ASSET PURCHASE AGREEMENT
TRINITY FITTING & FLANGE GROUP, INC.
Buyer
XXXXXX CO., INC.
Company
April 24, 1997
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . 1
1.1. Definition of "Business" . . . . . . . . . . . . . . . . . 1
1.2. Assets to be Transferred . . . . . . . . . . . . . . . . . 1
1.3. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . 4
2.1. Liabilities to be Assumed . . . . . . . . . . . . . . . . . 4
2.2. Liabilities Not to be Assumed . . . . . . . . . . . . . . . 5
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . . . 6
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . 6
3.3. Determination of Net Working Capital . . . . . . . . . . . 7
3.4. Prorations . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5. Intentionally Left Blank. . . . . . . . . . . . . . . . . . 11
3.6. Allocation of Purchase Price . . . . . . . . . . . . . . . 11
4. REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . . 11
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . 12
4.4. Division Financial Statements . . . . . . . . . . . . . . . 12
4.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6. Accounts Receivable . . . . . . . . . . . . . . . . . . . . 13
4.7. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8. Absence of Certain Changes . . . . . . . . . . . . . . . . 14
4.9. Absence of Undisclosed Liabilities . . . . . . . . . . . . 15
4.10. No Litigation . . . . . . . . . . . . . . . . . . . . . . . 15
4.11. Compliance With Laws and Orders . . . . . . . . . . . . . . 15
4.12. Title to and Condition of Properties . . . . . . . . . . . 20
4.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.14. Contracts and Commitments . . . . . . . . . . . . . . . . . 22
4.15. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 23
4.16. Intentionally Left Blank . . . . . . . . . . . . . . . . . 24
4.17. Intentionally Left Blank . . . . . . . . . . . . . . . . . 24
4.18. Trade Rights . . . . . . . . . . . . . . . . . . . . . . . 24
4.19. Major Customers and Suppliers . . . . . . . . . . . . . . . 24
4.20. Product Warranty and Product Liability . . . . . . . . . . 25
4.21. Affiliates' Relationships to Company . . . . . . . . . . . 25
4.22. Assets Necessary to Business . . . . . . . . . . . . . . . 26
4.23. No Brokers or Finders . . . . . . . . . . . . . . . . . . . 26
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . 26
5.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.3. No Brokers or Finders . . . . . . . . . . . . . . . . . . . 27
6. EMPLOYEES - EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . 27
6.1. Plant Closing Notification . . . . . . . . . . . . . . . . 27
6.2. Employment Liabilities. . . . . . . . . . . . . . . . . . . 27
6.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4. COBRA. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1. Title Matters . . . . . . . . . . . . . . . . . . . . . . . 28
7.2. Environmental Audits . . . . . . . . . . . . . . . . . . . 28
7.3. Noncompetition . . . . . . . . . . . . . . . . . . . . . . 28
7.4. Confidential Information . . . . . . . . . . . . . . . . . 30
7.5. Privileged Materials . . . . . . . . . . . . . . . . . . . 30
7.6. HSR Act Filings . . . . . . . . . . . . . . . . . . . . . . 30
7.7. Use of Company's Name . . . . . . . . . . . . . . . . . . . 31
7.8. Sales Tax Matters . . . . . . . . . . . . . . . . . . . . . 31
7.9. Intentionally Left Blank. . . . . . . . . . . . . . . . . . 31
7.10. Cynthiana, Kentucky Flood . . . . . . . . . . . . . . . . . 31
7.11. Nondisparagement . . . . . . . . . . . . . . . . . . . . . 32
7.12. Form 8594 Filing . . . . . . . . . . . . . . . . . . . . . 32
8. FURTHER COVENANTS OF COMPANY . . . . . . . . . . . . . . . . . . . 32
8.1. Access to Information and Records and Physical Inspections 32
8.2. Conduct of Business Pending the Closing . . . . . . . . . . 33
8.3. Consents . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.4. Other Action . . . . . . . . . . . . . . . . . . . . . . . 34
8.5. Production Contract . . . . . . . . . . . . . . . . . . . . 34
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . . . 34
9.1. Representations and Warranties True on the Closing Date . . 34
9.2. Compliance With Agreement . . . . . . . . . . . . . . . . . 34
9.3. Absence of Litigation . . . . . . . . . . . . . . . . . . . 34
9.4. Consents and Approvals . . . . . . . . . . . . . . . . . . 34
9.5. Title Insurance . . . . . . . . . . . . . . . . . . . . . . 35
9.6. Xxxx-Xxxxx-Xxxxxx Waiting Period . . . . . . . . . . . . . 35
9.7. Section 1445 Affidavit . . . . . . . . . . . . . . . . . . 35
9.8. Environmental Audit . . . . . . . . . . . . . . . . . . . . 35
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . . . . 35
10.1. Representations and Warranties True on the Closing Date . . 35
10.2. Compliance With Agreement . . . . . . . . . . . . . . . . . 35
10.3. Absence of Litigation . . . . . . . . . . . . . . . . . . . 36
10.4. Waiting Periods . . . . . . . . . . . . . . . . . . . . . . 36
11. ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1. Documents to be Delivered by Company . . . . . . . . . . . 36
12.2. Documents to be Delivered by Buyer . . . . . . . . . . . . 37
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.1. Right of Termination Without Breach . . . . . . . . . . . . 38
13.2. Termination for Breach . . . . . . . . . . . . . . . . . . 38
13.3. Environmental Defects . . . . . . . . . . . . . . . . . . . 39
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 39
14.1. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . 39
14.2. Further Assurance . . . . . . . . . . . . . . . . . . . . . 40
14.3. Disclosures and Announcements . . . . . . . . . . . . . . . 40
14.4. Assignment; Parties in Interest . . . . . . . . . . . . . . 40
14.5. Equitable Relief . . . . . . . . . . . . . . . . . . . . . 40
14.6. Law Governing Agreement . . . . . . . . . . . . . . . . . . 41
14.7. Amendment and Modification . . . . . . . . . . . . . . . . 41
14.8. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.9. Expenses; Cost of Litigation . . . . . . . . . . . . . . . 42
14.10. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 43
14.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 43
14.12. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.13. Glossary of Terms . . . . . . . . . . . . . . . . . . . . . 43
Disclosure Schedule
Schedule 1.2.(a) - Owned Real Property
Schedule 1.2.(b) - Leased Real Property
Schedule 1.2.(e) - Personal Property Leases
Schedule 1.2.(g)(i) - Contracts
Schedule 1.2.(g)(ii) - Purchase Orders
Schedule 1.2.(g)(iii) - Sales Orders
Schedule 4.1.(c) - Foreign Corporation Qualification
Schedule 4.3 - Violation, Conflict, Default
Schedule 4.4 - Business Financial Statements
Schedule 4.5 - Tax Matters
Schedule 4.6 - Accounts Receivable (Aged Schedule)
Schedule 4.7 - Inventory Off Premises
Schedule 4.8 - Certain Changes
Schedule 4.9 - Off-Balance Sheet Liabilities
Schedule 4.10 - Litigation Matters
Schedule 4.11.(a) - Non-Compliance with Laws
Schedule 4.11.(b) - Licenses and Permits
Schedule 4.11.(c) - Environmental Matters (Exceptions to
Representations)
Schedule 4.11.(c)(E) - Storage Tanks
Schedule 4.11.(c)(L) - Environmental Consents and Approvals
Schedule 4.12.(a)(i) - Pre-Closing Liens
Schedule 4.12.(a)(ii) - Post-Closing Liens
Schedule 4.12.(b) - Condition (Exceptions to
Representations)
Schedule 4.13 - Insurance
Schedule 4.14.(d) - Sales Commitments
Schedule 4.14.(g) - Collective Bargaining Agreements
Schedule 4.14.(h) - Material Contracts
Schedule 4.15 - Labor Matters
Schedule 4.18 - Trade Rights
Schedule 4.19.(a) - Major Customers
Schedule 4.19.(b) - Major Suppliers
Schedule 4.19.(c) - Sales Representatives
Schedule 4.20 - Product Warranty and Product Liability
Schedule 4.21.(a) - Contracts with Affiliates
Exhibit Schedule
Exhibit 8.5. - Machining Contract
Exhibit 11.1 - Escrow Agreement
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated April 24,
1997, by and between Trinity Fitting & Flange Group, Inc., a Delaware
corporation ("Buyer"), and Xxxxxx Co., Inc., a Wisconsin corporation
("Company").
RECITALS
A. Company is engaged, through its Industrial Products
Division (the "Division"), in the manufacture and sale of piping
components.
B. The Division operates at Company's facilities located at
Cynthiana, Kentucky and Russellville, Arkansas (the "Facilities").
C. Buyer desires to purchase from Company, and Company desires
to sell to Buyer, certain of the property and assets of the Division.
NOW THEREFORE, in consideration of the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business". As used herein, "Business" shall
mean the manufacture, production, marketing, distribution, exploitation,
sale and related research and development by Company of pipes, valves and
fittings including, without limitation, all operations carried on by, or
related to products associated by trade name or otherwise with, the
Division prior to the Closing Date (as defined below). The term
"Business" shall also mean the Company insofar as the operation of the
Business prior to the Closing Date is concerned.
1.2. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, on the Closing Date, Company shall sell, transfer,
convey, assign, and deliver to Buyer (or upon Buyer's request, to one or
more wholly-owned subsidiaries of Buyer as designated by Buyer), and Buyer
shall purchase from Company all of the rights, claims and assets (of every
kind, nature, character and description, whether real, personal or mixed,
whether tangible or intangible, whether accrued, contingent or otherwise,
and wherever situated) of Company used, held for use or acquired or
developed for use in the Business, together with all rights and privileges
associated with such assets, other than the Excluded Assets (as
hereinafter defined) (collectively, the "Purchased Assets"). The
Purchased Assets shall include, without limitation, the following:
1.2.(a) Owned Real Property. The real property, including
fixtures, buildings, improvements, and all appurtenant rights,
described on Schedule 1.2.(a) of the Disclosure Schedule attached
hereto and made a part hereof (the "Disclosure Schedule") (the "Owned
Real Property").
1.2.(b) Leased Real Property. The leases of real property
described on Schedule 1.2.(b) of the Disclosure Schedule (the "Real
Property Leases") with respect to the real property described thereon
(the "Leased Real Property").
1.2.(c) Personal Property. All machinery, equipment,
vehicles, tools, supplies, spare parts, furniture and all other
personal property (other than personal property leased pursuant to
Personal Property Leases as hereinafter defined) owned, utilized or
held for use in the Business by Company on the Closing Date.
1.2.(d) Inventory. All inventories of raw materials,
work-in-process and finished goods (including all such in transit),
and service and repair parts, supplies and components held for resale
in the Business by Company on the Closing Date, together with related
packaging materials (collectively the "Inventory").
1.2.(e) Personal Property Leases. All leases of machinery,
equipment, vehicles, furniture and other personal property leased by
Company for the Business, described in Schedule 1.2.(e) of the
Disclosure Schedule (the "Personal Property Leases").
1.2.(f) Trade Rights. All the Company's right, title and
interest in and to any and all Trade Rights used in the Business. As
used herein, the term "Trade Rights" shall mean and include: (i) all
trademark rights, business identifiers, trade dress, service marks,
trade names, and brand names (except as otherwise provided herein);
(ii) all copyrights and all other rights associated therewith and the
underlying works of authorship; (iii) all patents and all proprietary
rights associated therewith; (iv) all contracts or agreements
granting any right, title, license or privilege under the
intellectual property rights of any third party; (v) all inventions,
mask works and mask work registrations, know-how, discoveries,
improvements, designs, trade secrets, shop and royalty rights,
employee covenants and agreements respecting intellectual property
and non-competition and all other types of intellectual property; and
(vi) all registrations of any of the foregoing, all applications
therefor, all goodwill associated with any of the foregoing, and all
claims for infringement or breach thereof.
1.2.(g) Contracts. All the Company's rights in, to and
under all contracts ("Contracts") purchase orders ("Purchase Orders")
and sales orders ("Sales Orders") described in Schedules 1.2.(g)(i),
1.2.(g)(ii) and 1.2.(g)(iii) of the Disclosure Schedule,
respectively, as well as every Purchase Order or Sales Order entered
into by Company after the date of this Agreement in the ordinary
course of business and in accordance with past practice. At the
Closing, Company shall update the Disclosure Schedule to include all
Contracts, Purchase Orders and Sales Orders entered into by the
Company after the date of this Agreement in the ordinary course of
business which involve consideration or other expenditures by Company
in excess of Fifty Thousand and 00/100 Dollars ($50,000) or
performance over a period of more than twelve (12) months from the
date of the Contract, Purchase Order or Sales Order, as to which
Buyer shall have the right to elect to include or exclude from the
Purchased Assets.
1.2.(h) Computer Software. All computer source and object
codes, programs and other software of Company or licensed or
otherwise owned by the Company relating to the Business, including
all machine readable code, printed listings of code, documentation
and related property and information of Company relating to the
Business, to the extent necessary to operate the Business; provided
that with respect to licensed software to the extent Company is
permitted to transfer same.
1.2.(i) Literature. All sales literature, promotional
literature, catalogs and similar materials of the Company relating to
the Business.
1.2.(j) Records and Files. All books, records and files of
Company of every kind relating to the Business including, without
limitation, invoices, customer and vendor lists, blueprints,
specifications, designs, drawings, and operating and marketing plans,
and all other documents, tapes, discs, programs or other tangible
embodiments of any such information.
1.2.(k) Notes and Accounts Receivable. All notes, drafts
and accounts receivable of Company relating to the Business, except
for those described in Section 1.3.(e) hereof.
1.2.(l) Licenses; Permits. All licenses, permits,
approvals, certifications and listings of Company relating to the
Business.
1.2.(m) General Intangibles. All prepaid items, all causes
of action arising out of occurrences after the Closing, and other
intangible rights and assets relating to the Business except as
provided in Section 7.10.
1.3. Excluded Assets. The provisions of Section 1.2
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer will not purchase from the Company the
following assets of Company (collectively, the "Excluded Assets"):
1.3.(a) Cash and Cash Equivalents. All cash on hand,
escrows, deposit accounts and cash in banks, other than xxxxx cash
balances at Cynthiana, Kentucky and Russellville, Arkansas.
1.3.(b) Consideration. The consideration delivered by Buyer
to Company pursuant to this Agreement.
1.3.(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and associated
returns and records for periods prior to the Closing Date. Buyer
shall have reasonable access to such returns and records and may make
excerpts therefrom and copies thereof.
1.3.(d) Corporate Franchise. Company's franchise to be a
corporation, its certificate of incorporation, corporate seal, stock
books, minute books and other corporate records having exclusively to
do with the corporate organization and capitalization of Company.
1.3.(e) Obligations of Affiliates. Notes, drafts, accounts
receivable or other obligations for the payment of money, made or
owed by any Affiliate of Company, and any inter-company balances.
For purposes of this Agreement, the term "Affiliate" of the Company
shall mean and include all shareholders, directors and officers of
Company; the spouse of any such person; any person who would be the
heir or descendant of any such person if he or she were not living;
and any entity in which any of the foregoing has a direct or indirect
interest (except through ownership of less than 5% of the outstanding
shares of any entity whose securities are listed on a national
securities exchange or traded in the national over-the-counter
market.
1.3.(f) Privileged Materials. All of Company's interest in
privileged communications, attorney work product, and materials
concerning either of the foregoing.
1.3.(g) Insurance Proceeds. Proceeds of insurance claims
with respect to the March, 1997 flooding of the Company's facility at
Cynthiana, Kentucky, whether collected or not at the Closing Date,
but only to the extent set forth in section 7.10.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall assume and agree to perform and discharge when
due and payable and otherwise in accordance with the relevant governing
agreements and instruments the following Liabilities of the Company (the
"Assumed Liabilities"):
2.1.(a) Closing Balance Sheet Payables. All trade accounts
payable of the Business at the Effective Time, in an amount not to
exceed the amount of trade accounts payable reflected on the Division
Closing Balance Sheet as finally determined in accordance with
Section 3.3.(b). No Liability which is an account payable, note,
draft, inter-company balance or other Liability accounted for as an
obligation for the payment of money by the Division to Company or any
other division or affiliate of Company shall be assumed by Buyer.
2.1.(b) Contractual Liabilities. Company's Liabilities
arising from and after the Closing Date under and pursuant to the
following:
(i) the Real Property Leases described on
Schedule 1.2.(b) of the Disclosure Schedule.
(ii) the Personal Property Leases described on
Schedule 1.2.(e) of the Disclosure Schedule.
(iii) the Contracts described on Schedule
1.2.(g)(i) of the Disclosure Schedule.
(iv) the unfilled Purchase Orders described on
Schedule 1.2.(g)(ii).
(v) the unfilled Sales Orders described on
Schedule 1.2.(g)(iii).
(vi) Every other Purchase Order or Sales Order
constituting a Purchased Asset under Section 1.2.(g).
The Real Property Leases, Personal Property Leases, Contracts,
Purchase Orders and Sales Orders described in this Section 2.1.(b)
are hereinafter collectively described as the "Assumed Contracts."
2.2. Liabilities Not to be Assumed. Buyer is not assuming, and
shall not assume or be deemed to have assumed, any Liability of the
Company other than the Assumed Liabilities expressly set forth in Section
2.1. of this Agreement. Company acknowledges that the Purchased Assets to
be purchased by Buyer from Company under this Agreement constitute only
certain of Company's assets and that Buyer is not intended, nor shall it
be deemed, to be a successor to Company for any purpose. The Company
shall pay, perform and discharge any and all Liabilities of the Company
other than the Assumed Liabilities; provided, in no event, may Buyer
recover any amount against Company in respect of a claim for any damage,
loss, cost or expense resulting from Company's failure to pay, perform or
discharge any such Liability (i) unless and only to the extent that the
amount of such claim or claims in the aggregate is equal to or in excess
of Fifty Thousand United States Dollars and no/100 (U.S. $50,000) or (ii)
in excess of Twenty Million, Seven Hundred Fifty Thousand United States
Dollars and no/100 (U.S. $20,750,000) exclusive of the proceeds of
insurance available to the Company to satisfy any such Liability. The
Company shall pay, perform and discharge any and all Liabilities of the
Company incurred by or relating to acts or omissions prior to Closing
relating to the machining or fabrication of aircraft parts without regard
to the limitation set forth in the preceding sentence; and the Company
shall pay, perform and discharge any and all Environmental Claims of the
Company without regard to the limitation set forth in Section (i) of the
preceding sentence. The obligations of the Company under this provision
shall expire four (4) years after the Closing.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price") for
the Purchased Assets shall be (i) the assumption of the Assumed
Liabilities, and (ii) the sum of Thirty-Six Million, Five Hundred Thousand
United States Dollars and No/100 (U.S. $36,500,000).
3.2. Payment of Purchase Price. The Purchase Price shall be paid
by Buyer as follows:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Company. At the Closing, Buyer shall
deliver to Company the sum of Thirty-Six Million, Five Hundred
Thousand United States Dollars and No/100 (U.S. $36,500,000), subject
to each of the adjustments contemplated in Section 3.2.(c) to be made
under this Agreement.
3.2.(c) Adjustment of Cash Purchase Price on Settlement
Date. On or before the fifth business day following the final
determination of the Closing Division Balance Sheet (as hereinafter
defined) (such date being hereinafter referred to as the "Settlement
Date"):
(i) either (A) Company shall pay to Buyer the
amount, if any, by which Net Working Capital on the Recent
Division Balance Sheet exceeds Net Working Capital on the
Closing Division Balance Sheet, or (B) Buyer shall pay to
Company the amount, if any, by which Net Working Capital on
the Closing Division Balance Sheet exceeds Net Working Capital
on the Recent Division Balance Sheet, in each case together
with interest from the Closing Date to the date of payment at
the rate of seven percent (7%) per annum.
(ii) Company shall pay to Buyer, or Buyer shall
pay to Company, as the case may be, an amount equal to the net
of any reconciliation of the prorations as provided in Section
3.4. below.
3.2.(d) Method of Payment. All payments under this Section
3.2 shall be made in the form of certified or bank cashier's check
payable to the order of the recipient or, at the recipient's option,
by wire transfer of immediately available funds to an account
designated by the recipient not less than 48 hours prior to the time
for payment specified herein. The obligation to make the adjustments
provided for in this Section 3.2. shall survive the Closing.
3.3. Determination of Net Working Capital.
3.3.(a) Definition of Net Working Capital. The term "Net
Working Capital" shall mean the dollar amount by which the net book
value of the Purchased Assets constituting accounts and notes
receivable and Inventory exceeds the net book value of the Assumed
Liabilities constituting accounts payable, as reflected in the Recent
Division Balance Sheet or Closing Division Balance Sheet, as
applicable.
3.3.(b) Closing Division Balance Sheet. The balance sheet
of the Division prepared as of the Effective Time shall be prepared
as follows:
(i) Within 45 days after the Closing Date, Buyer
shall prepare or cause to be prepared and deliver to Company a
partial balance sheet of the Division as of the close of
business on the business day immediately prior to the Closing
Date (the "Effective Time") prepared in accordance with
generally accepted accounting principles from the books and
records of the Company, on a basis consistent with the
generally accepted accounting principles theretofore followed
by Company in the preparation of the Recent Division Balance
Sheet and in accordance with this Section 3.3, and fairly
presenting as of the Effective Time the valuation of the
Purchased Assets and Assumed Liabilities needed in order to
calculate Net Working Capital at the Effective Time. The
balance sheet shall be accompanied by detailed schedules of
such Purchased Assets and Assumed Liabilities and by a report
(1) setting forth the amount of Net Working Capital (as
defined above) reflected in the balance sheet, (2) containing
the certification of a duly authorized officer of Buyer that
the balance sheet has been prepared in accordance with the
generally accepted accounting principles theretofore followed
by Company in the preparation of the Recent Division Balance
Sheet and in accordance with this Section 3.3. and (3) setting
forth the amount of any adjustment to the Purchase Price to be
paid and by whom pursuant to Section 3.2.(c)(i) hereof.
(ii) Within 30 days following the delivery of the
balance sheet referred to in (i) above, Company may object to
any of the information contained in said balance sheet or
accompanying schedules which could affect the necessity or
amount of any adjustment to the Purchase Price by Buyer or
Company pursuant to Section 3.2.(c)(i) hereof. Any such
objection shall be made in writing and shall state Company's
determination of the amount of the Net Working Capital and the
amount of any such adjustment.
(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and
Company are unable to resolve, either party may elect to have
all such disputes or disagreements resolved by such national
independent accounting firm as mutually agreed by Company and
Buyer (the "Independent Accounting Firm"). The Independent
Accounting Firm shall make a resolution of the balance sheet
of the Division as of the Effective Time and the calculation
of Net Working Capital which shall be final and binding for
purposes of this Article 3. The Independent Accounting Firm
shall be instructed to use every reasonable effort to perform
its services within 15 days of submission of the balance sheet
to it and, in any case, as soon as practicable after such
submission. The fees and expenses for the services of the
Independent Accounting Firm shall be shared by Buyer and
Company as follows: Company shall pay a percentage of such
fees and expenses equal to A/(A+B) and Buyer shall pay a
percentage of such fees and expenses equal to B/(A+B), where A
is equal to the absolute value of the difference (in dollars)
between Net Working Capital at the Effective Time as finally
determined by the Independent Accounting Firm and Net Working
Capital as reflected in the objection prepared and delivered
by Company in accordance with Section 3.3.(b)(ii), and B is
equal to the absolute value of the difference (in dollars)
between Net Working Capital at the Effective Time as finally
determined by the Independent Accounting Firm and Net Working
Capital as reflected in the report prepared and delivered by
Buyer in accordance with Section 3.3.(b)(i). As used in this
Agreement, the term "Closing Division Balance Sheet" shall
mean the partial balance sheet of Company determined in
accordance with Section 3.3(b)(i) as of the Effective Time as
finally determined for purposes of this Article 3, whether by
acquiescence of Company in the figures supplied by Buyer in
accordance with Section 3.3.(b)(i), by negotiation and
agreement of the parties or by the Independent Accounting Firm
in accordance with Section 3.3.(b)(iii).
(iv) Buyer agrees to permit Company, Company's
accountants, and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records, including
but not limited to the books, records, schedules, work papers
and audit programs, to the extent not proprietary to a third
party, of Buyer and Buyer's accountants and access to
representatives of Buyer's accountants, which documents and
access are necessary to review the balance sheet delivered by
Buyer in accordance with Section 3.3.(b)(i). In addition,
Company's accountants shall have the opportunity to observe
the taking of the inventory in connection with the preparation
of such balance sheet.
(v) Notwithstanding any provision contained
herein requiring that the Closing Division Balance Sheet be
prepared in a manner consistent with Company's past practices
or in accordance with generally accepted accounting
principles, the Closing Division Balance Sheet shall be
prepared utilizing the following criteria:
(A) Inventory shall be valued on a First-In
First-Out ("FIFO") basis in accordance with
generally accepted accounting principles ("GAAP")
consistently applied using the lower of cost or
market valuation convention. A physical inventory
shall be taken by Buyer as of the Effective Time.
The Company shall have the right to have designated
representatives present for the physical inventory.
(i) Items of Finished Inventory in excess of the
usage for the 1996 calendar year shall be valued at
ninety percent (90%) of its value as otherwise
determined in accordance with GAAP, items of
Inventory in excess of two (2) times the usage in
1996 calendar year shall be valued at seventy
percent (70%) of its value as otherwise determined
in accordance with GAAP and items of inventory in
excess of three (3) times the usage in 1996 calendar
year shall be valued at fifty percent (50%) of its
value as otherwise determined in accordance with
GAAP. As used in the preceding sentence, "Usage"
shall be arms-length sales to third parties. For
special or custom items of Inventory which had no
Usage in 1996 calendar year but are subject to firm
purchase order for delivery in 1997 and which a
normal profit margin is projected, these items will
be valued at cost applied on a consistent basis.
(ii) Raw Material Inventory and Work-In-Process
Inventory shall be valued in accordance with GAAP
consistently applied using the lower of cost or
market valuation convention. Such valuation method
shall be applicable to each of the Recent Division
Balance Sheet and the Closing Division Balance
Sheet. No Inventory which has been written down in
value shall be written up by this pricing
convention.
(B) Accounts receivable and notes
receivable shall be stated net of an appropriate
reserve for doubtful accounts, discounts and
anticipated collection expenses; but such reserve
shall not be increased or decreased after the time
of the Recent Division Balance Sheet except (i) in
proportion to the increase or decrease in accounts
and notes receivable, or (ii) to reflect the
discovery or resolution of specific credit problems,
in accordance with the accounting practices employed
by Company in the Business prior to the Closing.
3.4. Prorations. The following prorations relating to the
Purchased Assets will be made as of the Effective Time, with Company
liable to the extent such items relate to any time period up to and
including the Effective Time and Buyer liable to the extent such items
relate to periods subsequent to the Effective Time. Except as otherwise
specifically provided herein, the net amount of all such prorations will
be settled and paid on the Closing Date:
3.4.(a) Personal property taxes, real estate taxes and
assessments, and other taxes, if any, on or with respect to the
Purchased Assets; provided that special assessments for work actually
commenced or levied prior to the date of this Agreement shall be paid
by Company. If the Effective Time occurs before the rate of any real
estate or personal property tax is fixed for the current year or
prior to the time that the assessed valuation of any Purchased Assets
subject to any such tax has been determined, the apportionment of the
taxes between the Company and Buyer at the Effective Time shall be
made upon the basis of the tax rate for the preceding year applied to
the latest assessed valuation. Any difference between the amount of
such taxes actually paid and the amount used in determining the
proration at the Effective Time shall be computed and adjusted
between the parties as hereinafter provided.
3.4.(b) Rents, additional rents, taxes and other items
payable by Company under any lease, license, permit, contract or
other agreement or arrangement to be assigned to or assumed by Buyer.
3.4.(c) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities. If
practicable, meter readings shall be taken at the Effective Time and
the respective obligations of the parties determined in accordance
with such readings.
3.4.(d) All other items normally adjusted in connection with
similar transactions.
If the actual expense of any of the above items for the billing
period within which the Effective Time falls is not known on the Closing
Date, except as otherwise expressly provided above, the proration shall be
made based on the expense incurred in the previous billing period, for
expenses billed less often than quarterly, and on the average expense
incurred in the preceding three billing periods, for expenses billed
quarterly or more often, subject to adjustment based on the actual amounts
as hereinafter provided. Company shall furnish Buyer with such documents
and other records as shall be reasonably requested in order to confirm all
proration calculations. Company and Buyer shall reasonably cooperate
after Closing to make a final determination of the prorations under this
Section 3.4. Prior to the Settlement Date, the parties shall make a final
reconciliation of the prorations under this Section 3.4., and the party
which owes the other party any sums based on such reconciliation shall, on
the Settlement Date, pay such amount.
3.5. Intentionally Left Blank.
3.6. Allocation of Purchase Price. The aggregate Purchase Price
(including the assumption by Buyer of the Assumed Liabilities) shall be
allocated among the Purchased Assets for tax purposes in the manner and
amounts mutually determined by Buyer and Company. Company and Buyer will
follow and use such allocation in all tax returns, filings or other
related reports made by them to any governmental agencies. To the extent
that disclosures of this allocation are required to be made by the parties
to the Internal Revenue Service ("IRS") under the provisions of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code") or any
regulations thereunder, Buyer and Company will disclose such reports to
the other prior to filing with the IRS.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to Buyer,
each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, and, except as provided in
Section 13.3, shall be unaffected by any investigation heretofore or
hereafter made by Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedule delivered to Buyer at
the time of the execution of this Agreement, and shall survive the Closing
of the transactions provided for herein, for a period of three (3) years.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
4.1.(b) Corporate Power. Company has all requisite power
and authority, licenses, registrations, authorizations, permits,
consents, notices of intent, and approvals to own, operate and lease
its properties, including, without limitation, the Purchased Assets,
to carry on its business as and where such is now being conducted, to
enter into this Agreement and the other documents and instruments to
be executed and delivered by Company pursuant hereto and to carry out
the transactions contemplated hereby and thereby.
4.1.(c) Qualification. Company is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the
properties which are Purchased Assets, or the nature of the Business,
makes such licensing or qualification necessary; such jurisdictions
are listed in Schedule 4.1.(c).
4.1.(d) No Subsidiaries. No portion of the Business is
conducted by means of any interest in, or through, any corporation,
partnership or other entity other than the Company.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company. No other or further corporate act or proceeding on
the part of Company is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Company pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement and any and all instruments executed and
delivered by Company pursuant hereto have been duly and validly executed
and delivered by the Company and constitute, the legal, valid and binding
agreements of Company, enforceable against the Company in accordance with
their respective terms.
4.3. No Violation. Except as set forth on Schedule 4.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto, nor
the consummation by Company of the transactions contemplated hereby and
thereby (a) will violate any applicable Law or Order, (b) except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 0000 (xxx "XXX Xxx"), will require any authorization, consent,
approval, exemption or other action by or notice to any Government Entity,
(c) subject to obtaining the consents referred to in Schedule 4.3, will
violate or conflict with, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
will result in the termination of, or accelerate the performance required
by, or result in the creation of any Lien (as defined in Section 4.12.(a))
upon any of the assets of Company under any term or provision of the
Articles of Incorporation or By-laws of Company or of any contract,
commitment, understanding, arrangement, agreement, note, commitment, bond,
mortgage, indenture, license, lease, pledge or other instrument or
obligation of any kind or character to which Company is a party or by
which Company or any of its assets, including, without limitation, the
Purchased Assets, or properties may be bound or affected or (d) conflict
with or result in any breach of any provisions of the Articles of
Incorporation or Bylaws of the Company.
4.4. Division Financial Statements. Included as Schedule 4.4 of
the Disclosure Schedule are the following financial statements consisting
of (i) balance sheets of the Business as of December 31, 1995 and 1996
(the latter such balance sheet sometimes referred to herein as "Recent
Division Balance Sheet"), and (ii) statements of income and expense of the
Division for the years ended December 31, 1994, 1995, and 1996
(collectively, the "Division Financial Statements"). All of such
financial statements (including the related schedules thereto) have been
prepared in accordance with GAAP consistently applied over the periods
covered thereby and with the books and records of the Company; and fairly
present the assets, liabilities and financial position and the results of
operations of the Division as of the dates and for the periods indicated.
Where any asset, liability, or item of income or expense of the Company
relates in part to any operation other than the Division, this fact, and
the method of calculating the allocation, is set forth. Neither the
Recent Division Balance Sheet nor the Closing Division Balance Sheet
includes or shall include, as assets of the Division, any obligations to
the Division of the Company or any other division or Affiliate of the
Company; nor do they or shall they include as liabilities of the Division
any obligations of the Division to the Company or any other division or
Affiliate of the Company.
4.5. Tax Matters. Except as set forth on Schedule 4.5: (i) all
federal, state, foreign, county, local and other tax returns relating to
the Purchased Assets, or required to be filed by or on behalf of Company
in any jurisdiction required to be listed in Schedule 4.1.(c) of the
Disclosure Schedule or any political subdivision thereof, have been timely
filed and the taxes fully paid, directly or indirectly; (ii) Company has
duly withheld and paid all taxes which it is required to withhold and pay
relating to salaries and other compensation heretofore paid to the
employees of the Company; and (iii) Company has not received any notice of
underpayment of taxes or other deficiency which has not been paid and
there are outstanding no agreements or waivers extending the statutory
period of limitations applicable to any tax return or report relating to
the Purchased Assets, or required to have been filed by Company in any
jurisdiction required to be listed in Schedule 4.1.(c) of the Disclosure
Schedule or any political subdivision thereof. No deficiency or
adjustment in respect of any tax that was assessed against the Company
that might result in a Lien on any of the Purchased Assets remains unpaid
and no claim, assessment or audit is pending or threatened with respect to
any tax whose assessment might result in a Lien on any of the Purchased
Assets. No sales tax, use tax or other transfer tax of any type
whatsoever is required to be paid by Buyer or Company with respect to the
transfer of the Purchased Assets as provided herein.
4.6. Accounts Receivable. All accounts receivable of the Business
reflected on the Recent Division Balance Sheet, and as incurred in the
normal course of business since the date thereof, represent bona fide
arm's length sales transactions actually made in the ordinary course of
operating the Division consistent with past practices are collectible in
full (subject to the aggregate allowance for doubtful accounts and sales
returns and allowances of One Hundred Sixty Thousand Dollars ($160,000))
and to the best of Company's knowledge are not subject to any defenses or
offsets. Schedule 4.6 contains an aged schedule of accounts receivable
included in the Recent Division Balance Sheet. All accounts receivable of
the Division reflected on the Final Division Balance Sheet will represent
arm's length sales actually made in the ordinary course of business.
4.7. Inventory. All inventory reflected on the Recent Division
Balance Sheet consists of a quality and quantity usable and saleable in
the ordinary course of business, and is valued in accordance with
generally accepted accounting principles consistently applied by the
Company at the lower of cost or market. All inventory purchased since the
date of such balance sheet consists of a quality and quantity usable and
saleable in the ordinary course of business. Except as set forth in
Schedule 4.7, all inventory of the Division is located on premises owned
or leased by Company which premises, or leaseholds thereof, constitute
Purchased Assets hereunder. Company has good and marketable title to all
inventory, free and clear of all Liens. The value at which the inventory
is carried on Company's balance sheet reflects the normal inventory policy
of Company and has been determined in accordance with GAAP consistently
applied. Company is under no obligation to repurchase any inventory
previously sold in connection with the operation of the Business, except
in connection with product warranties set forth in Schedule 4.20.
4.8. Absence of Certain Changes. Except as and to the extent set
forth in Section 7.10 or Schedule 4.8, since the date of the Recent
Division Balance Sheet there has not been:
4.8.(a) No Adverse Change. Any adverse change in the
financial condition, assets, Liabilities, business, or operations of
the Division or the Business;
4.8.(b) No Damage. Any loss, damage or destruction, whether
covered by insurance or not, affecting the Business or any of the
Purchased Assets;
4.8.(c) No Commitments. Any commitment or transaction by
Company in connection with or affecting the Business (including,
without limitation, any borrowing or capital expenditure) other than
in the ordinary course of business consistent with past practice;
4.8.(d) No Disposition of Property. Any sale, lease or
other transfer or disposition of any properties or assets of the
Business that would have been Purchased Assets had no such sale,
lease, transfer or disposition occurred, except for the sale of
inventory items in the ordinary course of business;
4.8.(e) No Liens. Any Lien made, created or imposed on any
of the properties or assets of the Business that are Purchased Assets
(or would have become Purchased Assets if not sold, leased,
transferred or disposed of prior to the Closing Date);
4.8.(f) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract in connection
with or affecting the Business or any of the Purchased Assets, or any
waiver of material rights thereunder, other than in the ordinary
course of business;
4.8.(g) Credit. Any grant of credit to any customer of the
Business or distributor of its products on terms or in amounts more
favorable than those which have been extended to such customer or
distributor in the past, any other change in the terms of any credit
heretofore extended, or any other change of Company's policies or
practices with respect to the granting of credit in connection with
the Business; or
4.8.(h) No Unusual Events. Any other event or condition not
in the ordinary course of business of Company's operation of the
Business.
4.9. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Division Balance Sheet, or in
Schedule 4.9, to the Company's best knowledge, the Business does not have
any Liabilities that affect, relate to or encumber the Purchased Assets
other than commercial liabilities and obligations incurred since the date
of the Recent Division Balance Sheet in the ordinary course of business
and consistent with past practice. Except as and to the extent described
in the Recent Division Balance Sheet or in Schedule 4.9, Company has no
knowledge of incurring any Liability affecting, relating to or encumbering
the Purchased Assets, except commercial liabilities and obligations
incurred in the ordinary course of the Business and consistent with past
practice.
4.10. No Litigation. Except as set forth in Schedule 4.10, there is
no Litigation pending or threatened against Company, its directors (in
such capacity), its business or any of its assets that in any way relates
to, directly or indirectly, the Division, the Business, the Purchased
Assets or the Assumed Liabilities, nor does Company know of any basis for
any such Litigation. Except as set forth in Schedule 4.10, neither
Company (in connection with its operation of the Business) nor the
Purchased Assets is subject to any Order. As used in this Agreement,
"Litigation" shall mean any action, writ, proceeding, arbitration,
investigation or inquiry, whether civil, criminal or administrative.
4.11. Compliance With Laws and Orders.
4.11.(a) Compliance. Except as set forth in Schedule
4.11.(a), Company, in all matters relating, directly or indirectly to
the Business (including each and all of its operations, practices,
properties and assets), is in compliance with all applicable Laws and
Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations,
product advertising and the Environmental Laws (as hereinafter
defined). Except as set forth in Schedule 4.11.(a), Company has not
received notice of any violation or alleged violation of, and is
subject to no Liability for past or continuing violation of, any
Laws, Orders or Environmental Laws with respect to the operation of
the Business, nor has the Company received any notice or other
communication of any alleged, actual or potential obligation to
undertake or bear the cost of Remediation at the Facilities or other
locations leased by the Company in connection with the Business, or
to which Materials of Environmental Concern generated by the Company
may have been transported, disposed or treated. All reports and
returns required to be filed by Company with any Government Entity
with respect to the operation of the Business have been filed, and
were accurate and complete when filed.
4.11.(b) Licenses and Permits. Company has all licenses,
permits, approvals, authorizations and consents of all Government
Entities and all certifications required for the conduct of the
Business (as presently conducted) and operation of the Facilities.
All such licenses, permits, approvals, authorizations and consents
are described in Schedule 4.11.(b), are in full force and effect and
are assignable to Buyer in accordance with the terms hereof. Except
as set forth in Schedule 4.11.(b), the Business (including its
operations, properties and assets) is and has been in compliance with
all such permits and licenses, approvals, authorizations and
consents.
4.11.(c) Environmental Matters. Without in any manner
limiting any other representations and warranties set forth in this
Agreement:
(i) Except as disclosed in Schedule 4.11.(c)
hereto, neither Company, nor any of the Purchased Assets or
their use is in violation of, or has violated, or has been or
is in non-compliance with, any Environmental Laws in
connection with the ownership, use, maintenance or operation
of, or conduct of the Business or any of the Purchased Assets.
(ii) Except as disclosed on Schedule 4.11(c)
hereto, without in any manner limiting the generality of (i)
above:
(A) Except in compliance with
Environmental Laws as they have existed from time to time
(including, without limitation, the obtaining of necessary
Permits), no Materials of Environmental Concern have been
used, generated, manufactured, stored or treated, or disposed
of, or in any other way released (and no release is
threatened), on, under or about any property on which Company
has conducted the Business or transported to or from Company's
place or places of conducting the Business, and to the best
of Company's knowledge no Materials of Environmental Concern
have been generated, stored or treated or disposed of, or in
any way released (and no release is threatened), on, under,
about or from any property adjacent to Company's Facilities or
property leased in connection with the conduct of the
Business;
(B) Company is not now, as a result of the
operation or condition of the Business of Company or Purchased
Assets prior to or at Closing, subject to any; (i) contingent
liability in connection with any release or threatened release
of any Materials of Environmental Concern into the environment
whether on or, to the best of Company's knowledge, off
property of Company; (ii) reclamation or Remediation
requirements under Environmental Laws, or any reporting
requirements related thereto; or (iii) consent order,
compliance order or administrative order relating to or issued
under any Environmental Law;
(C) There are no Environmental Claims
known, pending or to the best of Company's knowledge,
threatened against Company with respect to, directly or
indirectly, the operation of the Business or the Facilities
and, to the best of Company's knowledge, there is no basis for
same;
(D) Company has all Permits (as listed on
Schedule 4.11(b)) to comply with Requirements of Environmental
Laws governing the Business, Company has all environmental and
pollution control equipment necessary for compliance with all
Environmental Laws (including, without limitation, all
applicable Permits) and operation of the Business as it is
presently conducted, and is hereunder transferring to Buyer
(to the extent permitted by law) all environmental and
pollution control equipment necessary for compliance with all
Environmental Laws;
(E) Except as set forth on Schedule
4.11(c)(E), there are no, nor have there ever been any,
storage tanks or solid waste management units located on or
under any property on which Company has conducted the
Business, and there are no Materials of Environmental Concern
on the Facilities or property leased by Company in connection
with the conduct of the Business in an amount exceeding
background levels for such geographic area or which would
require reporting to any governmental authority or Remediation
to comply with Requirements of Environmental Laws;
(F) To the best of Company's knowledge,
none of the off-site locations where Materials of
Environmental Concern generated from the Business or from any
of the Purchased Assets or for which Company has arranged for
their disposal have been stored, treated, recycled, disposed
of or released has been nominated or identified as a facility
which is subject to an existing or potential claim under
Environmental Laws or is otherwise not in compliance with
Requirements of Environmental Laws;
(G) With respect to the Business, Company
has not been named as a potentially responsible party under,
and not received notice that it has been nominated or
identified as a facility which is subject to an existing or
potential claim under, the Clean Water Act, the Clean Air Act,
the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental
Response Compensation Liability Act ("CERCLA") or comparable
federal or state Environmental Laws, and the Business is not
subject to any existing Lien arising under Environmental Laws:
(H) Company has not received notice of any
release or threatened release of Materials of Environmental
Concern, or of any violation of, noncompliance with, or
remedial obligation under, Environmental Laws or Permits,
relating to the ownership, use, maintenance, operation of, the
Business, the Purchased Assets, or any property on which
Company has conducted the Business, nor to the best of
Company's knowledge, is there any basis for any of the
foregoing, nor has Company voluntarily undertaken Remediation
or other cleanup of any facility or site or entered into any
agreement for the payment of costs associated with such
activity;
(I) Company has no knowledge of any
Requirement of Environmental Laws that will require future
compliance cost on the part of Company or Buyer in excess of
Twenty-Five Thousand United States Dollars and No/100 (U.S.
$25,000) in the aggregate assuming Buyer complies with all
Environmental Laws;
(J) To the best of Company's knowledge
there are no present or past event, facts, conditions,
circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent continued compliance
by the Business with Requirements of Environmental Laws or
which may give rise to any common law or statutory liability
under Environmental Laws or form the basis of an Environmental
Claim against the Business, assuming Buyer complies with all
Environmental Laws; or
(K) Other than those obligations arising
directly from statutes or regulations, there are no
obligations, undertakings or liabilities arising out of or
relating to Environmental Laws which Company has agreed to,
assumed or retained, by contract or otherwise, with respect to
the Business except pursuant to law.
(L) Except as set forth on Schedule
4.11.(c)(L), there are no consents or approvals required under
any Environmental Laws (including without limitation
applicable Permits) which must be obtained to consummate the
transaction contemplated by this Agreement.
(iii) As used in this Agreement "Environmental
Claim" shall mean any claim, demand, action, cause of action,
suit, loss, cost, including, but not limited to, attorneys'
fees, diminution in value, experts' fees, damage, punitive
damage, fine, penalty, expense, liability, strict liability,
criminal liability, judgment, governmental or private
investigation, testing, notification of status of being
potentially responsible for clean-up of any facility, or for
being in violation or in potential violation of any
Requirement of Environmental Law relating to Remediation or
compliance with Requirements of Environmental Laws,
proceeding, Lien, personal injury or death of any person, or
property damage, whether threatened, sought, brought or
imposed, that is related to or that seeks to recover costs or
damages related to, or seeks to impose liability for: (i)
explosives; (ii) pollution, contamination, preservation,
protection, remediation, removal, clean-up or monitoring of
the air, surface water, ground water, soil or protected lands;
(iii) solid, gaseous or liquid waste (whether hazardous or
non-hazardous) generation, handling, discharge, release,
threatened release, treatment, storage, disposal or
transportation; (iv) exposure of persons or property to
Materials of Environmental Concern and the effects thereof;
(v) the release, threatened release, manufacture, processing,
distribution in commerce, use, treatment, storage, disposal or
Remediation of Materials of Environmental Concern; (vi) injury
to, death of or threat to the health or safety of any person
or persons caused directly or indirectly by Materials of
Environmental Concern; (vii) destruction caused directly or
indirectly by Materials of Environmental Concern or the
release or threatened release of any Materials of
Environmental Concern on any property (whether real or
personal); (viii) the implementation or lack thereof of spill
prevention and/or disaster plans relating to Materials of
Environmental Concern; (ix) community right-to-know and other
disclosure laws; or (x) maintaining, disclosing or reporting
information to governmental authorities under any
Environmental Law. The term, "Environmental Claim" also
includes, without limitation, any damages, costs or expenses
incurred in testing for the likelihood of Remediation or
likelihood of breach or violation of any Requirements of
Environmental Laws, monitoring or responding to efforts to
require Remediation and any claim based upon any asserted or
actual breach or violation of any Requirements of
Environmental Law, any disruption in Buyer's business
associated with Remediation, or upon any event, occurrence or
condition as a consequence of which, pursuant to any
Requirements of Environmental Law, the Purchased Assets shall
be subject to any restriction on use after Closing as a result
of any events or circumstances relating to facts or conditions
existing prior to the Closing Date.
"Environmental Laws" shall mean any laws, rules,
regulations, ordinances, orders or guidance documents now or
hereafter in effect of any applicable federal, state or local
executive, legislative, judicial, regulatory or administrative
agency, board or authority or any judicial or administrative
decision relating thereto that relate in any manner to health,
worker protection, the environment, or a community's right to
know.
"Government Entity" shall mean any court,
arbitrator, department, commission, board, bureau, agency,
authority, instrumentality or other body, whether federal,
state, municipal, foreign or others.
"Law" shall mean any statute, law, ordinance, rule
or regulation of general application adopted, enacted or
promulgated by any Government Entity.
"Material of Environmental Concern" means: (i)
those substances included within the statutory and/or
regulatory definitions of "Hazardous substance," "hazardous
waste," "extremely hazardous substance," "regulated
substance," "Hazardous materials," "toxic substances," under
any Environmental Law; (ii) any material, waste or substance
which is: (A) petroleum, oil or a fraction thereof, (B)
explosives, (C) radioactive materials (including naturally
occurring radioactive materials), or (D) solid wastes that
pose imminent and substantial endangerment to health or the
environment (as defined by RCRA, 42 USC 6973(a)), and (iii)
such other substances, materials, or wastes that are
classified or regulated as hazardous or toxic under any
applicable federal, state or local law or regulation.
"Order" shall mean any order, writ, injunction,
judgment, plan or decree issued or promulgated by any
Government Entity.
"Permits" shall mean any permit, registration,
notice, notice with intent, permit by rule, or other
authorization which is necessary for the Business and/or
Company to be in compliance with Requirements of Environmental
Laws.
"Remediation" means any action necessary to: (i)
comply with and ensure compliance with the Requirements of
Environmental Laws; (ii) the taking of all reasonably
necessary precautions to protect against and/or respond to,
remove or remediate or monitor the release or threatened
release of Materials of Environmental Concern at, on, in,
about, under, within or near the air, soil, surface water,
groundwater or soil vapor at the Facilities or any public
domain affected by the Business; or (iii) ensure that any
storage vessels or tanks are closed or otherwise meet the
requirements of Environmental Laws.
"Requirement(s) of Environmental Law(s)" means all
requirements, conditions, restrictions or stipulations of
Environmental Laws imposed upon or related to Company, the
Purchased Assets and/or the Business of Company.
4.12. Title to and Condition of Properties.
4.12.(a) Marketable Title. Company has good and marketable
title to all the Purchased Assets, free and clear of all mortgages,
liens (statutory or otherwise), security interests, claims, pledges,
licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens") except
those described in Schedule 4.12.(a)(i); and, in the case of real
property, Liens for taxes not yet due or which are being contested in
good faith by appropriate proceedings (and which have been
sufficiently accrued or reserved against in the Recent Division
Balance Sheet, which Liens for taxes and such proceedings are
described in Schedule 4.12.(a)(i)), municipal and zoning ordinances
and easements for public utilities, none of which interfere with the
use of the property as currently utilized ("Permitted Real Property
Liens"). Company has complete and unrestricted power and right to
sell, assign, convey and deliver the Purchased Assets to Buyer as
contemplated hereby. At Closing, Buyer will receive good and
marketable title to all the Purchased Assets (other than the Owned
Real Property and the Leased Real Property) free and clear of all
Liens of any nature whatsoever except those described in Schedule
4.12.(a)(ii).
4.12.(b) Condition. All tangible assets (real and personal)
constituting Purchased Assets hereunder are in good operating
condition and repair, have been maintained consistent with the
standards generally followed in the industry and are sufficient to
carry on the Business as conducted during the preceding 12 months.
Except as described in Schedule 4.12(b), all buildings, plants,
equipment and other structures owned or otherwise utilized by
Company in operating the Business are in good condition and repair.
4.12.(c) Real Property. Schedules 1.2.(a) and 1.2.(b) set
forth all real property owned, used or occupied by Company in
operating the Business (the "Real Property"), including a description
of all land, and all encumbrances, easements or rights of way of
record (or, if not of record, of which Company has notice or
knowledge) granted on or appurtenant to or otherwise affecting such
Real Property, the zoning classification thereof, and all plants,
buildings or other structures located thereon. Schedule 1.2.(b) also
sets forth, with respect to each parcel of Real Property which is
leased, the material terms of such lease. There are now in full
force and effect duly issued certificates of occupancy permitting the
Real Property and improvements located thereon to be legally used and
occupied as the same are now constituted. All of the Real Property
has permanent rights of access to dedicated public highways. There
is not (i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located on any
Real Property which encroaches on or over the boundaries of
neighboring or adjacent properties or (iii) any structure of any
other party which encroaches on or over the boundaries of any of such
Real Property. No public improvements have been commenced and to
Company's knowledge none are planned which in either case may result
in special assessments against or otherwise materially adversely
affect any Real Property. To Company's best knowledge, no portion of
any of the Real Property has been used as a landfill. Company has no
notice or knowledge of any (i) planned or proposed increase in
assessed valuations of any Real Property, (ii) Order requiring
repair, alteration, or correction of any existing condition affecting
any Real Property or the systems or improvements thereat, (iii)
condition or defect which could give rise to an order of the sort
referred to in "(ii)" above, or (iv) underground storage tanks, or
any structural, mechanical, or other defects of material significance
affecting any Real Property or the systems or improvements thereat
(including, but not limited to, inadequacy for normal use of
mechanical systems or disposal or water systems at or serving the
Real Property).
4.12.(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the Purchased Assets is subject to any Order to be
sold or is being condemned, expropriated or otherwise taken by any
Government Entity with or without payment of compensation therefor,
nor to the best of Company's knowledge has any such condemnation,
expropriation or taking been proposed.
4.12.(e) No Certified Survey Map Required. No certified
survey map or other state, municipal, or other governmental approval
regarding the division, platting, or mapping of real estate is
required as a prerequisite to the conveyance by Company to Buyer (or
as a prerequisite to the recording of any conveyance document) of any
Owned Real Property or Leased Real Property pursuant to the terms
hereof.
4.13. Insurance. Set forth in Schedule 4.13 is a complete and
accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance
presently in effect with respect to the Business or the Purchased Assets.
4.14. Contracts and Commitments.
4.14.(a) Real Property Leases. Except as set forth in
Schedule 1.2.(b), Company has no leases of real property used or held
for use in connection with the Business.
4.14.(b) Personal Property Leases. Except as set forth in
Schedule 1.2.(e), Company has no leases of personal property used or
held for use in connection with the Business.
4.14.(c) Purchase Commitments. Company has no purchase
commitments for inventory items or supplies in connection with the
Business that, together with amounts on hand, constitute in excess of
12 months normal usage, or which are in excess of the current price.
4.14.(d) Sales Commitments. Company has no sales contracts
or commitments in connection with or affecting the Business or the
Purchased Assets except those made in the ordinary course of
business, at arm's length or which are expected to produce a loss,
except as disclosed in Schedule 4.14.(d).
4.14.(e) Contracts for Services. Company has no agreement,
understanding, contract or commitment in connection with or affecting
the Business or the Purchased Assets (written or oral) with any
agent, consultant, distributor, dealer or franchisee that is not
cancelable by Company on notice of not longer than 30 days without
liability, penalty or premium of any nature or kind whatsoever.
4.14.(f) Powers of Attorney. The Company has not given a
power of attorney, which is currently in effect, to any person, firm
or corporation for any purpose whatsoever in connection with or
affecting the Business or the Purchased Assets.
4.14.(g) Collective Bargaining Agreements. Except as set
forth in Schedule 4.14.(g), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or
other collective bargaining groups representing or purporting to
represent employees of the Business. Copies of all such agreements
have heretofore been delivered to Buyer.
4.14.(h) Other Material Contracts. Company has no lease,
license, contract or commitment of any nature affecting the Business
which is individually or in the aggregate material to the operation
of the Business, except as explicitly described in Schedule 4.14.(h)
or any other Schedule.
4.14.(i) No Default. Company is not in default under any
lease, contract or commitment in its operation of the Business, nor
has any event or omission occurred which through the passage of time
or the giving of notice, or both, would constitute a default
thereunder or cause the acceleration of any of Company's obligations
or result in the creation of any Lien on any of the Purchased Assets.
To Company's best knowledge, no third party is in default under any
lease, contract or commitment to which Company is a party in its
operation of the Business, nor has any event or omission occurred
which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or give rise to an automatic
termination, or the right of discretionary termination, thereof.
4.15. Labor Matters. Except as set forth in Schedule 4.15, within
the last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with the Business. In its operation of the Business, except to
the extent set forth in Schedule 4.15, (a) Company is in compliance with
all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and is not engaged in
any unfair labor practice; (b) there is no unfair labor practice charge or
complaint against Company pending or threatened; (c) there is no labor
strike, dispute, request for representation, slowdown or stoppage actually
pending or threatened against or affecting the Business nor any secondary
boycott with respect to products of the Business; (d) no question
concerning representation has been raised or is threatened respecting the
employees of the Business; and (e) there are no administrative charges or
court complaints against Company concerning alleged employment
discrimination or other employment related matters pending or threatened
before the U.S. Equal Employment Opportunity Commission or any Government
Entity.
4.16. Intentionally Left Blank.
4.17. Intentionally Left Blank.
4.18. Trade Rights. Schedule 4.18 lists all Trade Rights of the
type described in clauses (i), (ii), (iii) or (iv) of Section 1.2.(f) in
which Company now has any interest and which are or were used, held for
use, or acquired or developed for use in the Business, specifying whether
such Trade Rights are owned, controlled, used or held (under license or
otherwise) by Company, and also indicating which of such Trade Rights are
registered. In order to conduct the Business as such is currently being
conducted Company does not require any Trade Rights that it does not
already have. Company is not infringing and has not infringed any Trade
Rights of another in the operation of the Business, nor to the Company's
best knowledge is any other person infringing the Trade Rights of Company.
Company has not granted any license or made any assignment of any Trade
Right listed on Schedule 4.18, and no other person has any right to use
any Trade Right owned or held by Company in its operation of the Business.
Company does not pay any royalties or other consideration for the right to
use any Trade Rights of others used in the Business. There is no
Litigation pending or threatened to challenge Company's right, title and
interest with respect to its continued use and right to preclude others
from using any Trade Rights of Company used in the Business. All Trade
Rights of Company are valid, enforceable and in good standing, and there
are no equitable defenses to enforcement based on any act or omission of
Company.
4.19. Major Customers and Suppliers.
4.19.(a) Major Customers. Schedule 4.19.(a) contains a list
of the ten largest customers, including distributors, of the Business
for each of the two (2) most recent fiscal years (determined on the
basis of the total dollar amount of net sales) showing the total
dollar amount of net sales to each such customer during each such
year. Company has no knowledge or information of any facts
indicating, nor any other reason to believe, that any of the
customers listed on Schedule 4.19.(a) will not continue to be
customers of the Business after the Closing at substantially the same
level of purchases as heretofore.
4.19.(b) Major Suppliers. Schedule 4.19.(b) contains a list
of the ten largest suppliers to the Business for each of the two (2)
most recent fiscal years (determined on the basis of the total dollar
amount of purchases) showing the total dollar amount of purchases
from each such supplier during each such year. Company has no
knowledge or information of any facts indicating, nor any other
reason to believe, that any of the suppliers listed on Schedule
4.19.(b) will not continue to be suppliers to the Business after the
Closing and will not continue to supply the Business with
substantially the same quantity and quality of goods at competitive
prices.
4.19.(c) Sales Representatives. Schedule 4.19.(c) contains a
list by product line of all sales representatives of the Business,
together with representative copies of all sales representative
contracts, and a description of all substantial modifications or
exceptions.
4.20. Product Warranty and Product Liability. Schedule 4.20
contains a true, correct and complete copy of Company's standard warranty
or warranties for sales of Products (as defined below) and, except as
stated therein, there are no warranties, commitments or obligations with
respect to the return, repair or replacement of Products. Schedule 4.20
sets forth the estimated aggregate annual cost to Company of performing
warranty obligations for customers of the Business for each of the two (2)
preceding fiscal years and the current fiscal year to the date of the
Recent Division Balance Sheet. Schedule 4.20 contains a description of
all product liability claims and similar Litigation relating to Products
manufactured or sold, or services rendered, which are presently pending or
which to Company's knowledge are threatened, or which have been asserted
or commenced against the Company in connection with its operation of the
Business within the last two (2) years, in which a party thereto either
requests injunctive relief or alleges damages in excess of Twenty-Five
Thousand United States Dollars and No/100 (U.S. $25,000) (whether or not
covered by insurance). None of the Products has been the subject of any
replacement, field fix, retrofit, modification or recall campaign and, to
Company's knowledge, no facts or conditions exist which could reasonably
be expected to result in such a recall campaign. The Products have been
designed and manufactured so as to meet and comply with all applicable
governmental standards and specifications currently in effect, and have
received all governmental approvals necessary to allow their sale and use.
As used in this Section 4.20, the term "Products" means any and all
products currently or at any time previously manufactured, distributed or
sold by the Business, or by any predecessor of the Business under any
brand name or xxxx under which products are or have been manufactured,
distributed or sold by Company in or through the Business.
4.21. Affiliates' Relationships to Company.
4.21.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements concerning the Business between
Company and any Affiliate are described on Schedule 4.21.(a).
4.21.(b) No Adverse Interests. No Affiliate has any direct
or indirect interest in (i) any entity which does business with
Company in connection with the operation of, or is competitive with
the Business, or (ii) any property, asset or right which is used by
Company in the conduct of the Business.
4.22. Assets Necessary to Business. The Purchased Assets include
all property and assets (except for the Excluded Assets), tangible and
intangible, and all leases, licenses and other agreements, which are
necessary to permit Buyer to carry on, or currently used or held for use
in, the Business as presently conducted.
4.23. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, shareholders or agents have retained,
employed or used any broker or finder in connection with the transactions
provided for herein or the negotiation thereof, except for Credit Suisse
First Boston. Company shall be solely responsible for the payment of any
and all fees or expenses of Credit Suisse First Boston in connection with
the transactions contemplated in this Agreement.
4.24. Disclosure. No representation or warranty contained in this
Agreement contains any untrue statement of material fact or omits to state
a material fact necessary to make the statements herein not misleading.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company
each of which is true and correct on the date hereof, shall remain true
and correct to and including the Closing Date, shall be unaffected by any
investigation heretofore or hereafter made by Company or any notice to
Company, and shall survive the Closing of the transactions provided for
herein for a period of three (3) years.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware.
5.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out
the transactions contemplated hereby and thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Buyer. No other corporate act or proceeding on the part of Buyer is
necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by Buyer pursuant hereto or the
consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes, and when executed and delivered, the other
documents and instruments to be executed and delivered by Buyer pursuant
hereto will constitute, valid and binding agreements of Buyer, enforceable
in accordance with their respective terms, except as such may be limited
by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
5.3. No Brokers or Finders. Neither Buyer nor any of its
directors, officers, employees or agents have retained, employed or used
any broker or finder in connection with the transactions provided for
herein or the negotiation thereof.
6. EMPLOYEES - EMPLOYEE BENEFITS
6.1. Plant Closing Notification. Company shall make all necessary
notifications under any and all applicable federal and state plant-closing
laws.
6.2. Employment Liabilities. Company hereby retains any and all
employment related costs, obligations and liabilities of the Business
incurred on or prior to the Closing Date or which relate to events,
occurrences, conditions, actions or inactions which took place or were in
effect on or prior to the Closing Date (whether or not reported, filed,
billed or paid for on or prior to the date hereof), including, without
limitation, costs, obligations and liabilities relating to employment
discrimination, unfair labor practices, wage and hour laws, health and
safety, workers compensation, wrongful discharge, plant closing,
compensation, fringe benefits, insurance, employee benefit plans,
pensions, retiree medical, severance pay, vacations, torts, accidents,
disabilities, injuries, sickness, exposure to harmful conditions, breach
of oral or written employment contracts or collective bargaining
agreements or breach of law, statute, judgment, decree, injunction, order,
writ, rule or regulation of any federal, state or local governmental
agency. The proportionate liability for continuing acts or conditions
(such as exposure to harmful conditions or continuing discrimination)
shall be assumed by Company if any material portion of the act or
condition occurred on or prior to the Closing Date. Company shall be
responsible for paying to its employees accrued vacation time to the
Closing Date.
6.3. Employees. Company will terminate all the employees of Company
engaged in the Business as of the Closing Date. The parties hereby agree
that the Buyer is not assuming any of the Benefit Plans (as defined below)
nor shall it be deemed a successor employer with respect to any of the
Benefit Plans. The terms "Benefit Plans" shall mean collectively any (i)
"cafeteria plan" as described in Section 125 of the Internal Revenue Code
of 1986, as amended (ii) "employee welfare benefit plans", as defined in
Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or (iii) "employee pension benefit plan" as defined in
Section 3 (2) of ERISA whether insured or otherwise. Company agrees to
cooperate with Buyer and give Buyer access to employee information and
assistance with employee communications in connection with Buyer's
potential employment of certain current employees of Company. Buyer shall
be under no obligation to (i) maintain any of Company's employees it may
hire at the same position, title or level or responsibility and/or
compensation that they had with the Company; (ii) grant seniority or
service credit to any such employee; or (iii) pay any specified level of
compensation or benefits to any such employee.
6.4. COBRA. Buyer does not assume, and Company agrees to be solely
responsible for, any and all liabilities relating to health care
continuation coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, which relate to, arise out of or are in
connection with the transaction or the events contemplated by this
Agreement.
6.5. Notification. After the Closing, Buyer agrees to promptly
notify Company of the identity of any of the former employees of the
Business which Buyer elects to hire. This obligation shall continue for a
period of two years after the Closing.
7. OTHER MATTERS
7.1. Title Matters.
7.1.(a) Title Commitments. By May 10, 1997, Company, at its
expense, shall provide to Buyer (i) title insurance commitments (each
a "Title Commitment") issued by a title insurance company or
companies reasonably satisfactory to Buyer (the "Title Company"),
agreeing to issue to Buyer standard form owner's (or lessee's, as the
case may be) policies of title insurance with respect to all Owned
Real Property and Leased Real Property, together with a copy of each
document to which reference is made in such commitments (the
"Supporting Documents"); and (ii) a current "as built" survey (each a
"Survey") of the Business' Russellville, Arkansas facility and the
Business' Cynthiana, Kentucky facility and all improvements situated
thereon made on the ground and certified by a professional land
surveyor licensed in the State in which the Real Property is located.
The costs and expenses associated with obtaining the above two
Surveys shall be shared equally by the Buyer and the Company
regardless of whether the transaction contemplated by this Agreement
actually Closes.
7.1.(b) Procedure for Objections to Title Commitments and
Surveys. Buyer shall have twenty (20) days after receipt of the last
of the Title Commitments together with complete and legible copies of
all Supporting Documents and the Surveys to notify Company in writing
("Buyer's Objection Notice") of any objections Buyer may have to
matters reflected in or relating to the Title Commitments, the
Supporting Documents or the Surveys. If Buyer timely delivers
Buyer's Objection Notice, Company shall have the option in its sole
and absolute discretion to determine whether or not to attempt to
remedy or cure any such objection within the 20-day period
("Company's Cure Period") following receipt of Buyer's Objection
Notice. If Company has not cured or undertaken in writing to cure
prior to Closing any objection set forth in Buyer's Objection Notice
to Buyer's reasonable satisfaction by the end of Company's Cure
Period, Buyer shall, as its sole and exclusive remedy, be entitled to
either (a) terminate this Agreement by written notice given (i)
within three (3) business days after the end of Company's Cure Period
or (ii) at or prior to the Closing Date, whichever shall first occur,
whereupon neither Buyer nor Company shall have any further right or
obligation hereunder except for rights or obligations which expressly
survive termination or (b) to proceed to Closing without any
abatement in Purchase Price and waive such uncured objection. As
used herein, the term "Permitted Real Property Liens" shall mean as
to each parcel of Real Property any and all matters disclosed in the
related Title Commitment, Survey or Supporting Documents, except for
those matters cured or undertaken by Company in writing to be cured
prior to Closing.
7.1.(c) Title Insurance. At Closing, Company shall convey
good and marketable title to all Owned Real Property by general
warranty deed, free and clear of all Liens except for the Permitted
Real Property Liens. In addition, at Closing, Company, at its
expense, shall provide to Buyer owner's (or lessee's, as the case may
be) policies of title insurance with respect to all Owned Real
Property and Leased Real Property. In the case of Owned Real
Property, each such policy shall be a standard ALTA Form 1990 owner's
policy in the full amount of that portion of the Purchase Price
allocated respectively to each subject parcel of Owned Real Property
under Section 3.6 hereof, insuring good and marketable title thereto
(expressly including all easements and other appurtenances) in fee
simple subject to no Liens other than the Permitted Real Property
Liens pertaining to such Owned Real Property. In the case of Leased
Real Property, each such policy shall be upon a standard ALTA Form
1990 leasehold owner's policies and in such amounts as such shall be
reasonably acceptable to Buyer insuring said leasehold estate to be
in Buyer subject to no Liens other than the Permitted Real Property
Liens pertaining to such Leased Real Property. In either case, all
policies shall contain such endorsements as Buyer shall reasonably
request.
7.2. Environmental Audits. Buyer will promptly assign certain of
its technical employees to conduct such environmental audits of the
Business' operations and the real estate occupied by the Business as Buyer
in its discretion shall consider necessary or appropriate, and thereafter
Buyer may promptly retain one or more firms engaged in the regular
business of environmental engineering to conduct such further
environmental audits of the Business' operations and real estate as are
indicated by the Buyer's own environmental audits. Buyer shall promptly
provide Company with copies of all written reports provided by its
employees or outside consultants.
7.3. Noncompetition. Subject to the Closing, and as an inducement
to Buyer to execute this Agreement and complete the transactions
contemplated hereby, Company hereby covenants and agrees that for a period
of five (5) years from the Closing Date (the "Noncompetition Term"), it
will not, directly or indirectly:
(i) engage in, continue in or carry on any
business which would be competitive with the Business as
currently conducted by the Company or is substantially similar
thereto, including owning or controlling any financial
interest in any corporation, partnership, firm or other form
of business organization which is so engaged, except that the
Company shall be free to continue to sell industrial forgings
and continue machining of forgings without violating this
provision;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any person, corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Buyer in any aspect with respect to
the Business as currently conducted by the Company including,
but not limited to, advertising or otherwise endorsing the
products of any such competitor; soliciting customers or
otherwise serving as an intermediary for any such competitor;
loaning money or rendering any other form of financial
assistance;
(iii) hire, offer to hire, or solicit for
employment any employee of Buyer, without the prior consent of
Buyer, until such person has been separated from employment by
the Buyer for at least 2 calendar years; or
(iv) engage in any practice the purpose of which
is to evade the provisions of this covenant not to compete or
to commit any act which adversely affects the Purchased Assets
acquired by Buyer hereunder;
provided, however, that the foregoing shall not prohibit the ownership by
Company of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in
an amount which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the geographic scope of this covenant
not to compete shall be worldwide. The parties hereto agree and stipulate
that the agreements and covenants not to compete contained in this Section
7.3. are fair and reasonable in light of all of the facts and
circumstances of the relationship between Buyer and Company; however,
Company and Buyer are aware that in certain circumstances courts have
refused to enforce certain agreements not to compete. Therefore, in
furtherance of, and not in derogation of the provisions of this Section,
Company and Buyer agree that in the event a court should decline to
enforce the provisions hereof, that this Section 7.3. shall be deemed to
be modified or reformed to restrict Company's competition with Buyer or
its affiliated companies to the maximum extent, as to time, geography and
business scope, which the court shall find enforceable; provided, however,
in no event shall the provisions hereof be deemed to be more restrictive
to Company than those contained herein. If, during any period within the
Noncompetition Term, Company is not in compliance with the terms of
Section 7.3., Buyer shall be entitled to, among any other remedies
available hereunder, at law or in equity, compliance by Company with the
terms of this Section 7.3. for an additional period equal to the period of
such noncompliance. For purposes of the Agreement, the term
"Noncompetition Term" shall also include this additional period. Company
and Buyer hereby acknowledge that the geographic boundaries, scope of
prohibited activities and the time duration of the provisions of this
Section 7.3. are reasonable and no broader than are necessary to protect
the legitimate business interest of Buyer. The parties agree that Buyer
may sell, assign or otherwise transfer this covenant not to compete, in
whole or in part, to any person, corporation, firm or entity that
purchases all or part of the Purchased Assets, but no such sale,
assignment or transfer shall increase the term or the business or
geographic scope of this covenant.
7.4. Confidential Information. Company shall not at any time
subsequent to the Closing, except as explicitly requested by Buyer, use
for any purpose, disclose to any person, or keep or make copies of
documents, tapes, discs, programs or other information storage media
("records") containing, any confidential information concerning the
Business, the Purchased Assets, or the Assumed Liabilities, all such
information being deemed to be transferred to the Buyer hereunder. For
purposes hereof, "confidential information" shall mean and include,
without limitation, all Trade Rights which are Purchased Assets, all
customer and vendor lists and related information of the Company related
to the Business, all information concerning the processes, products,
costs, prices, sales, marketing and distribution methods, properties and
assets, liabilities, finances, and employees of the Company related to the
Business, and any other information not previously disclosed to the public
directly by Company. The foregoing provisions shall not apply to any
information which is an "Excluded Asset" as defined in Section 1.3, or
which relates solely to one or more Excluded Assets. If at any time after
Closing Company should discover that it is in possession of any records
containing the confidential information of Buyer, then Company shall
immediately turn such records over to Buyer, which shall upon request make
available to Company any information contained therein which is not
confidential or privileged information. After the Closing, each party
shall cooperate with the other in providing to the other information and
materials in its possession necessary or useful to the other party in
prosecuting or defending itself in any Litigation; provided that neither
party shall be required to provide any such information or materials (i)
if the parties are or may reasonably be expected to become adverse to one
another with respect to such Litigation or any other Litigation in which
such information or materials may be material, or (ii) to the extent such
provision would (in the opinion of counsel) constitute a waiver of
privilege.
7.5. Privileged Materials. The parties mutually agree that
neither party will assert a waiver or loss of confidential or privileged
status of information obtained by Buyer hereunder, nor disclose the
content of communications or work product related to such privilege,
without the express written consent of the other except in response to or
in connection with formal legal process or upon request from any
Government Entity. In the event Buyer shall receive a request or demand
for production of such material in connection with formal legal process or
from any Government Entity, Buyer shall promptly give notice thereof to
Company and, upon Company's request, shall allow Company at Company's
expense to make such objections to production as Company shall elect; and
Buyer shall not produce such materials unless Buyer is advised by counsel
that it is legally obligated to do so.
7.6. HSR Act Filings. To the extent such filings have not been
completed prior to the execution of this Agreement, each of Company and
Buyer shall, in cooperation with the other, file any reports or
notifications that may be required to be filed by it under the HSR Act,
with the Federal Trade Commission and the Antitrust Division of the
Department of Justice, and shall furnish to the other all such information
in its possession as may be necessary for the completion of the reports or
notifications to be filed by the other.
7.7. Use of Company's Name. Following the Closing, Company agrees
that it will not object to or interfere with Buyer's use or registration
of the name "Xxxxxx" in connection with Buyer's operation of the Purchased
Assets in the manner operated by the Company in connection with the
Business prior to Closing with respect to the categories of products and
services constituting the Business prior to Closing. Company shall not
grant any other person or entity whatsoever any rights or forbearances
with respect to the use of the name "Xxxxxx" in connection with the
activities described in Section 1.1. as constituting the Business.
Company shall bear no responsibility for the defense of Buyer's right to
use the name at any time hereafter (provided that, at Buyer's request and
expense, Company shall include Buyer's rights in the name "Xxxxxx" in any
defense Company may make after the Closing of its own rights in such
name). Buyer agrees not to expand its use of the name "Xxxxxx" beyond the
categories of products and services constituting the Business at the time
of Closing. Buyer acknowledges that except for the rights granted under
this Agreement, it has no right or interest in Company's name. Each party
agrees to indemnify the other for all claims, losses and Liabilities which
result from or may arise out of the indemnifying party's use of the name
"Xxxxxx" after the Closing.
7.8. Sales Tax Matters. Buyer will use commercially reasonable
efforts to cooperate with Company in availing itself of any available
"occasional sale" or sale-of-business exemption from applicable sales and
use taxes arising out of the transactions described in Articles 1 and 2 of
this Agreement.
7.9. Intentionally Left Blank.
7.10. Cynthiana, Kentucky Flood. Buyer is aware of the occurrence
and the extent of the flooding of the Company's facility at Cynthiana,
Kentucky, which facility is entirely devoted to the Business. With
respect to the cleanup of such facility:
7.10.(a) Business Interruption Insurance. Claims upon and
proceeds of business interruption insurance received by Company
whether before or after Closing, relating to periods to and including
Closing, shall be retained by Company as an Excluded Asset. Claims
upon and proceeds of business interruption insurance received by
Company relating to periods after Closing shall be remitted promptly
to Buyer.
7.10.(b) Property Insurance. Claims upon and proceeds of
insurance covering the value of inventory shall be retained by
Company as an Excluded Asset. Claims upon and proceeds of insurance
covering improvements to realty and other fixed assets shall be
disposed of by Company as follows: Prior to Closing, subject to
Buyer's approval which approval shall not be unreasonably withheld,
Company shall as expeditiously as possible undertake to clean up and
restore the property, and all property insurance proceeds covering
property shall be applied for this purpose. Company agrees to
consult with Buyer with respect to such cleanup and restoration, to
the end that the property be reasonably suited to Buyer's intended
operation at or after Closing. Any such proceeds received by Company
relative to the fixed assets and not disbursed for the purpose of
such cleanup and restoration at the time of Closing shall be remitted
to Buyer at or promptly after Closing; any such proceeds received
after Closing shall be remitted to Buyer promptly after receipt.
Company shall exercise its best efforts to diligently and fully
prosecute its claim to recover such property insurance proceeds to
the maximum value of such insured loss. Company shall be solely
responsible for the payment of any and all deductibles payable with
respect to any insurance coverage referenced in this Section 7.10(b).
7.10.(c) If, after signing of this Agreement and before
Closing, in the course of the clean-up and restoration of the
property, representatives of the Buyer and the Company elect to
improve the condition or effectiveness of certain items of the
Purchased Assets to a level beyond their condition prior to the flood
and the cost of this improvement exceeds insurance proceeds available
for such improvement, then Buyer shall be responsible for the cost of
such improvements to the extent in excess of available insurance
proceeds and shall reimburse Company for any amount incurred by the
Company in respect of such excess amount. In order to be covered by
this Section 7.10.(c), the items of Purchased Assets must be
identified in a written instrument signed by duly authorized
representatives of Buyer and Company, which instrument also
identifies as to each such item, the extent to which it is being
improved beyond its condition prior to the flood.
7.11. Nondisparagement. For a period of two years from and after
the Closing Date, none of the parties to this Agreement shall say, publish
or cause to be published or do anything that casts any other party hereto
in an unfavorable light, or disparage or injure any other party's
goodwill, business reputation or relationship with existing or potential
suppliers, vendors, customers, employees, contractors, investors or the
financial community in general, or the good will or business reputation of
such party.
7.12. Form 8594 Filing. Company and Buyer agree that each shall
timely file Treasury Form 8594 "Asset Acquisition Statement" as required
under Section 1060 of the Internal Revenue Code of 1986, as amended based
upon the allocation of the purchase price of the Purchased Assets on or
after the Closing Date.
8. FURTHER COVENANTS OF COMPANY
Company covenants and agrees as follows:
8.1. Access to Information and Records and Physical Inspections.
During the period prior to the Closing:
8.1.(a) Company shall, and shall cause its officers,
employees, agents, independent accountants and advisors to: (i)
furnish to Buyer, its officers, employees, agents, independent
accountants and advisors, at reasonable times and places, all
information in their possession concerning the Division and the
operation of the Business as may be requested, and give such persons
access to all of the properties, books, records, contracts and other
documents of or pertaining to the Business that Company or its
officers, employees, agents, independent accountants or advisors
shall have in their custody; and (ii) grant to Buyer and its
employees, agents and contractors reasonable access to the Facilities
during normal business hours for the purpose of conducting such soils
tests, environmental tests and inspections and such other engineering
and physical tests and inspections as Buyer deems reasonably
necessary or desirable (so long as such tests and inspections do not
unreasonably interfere with the operation of the Facilities).
8.1.(b) With the prior consent of the authorized
representative of Company in each instance (which consent shall not
be unreasonably withheld), Buyer and its officers, employees, agents,
independent accountants and advisors, shall have access to vendors,
customers, and others having business dealings with the Business for
the purpose of performing Buyer's due diligence investigation.
8.2. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer:
8.2.(a) No Changes. Company will carry on the Business
diligently and in the same manner as heretofore and will not make or
institute any changes in its methods of purchase, sale, management,
accounting or operation.
8.2.(b) Maintain Organization. Company will take such
action as may be necessary to maintain, preserve, renew and keep in
favor and effect the existence, rights and franchises of the Business
and will use its best efforts to preserve the Business intact, to
keep available to Buyer the present officers and employees of the
Business, and to preserve for Buyer its present relationships with
suppliers and customers and others having business relationships with
the Business.
8.2.(c) No Breach. Company will not do or omit any act, or
permit any omission to act, which may cause a breach of any contract,
commitment or obligation material to the Business, or any breach of
any representation, warranty, covenant or agreement made by Company
herein, or which would have required disclosure on Schedule 4.8 had
it occurred after the date of the Recent Business Balance Sheet and
prior to the date of this Agreement.
8.2.(d) No Material Contracts. No contract or commitment
will be entered into, and no purchase of raw materials or supplies
and no sale of goods or services (real, personal, or mixed, tangible
or intangible) will be made, by or on behalf of Company in connection
with its operation of the Business, except contracts, commitments,
purchases or sales which are in the ordinary course of business and
consistent with past practice, are not material to the Business and
would not have been required to be disclosed in the Disclosure
Schedule had they been in existence on the date of this Agreement.
8.2.(e) Maintenance of Insurance. Company shall maintain
all of the insurance in effect as of the date hereof with respect to
the Business and the Purchased Assets.
8.2.(f) Maintenance of Property. Company shall use,
operate, maintain and repair all property constituting Purchased
Assets in a normal business manner.
8.2.(g) Interim Financials. Company will provide Buyer as
promptly as is practical with interim monthly financial statements of
the Business.
8.2.(h) No Negotiations. Company will not directly or
indirectly (through a representative or otherwise) solicit or furnish
any information to any prospective buyer, commence, or conduct
presently ongoing, negotiations with any other party or enter into
any agreement with any other party concerning the sale of the
Business or any part thereof or any equity securities of Company.
8.3. Consents. Company will obtain all consents necessary for the
consummation of the transactions contemplated hereby.
8.4. Other Action. Company shall use its best efforts to cause the
fulfillment at the earliest practicable date of all of the conditions to
the parties' obligations to consummate the transactions contemplated in
this Agreement.
8.5. Production Contract. Company and Buyer agree that at Closing
they will enter into a contract under which Buyer shall machine forgings
manufactured by Company in the form attached hereto as Exhibit 8.5.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms of this
Agreement or consented to in writing by Buyer.
9.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by it
prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 12.1.
9.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
9.4. Consents and Approvals. All approvals, consents and waivers
that are required to effect the transactions contemplated hereby shall
have been received, and executed counterparts thereof shall have been
delivered to Buyer not less than two business days prior to the Closing.
9.5. Title Insurance. Buyer shall have obtained good and valid
title insurance policies or, in final form, irrevocable title insurance
binders, dated as of the Effective Time, conforming to the specifications
set forth in Section 7.1 hereof.
9.6. Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
9.7. Section 1445 Affidavit. Company shall have delivered to Buyer
an affidavit, in form satisfactory to Buyer, to the effect that Company is
not a "foreign person," "foreign corporation," "foreign partnership,"
"foreign trust," or "foreign estate" under Section 1445 of the Code, and
containing all such other information as is required to comply with the
requirements of such Section.
9.8. Environmental Audit. The results of the environmental audit
conducted pursuant to Section 7.2 shall not have disclosed any past or
present condition, process or practice with respect to the Business as
conducted by the Company prior to the Closing Date or any property owned,
occupied or operated by the Company in connection with Business which is
not in material compliance with all applicable Environmental Laws or which
otherwise requires Remediation under any Environmental Law, if a
reasonable estimate by Buyer of the cost of remediation, or the potential
liability to third persons arising from such condition, process or
practice, or the cost of bringing such property into material compliance
with all applicable Environmental Laws, would exceed Fifty Thousand United
States Dollars and No/100 (U.S. $50,000) in the aggregate with respect to
all matters described in this Section.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
10.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date.
10.2. Compliance With Agreement. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and
obligations under this Agreement which are to be performed or complied
with by Buyer prior to or on the Closing Date, including the delivery of
the closing documents specified in Section 12.2.
10.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
10.4. Waiting Periods. All applicable waiting periods related to
the HSR Act and all applicable plant-closing laws shall have expired.
11. ESCROW
11.1. On the Closing Date, Company will deposit the sum of (i) the
Base Escrow Amount (hereinafter defined) plus (ii) the Environmental
Escrow Amount (as defined in Section 13.3), if any (collectively the
"Escrow Amount") with an escrow agent to be held and disbursed by such
escrow agent pursuant to the terms and conditions of an escrow agreement
in the form of Exhibit 11.1 attached hereto and made a part hereof (the
"Escrow Agreement"). The Escrow Agreement will direct the escrow agent to
deposit the Escrow Amount in an interest-bearing account, and so long as
Buyer has filed no claim against Company to pay the interest to Company
quarterly. Should a claim be filed the interest earned thereafter will
not be distributed but will remain with the Escrow Amount until the claim
is resolved. The Escrow Amount shall secure, in part, the performance of
Company's covenants and agreements under or pursuant to, and the accuracy
of the representations and warranties made by Company in, this Agreement,
including, without limitation any indemnity provided by Company pursuant
to Section 13.3. Should Buyer assert a claim against Company for breach
of any of Company's representations, warranties, covenants, indemnities or
agreements under this Agreement (an "Eligible Claim"), Company and Buyer
may by joint written notice direct the escrow agent to disburse all or any
part of the Escrow Amount to Buyer in respect of such Eligible Claim.
Otherwise, Buyer shall be entitled to receive disbursements of the Escrow
Amount only as provided in Section 4(b) of the Escrow Agreement. Provided
no Eligible Claim has been filed and is then pending in a court of
competent jurisdiction and provided the Escrow Amount does not then
include an Environmental Escrow Amount, (i) on the first (1st) anniversary
of the Closing Date, fifty percent (50%) of the Base Escrow Amount shall
be released to Company, (ii) on the second (2nd) anniversary of the
Closing Date, fifty percent (50%) of the then remaining Base Escrow Amount
shall be released to Company and (iii) on the third (3rd) anniversary of
the Closing Date, the then remaining Base Escrow Amount shall be released
to Company. In the event of an Eligible Claim arising under an Objection
Notice under Section 13.3 Company shall promptly engage qualified third
parties for remediation and Buyer shall join Company in giving
instructions to the Escrow Agent for the payment of the third parties'
costs and expenses arising from the remediation. If an Eligible Claim is
pending or any matter as to which Company has deposited the Environmental
Escrow Amount has not been fully resolved and cured to Buyer's reasonable
satisfaction on any of the foregoing dates, a portion of the Escrow Amount
sufficient to resolve the open Eligible Claim shall not be released to
Company until final resolution of all such Eligible Claims. Upon final
resolution of all Eligible Claims, Company shall be entitled to receive
any remaining balance of the Escrow Amount. Buyer's right to recover all
or any portion of the Escrow Amount shall be in addition to and cumulative
of any other right or remedy available to Buyer under the Agreement or
otherwise available to Buyer at law or in equity. As used herein, the
term "Base Escrow Amount" shall mean an amount equal to Three Million Six
Hundred Fifty Thousand Dollars ($3,650,000).
12. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall take place at
the offices of Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, at 9:00 A.M. on May 30, 1997, or at such other time and
place as the parties hereto shall agree upon (the "Closing Date").
12.1. Documents to be Delivered by Company. At the Closing, Company
shall deliver to Buyer the following documents, in each case duly executed
or otherwise in proper form or take the following actions:
12.1.(a) Deeds, Bills of Sale. Warranty deeds to real estate
and bills of sale and such other instruments of assignment, transfer,
conveyance and endorsement as will be sufficient to transfer, assign,
convey and deliver to Buyer the Purchased Assets as contemplated
hereby. At or after the Closing, and without further consideration,
Company shall execute and deliver to Buyer such further instruments
of conveyance and transfer as Buyer may reasonably request in order
to more effectively convey and transfer to Buyer and of the Purchased
Assets, or for aiding and assisting in collecting and reducing to
possession and exercising rights with respect thereto.
12.1.(b) Compliance Certificate. A certificate signed by an
executive officer of Company that each of the representations and
warranties made by Company in this Agreement is true and correct in
all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or
given on and as of the Closing Date (except for any changes permitted
by the terms of this Agreement or consented to in writing by Buyer),
and that Company has performed and complied with all of Company's
obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
12.1.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Company authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.1.(d) Articles; By-laws. A copy of the By-laws of Company
certified by the secretary of Company, and a copy of the Articles of
Incorporation of Company certified by the Department of Financial
Institutions of the State of Wisconsin.
12.1.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
12.1.(f) Nonforeign Affidavit. Company shall deliver to
Buyer a nonforeign affidavit as required by Section 1445(b)(2),
Internal Revenue Code of 1986, as amended.
12.1.(g) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Buyer may reasonably request.
12.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to Company the following documents, in each case duly
executed or otherwise in proper form:
12.2.(a) Cash Purchase Price. A certified or bank cashier's
check (or wire transfer) as required by Section 3.2.(b) hereof.
12.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company Liabilities as provided for in Article 2.
12.2.(c) Compliance Certificate. A certificate signed by the
chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Company), and that Buyer
has performed and complied with all of Buyer's obligations under this
Agreement which are to be performed or complied with on or prior to
the Closing Date.
12.2.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.2.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company by Buyer pursuant to the terms hereof.
12.2.(f) Other Documents. All other documents, instruments
or writings required to be delivered to Company at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.
13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
(a) by mutual written agreement of Buyer and Company, or
(b) by either Buyer or Company if the Closing shall not have
occurred on or before August 1, 1997, provided the terminating party
has not, through breach of a representation, warranty or covenant,
prevented the Closing from occurring on or before such date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer, or (ii) there has been a failure
of satisfaction of a condition to the obligations of Buyer which has
not been so waived or (iii) Company shall have attempted to terminate
this Agreement under this Article 13 or otherwise without grounds to
do so, then Buyer may, by written notice to Company at any time prior
to the Closing that such violation, breach, failure or wrongful
termination attempt is continuing, terminate this Agreement with the
effect set forth in Section 13.2.(c) hereof.
13.2.(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Company, (ii) there has been a failure
of satisfaction of a condition to the obligations of Company which
has not been so waived, or (iii) Buyer shall have attempted to
terminate this Agreement under this Article 13 or otherwise without
grounds to do so, then Company may, by written notice to Buyer at any
time prior to the Closing that such violation, breach, failure or
wrongful termination attempt is continuing, terminate this Agreement
with the effect set forth in Section 13.2.(c) hereof.
13.2.(c) Effect of Termination. Because of the inherent
difficultly in ascertaining actual damages resulting from the
termination of the Agreement pursuant to Section 13.2., the parties
hereby irrevocably agree to the fullest extent permitted by law to
establish liquidated damages in the amount of Ten Million United
States Dollars and No/100 (U.S. $10,000,000.00), in the event either
party shall refuse to close the transaction as provided herein
without having proper cause to terminate under either Section 13.1 or
13.2. Each party stipulates that such liquidated damage amount is
reasonable and is not designed as punishment for the wrongful
termination of the Agreement and shall be paid to the non breaching
party by the breaching party in such event. Subject to the
foregoing, the parties' obligations under Section 14.9. of this
Agreement shall survive termination.
13.3. Environmental Defects. Buyer will within ten (10) days after
completion of any environmental audits and final report conducted pursuant
to Section 7.2 but in no event later than twenty (20) days prior to the
Closing, notify Company ("Objection Notice") of any fact or condition
regarding Matters of Environmental Concern which is unacceptable to Buyer.
The Objection Notice shall include Buyer's good faith estimate of the cost
of remedying such objectionable matter. If Buyer fails to make a timely
Objection Notice, then any such objectionable matter disclosed in the
environmental audit report shall be deemed waived for purposes of Section
13.3. If Buyer makes a timely Objection Notice, and if the cost of
remedying such objectionable matter is reasonably estimated by Buyer to be
Fifty Thousand Dollars ($50,000) or less, then such objectionable matter
shall not be deemed "material" for purposes of Sections 9.1 and 13.2.(a),
provided Company remedies the same to Buyer's reasonable satisfaction at
Company's sole expense prior to Closing. If the cost of remedying such
objectionable matter is reasonably estimated by Buyer to be in excess of
Fifty Thousand Dollars ($50,000), then Buyer shall have the option, in its
sole discretion, of either (i) closing the transaction contemplated by
this Agreement on the conditions that Company (A) indemnifies Buyer fully
(and not subject to any limitation set forth in Section 2.2 of this
Agreement) for the cost of satisfying the Liability arising from such
objectionable matter and (B) deposits in escrow to be held and applied in
accordance with the Escrow Agreement the amount (the "Environmental Escrow
Amount"), if any, by which Buyer's estimated cost of curing the
objectionable matter exceeds the Base Escrow Amount (ii) closing the
transaction contemplated by this Agreement without the indemnity and
escrow deposit described in subpart (i) above, provided in that event
Company shall continue to be liable for any Liability arising from such
objectionable matter to the extent and on the terms set forth in Section
2.2 of this Agreement or (iii) terminating this Agreement.
14. MISCELLANEOUS
14.1. Disclosure Schedule. The Schedules referenced from time to
time in the body of this Agreement are sometimes collectively referred to
herein as the "Disclosure Schedule." The Disclosure Schedule in its
entirety constitutes a part of this Agreement. Information set forth in
any portion of the Disclosure Schedule shall be deemed disclosed for all
purposes hereunder, so long as its import is clearly stated or summarized.
14.2. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company will execute and deliver to Buyer
such documents, instruments and consents and take such other action as
Buyer may reasonably request in order to consummate more effectively the
transactions contemplated hereby, to discharge the covenants of Company
and to vest in Buyer good, valid and marketable title to the business and
assets being transferred hereunder.
14.3. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by either
Company or Buyer shall be subject to the approval of the other in all
essential respects, except that Company's approval shall not be required
as to any statements and other information which Buyer may be required to
make pursuant to any rule or regulation of the Securities and Exchange
Commission or the New York Stock Exchange, or otherwise required by law,
and Buyer's approval shall not be required as to any statements and other
information which Seller may be required to make pursuant to any law or
regulation governing plant closure notifications.
14.4. Assignment; Parties in Interest.
14.4.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without
consent of any other party, cause one or more subsidiaries of Buyer
to carry out all or part of the transactions contemplated hereby;
provided, however, that Buyer shall, nevertheless, remain liable for
all of its obligations, and those of any such subsidiary, to Company
hereunder.
14.4.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other
person any right or remedy under or by reason of this Agreement.
14.5. Equitable Relief. Company agrees that any breach of the
Company's obligation to consummate the sale of the Purchased Assets on the
Closing Date, any breach or threatened breach of any noncompetition
obligation imposed by Section 7.3 hereof, or any breach or threatened
breach by Company of its obligations imposed by Section 7.4 hereof, will
result in irreparable injury to Buyer for which a remedy at law would be
inadequate; and that, in addition to any relief at law which may be
available to Buyer for such breach or threatened breach and regardless of
any other provision contained in this Agreement, Buyer shall be entitled
to injunctive and other equitable relief as a court may grant. This
Section 14.5 shall not be construed to limit Buyer's right to obtain
equitable relief for other breaches of this Agreement under general
equitable standards.
14.6. Law Governing Agreement. This Agreement shall be construed
and interpreted according to the internal laws of the State of Wisconsin,
excluding any choice of law rules that may direct the application of the
laws of another jurisdiction. Process and pleadings mailed to a party at
the address provided in Section 14.8 shall be deemed properly served and
accepted for all purposes.
14.7. Amendment and Modification. Buyer and Company may amend,
modify and supplement this Agreement in such manner as may be agreed upon
by them in writing.
14.8. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer, to:
Trinity Industries, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Executive Vice President
Facsimile: (000) 000-0000
(with a copy to)
X.X. Xxxxxx, Xx.
Vice President
Trinity Industries, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
(and)
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to Company in
writing.
(b) If to Company to:
Xxxxxx Co., Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx
Attention: Xxxxx X. Xxxxxx
Vice President
Facsimile: (000) 000-0000
(with a copy to)
Xxxx X. Xxxxx
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other person or address as Company shall furnish to Buyer in
writing.
If sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt; and if sent by U.S.
mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
14.9. Expenses; Cost of Litigation. Regardless of whether or not
the transactions contemplated hereby are consummated, except as otherwise
provided herein, each of the parties shall bear its own expenses and the
expenses of its counsel and other agents in connection with the
transactions contemplated hereby, including, without limitation, the fees
and expenses associated with necessary filings under the HSR Act. The
parties agree that the prevailing party in any action brought with respect
to or to enforce any right or remedy under this Agreement shall be
entitled to recover from the other party or parties all reasonable costs
and expenses of any nature whatsoever incurred by the prevailing party in
connection with such action, including without limitation attorneys' fees
and prejudgment interest.
14.10. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein, except for a Confidentiality Agreement dated
February 24, 1997, which is hereby ratified and reaffirmed.
14.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.12. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
14.13. Glossary of Terms. The following sets forth the location of
definitions of capitalized terms defined in the body of this Agreement:
"Affiliate" - Section 1.3.(e)
"Assumed Contracts" - Section 2.1.(b)
"Assumed Liabilities" - Section 2.1
"Business" - Section 1.1
"CERCLA" - Section 4.11.(c)(ii)(G)
"Closing" - Preamble to Article 12
"Closing Date" - Preamble to Article 12
"Code" - Section 3.6
"Contracts" - Section 1.2.(g)
"Disclosure Schedule" - Section 14.1
"Division" - Recitals
"Effective Time" - Section 3.3.(b)
"Environmental Claim" - Section 4.11.(c)
"Environmental Laws" - Section 4.11.(c)
"Excluded Assets" - Section 1.3
"Facilities" - Recitals
"Government Entities" - Section 4.11.(b)
"HSR Act" - Section 4.3
"IRS" - Section 3.6
"Inventory" - Section 1.2.(d)
"Laws" - Section 4.11.(b)
"Leased Real Property" - Section 1.2.(b)
"Liability" - Section 2.1
"Lien" - Section 4.12.(a)
"Litigation" - Section 4.10
"Net Working Capital" - Section 3.3.(a)
"Orders" - Section 4.11.(b)
"Owned Real Property" - Section 1.1.(a)
"Permits" - Section 4.11.(c)
"Permitted Real Property Liens" - Section 4.12.(a)
"Personal Property Leases" - Section 1.2.(e)
"Products" - Section 4.20
"Purchase Orders" - Section 1.2.(g)
"Purchased Assets" - Section 1.2
"Purchase Price" - Section 3.1
"Real Property" - Section 4.12.(c)
"Real Property Leases" - Section 1.2.(b)
"Recent Business Balance Sheet" - Section 4.4
"Remediation" - Section 4.11.(c)
"Requirement(s) of Environmental Law(s)" - Section 4.11.(c)
"Sales Orders" - Section 1.2.(g)
"Settlement Date" - Section 3.2.(c)
"Trade Rights" - Section 1.2.(f)
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
TRINITY FITTING & FLANGE
GROUP, INC. XXXXXX CO., INC.
By: /s/ By: /s/
Attest: /s/ Attest: /s/
