
of officers or employees (including any such
increase pursuant to any bonus, pension, profit
sharing or other plan) other than customary
increases on a periodic basis or required by
agreement or understanding in the ordinary
course of business and in accordance with past
practice.
3.1.7 With the exception of the normal retentions of
title and the security rights of banks set forth in
Schedule 3.1.7, PMCT and Mecup each has good and
marketable title to all of its assets listed in the
financial statements pursuant to Section 3.1.5 or
acquired since the relevant dates of such financial
statements (except assets sold or otherwise
disposed of subsequently to such dates in the
ordinary course of business), free and clear of any
rights of third parties.
3.1.8 Schedule 3.1.8 lists all real property owned by
PMCT and all real property and buildings leased by
it. All real properties and the structures thereon
are in satisfactory condition, consistent with
their present use. None of these plants and
structures, or use thereof, contravenes or violates
any laws, decrees or orders by a governmental
authority in any material respect.
3.1.9 Except as otherwise set forth in Schedule 3.1.9:
(i) Neither PMCT nor Mecup is involved in any
court or arbitration proceedings either as
plaintiff or as defendant or any other type of
intervening party;
(ii) No circumstances are known from which can
be inferred that PMCT or Mecup is threatened
with orders, judgments or decrees of any court
or other tribunal ordering or requiring it to
take any action of any kind with respect to its
business operations or assets.
3.1.10 Within the time and manner prescribed by law or, if
it was not the case, without negative legal
consequences, PMCT and Mecup has each filed all
federal, state or local tax returns and/or tax
returns of foreign countries, provinces and other
governing bodies having jurisdiction to levy taxes
upon it including, without limitation, withholding
tax returns; Schedule 3.1.10 lists the last such
tax return for each tax filed. Copies of these
documents have been submitted to Purchaser prior to
the signature of this Agreement. For such period of
time up to the Closing Date for which taxes will
become due, such taxes (i) have been paid in full,
(ii) are provided for or (iii) will be provided for
in the interim financial statements of PMCT and
Mecup as of the Closing Date prepared on a
consistent basis unless anything to the contrary is
stated in Schedule 3.1.10.
PMCT has been determined to be a partnership for
United States tax purposes and has been
consistently treated as such for all matters of
United States taxation since the time such
determination was relevant under United States tax
law.
No audits of federal, state, local or foreign tax
returns of PMCT or Mecup are currently in progress,
nor is any such audit announced. Schedule 3.1.10
indicates the periods for which tax audits have
been carried out by the respective fiscal
authorities and the taxes covered by such audits.
No taxes other than those paid (i) according to the
tax returns described or listed pursuant to this
Section 3.1.10 or (ii) provided for in the
financial statements of PMCT or Mecup pursuant to
Section 3.1.5 or in the interim financial
statements as of the Closing Date for the
respective period or (iii) set forth in Schedule
3.1.10 shall be payable by PMCT or Mecup for any
periods prior to the Closing Date.
3.1.11 To Sellers' best knowledge, neither PMCT nor
Mecup is violating any laws and regulations
applicable to the conduct of its business, and it
is in possession of all official permits material
to the conduct of its business as presently
operated.
3.1.12 To Sellers' best knowledge, PMCT is insured
against all material risks customary for the
business pursuant to the insurance policies set
forth in Schedule 3.1.12 and none of such insurance
will terminate upon the transfer of the Sellers'
partnership interests in PMCT to Purchaser.
3.1.13 Schedule 3.1.13 contains a complete list of all
officers and employees of PMCT and Mecup including
their position, salary, termination period,
entrance date and other particularities.
Schedule 3.1.13 further contains a complete list
of all shop agreements, collective bargaining
agreements and comparable rules and regulations
applicable to PMCT or Mecup, including without
limitation "employee benefit plans" as defined in
Section 3 (3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and all
contributions required by law for such benefit
plans have been timely made, and there are no
funding deficiencies for current benefit plans or
any liabilities for plans that have been terminated
or otherwise wound up. There have been no
violations of ERISA reporting requirements and
nothing has occurred with respect to the operation
of any plan that would cause the loss of
qualification or the imposition of any penalty,
tax, or other liability.
Schedule 3.1.13 further includes a complete list of
all pension claims of employees, officers and
directors of PMCT or Mecup, and Schedule 3.1.13.a
separately sets forth a complete list of all
pension claims of any Seller, including the terms
and amounts of each such claim.
Except as set forth in Schedule 3.1.13
(i) no unfair labor practice complaint is
pending against PMCT or Mecup before any
governmental agency or other judicial or
administrative forum, and no labor strike or
other labor trouble affecting PMCT or Mecup is
pending;
(ii) no organization or representation question
is pending in respect of any employees of PMCT
or Mecup; and
(iii) there is no shop agreement, collective
bargaining agreement or similar contract or
arrangement with regard to pension rights or
profit or turnover participation of employees or
similar benefits.
3.1.14 Except as set forth in Schedule 3.1.14 the
following is true for PMCT and Mecup for all
periods of time prior to the Closing Date:
(i) no releases of environmentally hazardous
substances have occurred except pursuant to an
environmental permit or otherwise authorized by
applicable environmental laws or regulations;
(ii) no measures have to be taken in order to
comply with obligations under environmental
aspects stipulated by laws, decrees or orders by
the competent governmental authorities nor have
any such measures not been fully performed and
completed;
(iii) there are no pending or threatened claims
relating to environmental aspects and, to the
best knowledge of the Sellers, there are also no
facts or circumstances which reasonably could be
expected to form the basis of one or more of
such claims;
(iv) no underground storage tanks (USTs) are
currently located at any of the premises, and
all prior USTs were properly removed, and any
contaminated soil or ground water properly
remediated in accordance with all applicable
environmental laws, decrees and orders of
governmental authorities;
(v) no asbestos, radon, PCBs or equipment or
material containing asbestos, radon or PCBs that
are required under current law to be removed or
remediated is currently located at any of the
premises;
(vi) there are no environmental conditions at
any of the premises or any other facts,
circumstances or conditions which reasonably
could be expected to substantially restrict or
prevent the ownership, occupancy, use or
transferability of any of the premises within
present use;
(vii) all of the premises have been operated in
compliance with all applicable environmental
laws, decrees and orders by governmental
authorities;
(viii) all environmental permits required for
the operation of the premises have been
obtained, are in effect, and are being complied
with in all respects, upon their present terms
with no modifications or required approvals from
governmental authorities.
3.1.15 Schedule 3.1.15 lists the names and addresses of
every bank and other financial institution in which
PMCT maintains an account (whether a checking,
savings or other account), lock box or safe deposit
box, and the account numbers and names of persons
having signing authority or other access thereto.
3.1.16 To Sellers' best knowledge the fixed assets of
PMCT are in satisfactory operating condition
subject to ordinary wear and tear.
3.1.17 To Sellers' best knowledge Schedule 3.1.17
contains a list of the ten largest customers of
PMCT.
To Sellers' best knowledge none of such customers
has given notice terminating, cancelling or
threatening to terminate or cancel any contract or
relationship with PMCT, and the Sellers are not
aware of any material deterioration of any such
relationship.
3.1.18 Except as set forth in Schedule 3.1.18, to
Sellers' best knowledge none of PMCT's principal
suppliers has for the past two fiscal years given
notice terminating, cancelling or threatening to
terminate or cancel any contract or relationship
with PMCT; and the Sellers are not aware of any
material deterioration of any such relationship.
3.1.19 No product liability claims are pending or to
Sellers' best knowledge threatened to be initiated
against PMCT or Mecup.
3.1.20 PMCT is owner or licensee of all intellectual
property rights including intellectual property
rights set forth in Schedule 3.1.20 and of the know-
how required to conduct its business. Except as
set forth in Schedule 3.1.20, no proceedings
because of infringement of rights are pending or
threatened to be initiated. Schedule 3.1.20 lists
all patents, patent applications, trademarks and
licenses of any intellectual property owned or
licensed by or to PMCT except ordinary hardware and
software standard licenses.
3.1.21 To Sellers' best knowledge, except as set forth
in Schedule 3.1.21 all contracts or agreements to
which PMCT is a party have been performed by PMCT
pursuant to the respective contractual terms and
conditions, unless the non-performance of
obligations was justified and with respect to none
of the contracts or agreements any contractual
violations, non-performances or late performances
have occurred or have been announced or are
reasonably to be expected on the part of PMCT or on
the part of the respective contract partner.
Except as set forth in Schedule 3.1.21 or any other
provision of or Schedule to this Agreement, neither
PMCT nor Mecup is party to any agreement, contract,
lease or license
(i) which involves payment by it subsequent to
the date of this Agreement or the Closing Date
of more than Two Hundred Thousand Dollars
($200,000) in any 12-month period; or
(ii) which has a remaining term of more than
twelve (12) months and cannot on or any time
after the first anniversary of the Closing Date
be terminated by it on ninety (90) or fewer
days notice without material penalty to it; or
(iii) relating to the lease of any material
personal property; or
(iv) restricting its ability to engage in any
material line of business.
3.1.22 Schedule 3.1.22 lists all loans, loan
engagements, credit and overdraft facilities,
promissory notes or other evidence of indebtedness
relating to the borrowing or lending of money,
guarantees of indebtedness or other obligations of
third parties, mortgages, pledges, grants of
security interest in or pledges of assets,
derivative transactions or securities of any kind
to which PMCT or Mecup is a party including any
amount outstanding and owed by it.
Schedule 3.1.22.a lists all such loans, promissory
notes or other evidence of indebtedness owed by any
of Sellers to PMCT or Mecup, or to anyone else and
guaranteed by PMCT or Mecup, all of which will be
paid by Sellers on the Closing Date.
3.1.23 Neither PMCT nor Mecup has any material
liabilities or obligations which are not reflected
in the financial statements pursuant to Section
3.1.5 hereof or a Schedule except liabilities or
obligations incurred in the ordinary course of
business after the relevant date of the financial
statements disclosure of which are not required by
Section 3.
3.1.24 To Sellers' best knowledge with regard to all
accounts receivable reflected in the financial
statements of PMCT pursuant to Section 3.1.5 of
this Agreement and those which have arisen in the
ordinary course of business of PMCT since
December 31, 1996, there are no reasons for
possible loss of any claims in excess of the usual
bad debt reserve.
3.1.25 The value at which the inventory of PMCT is
shown in the financial statements pursuant to
Section 3.1.5 reflects the inventory valuation
policy utilized by PMCT and is in accordance with
generally accepted accounting principles in the
United States consistently applied.
PMCT does not hold any items of inventory on
consignment.
3.1.26 The Sellers have disclosed any information which
they must consider as being relevant for the
decision of Purchaser to enter into this Agreement
at all or at the terms and conditions provided for
herein.
3.1.27 Whenever the term "best knowledge" is used in
connection with any of the Sellers' foregoing
warranties in this Section 3.1 such term shall not
be limited to the knowledge of the Sellers of
certain circumstances relating to a specific
warranty but shall include the knowledge of PMCT,
as well as that of its directors and senior
executives.
3.1.28 With the exception of the representations and
warranties set forth in Sections 3.1.1 through
3.1.27 above, the Sellers make no representations
and warranties.
3.2 With regard to Purchaser's claims in case of
misrepresentations and breach of warranties by the
Sellers the following shall apply:
3.2.1 SELLERS' representations and warranties shall,
notwithstanding any investigation by Purchaser,
survive the Closing. If any of the Sellers'
representations and warranties in Section 3.1
hereof is totally or partially incorrect, Purchaser
shall promptly upon becoming aware thereof notify
the Sellers' Representative of such incorrectness
and request to be placed in the position that it
would have been in, had the representation and
warranty been correct. If, after a period of six
(6) weeks after receipt of such notification the
Sellers have not done so, they shall be jointly and
severally liable for any damages (which shall
include any losses, liabilities, obligations, costs
and expenses, including reasonable attorneys' fees)
incurred by the Purchaser as a result of such total
or partial incorrectness, it being understood and
agreed that Sellers' aggregate liability to
Purchaser for any misrepresentations and breaches
of warranties (except those in Sections 3.1.2
through 3.1.4) pursuant to Section 3.2.1 hereof
shall be limited to 23.88% of the total amount of
damages incurred by Purchaser (including
Purchaser's costs, expenses and reasonable
attorneys' fees), with Purchaser having a right to
proceed against the Sellers under the Pfauter
Agreement for the remaining 76.12% of the total
further provided, that with respect to claims by
the Purchaser based on misrepresentations or
incorrect warranties relating to MECUP, Sellers'
aggregate liability pursuant to Section 3.2.1 shall
be limited to 14.33% (i.e., 23.88% of 60%) of the
total amount of damages incurred by the Purchaser
(including Purchaser's costs, expenses and
reasonable attorneys' fees). However the Purchaser
is not entitled to be reimbursed to the extent the
Purchaser, for the purpose of preserving customer
relationships, intentionally fails to make a good
faith reasonable effort to resolve claims vis-a-vis
third parties, the fulfillment of which would
reasonably be expected to eliminate or reduce
claims against the Sellers for misrepresentations
and breaches of warranty; provided, however, in no
event shall good faith reasonable efforts require
Purchaser to threaten or commence litigation
against a third party. However Purchaser's failure
to litigate will not limit the right of Sellers in
a proceeding pursuant to Section 3.2.4 to attempt
to establish that the claim was a valid one. The
above claims of the Purchaser do not require fault
on the part of the Sellers. Any claims by the
Purchaser for misrepresentations and breaches of
warranty other than those provided in Section 3
hereof shall be excluded.
3.2.2 Purchaser shall be entitled to indemnification
pursuant to Section 3.2.1 hereof only if the total
damages suffered or incurred by it exceed One
Hundred Thousand Dollars ($100,000) (except that
for breaches of the representations and warranties
contained in Sections 3.1.2, 3.1.3 and 3.1.4, it
will be entitled to indemnification without regard
to whether that figure is exceeded), and shall in
that event be entitled to indemnification for all
such damages, limited, however, to Section 3.2.3
and 3.2.4.
3.2.3 The aggregate amount for which Purchaser will be
entitled to indemnification for damages suffered or
incurred as a result of misrepresentsions and
breaches of warranties pursuant to Section 3.2.1
hereof shall not exceed Seven Hundred Fifty
Thousand Dollars ($750,000). As used in the
preceding sentence, "aggregate" shall be deemed to
mean the aggregate of all damages for breaches of
warranties (including Purchaser's costs, expenses
and reasonable attorneys' fees referred to in
Section 3.2.1 above) recoverable against all of the
Sellers together.
3.2.4 Any claims by the Purchaser based on
misrepresentations and breaches of warranties,
(i) the validity of which has not been acknowledged
by Sellers' Representative or (ii) which has not
been asserted within a period of either (A) two
(2) years after the Closing Date or (B) two (2)
months after Purchaser's last notice of claim prior
to the expiration of such two-year period,
whichever is later, by initiating litigation shall
be excluded.
3.2.5 The limitations of Sections 3.2.1 through 3.2.3
above are not applicable to incorrectness regarding
the warranties in Sections 3.1.2 through 3.1.4.
4. Warranties and Obligations of the Purchaser /
Remedies of the Sellers
4.1 Purchaser represents and warrants to the Sellers as
follows:
4.1.1 Purchaser is a corporation duly organized and
validly existing under the laws of the State of
Delaware. The Purchaser and its representatives
have all the requisite power and authority to enter
into this Agreement.
4.1.2 Purchaser is not a party to, subject to or bound by
any agreement or judgment or decree of any court or
governmental authority which would prevent the
execution or performance of this Agreement by
Purchaser or the acceptance of the sale and
assignment of the PMCT partnership interests
pursuant to the terms of this Agreement.
4.1.3 With the exception of the representations and
warranties set forth in Sections 4.1.1 and 4.1.2,
Purchaser makes no representations and warranties.
4.2 If any of Purchaser's representations and
warranties in Section 4.1 hereof are totally or
partially incorrect, the Sellers shall promptly
notify Purchaser of such incorrectness and
Purchaser shall indemnify Sellers for any damages
incurred by the Sellers as a result of such total
or partial incorrectness, subject to the same
limitations and procedures specified with respect
to indemnification by Sellers of Purchaser in
Sections 3.2.1 through 3.2.4.
4.3 Purchaser assumes the following obligations vis-a-
vis the Seller:
4.3.1 Purchaser shall keep Sellers' Representative
informed without undue delay of all material
developments regarding all judicial and extra-
judicial disputes which arise or continue after the
Closing Date so far as these affect Purchaser's
claims vis-a-vis the Sellers pursuant to Section 3
of this Agreement.
4.3.2 If Purchaser notifies Sellers' Representative that
it has decided not to defend or prosecute a claim
pursuant to Section 4.3.1, the Sellers'
Representative may assume the defense or
prosecution of such dispute, in conjunction, if
they wish to participate, with Sellers'
Representatives under the Pfauter Agreement. The
costs of such defense or prosecution shall be paid
by Sellers, or shared proportionately by them with
Sellers' Representatives designated in the Pfauter
Agreement ("Pfauter Sellers' Representatives") if
they participate in such defense or prosecution.
If the defense or prosecution is successful,
Purchaser shall, provided Sellers' Representative
and the Pfauter Sellers' Representatives use the
same attorney, pay the reasonable costs of such
defense or prosecution which are not otherwise
reimbursed; not, however, to exceed 50% of (i) the
recovery against a third party or (ii) the amount
claimed by an unsuccessful third party.
4.3.3 Although the Sellers shall be responsible for the
filing of their tax returns with respect to their
PMCT partnership interests which relate to the
assessment period between December 29, 1996 and the
Closing Date, Purchaser shall assist the Sellers in
the preparation of these tax returns if and to the
extent that material and information relating
hereto is available at PMCT. The reporting related
to the redemption of certain PMCT-Partnership
interests in May of 1996 shall be decided jointly
by the parties hereto. In addition,
notwithstanding Section 9.2(b) of the PMCT Limited
Partnership Agreement, the parties agree that the
Sellers' distributive share of PMCT's items of
income, gain, loss and deductions for 1997 for U.S.
federal income tax purposes shall be calculated
based on the results of an ordinary internal
closing of the books of PMCT as of the close of
business on the Closing Date and not through any
proration of such items for the entire taxable
year.
5. Non-Compete; Confidentiality
5.1 Each of the Individual Sellers severally agrees
that he will comply with any noncompetition
covenant and confidentiality covenant contained in
his employment agreement set forth in
Exhibit 9.1.1.
6. Closing Date / Allocation of Results
6.1 The Closing shall occur on the Closing Date which
shall be the first day of the month following the
fulfilment, or waiver by Purchaser, of all
conditions precedent pursuant to Section 9 hereof,
or such other date as Purchaser and Sellers'
Representative shall agree.
6.2 The Sellers shall be entitled to the share of the
results for the year ended December 28, 1996 and
the period between December 29, 1996 and the
Closing Date to which they are entitled by reason
of the partnership interests in PMCT owned by them.
For the latter period interim financial statements
shall be jointly prepared by the parties hereto,
and those to the Pfauter Agreement in a manner
consistent with prior periods, in order to
ascertain the results of PMCT's operations.
Notwithstanding the foregoing the Sellers, however,
shall only be entitled to distributions for the
year ended December 28, 1996 and the period between
December 29, 1996 and the Closing Date to the
extent that such distributions are permitted under
PMCT's Limited Partnership Agreement (Schedule
3.1.1), which it is agreed for the period
commencing March 31, 1997 and ending on the Closing
Date shall be sixty-five percent (65%) of their
share of PMCT's income as reflected in the interim
financial statements for such period specified in
Section 3.1.10. Payment of such distributions
shall be made within thirty (30) business days
after the Closing Date. No other distributions or
payments irrespective of their legal nature shall
be due from PMCT to the Sellers, except as provided
in Section 6.3.
6.3 In addition to such distributions described in
Section 6.2 above, Purchaser agrees to cause PMCT
to pay, (i) within five (5) business days of the
Closing Date, bonuses to the employees of American
Pfauter L.P. named in Schedule 6.3 in the amounts
set forth on Schedule 6.3 and (ii) within five (5)
business days of the Closing Date, bonuses to the
employees of PMCT named in Schedule 6.3 in seventy
five percent (75%) of the amounts determined in
accordance with Schedule 6.3, with the remaining
twenty five percent (25%) to be paid within thirty
(30) business days of the Closing Date; in each
case paid in respect of the period from January 1,
1997 through the Closing Date.
7. Intentionally left blank
8. Closing
8.1 At the Closing
8.1.1 Sellers shall deliver to Purchaser:
8.1.1.1 The certificate specified in Section 9.2.1.
8.1.1.2 Assignments of the PMCT partnership interest of
each Seller.
8.1.1.3 Resolutions of PCTI consenting to such
assignments.
8.1.1.4 Resolutions of DWG approving this Agreement.
8.1.2 Purchaser shall deliver to Sellers' Representative
the checks specified in Section 2.2.
8.1.3 Sellers shall pay in full all indebtedness
specified in Section 2.3.
9. Conditions Precedent
9.1 The obligation of the parties to consummate the
Closing shall be subject to satisfaction, or waiver
by them, on or prior to the Closing Date of the
following conditions:
9.1.1 Purchaser and the Individual Sellers shall have
entered into employment agreements in the forms
attached as Exhibit 9.1.1.
9.1.2 The closing of the Pfauter Agreement shall occur
simultaneously with the closing of this Agreement.
9.2 The obligation of Purchaser to consummate the
Closing shall be subject to satisfaction, or waiver
by Purchaser, on or prior to the Closing Date, of
the following conditions:
9.2.1 The representations and warranties contained in
Section 3.1 shall be true in all material respects
on the Closing Date, except for changes
contemplated by this Agreement, and Sellers shall
deliver to Purchaser a certificate to that effect
signed on their behalf by Sellers' Representative.
9.2.2 The consents to the sale to Purchaser of Sellers
partnership interests specified in Section 3.1.3
shall have been obtained.
9.3 The obligation of the Sellers to consummate the
Closing shall be subject to satisfaction, or waiver
by the Sellers, on or prior to the Closing date of
the following conditions:
9.3.1 Pfauter shall have delivered releases to Sellers
reasonably satisfactory to them, releasing them
from any claims arising out of the acquisition by
DWG from ▇▇▇▇ Cutting Tools, Inc. as of May 1996 of
its partnership interest in PMCT.
9.4 Should any of the forementioned conditions
precedent not be fulfilled, or be waived by
Purchaser and/or Sellers, as the case may be, by
July 31, 1997 then each party hereto shall be
entitled, subject to the provisions relating to
costs pursuant to Section 10 hereof , to cancel
this Agreement by written notice to the other
party.
10. Costs
10.1 The transfer costs of this Agreement, i.e.,
publication costs and transfer filing fees (but
excluding the fees of any advisors) or any real
estate transfer tax that become due as a result of
this Agreement shall be paid by Purchaser.
10.2 Sellers and Purchaser, respectively, shall bear
their own legal, accounting and consulting fees and
any other costs incurred by them in connection with
this Agreement.
11. Concluding Provisions
11.1 All notices and other communications required or
permitted hereunder shall be made in writing to the
following representatives of the parties hereto:
For the Sellers:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇ Cutting Tools
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
For the Purchaser:
with copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Corporation Nixon, Hargrave, Devans &
▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ llp
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇
or to such other addresses as any of the foregoing
may have designated.
11.2 Unless specifically provided for in other
provisions hereof, the parties hereto shall
cooperate in good faith in order to consummate this
Agreement and take all actions and render all
statements that are necessary therefor.
11.3 This Agreement including all Exhibits and Schedules
mentioned herein supersedes any other written
and/or oral agreement that may have been made or
entered into by the Purchaser and the Sellers prior
to the execution of this Agreement relating to the
matters contemplated herein. The Exhibits and
Schedules consitute an integral part of this
Agreement, and this Agreement and such Exhibits and
Schedules constitutes the entire agreement by and
between the parties hereto. Any amendment to this
Agreement must be made in writing and signed by the
parties, or their authorized representatives in
order to be valid. This requirement shall also
apply to the waiver of this written form
requirement.
11.4 The parties hereto shall treat any confidential
information disclosed in the course of the
negotiations of this Agreement as confidential
whereby the term "confidential information" shall
cover all facts and circumstances which are not
publicly known, in particular trade and business
secrets.
The parties shall not disclose the terms of this
Agreement, in particular the purchase price
stipulated herein to any third party that is not
entitled to receive such information. Such
disclosure may however be made to any direct or
indirect shareholder of Purchaser or to any third
party providing any financing to or investment in
the Purchaser or their affiliates and related
parties, or to any professional advisors.
Purchaser shall have the right to release and file
any information required by law.
The confidentiality agreement dated September 20,
1996 between Pfauter and ▇▇▇▇▇▇▇ Corporation shall
remain in full force and effect until the Closing
Date.
11.5 If any provision of this Agreement is or becomes
invalid, this shall not affect the validity of the
other provisions of this Agreement. The parties
hereto shall replace the invalid provision by such
valid provision which comes closest to its economic
purpose. The same shall apply to any gaps in this
Agreement necessary to carry out the intentions of
the parties hereto.
11.6 This Agreement shall be governed by the laws of New
York without regard to its principles of conflict
of laws.
11.7 This Agreement shall be binding on and inure to the
benefit of the parties hereto, their successors and
assigns.
GW ACQUISITION CORP.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇
Its President
SELLERS:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ Hans Grass
Hans Grass
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
DWG L.L.C.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Its Sole Manager
Exhibits and Schedules to Agreement
The following exhibits and schedules to the Agreement are not filed
herwith, but the Company will furnish supplementally a copy of any such
omitted exhibit or schedule to the Commission upon request:
Schedule 3.1.1 PMCT's Limited Partnership Agreement as
presently in force
Schedule 3.1.2 Sellers' percentage ownership of PMCT
Schedule 3.1.5 PMCT financial statements
Schedule 3.1.5a Other liabilities
Schedule 3.1.6 Transactions outside the ordinary course of
business
Schedule 3.1.7 Security interests
Schedule 3.1.8 Real property
Schedule 3.1.9(i) Legal proceedings
Schedule 3.1.10 Tax status
Schedule 3.1.12 Insurance summaries
Schedule 3.1.13 Employment benefit plans and employee and
pensio information
Schedule 3.1.13(i) Legal proceedings
Schedule 3.1.14 Environmental matters
Schedule 3.1.15 Bank accounts, boxes and signatories
Schedule 3.1.16 Fixed asset operating condition
Schedule 3.1.17 Largest customers
Schedule 3.1.20 Intellectual property
Schedule 3.1.21 Major contracts and leases
Schedule 3.1.22 Loan and other credit arrangements
Schedule 3.1.23 Undisclosed liabilities
Schedule 3.1.22 Loan and other credit arrangements
Schedule 3.1.23 Undisclosed liabilities
Schedule 6.3 Bonuses
Exhibit 9.1.1 Employment Agreements
