EXHIBIT 10.47
ASSET PURCHASE AGREEMENT
BY AND AMONG
LULL LIFT CORPORATION,
LULL INDUSTRIES, INC.
AND
THE STOCKHOLDERS LISTED HEREIN
AUGUST 15, 1996
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Interpretive Rules. . . . . . . . . . . . . . . . 5
ARTICLE II SALE AND PURCHASE OF ASSETS AND ASSUMPTION
OF LIABILITIES
Section 2.1 The Purchase and Sale . . . . . . . . . . . . . . 5
Section 2.2 Assumption of Liabilities . . . . . . . . . . . . 7
Section 2.3 Liabilities Not Assumed . . . . . . . . . . . . . 8
Section 2.4 FMV Schedule. . . . . . . . . . . . . . . . . . . 8
ARTICLE III PURCHASE PRICE
Section 3.1 Purchase Price Determination. . . . . . . . . . . 9
Section 3.2 Payment . . . . . . . . . . . . . . . . . . . . . 9
Section 3.3 Working Capital Statement; Adjustments. . . . . . 10
Section 3.4 Additional Purchase Price . . . . . . . . . . . . 11
ARTICLE IV CLOSING
Section 4.1 Closing . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V ADDITIONAL AGREEMENTS . . . . . . . . . . . . . .
Section 5.1 Expenses. . . . . . . . . . . . . . . . . . . . . 12
Section 5.2 Escrow Agreement. . . . . . . . . . . . . . . . . 12
Section 5.3 Noncompetition Agreements . . . . . . . . . . . . 12
Section 5.4 Employment and Consulting Agreement . . . . . . . 12
Section 5.5 Employee Benefit Matters. . . . . . . . . . . . . 12
Section 5.6 Certain Insurance Coverage. . . . . . . . . . . . 13
Section 5.7 Certain Software Licenses . . . . . . . . . . . . 13
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE
SELLERS
Section 6.1 Title to the Purchased Assets . . . . . . . . . . 13
Section 6.2 Valid and Binding Agreement . . . . . . . . . . . 13
Section 6.3 Corporate Organization. . . . . . . . . . . . . . 13
Section 6.4 No Violation. . . . . . . . . . . . . . . . . . . 14
Section 6.5 Consents and Approvals. . . . . . . . . . . . . . 14
Section 6.6 Financial Statements. . . . . . . . . . . . . . . 14
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Section 6.7 Interim Operations and Absence of Certain Changes 15
Section 6.8 Employee Benefit Plans. . . . . . . . . . . . . . 16
Section 6.9 Compliance with Law . . . . . . . . . . . . . . . 18
Section 6.10 Litigation, Claims. . . . . . . . . . . . . . . . 19
Section 6.11 Contracts and Commitments . . . . . . . . . . . . 19
Section 6.12 Intellectual Property Rights. . . . . . . . . . . 19
Section 6.13 Liens . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.14 Insurance . . . . . . . . . . . . . . . . . . . . 20
Section 6.15 Disclosure. . . . . . . . . . . . . . . . . . . . 20
Section 6.16 Accounts Receivable and Accounts Payable. . . . . 20
Section 6.17 Inventory and Backlog . . . . . . . . . . . . . . 21
Section 6.18 Tangible Personal Property. . . . . . . . . . . . 21
Section 6.19 Real Property . . . . . . . . . . . . . . . . . . 21
Section 6.20 Employees . . . . . . . . . . . . . . . . . . . . 23
Section 6.21 Labor Disagreements . . . . . . . . . . . . . . . 23
Section 6.22 Governmental Authorizations . . . . . . . . . . . 23
Section 6.23 Tax Matters . . . . . . . . . . . . . . . . . . . 24
Section 6.24 Customers and Vendors . . . . . . . . . . . . . . 26
Section 6.25 Distributors and Representatives. . . . . . . . . 26
Section 6.26 Adequacy and Sufficiency of Assets. . . . . . . . 26
Section 6.27 Environmental Matters . . . . . . . . . . . . . . 26
Section 6.28 Government Contracts. . . . . . . . . . . . . . . 28
Section 6.29 Defects in Products or Designs; Product Safety. . 28
Section 6.30 Product Warranties. . . . . . . . . . . . . . . . 29
Section 6.31 Broker's or Finder's Fees . . . . . . . . . . . . 29
Section 6.32 Related Party Transactions. . . . . . . . . . . . 29
Section 6.33 Absence of Questionable Payments. . . . . . . . . 29
Section 6.34 Boom Recall Machines. . . . . . . . . . . . . . . 30
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE
BUYER
Section 7.1 Organization, Standing and Power. . . . . . . . . 30
Section 7.2 Valid and Binding Agreements. . . . . . . . . . . 30
Section 7.3 No Violation. . . . . . . . . . . . . . . . . . . 30
Section 7.4 Consents and Approvals. . . . . . . . . . . . . . 30
Section 7.5 Broker's or Finder's Fees . . . . . . . . . . . . 31
Section 7.6 Insurance . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE VIII COVENANTS
Section 8.1 Compliance with Law . . . . . . . . . . . . . . . 31
Section 8.2 Operation of Business Prior to Closing. . . . . . 31
Section 8.3 Access. . . . . . . . . . . . . . . . . . . . . . 33
Section 8.4 Environmental Matters . . . . . . . . . . . . . . 34
ARTICLE IX CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE BUYER
Section 9.1 Representations and Warranties. . . . . . . . . . 35
Section 9.2 Covenants, Agreements and Conditions. . . . . . . 35
Section 9.3 No Material Adverse Change. . . . . . . . . . . . 35
Section 9.4 Corporate Proceedings; Consents and Approvals . . 35
Section 9.5 Proceedings . . . . . . . . . . . . . . . . . . . 35
Section 9.6 Governmental Approvals. . . . . . . . . . . . . . 35
Section 9.7 Insurance . . . . . . . . . . . . . . . . . . . . 36
Section 9.8 Deliveries. . . . . . . . . . . . . . . . . . . . 36
Section 9.9 Releases of Liens . . . . . . . . . . . . . . . . 36
Section 9.10 Customer Relationships. . . . . . . . . . . . . . 36
Section 9.11 Consents of Third Parties . . . . . . . . . . . . 37
Section 9.12 Opinion of Counsel. . . . . . . . . . . . . . . . 37
Section 9.13 Payment of Expenses . . . . . . . . . . . . . . . 37
ARTICLE X CONDITIONS PRECEDENT TO OBLIGATIONS OF
THE SELLERS
Section 10.1 Representations and Warranties. . . . . . . . . . 37
Section 10.2 Covenants, Agreements and Conditions. . . . . . . 37
Section 10.3 Proceedings . . . . . . . . . . . . . . . . . . . 37
Section 10.4 Corporate Proceedings; Consents and Approvals . . 37
Section 10.5 Governmental Approvals. . . . . . . . . . . . . . 38
Section 10.6 Deliveries. . . . . . . . . . . . . . . . . . . . 38
Section 10.7 Opinion of Counsel. . . . . . . . . . . . . . . . 38
Section 10.8 Insurance . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XI POST-CLOSING MATTERS
Section 11.1 Indemnification . . . . . . . . . . . . . . . . . 38
Section 11.2 Compliance with Environmental Regulatory
Requirements and Environmental Indemnification. . 41
Section 11.3 Indemnification Procedures. . . . . . . . . . . . 42
Section 11.4 Limitations on Buyer's Remedies . . . . . . . . . 44
Section 11.5 Special Boom Recall Provisions . . . . . . . . . 44
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Section 11.6 Sellers' Agents . . . . . . . . . . . . . . . . . 46
Section 11.7 Dispute Resolution by Arbitration . . . . . . . . 47
Section 11.8 Confidentiality . . . . . . . . . . . . . . . . . 47
Section 11.9 Noncompetition. . . . . . . . . . . . . . . . . . 48
Section 11.10 Further Assurances. . . . . . . . . . . . . . . . 48
Section 11.11 Accounts Receivable . . . . . . . . . . . . . . . 48
Section 11.12 Pro-Rating of Expenses. . . . . . . . . . . . . . 49
Section 11.13 Use of Name . . . . . . . . . . . . . . . . . . . 49
Section 11.14 Maintenance of Corporate Existence. . . . . . . . 49
Section 11.15 Sellers' Access to Tax Information. . . . . . . . 49
ARTICLE XII TERMINATION
Section 12.1 Methods of Termination. . . . . . . . . . . . . . 50
Section 12.2 Procedure Upon Termination. . . . . . . . . . . . 50
ARTICLE XIII MISCELLANEOUS
Section 13.1 Survival of Representations and Warranties. . . . 51
Section 13.2 Notices . . . . . . . . . . . . . . . . . . . . . 51
Section 13.3 Governing Law . . . . . . . . . . . . . . . . . . 52
Section 13.4 Modification; Waiver. . . . . . . . . . . . . . . 52
Section 13.5 Entire Agreement. . . . . . . . . . . . . . . . . 52
Section 13.6 Assignment; Successors and Assigns. . . . . . . . 52
Section 13.7 Public Announcements. . . . . . . . . . . . . . . 52
Section 13.8 Severability. . . . . . . . . . . . . . . . . . . 53
Section 13.9 No Third Party Beneficiary. . . . . . . . . . . . 53
Section 13.10 Execution in Counterpart. . . . . . . . . . . . . 53
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Exhibit A Principles and Procedures
Exhibit B Form of Escrow Agreement
Exhibit C Form of ▇▇▇▇ of Sale, Assignment and
Assumption Agreement
Exhibits D-1 and D-2 Forms of Noncompetition and Nondisclosure Agreements
Exhibit D-3 Form of Employment, Consulting and Noncompetition
Agreement
Exhibit E Form of Opinion of ▇▇▇▇▇▇▇, Street and Deinard
Exhibit F Form of Opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP
Exhibit G Boom Recall
Schedule 2.1(v) Hertz Equipment Rentals
Schedule 2.2 Assumed Liabilities
Schedule 2.4 FMV Schedule
Schedule 5.7 Certain Software Licenses
Schedule 6.1 Title to the Purchased Assets
Schedule 6.3 Corporate Organization
Schedule 6.5 Consents and Approvals
Schedule 6.6A Financial Statements
Schedule 6.6B Interim Financial Statements
Schedule 6.7 Interim Operations
Schedule 6.8 Employee Benefit Plans
Schedule 6.10 Litigation, Claims
Schedule 6.11 Contracts and Commitments
Schedule 6.12 Intellectual Property Rights
Schedule 6.13 Liens
Schedule 6.14 Insurance
Schedule 6.17 Inventory and Backlog
Schedule 6.18A Owned Tangible Personal Property
Schedule 6.18B Leased Tangible Personal Property
Schedule 6.19A Owned Real Property
Schedule 6.19B Leased Real Property
Schedule 6.20 Employees
Schedule 6.21 Labor Disagreements
Schedule 6.22 Governmental Authorizations
Schedule 6.23 Tax Matters
Schedule 6.24 Customers and Vendors
Schedule 6.25 Distributors and Representatives
Schedule 6.27(a) Hazardous Materials used on the Real Estate
Schedule 6.27(b) Underground Storage Tanks
Schedule 6.29 Defects in Products or Designs
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Schedule 6.31 Broker's or Finder's Fees
Schedule 6.32 Related Party Transactions
Schedule 7.4 Consents and Approvals
Schedule 7.5 Broker's or Finder's Fees
Schedule 7.6 Buyer's Insurance
Schedule 8.2(b) Contracts for Capital Expenditures
Schedule 8.2(c) New Employment Agreements
Schedule 8.2(j) Company Obligations Satisfied as of
the Closing Date
Schedule 8.4(f) Work Performed by ENSR Consultants
Schedule 9.9 Certain Encumbrances
Schedule 9.11 Consents of Third Parties
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") dated August 15, 1996, by
and among Lull Lift Corporation, a Delaware corporation (the "Buyer"), Lull
Industries, Inc., a Minnesota corporation (the "Company"), and the stockholders
of the Company listed on the signature page hereto (the "Stockholders," and
collectively with the Company, the "Sellers").
RECITALS
WHEREAS, the Company is engaged in the business of the design, manufacture
and sale of rough terrain telescoping boom forklifts (the "Business");
WHEREAS, the Stockholders own all of the issued and outstanding stock of
the Company; and
WHEREAS, the Sellers desire to sell to the Buyer, and the Buyer desires to
purchase from the Sellers the Business and substantially all the assets of the
Company upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants which are to be made and performed by
the respective parties, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The following terms when used in this
Agreement have the meanings set forth below:
(a) "Accountants" means McGladrey & ▇▇▇▇▇▇, LLP, as independent certified
public accountants for the Company.
(b) "Accounts Receivable" has the meaning set forth in Section 11.11.
(c) "Additional Purchase Price" has the meaning set forth in Section 3.4.
(d) "Affiliate" means any Person now or hereinafter controlling,
controlled by or under common control with another Person.
(e) "Appraiser" has the meaning set forth in Section 2.4.
(f) "Arbitrator" has the meaning set forth in Section 11.7.
(g) "Assumed Liabilities" has the meaning set forth in Section 2.2.
(h) "▇▇▇▇ of Sale, Assignment and Assumption Agreement" means the ▇▇▇▇ of
sale, assignment and assumption agreement substantially in the form attached
hereto as EXHIBIT C.
(i) "Boom Recall" means the recall by the Company of the innertube
sections of 2-section and 3-section booms which are mounted in rough terrain
telescopic boom forklift trucks manufactured by the Company, known as models
644-B, 6K, 844-C, 8K, 1044-C, and 10k, as such recall is further described on
EXHIBIT G.
(j) "Boom Recall Certificate" has the meaning set forth in Section 3.4.
(k) "Boom Recall Costs" is equal to all costs and expenses incurred by the
Buyer after the Closing Date in connection with the Boom Recall, as determined
in accordance with, and limited to, EXHIBIT G.
(l) "Boom Recall Vehicles" has the meaning set forth in EXHIBIT G.
(m) "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, ET SEQ.
(n) "Claims Amount Escrow Fund" has the meaning set forth in Section 3.2.
(o) "Closing" has the meaning set forth in Section 4.1.
(p) "Closing Date" has the meaning set forth in Section 4.1.
(q) "Closing Report" has the meaning set forth in Section 3.3(a).
(r) "Code" means the United States Internal Revenue Code of 1986, as
amended.
(s) "ERISA" means the Employment Retirement Income Security Act of 1974,
as amended.
(t) "Environmental Laws" has the meaning set forth in Section 6.27(b).
(u) "Escrow Agent" means the escrow agent selected by the parties to act
pursuant to the Escrow Agreement.
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(v) "Escrow Agreement" means an escrow agreement substantially in the form
attached hereto as EXHIBIT B.
(w) "Escrow Amount" has the meaning set forth in Section 3.2.
(x) "Estimated Working Capital Statement" has the meaning set forth in
Section 3.1(b).
(y) "Estimated Purchase Price" has the meaning set forth in Section
3.1(b).
(z) "Estimated Working Capital" means the estimated Working Capital of the
Company determined by the Company as of the Closing Date in good faith and set
forth on the Estimated Working Capital Statement.
(aa) "Excluded Assets" has the meaning set forth in Section 2.1(b).
(ab) "Financial Statements" has the meaning set forth in Section 6.6.
(ac) "GAAP" means generally accepted accounting principles of the United
States.
(ad) "Hazardous Material" has the meaning set forth in Section 6.27.
(ae) "Improvements" has the meaning set forth in Section 6.19(a).
(af) "Intellectual Property" means any and all inventions, Marks (including
trademarks, service marks, certification marks, collective marks, and collective
membership marks whether word, logo, or other forms of Marks, all of the
foregoing collectively referred to as "Marks"), trade names, copyrights,
applications therefor, patents thereon, registrations thereof and licenses
thereof, royalty rights, any and all goodwill associated with the Business or
represented by the assets of the Company, trade secrets, secret processes and
procedures, engineering, production, assembly design and installation
encompassed in any and all embodiments including, but not limited to technical
drawings and specifications, working notes and memos, market studies,
consultants' reports, technical and laboratory data, competitive samples,
engineering prototypes, and confidential information, know-how, and all similar
property of any nature, tangible or intangible, including, but not limited to,
all property listed or described on SCHEDULE 6.12.
(ag) "Interim Financial Statements" has the meaning set forth in Section
6.6.
(ah) "IRS" means the United States Internal Revenue Service.
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(ai) "Leased Improvements" has the meaning set forth in Section 6.19(b).
(aj) "Leased Property" has the meaning set forth in Section 6.19(b).
(ak) "Material Adverse Effect" means, with respect to any Person, any
event, fact, condition, occurrence or effect which is materially adverse to the
business, properties, assets, liabilities, financial condition or operations of
such Person.
(al) "Original Boom Recall Machines" has the meaning set forth in EXHIBIT
G.
(am) "Pension Plans" has the meaning set forth in Section 6.8(c).
(an) "Person" means and includes an individual, a partnership, a joint
venture, a corporation or trust, an unincorporated organization, a group or a
government or other department or agency thereof.
(ao) "Plans" has the meaning set forth in Section 6.8(a).
(ap) "Price Waterhouse" means Price Waterhouse LLP, as independent
certified public accountants for the Buyer.
(aq) "Principles and Procedures" means the principles and procedures set
forth on EXHIBIT A.
(ar) "Product" has the meaning set forth in Section 6.29.
(as) "Purchase Price Escrow Fund" has the meaning set forth in Section 3.2.
(at) "Purchased Assets" has the meaning set forth in Section 2.1.(a).
(au) "Real Property" has the meaning set forth in Section 6.19(a).
(av) "Second Anniversary Date" means the date two years from the date
hereof.
(aw) "Sellers' Agents" has the meaning set forth in Section 11.6.
(ax) "Stock Option Plan" means the Lull Industries, Inc. stock option plan
adopted January 5, 1994.
(ay) "Tax" has the meaning set forth in Section 6.23(n).
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(az) "Taxing Authority" has the meaning set forth in Section 6.23(o).
(ba) "Tax Return" has the meaning set forth in Section 6.23(o).
(bb) "Working Capital" means the excess as of the Closing Date of (i) the
Company's current assets (excluding cash) over (ii) the Company's non-interest
bearing current liabilities, each as determined in accordance with the
Principles and Procedures.
(bc) "Working Capital Statement" has the meaning set forth in Section
3.3(a).
SECTION 1.2 INTERPRETIVE RULES. For purposes of this Agreement, except
as otherwise expressly provided herein or unless the context otherwise requires:
(a) defined terms include the plural as well as the singular and the use of any
gender shall be deemed to include the other gender; (b) references to
"Articles," "Sections" and other subdivisions and to "Schedules" and "Exhibits"
without reference to a document, are to designated Articles, Sections and other
subdivisions of, and to Schedules and Exhibits to, this Agreement; (c) the use
of the term "including" means "including but not limited to"; and (d) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision.
ARTICLE II
SALE AND PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 2.1 THE PURCHASE AND SALE.
(a) Upon the terms and subject to all of the conditions set forth herein,
on the Closing Date, the Company agrees to sell to the Buyer and the Buyer shall
purchase from the Company, free and clear of all liens, restrictions, leases,
security interests, claims, charges or encumbrances whatsoever, the Business as
a going concern and all of the right, title and interest of the Company in and
to all of the assets and property, tangible and intangible, except for the
Excluded Assets, owned by the Company (the "Purchased Assets"). The Purchased
Assets shall include but not be limited to the following:
(i) all tangible personal property owned by the Company,
including all machinery, equipment, vehicles, supplies, furniture,
furnishings, office equipment, tools, racks, displays, fixtures and other
tangible personal property listed or described on SCHEDULE 6.18a, or not so
described;
(ii) all customer and supplier lists, sales data, catalogs,
brochures, literature, forms, mailing lists, art work, photographs and
advertising material, in whatever form or media;
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(iii) all inventory, work in process, raw materials, finished
products, supplies, packaging, spare parts and shipping containers and
materials;
(iv) all accounts receivable;
(v) all prepaid expenses, deposits and credits;
(vi) all telephone, telex, e-mail, Internet, post office box and
other numbers and addresses used by the Company;
(vii) all goodwill of the Business and the Company;
(viii) all orders, contracts, and commitments for the purchase of
goods and/or services, including, without limitation, all such items
relating to the purchase of capital, tooling, products, supplies, and
services;
(ix) all orders, contracts, and commitments for the sale of
products, including, without limitation, all such items relating to
distribution, dealership, and similar arrangements;
(x) all other orders, contracts, commitments, leases and
licenses;
(xi) all rights to use the names "Lull", "Dyna Lugger", and
"Highlander" and any other trade names or trademarks previously used by the
Company and any logo or ▇▇▇▇, whether or not registered, used by the
Company;
(xii) all Intellectual Property;
(xiii) all permits, approvals, qualifications, and the like issued
by any government or governmental unit, agency, board, body, or
instrumentality, whether federal, state or local, and all applications
therefor;
(xiv) all books and records of the Company, including all
property, records, personnel records, accounting records and all original
applications and files correspondence with the U.S. Patent and Trademark
Office which relate to patent and trademark applications held by the
Company and its agents; all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind in favor of the
Company, and pertaining to, or arising out of, the Purchased Assets or
offsetting any Assumed Liabilities;
(xv) all Real Property; and
(xvi) all Leased Property.
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To the extent that any asset otherwise described above is not assignable to
the Buyer, the Company shall use its reasonable efforts to provide the Buyer
with all of the benefits of such asset. To the extent that any asset described
above is not assignable to the Buyer without the consent of a third party, which
consent has not been obtained as of the Closing Date, if the Closing occurs
prior to obtaining of such consent, then (x) such asset shall not be assigned to
the Buyer until the consent has been obtained; (y) the Company shall use its
reasonable efforts to obtain the consent; and (z) until the consent is obtained
the Company shall use its reasonable efforts to provide the Buyer with all of
the benefits of such asset.
(b) The Purchased Assets shall not include the following assets and
properties (collectively, the "Excluded Assets"):
(i) cash and cash equivalents of the Company as of the Closing
Date;
(ii) the Company's franchise as a corporation, its minute books,
stock transfer records and similar records relating to the Company's
organization, existence or capitalization, and the capital stock of the
Company;
(iii) the rights of the Sellers under this Agreement and the
instruments and certificates delivered in connection with this Agreement;
(iv) any of the Company's existing insurance policies, including
environmental, product liability, workmen's compensation, and key man life
insurance policies; and
(v) the Company's lease-purchase orders on equipment with Hertz
Equipment Rental Corporation ("Hertz"), the equipment so leased, and the
purchase orders issued by Hertz for the purchase of such equipment, all as
set forth on SCHEDULE 2.1(v).
SECTION 2.2 ASSUMPTION OF LIABILITIES. Subject to the conditions herein
set forth, upon the transfer of the Purchased Assets on the Closing Date, the
Buyer shall assume and discharge the following liabilities and obligations of
the Company (the "Assumed Liabilities"):
(a) those liabilities of the Company, set forth on SCHEDULE 2.2, for
accrued current liabilities (excluding income tax payables and accrued interest
attributable to the Company) and accounts payable relating to the Business, to
the extent, and only to the extent, of the dollar amount reflected as a
liability or reserve on the Working Capital Statement, as of the close of
business on the Closing Date, remaining unpaid or unperformed as of the Closing
Date;
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(b) all liabilities and obligations of the Company arising after the
Closing Date under any contract, lease or other agreement assigned to the Buyer
pursuant to Section 2.1 which, unless otherwise indicated thereon, is set forth
in any Schedule to this Agreement (or which is not required to be set forth
thereon), or which was entered into after the date hereof and prior to the
Closing Date in accordance with the provisions of this Agreement or to which the
Buyer otherwise specifically consents in writing;
(c) all liabilities and obligations relating to product liability claims
for use of goods or products manufactured, sold, tested, handled or distributed
by the Company, or any of its subsidiaries or Affiliates, or by the Buyer or any
of its subsidiaries or Affiliates which causes or caused, allegedly causes or
caused or is deemed to cause or have caused personal injury or property damage
taking place with respect to all injured persons and damaged property subsequent
to the Closing Date;
(d) to the extent, and only to the extent, of the dollar amount reflected
as a liability or reserve on the Working Capital Statement, any liabilities or
obligations relating to warranty claims for products manufactured by the
Company; and
(e) all Boom Recall Costs up to the amount of $2,000,000.
SECTION 2.3 LIABILITIES NOT ASSUMED. The Buyer shall assume no debts,
obligations, contracts, leases or liabilities of the Company, except for the
Assumed Liabilities. The Company shall pay and be responsible for all debts
(including all amounts owed pursuant to the Lease Contract - Security Agreements
with Deere Credit, Inc., as set forth on SCHEDULE 2.1(v)), obligations,
contracts, leases or liabilities of the Company which are not Assumed
Liabilities.
SECTION 2.4 FMV SCHEDULE. The Buyer and the Sellers have determined the
fair market value of the various classes of the Purchased Assets, and the other
rights and benefits conferred hereunder, which fair market values are set forth
on SCHEDULE 2.4. Such values shall be adjusted as of the Closing Date by the
parties subsequent to the delivery of the Working Capital Statement and as so
adjusted shall be referred to as the "FMV Schedule." If the Sellers and the
Buyer are unable to agree on such adjustments to the FMV Schedule within thirty
(30) days after the Working Capital Statement has been approved by the parties
or the Arbitrator, as the case may be, then the FMV Schedule shall be based upon
the appraised values of such Purchased Assets as established by an appraisal
obtained at the Buyer's expense from a nationally recognized independent
appraisal firm (the "Appraiser") mutually agreed upon by the Sellers and the
Buyer. If the parties cannot agree on the determination of the Appraiser for
purposes hereof, the Buyer shall instruct Price Waterhouse to make a mutual
determination with the Accountants regarding a nationally recognized independent
appraisal firm to serve as the Appraiser; provided, however, if the parties
cannot agree on the determination of the Appraiser, all fees and expenses
incurred in connection with the appraisal conducted by the Appraiser selected by
Price Waterhouse and the Accountants shall be borne one-half by the Sellers and
one-half by the Buyer. The parties agree that the consideration
8
described in Section 3.1 of this Agreement (taking into account transaction
costs paid by such party) shall be allocated, for tax purposes, among the
Purchased Assets in a manner consistent with the FMV Schedule and the provisions
of Section 1060 of the Code and all regulations promulgated thereunder. Each of
the parties hereto agrees to report this transaction for federal tax purposes in
accordance with the provisions of this Section 2.4 and the FMV Schedule, and
shall not take any position or action inconsistent therewith upon examination of
any tax return, in any refund claim, in any litigation, investigation or
otherwise; PROVIDED, HOWEVER, that if, in any audit of any Tax Return of the
Company or the Buyer by a Taxing Authority, the fair market values are finally
determined to be different from the FMV Schedule, as adjusted, the Buyer and the
Company may (but shall not be obligated to) take any position or action
consistent with the fair market values as finally determined in such audit.
ARTICLE III
PURCHASE PRICE
SECTION 3.1 PURCHASE PRICE DETERMINATION.
(a) Subject to adjustment pursuant to Section 3.3, the aggregate purchase
price (the "Purchase Price") to be paid by the Buyer to the Company for the
Purchased Assets, and the rights and benefits conferred hereunder, shall be
Sixty-Three Million Two Hundred Sixty Thousand Dollars ($63,260,000), plus the
assumption and discharge of the Assumed Liabilities by the Buyer.
(b) The Company, at its expense, shall prepare, in accordance with the
Principles and Procedures, an estimated statement of working capital of the
Business as of the close of business on the Closing Date (the "Estimated Working
Capital Statement"). Prior to issuance of the Estimated Working Capital
Statement, the Company shall consult with the Buyer as to the contents of such
statement. Not later than three (3) business days prior to the Closing Date,
the Company shall deliver to the Buyer (i) the Estimated Working Capital
Statement and (ii) its estimate of the amount of the Purchase Price, taking into
account any adjustment pursuant to Section 3.3(b) , based on the Estimated
Working Capital Statement (such estimate is referred to herein as the "Estimated
Purchase Price").
SECTION 3.2 PAYMENT. On the Closing Date, the Buyer shall, by wire
transfer or bank check of immediately available funds, pay to the Company an
amount equal to the Estimated Purchase Price less Four Million Five Hundred
Thousand Dollars ($4,500,000) (the "Escrow Amount") to be deposited with the
Escrow Agent pursuant to the terms of the Escrow Agreement. The Escrow Amount
shall be divided into two accounts, a Purchase Price Escrow Fund in the amount
of $1,000,000 and a Claims Amount Escrow Fund in the amount of $3,500,000.
9
SECTION 3.3 WORKING CAPITAL STATEMENT; ADJUSTMENTS.
(a) As promptly as practicable following the Closing Date, the Buyer, at
its expense, shall cause to be prepared in accordance with the Principles and
Procedures, a statement of the Working Capital of the Company as of the Closing
Date. This statement of Working Capital (the "Working Capital Statement") shall
be prepared by the Buyer and examined in accordance with the Principles and
Procedures by Price Waterhouse as soon after the Closing Date as possible, but
in no event later than sixty (60) days after the Closing Date, and shall be
accompanied by a report to the Buyer and the Sellers prepared by Price
Waterhouse setting forth the Working Capital of the Company as of the Closing
Date (the "Closing Report"). A physical inventory having been taken, the
Accountants shall have the opportunity to review such of the worksheets and
other documents created or utilized by the Buyer in connection with the
preparation of the Working Capital Statement as the Accountants shall from time
to time request. The Accountants shall also have the opportunity to review the
draft of the Working Capital Statement and the Closing Report (each of which
Price Waterhouse shall be directed by the Buyer to prepare and deliver to the
Company not later than 10 days prior to the issuance of the Working Capital
Statement and the Closing Report), and related work papers of Price Waterhouse
with respect to such documents. The Buyer shall direct Price Waterhouse to
review the draft of the Working Capital Statement and the Closing Report and
related methodology with the Accountants prior to the issuance thereof.
Promptly after the Buyer's receipt from Price Waterhouse of the Working Capital
Statement and the Closing Report, the Buyer shall deliver a copy of each of the
same to the Company.
(b) If the Working Capital of the Company on the Closing Date, as
determined in accordance with the Working Capital Statement and the Closing
Report, is less than Eight Million Two Hundred Fifty Thousand Dollars
($8,250,000) and if such difference is not disputed pursuant to Section 3.3(d),
the Purchase Price shall be decreased by the amount by which $8,250,000 exceeds
the Working Capital of the Company on the Closing Date. If the Working Capital
of the Company on the Closing Date, as determined in accordance with the Working
Capital Statement and the Closing Report, is greater than or equal to Eight
Million Two Hundred Fifty Thousand Dollars ($8,250,000), and if such difference
is not disputed pursuant to Section 3.3(d), the Purchase Price shall not be
adjusted pursuant to this Section 3.3(b).
(c) If the Purchase Price, as adjusted pursuant to Section 3.3(b) ,
exceeds the Estimated Purchase Price, (i) the Buyer shall pay the Company the
amount of such excess effective within 30 days of the delivery of the Working
Capital Statement and the Closing Report and (ii) the funds in the Purchase
Price Escrow Fund shall be released to the Company pursuant to the terms of the
Escrow Agreement. If the Purchase Price, as adjusted, is less than the
Estimated Purchase Price, the Company shall pay to the Buyer the amount of such
deficit, in immediately available funds, within 30 days after delivery of the
Working Capital Statement and the Closing Report to the Buyer and Price
Waterhouse. Any amounts payable by the Company to the Buyer pursuant to this
Section 3.3(c) shall be paid first from the funds in the Purchase Price Escrow
Fund and
10
thereafter directly from the Company. If the total sum payable by the Company
pursuant to this Section 3.3(c) is less than the Purchase Price Escrow Fund, the
balance of the Purchase Price Escrow Fund shall thereupon be paid to the
Company.
(d) If the Company disputes any items shown on the Working Capital
Statement or the Closing Report, the Company shall give written notice to the
Buyer within 30 days after the Company's receipt of the Working Capital
Statement and the Closing Report, which written notice shall specify the
rationale for such disagreement and the amount in dispute. The Buyer shall
cause Price Waterhouse to notify the Company and the Accountants within 30 days
of receipt of the notice of dispute whether or not it acquiesces in the
exceptions taken. If Price Waterhouse and the Company are unable to resolve the
matters outstanding within 60 days after delivery of the Working Capital
Statement and the Closing Report to the Company, payment shall be made by the
Buyer or the Company, if appropriate, as to all "agreed upon" issues on said
sixtieth day and all matters not so resolved shall be submitted to the
Arbitrator in accordance with the procedures set forth in Section 11.7.
(e) All sums to be paid subsequent to the Closing Date pursuant to this
Section 3.3 shall bear interest from and after the Closing Date, until so paid,
at the rate which is equal to the interest rate then earned on the Escrow Amount
during such period, computed on the basis of a 365-day year and paid for the
actual number of days elapsed. Interest calculated in accordance with this
Section 3.3(e) shall be due and payable on the date on which the corresponding
payment is due.
SECTION 3.4 ADDITIONAL PURCHASE PRICE. If on the Second Anniversary
Date the sum of the Boom Recall Costs incurred as of such date and the Boom
Recall Costs reasonably expected by the Buyer to be incurred after such date is
less than $2,000,000, then the Buyer shall pay to the Company or its designees
the amount by which $2,000,000 exceeds such sum (the "Additional Purchase
Price"). Within thirty (30) days following the Second Anniversary Date, the
Buyer shall provide to the Sellers a certificate of an officer of the Buyer that
shall set forth the Additional Purchase Price, if any (the "Boom Recall
Certificate"). If within fifteen (15) days of receipt of the Boom Recall
Certificate the Sellers fail to object to the Buyer's calculation of the
Additional Purchase Price, then the Buyer shall pay the Additional Purchase
Price, if any, to the Company or its designees. If the Sellers object to the
calculation of the Additional Purchase Price set forth in the Boom Recall
Certificate, the Buyer and the Sellers will attempt to resolve such dispute in
good faith. If resolution cannot be reached within thirty (30) days of the
receipt of the Boom Recall Certificate by the Sellers, then the unresolved
disputed items will be resolved by the Arbitrator in accordance with the
procedures set forth in Section 11.7.
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ARTICLE IV
CLOSING
SECTION 4.1 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of ▇▇▇▇▇▇▇, Street
and Deinard, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ at 10:00 a.m. on
August ___, 1996 or on such other date as may be agreed upon by the parties
hereto, and shall be effective as of the close of business on such date (the
"Closing Date").
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 EXPENSES. Except as otherwise stated herein, the Buyer and
the Company will pay their own expenses incident to the preparation and carrying
out of this Agreement and the expenses and fees involved in the preparation and
delivery of all documents, reports and opinions required to be delivered by or
on behalf of it hereunder. The Buyer and the Company shall pay equally any
transfer or recordation taxes, if any, incurred as a result of the consummation
of the transactions contemplated by this Agreement.
SECTION 5.2 ESCROW AGREEMENT. At the Closing, the Buyer, the Sellers
and the Escrow Agent will enter into the Escrow Agreement, pursuant to which the
Buyer shall deliver to the Escrow Agent the Escrow Amount, to be held in escrow
as provided in the Escrow Agreement.
SECTION 5.3 NONCOMPETITION AGREEMENTS. At the Closing, in order to
protect the Buyer's investment in the Business: (i) Badger ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ each shall execute and deliver an agreement not to compete with the
Buyer substantially in the form attached hereto as EXHIBIT D-1; and (ii) the
remaining Sellers shall each execute an agreement not to compete with the Buyer
substantially in the form attached hereto as EXHIBIT D-2.
SECTION 5.4 EMPLOYMENT AND CONSULTING AGREEMENT. At the Closing, Badger
▇. ▇▇▇▇▇ and the Buyer will enter into an employment and consulting agreement
substantially in the form attached hereto as EXHIBIT D-3.
SECTION 5.5 EMPLOYEE BENEFIT MATTERS. The Company has terminated the
Lull Industries Retirement Savings Plan prior to Closing. In addition, the
Company shall promptly after the Closing, at its expense, seek a determination
letter from the IRS relating to the termination of such plan. Upon the Buyer's
receipt from the Company of such determination letter, the Buyer shall use its
reasonable efforts to cause the acceptance of any eligible rollover
distributions from former employees of the Company employed by the Buyer into
any plan maintained by the Buyer. The Sellers acknowledge
12
and agree that the Buyer shall not assume any liabilities or obligations
relating to any Plans of the Company. Without limiting any of the foregoing,
the Buyer will not adopt or sponsor such plans and no assets or liabilities of
any such plans will be transferred to or assumed by the Buyer or any plan or
trust maintained by the Buyer.
SECTION 5.6 CERTAIN INSURANCE COVERAGE. The Buyer agrees to obtain a
"claims-made" insurance policy for occurrences on or prior to the date of the
acquisition of the Business by the Company, in the coverages set forth on
SCHEDULE 7.6. The Buyer shall name the Company as an additional insured for such
policy. The Company shall pay the premiums for such policy on the Closing Date.
SECTION 5.7 CERTAIN SOFTWARE LICENSES. The Company shall pay all fees
and any related expenses and execute all documentation required to (i) comply
with the terms of the software licenses referenced on SCHEDULE 5.7, (ii) ensure
that any copies of the software referenced on SCHEDULE 5.7 have been made in
accordance with the licenses referenced therein, and (iii) transfer such
licenses to the Buyer.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The individual Sellers, individually and not jointly, and the Company
represent and warrant to the Buyer, and the Buyer in agreeing to consummate the
transactions contemplated by this Agreement has relied upon such representations
and warranties, that:
SECTION 6.1 TITLE TO THE PURCHASED ASSETS. Except as set forth on
SCHEDULE 6.1 and for assets which are currently being leased, the Company has
good and marketable title to all of the Purchased Assets, and on the Closing
Date will have complete and unrestricted power and the unqualified right to
sell, assign, transfer, convey and deliver to the Buyer, and will transfer and
convey to the Buyer at the Closing, and the Buyer will acquire at the Closing,
good, valid and marketable title to the Purchased Assets free and clear of any
lease, lien, security interest, claim, charge, or encumbrance whatsoever.
SECTION 6.2 VALID AND BINDING AGREEMENT. The Sellers have taken all
necessary action, corporate or otherwise, to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of the Sellers and constitutes a
valid and binding agreement of each of the Sellers, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization or similar
laws relating to creditors' rights generally.
SECTION 6.3 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the requisite power and authority to carry on the Business as
currently
13
conducted and to own the properties and assets it now owns. The Company is
licensed or qualified and is in good standing to do business as a foreign
corporation in those jurisdictions listed on SCHEDULE 6.3. The operation of the
Business or use and ownership of the Purchased Assets in any other jurisdictions
does not require such license or qualification in any such other jurisdiction.
SECTION 6.4 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance by each of the Sellers with any of the provisions hereof will
(i) violate or conflict with any provisions of the Certificate of Incorporation
or By-Laws of the Company, or any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to the Sellers, or
(ii) violate, or conflict with, or result in a breach in any provision of, or
constitute a default (or any event that, with or without due notice or lapse of
time, or both, would constitute such a default) under, or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of the Company under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation of which the Company is a
party or by which any of the Company's assets are bound.
SECTION 6.5 CONSENTS AND APPROVALS. Except as set forth on
SCHEDULE 6.5, no permit, application, notice, transfer, consent, approval,
order, qualification, waiver from, or authorization of, or declaration, filing
or registration with, any governmental authority is necessary in connection with
the execution and delivery by any of the Sellers of this Agreement or the
consummation by any of the Sellers of the transactions contemplated hereby and
no consent of any third party is required to consummate any of the transactions
contemplated hereby.
SECTION 6.6 FINANCIAL STATEMENTS. The audited financial statements of
the Company for the fiscal years ended December 31, 1994 and 1995 (the
"Financial Statements"), copies of which are attached hereto on SCHEDULE 6.6A,
(i) present fairly the financial position, results of operations and cash flows
of the Company, as of the statement dates and for the periods indicated, and
(ii) have been prepared in accordance with the income-tax basis of accounting
consistently applied throughout and among the periods indicated. The unaudited
financial statements of the Company for the period ending June 30, 1996, copies
of which are attached hereto on SCHEDULE 6.6B (the "Interim Financial
Statements") (i) present fairly the financial position, results of operations
and cash flows of the Company, as of the statement dates and for the periods
indicated, and (ii) have been prepared in accordance with the income-tax basis
of accounting consistently applied throughout and among the periods indicated
and are consistent with the Financial Statements subject to year-end audit and
other normal or recurring year-end adjustments (made in the ordinary course of
business and consistent with prior year-end accounting principles and
adjustments) as set forth on SCHEDULE 6.6B.
14
SECTION 6.7 INTERIM OPERATIONS AND ABSENCE OF CERTAIN CHANGES. Since
December 31, 1995, except as set forth on EXHIBIT G and SCHEDULE 6.7, the
Company has conducted the Business only in the ordinary course and consistent
with past practice and the Company did not :
(i) suffer any damage, destruction or loss of tangible assets,
whether or not covered by insurance, in excess of $10,000;
(ii) suffer any change in its financial condition, assets,
liabilities or business or suffer any other event or condition of any
character which individually or in the aggregate had or has a Material
Adverse Effect on the financial condition or earnings of the Business, or
materially diminishes the value of the assets used in or relating to the
Business;
(iii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) of or relating to
the Business except in each case in the ordinary course of business;
(iv) waive any claims or rights of substantial value of or
relating to the Business, except in each case in the ordinary course of
business;
(v) pledge or permit the imposition of any lien on or sell,
assign, transfer or otherwise dispose of any of its tangible assets used in
or relating to the Business, except the sale of inventory in the ordinary
course of business;
(vi) sell, assign, encumber, license, pledge, abandon or
otherwise transfer any patents, applications for patent, trademarks, trade
names, copyrights, licenses or other intangible assets used in or relating
to the Business;
(vii) make any change in any method of accounting or accounting
principle or practice;
(viii) except for DE MINIMUS adjustments, write up or down the
value of the inventory of the Business or determine as collectible any
notes or accounts receivable of or arising out of the Business that were
previously considered to be uncollectible, except for write-ups or
write-downs and other determinations in the ordinary course of business and
consistent with past practice;
(ix) grant any general increase in the compensation payable or to
become payable to its officers or employees, engaged in or relating to the
Business, or otherwise designated as officers or employees of the Business
(including any such increase pursuant to any bonus, pension, profit-sharing
or
15
other plan or commitment) or any special increase in the compensation
payable or to become payable to any such officer or employee, or make any
bonus payments to any such officer or employee, except for normal merit and
cost of living increases in the ordinary course of business and in
accordance with past practice;
(x) lose or learn of the prospective loss of any customer or
vendor listed on SCHEDULE 6.24;
(xi) make capital commitments on behalf of or relating to the
Company in excess of $100,000 in the aggregate;
(xii) fail to maintain accounts receivable, inventory, accounts
payable and other tangible capital accounts and make contributions to the
Lull Industries Retirement Savings Plan; or
(xiii) agree, whether in writing or otherwise, to take any action
described in this Section 6.7.
SECTION 6.8 EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 6.8 is a true and complete list, exclusive of the benefits
and plans provided by RJ Associates to the Company's leased employees, of all
written and oral, formal and, to the knowledge of the Sellers, informal annuity,
bonus, cafeteria, stock option, stock purchase, profit sharing, savings,
pension, retirement, incentive, group insurance, disability, employee welfare,
prepaid legal, non-qualified deferred compensation including, without
limitation, excess benefit plans, top-hat plans, deferred bonuses, rabbi trusts,
secular trusts, non-qualified annuity contracts, insurance arrangements,
non-qualified stock options, phantom stock plans, or golden parachute payments,
or other similar fringe benefit plans, and all other employee benefit funds or
programs (within the meaning of Section 3(3) of ERISA), covering employees or
former employees of the Company (including leased employees) (the "Plans").
Except as set forth on SCHEDULE 6.8, the Company is not a party to any employee
agreement, understanding, plan, policy, procedure or arrangement, whether
written or oral, which provides compensation or fringe benefits to their
employees engaged or formerly engaged in the operation of the Business or which
applies to former employees of the Company who were engaged in the Business, and
the Company is in compliance with its obligations under all such Plans. Except
for changes required by applicable law, there are no negotiations, demands,
commitments or proposals that are pending or that have been made that concern
matters now covered, or that would be covered by the type of agreements
described on SCHEDULE 6.8 or this Section 6.8(a). The Company has no direct or
indirect, actual or contingent liability for any Plan, other than to make
payments for contributions, premiums or benefits when due, all of which payments
have been timely made. None of the Purchased Assets are subject to any existing
lien or security interest
16
under Section 302(f), 306(a), 307(a) or 4068 of ERISA or Section 401(a)(29),
412(n) or 6321 of the Code.
(b) With respect to each employee benefit plan listed on SCHEDULE 6.8,
true and complete copies of (i) all Plan documents (including all amendments and
modifications thereof), and related agreements including without limitation, the
trust agreement and amendments thereto, insurance contracts and investment
management agreements; (ii) the last three filed Form 5500 series and Schedules
A, B, P and/or SSA, as applicable, and Forms PBGC-1, if any; (iii) summary plan
descriptions; (iv) summary of material modifications, if any; (v) the most
recent auditor's report, and copies of any and all tax qualification
correspondence including without limitation, private letter rulings,
applications for determination and determination letters issued with respect to
the Plans; and (vi) the most recent annual and periodic accounting of related
Plan assets, have also been delivered to the Buyer.
(c) With respect to the Plans listed on SCHEDULE 6.8 which are subject to
ERISA:
(i) The Plans are in material compliance with the applicable
provisions of ERISA and each of the employee pension benefit plans, within
the meaning of Section 3(2) of ERISA (the "Pension Plans"), which are
intended to be qualified under Section 401(a) of the Code have been
determined by the IRS to be so qualified or a request for such
determination has been timely filed with the IRS (and to the knowledge of
the Sellers, nothing has occurred to cause the IRS to revoke such
determination and the IRS has not indicated any disapproval of any request
for such a determination);
(ii) Each Plan has been operated materially in accordance with
its terms and all required filings that are due prior to the date hereof,
including without limitation, the Forms 5500, for all Plans have been
made;
(iii) No prohibited transactions, as defined by Section 406 of
ERISA or Section 4975 of the Code, for which exemptions are not available,
have occurred with respect to any of the Plans;
(iv) The Company has not engaged in any transaction in connection
with which the Company could be subjected to a criminal or civil penalty
under ERISA;
(v) None of the Plans, nor any trust which serves as a funding
medium for any of such Plans, nor any issue relating thereto is currently
under examination by or pending before the IRS, the Department of Labor,
the PBGC or any court, other than applications for determinations pending
before the IRS;
17
(vi) Except as set forth on SCHEDULE 6.8, none of the Pension
Plans is a defined benefit plan within the meaning of Section 414(j) of the
Code;
(vii) None of the Plans is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA and Section 411(f) of the Code, nor a
plan maintained by more than one employer (hereinafter referred to as an
"multiple employer plan"), nor a single employer plan under a multiple
controlled group within the meaning of Section 4063 of ERISA, and neither
the Company nor any entity required to be aggregated with the Company under
Section 414(b), (c), (m), or (o) of the Code has incurred any withdrawal
liability with respect to any single plan, multiemployer or multiple
employer plan, which liability could constitute a liability of the Buyer;
(viii) No benefit claims (except those submitted in the ordinary
course of administration of such Plan) are currently pending against any
Plan;
(ix) Except as set forth on SCHEDULE 6.8, no Plan provides for
retiree medical or retiree life insurance benefits for former employees of
the Company and there is no liability for Taxes with respect to
disqualified benefits under Section 4976 of the Code; and
(x) Except as set forth on SCHEDULE 6.8, no Pension Plan has
been terminated by the Company and there is no liability for Taxes with
respect to a reversion of qualified plan assets under Section 4980 of
the Code.
(d) To the knowledge of the Sellers, there have been no failures
to comply with the continuation coverage provisions required by Sections
601-608 of ERISA and Section 4980B of the Code under any Plan.
(e) There are no employee benefit plans which cover employees of the
Company which are required to comply with the provisions of any foreign law.
(f) All excess contributions, if any (together with any income allocable
thereto), have been distributed (or, if forfeitable, forfeited) before the close
of the first two and one half (2 1/2) months of the following plan year; and
there is no liability for excise tax under Section 4979 of the Code with respect
to such excess contributions, if any, for any Plan.
(g) There is no liability for Taxes with respect to: (i) an accumulated
funding deficiency under Section 4971 of the Code; and/or (ii) nondeductible
contributions under Section 4972 of the Code.
SECTION 6.9 COMPLIANCE WITH LAW. The Company has been, is and on the
Closing Date will continue to be, in compliance in all respects with all
applicable laws
18
(including duties imposed by common law), rules, regulations, orders,
ordinances, judgments and decrees of all governmental authorities (federal,
state, local and foreign) having jurisdiction over, applicable to or otherwise
concerning the Business, the Purchased Assets and the products and employees of
the Company.
SECTION 6.10 LITIGATION, CLAIMS. EXHIBIT G and SCHEDULE 6.10 hereto
contain a complete and accurate list of (a) all actions, suits, material claims,
proceedings and investigations pending or threatened by or against the Company,
and (b) all judgments, decrees, arbitration awards, agreements or orders binding
upon the Company. To the knowledge of the Sellers, there is no basis for any
claim, action or proceeding which could have a Material Adverse Effect on the
Company other than as set forth on SCHEDULE 6.10.
SECTION 6.11 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 6.11 contains a complete and accurate list of all contracts,
agreements and commitments (other than the agreements or arrangements set forth
on SCHEDULES 6.8, 6.12, 6.14, 6.18B, 6.19B, 6.20, 6.24 and 6.25), whether
written or oral, of the Company relating to the Business that involve
commitments in excess of $10,000, have a term of six (6) months or more or that
are not in the ordinary course of business.
(b) The agreements set forth on SCHEDULES 6.8, 6.11, 6.12, 6.14, 6.18B,
6.19B, 6.20, 6.24 and 6.25 are hereinafter referred to collectively as the
"Operating Agreements." Except as otherwise set forth on SCHEDULE 6.11, none of
the Operating Agreements has been assigned or is the subject of any security
agreement. Except as otherwise set forth in SCHEDULE 6.11, (i) each of the
Operating Agreements is a valid and binding obligation of the Company and, to
the knowledge of the Sellers, of the other party or parties thereto, enforceable
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws or equitable principles
relating to creditors' rights generally; (ii) neither the Company nor any other
party thereto has terminated, canceled, modified or waived in any material
respect any term or condition of any Operating Agreement; and (iii) neither the
Company nor, to the knowledge of the Sellers, any other party to any Operating
Agreement is in default in any material respect under any Operating Agreement
and there exists no event, condition or occurrence that, after notice or lapse
of time, or both, would constitute such a default either by the Company or, to
the knowledge of the Sellers, by any party to any such Operating Agreement.
Except as set forth on SCHEDULE 6.11, none of the Operating Agreements contains
any covenant or other restriction preventing or limiting the consummation of the
transactions contemplated hereby. The Company has delivered to the Buyer a copy
of each of the written Operating Agreements and a description of the terms and
conditions of any oral Operating Agreements.
SECTION 6.12 INTELLECTUAL PROPERTY RIGHTS. SCHEDULE 6.12 contains a
correct and complete list of the following assets and related matters: (a) all
patents and applications for patents, all Marks and registration of Marks and
applications for
19
registration of Marks, all copyright registrations and applications for
copyright registration, and all trade names, owned or used (pursuant to license
agreements or otherwise) by the Company, and in the case of any such
Intellectual Property that is so owned, the jurisdictions in or by which such
assets or any of them have been registered, filed or issued and (b) to the
extent not listed on SCHEDULE 6.11, all contracts, agreements or understandings
pursuant to which the Company has authorized any Person to use any of the
Intellectual Property which is so owned. The Company owns, possesses, or
licenses and as of the Closing Date will own, possess or license, all right,
title and interest in and to the items of Intellectual Property that are
required to conduct their businesses as now conducted without conflict with the
rights of others. Except as set forth in SCHEDULE 6.12: (i) the Company has
the right to use, and to the knowledge of the Sellers, the sole and exclusive
right to use, the Intellectual Property (including applications for any of the
foregoing) used in connection with the Business, and none of the past or present
employees, officers, directors or stockholders of the Company, or anyone else,
has any rights with respect thereto; (ii) the consummation of the transactions
contemplated hereby will not alter or impair any such rights; (iii) the Company
has not received any notice or claim of infringement or any claim challenging or
questioning the validity or effectiveness of any of the items of Intellectual
Property, and there is no valid basis for any such claim; and (iv) the Company
is not liable, nor has it made any contract or arrangement whereby it may become
liable, to any Person for any royalty or other compensation for use of any of
the items of Intellectual Property.
SECTION 6.13 LIENS. Except as set forth on SCHEDULE 6.13, none of the
Purchased Assets are subject to any mortgage, lien, encumbrance or other
security interest.
SECTION 6.14 INSURANCE. All insurance policies and fidelity bonds
relating to the Business or the Purchased Assets, including summary descriptions
and the termination dates thereof, are set forth on SCHEDULE 6.14. Except as
set forth on SCHEDULE 6.14, the Company has not been refused any insurance with
respect to the Business or any of the Purchased Assets, nor has coverage been
limited by any insurance carrier to which it has applied for insurance or with
which it has carried insurance, during the last two years.
SECTION 6.15 DISCLOSURE. No representation or warranty by the Sellers to
the Buyer contained in this Agreement, and no statement contained in the
Schedules hereto or any certificate furnished to the Buyer pursuant to the
provisions hereof, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary in order to make
the statements herein or therein not misleading in light of the circumstances in
which they are or will be made.
SECTION 6.16 ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE. All accounts
receivable of the Company, whether reflected on the Financial Statements and/or
the Interim Financial Statements, or to be reflected on the Working Capital
Statement, represent sales actually made in the ordinary course of business or
valid claims as to which full performance has been rendered. Except to the
extent reserved against the
20
accounts receivable, and as set forth on EXHIBIT G and SCHEDULE 6.10, no
counterclaims or offsetting claims with respect to the accounts receivable are
pending or, to the knowledge of the Sellers, threatened. The accounts payable
of the Company reflected on the Financial Statements and the Interim Financial
Statements and to be reflected on the Working Capital Statement arose, or will
arise, from BONA FIDE transactions in the ordinary course of business, and all
such accounts payable have been paid, are not yet due and payable under the
Company's payment policies and procedures or are being contested by the Company
in good faith.
SECTION 6.17 INVENTORY AND BACKLOG. The inventories of the Company as of
the date hereof consist of raw materials, parts, goods in process and finished
goods salable or usable in the normal course of the Business, and such
inventories are at levels consistent with past practices of the Business. All
such inventories are carried on the books of the Company pursuant to the normal
inventory valuation policies of the Company, as reflected in the Company's
Financial Statements and Interim Financial Statements. SCHEDULE 6.17 sets forth
the locations of all inventories of the Company. Except as set forth on
SCHEDULE 6.17, no items included in inventories of the Company are or will be
pledged as collateral or held by the Company on consignment from others. The
Company is not committed to purchase inventories in amounts greater than are
reasonably expected to be usable in the ordinary course of business as presently
conducted. With respect to inventories in the hands of suppliers for which the
Company will be committed on the Closing Date, such inventories on the Closing
Date will be reasonably expected to be usable in the ordinary course of business
as presently being conducted. Subject to the qualifications set forth in
SCHEDULE 6.17, at August 3, 1996, the backlog of firm orders for the Company was
$25,576,471.
SECTION 6.18 TANGIBLE PERSONAL PROPERTY. SCHEDULE 6.18a includes all of
the fixed assets of the Company included within the Purchased Assets and each
item of tangible personal property other than inventory and supplies (whether
finished goods or raw materials) having a book value in excess of $25,000, and
the location thereof, including all such furniture, furnishings, office
equipment, machinery, tools and other equipment. The Company has good and
marketable title to all of the items listed on or referred to in SCHEDULE 6.18a,
free and clear of all liens, claims and encumbrances except as set forth thereon
or on SCHEDULE 6.13. SCHEDULE 6.18b lists all leases of tangible personal
property leased by the Company in connection with the operation of the Business
and the location thereof. Except as set forth on SCHEDULE 6.18b, none of such
leases contains any covenant or restriction preventing or limiting the
consummation of the transactions contemplated hereunder. All of the personal
property listed in SCHEDULE 6.18a and the assets leased pursuant to the leases
listed on SCHEDULE 6.18b are in reasonable operating condition and repair,
subject to ordinary wear and tear.
SECTION 6.19 REAL PROPERTY.
(a) SCHEDULE 6.19a contains a correct and complete list of all the real
property (including a general description of the improvements thereon) that is
owned by
21
the Company or that the Company has agreed (or has an option) to purchase, sell
or lease, or may be obligated to purchase, sell or lease to a third party in
connection with the conduct of the Business and any title insurance or guarantee
policies with respect thereto. Such real property is hereinafter referred to as
the "Real Property," and the improvements and fixtures thereon are hereinafter
referred to as the "Improvements."
(b) SCHEDULE 6.19b identifies all of the real property that the Company
leases (as lessee), has agreed to lease or has an obligation to lease in
connection with the Business (including a general description of the
improvements thereon). Such leased real property is hereinafter referred to as
the "Leased Property," and the improvements and fixtures thereon are hereinafter
referred to as the "Leased Improvements."
(c) Except as set forth on SCHEDULE 6.19a, the Company is the sole legal
and equitable owner of the Real Property, the Improvements and all interests
therein and possesses good and marketable, indefeasible fee simple title to the
Real Property and the Improvements, good of record and in fact, free and clear
of all conditions, exceptions, reservations, liens, restrictions, rights-of-way,
easements, encumbrances and other matters affecting title except such matters
which do not adversely affect the present use of the Real Property.
(d) There are no adverse or other parties in possession of the Real
Property, the Improvements, the Leased Property, the Leased Improvements or any
portion or portions thereof, and on the Closing Date the Real Property, the
Improvements and the leasehold interest in the Leased Property and the Leased
Improvements will be free and clear of any and all leases, licensees, occupants
or tenants except as set forth on SCHEDULE 6.19a and SCHEDULE 6.19b. To the
knowledge of the Sellers, there are no pending or threatened condemnation,
eminent domain or similar proceedings, or litigation or other proceedings
affecting the Real Property, the Improvements, the Leased Property, the Leased
Improvements or any portion or portions thereof. To the knowledge of the
Sellers, there are no pending requests, applications or proceedings to alter or
restrict any zoning or other use restrictions applicable to the Real Property,
the Improvements, the Leased Property or the Leased Improvements that would
interfere with the conduct of the Business or the use of the Purchased Assets
consistent with past practice, which interference would have a Material Adverse
Effect on the Business. Except as set forth on SCHEDULE 6.19a, to the knowledge
of the Sellers, all water, sewer, gas, electric, telephone, drainage and other
utility equipment, facilities and services required by law or necessary for the
operation of the Improvements or the Leased Improvements are installed and
connected pursuant to valid permits and no notice has been received by the
Company regarding the termination or material impairment of any such service.
All necessary easements exist and are in full force and effect. The Real
Property and the Leased Property have access, in accordance with past practice,
to and from a public right of way or road dedicated for public use and no notice
has been received by the Company relating to the termination or impairment of
such access (including applicable parking requirements).
22
SECTION 6.20 EMPLOYEES. SCHEDULE 6.20 sets forth a complete and
accurate list of all employees (including leased employees) of the Business,
showing for each: name, hire date, current job title or description, current
salary level (including any bonus or deferred compensation arrangements) and
any bonus, commission or other remuneration paid during the most recently
completed fiscal year, and describing any existing contractual arrangement.
Except as set forth on SCHEDULE 6.20, and except pursuant to or in
consideration of options granted under the Stock Option Plan, no employee
(including leased employees) of the Business shall receive any compensation
as a result of the consummation of the transaction contemplated by this
Agreement. Except as set forth on SCHEDULE 6.20, none of the employees
(including leased employees) of the Business is currently on short-term or
long-term disability. Except as set forth on SCHEDULE 6.20, since December
31, 1994 no salaried employee (including leased employees) of the Business
who has been compensated at an annual rate in excess of $50,000 has
terminated his or her employment or had such employment terminated for any
reason or for no reason; no such employee has given notice of his or her
intent to terminate such employment; and no notice of termination has been
given to any such employee by the Company.
SECTION 6.21 LABOR DISAGREEMENTS. Within the last three (3) years, the
Company has not experienced any labor disputes or any work stoppage or slowdowns
due to labor disagreements. Except as set forth on SCHEDULE 6.21, to the
knowledge of the Sellers, (a) each of the Company and RJ Associates (with
respect to the employees leased to the 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 either the Company or RJ Associates (with respect to the employees
leased to the Company), or threatened before the National Labor Relations Board
or any foreign authority; (c) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or threatened against or
affecting either the Company or RJ Associates (with respect to the employees
leased to the Company); (d) no question concerning representation has been
raised or is threatened respecting the employees of either the Company or RJ
Associates (with respect to the employees leased to the Company); (e) no
grievance that might have a Material Adverse Effect on the Company, nor any
arbitration proceeding arising out of or under any collective bargaining
agreement, is pending and no claims therefor exist; and (f) no collective
bargaining agreement that is binding on the Company restricts it from
relocating, closing or subcontracting any of its operations.
SECTION 6.22 GOVERNMENTAL AUTHORIZATIONS. The Company has all licenses,
permits or other authorizations from governmental, regulatory or administrative
agencies or authorities required for the operation of the Business in the manner
presently conducted, each of which will be in full force and effect on the
Closing Date. A list of all such material governmental authorizations is set
forth on SCHEDULE 6.22. No registrations, filings, applications, notices,
transfers, consents, approvals, orders, qualifications, waivers or other actions
of any kind are required by virtue of the execution and delivery of this
Agreement or the consummation of the transactions
23
contemplated hereby to enable the Buyer to continue the operation of the
Business as presently conducted in all respects.
SECTION 6.23 TAX MATTERS.
(a) There have been timely filed by the Company with the appropriate
Taxing Authority all Tax Returns relating to the Business required to be filed
on or before the Closing Date, and all such Tax Returns were materially correct
and complete in all respects. An extension of time within which to file any Tax
Return which has not been filed has not been requested or granted.
(b) The Company has paid in full all Taxes, if any, shown to be due on
such Tax Returns, or otherwise has reserved for or paid all other Taxes due for
all periods up to and including the date hereof, and at the Closing Date shall
have paid or reserved for all Taxes allocable to periods or portions thereof
ending on or before the Closing Date. All Taxes for the periods covered by the
Tax Returns filed or to be filed by the Company, or if not covered by a Tax
Return but required to be paid, have been or will be paid when due whether to a
Taxing Authority or to other persons or entities (as, for example, under tax
allocation agreements).
(c) The representations and warranties set forth in subsections (a) and
(b) of this Section 6.23 are not applicable to the extent the Purchased Assets
and the Business cannot be made subject to tax liens and the Buyer cannot be
made liable for Taxes relating to the matters constituting breaches of such
representations and warranties.
(d) There are no liens for Taxes upon the Business or any of the Purchased
Assets except liens for current Taxes not yet due.
(e) None of the Purchased Assets is property which is required to be
treated as being owned by any other person pursuant to the so-called "safe
harbor lease" provisions of former Section 168(f)(8) of the Code.
(f) None of the Purchased Assets have been financed directly or indirectly
by any tax exempt bonds.
(g) None of the Purchased Assets is "tax-exempt use property" within the
meaning of Section 168(h) of the Code.
(h) The Company is not a person other than a United States person within
the meaning of Section 7701(a)(30) of the Code.
(i) No state of facts exist to the Sellers' knowledge which would
constitute grounds for the assessment of any additional Taxes by any Taxing
Authority against the
24
Company or the Buyer with respect to the Purchased Assets or the Business other
than sales, use, transfer, recording or similar fees and taxes which may arise
from the transactions contemplated by this Agreement. No state of facts exist
to the Sellers' knowledge which would constitute grounds for the assessment of
any liability for Taxes with respect to the Purchased Assets or the Business for
the periods which have not been audited by the Internal Revenue Service or any
other Taxing Authority.
(j) The Company has not granted any waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any Taxes
which relate to the Business.
(k) There is no material action, suit, proceeding, investigation, audit or
claim now pending against the Company with respect to the Business or any of the
Purchased Assets in respect of any Tax, and no matter under discussion with any
Taxing Authority relating to any material Tax or assessment or any claim for
additional Tax, asserted by any such Authority against the Company with respect
to the Business or any of the Purchased Assets.
(l) All Taxes with respect to the Purchased Assets and the Business that
are required to be withheld or collected have been duly withheld and collected
and, to the extent required, have been paid to the proper Taxing Authority,
person, or entity to have been properly deposited as required by applicable
laws.
(m) SCHEDULE 6.23 lists each jurisdiction in which the Company is required
to file Tax Returns or pay Taxes with respect to which no returns are required
to be filed with respect to the Purchased Assets and the Business for each
period or portion thereof ending on or before the Closing Date. No claim has
ever been made by any Taxing Authority in a jurisdiction where the Company does
not file Tax Returns that they are or may be subject to taxation by that
jurisdiction with respect to the Purchased Assets or the Business.
(n) As used in this Agreement, "Tax" means any of the Taxes and "Taxes"
means (i) all income taxes (including any tax on or based upon net income, or
gross income, or income as specially defined, or earnings, or profits, or
selected items of income, earnings or profits) and all gross receipts,
estimated, sales, use, ad valorem, transfer, franchise, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, environment, alternative or add-on minimum taxes, custom
duties or other taxes of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts imposed by any Taxing
Authority and (ii) any liability for the payment of any amount of the Tax
described in the immediately preceding clause (i) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable law) of another person or successor, by contract, or otherwise, or a
member of an affiliated, consolidated, or combined group.
25
(o) As used in this Agreement, "Tax Return" is defined as any return,
report, information return or other document (including any related or
supporting information) filed or required to be filed with any federal, state,
local or foreign governmental entity or other authority (individually or
collectively a "Taxing Authority") in connection with the determination,
assessment or collection of any Tax (whether or not such Tax is imposed on the
Company) or the administration of any laws, regulations or administrative
requirements relating to any Tax.
(p) The Company is not a party to any tax allocation or sharing agreement.
(q) The Company has had in effect at all times valid elections under
Section 1362 of the Code (or its equivalent) and similar provisions of the
applicable state laws (where required or allowed) to be taxed as an "S"
corporation for all tax years beginning after December 31, 1993.
SECTION 6.24 CUSTOMERS AND VENDORS. SCHEDULE 6.24 sets forth correct and
complete lists of the twenty-five (25) largest (by dollar volume) customers and
vendors of the Business during the most recently completed fiscal year,
indicating the existing contractual arrangements, if any, with each such
customer or vendor. Except as set forth in SCHEDULE 6.24, there are no
outstanding disputes with any customer or vendor listed thereon and no customer
or vendor listed thereon has refused to continue to do business with the Company
or has stated its intention not to continue to do business with the Company.
Since December 31, 1995, there has not been any material shortage or
unavailability of the raw materials necessary to manufacture the products sold
by the Business, and, to the knowledge of the Sellers, there is no current
shortage or unavailability which leads it to believe that any such shortages
will occur.
SECTION 6.25 DISTRIBUTORS AND REPRESENTATIVES. SCHEDULE 6.25 sets forth
a correct and complete list of the twenty-five (25) largest (by dollar volume)
distributors, representatives and agents for the sale of the products of the
Company during the two most recently completed fiscal years and all
distributors, representatives and agents to whom the Company has given any
exclusive rights with respect to territories or products. Since December 31,
1995, there has been no termination of any independent distributor, wholesaler,
sales representative or agent relationship, nor, to the knowledge of the
Sellers, has any present independent distributor, wholesaler, sales
representative or agent indicated any intention to terminate or materially
change the terms of its relationship with the Company.
SECTION 6.26 ADEQUACY AND SUFFICIENCY OF ASSETS. The Purchased Assets
are substantially all of the assets and properties used by the Company in
connection with its conduct of the Business and are sufficient to operate the
Business as presently operated.
SECTION 6.27 ENVIRONMENTAL MATTERS. As used in this Agreement "Hazardous
Material" shall mean: (i) any "hazardous substance" as now defined pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of 1980
26
("CERCLA"), 42 U.S.C. Section 9601(14), or any substance listed or identified
by any characteristic in any regulation adopted pursuant to any statute referred
to or incorporated into such definition, all as in effect on the date hereof;
(ii) any petroleum, including crude oil and any fraction thereof; (iii) natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel; (iv) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910;
and (v) any asbestos, polychlorinated biphenyl ("PCB"), or isomer of dioxin.
(a) Except as set forth on SCHEDULE 6.27(a), there is no Hazardous
Material within, under, originating from or relating to any real property
interest or other location contiguous and adjacent to such properties owned,
operated or controlled by the Company that is used in connection with the
Business.
(b) Except as set forth on SCHEDULE 6.27(b), the Company has no liability,
matured or not matured, absolute or contingent, assessed or unassessed, imposed
or based upon any provision under any federal, state or local law, rule, or
regulation or common law, or under any code, order, decree, judgment or
injunction applicable to the Company in connection with the Business, nor in
connection with the Business has the Company received any notice, or request for
information issued, promulgated, approved or entered thereunder, or under the
common law, or any tort, nuisance or absolute liability theory, relating to
public health or safety, or pollution, damage to or protection of the
environment including without limitation, laws relating to emissions,
discharges, releases or threatened releases of Hazardous Material into the
environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, generation,
disposal, transport or handling of any Hazardous Material (hereinafter
collectively referred to as "Environmental Laws").
(c) The Company possesses and is in compliance in all material respects
with all permits, licenses, certificates, franchises and other authorizations
relating to the Environmental Laws necessary to conduct the Business or
otherwise required by environmental regulations in connection with the Business.
(d) The Company has not, in connection with the Business during the past
five (5) years, been subject to any civil, criminal or administrative action,
suit, claim, hearing, notice of violation, investigation, inquiry or proceeding
for failure to comply with, or received notice of any violation or potential
liability under the Environmental Laws, nor is the Company aware of any
information, whether or not confirmed or reported, which could give rise to any
such potential liability.
(e) No real property, site or facility (as defined in CERCLA, 42 U.S.C.
Section 9601(9)) owned or operated by the Company in connection with the
Business is (i) listed or proposed for listing on the National Priority List or
(ii) listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List ("CERCLIS")
27
promulgated pursuant to CERCLA, or any comparable list maintained by any
foreign, state or local government authority.
(f) Except as set forth on SCHEDULE 6.27(b), there are no underground
storage tanks owned or operated by the Company in connection with the Business,
and any prior use and operation of underground storage tanks owned or operated
by the Company in connection with the Business has been in compliance with all
Environmental Laws.
(g) The Company has provided to the Buyer an opportunity to inspect its
facilities, review and copy documents, and the Company has delivered to the
Buyer true, complete and correct copies of any reports, together with supporting
studies, analyses and tests in the possession of or initiated by the Company
pertaining to the existence of Hazardous Material and any other environmental
concerns relating to any of their facilities, or sites or real property owned,
leased, operated, used or controlled by the Company in connection with the
Business, or concerning compliance with or liability under the Environmental
Laws.
(h) Except as set forth on SCHEDULE 6.27(a), there are no PCBs in or at
any premises owned, leased, operated or controlled by the Company in connection
with the Business. The Company's prior use, handling, storage, transport or
disposal of PCBs has been in compliance with all then-applicable Environmental
Laws.
(i) Except as set forth on SCHEDULE 6.27(a), there is no friable asbestos
or asbestos containing materials on or in the properties and assets owned,
leased, operated or controlled by the Company in connection with the Business
and the facilities on such properties comply with the Environmental Laws
including but not limited to, Occupational Safety and Health Act regulations
with respect to ambient air exposure to asbestos.
(j) The Company has not, by contract, agreed to assume the liability of
any other person or entity pursuant to any of the Environmental Laws.
SECTION 6.28 GOVERNMENT CONTRACTS. The Company is not a party to, or
bound by the provisions of, any contract (including purchase orders, blanket
purchase orders and agreements and delivery orders) with the United States
Government or any department, agency, or instrumentality thereof or any state or
local governmental agency or authority.
SECTION 6.29 DEFECTS IN PRODUCTS OR DESIGNS; PRODUCT SAFETY.
(a) Except as set forth on EXHIBIT G and SCHEDULE 6.29, there has been no
pattern of defects in any product line in the design, construction,
manufacturing or installation of any material product ("Product") made,
manufactured, constructed,
28
distributed, sold, leased or installed by the Company that would adversely
affect the performance or quality of such Product. Each Product has been
designed, manufactured, packaged and labelled in compliance with all regulatory,
engineering, industrial and other codes applicable thereto and the Company has
not received notice of any alleged noncompliance with any such code. The
Company does not advertise any Product as being commercially rated.
(b) The Company has not been required to file, and has not filed, a
notification or other report with the United States Consumer Product Safety
Commission concerning actual or potential hazards with respect to any Product
manufactured or sold by the Company.
SECTION 6.30 PRODUCT WARRANTIES. True and correct copies of all written
warranties and guaranties applicable to the Company and its products and
services have been provided to the Buyer. The amounts reflected as warranty
reserves in the Financial Statements and/or Interim Financial Statements, and to
be reflected in the Working Capital Statement are or will be commercially
reasonable.
SECTION 6.31 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
6.31, no agent, broker, investment banker, person or firm acting on behalf of
the Company or under the authority of the Company is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any of the
transactions contemplated hereby.
SECTION 6.32 RELATED PARTY TRANSACTIONS. Except as set forth on SCHEDULE
6.32, neither the Company, nor any director or officer of the Company is
currently a party to any transaction with the Company (other than for services
as employees, officers and directors), including without limitation any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from, the Company in connection with the
operation of the Business, any employee, officer or director of the Company, or
to or from any corporation, partnership, trust or other entity in which any such
person, or group of such persons, owns in excess of 5% of the outstanding equity
interest.
SECTION 6.33 ABSENCE OF QUESTIONABLE PAYMENTS. Neither the Company nor
any of its respective directors, officers, agents, employees or any other
persons acting on its behalf has, in connection with the operation of the
Business (i) used any corporate or other funds for unlawful contributions,
payments, gifts or entertainment, or made any unlawful expenditures relating to
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 104 of the
Foreign Corrupt Practices Act (15 U.S.C. 78dd-2), as amended, or any other
applicable foreign, federal or state law; or (ii) accepted or received any
unlawful contributions, payments, expenditures or gifts.
29
SECTION 6.34 BOOM RECALL MACHINES. The rough terrain telescopic boom
forklifts subject to the Boom Recall have the model and serial numbers set forth
in Section 1(c) of EXHIBIT G. Except for the machines referenced in the
previous sentence, the Company did not sell or ship any additional machines
containing the defect associated with the Boom Recall as described on EXHIBIT G.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers, and the Sellers in
agreeing to consummate the transactions contemplated by this Agreement have
relied upon such representations and warranties, that:
SECTION 7.1 ORGANIZATION, STANDING AND POWER. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite power and authority (corporate
and other) to own, lease and operate its properties, to carry on its business as
now being conducted and to enter into this Agreement and consummate the
transactions contemplated hereby.
SECTION 7.2 VALID AND BINDING AGREEMENTS. All necessary action on the
part of the Buyer has been taken to authorize and approve the execution and
delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Buyer and constitutes a valid and
binding agreement of the Buyer, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or similar laws or equitable
principles relating to creditors' rights generally.
SECTION 7.3 NO VIOLATION. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby nor
compliance with any of the provisions hereof will (i) violate or conflict with
the Certificate of Incorporation or the By-Laws of the Buyer or any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Buyer, or (ii) violate or conflict with, or result in a breach
of any of the provisions of, or constitute a default (or any event which, with
or without due notice or lapse of time, or both, would constitute such a
default) under, or result in the termination of, or accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon the stock or any of the properties or assets of the Buyer
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument of which
the Buyer is a party or by which it or any of its assets is bound.
SECTION 7.4 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE
7.4, no permit, consent, approval or authorization of, or declaration, filing
or registration
30
with, any governmental authority is necessary in connection with the execution
and delivery of this Agreement by the Buyer or the consummation by the Buyer of
the transactions contemplated hereby and no consent of any third party is
required to consummate any of the transactions contemplated hereby.
SECTION 7.5 BROKER'S OR FINDER'S FEES. Except as set forth on SCHEDULE
7.5, no agent, broker, investment banker, person or firm acting on behalf of the
Buyer or under the authority of the Buyer is or will be entitled to any broker's
or finder's fee or any other commission or similar fee directly or indirectly
from any of the parties hereto in connection with any of the transactions
contemplated hereby.
SECTION 7.6 INSURANCE. The Buyer has obtained policies of insurance in the
coverages set forth on SCHEDULE 7.6 hereto, all of which policies shall be in
full force and effect as of the Closing Date. The Buyer has named the Company as
an additional insured on its occurrence-based products liability insurance
policy and shall maintain such insurance (or similar insurance) for a period of
four (4) years from the Closing Date.
ARTICLE VIII
COVENANTS
SECTION 8.1 COMPLIANCE WITH LAW. The Sellers will promptly comply in
all material respects with all laws and regulations applicable to the Business
and the Purchased Assets and all laws and regulations with which compliance is
required by the Sellers for the valid consummation of the transactions
contemplated hereby and will promptly notify the Buyer of any legal,
administrative or other proceedings, investigations, inquiries, complaints,
notices of violation or other asserted claims, judgments, injunctions or
restrictions, pending, outstanding or threatened or contemplated, which could
affect the Business or any of the Purchased Assets.
SECTION 8.2 OPERATION OF BUSINESS PRIOR TO CLOSING. Prior to the
Closing Date, and except as otherwise contemplated by this Agreement or with the
specific prior written consent of the Buyer, the Sellers covenant and agree
that:
(a) the Company shall conduct the Business in the ordinary course,
consistent with past practices;
(b) except as disclosed on SCHEDULE 8.2(b), the Company shall not enter
into any contract or commitment entailing a commitment, or make any expenditures
for, property, plant or equipment in excess of $100,000 in the aggregate without
obtaining the prior written consent of the Buyer;
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(c) except as disclosed on SCHEDULE 8.2(c), the Company shall not enter
into any new employment agreement, sales agency agreement or other contract for
the performance of personal services which is not terminable without liability
upon no more than thirty (30) days' notice or grant any general increase in the
compensation payable or to become payable to any officers or employees engaged
in or relating to the Business (including any such increase pursuant to any
bonus, pension, profit-sharing or other plan or commitment), saving and
excepting the exercise, purchase or exchange of options issued pursuant to the
Stock Option Plan, or any special increase in the compensation payable or to
become payable to any such officer or employee, or make any bonus payments to
any such officer or employee, except for normal merit and cost of living
increases in the ordinary course of business and in accordance with past
practice;
(d) the Company will use its best efforts to preserve the Business intact
and the goodwill of customers and others having business relations on behalf of
or relating to the Business and to keep available the employees of the Company
for employment by the Buyer;
(e) the Company will maintain its real and personal properties used in
connection with the Business in as good as a state of operating condition and
repair as they are on the date of this Agreement, except for ordinary wear and
tear;
(f) the Company will not terminate or modify any leases, contracts,
governmental licenses, permits, or other authorizations or agreements affecting
its real and/or personal properties used in connection with the Business or the
operation thereof or any additional lease or contract of any nature affecting
such properties or the operation thereof;
(g) the Company will keep in force all policies of insurance covering or
relating to the real and personal property used in the operation of the Business
to the Closing Date;
(h) the Company will not do or omit to do any act, or permit any act or
omission to act, which may cause a breach of any Operating Agreement or a breach
of any representation, warranty, covenant or agreement made by the Company
herein;
(i) the Company will not enter into any contract or commitment on behalf
of or relating to the Business, and no purchase of raw materials or supplies and
no sales of any of its assets will be made on behalf of or in relation to the
Business, except (i) normal contracts or commitments for the purchase of, and
normal purchases of, raw materials and supplies made in the ordinary course of
business and consistent with past practice, and (ii) normal contracts or
commitments for the sale of, and normal sales of, product or inventory in the
ordinary course of business and consistent with past practice;
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(j) except as set forth on SCHEDULE 8.2(j), no obligations or liabilities
of or relating to the Business, whether absolute or contingent (including
litigation claims), shall be discharged, satisfied or paid, other than
liabilities shown on the Financial Statements and/or Interim Financial
Statements and liabilities incurred after the date thereof in the ordinary
course of business and in normal amounts, and no such discharge, satisfaction or
payment shall be effected other than in accordance with the ordinary payment
terms relating to the liability discharged, satisfied or paid;
(k) no debts of or claims against others arising out of or relating to the
Business held by the Company shall be canceled or released and no rights
relating to the Business shall be waived, except in the ordinary course of
business;
(l) the Company will not write up the value of any inventory of or
relating to the Business, determine as collectible any notes or accounts
receivable of or arising out of the Business which were previously considered to
be uncollectible, except for adjustments and changes in the ordinary course of
business and consistent with past practice;
(m) except for the changes set forth in the Principles and Procedures, the
Company will not make any change in any method of accounting principles or
practices;
(n) the Company will maintain accounts receivable, inventory, accounts
payable and other tangible capital accounts relating to the Business at levels
consistent with their normal business practices; and
(o) the Company will not incur any indebtedness or other liabilities
(whether absolute, accrued, contingent or otherwise) or guarantee any such
indebtedness relating to the Business, except in the ordinary course of its
business.
SECTION 8.3 ACCESS. At all times prior to the Closing Date, the Sellers
shall provide the Buyer and its representatives with reasonable access to, and
will make available for inspection and review, all properties, personnel, books,
records and accounts of the Company in order that the Buyer may have a
reasonable opportunity to make such investigation as it shall desire to make of
the Business during normal business hours. It is understood that the Buyer
shall be permitted to maintain personnel on the premises of the Company during
normal business hours to observe all aspects of the operations of the Business
and to confer with the Company's management, attorneys, accountants and other
third parties reasonably requested for verification of any information obtained
pursuant to such observations. The Sellers also consent to the examination by
Price Waterhouse of work papers and other records of the Accountants pertaining
to the Business and will cooperate with Buyer to obtain such access and related
information from the Accountants.
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SECTION 8.4 ENVIRONMENTAL MATTERS. The Sellers covenant and agree to
undertake and, to the extent reasonably possible, complete prior to the Closing
Date the evaluation and correction of the environmental matters set forth in
this Section 8.4. Notwithstanding anything to the contrary in this Agreement,
the Sellers' performance of the covenants in this Section 8.4 (or the
qualifications set forth in Section 8.4(f)) shall not excuse or mitigate any
breach of the Sellers' representations and warranties under Article VI hereof or
relieve the Sellers of their indemnification obligations set forth in Section
11.2.
(a) Sellers shall remove from all Real Property and all Leased Property
all trash, empty drums, and other discarded materials, other than such materials
which are removed by vendors under contracts requiring removal no less
frequently than one time per month.
(b) Sellers shall either (i) obtain all required permits to construct air
pollution sources which are required under Environmental Laws, obtain all
permits to operate air pollution sources currently required under Environmental
Laws, and file a complete application for all permits or exemptions from
permitting which will be required under Title V of the federal Clean Air Act and
applicable state laws implementing Title V or (ii) obtain the opinion of a
reputable environmental consultant that any such permit(s) is not required or
will not be required under Environmental Laws, including Title V.
(c) Sellers shall evaluate the need to file and, as appropriate, file Form
R's as required under the federal Emergency Planning and Community Right-to-Know
Act, for all years during which the Sellers operated any Real Property or Leased
Property which is or was a facility under such Act.
(d) Sellers shall obtain a SPCC plan in compliance with the requirements
of 40 CFR Part 112 for the ▇▇▇▇▇, MN property, and shall obtain a stormwater
permit for the Oaks, ND property.
(e) Sellers shall comply with all requirements of 40 CFR Parts 403 and 433
relating to discharges of wastewater from the Oaks, ND property.
(f) The Sellers shall fulfill all of the Sellers' obligations under
Section 8.4(b), (c), (d) and (e) by agreeing to employ, at Sellers' own cost and
expense, ENSR Consultants, Inc. ("ENSR") to perform the services as detailed in
SCHEDULE 8.4(f), irrespective of whether, for any reason other than non-payment
by Sellers of ENSR's fees and expenses, ENSR fails to obtain any or all of the
permits, forms and plans otherwise required under said Sections 8.4(b), (c), (d)
and (e).
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ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
All obligations of the Buyer that are to be discharged under this Agreement
at the Closing are subject to the fulfillment, at Closing or effective as of
the Closing Date, of each of the following conditions (unless expressly waived
in writing by the Buyer at any time at or prior to the Closing) and the Sellers
shall use their reasonable efforts to cause each of such conditions to be
satisfied:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date, the
representations and warranties of the Sellers set forth in Article VI of this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date, and the Buyer shall have
received at the Closing a certificate, dated the Closing Date, signed by the
President or Vice President of the Company and by each of the Stockholders to
such effect.
SECTION 9.2 COVENANTS, AGREEMENTS AND CONDITIONS. The Sellers shall
have performed and complied with all covenants, agreements and conditions
contained in this Agreement required to be performed by them on or prior to the
Closing Date, and the Buyer shall have received at the Closing a certificate,
dated the Closing Date, signed by the President or Vice President of the Company
and each of the Stockholders to such effect.
SECTION 9.3 NO MATERIAL ADVERSE CHANGE. During the period from the date
hereof to the Closing Date, there shall not have been any material adverse
change in the condition (financial or otherwise) or earnings of the Business.
SECTION 9.4 CORPORATE PROCEEDINGS; CONSENTS AND APPROVALS. All
corporate and other proceedings to be taken and all consents to be obtained in
connection with the transactions contemplated by this Agreement by the Sellers
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Buyer and its counsel, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
each of whom shall have received all such originals or certified or other copies
of such documents as either may reasonably request.
SECTION 9.5 PROCEEDINGS. No action or proceeding shall be pending or
threatened to restrain or prevent the consummation of the transactions
contemplated hereby.
SECTION 9.6 GOVERNMENTAL APPROVALS. There shall have been received all
necessary governmental consents or authorizations required in connection with
the transactions contemplated hereby.
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SECTION 9.7 INSURANCE. The Company shall have maintained in full force
and effect the insurance coverage described in SCHEDULE 6.14 hereto or policies
providing substantially equivalent coverage to the Closing Date.
SECTION 9.8 DELIVERIES. The Sellers shall have delivered to the Buyer
the following items:
(a) certified resolutions of the Board of Directors and stockholders of
the Company authorizing the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein;
(b) executed documents of transfer and assignment required to transfer
title to the Purchased Assets to the Buyer, including without limitation (i) the
▇▇▇▇ of Sale, Assignment and Assumption Agreement; and (ii) such other deeds,
bills of sale, endorsements, assignments and other good and sufficient
instruments of conveyance and delivery as the Buyer may reasonably request;
(c) applications for such tax clearance certificates as may be required by
the Buyer to evidence payment of any outstanding tax obligations of the Company;
(d) except as set forth on SCHEDULE 6.3, certificates from appropriate
authorities, dated as of the Closing Date, as to the good standing and
qualification to do business of, and payment of franchise taxes by the Company
in each jurisdiction where it operates the Business;
(e) a joint notice by the Company and the Buyer regarding disposition of
funds deposited subsequent to the Closing Date in the Company's lockbox and with
each of the Company's other bank accounts;
(f) an executed assignable agreement between Lull Industries, Inc. and
▇▇▇▇▇▇ Fabrication, Inc. in form satisfactory to the Buyer; and
(g) all other previously undelivered items required to be delivered by the
Sellers to the Buyer at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith unless waived in writing by the Buyer.
SECTION 9.9 RELEASES OF LIENS. The Sellers shall have delivered to the
Buyer releases of all liens and encumbrances of record on the Purchased Assets
other than the liens and encumbrances set forth on SCHEDULE 9.9.
SECTION 9.10 CUSTOMER RELATIONSHIPS. The Buyer shall be reasonably
satisfied with the Company's relationship with its customers listed on SCHEDULE
6.24.
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SECTION 9.11 CONSENTS OF THIRD PARTIES. There shall have been received
all necessary consents from third parties to the assignment and conveyance of
the Purchased Assets to the Buyer, including those set forth on SCHEDULE 9.11.
SECTION 9.12 OPINION OF COUNSEL. The Buyer shall have received a written
opinion dated as of the Closing Date from ▇▇▇▇▇▇▇, Street and Deinard, counsel
to the Company, in the form attached hereto as EXHIBIT E.
SECTION 9.13 PAYMENT OF EXPENSES. The Buyer shall have received payment
for or evidence of payment by the Company of all fees and expenses required to
be paid by the Company pursuant to Sections 5.1, 5.6 and 5.7. In addition, the
Buyer shall have received payment of the cash surrender value, as of the Closing
Date, of the key man insurance policies set forth on SCHEDULE 6.8.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
All obligations of the Sellers that are to be discharged under this
Agreement at the Closing are subject to the fulfillment at the Closing or
effective as of the Closing Date of each of the following conditions (unless
expressly waived in writing by the Sellers at any time at or prior to the
Closing) and the Buyer shall use its reasonable efforts to cause each of such
conditions to be satisfied:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date, the
representations and warranties of the Buyer set forth in Article VII of this
Agreement shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such representations and
warranties had been made on and as of the Closing Date, and the Sellers shall
have received at the Closing a certificate, dated the Closing Date, signed by
the President or a Vice President of the Buyer to such effect.
SECTION 10.2 COVENANTS, AGREEMENTS AND CONDITIONS. The Buyer shall have
performed and complied with all covenants, agreements and conditions contained
in this Agreement required to be performed by it on or prior to the Closing
Date, and the Sellers shall have received at the Closing a certificate, dated
the Closing Date, signed by the President or a Vice President of the Buyer to
such effect.
SECTION 10.3 PROCEEDINGS. No action or proceeding shall be pending or
threatened to restrain or prevent the consummation of the transactions
contemplated hereby.
SECTION 10.4 CORPORATE PROCEEDINGS; CONSENTS AND APPROVALS. All
corporate and other proceedings to be taken and all consents to be obtained in
connection with the
37
transactions contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the Company and its
counsel, ▇▇▇▇▇▇▇, Street and Deinard, each of whom shall have received all such
originals or certified or other copies of such documents as either may
reasonably request.
SECTION 10.5 GOVERNMENTAL APPROVALS. There shall have been received all
necessary governmental consents or authorizations required in connection with
the transactions contemplated hereby.
SECTION 10.6 DELIVERIES. The Buyer shall have delivered to the Sellers,
and Escrow Agent as applicable, the following items:
(a) the Estimated Purchase Price as required under Section 3.2;
(b) certified resolutions of the Board of Directors of the Buyer
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein;
(c) executed documents reasonably requested by the Sellers providing for
the assumption of obligations in accordance with Section 2.2, including without
limitation, the ▇▇▇▇ of Sale, Assignment and Assumption Agreement; and
(d) all other previously undelivered items required to be delivered by the
Buyer at or prior to the Closing pursuant to this Agreement or otherwise
required in connection herewith unless waived in writing by the Sellers.
SECTION 10.7 OPINION OF COUNSEL. The Sellers shall have received a
written opinion dated as of the Closing Date from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, counsel to the Buyer, in the form attached hereto as EXHIBIT F.
SECTION 10.8 INSURANCE. The Buyer shall have obtained the insurance
coverage described in SCHEDULE 7.6 hereto, and said insurance coverage shall be
in full force and effect as of the Closing Date.
ARTICLE XI
POST-CLOSING MATTERS
SECTION 11.1 INDEMNIFICATION.
(a) The individual Sellers, individually and not jointly, and the Company
shall protect, defend, hold harmless and indemnify the Buyer, its officers,
directors, employees and agents, and their respective successors and assigns
from, against and in
38
respect of any and all losses, liabilities, deficiencies, penalties, fines,
costs, damages and expenses (including without limitation, reasonable
professional fees and costs of investigation, litigation, settlement, and
judgment and interest awarded) (collectively, "Losses") that may be suffered or
incurred by any of them arising from or by reason of any of the following:
(i) Any breach of any representation, warranty, covenant or
agreement made by the Sellers in this Agreement or contained in any
certificate executed by the Sellers and delivered to the Buyer in
connection with this Agreement;
(ii) Any liability of the Company which is not an Assumed
Liability;
(iii) Any Boom Recall Costs in excess of $2,000,000;
(iv) Any liability and obligations relating to product liability
claims for the use of goods or products manufactured, sold, tested, handled
or distributed by the Company, Lull Corporation ("Lull Corp."), Lull
Engineering Co. ("Lull Engineering"), or any of their subsidiaries or
Affiliates which causes or caused, allegedly causes or caused or is deemed
to cause or have caused personal injury or property damage taking place
with respect to all injured persons and damaged property prior to the
Closing Date (including without limitation the existing litigation listed
on SCHEDULE 6.10), and, with respect to Lull Corp., Lull Engineering or any
of their subsidiaries or Affiliates, personal injury or property damage
taking place with respect to all injured persons and damaged property on or
subsequent to the Closing Date; provided, however, that, the Buyer shall
pay one-half of any insurance retention or deductible with respect to a
personal injury or property damage claim which was incurred prior to the
Company's acquisition of the Business but not reported until after the
Closing Date; and
(v) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.1 or
Section 11.2.
(b) The Buyer shall protect, defend, hold harmless and indemnify the
Sellers, their officers, directors, employees and agents, and their respective
successors and assigns from, against and in respect of any and all Losses that
may be suffered or incurred by any of them arising from or by reason of any of
the following:
(i) Any breach of any representation, warranty, covenant or
agreement made by the Buyer in this Agreement or contained in any
39
certificate executed by the Buyer and delivered to the Sellers in
connection with this Agreement;
(ii) Any failure by the Buyer to perform, pay or discharge any of
the Assumed Liabilities;
(iii) Except as otherwise provided for herein, any and all
Losses incurred in connection with the Buyer's operation of the Business
(A) occurring after the Closing Date, and (B) caused by the Buyer or by any
act or omission of a third party or parties after the Closing Date; and
(iv) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses (including without limitation,
interest, penalties, reasonable legal fees and accounting fees) incident to
the foregoing and the enforcement of the provisions of this Section 11.1.
(c) The Sellers and the Buyer shall not be responsible to each other for
any Losses arising under this Section 11.1 (except for (i) any Losses caused by
any breach of the representations and warranties set forth in Sections 6.1,
6.31, 6.34 and 7.5; (ii) any Losses arising under Section 11.1(a)(iii) and under
Section 11.1(a)(v) to the extent incurred in connection with the enforcement of
Section 11.1(a)(iii); (iii) any Losses arising under Section 11.1(a)(iv) or
under Section 11.1(a)(v) to the extent incurred in connection with Section
11.1(a)(iv); (iv) any amounts owed to the Buyer by the Company pursuant to
Section 3.3(c) in excess of the Purchase Price Escrow Fund and (v) any Losses
caused by any breach of the post-Closing covenants and agreements set forth in
Sections 11.8, 11.9, 11.10, 11.11, 11.12, 11.13, 11.14 and 11.15) unless and
until such Losses exceed $350,000, and then only to the extent of such excess.
The maximum aggregate amount which the Buyer shall be entitled to recover from
the Sellers under Article XI shall not exceed $3,500,000. The maximum aggregate
amount which the Sellers shall be entitled to recover from the Buyer under
Article XI shall not exceed $3,500,000.
(d) In the event the Buyer seeks indemnification for any Losses arising
under Section 11.1(a)(iv), the Buyer shall first seek to obtain recovery
pursuant to the applicable insurance coverage listed on SCHEDULE 7.6; provided
however this Section 11.1(d) shall in no way limit the ability of the Buyer to
seek recovery under Section 11.1(a)(iv) from the Sellers for amounts not covered
by such insurance, including any deductibles or coverage limits or limitations
thereunder.
(e) For purposes of this Section 11.1 and Section 11.2, any assertion of
fact and/or law by a third party that, if true, would constitute a breach of a
representation or warranty made by a party to this Agreement or make operational
an indemnification obligation hereunder, shall, on the date that such assertion
is made, immediately invoke that party's obligation to protect, defend, hold
harmless and indemnify the other party to this Agreement pursuant to this
Section 11.1 and Section 11.2.
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SECTION 11.2 COMPLIANCE WITH ENVIRONMENTAL REGULATORY REQUIREMENTS AND
ENVIRONMENTAL INDEMNIFICATION.
(a) Except as set forth in Section 11.2(c) hereunder, the Sellers shall be
responsible for, and shall indemnify and defend the Buyer against and save it
harmless from, against, and in respect of, and covenants not to ▇▇▇ the Buyer,
its officers, directors, shareholders and agents, and their respective
successors and assigns for, any and all Losses incurred with regard to the
matters set forth in Section 6.27 or SCHEDULE 6.27 hereof or based upon the
presence of or any release of any Hazardous Material occurring prior to the
Closing Date whether caused by any act or omission of a third party or parties
or by virtue of any condition or use of the properties owned, leased, operated
or controlled by the Company or the previous owners of the business acquired by
the Company.
(b) Except as set forth in Section 11.2(c) hereunder, the indemnification
of this Section 11.2 shall include any and all Losses relating to or arising out
of any claim, order or requirement by any Person or regulatory agency arising
out of, related to or in connection with (i) any violation or alleged violation
attributable to circumstances or events arising or occurring prior to the
Closing Date, of any federal, state, local or foreign license, permit or other
government approval, authorization, order, decree, judgment, injunction, notice,
or request for information pertaining to any environmental matter; (ii) the
generation, transport, treatment, recycling, storage or disposal of Hazardous
Material, or arrangement therefor, prior to the Closing Date, at or from any
facility owned, leased, controlled or operated by the Company or the previous
owners of the business acquired by the Company; and (iii) the disposal,
discharge, migration, emission or release of any Hazardous Material in or on any
facility owned, leased, controlled or operated by the Company or the previous
owners of the business acquired by the Company.
(c) Notwithstanding any provision in this Agreement to the contrary, the
Sellers shall not be responsible for, and shall not indemnify the Buyer against,
any and all Losses incurred in connection with Item 6 set forth on SCHEDULE 6.27
hereto.
(d) In the event that liabilities and costs result from circumstances or
events arising or occurring both before and after the Closing Date, the Sellers
shall be liable under this Section 11.2 only for those liabilities and costs
attributable to circumstances or events arising or occurring prior to the
Closing Date. If costs and liabilities are not clearly allocable to
circumstances or events arising or occurring either before or after the Closing
Date, such allocation shall be made in an equitable manner.
(e) The indemnification of this Section 11.2 shall also include any Losses
relating to or arising out of any claim of injury to employees of the Company
caused by the Company's use of asbestos in any manner provided that this
indemnification shall only be applicable to the extent such injury results from
asbestos which was present in any product or asset of the Company on or prior to
the Closing.
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SECTION 11.3 INDEMNIFICATION PROCEDURES.
All claims for indemnification under this Agreement shall be asserted and
resolved as follows:
(a) A party claiming indemnification under this Agreement (an "Indemnified
Party") shall promptly (i) notify the party from whom indemnification is sought
(the "Indemnifying Party") of any third-party claim or claims ("Third Party
Claim") asserted against the Indemnified Party which could give rise to a right
of indemnification under this Agreement and (ii) transmit to the Indemnifying
Party a written notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), an estimate of the amount of damages attributable to the
Third Party Claim, if reasonably possible, and the basis of the Indemnified
Party's request for indemnification under this Agreement.
(b) Within 30 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party (i) whether
the Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article XI with respect to such Third Party Claim and (ii) whether
the Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim. If the
Indemnifying Party does not dispute the Third Party Claim and does not dispute
the estimate of damages, and if the Indemnifying Party is the Sellers, the
Sellers shall join with the Buyer in signing a certificate to such damages and
in presenting the same to the Escrow Agent under the Escrow Agreement. In the
event either (or both) of the Indemnifying Party and the Indemnified Party elect
to defend against a Third Party Claim, the Indemnified Party shall give notice
of the same, and the estimate of the amount of damages attributable to the same,
to the Escrow Agent under the Escrow Agreement.
(c) If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party does not dispute its potential
liability to the Indemnified Party under this Article XI and that the
Indemnifying Party elects to assume the defense of the Third Party Claim, then
the Indemnifying Party shall have the right to defend, at its sole cost and
expense, such Third Party Claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 11.3. The Indemnifying Party shall have full control of such
defense and proceedings including any compromise or settlement thereof; provided
that any non-monetary aspect of any settlement shall require the consent of the
Buyer, which consent shall not be unreasonably withheld or delayed. The
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is actually entitled to
indemnification hereunder or if the Indemnifying Party assumes the defense with
respect to the Third Party Claim), to file, during the Election Period, any
motion, answer or other pleadings which the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party. If requested by the Indemnifying Party, the Indemnified Party shall, at
the sole
42
cost and expense of the Indemnifying Party, cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim which the Indemnifying
Party elects to contest. The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 11.3 and, except as permitted above,
shall bear its own costs and expenses with respect to such participation.
(d) If the Indemnifying Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to this Section 11.3, or if the Indemnifying Party elects to
defend the Indemnified Party pursuant to this Section 11.3 but fails to
diligently and promptly prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party, the Third Party Claim by all appropriate proceedings.
The Indemnified Party shall have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into, without the
Indemnifying Party's consent, which shall not be unreasonably withheld or
delayed, any compromise or settlement of such Third Party Claim. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 11.3,
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
(e) In the event an Indemnified Party should have a claim against an
Indemnifying Party hereunder which does not involve a Third Party Claim, the
Indemnified Party shall transmit to the Indemnifying Party a written notice (the
"Indemnity Notice") describing in reasonable detail the nature of the claim, an
estimate of the amount of damages attributable to such claim and the basis of
the Indemnified Party's request for indemnification under this Agreement. If
the Indemnifying Party does not dispute the Indemnity Notice, and if the
Indemnity Party is the Sellers, the Sellers shall join with the Buyer in signing
a certificate to such damages and in presenting the same to the Escrow Agent
under the Escrow Agreement. In the event that the Indemnifying Party disputes
such claim, the Indemnifying Party and the Indemnified Party shall within 30
days of the Indemnity Notice attempt to settle the same by mutual agreement. If
the dispute is not resolved within said thirty-day period, such dispute shall be
resolved by the arbitration procedure specified in Section 11.7 herein. In the
event the dispute is submitted to arbitration, the Indemnified Party shall give
notice of the same, and the amount of the disputed claim, to the Escrow Agent
under the Escrow Agreement.
(f) Payments of all amounts owing by the Indemnifying Party pursuant to
Sections 11.3(b), (c) and (d) shall be made (aa) if owed by Sellers, by the
Sellers and Buyer signing a certificate to such claims and presenting the same
to the Escrow Agent under the Escrow Agreement, or (bb) if owed by Buyer, by
Buyer making payment of the same to the Sellers, all within thirty (30) days
after the latest of (i) the settlement of the Third Party Claim, or (ii) the
expiration of the period for appeal of a final adjudication of such Third Party
Claim. Payments of all amounts owing by the Indemnifying Party pursuant to
Section 11.3(e) shall be made (aa) if owed by Sellers, by the Sellers and
43
Buyer signing a certificate to such claims and presenting the same to the Escrow
Agent under the Escrow Agreement, or (bb) if owed by Buyer, by Buyer making
payment of the same to the Sellers, all within thirty (30) days after the later
of the date of settlement by mutual agreement, or the arbitration decision.
(g) The failure to provide notice as provided in this Section 11.3 shall
not excuse any party from its continuing obligations hereunder; however, any
claim shall be reduced by the damages resulting from such party's delay or
failure to provide notice as provided in this Section 11.3.
(h) In the event the Indemnified Party provides to the Escrow Agent a
Claims Notice or an Indemnity Notice which estimates the damages grossly in
excess of the damages actually settled, adjudicated or arbitrated, as the case
may be, the Indemnifying Party may assert its expenses so incurred in a claim
against the Indemnified Party under the arbitration procedure specified in
Section 11.7 herein.
SECTION 11.4 LIMITATIONS ON BUYER'S REMEDIES.
Notwithstanding any provision in this Agreement to the contrary, (i) the
Buyer's sole and exclusive remedy for any and all Losses under this Agreement
shall be to make a claim for the same against the Escrow Amount in accordance
with the procedures set forth in this Agreement and pursuant to the terms of the
Escrow Agreement; provided however, nothing herein shall prevent the Buyer from
seeking an injunction or other non-monetary or equitable remedy from the
Arbitrator; (ii) in no event shall the Sellers be liable to indemnify the Buyer
in an aggregate amount exceeding the Escrow Amount; and (iii) except as set
forth in Section 11.5, no claims for Losses will be recognized unless the event
giving rise to such claim occurred on or before February 15, 1998 and the Buyer
has so notified the Sellers and the Escrow Agent of the existence of such claim
on or before February 15, 1998.
SECTION 11.5 SPECIAL BOOM RECALL PROVISIONS.
(a) The Buyer may make claims for indemnification against the Escrow
Amount pursuant to the terms of this Agreement and the Escrow Agreement for
Losses arising under Section 11.1(a)(iii) and under Section 11.1(a)(v) to the
extent incurred in connection with the enforcement of Section 11.1(a)(iii) until
the Second Anniversary Date.
(b) Without limiting the right of the Buyer to make claims for Losses
arising under Section 11.1(a)(iii) and under Section 11.1(a)(v) to the extent
incurred in connection with the enforcement of Section 11.1(a)(iii) and which
are incurred prior to or on the Second Anniversary Date, the Buyer may on the
Second Anniversary Date make the following claims for indemnification:
44
(i) if on the Second Anniversary Date any of the Original Boom
Recall Machines have not been repaired in accordance with the Boom Recall,
then a claim for one hundred fifty percent (150%) of the Boom Recall Costs
required for each such unrepaired Original Boom Recall Machine, based on
the average of the actual per machine Boom Recall Costs for the last ten
(10) Original Boom Recall Machines repaired in accordance with the Boom
Recall; and
(ii) if on the Second Anniversary Date any of the Original Boom
Recall Machines that have been repaired in accordance with the Boom Recall
require additional repairs in connection with the Boom Recall, or if the
Buyer reasonably anticipates such repairs will be necessary, then a claim
for (A) if such additional repairs have previously been performed on any of
the Original Boom Recall Machines, then a claim for one hundred fifty
percent (150%) of the costs for the additional repairs to each such
Original Boom Recall Machine, based on the average of the actual costs per
machine for all Original Boom Recall Machines requiring such additional
repair and (B) if such additional repair had not been previously performed
on any of the Original Boom Recall Machines, then one hundred fifty percent
(150%) of the costs reasonably anticipated by the Buyer for such additional
repairs.
(c) Upon the reasonable determination by the Buyer that it no longer
requires the use of the Boom Recall Vehicles described in EXHIBIT G for the Boom
Recall (which determination shall be made promptly after the completion of the
Boom Recall), the Buyer shall make a good faith effort to sell the Boom Recall
Vehicles for a price at or near their then fair market value. Any such sale
shall be conducted with the cooperation and assistance, if promptly given
following notice, of Badger ▇. ▇▇▇▇▇ or his designee. The proceeds from such
sale shall be distributed as follows:
(i) if proceeds from the sale are received by the Buyer prior to
the Second Anniversary Date, the funds shall be added to the Claims Amount
Escrow Fund;
(ii) if proceeds from the sale are received by the Buyer on or
subsequent to the Second Anniversary Date and there are no outstanding
claims by the Buyer for Losses arising under Section 11.1(a)(iii) or under
Section 11.1(a)(v) incurred in connection with the enforcement of Section
11.1(a)(iii) on the date such proceeds are received, the Buyer shall
disburse the funds to the Sellers' Agents; and
(iii) if proceeds from the sale are received by the Buyer on or
subsequent to the Second Anniversary Date, and if there are outstanding
claims by the Buyer for Losses arising under Section 11.1(a)(iii) or under
Section 11.1(a)(v) incurred in connection with the enforcement of Section
11.1(a)(iii), then:
45
(A) if at the time the claim(s) was made, the amount of such
claim(s) was limited by a shortfall in the funds available for such
claim(s) in the Claims Amount Escrow Fund (whether such shortfall was
caused by a previous distribution of funds or any previous claims
made), then the Buyer shall deposit that portion of the proceeds from
the sale required to fund such shortfall into the Claims Amount Escrow
Fund and shall pay the remainder of such proceeds, if any, to the
Sellers' Agents; or
(B) if at the time the claim(s) was made, the amount of such
claim(s) was not limited by funds available for such claim(s) in the
Claims Amount Escrow Fund, then the proceeds from the sale shall be
paid to the Sellers' Agents.
SECTION 11.6 SELLERS' AGENTS.
(a) The Sellers hereby designate Badger ▇. ▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. ("▇▇▇▇▇▇") as the Sellers' agents ("Sellers' Agents") for the
purposes of (i) giving and receiving Claim Notices and Indemnity Notices, (ii)
executing and delivering certificates and notices to the Escrow Agent under the
Escrow Agreement, (iii) representing the Sellers in the defense of any Third
Party Claim, and (iv) negotiating, settling and arbitrating Third Party Claims
and claims for other Losses under this Agreement. All notices to and
communications with the Sellers by the Buyer after the Closing Date shall be
made to Sellers' Agents, and all notices and communications by Sellers' Agents
to Buyer after the Closing Date on behalf of the Sellers shall be deemed to be
on behalf of all of the Sellers. Buyer shall be entitled to rely upon a
certificate, notice or communication executed by Sellers' Agents as being made
on behalf of all of the Sellers, and such certificate, notice or communication
will be binding upon all of the Sellers, as though executed by each and all of
the same.
(b) In the event either ▇▇▇▇▇ or ▇▇▇▇▇▇ dies, or becomes disabled from
serving as one of Sellers' Agents hereunder, the survivor or the non-disabled
person of the aforesaid two individuals shall serve as the sole Sellers' Agent
hereunder. If both ▇▇▇▇▇ and ▇▇▇▇▇▇ die or are disabled from serving as
Sellers' Agents hereunder, two successor Sellers' Agents will be designated by a
written notice to Buyer executed by at least six of the Sellers. Buyer shall be
entitled to rely upon such notice, and the same shall be binding on all of the
Sellers as though executed by each and all of the same.
(c) Each of the Sellers hereby individually waives any and all claims such
Sellers may now or at any time in the future have as a result of Buyer's proper
delivery hereunder of notices, certificates or communications to Sellers under
this Agreement, and/or arising out of Buyer's relying upon any notices,
certificates or communications properly made to Buyer by Sellers' Agents under
this Agreement.
46
SECTION 11.7 DISPUTE RESOLUTION BY ARBITRATION.
(a) In the event any dispute arises out of or relates to this Agreement,
or arises out of or relates to the Escrow Agreement, and is unable to be
resolved by mutual agreement of the parties hereto, including specifically, but
without limitation thereto, in the event the Sellers and the Buyer are unable to
resolve matters outstanding with regard to the Working Capital Statement
adjustments under Section 3.3, or claims for indemnification under Article XI
herein, all matters so disputed shall be submitted to one of the six largest
public accounting firms mutually acceptable to the Sellers and the Buyer, or if
the Sellers and Buyer cannot agree upon such firm within ten business days of
the date the matter or matters are to be submitted to arbitration, then all
matters so disputed shall be submitted to one of the six largest public
accounting firms selected by the presiding officer of the American Arbitration
Association in Minneapolis, Minnesota (the accounting firm so selected being
referred to herein as the "Arbitrator") for resolution in accordance with the
terms, where applicable, of this Agreement, the Escrow Agreement, and the
Principles and Procedures, and otherwise in accordance with the Rules of the
American Arbitration Association, such arbitration to take place in Minneapolis,
Minnesota.
(b) The Arbitrator shall be requested by the Sellers and the Buyer to make
its determination as soon as possible after the matter or matters in dispute are
submitted to the same, and such determination shall be final and binding upon
all of the parties hereto. All fees and disbursements of the Arbitrator shall
be paid in accordance with the decision of the Arbitrator. Any payment required
to be made as a consequence of the decision of the Arbitrator shall be made by
the party hereto then obligated to pay the same, not later than thirty days
after the receipt of such decision.
(c) The Arbitrator shall have the authority to award any remedy or relief
that a court of the State of Minnesota could order or grant, including, without
limitation, equitable remedies, rescission, or specific performance of any
obligation created under this Agreement, the issuance of an injunction, or the
imposition of sanctions for abuse or frustration of the arbitration process,
provided, however, that punitive or exemplary damages shall not be awarded by
the Arbitrator or by any court.
(d) Nothing in this Section 11.7 shall prevent the Buyer from joining or
asserting a cross-claim or third-party claim against the Sellers in connection
with a suit brought by a third party against the Buyer.
SECTION 11.8 CONFIDENTIALITY.
(a) Each party hereto and its respective accountants, attorneys, employees
and other agents, will keep confidential all information, oral and written,
obtained from any other party hereto or its affiliates and refrain from using in
any manner all information set forth above not otherwise publicly available
notwithstanding the termination of this Agreement.
47
(b) The Sellers agree that, at all times from and after the Closing Date,
they shall keep secret and retain in strictest confidence, and shall not use for
its benefit or for the benefit of others, confidential information with respect
to the Business, including, but not limited to, know-how, trade secrets,
customer lists, details of client or consultant contracts, pricing policies,
operational methods, marketing plans or strategies, product development
techniques or plans other than any of the foregoing which are in the public
domain (except through conduct of the Sellers which violate this Section 11.8)
prior to any disclosure by the Sellers.
SECTION 11.9 NONCOMPETITION. The Company agrees that for the period
commencing on the Closing Date and terminating five (5) years from the Closing
Date, it will not directly or indirectly (A) engage in the business of
manufacturing, marketing, selling or distributing products of the kind
manufactured, sold or distributed by the Business on the date of this Agreement
anywhere in the world; (B) solicit the employment of or hire any person while
such person is in the employ of the Buyer; or (C) induce or attempt to induce
any individual, business, corporation, firm, partnership or other business
entity that is a customer of supplier to the Buyer or any distributor or seller
of products of the Buyer, or that otherwise is a contracting party with the
Buyer, to terminate or otherwise adversely change or to cancel any written or
oral agreement with the Buyer; PROVIDED, that if the Company shall breach any
covenant of this Section 11.9, the periods specified in this Section 11.9 shall
be extended by the number of days during which the Company is in breach of such
covenant. The Company acknowledges that the periods of restriction, the
geographical areas of restriction and the restraints imposed by the provisions
of this Section 11.9 and Section 11.8 are fair and reasonably required for the
protection of the Buyer. In the event that any of the provisions of this
Section 11.9 relating to the geographic areas of restriction or the periods of
restriction shall be deemed to exceed the maximum area or period of time which a
court of competent jurisdiction would deem enforceable, the geographic areas and
times shall, for the purposes of this Agreement, be deemed to be the maximum
areas or time periods which a court of competent jurisdiction would deem valid
and enforceable in any state in which such court of competent jurisdiction shall
be convened. The Company agrees that any violation of the covenants contained
in this Section 11.9 and Section 11.8 is likely to cause irreparable damage to
the Buyer and may, as a matter of course, be restrained by process issued out of
a court of competent jurisdiction, in addition to any other remedies provided by
law.
SECTION 11.10 FURTHER ASSURANCES. Each party hereto shall cooperate with
the other, and execute and deliver, or cause to be executed and delivered, all
such other instruments, including instruments of conveyance, assignment and
transfer, and take all such other actions as may be reasonably requested by the
other party hereto from time to time, consistent with the terms of this
Agreement, to effectuate the purposes and provisions of this Agreement.
SECTION 11.11 ACCOUNTS RECEIVABLE. The Sellers shall furnish to the Buyer
at the Closing a detailed listing of the accounts receivable of the Company
which are included in the Purchased Assets (the "Accounts Receivable"), which
listing shall have
48
been updated within five (5) business days of the close of business on the
Closing Date. The Sellers shall provide to the Buyer any and all information
pertinent to collection of the Accounts Receivable remaining outstanding on the
Closing Date, promptly as such information shall from time to time come to the
knowledge of the Sellers. After the Closing Date, the Buyer shall have the
right and authority to collect, for the account of the Buyer, all Accounts
Receivable and to endorse with the name of the Company any checks, drafts or
other items of payment received on account of the Accounts Receivable. The
Company shall promptly transfer and deliver to the Buyer any cash, checks,
drafts, other items of payment or other property that it may receive in respect
of the Accounts Receivable after the Closing Date. The Sellers acknowledge and
agree that any such cash, checks, drafts, other items of payment or other
property, while in the possession of the Company shall be held in trust for the
Buyer until transferred and delivered to the Buyer.
SECTION 11.12 PRO-RATING OF EXPENSES. After the Closing Date, any bills
or requests for payment received by the Company or the Buyer in connection with
the Business which reflect in whole or part liabilities retained or assumed,
respectively, by the Company on the one hand, or the Buyer, on the other
(excluding any federal, state, or local income taxes), and which are not
reflected in the Working Capital Statement, shall be allocated between the
Company and the Buyer on the basis of the amount of time covered by such ▇▇▇▇ or
request that the Business was owned by the Company or by the Buyer, or as
otherwise appropriate under the terms of this Agreement; provided, however, that
neither party shall pay such ▇▇▇▇ or request for payment without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed. If one party fails to obtain such written consent, the
other party shall be released from any liability with respect to such ▇▇▇▇ or
request for payment.
SECTION 11.13 USE OF NAME. The Company agrees that, as of the Closing
Date, it will cease to use the name "Lull Industries, Inc." and any derivative
or combination thereof in connection with its business activities, it being
understood however that the Company can continue to use such name in connection
with the preparation and filing of its financial, tax and similar reports and/or
returns which relate to the Company as of the Closing Date. Immediately after
the Closing, the Company shall, at its expense, take all action required to
change the name of the Company in all jurisdictions in which it is registered or
qualified to do business.
SECTION 11.14 MAINTENANCE OF CORPORATE EXISTENCE. Until the earlier of
(i) December 31, 1996, or (ii) such time as the adjustments to the Purchase
Price, if any, are finally determined and paid pursuant to Section 3.3, the
Sellers shall (a) maintain the corporate existence and good standing of the
Company in the State of Minnesota and (b) cause the Company to retain for its
own account at least $500,000 of the proceeds received hereunder.
SECTION 11.15 SELLERS' ACCESS TO TAX INFORMATION. Buyer agrees to allow
Sellers and their authorized representatives reasonable access during normal
business hours to the financial books and records relating to the Company's
business for any
49
matter relating to any tax or tax return of the Company or of a Seller (insofar
as the Seller's tax or tax return is based on the Company's income or other tax
items), for the period ending on or prior to the Closing Date, and Buyer agrees
that it shall not dispose of such financial books and records for a period of at
least seven (7) years from the Closing Date.
ARTICLE XII
TERMINATION
SECTION 12.1 METHODS OF TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual consent of the Buyer and the Sellers;
(b) by the Buyer at any time after August 31, 1996 if any of the
conditions provided for in Article IX of this Agreement shall not have been met
prior to such date; or
(c) by the Sellers at any time after August 31, 1996 if any of the
conditions provided for in Article X of this Agreement shall not have been met
prior to such date.
SECTION 12.2 PROCEDURE UPON TERMINATION. In the event of termination by
the Buyer, the Sellers, or both, pursuant to this Article XII, written notice
thereof shall promptly be given to the other party and the obligations of the
Buyer and the Sellers under this Agreement shall, except as set forth below,
terminate without further action. Upon any such termination:
(a) each party will redeliver all documents, work papers and other
materials of the other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
(b) all information received by either party shall be held in accordance
with Section 11.8; and
(c) neither party shall have any liability or further obligation to the
other party, except for such legal and equitable rights and remedies as such
party may have under this Agreement or otherwise, by reason of any breach or
violation of this Agreement by the other party.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Buyer and the Sellers contained in this
Agreement and in any certificate executed and delivered by any of them in
connection with this Agreement, shall survive the Closing Date and shall
terminate and expire eighteen (18) months thereafter.
SECTION 13.2 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and may be delivered personally
(including by courier) or by first class registered or certified mail, postage
prepaid, addressed to the following addresses or to other such addresses as may
be furnished in writing by one party to the others:
(a) if to the Sellers:
Lull Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Badger ▇. ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇, Street and Deinard
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
(b) if to the Buyer:
c/o Uniquip Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Harbour Group Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
51
and a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esquire
Service of any such notice or other communication so made by mail shall be
deemed complete on the day of actual delivery thereof as shown by the
addressee's registry or certification receipt.
SECTION 13.3 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Minnesota, without regard
to such jurisdiction's conflicts of laws principles. The parties agree that
venue for any suit, action, proceeding or litigation arising out of or in
relation to this Agreement shall be in any federal or state court in the State
of Minnesota having subject matter jurisdiction.
SECTION 13.4 MODIFICATION; WAIVER. This Agreement shall not be altered
or otherwise amended except pursuant to an instrument in writing signed by the
Buyer and the Sellers. Either party may waive any misrepresentation by the
other party, or any breach of warranty by, or failure to perform any covenant,
obligation or agreement of, the other party, PROVIDED that mere inaction or
failure to exercise any right, remedy or option under this Agreement, or
delaying in exercising the same, will not operate as nor shall be construed as a
waiver, and no waiver will be effective unless set forth in writing and only to
the extent specifically stated therein.
SECTION 13.5 ENTIRE AGREEMENT. This Agreement, the schedules and
exhibits hereto and any other agreements or certificates delivered pursuant
hereto constitute the entire agreement of the parties hereto with respect to the
matters contemplated hereby and supersede all previous written or oral
negotiations, commitments, representations and agreements.
SECTION 13.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement may not
be assigned by the Sellers without the prior written consent of the Buyer. The
Buyer may assign this Agreement to an affiliated entity of the Buyer or any of
its lenders without the prior written consent of any other party. Subject to
Section 13.1, all covenants, representations, warranties and agreements of the
parties contained herein shall be binding upon and inure to the benefit of their
respective successors and permitted assigns. No assignment will constitute a
release of the assigning party without the other party's written consent.
SECTION 13.7 PUBLIC ANNOUNCEMENTS. No public announcement of the
transactions contemplated hereby prior to the Closing or of the terms hereof at
any time shall be made by any party without the prior written consent of the
other parties, such consent not to be unreasonably withheld or delayed, except
to the extent as may be required by law in the opinion of counsel to the Buyer
or counsel to the Sellers.
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SECTION 13.8 SEVERABILITY. The provisions of this Agreement are
severable, and in the event that any one or more provisions are deemed illegal
or unenforceable, the remaining provisions shall remain in full force and
effect.
SECTION 13.9 NO THIRD PARTY BENEFICIARY. This Agreement is intended and
agreed to be solely for the benefit of the parties hereto, and no third party
shall accrue any benefit, claim or right of any kind whatsoever pursuant to,
under, by or through this Agreement.
SECTION 13.10 EXECUTION IN COUNTERPART. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
53
WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first written above.
LULL LIFT CORPORATION
By:/s/ ▇. ▇▇▇▇▇ Stiff
-------------------------------------
Name: ▇. ▇▇▇▇▇ Stiff
Title: President and Chief
Executive Officer
LULL INDUSTRIES, INC.
By:/s/ Badger ▇. ▇▇▇▇▇
-------------------------------------
Name:
Title: President
STOCKHOLDERS:
/s/ Badger ▇. ▇▇▇▇▇
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Badger ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
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