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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
------------------------
By and Between
MONARCH LATHES, L.P.
an Ohio limited partnership
("Buyer")
and
THE MONARCH MACHINE TOOL COMPANY
an Ohio corporation
("Seller")
PURCHASE AND SALE
OF
CERTAIN ASSETS
OF ▇▇▇▇▇▇ DIVISION
JULY 16, 1997
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TABLE OF CONTENTS
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ARTICLE 1 - DEFINITIONS...............................................................................................2
ARTICLE 2 - SALE AND PURCHASE OF BUSINESS AND ASSETS..................................................................8
2.1 Business and Assets.................................................................................8
2.2 Assumption of Liabilities..........................................................................12
2.3 Purchase Price and Manner of Payment...............................................................16
2.4 Adjustment to Purchase Price.......................................................................16
2.5 Allocation of Purchase Price.......................................................................20
2.6 Prorations.........................................................................................20
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER.................................................................20
3.1 Ownership of Assets................................................................................20
3.2 Organization, Qualification, and Authority of Seller...............................................21
3.3 No Equity Interests................................................................................22
3.4 Title to Properties; Liens, Conditions of Properties...............................................22
3.5 Financial Statements...............................................................................23
3.6 Changes............................................................................................24
3.7 Absence of Undisclosed Liabilities.................................................................26
3.8 [RESERVED].........................................................................................26
3.9 Inventories........................................................................................26
3.10 Trade Names, Trademarks, and Copyrights............................................................27
3.11 Patents............................................................................................27
3.12 [RESERVED].........................................................................................28
3.13 Trade Secrets......................................................................................28
3.14 Customers and Suppliers............................................................................28
3.15 Contracts and Commitments..........................................................................29
3.16 Accounts or Trade Payable..........................................................................30
3.17 Litigation; Judgments and Consent Decrees..........................................................30
3.18 OSHA Matters.......................................................................................30
3.19 Employee Relations.................................................................................31
3.20 Employee Benefits..................................................................................32
3.21 Compliance With Law/Governmental Authorizations....................................................33
3.22 Environmental Matters..............................................................................33
3.23 [RESERVED.]........................................................................................35
3.24 Payment of Taxes...................................................................................36
3.25 Related Party Transactions.........................................................................36
3.26 Insurance..........................................................................................36
3.27 Finder's Fees......................................................................................37
3.28 Product Warranties.................................................................................37
3.29 Customer Deposits..................................................................................37
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3.30 Full Disclosure....................................................................................37
3.31 Survival...........................................................................................37
ARTICLE 4 - COVENANTS OF SELLER......................................................................................38
4.1 Conduct of Business. .............................................................................38
4.2 Breach of Representations, Warranties and Covenants................................................40
4.3 Consummation of Agreement..........................................................................41
4.4 Cooperation........................................................................................41
4.5 Regulatory Filings.................................................................................41
4.6 Injunctions........................................................................................41
4.7 Taxes..............................................................................................41
4.8 Governmental Authorization.........................................................................41
4.9 Employees of the Business..........................................................................41
4.10 Environmental Matters..............................................................................43
4.11 Use of Certain Supplies............................................................................44
4.12 Enforcement of Restrictive Covenant of Former Executive............................................45
4.13 Notification to Distributors and Sales Representatives.............................................45
4.14 Removal of Excess Lubricants and Other Materials of
Environmental Concern..............................................................................45
4.15 Closing Schedule of Accounts Payable...............................................................46
4.16 Extended Product Liability Insurance...............................................................46
4.17 Shipment by Seller of "Predator" Unit at Cortland Division.........................................46
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF BUYER..................................................................46
5.1 Organization of Buyer..............................................................................46
5.2 Authority of Buyer.................................................................................46
5.3 Finder's Fee.......................................................................................47
5.4 Litigation.........................................................................................47
5.5 Full Disclosure of Representations.................................................................47
5.6 Survival...........................................................................................47
ARTICLE 6 - COVENANTS OF BUYER.......................................................................................48
6.1 Breach of Representations, Warranties and Covenants................................................48
6.2 Consummation of Agreement..........................................................................48
6.3 Cooperation........................................................................................48
6.4 Regulatory Filings.................................................................................48
6.5 Injunctions........................................................................................48
6.6 Maintenance of Books and Records...................................................................49
ARTICLE 7 - FURTHER AGREEMENTS AND UNDERSTANDINGS ...................................................................49
7.1 Assistance in Collection of Seller's Receivable Upon Seller's Request..............................49
7.2 No Assumption of Plan Liabilities. ...............................................................50
ARTICLE 8 - CONDITIONS TO OBLIGATIONS OF BUYER.......................................................................50
8.1 Representations; Warranties; Covenants.............................................................50
8.2 Opinion of Seller's Counsel........................................................................51
8.3 Proceedings, Documents, Instruments Satisfactory to Buyer..........................................51
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8.4 No Damage or Destruction to Fixed Assets; No Material Changes......................................51
8.5 No Material Adverse Change.........................................................................51
8.6 Officers' Certificate..............................................................................51
8.7 Consents...........................................................................................52
8.8 No Actions, Suits or Proceedings...................................................................52
8.9 [RESERVED.]........................................................................................52
8.10 Non-Competition Agreement..........................................................................52
8.11 ▇▇▇▇▇▇ Lease.......................................................................................53
8.12 [RESERVED.]........................................................................................53
8.13 Royalty Agreement..................................................................................53
8.14 Landlord's Waiver..................................................................................53
8.15 UCC-1 Financing Statements from Third Parties in Possession of Assets..............................53
8.16 Due Diligence......................................................................................53
ARTICLE 9 - CONDITIONS TO OBLIGATIONS OF SELLER......................................................................53
9.1 Representations, Warranties, Covenants.............................................................53
9.2 Opinion of Buyer's Counsel.........................................................................54
9.3 Proceedings, Documents, Instruments Satisfactory to Seller.........................................54
ARTICLE 10 - INDEMNIFICATION.........................................................................................54
10.1 Indemnification by Seller..........................................................................54
10.2 Indemnification by Buyer...........................................................................54
10.3 Procedures.........................................................................................55
ARTICLE 11 - TERMINATION.............................................................................................56
11.1 Termination of Agreement. ........................................................................56
11.2 Right to Proceed...................................................................................57
11.3 Confidentiality of Information and Documents.......................................................57
ARTICLE 12 - CLOSING OF TRANSACTION..................................................................................57
12.1 Closing............................................................................................57
12.2 Closing Certificate................................................................................58
12.3 Risk of Loss. ....................................................................................58
ARTICLE 13 - MISCELLANEOUS...........................................................................................58
13.1 Binding Effect.....................................................................................58
13.2 Recitals; Schedules and Exhibits...................................................................58
13.3 Governing Law......................................................................................58
13.4 Notices............................................................................................58
13.5 Further Assurances.................................................................................59
13.6 Entire Agreement...................................................................................59
13.7 Waivers............................................................................................59
13.8 Headings...........................................................................................60
13.9 Severability.......................................................................................60
13.10 Counterparts.......................................................................................60
13.11 Public Announcements; Non-Disclosure...............................................................60
13.12 Costs and Expenses.................................................................................60
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13.13 Time of the Essence................................................................................60
13.14 Arbitration........................................................................................60
13.15 No Third Party Beneficiaries.......................................................................61
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LIST OF EXHIBITS
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EXHIBIT DESCRIPTION
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"A" Form of Non Competition Agreement
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"B" List of Products
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"C" Form of Royalty Agreement
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"D" Form of Shared Services Agreement
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"E" Form of ▇▇▇▇▇▇ Lease
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"F" Form of Assumption Agreement
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"G" Form of General Assignment and ▇▇▇▇ of Sale
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"H" [Reserved]
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"I" Estimated Closing Statement
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"J" Inventory Valuation/Verification Procedures
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"K" Legal Opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇, L.L.C.
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"L" Legal Opinion of Kahn, Kleinman, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Co., L.P.A.
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"M" Form of Closing Certificate
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PARTS TO DISCLOSURE STATEMENT
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PART DESCRIPTION
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1.4 Monarch ▇▇▇▇▇▇ Backlog Report
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2.1A(v) Fixed Asset Ledger
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2.1A(ix) Non-Compete/Confidentiality Agreements
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2.1C(ix) Excluded Personal Property
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3.2A Permits and Licenses
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3.2C List of Consents, Approvals and Authorizations Required by Seller
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3.4A Real Property Leases (Facilities [▇▇▇▇▇▇ Facility])
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3.5A Financial Statements for the years ended December 31, 1994, 1995 and 1996
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3.5B ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ Balance Sheet
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3.5C June 30, 1997 Interim Balance Sheet
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3.6 Material Changes
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3.9 Schedule of Inventory
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3.9B Consignment and other Off-Site Inventory
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3.10B Schedule of Trademarks, Service marks, Trade Names, Brand Names,
Copyrights and Franchises
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3.11A Schedule of Patents, Inventions, Industrial Model Designs and Applications for
Patents
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3.11B Exclusive Use of Patents; Exceptions
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3.14A Customer List
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3.14B Supplier List
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3.15 Contracts and Commitments
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3.15A(i) Outstanding Customer Sales Orders
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3.15B Outstanding Customer Purchase Orders
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3.15C Personal Property Leases and Other Contracts and Commitments
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3.19C Grievances/Claims
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PART DESCRIPTION
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3.19F List of Employees
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3.20A Schedule of Employee Benefit Plans
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3.22A Environmental Disclosure Schedule
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3.22B Environmental Claims
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3.22C Absence of Events or Conditions (regarding Environmental Matters)
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3.26A Schedule of Insurance Policies and Arrangements
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3.26C Schedule of Self-Insurance Policies and Arrangements
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3.28 Product and Service Warranties
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3.29 Customer Deposits
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4.15 Closing Schedule of Accounts Payable
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5.2C Consents, Approvals and Authorization Required by Buyer
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7.1B Schedule of Seller's Receivables
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ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT made and entered into July 16, 1997, by and between
MONARCH LATHES, L.P. ("Buyer"), an Ohio limited partnership of which ▇▇▇▇▇
Precision, Inc., an Ohio corporation, is the sole general partner (the "General
Partner"), and THE MONARCH MACHINE TOOL COMPANY, an Ohio corporation ("Seller"),
is to evidence the following agreements and understandings:
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the ▇▇▇▇▇▇ Division of Seller ("▇▇▇▇▇▇" or the "Division") is
engaged in the Business (defined in Section 1.6 below) at facilities located at
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ (the "▇▇▇▇▇▇ Facility");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain
properties, rights and assets owned by Seller and used in the Business (the
"Assets", as more particularly identified in Section 2.1 below), and in
connection therewith, Buyer has agreed to assume only those specified
liabilities of Seller delineated herein, upon the terms and conditions
hereinafter set forth; and
WHEREAS, to induce Buyer to purchase the Assets, Seller will enter into
a Non-Competition Agreement (defined in Section 1.39 below) and a Royalty
Agreement (defined in Section 1.49 below).
NOW, THEREFORE, in exchange for the mutual promises contained herein
and for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
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ARTICLE 1
DEFINITIONS
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In addition to those terms defined elsewhere in this Agreement, the
following terms shall have the definitions set forth below:
1.1 "AFFILIATE" when used with respect to Seller includes, but is not limited
to: (i) any corporation, partnership, trust, limited liability company or other
entity (whether or not incorporated), directly or indirectly, through one or
more intermediaries, controlled by, or under common control with, Seller; (ii)
any officer, director or executive employee of Seller, or his spouse or child;
(iii) any person who is a member in any relationship or similar form of
unincorporated business association with any person or entity referred to above;
and (iv) any entity required to be aggregated with any entity referred to above
under Code Section 414.
1.2 "ASSETS" shall have the meaning set forth in Section 2.1A.
1.3 "ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.2B.
1.4 "BACKLOG REPORT" means the report, captioned "Monarch ▇▇▇▇▇▇ Backlog, June
30, 1997", attached hereto at PART 1.4 to the Disclosure Schedule.
1.5 "▇▇▇▇▇ DIVISION" means the business division of Seller engaged in the
design and manufacture of paper converting equipment, a portion of such
operations being conducted at the ▇▇▇▇▇▇ Facility.
1.6 "BUSINESS" means (i) the manufacture, modification and redesign, marketing,
distribution or sale of the Products (defined in Section 1.44 below); (ii) the
manufacture, modification and redesign, marketing, distribution or sale of
parts, components, sub-assemblies or accessories for the Products; and (iii) the
service, repair, reconditioning and rebuilding of the Products.
1.7 "BUYER'S PRODUCT LIABILITY OBLIGATIONS" means any claims for product
liability (whether for bodily injury or death or property loss or damage or
otherwise) in respect of the Business arising from any Products shipped by Buyer
at any time after the Effective Time.
1.8 "CASH PORTION OF THE PURCHASE PRICE" shall have the meaning set forth in
Section 2.3.
1.9 "CLOSING DATE" means the date described in Section 12.1 hereof.
1.10 "COBRA" means the Consolidated Omnibus Budget Reconciliation Act.
1.11 "CODE" means the Internal Revenue Code of 1986 and any amendments,
predecessor laws, or successor laws.
1.12 "CONFIDENTIAL INFORMATION" means all proprietary or confidential
information of any type, kind or character used or held for use in connection
with the Business, including Trade Secrets (defined below), but expressly
excludes information which: (i) is or becomes generally available to the public
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other than as a result of disclosure by Buyer; (ii) was available to Buyer on a
non-confidential basis prior to its disclosure by Seller or its representatives;
(iii) becomes available to Buyer on a non-confidential basis from a person other
than Seller who is not otherwise bound by a confidentiality agreement with
Seller or is otherwise not prohibited from transmitting the information to
Buyer; or (iv) is information now used by Seller in the conduct of the business
of its other operating divisions and subsidiaries.
1.13 "CONTRACTS" means all purchase and sale orders, commitments, outstanding
quotations, and contracts, all personal property lease agreements, and all
warehouse agreements, license agreements, distributor agreements, sales
representative agreements and service and maintenance contracts incurred in the
ordinary course of business of the Business by Seller and identified on PART
3.15C of the Disclosure Schedule (defined in Section 1.14 below) and such of
those Contracts that, due to their size or term, are not required to be listed
on PART 3.15C of the Disclosure Schedule.
1.14 "DISCLOSURE SCHEDULE" means the schedule referenced from time to time
throughout this Agreement to its various Parts, all of which are incorporated
herein by reference in their entirety. The Disclosure Schedule has been
initialed and delivered by Seller to Buyer, and initialed and accepted by Buyer,
on the date this Agreement is executed and is referred to throughout this
Agreement in respect of the particular items thereof and is incorporated herein
by reference in its entirety. Disclosure of an item in any Part of the
Disclosure Schedule corresponding to a particular section of this Agreement
shall, should the existence of the item or its contents be relative to any other
section, be deemed to be disclosed in that other section (or the part of the
Disclosure Schedule to which such relates), PROVIDED that an explicit
cross-reference appears.
1.15 "EFFECTIVE TIME" means 11:59 p.m. on the Closing Date.
1.16 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any amendments, predecessor laws, or successor laws.
1.17 "ESTIMATED CLOSING STATEMENT" shall have the meaning set forth in Section
2.4A.
1.18 "EXCLUDED ASSETS" shall have the meaning set forth in Section 2.1C.
1.19 "EXCLUDED PERSONAL PROPERTY"shall have the meaning set forth in Section
2.2C(ix).
1.20 "FACILITIES" or "SELLER'S FACILITIES" shall mean, collectively, the ▇▇▇▇▇▇
Facility and the warehouse facilities listed in PART 3.4A of the Disclosure
Schedule.
1.21 "FIXED ASSETS" shall have the meaning set forth in Section 2.1A(v).
1.22 "FINAL CLOSING STATEMENT" shall have the meaning set forth in Section 2.4B.
1.23 "1996 FINANCIAL STATEMENTS" means the pro forma balance sheet of the
Business as of December 31, 1996 and the operating income statement of the
Business for the year ended December 31, 1996 prepared by Seller in accordance
with the Business' historical accounting practices consistently applied,
utilizing GAAP valuations for all items reported unless otherwise noted thereon.
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1.24 "1995 FINANCIAL STATEMENTS" means the pro forma consolidated balance sheet
of the Business as of December 31, 1995 and the operating income statement for
the year ended December 31, 1995 prepared by Seller in accordance with the
Business' historical accounting practices consistently applied, utilizing GAAP
valuations for all items reported unless otherwise specifically noted thereon.
1.25 "1994 FINANCIAL STATEMENTS" means the balance sheet of the Business as of
December 31, 1994 and the operating income statement of the Business for the
year ended December 31, 1994 as prepared by Seller in accordance with the
Business' historical accounting practices consistently applied, utilizing GAAP
valuations for all items reported unless otherwise specifically noted thereon.
1.26 "GAAP" means generally accepted accounting principles, consistently
applied.
1.27 "GOVERNMENTAL AUTHORIZATIONS" shall have the meaning set forth in Section
2.1A(xiii).
1.28 "HOLDBACK AMOUNT" means the sum of $250,000, to be paid or retained by
Buyer pursuant to the provisions of Section 2.4.
1.29 "INJUNCTION" means any injunction, decree or similar order which prohibits
the consummation of the transaction contemplated by this Agreement.
1.30 "INTELLECTUAL PROPERTY" means all Trade Secrets, patents, patent
applications as well as all reissues, divisionals, continuations and
continuation-in-part applications and any patents issuing thereon, all license
agreements and other agreements which relate to inventions and discoveries and
any patent applications and patents thereon, as well as improvements therein
which are owned, licensed, used or held for use by Seller in respect of the
Business; all trade names, trademarks, logos and service marks (whether domestic
or foreign, registered or unregistered) together with all applications,
registration certificates, renewals, investigations, search reports, histories
and other documents or files pertaining thereto; and all copyrights (registered
or unregistered), licensed or owned by Seller and used in the Business except
for the ▇▇▇▇ "MONARCH" or any derivation thereof, the use of which by Buyer
shall be governed by the provisions of Section 2.1A(x), PROVIDED, HOWEVER, that
to the extent any Intellectual Property is used primarily in respect of the
Business but is also used by Seller's other operating divisions and/or
subsidiaries, Buyer is acquiring such Intellectual Property and hereby grants
Seller a non-exclusive license to use such Intellectual Property coextensively
with Buyer; PROVIDED, FURTHER, that to the extent any Intellectual Property is
used primarily by Seller's other operating divisions and/or subsidiaries but is
also used in respect of the Business, Seller is retaining such Intellectual
Property and hereby grants Buyer a non-exclusive license to use such
Intellectual Property coextensively with Seller.
1.31 "INVENTORY" shall have the meaning set forth in Section 2.1A(iii).
1.32 "INVENTORY RESERVE" means the sum of $22,893,975, consisting of a LIFO
reserve of $9,825,696, and a FIFO (inventory valuation) reserve of $13,068,279,
each as set forth in the March 31, 1997 Interim Financial Statement.
1.33 "INVENTORY VALUATION/VERIFICATION PROCEDURES" shall have the meaning
set forth in Section 2.4C.
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1.34 "JUNE 30, 1997 FINANCIAL STATEMENTS" means, collectively: (i) the unaudited
balance sheet of the Business as of June 30, 1997, as prepared by Seller; and
(ii) Statement of Income and Expense by Product Line.
1.35 "KNOWN TO SELLER" or "TO SELLER'S KNOWLEDGE" with respect to
representations and warranties made by Seller, means information known, or which
should be known assuming reasonable investigation, to any of the following:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, Plant Manager, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Director of Human Resources,
and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Director of Engineering.
1.36 "LIENS" means any mortgages, security interests, pledges, equities, liens,
charges, covenants, restrictions, conditional sales agreements, or other
encumbrances of title.
1.37 "MARCH 31, 1997 FINANCIAL STATEMENTS" means, collectively: (i) the
unaudited balance sheet of the Business as of March 31, 1997, as prepared by
Seller; and (ii) Statement of Income and Expense by Product Line.
1.38 "MINSTER LEASE" means a Lease dated April 1, 1995 by and between Seller, as
landlord, and The Minster Machine Company, as tenant, with respect to
approximately 3,000 square feet at the ▇▇▇▇▇▇ Facility.
1.39 "NON-COMPETITION AGREEMENT" means the Non-Competition Agreement to be
executed by Seller and delivered to Buyer at Closing in the form attached hereto
as EXHIBIT "A".
1.40 "PLAN" or "PLANS" means each single-employer and multi-employer pension,
profit-sharing, flexible benefit, fringe benefit, tax-sheltered annuity,
accident , savings, sick pay, medical reimbursement, workers compensation,
supplemental unemployment, salary continuation, holiday, sick leave, cafeteria,
medical reimbursement, 401(k), retirement, deferred compensation, stock option,
stock purchase, stay or retention contract, incentive, vacation,
hospitalization, medical, disability, accident or life insurance, severance,
termination, bonus or other employee benefit plan, contract, agreement, policy,
arrangement, or understanding, whether or not covered by ERISA, whether written
or oral, qualified or nonqualified, and whether or not in effect as of the
Closing Date, and any trust, custody, escrow, or other agreement related
thereto, of Seller or any of Seller's Affiliates for the benefit of any of the
present or former Division employees or their dependents or in which any such
employees, or their dependents have a right to participate. The Plans include ,
but are not limited to: (i) The Monarch Machine Tool Company Retirement Savings
Plan; (ii) The Monarch Machine Tool Company Pension Plan A; (iii) The Monarch
Machine Tool Company Pension Plan B; and (iv) The Monarch Machine Tool Company
Pension Plan C; (v) the 1997 Short-Term Management Plan; (vi) the 1984
Restricted Stock Bonus Plan; and (vii) the 1994 Employees Stock Option Plan.
1.41 "PBGC" means the Pension Benefit Guarantee Corporation.
1.42 "PRIME RATE" shall have the meaning set forth in Section 2.4G.
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1.43 "PROHIBITED TRANSACTION" has the meaning set forth in Section 406 of ERISA
or Section 4975 of the Code.
1.44 "PRODUCTS" (or "PRODUCT", if singular) means: (i) any and all metal cutting
turning machines commonly referred to as lathes, that are now or at any time
have been manufactured, rebuilt, reconditioned, repaired, serviced or sold by
the Business or offered for sale by the Business, such Products to include,
without limitation, all of the items listed on EXHIBIT "B" which items comprise
the models of lathes offered by the Business since January 1, 1996; (ii) any
parts, components, sub-assemblies or accessories for any of the machines listed
on EXHIBIT "B" or any other Products described in clause (i) of this Section
1.44; (iii) any improvements or modifications to any of the Products described
in EXHIBIT "B" or any other Products described in clause (i) of this Section
1.44; and (iv) any extension or modification of any Product line currently
manufactured or offered for sale by the Business.
1.45 "PURCHASE PRICE" shall have the meaning set forth in Section 2.3A.
1.46 "PURCHASE PRICE PAYMENT SCHEDULE" shall have the meaning set forth in
Section 2.4A.
1.47 "REAL PROPERTY" means the real property located at ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇.
1.48 "RELATED DOCUMENT" means the Disclosure Schedule, the Exhibits to this
Agreement and any and all agreements, documents, certificates and other
instruments required to be executed pursuant to this Agreement.
1.49 "ROYALTY AGREEMENT" means the agreement with respect to the Royalty
Inventory, in substantially the form attached hereto as EXHIBIT "C".
1.50 "ROYALTY INVENTORY" means such of the inventory of the Business having an
aggregate book value of $1,800,000 as Buyer, in its sole discretion, designates
in writing on or within fifteen (15) days following the Closing Date as Royalty
Inventory.
1.51 "SCHEDULE OF INVENTORY" shall have the meaning set forth in Section 3.9A.
1.52 "SCHEDULE OF RECEIVABLES" shall have the meaning set forth in Section 7.1B.
1.53 "SELECTED ACCOUNTING FIRM" shall have the meaning set forth in Section
2.4E.
1.54 "SELLER'S PRODUCT LIABILITY OBLIGATIONS" means any claims for product
liability, including, but not limited to, claims for bodily injury or death or
property loss or damage, in respect of the Business arising from any Products
shipped by Seller at any time prior to the Effective Time.
1.55 "SELLER'S RECEIVABLES" mean all accounts, drafts and notes receivable of
the Business, regardless of their origin, as of the Effective Time.
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1.56 "SELLER'S WARRANTY CLAIMS" means all warranty or similar claims of Seller
in respect of the Business, whether implied, express or otherwise, or refunds
against suppliers of goods or services.
1.57 "SHARED SERVICES AGREEMENT" means an agreement, the form of which is
attached hereto as EXHIBIT "D".
1.58 "▇▇▇▇▇▇ FACILITY" shall have the meaning set forth in the recitals to this
Agreement.
1.59 "▇▇▇▇▇▇ LEASE" means the Lease, the form of which is attached hereto as
EXHIBIT "E" pursuant to which Buyer shall lease the ▇▇▇▇▇▇ Facility from Seller.
1.60 "TRADE SECRETS" means all processes, testing procedures, devices, formulae,
computer software, computer programs and data bases, drawings, blueprints,
sketches, records, development data and reports, engineering data and reports,
plant designs, quality control specifications, cost analysis, flow charts,
process sheets, "know how", memoranda, customer lists, supplier lists, or other
confidential information relating to technical matters, and information relating
to sales, financial structure, pricing and marketing data, personnel data, and
other information of like nature; PROVIDED, HOWEVER, that nothing contained in
this Agreement shall limit, diminish or affect in any way the right of Seller to
use and/or retain copies of any Trade Secrets to the extent such Trade Secrets
are also used in the conduct of the business of Seller's other operating
divisions and subsidiaries.
1.61 "UNION AGREEMENT" means the collective bargaining agreement dated December
8, 1995 entered into by and between Seller and the International Association of
Machinists and Aerospace Workers (AFL-CIO) Local Lodge 996 (the "Union").
1.62 "WARN" means the Worker Adjustment Retraining Notification Act of 1988.
1.63 "WARN NOTICE" means the notice of Seller, dated June 18, 1997, given
pursuant to WARN.
ARTICLE 2
SALE AND PURCHASE OF BUSINESS AND ASSETS
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2.1 BUSINESS AND ASSETS.
--------------------
1. ASSETS TO BE ACQUIRED. Subject to the terms and conditions of this
Agreement, Seller agrees to sell, convey, transfer, assign, and deliver to
Buyer, and Buyer agrees to purchase from Seller, free and clear of all Liens,
all of the business, rights, properties and assets of Seller used in or
primarily relating to the Business and all other assets of Seller located at the
▇▇▇▇▇▇ Facility (other than the Excluded Assets identified in Section 2.1C
below), of every kind, character, and description, recorded and unrecorded,
whether tangible, intangible, personal, or mixed and wherever located, as the
same shall exist at the Effective Time, including, without limitation, all of
the assets described below (collectively, the "Assets"):
(1) All assets of the Business as reflected in the March 31, 1997
Interim Financial Statements; all assets acquired by the Business
in the ordinary course of business
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on or after March 31, 1997 through the Closing Date and all other
property and rights listed as assets of the Business in the
Disclosure Schedule and Exhibits to this Agreement, except: (a)
inventory or other assets disposed of in the ordinary course of
business; (b) Fixed Assets disposed of since March 31, 1997 as
specifically described in PART 3.6 of the Disclosure Schedule; or
(c) assets otherwise specifically excluded by this Agreement;
(2) All manufacturer and supplier rebates in respect of the Business
which relate to the Assumed Liabilities;
(3) All inventory, including, but not limited to, raw materials,
replacement, spare or component parts, related accessories,
work-in-process and finished goods on hand, in transit or in
storage, together with packaging and labeling material,
catalogues, and sales literature (collectively, the "Inventory");
(4) Furniture, office equipment, and computer hardware at the ▇▇▇▇▇▇
Facility;
(5) Machinery, equipment, tools, spare parts, patterns, maintenance
parts, manufacturing supplies, vehicles and rolling stock of the
Business (but expressly excluding automobiles), those cranes and
compressors listed in the Fixed Asset Ledgers dated December 31,
1996 (a copy of which is attached to the Disclosure Schedule at
PART 2.1A(V) and which Seller represents and warrants is a
complete and accurate listing of all Fixed Assets as of June 30,
1997, but for accumulated depreciation from and after January 1,
1997), wherever located, as well as any rights to tooling or
patterns in the possession of Seller which are owned by the
customer and are supplied to the customer by Seller and any other
asset described in the "Fixed Asset Ledger" (collectively, the
"Fixed Assets");
(6) All of Seller's Warranty Claims;
(7) the Intellectual Property and the Trade Secrets;
(8) All books, accounts, and records relating to the Business,
including, without limitation, all files, correspondence, credit
and sales records, warranty records, customer lists, supplier
lists, import and export records, product service records,
operating manuals, equipment and parts lists (with related
descriptions and instructions), employment records of employees
of the Business who accept employment with Buyer, product
packaging instructions, product specifications, sources and
specifications for raw materials, toxicity and general health and
safety information, environmental compliance and regulatory
information, research and development records and reports and all
other records (except the Articles of Incorporation, original
minute books, corporate seal, original stock books, tax returns
and other original corporate records of Seller directly
pertaining to its corporate existence and all records relating to
any assets related to the Business retained by the Seller or
primarily relating to the businesses of Seller other than the
Business);
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(9) Except as set forth in Section 4.12, all rights of Seller with
respect to all restrictions on competition and obligations
regarding confidentiality imposed on third parties and present
and former owners or employees of the Business, each of which
rights are transferable except as otherwise disclosed in PART
2.1A(IX) of the Disclosure Schedule (and, to the extent a portion
of such rights are non-transferable, then to the fullest extent
the same may be transferred);
(10) A royalty-free license for the exclusive, perpetual use by Buyer
of the name "Monarch" but only in conjunction with the words
"Lathe" or "Lathes" and in connection with both: (a) the Business
as presently conducted by Seller, and (b) to the extent
reasonably related to the lathe business, as may be hereafter
conducted by Buyer or its assigns or any successor to the
Business, PROVIDED, HOWEVER, that Buyer shall have no right to
use the "Monarch" ▇▇▇▇ in connection with any business whatsoever
other than the lathe business;
(11) The telephone numbers (including toll-free 800 numbers), and post
office boxes used by the Business, each to the extent
transferrable;
(12) All of Seller's rights under such contracts, leases and
commitments of Seller relating exclusively or primarily to the
Business as Buyer assumes pursuant to Section 2.2B hereof and
which rights shall be assigned to Buyer pursuant to an Assumption
Agreement in substantially the form attached hereto as EXHIBIT
"F"; and
(13) All of Seller's governmental and regulatory permits, licenses,
franchises, certifications, variances, authorizations,
registrations, approvals and applications therefor in respect of
the Business, each to the extent transferable ("Governmental
Authorizations").
B. CONVEYANCE OF ASSETS. The Assets shall be conveyed to Buyer by
execution and delivery of a General Assignment and ▇▇▇▇ of Sale in substantially
the form attached hereto as EXHIBIT "G" and such other instruments of conveyance
as Buyer reasonably deems necessary or appropriate to transfer the Assets as
contemplated herein.
C. EXCLUDED ASSETS. Notwithstanding anything in this Agreement or a
Related Document to the contrary, Seller is not selling, and Buyer is not
purchasing, the following assets (collectively, the "Excluded Assets");
(1) cash, bank accounts, deposits and securities, and cash
equivalents;
(2) Seller's Receivables;
(3) rights, claims and causes of action regarding Contracts of Seller
not expressly assumed by Buyer pursuant to this Agreement;
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(4) any and all claims for refunds, carrybacks or carryforwards in
connection with foreign, federal, state or local income taxes (or
similar taxes based upon the income of ▇▇▇▇▇▇) for tax periods
ending on or prior to the Effective Time (including prepaid and
deferred taxes, if any);
(5) any real property owned by Seller, including the Real Property,
the building and other structures located thereon, and all
improvements, including items which are considered "fixtures" to
real property under Ohio law, but expressly excluding the cranes
and compressors described in the Fixed Asset Ledger;
(6) any automobiles;
(7) all right or assets in connection with any Plan of Seller, or
under the trust, escrow or custody agreement related to such
Plan;
(8) all interest in and rights under insurance contracts and policies
and claims thereunder and all credits or refunds under Seller's
insurance policies and any return of premium resulting from
cancellation of any such policies;
(9) those items of tangible personal property specifically identified
in PART 2.1C(IX) of the Disclosure Schedule (the "Excluded
Personal Property");
(10) litigation claims and benefits to the extent they arise therefrom
(other than Seller's Warranty Claims);
(11) any books and records of the Business which are specifically
excluded pursuant to other sections of this Agreement;
(12) all software programs, other than software programs that are
utilized primarily by the Business, subject, however, to any
rights of usage granted in favor of Buyer pursuant to the Shared
Services Agreement;
(13) except for the limited rights conferred in Buyer as set forth in
Section 2.1A(xi), and subject to the terms and conditions
described therein, all of Seller's right, title and interest in
and to the name "Monarch";
(14) prepaid expenses relating to the Business, including, but not
limited to security deposits, utility deposits, and insurance;
and
(15) all rights of Seller under this Agreement, including the proceeds
of sale and other payments to Seller contemplated under this
Agreement.
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2.2 ASSUMPTION OF LIABILITIES.
1. IN GENERAL. Buyer is not purchasing, assuming, or accepting any debts,
liabilities or obligations whatsoever of Seller, contingent or non-contingent,
liquidated or unliquidated, asserted or unasserted, all of which remain the
debts, liabilities, and obligations of Seller except as specifically provided in
Section 2.2B hereof.
2. ASSUMED LIABILITIES. At the Effective Time, Buyer will assume only the
following liabilities and obligations of Seller existing as of the Effective
Time which primarily relate to or arise out of, the Business (collectively, the
"Assumed Liabilities"):
(1) Obligations under Contracts identified on PART 3.15B of the
Disclosure Schedule or which arise in the ordinary course of
business of the Business after the date of this Agreement (to the
extent the same remain unfulfilled on the Closing Date), except
for those Contracts identified with an asterisk (*) on PART 3.15A
of the Disclosure Schedule;
(2) Subject to this subsection, all Contracts accepted or incurred by
the Business to customers in the ordinary course of business
identified on PART 3.15A of the Disclosure Schedule (to the
extent the same remain unfulfilled on the Closing Date), except
for those Contracts identified with an asterisk (*) on PART 3.15B
of the Disclosure Schedule;
(3) The Contracts listed on PART 3.15C of the Disclosure Schedule,
except for: (a) those Contracts which Buyer identifies with an
asterisk (*) on PART 3.15C of the Disclosure Schedule prior to
the Closing Date; (b) the Union Agreement; and (c) Seller's
agreements with its distributors and sales representatives;
(4) All trade payables and other current liabilities identified and
recorded in the Final Closing Statement;
(5) The liability for customer deposits and advance payments
reflected on PART 3.29 of the Disclosure Schedule and as may be
reflected on the Final Closing Statement;
(6) Buyer's Product Liability Obligations; and
(7) Any and all liabilities, obligations and commitments specifically
assumed by Buyer pursuant to other provisions of this Agreement.
Buyer shall pay and discharge the Assumed Liabilities as the same become
due and payable unless Buyer and such other person have agreed to different
terms, but nothing herein shall prevent Buyer from contesting in good faith any
of the Assumed Liabilities, provided such contest is based on an actual or
threatened breach or default in the creditor', vendor's, customer's or other
person's performance which give rise to the Assumed Liability.
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Each party agrees to be responsible for fifty percent (50%) of the transfer
taxes, if any, arising in connection with the sale of the Assets or the
consummation of the transactions contemplated by this Agreement (other than
taxes in respect of the income of Seller, which shall be the sole responsibility
of Seller).
3. UNASSUMED LIABILITIES. Seller shall remain liable for or in respect of
any debts, liabilities and obligations of the Business not specified in Section
2.2B (collectively, the "Unassumed Liabilities"). Notwithstanding anything in
Section 2.2B to the contrary (but subject to Section 2.2C(xiii)) and without
limiting the generality of the preceding sentence, Buyer is not assuming any the
following obligations of Seller:
(1) Any debt, liability or obligation of Seller to taxing or other
governmental authorities for any foreign or domestic, federal,
state or local taxes, and any taxes based upon the income of the
Business or otherwise for periods ending on, prior to, or after
the Effective Time except to the extent that Buyer is obligated
for (a) real estate taxes under the ▇▇▇▇▇▇ Lease and (b) Ohio
personal property taxes to the extent prorated to reflect Buyer's
ownership of the Assets from and after the Effective Time;
(2) Any taxes, including, but not limited to, taxes in respect of the
income of Seller, other than transfer taxes, if any, arising out
of the sale and transfer of the Assets (which shall be borne
equally by the parties).
(3) Warranty obligations of Seller with respect to the Products as
customers of the Business may request in connection with express
written warranties made by Seller to purchasers of Products
shipped prior to the Effective Time, pursuant to the form of
warranty attached to Part 3.28 of the Disclosure Schedule, or
pursuant to any other written warranty or pursuant to implied
warranty claims or other contractual or quasi-contractual claims
for repair or service. Such warranty obligations include, but are
not limited to, the Product warranty obligations described in
PART 3.2B of the Disclosure Schedule (the "Disclosed Unexpired
Product Warranties");
(4) Seller's Product Liability Obligations;
(5) Any Contracts which are either: (a) identified with an asterisk
(*) in PART 3.15 of the Disclosure Schedule; (b) required to be
disclosed in PART 3.15 of the Disclosure Schedule and which have
not been disclosed thereon; or (c) otherwise described or
provided for in this Agreement, or in any Related Document, as
Unassumed Liabilities;
(6) Any liability for or obligation to provide salary, accrued
vacation or holiday pay, sick pay, profit sharing or bonuses,
severance or termination pay, retirement benefits, health
insurance, workers' compensation or other benefits arising out of
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or accrued with respect to the employment of any person by Seller
prior to the Effective Time;
(7) Any debt, liability, cost, contribution, or obligation of Seller
under or in respect of any Plan, whether or not imposed prior to
the Closing Date, including but not limited to, excise taxes,
interest, and penalties attributable to events occurring prior to
the Effective Time, whether to current or former employees,
retired employees, eligible participants, alternative payees
under any Qualified Domestic Relations Order as defined in
Section 206 of ERISA or Section 414(p) of the Code, or the
beneficiaries of any such party or parties, or to the Internal
Revenue Service, Department of Labor, PBGC or other government
agency, to any multi-employer plan or fund or to any other party,
and Buyer shall not be a successor employer under any such Plan;
(8) Any debt, liability, or obligation of Seller to any of the
officers or employees of the Business arising out of the
transactions contemplated hereby, including, but not limited to,
any incentive compensation or bonus payments due or to become due
with respect to the sale of the Assets or any similar payments
including severance obligations to employees of Seller;
(9) The Union Agreement;
(10) Any insurance premiums or other costs of insurance or any
post-retirement medical benefits including, but not limited to,
amounts payable to any former employees of the Business;
(11) Any brokerage fee, finder's fee or similar obligation of Seller
or any Affiliate of Seller to any person or entity in connection
with this transaction (including, but not limited to, ▇▇▇▇▇▇
Bros.);
(12) All claims of creditors except as specifically disclosed to or
assumed by Buyer pursuant to this Agreement, the Disclosure
Schedule or any Exhibit or Related Document;
(13) Any debt, liability or obligation of Seller or any Affiliate of
Seller to any institutional lender or other secured party;
(14) Any debt, liability or obligation of the Business to any other
division or Affiliate of Seller; and
(15) Any liability of Seller for costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby.
4. NON-ASSIGNABLE CONTRACTS AND RIGHTS. To the extent that the assignment
by Seller of any property, right, Contract or asset which Buyer assumes and
which is being assigned to Buyer pursuant to this Agreement shall require the
consent or approval of any other party, and such consent or approval
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shall not have been obtained on or prior to the Effective Time, this Agreement
shall not constitute a contract to assign the same if an attempted assignment
would constitute a breach hereof or would in any way adversely affect the rights
of Seller or Buyer as assignee thereunder. In such case, the beneficial interest
in or to such property, right, Contract or asset shall in any event pass as of
the Effective Time to Buyer hereunder, and Seller covenants and agrees:
(1) From and after the Effective Time, to hold and declare that
Seller holds any and all such properties, rights, Contracts and
assets in trust for the benefit of Buyer and its successors and
assigns;
(2) To use its reasonable efforts to obtain and secure any and all
consents and approvals that may be necessary to effect the valid
sale, transfer or assignment of the same to Buyer without change
in any of the material terms or conditions thereof, including,
without limitation, the formal assignment or novation of any of
the same, if so required;
(3) To make or complete such transfers as soon as reasonably
possible;
(4) To cooperate with Buyer in any other reasonable arrangement
designed to provide for Buyer the benefits of and to such
properties, rights, Contracts or assets; and
(5) From and after the Effective Time, to use reasonable efforts, at
the request and expense of Seller, to enforce for the account of
Buyer (and its successors and assigns) any and all rights of
Seller arising from or in respect of such properties, rights,
contracts, or assets.
5. PRODUCT WARRANTY SERVICE. In addition to the assumption by Buyer of
the Assumed Liabilities pursuant to Section 2.2B, Buyer shall perform, as
subcontractor for Seller, such of Seller's warranty repair service obligations
for Products shipped prior to the Effective Time and for which a warranty claim
is submitted to Buyer or Seller prior to the expiration of the applicable
warranty period by customers of the Business (including, but not limited to, the
Disclosed Unexpired Product Warranties). Buyer shall exercise its reasonable
business judgment consistent with its ongoing operations (but subject to this
Section 2.2E) in performing repair service under such product warranty claims.
Buyer will consult with Seller, to the extent practicable, regarding the product
warranty claim and the type and extent of work to be performed by Buyer pursuant
thereto. Buyer shall use its reasonable efforts to consult with Seller prior to
performing any warranty repair service for a cost which Buyer estimates will
exceed $3,000. Seller agrees that Buyer shall be the exclusive provider of
warranty services for all Products from and after the Effective Time, regardless
of the date of shipment. Seller shall pay to Buyer, within twenty (20) days
following the date of invoice, an amount equal to the sum of: (a) ninety percent
(90%) of the standard selling price of products, components and materials used
by Buyer; (b) Buyer's standard charging rate of $75 per hour for labor hours
utilized in the performance of such services; and (c) subject to receipt of
invoices or other cost documentation reasonably satisfactory to Seller, all
direct, out-of-pocket "field service" costs incurred by Buyer (including, but
not limited to, travel, lodging and meals) in connection with such services.
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2.3 PURCHASE PRICE AND MANNER OF PAYMENT. Subject to adjustment as provided in
Section 2.4, the purchase price for the Purchased Assets (the "Purchase Price")
shall be $9,980,971, representing the sum of: (a) the net book value of the
Fixed Assets; and (b) Seller's Inventory, calculated in accordance with the
Inventory Valuation/Verification Procedures. Of the total Purchase Price: (i)
$7,416,529, less the Holdback Amount, shall be paid in cash by wire transfer at
the Closing (the "Cash Portion of the Purchase Price"); (ii) $764,442 shall be
paid by Buyer assuming the Assumed Liabilities;(iii) the Royalty Inventory shall
be paid for in accordance with the terms of the Royalty Agreement; and (iv) the
Holdback Amount shall be paid or retained by Buyer, as applicable, in the manner
described in Section 2.4G, each subject to adjustment as provided in Section 2.4
all as more fully set forth on EXHIBIT "I" (the "Estimated Closing Statement").
2.4 ADJUSTMENT TO PURCHASE PRICE. The Purchase Price shall be subject to
adjustment as provided in this Section 2.4.
1. ESTIMATED CLOSING STATEMENT. Seller has delivered to Buyer the
"Estimated Statement of Assets to be Acquired and Liabilities to be Assumed" set
forth at Part I of EXHIBIT "I" and the "Purchase Price Payment Schedule" set
forth at Part II of EXHIBIT "I" (collectively, the "Estimated Closing
Statement"). Seller represents and warrants that the Estimated Statement of
Assets to be Acquired and Liabilities to be Assumed has been prepared based on
the books, records, and accounts of the Business at June 30, 1997; that such
statement has been prepared by Seller on the basis of historical cost in
accordance with GAAP consistently applied on a going-concern basis in accordance
with the standard practices of the Business used to prepare the 1996 Financial
Statements; that each line item caption comprising such statement is a defined
term included in this Agreement and amounts reflected after each such line item
caption are consistent with the definition of such term in this Agreement.
Seller and Buyer agree that: (i) the format of, and accounts included in, the
Estimated Statement of Assets to be Acquired and Liabilities to Be Assumed and
(ii) the format of, and the accounts included in, the Purchase Price Payment
Schedule are consistent with the provisions of this Agreement.
2. PREPARATION OF THE FINAL CLOSING STATEMENT. Within thirty (30) days
after the Effective Time, Seller shall deliver to Buyer the Final Closing
Statement. The Final Closing Statement shall be prepared in the same format and
upon the same basis as the Estimated Closing Statement, except that it shall be
prepared as of the Effective Time.
3. SCOPE OF REVIEW, AND OBSERVATION OF REVIEW, OF INVENTORY.
(1) The review of the Inventory and the procedures for the review of
the Inventory in connection with the preparation of the Final
Closing Statement are set forth in EXHIBIT "J" ("Inventory
Valuation/Verification Procedures"). ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and
other representatives of Buyer shall be entitled to observe and
participate in the review of the Inventory in connection with the
preparation of the Final Closing Statement and to observe such
other activities related to the preparation of the Final Closing
Statement as they may reasonably request. Each of Seller and
Buyer will pay for the costs of services and expenses of any of
its respective representatives who are present at such review of
the Inventory. As promptly as possible after Closing, Seller
shall furnish to Buyer a final report
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reflecting the application of the Inventory
Valuation/Verification Procedures to the Inventory.
(2) The value of the Inventory of the Business will be verified
pursuant to the Inventory Valuation/Verification Procedures. The
"significant sampling" of Inventory to be tested pursuant to the
Inventory Valuation/Verification Procedures will be taken by
Seller and observed by Buyer on the Closing Date or within ten
(10) days prior to or ten (10) days following the Closing Date.
The results of such Inventory testing shall be adjusted (rolled
forward or rolled back, as applicable) to the Closing Date, if
necessary, in accordance with the Inventory
Valuation/Verification Procedures, and shall be final and binding
on the parties and their respective accountants for such
purposes.
4. ACCESS TO BOOKS AND RECORDS. After the Effective Time, Buyer shall
permit Seller, Coopers & ▇▇▇▇▇▇▇, and their respective representatives, during
normal business hours, to have reasonable access to the ▇▇▇▇▇▇ Facility, to the
Inventory, and to examine and make copies of any books and records of Buyer
which are reasonably required for purposes of preparing the Final Closing
Statement. After the Effective Time, Seller shall permit Buyer, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
LLP and their representatives, during normal business hours, to have reasonable
access to, and to examine and make copies of, the books and records of Seller or
Coopers & ▇▇▇▇▇▇▇, which are in the possession of any of them and are necessary
for Buyer and its representatives to review the Final Closing Statement.
5. OBJECTIONS TO THE FINAL CLOSING STATEMENT OR CALCULATION OF CLOSING
ADJUSTMENT. Buyer may object to any of the information contained in the Closing
Statement which could affect the Closing Adjustment to be made pursuant to
Section 2.4(F) if such objection is based on a claim that the Final Closing
Statement was not prepared in accordance with Section 2.4(B) and may object to
the Closing Adjustment shown on the Final Closing Statement if such objection is
based on the claim that the Final Closing Statement or the calculation of the
Closing Adjustment is inconsistent with the provisions of this Agreement. Any
such objection must be made by delivery of a written statement of objections
("Notice of Objection") to Seller within 20 days following delivery of the Final
Closing Statement. If Buyer does not so object to the Final Closing Statement or
the Closing Adjustment within such 20-day period, the Final Closing Statement
and the Closing Adjustment as shown on the Final Closing Statement shall be
considered final and binding upon the parties.
In the event Buyer and Seller are unable to resolve a dispute or
disagreement set forth in a written objection pursuant to this Section 2.4(E)
within fifteen (15) days after delivery of Buyer's Notice of Objection, either
party may elect to have all such disputes or disagreements resolved by an
accounting firm of recognized national standing acceptable to Seller and Buyer
and not then employed by either Seller or Buyer (the "Selected Accounting
Firm"). If Buyer and Seller cannot agree within thirty (30) days following the
date of the Notice of Objection upon the accounting firm to serve as the
Selected Accounting Firm, then ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ (through its Columbus, Ohio
office) shall serve as the Selected Accounting Firm. The Selected Accounting
Firm shall make a final and binding resolution of the disputes or disagreements
in accordance with the provisions of this Agreement and the Final Closing
Statement and calculation of the Closing Adjustment as shown on the Final
Closing Statement as finally determined by the Selected Accounting Firm shall be
deemed acceptable to Buyer and Seller for all purposes of this Agreement. The
Selected Accounting Firm shall be instructed to use every reasonable
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effort to perform its services within 30 days after submission of the Final
Closing Statement to it and, in any case, as soon as practicable after such
submission. The costs and expenses for the services of the Selected Accounting
firm shall be borne by Buyer and Seller in proportion to the extent to which the
Selected Accounting Firm accepts the respective positions of Buyer and Seller.
For example, if Seller asserts that the Closing Adjustment should be $100,000
and Buyer asserts that no Closing Adjustment is warranted, and the Selected
Accounting Firm determines that the Closing Adjustment is $40,000, Seller is
responsible for 60% and Buyer is responsible for 40% of the costs of the
Selected Accounting Firm.
6. CALCULATION AND PAYMENT OF CLOSING ADJUSTMENT. The amount of the
"Closing Adjustment," if any, shall be determined as follows:
(1) If the Purchase Price set forth on the Final Closing Statement
exceeds $9,980,971, then the Closing Adjustment shall be an
amount equal to the excess of the Purchase Price set forth on the
Final Closing Statement over $9,980,971 and such amount, together
with the Holdback Amount plus interest at the Applicable Rate
(defined in Section 2.4G below) from the Closing Date, shall be
paid by Buyer to Seller in cash within five (5) days after the
Closing Adjustment is finally determined.
(2) If the Purchase Price set forth on the Final Closing Statement,
less the Holdback Amount, is less than $9,980,971, then the
Closing Adjustment shall be an amount equal to the difference
between the Purchase Price set forth on the Final Closing
Statement and $9,980,971 and shall be paid to Buyer in cash
within five (5) days after the Closing Adjustment is finally
determined, as follows: (1) retention of the Holdback Amount by
Buyer; and (2) the balance of the Closing Adjustment by Seller.
To the extent the Closing Adjustment payable to Buyer is less
than the Holdback Amount, the remaining balance of the Holdback
Amount, plus any interest earned thereon at the Applicable Rate
from the Closing Date, shall be to Seller.
7. FORM OF PAYMENT. Payment of the Closing Adjustment, if any, shall be
made by wire transfer of immediately available federal funds, together with
interest thereon at a rate of interest (the "Applicable Rate") equal to the
prime rate of National City Bank, Cleveland, Ohio ("Prime Rate") plus one
percent (1%) per annum from the Closing Date until the date of payment. If such
adjustment (including the interest component, if any), is not paid within five
(5) business days after final determination of the Closing Adjustment, then such
payment shall accrue interest at the Prime Rate plus three percent (3%) from the
Closing Date until the date of actual payment.
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2.5 ALLOCATION OF PURCHASE PRICE. Seller agrees that the Purchase Price of the
Assets shall be allocated among the Assets in the manner submitted in writing by
Buyer to Seller not later than December 31, 1997 and which is reasonably
acceptable to Seller, provided that Seller shall have no right to object to any
such allocation unless, in Seller's reasonable opinion, such allocation
materially adversely affects Seller's income tax position. The Purchase Price
allocation shall be based on the Final Closing Statement. The parties intend to
act in a manner consistent with such allocation in: (i) filing Internal Revenue
Form 8594, captioned "Asset Allocation Statement under Section 1060", and (ii)
paying sales and other transfer taxes in connection with the purchase and sale
of Assets pursuant to this Agreement.
2.6 PRORATIONS. All real estate taxes for which Buyer shall be responsible as
tenant under the ▇▇▇▇▇▇ Lease, and assessments and any personal property taxes,
utility charges, water and sewer charges, fuel and other charges directly
applicable to the ▇▇▇▇▇▇ Facility and to the personal property transferred to
Buyer on the Closing Date shall be prorated over the period covered thereby (to
the extent such items cannot be specifically apportioned on the basis of meter
readings taken pursuant to the succeeding sentence) as of the Closing Date, and
such taxes and other charges shall be proportioned between the parties by
adjustments to the Purchase Price as provided in Section 2.4. For the purpose of
making such apportionments, Seller shall cause all water, electricity, gas and
other utility meters to be read, and all fuel readings to be taken, on the
business day immediately preceding the Closing Date (or as close thereto as
practicable).
Any net amount owed hereunder shall be paid within sixty (60) days
following the Closing Date by the party owing such amount.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
In order to induce Buyer to purchase the Assets hereunder, Seller hereby
makes the following representations and warranties, each of which shall be true
and correct on the execution hereof except as otherwise specified herein, and
will be true and correct on the Closing Date, and which shall survive the
Closing Date for the period of time specified in Section 3.31 below:
3.1 OWNERSHIP OF ASSETS. At the Effective Time, each of the Assets shall have
been sold, transferred and assigned to Buyer, and Buyer shall thereupon be the
owner of all the Assets, free and clear of any Liens.
3.2 ORGANIZATION, QUALIFICATION, AND AUTHORITY OF SELLER.
1. DUE ORGANIZATION AND QUALIFICATION/POWER AND AUTHORITY TO CONDUCT
BUSINESS.
(1) Seller is a corporation validly organized and existing and in
good standing under the laws of the State of Ohio, and is duly
qualified to do business and is in good standing as a foreign
corporation in the State of New York and each other jurisdiction
where the nature of its activities or properties makes such
qualification necessary.
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(2) Seller has full corporate power and authority to own and hold
under lease its property and to conduct its business as currently
conducted by it, and holds all Governmental Authorizations, to
own and hold under lease its property and to conduct the Business
as currently conducted by it except where such failure does not
and will not have a material adverse effect on the Business and
the Assets. A list of all Governmental Authorizations owned by or
issued to Seller and necessary to operate the Business or to own
or lease the Assets (except for those Governmental Authorizations
relating to tax matters, workers' compensation, unemployment
compensation and other Governmental Authorizations that are not
directly related to the physical operation of the Business) is
set forth in PART 3.2A of the Disclosure Schedule.
(3) Seller has full power and authority to execute, deliver, and
perform its obligations under this Agreement.
2. NO DEFAULTS OR VIOLATIONS. As of the Effective Time, the execution and
delivery of this Agreement and the Related Documents, and the performance of the
obligations by Seller under this Agreement and the Related Documents: (i) will
not violate, contravene, be in conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under:
(a) any provision of law; (b) any order, rule or regulation of any court,
arbitrator or other agency of government; (c) any provision of the Articles of
Incorporation or Code of Regulations of Seller; and (d) any lease, indenture,
agreement or other instrument to which Seller in respect of the Business or the
properties or assets of the Business is or may be bound which requires the
payment by Seller of an amount in excess of Five Thousand Dollars ($5,000); and
(ii) will not result in the creation or imposition of any Lien upon the Assets.
3. POWER AND AUTHORITY TO ENTER INTO AGREEMENTS. Seller has the right,
power, legal capacity, and authority to enter into and perform its obligations
under this Agreement and the Related Documents, and except as listed on the
"List of Consents Required" set forth in PART 3.2C of the Disclosure Schedule,
no consent, approval or authorization of, or registration, declaration, or
filing with any governmental authority (federal, state, local, domestic, or
foreign), collective bargaining unit, lending institution or other third party
is required in connection with the execution and delivery by Seller of this
Agreement and the Related Documents, or its performance of, or compliance with,
the terms, provisions, and conditions hereof.
4. DUE EXECUTION AND ENFORCEABILITY. All necessary corporate actions of
the Board of Directors of Seller and any committee thereof, have been taken to
authorize Seller to execute and deliver this Agreement and the Related
Documents. The sale of the Assets does not constitute a sale of substantially
all the assets of Seller, and the consent or approval of the shareholders of
Seller is not required prior to the consummation of the transactions
contemplated hereby. This Agreement and the Related Documents constitute the
valid and binding obligations of Seller, enforceable in each case in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights or by general principles of equity. All persons
who have executed this Agreement on behalf of Seller or will execute on behalf
of Seller
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any Related Document or other agreement or instrument contemplated by this
Agreement, have been duly authorized to do so by all necessary corporate action.
3.3 NO EQUITY INTERESTS. Seller does not own, directly or indirectly, an equity
interest in any corporation, joint venture, partnership, business association,
limited liability company, trust or other firm or entity which is engaged, in
whole or in part, in the Business, except Monarch Werkzeugemachin, GmbH, which
operates solely in Europe.
3.4 TITLE TO PROPERTIES; LIENS, CONDITIONS OF PROPERTIES.
1. REAL PROPERTY. Seller does not own or lease real property in respect
of the Business except for the ▇▇▇▇▇▇ Facility and the facilities described in
PART 3.4A of the Disclosure Schedule, and Seller is not a party to any agreement
to acquire in respect of the Business any real property or any interest therein.
Neither the Real Property nor any interest therein is the subject of any Liens.
Each real property lease described in PART 3.4A of the Disclosure Schedule is
valid, subsisting and assignable (except as disclosed in PART 3.4A of the
Disclosure Schedule and no default (or event which with the passage of time or
the giving of notice, or both, shall constitute a default) exists thereunder.
2. PERSONAL PROPERTY (OTHER THAN INVENTORY). The Fixed Asset Ledger
completely and accurately describes, as of June 30, 1997 (including the
acquisition date and cost and specifies the location of) all Fixed Assets and
all other tangible personal property included among the Assets (but excluding
Inventory) on the date of execution and which satisfy one of the following
descriptions:
(1) personal property having any undepreciated value and reflected on
the books of the Business;
(2) fully depreciated personal property having an original cost to
Seller in excess of $2,500 (individually); and
(3) items of personal property which are not otherwise described in
clauses (a) or (b) of this subparagraph but which are readily
identifiable to Seller.
The property listed in the Fixed Asset Ledger constitutes all significant
tangible personal property owned by, in the possession of, or exclusively or
primarily used by Seller in respect of the Business as of June 30, 1997 and will
be sufficient for the conduct of business of the Business in the ordinary course
as of the Effective Time. All such property will be owned or used exclusively by
the Business and located at the ▇▇▇▇▇▇ Facility or one of the warehouse
facilities listed in the Disclosure Schedule, and no Affiliate or other division
of Seller will own, possess, use or have the right to acquire, possess or use
any such Assets. For purposes of this Section 3.4, the term "Seller" shall also
include any Affiliate of Seller.
As of the Effective Time, Seller will have good title to all of the Assets
free and clear of all Liens.
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All of the Fixed Assets which Buyer is acquiring are, and at the Effective
Time will be, in reasonable operating condition, ordinary wear and tear
excepted, and fully functional with no known defects, to the extent required for
the operation of the Business in the ordinary course of the Business as
presently conducted. To Seller's Knowledge, the ▇▇▇▇▇▇ Facility, all machinery
and equipment owned, leased, used or held for use by Seller with respect to the
Business presently conducted and as conducted by Seller on the Closing Date are
structurally sound with no known defects, and to Seller's Knowledge, the conduct
of the Business and operation of the ▇▇▇▇▇▇ Facility as presently operated does
not require the expenditure of funds for restoration, replacement, or repair,
other than maintenance in the ordinary course of business.
3.5 FINANCIAL STATEMENTS.
1. HISTORICAL FINANCIAL STATEMENTS OF BUSINESS. Annexed to the Disclosure
Schedule at PART 3.5A are the 1994 Financial Statements, the 1995 Financial
Statements, and the 1996 Financial Statements. The foregoing financial
statements present fairly in all material respects, the financial position of
the Business as of December 31, 1994, December 31, 1995 and December 31, 1996,
respectively, and the results of the Business operations for the periods from
January 1, 1994 through December 31, 1994, from January 1, 1995 through December
31, 1995, and from January 1, 1996 through December 31, 1996, and the items
reflected therein have been recorded in accordance with GAAP consistently
applied, except as set forth in PART 3.5A of the Disclosure Schedule. Attached
as part of the Disclosure Schedule is all correspondence from accounting firms
from January 1, 1994 through the date of execution of this Agreement with
respect to the recommendations for improvements in accounting procedures,
practices and internal controls of the Business.
2. MARCH 31, 1997 INTERIM BALANCE SHEET AND STATEMENT OF OPERATIONS.
Annexed to the Disclosure Schedule at PART 3.5B are the March 31, 1997 Interim
Balance Sheet of the Business, which is true, complete and accurate and in all
material respects reflects the assets and liabilities of the Business as of
March 31, 1997, and the Statement of Operations for three (3) month period then
ended. The items reflected in the March 31, 1997 Interim Balance Sheet have been
recorded in conformity with and on a basis consistent with prior financial
statements of the Business and with the 1996 Financial Statements. Since March
31, 1997, with respect to the Business, there have been no asset dispositions or
obligations incurred other than in the ordinary course of business except as set
forth in PART 3.6 of the Disclosure Schedule or as shown in the June 30, 1997
Financial Statements.
3. JUNE 30, 1997 INTERIM BALANCE SHEET AND STATEMENT OF OPERATIONS.
Annexed to the Disclosure Schedule at PART 3.5C are the June 30, 1997 Interim
Balance Sheet of the Business, which is true, complete and accurate and in all
material respects reflects the assets and liabilities of the Business as of June
30, 1997 and the Statement of Operations for the period from April 1, 1997
through June 30, 1997 (the "June 30, 1997 Statement of Operations") The items
reflected in the June 30, 1997 Interim Balance Sheet and the June 30, 1997
Statement of Operations have been recorded in conformity with and on a basis
consistent with prior interim financial statements of the Business and with the
1996 Financial Statements.
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4. BACKLOG REPORT. The information set forth in the Backlog Report is
true, correct and complete in all material and is based on Seller's historical
accounting practices consistently applied. Except as disclosed in the Backlog
Report or the explanatory notes contained in the Disclosure Schedule, and
assuming that Buyer performs each customer contract described in the Backlog
Report in a manner consistent with Seller's past practices, no customer contract
or commitment described in the Backlog Report will result in a net loss to Buyer
(negative gross margin) of more than five percent (5%) after giving effect to
that portion of the contract which has been performed by Seller as of the
Closing Date, except as specifically described in the Backlog Report.
3.6 CHANGES.
1. Since March 31, 1997, there has been no material adverse change in the
financial condition, operating results, assets, operations, employee relations,
supplier relations, customer relations or business prospects of the Business
other than economic or industry trends affecting the economy or industry as a
whole. Buyer acknowledges that the giving by Seller of the WARN Notice may have
had and may have prior to Closing a negative impact on Seller's relations with
employees, suppliers, customers and others in respect of the Business, the
extent of which is not ascertainable at this time.
2. Since March 31, 1997, except as set forth in PART 3.6 of the
Disclosure Schedule, Seller has not, in respect of the Business:
(1) borrowed any amount or incurred or become subject to any material
liabilities, except current liabilities incurred in the ordinary
course of business, borrowings under established credit
facilities, and liabilities under contracts entered into in the
ordinary course of business;
(2) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of the Assets, except for liens for
current property taxes not yet due and payable or for current
liens to which after acquired property became subject to;
(3) sold, assigned or transferred any of the Assets, except in the
ordinary course of business, or canceled without fair
consideration any material debts or claims owing to or held by
it;
(4) sold, assigned, transferred, abandoned or permitted to lapse any
patents, trademark registrations, trade name registrations,
copyright registrations, Trade Secrets which are material to the
Business or other intangible assets, or disclosed any Trade
Secrets or other material proprietary confidential information,
to any person other than Buyer which are material to the Business
and to other potential buyers of the Business;
(5) made or granted any bonus or any wage or salary increase to any
employee or group of employees except under the terms of the
Union Agreement or in the ordinary course of business;
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(6) made or granted any increase in any Plan (except in accordance
with past custom and practice or with the Union Agreement), or
amended or terminated any existing Plan or adopted any new Plan;
(7) made any capital expenditures or commitments in excess of $15,000
in the aggregate;
(8) made any loans or advances to, or guarantees for the benefit of,
any persons, except for advances made to employees for expenses
in the ordinary course of business;
(9) entered into any other material transaction other than in the
ordinary course of business;
(10) entered into any amendments, extension or modifications of the
Union Agreement or entered into any new labor agreement or
commitment except to the extent effects bargaining entered into
after the announcement of the execution of this Agreement may
result in modifications of the Union Agreement or other agreement
with the Union;
(11) waived any rights of material value, not in the ordinary course
of business or consistent with past practice;
(12) suffered any material damage, destruction or casualty loss to the
Assets, whether or not covered by insurance;
(13) agreed, whether in writing or otherwise to do any of the
foregoing; or
(14) conducted the Business other than in the ordinary course, except
to the extent that the giving of the WARN Notice, on its face,
indicates that Seller intends to make changes in the Business.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Seller, to Seller's Knowledge, has no
liabilities of any nature (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others, or liabilities for
taxes due or then accrued or to become due) in respect of the Business except as
will be expressly disclosed on the Final Closing Statement or in this Agreement
or the Disclosure Schedule or Exhibits attached hereto.
3.8 [RESERVED]
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3.9 INVENTORIES.
1. Annexed to the Disclosure Schedule at PART 3.9 is a list ("Schedule of
Inventory") that accurately identifies the Products, models, quantities and cost
to Seller of all Inventory owned by Seller as of July 14, 1997. The inventories
shown on the June 30, 1997 Interim Financial Statements were valued on a LIFO
basis pursuant to GAAP, and represented the normal inventory valuation policy of
the Business, which is consistent with the past practices of the Business. The
Inventory figures reflected on the Estimated Closing Statement correctly and
accurately reflect the Inventory (including raw materials, work in process, and
finished goods) of the Business owned by, in transit to, or in the possession
of, Seller on July 14, 1997.
2. No items included in Inventory are held by Seller for the benefit of,
or on consignment from, others. Except for the inventory consigned to
distributors and others as specifically described in PART 3.9B of the Disclosure
Schedule, all of the Inventory (other than Inventory in transit) is located at
the ▇▇▇▇▇▇ Facility or one of the facilities described in PART 3.4A of the
Disclosure Schedule.
3.10 TRADE NAMES, TRADEMARKS, AND COPYRIGHTS.
1. Seller possesses the right within the United States to use the trade
name "Monarch" in connection with the operation of the Business. Seller has no
knowledge of others using the name "Monarch" or any similar name in the Business
in the United States.
2. PART 3.10B of the Disclosure Schedule sets forth all trademarks and
service marks (whether registered or unregistered), trade names, brand names,
registered copyrights and franchises, and all applications for any of the
foregoing, domestic or foreign, used now or within the past two (2) years in
connection with the Business (all of which are owned by Seller), and Seller has
the unrestricted right to assign to Buyer the trademarks and other rights listed
on the Disclosure Schedule in accordance with the terms of this Agreement.
Neither Seller nor any Affiliate has received any notification, nor, to Seller's
Knowledge, has it infringed, or is now infringing, on any trade name, trademark,
service ▇▇▇▇, or copyright belonging to any other person, firm or corporation in
respect of the Business, and Seller is not aware of any basis for any such
claim. Seller owns or holds an exclusive, unrestricted license or has the full
and exclusive, unrestricted right, in the jurisdictions in which such
Intellectual Property is registered, to use all registered trademarks, service
marks, trade names, and copyrights used in the Business as now conducted, and,
to Seller's Knowledge, the use of such Intellectual Property, whether or not
registered, does not, and will not, conflict with, infringe on, or otherwise
violate any rights of others.
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3.11 PATENTS.
1. PART 3.11A of the Disclosure Schedule contains is a true and complete
list of all patents, inventions, industrial model designs and applications for
patents (both domestic and foreign) owned by Seller or any Affiliate of Seller
and used in connection with the Business or in which Seller or any Affiliate has
any right or licenses used in connection with the Business. All such patents and
licenses for patents are, to Seller's Knowledge, owned free and clear of any
actual or, threatened claims of others. Each of the patents listed in PART 3.11A
of the Disclosure Schedule contains as owned by Seller are valid and in full
force and effect, except as noted thereon. Within the past five (5) years, there
has not been any interference, action or other judicial action or arbitration or
other adversary proceeding concerning the patents or applications for patents
listed in PART 3.11A.
2. Except as disclosed in PART 3.11B of the Disclosure Schedule, Seller,
to its knowledge, has the full exclusive and unrestricted right and authority in
the jurisdictions issuing the patents to use such processes, inventions, models,
designs and systems covered by the patents and applications for patents listed
on PART 3.11B of the Disclosure Statement and as otherwise may be necessary to
or used in the conduct of the Business, and to Seller's Knowledge, in respect of
the Business, and Seller is not infringing, and has not infringed on any patent
or other right belonging to any person, firm, or corporation, nor has Seller
received or given notice of any infringement.
3.12 [RESERVED].
3.13 TRADE SECRETS. Seller is the owner of or has the right to use and will
transfer the right to use all Trade Secrets required for the manufacture,
distribution and marketing of the Products and services of the Business, free
and clear of any claims, liens, encumbrances, restrictions, rights, or legal or
equitable claims of others, subject, however, to the coextensive rights of use
as described in Section 1.60 and except for Trade Secrets which are generally
used within the machine tool industry. Seller, in respect of the Business, to
Seller's Knowledge is not using, or in any way making use of, without
authorization or legal right to use the same, any confidential information,
trade secrets or customer lists of any third party, including, without
limitation, former employer of any present or past employee of Seller. There are
no suits pending or, to Seller's Knowledge, threatened with respect to any Trade
Secrets. Copies or originals of all engineering, designs and drawings of Seller
or any Affiliate of Seller used in connection with the Business are located, or
on the Closing Date will be located, at the ▇▇▇▇▇▇ Facility.
3.14 CUSTOMERS AND SUPPLIERS.
1. Annexed to the Disclosure Schedule at PART 3.14A is a list of all
customers of the Business which purchased in the aggregate in excess of Fifty
Thousand Dollars ($50,000) of Products or services during the twelve (12) month
period ended June 30, 1997, indicating the dollar amount of finished goods,
components or services purchased from Seller. Seller has not been advised and is
not aware that any customers listed in the Disclosure Schedule intends to cease
doing business with Seller in respect of the Business. To Seller's Knowledge,
there are no current disputes between Seller and any customer of the Business
which, either alone or in the aggregate, would have a material adverse effect on
the Business.
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2. Annexed to the Disclosure Schedule at PART 3.14B is the Schedule of
Suppliers listing all suppliers from whom the Business has made purchases which
aggregate for any one (1) such supplier in excess of Fifty Thousand Dollars
($50,000) during the twelve (12) month period ending June 30, 1997, indicating
the dollar amounts of supplies, materials or services purchased from each such
supplier. Seller has not been advised and is not aware that any supplier listed
in the Disclosure Schedule intends to cease doing business with Seller in
respect of the Business or materially reduce the amount of its product available
to the Business. To Seller's Knowledge, there are no current disputes between
Seller and any supplier of the Business except for normal claims and price
adjustments in the ordinary course of business.
3.15 CONTRACTS AND COMMITMENTS.
1. SALES ORDERS, SUBCONTRACTS, BIDS AND PROPOSALS.
(1) To Seller's Knowledge, set forth in PART 3.15A(I) of the
Disclosure Schedule is a true and complete list and description
of each individual outstanding customer sales order, sales
Contract, subcontract, outstanding written bid or sales proposal
for new equipment of the Business as of June 30, 1997.
(2) Seller is not under any liability or obligation in respect of the
Business with respect to the return of any amount in excess of
Five Thousand Dollars ($5,000) individually or Twenty-Five
Thousand Dollars ($25,000) in the aggregate of inventory or
merchandise in the possession of distributors or other customers.
2. PURCHASE ORDERS AND OTHER TRADE OBLIGATIONS. Set forth in PART 3.15B
of the Disclosure Schedule is a true and complete list and description of each
individual outstanding purchase orders and purchase commitment in excess of Five
Thousand Dollars ($5,000) of the Business as of June 30, 1997. No purchase
contracts or commitments of the Business continue for a period of more than six
(6) months or are in excess of the normal, ordinary and usual requirements of
the Business (as conducted by Seller) or at any excessive price.
3. PERSONAL PROPERTY LEASES (AS LESSEE OR LESSOR) AND OTHER CONTRACTS.
Set forth at PART 3.15C of the Disclosure Schedule is a true and complete list
and description of all personal property leases, warehouse agreements, licensing
agreements, sales representative agreements, and any other contracts and
commitments (other than purchase orders and sales orders, loan agreements, labor
and employment agreements or employee benefit plans or agreements) with respect
to the Business as of the date of this Agreement that are not cancelable on
thirty-one (31) days or less notice without any further obligation thereunder or
which involve a total liability on the part of Seller thereunder exceeding Five
Thousand Dollars ($5,000) per contract or lease. Seller has not granted any
interest to any third party (other than the actual parties contracting) in
connection with any such lease, contract or agreement.
4. COPIES, CONSENTS AND BINDING EFFECT. As of the Effective Time, to the
extent consent to assignment is required, all lessors and other contractual
third parties listed in the Disclosure Schedule have consented to the
consummation of the transactions contemplated by this Agreement without
requiring modification of the rights or obligations of Seller or any successor
in interest. True and correct
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copies, or written summary, if oral, of all the leases, contracts, commitments,
agreements, understandings or other obligations, written and oral, relating to
the Business or the Assets and listed in the Disclosure Schedule have been
delivered to Buyer. Seller is not in default in respect of Seller's monetary
obligations and, to Seller's Knowledge: (i) Seller is not in default in respect
of any of Seller's obligations other than for the payment of money; and (ii) no
third party is in default (in each case whether with the giving of notice, the
passage of time or both) under any of the contracts, leases or other commitments
or obligations listed in the Disclosure Schedule which are being assumed by
Buyer, the result of which default is reasonably likely to have a material
adverse effect on the Business. The execution of this Agreement and the
consummation of the transactions contemplated hereby will not give rise to a
right of termination by any party thereto to any Contract.
5. UPDATING. If there have been any material changes from the execution
of the Agreement, Seller shall update and revise PART 3.15 of the Disclosure
Schedule up to and including the Effective Date, and shall deliver to Buyer such
updated and revised Schedule (or portions thereof) on the Closing Date or within
five (5) days thereafter.
6. RESTRICTIONS ON CONDUCT OF BUSINESS. Seller is not restricted by
commitment (including, without limitation, any non-competition agreement or
covenant) from carrying on the Business as carried on at the date hereof.
7. POWERS OF ATTORNEY, PROXIES. There are no outstanding powers of
attorney or proxies granted by Seller or any Affiliate of Seller in respect of
the Business.
3.16 ACCOUNTS OR TRADE PAYABLE. All of Seller's accounts payable in respect of
the Business have arisen from valid purchases in the ordinary course of business
and are, to Seller's Knowledge, valid and enforceable claims against Seller.
Seller has paid and will continue to pay through the Closing Date when due all
payables of the Business in accordance with its usual and customary terms and
practices.
3.17 LITIGATION; JUDGMENTS AND CONSENT DECREES. No litigation is pending or, to
Seller's Knowledge, currently threatened against Seller in respect of the
Business and no litigation is pending or currently threatened by Seller or any
Affiliate in respect of the Business which will have or may have a material
adverse effect on the operation of the Business. The responses of all law firms
to the annual audit request sent by management of the Business since January 1,
1994 have been provided to Buyer. Seller is not subject to any judgment, ruling,
injunction, order or agreement with any court, arbitrator or regulatory
authority materially restricting or adversely affecting the conduct of the
Business or Seller's ownership of the Assets. Seller has heretofore delivered to
Buyer a list, which to Seller's Knowledge is complete, setting forth all product
liability claims, workers' compensation claims, unemployment compensation
claims, all age, race, religion or other discrimination claims, and all other
claims of any sort and nature known to Seller, whether such claims were
dismissed, settled, or otherwise resolved against Seller or any Affiliate in
respect of the Business since January 1, 1994.
3.18 OSHA MATTERS. Seller, in respect of the Business, is in compliance with all
requirements of the Occupational Safety and Health Act ("OSHA"), the regulations
promulgated thereunder and any and all state, local and regional laws relating
to employee health, welfare and safety with respect to the Business
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except for matters of non-compliance which, individually or in the aggregate,
are inconsequential to the Business. Seller has no knowledge of and has not
received any citation from OSHA, any inspector therefor, or any state, local or
regional agency setting forth any reason for which the facilities or operations
of the Business are not in compliance with OSHA, the regulations thereunder, or
any comparable foreign, state or local law ("OSHA Claims") which remain
unresolved or outstanding at the Effective Time. Seller has heretofore delivered
to Buyer a complete list setting forth all OSHA Claims Known to Seller which
have been threatened or asserted against the Business since January 1, 1994.
3.19 EMPLOYEE RELATIONS.
1. UNION AGREEMENTS. Seller is not a party to any collective bargaining
agreement with respect to the Business except for the Union Agreement. The Union
Agreement has not been amended, modified or extended. Except for the Union, no
unions or other collective bargaining units have been, or are required to be,
certified or recognized by Seller as representing any employees of the Business,
and no union organized efforts exist with respect to any employees of the
Business except for the Union.
2. LABOR DISPUTES. There are not, to Seller's Knowledge, any pending or
currently threatened any strike, picketing or work stoppage by any employees of
the Business against Seller, the Assets or properties of the Business wherever
located, any secondary boycott with respect to the Products, any lockout by
Seller of any Business employees which may materially affect the Business, its
operation, or the Assets ("Labor Disputes"). Seller has heretofore delivered to
Buyer a complete list setting forth all material Labor Disputes (if any) known
to Seller occurring in respect of the Business from and after January 1, 1994.
3. GRIEVANCES, CLAIMS, ETC. Except as disclosed in PART 3.19C there are
not, to Seller's Knowledge, any pending or currently threatened grievances,
arbitrations, unfair labor charges or practices filed against Seller in respect
of the Business with the National Labor Relations Board or any comparable
federal, state or local board, agency or commission, or any claims, including
but not limited to any claims brought before the Equal Employment Opportunity
Commission ("Labor Claims") or under any act, local, state, federal civil rights
laws or any other law, rule or regulation relating to employment.
4. COMPLIANCE WITH LAWS. To Seller's Knowledge, in respect of the
Business, Seller has complied and is in compliance with, and Seller covenants
and agrees that it will comply through the Closing Date, with all laws relating
to the employment of labor, including, but not limited to, any provisions
thereof relating to equal employment opportunities, civil rights, working
conditions, wages, hours, COBRA, and the payment of social security and similar
taxes, and is not liable for any arrearage of wages or any taxes or penalties
for failure to comply with any of the foregoing, except that no representation
is made with respect to WARN or the Union Agreement.
5. EMPLOYEE HANDBOOK. Seller has provided to Buyer a true and complete
copy of the Business' current Employee Handbook for the ▇▇▇▇▇▇ Division.
6. LIST OF EMPLOYEES. PART 3.19F of the Disclosure Schedule sets forth
the true and complete list of names, positions and total direct remuneration of
all salaried and hourly employees who
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are employed by the Business as of July 10, 1997 together with a listing of all
individuals on layoff, out on workers' compensation, or other approved leave
programs, whether paid or unpaid. No employee of the Business is subject to any
confidentiality, non-disclosure and non-competition agreement with Seller or any
other entity except as described in the Disclosure Schedule.
3.20 EMPLOYEE BENEFITS.
1. DESCRIPTION OF PLANS. Set forth in PART 3.20A is a true and complete
list of each Plan currently affecting or covering any employees of the Business.
2. COMPLIANCE WITH LAW. All Employee Benefit Plans, as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, The Monarch Machine Tool Company
Pension Plan A, and The Monarch Machine Tool Company Retirement Savings Plan:
(i) are qualified to the extent required by law under Section 401(a) of the
Code; (ii) have been operated in all material respects in accordance with ERISA;
(iii) have not engaged in any nonexempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4875 of the Code); (iv) are fully
funded to the extent required by Section 412 of the Code; (v) are not subject to
liability to the Pension Benefit Guaranty Corporation for any reason except
payment of annual premiums; (vi) are not subject to "partial" or "complete"
termination (as defined in ERISA); and (vii) are not subject to any "reportable
event" as defined in ERISA (except that the giving of the WARN Notice may
involve a "reportable event"). All employee welfare benefit plans, as described
in Section 3(1) of ERISA, covering the employees of the Business have been
operated in all material respects in accordance with ERISA. Seller is not
subject to any liability to any multi-employer pension plan on account of any
"withdrawal" or "partial withdrawal" as those terms are defined in ERISA.
3. DOCUMENTATION PROVIDED TO BUYER. Seller will deliver or will make
available to Buyer, upon request, true, complete and correct copies of (i) all
documents and summary plan descriptions with respect to the Plans, or summary
plan descriptions of any such Plans not otherwise in writing, (ii) the most
recent Form 5500s filed, including all schedules thereto and financial
statements with attached opinions of independent accountants, (iii) the most
recent determination letters from the IRS, or correspondence related thereto,
(iv) the consolidated statement of assets and liabilities of the Plans as of
their most recent valuation date, and (v) the statement of changes in net assets
available for benefits under the Plans for the most recently ended Plan year.
The financial statements so delivered fairly present the financial condition and
the results of operations of each of the Plans as of such dates, in accordance
with GAAP.
4. HEALTH PLANS. All group health plans of Seller and any ERISA Affiliate
have been operated in material compliance with the group health plan
continuation coverage requirements of Sections 162(i) (as in effect immediately
prior to the Technical and Miscellaneous Revenue Act of 1988) and 4980B of the
Code to the extent such requirements are applicable.
3.21 COMPLIANCE WITH LAW/GOVERNMENTAL AUTHORIZATIONS. Seller, in respect of the
Business, has complied, and has conducted the Business in accordance with all
applicable statutes, laws, regulations, rules and other requirements of all
foreign, federal, state and local governmental authorities having jurisdiction
over Seller applicable to the Assets or the Business other than statutes, laws,
regulations and
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other requirements relating to tax, employment, employee benefit
and environmental matters (which are the subject of specific representations and
warranties hereunder) except where the failure to so comply has not had and will
not have a material adverse effect on the Business or Assets. Since January 1,
1994, Seller has not received any notification of any asserted present or past
failure by the Business to comply with such statutes, laws, regulations or
rules, except as disclosed in this Agreement or pursuant to this Agreement or in
a Schedule to this Agreement.
3.22 ENVIRONMENTAL MATTERS.
1. IN GENERAL. Except as set forth in PART 3.22A of the Disclosure
Schedule, the Environmental Disclosure Schedule, Seller is in compliance with
all applicable Environmental Laws (as defined below), which compliance includes,
but is not limited to, the possession by Seller of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof except for such minor instances
of noncompliance which do not, either alone or in the aggregate, adversely
affect the financial condition or operation of the Business. Except as set forth
in PART 3.22A of the Disclosure Schedule, Seller has received no communication
(written or oral), whether from a governmental authority, citizens' group,
employee or otherwise, that alleges that Seller is not in such full compliance.
All governmental authorizations currently held by Seller pursuant to the
Environmental Laws are identified on the Disclosure Schedule.
2. NO CLAIMS. Except as set forth in PART 3.22B of the Disclosure
Schedule, there is no Environmental Claim (as defined below) pending or, to
Seller's Knowledge, threatened against the Business, the Assets or the ▇▇▇▇▇▇
Facility or, to Seller's Knowledge, against any person or entity whose liability
for any Environmental Claim Seller has or may have retained or assumed in
respect of the Business, the Assets, or the ▇▇▇▇▇▇ Facility, either
contractually or by operation of law.
3. ABSENCE OF EVENTS OR CONDITIONS. Without in any way limiting the
generality of the foregoing, (i) all on-site and off-site locations where
Seller, within the past five (5) years, has treated, stored, disposed or
arranged for the storage, treatment or disposal of Materials of Environmental
Concern used in the Business are identified in PART 3.22C of the Disclosure
Schedule, (ii) all underground storage tanks, and the capacity and contents of
such tanks, located now or, to Seller's Knowledge, within the past ten (10)
years on the Real Property are identified in the Disclosure Schedule, (iii)
except as set forth in the Disclosure Schedule, there is no asbestos contained
in or forming part of any building, building component, structure or office
located on the Real Property, (iv) except as set forth in the Disclosure
Schedule, no polychlorinated byphenyls (PCBs) are or have been used or stored at
the Real Property, (v) neither Seller nor, to Seller's Knowledge, any
predecessor owner of the Real Property, has filed, within the past ten (10)
years, any notice under any federal law or under any law of the State of Ohio
reporting a spill or release of Materials of Environmental Concern at the Real
Property; (vi) no lien asserting any claim or liability in favor of any
governmental entity for (A) any liability under federal, state or environmental
laws or regulations, or (B) damages arising from or costs incurred by any local
governmental entity in response to a release of Materials of Environmental
Concern into the environment is presently pending against or attached to the
Real Property.
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4. NO CAPITAL EXPENDITURES REQUIRED FOR COMPLIANCE. Except as set forth
in the Disclosure Schedule, to Seller's Knowledge, no capital or other
expenditures are required to bring the Assets or Seller into compliance with any
currently applicable, or adopted but not yet effective, Environmental Laws.
5. CERTAIN DEFINITIONS. For purposes of this Section, the following
definitions apply:
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products,
including, without limitation, any hazardous substances, wastes or materials as
defined by any Environmental Laws.
"ENVIRONMENTAL CLAIM" shall mean any legal or equitable, civil, criminal or
administrative claim, action, suit, demand, hearing, notice letter, notice
of violation, order, judgment, investigation or proceeding, against or
relating in any way to the Premises and/or it appurtenances that is based
upon pollution, contamination, damage or injury, or the threat of the same,
due to the release or threatened release of a Hazardous Substance(s) (as
defined below) into the environment, or that is related to requirements of,
violations of, liability under, or limitations or restrictions arising
under any "Environmental Law" (as defined below).
"ENVIRONMENTAL LAW" shall mean any common law or any federal, state or
local law, statute, code, ordinance, rule or regulation any amendments
thereto (whether such state or local law, statute, code, ordinance, rule or
regulation and any amendments thereto (whether such state or local law,
statute, code, ordinance, rule or regulation derives its authority from the
constitution or laws of the United States or the state where the Premises
is located) relating to either the waters of the United States or the state
where the Premises is located or to the emission, discharge, spill, release
or threatened release of any Hazardous Substance into the environment
(including, but not limited to, ambient air, surface water groundwater or
land), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of Hazardous
Substances, including, but no limited to, the Comprehensive Environmental
Responses, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq.,
the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901, et
seq., the Federal Clean Air Act, 42 U.S.C. 7401-7626, the Federal Water
Pollution Control Act and Federal Clean Water Act of 1977, 33 U.S.C. 1251,
et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
135 et seq., the Federal Environmental Pesticide Control Act, the Federal
Toxic Substances Control Act, 15 U.S.C. 2601, et seq., the Federal Safe
Drinking Water Act, 42 U.S.C. 300(f), et seq., and the Emergency Planning
and Community ▇▇▇▇▇-▇▇-▇▇▇▇ ▇▇▇, ▇▇ ▇.▇.▇. ▇▇▇▇▇, et seq. (reference to all
of such Acts to include all amendments).
"HAZARDOUS MATERIALS" shall include, without limitation: (i) those
substances which now or hereafter are included within the definition of
"Hazardous Substances", "Hazardous Materials", "Toxic Substances",
"Hazardous Waste",
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"Solid Waste", "Pollutant", or "Contaminant" in any Environmental Law, the
Hazardous Material Transportation Act, 49 U.S.C. 1801, et seq. and in the
regulations promulgated pursuant to those laws (as amended), (ii) those
substances listed int he United States Department of Transportation Table
(49 C.F.R. 172.101 and any amendments thereto) and by the Environmental
Protection Agency as hazardous substances (40 C.F.R. Part 302 and
amendments thereto), (iii) such other substances, materials, and wastes
which now or hereafter are regulated or are classified as hazardous or
toxic by any federal, state, or local government or political subdivision
of any government or any agency or instrumentality thereof, and (iv) oil
and petroleum products or by-products.
"ENVIRONMENTAL AUDIT". Buyer acknowledges receipt of the Level I Site
Assessment and Environmental Audit Report with respect to the ▇▇▇▇▇▇
Facility prepared by The ▇▇▇▇▇ Firm, Inc., Cincinnati, Ohio.
3.23 [RESERVED.]
3.24 PAYMENT OF TAXES.
1. Seller has filed and will continue to file all federal, state,
regional and/or local income, excise or franchise tax and informational returns,
real estate and personal property tax returns, sales and use tax returns,
F.I.C.A. returns, Workers Compensation returns and other tax and informational
returns required to be filed by it and has paid all taxes owing by Seller in
respect of the Business or the Assets, including both the employee and employer
portion of the F.I.C.A. taxes, income, excise, and franchise taxes, and workers
compensation premiums, except taxes which have not yet accrued or otherwise
become due and payable and except a may, in the future, be contested in good
faith proceedings.
2. Neither the Internal Revenue Service nor any other taxing authority is
now asserting or to the best of Seller's Knowledge, threatening to assert
against Seller or any Affiliate, in respect of any of the Assets, any deficiency
or claim for additional taxes or interest thereon or penalties in connection
therewith.
3.25 RELATED PARTY TRANSACTIONS. Seller is not a party to any contract,
agreement, lease, loan, commitment, transaction, arrangement or other
understanding, oral or written, with any Affiliate in respect of the Business.
Neither Seller nor any Affiliate has any direct or indirect interest in any
competitor, supplier, or customer of the Business or in any party from, or to,
whom Seller leases any real or personal property in respect of the Business or
in any other person with whom Seller or any Affiliate, in respect of the
Business, is doing business.
3.26 INSURANCE.
1. IN GENERAL. Attached hereto as PART 3.26A is the Schedule of
Insurance, which lists all insurance policies and arrangements of the Business,
including the name of the insurer, the insured, the beneficiary, the policy
number, the amount of the coverage, and the dates of commencement and
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termination. Seller has maintained (and paid all premiums thereon when due) and
now maintains: (i) insurance on the Assets of a type customarily insured,
covering property damage by fire or other casualty; and (ii) adequate, in
Seller's reasonable business judgment, insurance protection against all
liabilities, claims, and risks against which it is customary to insure, in
respect of the Business, including without limitation, all required insurance
for worker's compensation and unemployment, products liability, and general
public liability. Seller will deliver to Buyer, upon written request, copies of
insurance certificates evidencing that all such insurance coverage is in full
force and effect as of the Closing Date. Seller, in respect of the Business, has
not been refused any insurance with respect to its assets or operations, nor has
its coverage been limited, by any insurance carrier to which it has applied for
any such insurance or with which it has carried insurance since January 1, 1994.
2. PRODUCT LIABILITY. Seller, since January 1, 1994, has maintained
insurance for product liability in respect of the Business in a principal amount
not less than One Million Dollars ($1,000,000) per occurrence and excess
coverage of Ten Million Dollars ($10,000,000), subject to a $100,000 retention,
through the Closing Date. Seller has maintained and now maintains (and has paid
all premiums thereon when due) product liability insurance on an "incurrence
basis."
3. SELF INSURANCE. PART 3.26C describes any self-insurance arrangements
affecting the Business, the Assets and/or the employees of the Business.
3.27 FINDER'S FEES. Neither Seller nor any Affiliate of Seller has incurred or
become liable for any broker's commission or finder's fee relating to, or in
connection with, the transactions contemplated by this Agreement or taken any
action whatsoever to cause Buyer to incur or become liable for any such
commission or fee.
3.28 PRODUCT WARRANTIES. Attached at PART 3.28 to the Disclosure Schedule are
true and correct copies of the only authorized standard product and service
warranty policies offered or given to dealers, distributors and/or other
purchasers of the Product. Except as set forth at Part 3.28 to the Disclosure
Schedule, neither Seller nor, to Seller's Knowledge, any distributor or sales
representative of Seller, has given any third party any product warranties,
representations, guarantees, or indemnifications (oral or written) with respect
to the Products.
3.29 CUSTOMER DEPOSITS. Seller has not received, as of June 30, 1997, any
deposits, payments on account or similar payment with respect to any of its
contracts in respect of the Business, and no such deposits, payments on account
or similar payments are due or owing to Seller except as set forth in PART 3.29
of the Disclosure Schedule (which will be updated as of the Closing and which
liability will be set forth in the Final Closing Statement).
3.30 FULL DISCLOSURE. No statement of fact made by Seller in this Agreement or
in any Schedule or Exhibit furnished to Buyer pursuant hereto is false or
inaccurate in any material respect or omits to state any fact necessary to make
the statements herein or therein not misleading in any material respect. To the
extent that any of the representations and warranties made by Seller in this
Agreement is qualified by the knowledge of Seller, as of the date of this
Agreement, Seller represents and warrants that it has made reasonable inquiry of
the key management personnel of Seller concerning the matters to which such
representations and warranties relate, including, but not limited to, the
individuals identified in the definition of "Knowledge" contained in ARTICLE 1.
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3.31 SURVIVAL. All representations and warranties made by Seller in this
Agreement or in any related document or other certificate or instrument
delivered pursuant to this Agreement shall survive the Closing for a period of
five (5) years irrespective of any investigation of the Assets or the Business
made by Buyer, shall be true and correct on the Closing Date as if specifically
made thereon, and shall survive thereafter to the extent a claim for
indemnification is asserted by Buyer in respect of such representation or
warranty during such five (5) year period. Notwithstanding anything in the
preceding sentence to the contrary: (i) the representations and warranties
contained in Sections 3.5 (Financial Statements), 3.6 (Changes), 3.15
(Contracts), 3.16 (Accounts Payable), 3.26 (Insurance), 3.28 (Product
Warranties), and 3.29 (Customer Deposits) shall survive the Closing for a period
of two (2) years; (ii) the representations and warranties contained in Section
3.22 (Environmental Matters) shall survive the Closing for a period of fifteen
(15) years; (iii) the representations and warranties contained in Section 3.24
(Taxes) and 3.20 (Employee Benefits, to the extent such representations and
warranties relate to taxes) shall survive the Closing until the expiration of
any statutes of limitations applicable with respect to such taxes; and (iv) the
representations and warranties contained in Sections 3.1 (Ownership of Assets)
and 3.4 (to the extent Section 3.4 relates to ownership of assets) and Section
3.2 (Organization, Qualification and Authority) shall survive the Closing
without limitation. To the extent any such representation or warranty relates to
the Real Property, such representations and warranties shall survive the
delivery and recording of the ▇▇▇▇▇▇ Lease (or any Memorandum of Lease) and
shall not be deemed merged therein.
ARTICLE 4
COVENANTS OF SELLER
-------------------
The covenants and agreements set forth in this ARTICLE 4 shall survive the
Closing Date.
4.1 CONDUCT OF BUSINESS.
Between the date of this Agreement and the Closing, Seller will do the
following in respect of the Business unless Buyer shall otherwise expressly
consent in writing:
1. Conduct the Business only in the ordinary course and refrain from
changing or introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices, except for
actions specifically required to be taken by Seller pursuant to this Agreement
prior to Closing, or actions not specifically permitted or specifically provided
for herein which Buyer directs Seller to take prior to Closing;
2. Refrain from the following with respect to the Business:
(1) amending, restating, modifying or extending any Union Agreement
or entering into a new collective bargaining agreement with any
Union except that Seller shall not be restricted in negotiating
in regard to the effects of the transactions contemplated herein
upon its employees covered by the Union Agreement;
(2) increasing its Inventory from the levels reported in the June 30,
1997 Interim Balance Sheet except in direct response to requests
from customers;
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(3) making any purchase, sale, transfer, assignment, or disposition
of the Assets or property or waiving any right of material value,
other than in the ordinary course of business;
(4) mortgaging, pledging, subjecting to a lien or otherwise
encumbering any of the Assets except liens for current property
taxes not yet due and payable and current liens to which after
acquired property became subject;
(5) incurring any contingent liability as a guarantor or otherwise
with respect to the obligations of others;
(6) incurring any other contingent or fixed obligations or
liabilities except those that are usual and normal in the
ordinary course of business;
(7) making sales to customers on other than upon the Business'
current terms and conditions with respect to each such customer
(including price and terms of payment) and in the ordinary course
of business;
(8) borrowing any amount or incurring or becoming subject to any
material liabilities, except normal borrowings under its existing
credit facilities, other current liabilities incurred in the
ordinary course of business and liabilities under contracts
entered into in the ordinary course of business;
(9) canceling without fair consideration any material debts or claims
owing to or held by it;
(10) granting any bonus or any wage or salary increase to any employee
or shareholder or group of employees, except as required under
the Union Agreement or except in the ordinary course;
(11) granting any increase in any employee benefit plan or arrangement
(except in accordance with past custom and practice and except
for the Union Agreement), or amending or terminating any existing
employee benefit plan or arrangement or adopting any new employee
benefit plan or arrangement (except for the termination thereof)
and any amendments in connection therewith of any Plans;
(12) making any capital expenditures or commitments therefor that are
in excess of Ten Thousand Dollars ($10,000) individually or in
the aggregate which would be an obligation of Buyer after the
Closing;
(13) making any loans or advances to, or guarantees for the benefit
of, any persons, except for advances made to employees for
expenses in the ordinary course of business; and
(14) entering into any other material transaction other than in the
ordinary course of business.
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3. Use its reasonable efforts to keep intact the Business' business
organization, to retain the Business' present officers and employees (other than
such officers and employees, if any, who have been advised by Buyer that Buyer
as of the Closing Date will not be extending an offer of employment to them) and
to preserve the goodwill of all suppliers, customers, and others having business
relations with the Business;
4. Have in effect and maintain at all times all insurance of the kind, in
the amount, and with the insurers set forth in the Schedule of Insurance
heretofore delivered to Buyer;
5. Permit Buyer and its authorized representatives to have at reasonable
times full access to all of the Business' properties, assets, records,
contracts, and documents, and furnish to Buyer or its authorized representative
such financial and other information as Buyer may from time to time reasonably
request in respect of the Business, including but not limited to, monthly
interim financial statements within twenty (20) days after the end of the month;
6. Permit Buyer to contact customers, suppliers, sales representatives,
personnel and others having relations with the Business as mutually agreed upon
between Seller and Buyer or with approval of Seller (which shall not be
unreasonably withheld or delayed).
7. Not cause the Business to combine or merge with or consolidate with
any other corporation or entity;
8. Not take any action, or omit to take any action, which would cause a
breach of or default under any of the Business' material Contracts, leases, or
commitments; and
9. Notify Buyer promptly of any material adverse event or material change
in the Business or the condition of the Assets.
4.2 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Between the date
hereof and the Closing, promptly upon the occurrence of, or promptly upon Seller
becoming aware of the impending or threatened occurrence of, any event which
would cause or constitute a breach, or would have caused or constituted a breach
had such event occurred or been known to Seller prior to the date hereof, of any
of the representations, warranties or covenants of Seller contained in this
Agreement, Seller shall give detailed written notice thereof to Buyer and shall
use its reasonable efforts to prevent or promptly remedy the same.
4.3 CONSUMMATION OF AGREEMENT. Seller shall use its reasonable efforts to
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement.
4.4 COOPERATION. Seller shall use its reasonable efforts to cause the Closing
to occur on July 31, 1997 or as soon as practicable thereafter and shall not
undertake any course of action inconsistent with such intended result.
4.5 REGULATORY FILINGS. Seller shall promptly take all actions necessary to
make each filing it is required to make with any governmental agency or
authority as a condition to or consequence of the
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consummation of this Agreement, and shall use its reasonable efforts to assist
Buyer in making such required filings.
4.6 INJUNCTIONS. If any United States court having jurisdiction over Seller
issues or otherwise promulgates any Injunction, Seller shall use its reasonable
efforts to have such Injunction dissolved or otherwise eliminated as promptly as
possible; PROVIDED, HOWEVER, that the foregoing provision shall not require
Seller to dispose of any of its assets or business or to agree to any
restriction on its ownership, acquisition or disposition of assets or the
conduct of its business or take any action other than to pursue the litigation
diligently and in good faith.
4.7 TAXES. Seller covenants and agrees that it will prepare and file all tax
returns required to be filed by it including, without limitation, payroll,
workers' compensation, state and federal unemployment tax returns and pay all
amounts due thereunder except for taxes contested in good faith by appropriate
proceedings.
4.8 GOVERNMENTAL AUTHORIZATION. Seller agrees that, with respect to
Governmental Authorizations (if any) which are non-transferrable, Seller shall
cooperate with Buyer to effect the creation of identical or substantially
similar rights in favor of Buyer after the Closing.
4.9 EMPLOYEES OF THE BUSINESS.
1. NO OBLIGATION TO ASSUME COLLECTIVE BARGAINING AGREEMENT. Buyer does
not accept or assume any collective bargaining agreement (including the Union
Agreement) covering any of Seller's employees. Seller agrees to satisfy any
obligations under the National Labor Relations Act, state or local laws to
bargain with the Union concerning the effects of this sale of Assets on
terminated bargaining unit employees.
2. NOTIFICATION. Following execution of this Agreement, Seller agrees to
notify the Union in writing of: (i) the execution of this Agreement; (ii) the
sale of the Assets under this Agreement; and (iii) that Buyer is not assuming
the Union Agreement.
3. OFFERS OF EMPLOYMENT; COMMUNICATION WITH EMPLOYEES. Buyer shall not be
obligated by this Agreement to offer employment after the Closing Date to any
employees of the Seller. Following the execution of this Agreement and upon
notice to Seller, Buyer may communicate with any employees of the Seller who are
to be terminated by Seller pursuant to Section 4.9D for the purpose of offering
such employees employment with Buyer. Seller shall not directly or indirectly
induce, suggest, or recommend to employees of Seller that they accept or reject
employment with Buyer.
4. NOTICE OF TERMINATION. Seller agrees that it will give notice of
termination of employment to all of its employees (hourly and salaried) located
at the ▇▇▇▇▇▇ Facility whose primary responsibility is in connection with the
Business, which termination of employment will be effective no later than the
date immediately prior to the Closing Date.
5. NO ASSURANCE OF CONTINUED EMPLOYMENT. Seller hereby agrees that it
will not, without the prior written consent of Buyer, notify, promise,
represent, advise, state or otherwise communicate
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to any employee of Seller that Buyer will nor will not be hiring any or all such
employees or make any offer of employment on behalf of Buyer. All inquiries
regarding the prospect of continued employment which may be made by Seller's
employees shall be directed to Buyer.
6. TERMINATION OF EMPLOYEES. Immediately prior to the Effective Time,
Seller shall terminate all of its employees located at the ▇▇▇▇▇▇ Facility whose
primary employment responsibility is in connection with the Business as of the
Closing Date, and shall bear all resulting claims, losses, damages and expenses,
and other liabilities and obligations, if any, relating to or arising out of
such termination and/or permanent layoff, including but not limited to the
following (regardless of when such claim may be asserted):
(1) severance pay;
(2) accrued wages or vacation pay;
(3) hospitalization or medical claims;
(4) unemployment compensation
(5) claims for back pay and/or reinstatement (including interest
assessed thereon);
(6) claims for contributions or benefits under the provisions of any
Plan;
(7) wage and hour claims;
(8) any claims under any collective bargaining agreement, grievances
filed pursuant to any collective bargaining agreement, unfair
labor practices filed with the National Labor Relations Board or
any comparable foreign, federal, state or local board, agency or
commission;
(9) claims relating to equal employment opportunity;
(10) claims asserting the right to participate in any medical
insurance program under COBRA or comparable state law;
(11) any funding or withdrawal liability relating to any Plan;
(12) any claims or litigation resulting from such termination and/or
permanent layoff and/or the sale of the Assets or otherwise; and
(13) any and all claims arising out of employment on or prior to the
Closing Date regardless of when such claims may be asserted.
7. OBLIGATIONS OF BUYER. Buyer agrees that it will retain all liability
for any and all claims, losses, damages, and expenses, and other liabilities and
obligations relating to or arising out of all unfair labor practice charges,
wrongful termination or refusal to hire litigation, employment discrimination
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charges, severance claims, health and welfare claims, retirement claims,
worker's compensation claims, and any other claims related to employment and
based solely upon Buyer's conduct after the Closing Date or based solely upon
Buyer's conduct in discussions contemplated by Section 4.9C above pending the
Closing Date (and which are filed within applicable statutes of limitations).
Notwithstanding the above, Buyer assumes no liability for Seller's compliance or
non-compliance with the WARN Act (based, in whole or in part, upon Buyer's not
hiring certain of Seller's employees at Closing).
8. VACATION PAY. Any costs of earned or accrued but unpaid vacation as of
the Closing Date shall be the obligation of Seller.
4.10 ENVIRONMENTAL MATTERS. Seller covenants and agrees at its sole cost and
expense, to defend, indemnify and hold harmless Buyer, its successors, assigns
from and against, and shall reimburse Buyer, its successors and assigns for, any
and all loss, claims, liability, damage, judgment, penalty, injunctive relief,
action or cause of action incurred by cost, expense, or asserted against Buyer
and arising in connection with or as a result of any one or more of the
following (collectively, "Environmental Loss"):
(1) Any existence, use, handling, storage, transportation,
manufacture, release, threat of release, disposal, or arrangement
for disposal of any Materials of Environmental Concern in, on,
under or affecting any of the Facilities during the occupancy
thereof by Seller which Materials of Environmental Concern or
events in respect thereof were created, arose or occurred on or
before the Effective Time;
(2) Any failure of Seller or any of their respective Affiliates to
comply with any Environmental Laws on or before the Effective
Time;
(3) Any investigation, inquiry, order, hearing, action or other
proceeding by or before any governmental agency in connection
with any release of a Material of Environmental Concern or
non-compliance with Environmental Laws occurring or allegedly
occurring in, on, under or affecting the Facilities, which
release or non-compliance arose or occurred on or before the
Effective Time;
(4) Any failure of any representation and/or warranty set forth in
Section 3.22 above to be correct in all material respects;
(5) Any failure of Seller to perform any covenant set forth in
Section 3.22 above; and
(6) Any claim, demand or cause of action, or any action or other
proceedings, whether meritorious or not, brought or asserted
against Buyer, its successors, assigns and/or designees which
relates to, arises from or is based on any of the matters
described in clauses (i) through (iv) of this Section 4.10.
The foregoing indemnification against Environmental Loss shall apply to all
of clauses (i) through (vi) of this Section 4.10 whether such events, acts or
omissions are foreseeable or unforeseeable, regardless of the source, the time
of occurrence or the time of discovery.
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The indemnification obligations of Seller under this Section 4.10 are
independent of the indemnification obligations set forth in Section 10.1. Claims
under this Section 4.10 shall be governed by the procedures described in Section
10.3 and shall survive the Closing for a period of fifteen (15) years.
4.11 USE OF CERTAIN SUPPLIES. Notwithstanding anything in this Agreement to the
contrary, Seller agrees to permit Buyer to use in the conduct and operation of
the Business of the Business the existing packaging, shipping invoices, purchase
orders, marketing materials and similar supplies of the Business which bear the
name "THE MONARCH MACHINE TOOL COMPANY" or any logos for the period necessary to
exhaust such supplies; PROVIDED, HOWEVER, that Buyer shall overprint, apply an
appropriate label or otherwise obliterate such names and logos on such items;
PROVIDED, FURTHER, that Buyer shall not represent or hold itself out to the
public as representing Seller.
0.1 ENFORCEMENT OF RESTRICTIVE COVENANT OF FORMER EXECUTIVE. Seller has
informed Buyer that Seller and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the former Chairman of Seller)
are parties to an agreement which, INTER ALIA, restricts ▇▇. ▇▇▇▇▇▇▇ from
competing in the Business for a defined period of time. Buyer agrees that
Seller's rights under said agreement are not being assigned to Buyer as part of
the Assets. Seller covenants and agrees that in the event Seller learns (from
Buyer or others) or has a reasonable basis to believe that ▇▇. ▇▇▇▇▇▇▇ is
engaging, or is about to engage, in any activities relating to the Business in
violation of his restrictive covenants, Seller agrees to seek and obtain, at no
cost to Buyer, appropriate legal and equitable relief as Buyer may request in
order to enforce ▇▇. ▇▇▇▇▇▇▇'▇ obligations and enjoin such actual or threatened
breach. Any and all monetary damages recovered or recoverable against ▇▇.
▇▇▇▇▇▇▇ shall inure to the sole benefit of Seller.
4.12 NOTIFICATION TO DISTRIBUTORS AND SALES REPRESENTATIVES. Seller has informed
Buyer that certain of the distributorship agreements and sales representative
agreements entered into by Seller in connection with the sale of Products of the
Business also cover other divisions and businesses of Seller (in particular
Seller's Cortland, New York operations). Immediately after the Effective Time,
Seller shall notify each of its distributors ("Notification of Distributors") in
respect of the Business that the Assets are being sold to Buyer and that the
distributorship agreements and sales representative agreements between Seller
and such distributors and sales representatives shall remain in effect solely
with respect to those portions of Seller's business which are not being
purchased by Buyer hereunder. Seller shall furnish Buyer a form of the proposed
Notification to Distributors not less than three (3) days prior to the intended
mailing date, and Seller shall not offer, promise, advise, state or otherwise
communicate to any distributor or sales representative that Buyer will not be
entering into a business relationship with such persons and entities.
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0.2 REMOVAL OF EXCESS LUBRICANTS AND OTHER MATERIALS OF ENVIRONMENTAL CONCERN.
Within five (5) days prior to the Closing Date or as soon as practicable
thereafter, representatives of Buyer and Seller shall examine the nature and
quantity of machine lubricants and similar materials stored at the ▇▇▇▇▇▇
Facility. Seller agrees to remove, at Seller's sole cost and expense, such
quantities of lubricants and similar materials as Buyer identifies as being in
excess of materials necessary to service Buyer's machine maintenance needs for a
six (6) month period following the closing. The method and location of such
removal shall be mutually agreed by Buyer and Seller and shall be conducted in
accordance with all applicable Environmental Laws.
4.13 CLOSING SCHEDULE OF ACCOUNTS PAYABLE. Within five (5) days following the
Closing Date, the parties will annex to the Disclosure Schedule at PART 4.15 the
Closing Schedule of Accounts Payable. The Closing Schedule of Accounts Payable
will be reflected on the Final Closing Statement and will reflect a full and
complete list of all accounts payable of the Business as of the Closing Date,
reflecting as to each account the creditor's name, the amount owed thereunder,
and the age or date of such payable.
4.14 EXTENDED PRODUCT LIABILITY INSURANCE. Seller covenants and agrees to
deliver to Buyer at the Closing an insurance certificate evidencing that
continuing "tail" product liability insurance coverage in an amount not less
than coverage in the amounts described in Section 3.26B is in full force and
effect, and Seller covenants and agrees to maintain such insurance for a period
of not less than three (3) years following Closing and, to the extent possible,
if requested by Buyer, to name Buyer as an additional insured, at Buyer's cost.
4.15 SHIPMENT BY SELLER OF "PREDATOR" UNIT AT CORTLAND DIVISION. Seller
covenants and agrees that Seller shall load, handle and ship to the ▇▇▇▇▇▇
Facility, prior to or following the Closing Date, as Buyer may request, and at
Seller's sole cost (including, but not limited to, freight insurance), the
certain "Predator" unit currently located at Seller's Cortland, New York
operations. Risk of loss of such unit shall pass to Buyer F.O.B. the ▇▇▇▇▇▇
Facility.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer, in order to induce Seller to sell the Assets to Buyer hereunder,
hereby makes the following representations and warranties, each of which shall
be true and correct on the execution hereof except as otherwise specified herein
and will be true and correct at the Effective Time, and which shall survive the
Closing Date for the period specified in Section 5.6.
5.1 ORGANIZATION OF BUYER. Buyer is a limited partnership duly organized,
validly existing, and in good standing under the laws of the State of Ohio with
full power to own or lease its properties, to conduct its business, and to
acquire and own the Assets and operate the Business. The General Partner has the
power and authority to execute this Agreement and the Related Documents on
behalf of Buyer. The General Partner is duly organized, validly existing and in
good standing under the laws of the State of Ohio.
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5.2 AUTHORITY OF BUYER.
1. DUE EXECUTION. All necessary action, corporate or otherwise, has been
taken by the General Partner of Buyer to authorize the execution, delivery, and
performance of this Agreement and the Related Documents.
2. NO BREACH OF STATUTE OR CONTRACT. At the Effective Time, the execution
and delivery of this Agreement, and the performance of the obligations by Buyer
under this Agreement will not violate, contravene, be in conflict with, result
in a breach of or constitute (with or without notice or lapse of time or both) a
default under: (i) any provision of law; (ii) any order, rule or regulation of
any court, arbitrator or other agency of government; (iii) any provision of the
Limited Partnership Agreement of Buyer or the Articles of Incorporation or Code
of Regulations of the General Partner, or (iv) any lease, indenture, agreement
or other instrument to which Buyer or its properties or assets is or may be
bound.
3. POWER AND AUTHORITY TO ENTER INTO AGREEMENT. Buyer has the right,
power, legal capacity, and authority to enter into and to and perform its
obligations under this Agreement and the Related Documents to which Buyer is a
party. Except as set forth in PART 5.2C of the Disclosure Schedule, no consent,
approval or authorization of, or registration, declaration, or filing with any
governmental authority (federal, state or local, domestic or foreign),
collective bargaining unit, lending institution or other third party is required
in connection with the execution and delivery by Buyer of this Agreement or any
Related Document to which Buyer is a party or its performance of, or compliance
with, the terms, provisions and conditions hereof or thereof.
4. ENFORCEABILITY. This Agreement and the Related Documents to which
Buyer is a party constitute the valid and binding obligation of Buyer, each
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights or by general principles of equity.
5.3 FINDER'S FEE. Buyer has not incurred or become liable for any broker's
commission or finder's fee relating to, or in connection with, the transactions
contemplated by this Agreement or taken any action whatsoever to cause Seller to
incur or become liable for any such commission or fee.
5.4 LITIGATION. No litigation is pending or, to the best of Buyer's knowledge,
threatened against Buyer which could prevent it from entering into, or
performing its obligations under, this Agreement.
5.5 FULL DISCLOSURE OF REPRESENTATIONS. No representation, covenant, or
warranty by Buyer and no statement, Exhibit or Schedule furnished to Seller
pursuant hereto, omits or will omit to state a material fact necessary to make
any representations, covenants, and/or warranties of Buyer under this Agreement
not misleading.
5.6 SURVIVAL. The representations and warranties made by Buyer in this
Agreement or in any related documents or other certificate or instrument
delivered pursuant to this Agreement, including, but not limited to, those
contained in this ARTICLE 5 shall survive the Closing for a period of five (5)
years, and shall survive thereafter to the extent a claim for indemnification is
asserted by Seller in respect of
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such representation or warranty during such five (5) year period except that the
representations and warranties contained in Sections 5.1 and 5.2 shall not
expire.
ARTICLE 6
COVENANTS OF BUYER
------------------
Buyer, in order to induce Seller to enter into this Agreement and to
perform the obligations hereunder, hereby makes the covenants and agreements set
forth in this ARTICLE 6. The covenants and agreements set forth in this ARTICLE
6 shall survive the Closing Date.
6.1 BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Between the date
hereof and the Closing, promptly upon the occurrence of, or promptly upon Buyer
becoming aware of the impending or threatened occurrence of, any event which
would cause or constitute a breach, or would have caused or constituted a breach
had such event occurred or been known to Buyer prior to the date hereof, of any
of the representations, warranties or covenants of Buyer contained in this
Agreement, Buyer shall give detailed written notice thereof to Seller and shall
use its reasonable efforts to prevent or promptly remedy the same.
6.2 CONSUMMATION OF AGREEMENT. Buyer shall use its reasonable efforts to
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement.
6.3 COOPERATION. Buyer shall use its reasonable efforts to cause the Closing to
occur on July 31, 1997 or as soon as practicable thereafter and shall not
undertake any course of action inconsistent with such intended result.
6.4 REGULATORY FILINGS. Buyer shall promptly take all actions necessary to make
each filing it is required to make with any governmental agency or authority as
a condition to or consequence of the consummation of this Agreement, and shall
use its best efforts to assist Seller in making such required filings.
6.5 INJUNCTIONS. If any United States court having jurisdiction over Buyer
issues or otherwise promulgates any Injunction, Buyer shall use its best efforts
to have such Injunction dissolved or otherwise eliminated as promptly as
possible, PROVIDED, HOWEVER, that the foregoing provision shall not require
Buyer to dispose of any of its assets or business or to agree to any restriction
on its ownership, acquisition or disposition of assets or the conduct of its
business or take any action other than to pursue the litigation diligently and
in good faith.
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6.6 MAINTENANCE OF BOOKS AND RECORDS.
1. RETENTION OF RECORDS. Subject to this Section 6.6A, for a period of
five (5) years following the Closing Date, Buyer shall retain, at no cost to
Seller, all books, records and files of the Business pertaining to the period
prior to the Closing Date. After the expiration of said five (5) year period,
Buyer may dispose of or destroy any and all such books, records and files;
PROVIDED, HOWEVER, that prior to disposing of or destroying such books, records
and files, Buyer shall notify Seller of its intention to dispose of or destroy
same. Should Seller determine that it may need such materials such as in the
case of litigation, tax examination or the like, Seller shall so notify Buyer in
writing within thirty (30) days after receipt of Buyer's notice and Buyer shall,
at Seller's expense, deliver such materials to Seller or permit Seller to take
possession thereof. Notwithstanding anything herein contained to the contrary,
Seller acknowledges and understands that Buyer's obligation to maintain books,
records and files of the Business following Buyer's relocation of the Business
from the ▇▇▇▇▇▇ Facility or any other Facility to a new facility shall be
limited to those items which Buyer physically removes to the new location.
2. ACCESS. During any period that Buyer retains any records described in
Section 6.6A, Buyer shall give Seller and its authorized representatives
reasonable access to such records during normal business hours upon reasonable
notice at all times, and the right to copy any such records, all at Seller's
sole expense. For so long after such period as Seller retains any such records,
Seller shall give Buyer and its authorized representatives reasonable access to
such records during normal business hours upon reasonable notice for the
purposes enumerated in the preceding sentence, all at Seller's sole expense.
ARTICLE 7
FURTHER AGREEMENTS AND UNDERSTANDINGS
-------------------------------------
7.1 ASSISTANCE IN COLLECTION OF SELLER'S RECEIVABLE UPON SELLER'S REQUEST.
1. Buyer agrees to use its reasonable administrative efforts (which shall
include, without limitation, those efforts taken by Buyer in connection with the
collection of Buyer's accounts receivables, but excluding the institution of
litigation or the retention of a collection agency), upon request by Seller, to
collect Seller's Receivables on behalf of Seller for a period not to exceed six
(6) months following the Closing. Each party agrees to promptly remit to the
other all funds collected in respect of the other party's accounts receivable.
Buyer shall not compromise any of Seller's Receivables without the prior written
consent of Seller. Should Seller request Buyer's assistance, Buyer shall provide
Seller with copies, not less frequently than monthly, of such portion of Buyer's
account ledgers which relate specifically to the collection of Seller's
Receivables and application of collections of Seller's Receivables and other
collections from those customers to whom Seller's Receivables relate. All funds
received from the account debtors in respect of Seller's Receivables will be
applied in accordance with specific invoices accompanying such payment or, in
the absence of such invoices, as directed by the customer. Seller agrees that it
will not institute any legal action against any of the account debtors described
in PART 7.1B of the Disclosure Schedule (Schedule of Receivables) for the
purpose of collecting Seller's Receivables without providing at least thirty
(30) days notice to Buyer of Seller's intention to institute such legal action.
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2. In order to facilitate the application of payments by account debtors
of the Business following the Closing, Seller will annex to the Disclosure
Schedule at PART 7.1B within five (5) days following the Closing a true and
complete schedule of Receivables as of the Closing Date ("Schedule of
Receivables"). The Schedule of Receivables shall be initialed by the parties
hereto and deemed delivered hereunder). The Schedule of Receivables will reflect
a full and complete list of all accounts receivables of the Business as of the
Closing reflecting as to each receivable the debtor's name and location (city
and state), the amount owed thereunder.
7.2 NO ASSUMPTION OF PLAN LIABILITIES. Buyer shall not, by reason of this
Agreement or the transactions contemplated hereby, incur or otherwise assume any
liability or obligations under any Plan, whether or not any such Plan or benefit
thereunder relates to employees of the Business whom may be employed by the
Buyer following the Closing Date, including, without limitation, all severance
plan payments and all health insurance benefits (including retiree benefits)
payable with respect to employment by the Business prior to the Closing Date.
Seller shall retain liability for all benefits (whether the due date for payment
of such benefits is on or after the Closing Date) to all employees of the
Business employed by Seller during all periods up to and including the Closing
Date, and to all present and former employees of the Business who are retired as
of the Closing Date, and to the beneficiaries of such employees of the Business,
pursuant to the terms and conditions of any Plan.
ARTICLE 8
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
Buyer's obligations to consummate this Agreement and the transaction
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of the following conditions precedent:
8.1 REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the representations,
warranties and covenants of Seller contained herein shall be true and correct in
all material respects as though made on and as of the date hereof and the
Closing Date. Seller shall, on or before the Closing, have performed all of its
obligations hereunder which by the terms hereof are to be performed on or before
the Closing. Seller shall have delivered to Buyer an officer's certificate of
Seller dated as of the Closing Date to the foregoing effect.
8.2 OPINION OF SELLER'S COUNSEL. At the Closing, Buyer shall have received from
▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ L.L.P., counsel for Seller, an opinion dated as of the
Closing Date, in substantially the form attached hereto as EXHIBIT "K".
8.3 PROCEEDINGS, DOCUMENTS, INSTRUMENTS SATISFACTORY TO BUYER. All actions,
proceedings, consents, schedules, exhibits, instruments and documents required
to be delivered by Seller pursuant to this Agreement or incident to the
performance of Seller's obligations hereunder, and all other related matters
shall be satisfactory to Buyer as to form and substance.
8.4 NO DAMAGE OR DESTRUCTION TO FIXED ASSETS; NO MATERIAL CHANGES.
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1. IN GENERAL. Between the date of this Agreement and the Closing Date,
there shall not have occurred any damage to or destruction of the Fixed Assets,
the cost of replacement or restoration of which shall exceed $25,000 (as
determined by an insurance appraiser reasonably satisfactory to the parties),
whether or not such loss is covered by insurance, and there shall not have
occurred any other material adverse change in the Assets.
2. BUYER'S RIGHTS IN THE EVENT OF MAJOR DAMAGE TO FIXED ASSETS. In the
event of any of the Fixed Assets are damaged or destroyed or are otherwise
rendered unusable in the operation of the Business and the estimated cost of
restoring, rebuilding, replacing or renovating such Fixed Assets shall exceed
Twenty-Five Thousand Dollars ($25,000) (as determined by an insurance appraiser
reasonably satisfactory to the parties) ("Major Damage"), Seller shall
immediately notify Buyer thereof and Buyer may, at its sole election:
(1) proceed with the purchase of the Assets as if no such damage or
destruction had occurred, with the Purchase Price automatically
being adjusted downward in an amount equal to the Major Damage;
(2) proceed with the purchase of the Assets as if no such damage or
destruction had occurred, without any adjustment to the Purchase
Price, but Buyer shall be entitled to receive, and Seller shall
promptly remit to Buyer, all insurance proceeds payable in
respect of such damaged or destroyed Fixed Assets (excluding
deductibles) and all claims in respect of such proceeds); or
(3) terminate this Agreement in accordance with Section 11.1(ii).
8.5 NO MATERIAL ADVERSE CHANGE. Since the date of execution, there has not been
any material adverse changes in the financial condition of the Business.
8.6 OFFICERS' CERTIFICATE. Buyer shall have been furnished with a certificate
executed on behalf of Seller by its President, certified by its Secretary, dated
the Closing Date, representing and certifying, in such detail as Buyer may
reasonably request, that the conditions set forth in Sections 8.1, 8.4, 8.5,
8.7, 8.8 and 8.16 have been fulfilled at or prior to the Closing Date, and that
Seller is not in default under any provision of this Agreement or any Related
Document to which they (or either of them) are parties.
8.7 CONSENTS. Seller shall have received all consents necessary to transfer the
Assets to Buyer hereunder and to permit Buyer to assume the obligations Buyer is
assuming pursuant to the Assumption Agreement except those consents the failure
to obtain of which Buyer reasonably determines will not have a material adverse
on the Business of the Assets.
8.8 NO ACTIONS, SUITS OR PROCEEDINGS.
1. IN GENERAL. Subject to the terms, conditions and qualifications
described in this Section 8.8, no action, suit or proceeding shall be pending
or, to the knowledge of Buyer, threatened, before any court or governmental body
to restrain or prohibit, or to obtain damages or a discovery order in respect
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of, this Agreement or the consummation of the transactions contemplated hereby
or which has had or may have, in the sole judgment of Buyer, a material adverse
effect on the Assets or the Business.
2. MATERIAL LABOR CLAIMS. Without limiting the generality of Section
8.8A, any action, suit, grievance, unfair labor practice or other administrative
proceeding ("Labor Claim") which is filed after the execution hereof but prior
to the Closing and which Labor Claim has, or may have, in the reasonable
judgment of Buyer, a material adverse affect on the Assets or the Business,
shall relieve the Buyer of its obligation to purchase the Assets.
3. INJUNCTION. Buyer may, in its sole and absolute discretion, terminate
this Agreement without liability in the event a court of competent jurisdiction
has issued an injunction directing Buyer or the parties hereto not to close the
transaction.
4. STRIKE, LOCKOUT OR OTHER INTERRUPTION OF BUSINESS. In the event of an
actual or strike, picketing or work stoppage by any employee of the Business or
a secondary boycott with respect to the Business's products, or a lockout by
Seller of any of its employees which occurs between the date of the execution of
this Agreement and the Closing and which Labor Dispute has not been fully
resolved prior to Closing and which labor dispute has, in Buyer's reasonable
judgment, a material adverse effect on the Assets or the Business, Buyer may
terminate this Agreement without liability, notwithstanding anything contained
in this Section 8.8 (or elsewhere in this Agreement) to the contrary.
8.9 [RESERVED.]
8.10 NON-COMPETITION AGREEMENT. Seller shall execute herewith and deliver to
Buyer the Non-Competition Agreement in the form of EXHIBIT "A" attached hereto.
8.11 ▇▇▇▇▇▇ LEASE. Seller shall execute herewith and deliver to Buyer the ▇▇▇▇▇▇
Lease in the form of EXHIBIT "E" attached hereto.
8.12 [RESERVED.]
8.13 ROYALTY AGREEMENT. Seller shall execute herewith and deliver to Buyer the
Royalty Agreement in the form of EXHIBIT "C" attached hereto.
0.3 LANDLORD'S WAIVER. Seller shall execute and deliver to Buyer a Landlord's
Waiver in form and substance satisfactory to counsel for Buyer.
8.14 UCC-1 FINANCING STATEMENTS FROM THIRD PARTIES IN POSSESSION OF ASSETS. On
or before the Closing Date, there shall have been delivered to Buyer a written
acknowledgment, in the form of UCC-1 Financing Statements, in favor of Buyer and
its institutional lender from each distributor, servicing center, warehouse,
vendor and other third parties (if any) in possession of any significant Assets
confirming that Seller is the sole and lawful owner of the Assets in the
possession of such party.
8.15 DUE DILIGENCE. Buyer shall have completed, to its sole satisfaction, an
analysis, review and inspection of any and all documents, assets and information
of Seller and the Business in respect of the
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distributor and sales representative lists, warranty service records, pricing,
selling and purchasing practices, environmental studies and other business
information as Buyer may reasonably request; PROVIDED, HOWEVER, that the
foregoing condition shall be deemed satisfied if Purchaser has not notified
Seller prior to 11:59 p.m. Cleveland, Ohio time, July 18, 1997 of Buyer's
election to terminate this Agreement pursuant to this Section and Section 11.1
hereof.
ARTICLE 9
CONDITIONS TO OBLIGATIONS OF SELLER
-----------------------------------
Seller's obligations to consummate this Agreement and the transactions
contemplated hereby are subject to the fulfillment, prior to or at the Closing,
of the following conditions precedent:
9.1 REPRESENTATIONS, WARRANTIES, COVENANTS. Each of the representations,
warranties and covenants of Buyer contained in ARTICLE 5, and the covenants
contained in ARTICLE 6, shall be true and correct in all respects as though made
on and as of the Closing Date. Buyer shall, on or before the Closing, have
performed all of its obligations hereunder which by the terms hereof are to be
performed on or before the Closing. Buyer shall have delivered to Seller an
officer's certificate of Buyer dated as of the Closing Date to the foregoing
effect.
9.2 OPINION OF BUYER'S COUNSEL. At the Closing, Seller shall have received from
Kahn, Kleinman, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Co., L.P.A., counsel for Buyer, an opinion
dated as of the Closing Date, in substantially the form to be attached hereto
prior to Closing as EXHIBIT "L".
9.3 PROCEEDINGS, DOCUMENTS, INSTRUMENTS SATISFACTORY TO SELLER. All actions,
proceedings, consents, schedules, exhibits, instruments and documents required
to be delivered by Buyer pursuant to this Agreement or incident to the
performance of Buyer's obligations hereunder, and all other related matters
shall be satisfactory to Seller as to form and substance.
ARTICLE 10
INDEMNIFICATION
---------------
10.1 INDEMNIFICATION BY SELLER. Subject to the terms and conditions of this
ARTICLE 10 and except for an Environmental Loss, which shall be governed by
Section 4.10, Seller hereby agrees to indemnify, defend and hold harmless Buyer
and its General Partner and the successors and assigns of either of them at any
time after the Closing, from and against all demands, claims, actions or causes
of action, assessments, losses, damages, liabilities, penalties, costs and
expenses (including, without limitation, reasonable fees and expenses of
counsel) (collectively, "Damages"), asserted against, resulting to, imposed upon
or incurred by Buyer, its successors and assigns, directly or indirectly, by
reason of or resulting from (i) any liabilities or obligations of Seller or an
Affiliate of Seller which are not Assumed Liabilities; (ii) any claims which
arise out of the operations of the Business or ownership of the Assets by Seller
or an Affiliate of Seller prior to the Effective Time and which are not Assumed
Liabilities; (iii) a breach of any representation or warranty of Seller
contained in or made pursuant to this Agreement; (iv) the breach by Seller of
any covenant or agreement of Seller contained in or made pursuant to this 48
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Agreement; (v) any claims pursuant to, or violations or alleged violations by
Seller of WARN or any similar state or local law, statute, rule or regulation;
(vi) any liability for brokerage or finders' fees or other commissions based on
agreements, arrangements or understandings made by Seller for services rendered
for or on behalf of Seller in connection with the transactions contemplated
hereby; or (vii) any failure to comply with any "bulk sales" or similar laws
applicable to the transactions contemplated hereby (collectively with the claims
set forth in Section 10.2, "Claims").
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of this
ARTICLE 10, Buyer hereby agrees to indemnify, defend and hold harmless Seller,
its successors and assigns at any time after the Closing, from and against all
Damages asserted against, resulting to, imposed upon or incurred by the Seller,
its successors and assigns, directly or indirectly, by reason of or resulting
from (i) any obligations or liabilities of Buyer or an Affiliate of Buyer; (ii)
the breach by Buyer of its obligations with respect to the Assumed Liabilities;
(iii) any liabilities, obligations or claims which arise out of the operations
of the Business or ownership of the Assets by Buyer after the Effective Time,
except for any such liabilities or obligations of Seller arising out of the
Shared Services Agreement; (iv) a breach of any representation or warranty of
Buyer contained in or made pursuant to this Agreement; (v) the breach by Buyer
of any covenant or agreement of Buyer, contained in or made pursuant to this
Agreement and except to the extent such liabilities result from or arise out of
the breach by Seller of any of its representations or warranties contained in or
made pursuant to this Agreement; or (vi) any liability for brokerage or finders'
fees or other commissions based on agreements, arrangements or understandings
made by Buyer for services rendered for or on behalf of Buyer in connection with
the transactions contemplated hereby (collectively with the claims set forth in
Section 10.1, "Claims").
10.3 PROCEDURES. The obligations and liabilities of either party to indemnify
the other under Section 10.1 or Section 10.2 with respect to Claims relating to
third parties shall be subject to the following terms and conditions:
1. The party to be indemnified (the "Indemnified Party") will give the
other party (the "Indemnifying Party") prompt notice of any such Claim, and,
subject to the provisions of Section 10.3B, the Indemnifying Party will
undertake the defense thereof by counsel chosen by it. The failure to promptly
notify the Indemnifying Party shall not relieve such party of its obligations
hereunder. The failure to promptly notify the Indemnifying Party shall not
relieve such party of its obligations hereunder except in the event, and solely
to the extent, that the failure to so notify materially adversely prejudices the
Indemnifying Party's ability to defend such Claim.
2. Following notice by the Indemnified Party to the Indemnifying Party
of a Claim and provided that the Indemnifying Party notifies the Indemnified
Party in writing that the Indemnified Party is entitled to indemnification
hereunder with respect to such Claim, the Indemnifying Party shall be entitled
at its cost and expense to contest and defend by all appropriate legal
proceedings such Claim, except that Indemnifying Party shall have the right to
participate in, but not control, the defense of any
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such Claim; and provided further that notice of the intention so to contest
shall be delivered by the Indemnifying Party to the Indemnified Party within 30
days from the date of receipt by the Indemnifying Party of notice from the
Indemnified Party of the assertion of such Claim. Any such contest may be
conducted in the name and on behalf of the Indemnifying Party or the Indemnified
Party, as may be appropriate. Subject to compliance by the Indemnifying Party
with the other requirements of this Section 10.3B, such contest shall be
conducted diligently by reputable counsel employed by the Indemnifying Party,
but the Indemnifying Party shall keep the Indemnified Party generally informed
with respect to such Claim and the contest thereof. Subject to compliance by
Indemnifying Party with the other requirements of this Section 10.3B, if the
Indemnified Party joins in any such contest, the Indemnifying Party shall have
full authority, in consultation with the Indemnified Party, to determine all
action to be taken with respect thereto, provided, that in no event shall the
Indemnifying Party have authority to agree to any relief other than the payment
of money damages by the Indemnifying Party unless agreed to by the Indemnified
Party. Each party shall bear its own expenses of such representation. If any
Claim is asserted and the Indemnifying Party fails to contest and defend such
Claim within a reasonable period of time, the Indemnified Party may take such
action in connection therewith as the Indemnified Party deems necessary or
desirable, including retention of counsel, and the Indemnified Party shall be
entitled to indemnification for costs incurred in connection with such defense.
3. If requested by the Indemnifying Party, the Indemnified Party agrees
to cooperate with the Indemnifying Party and its counsel, including permitting
reasonable access to books and records, in contesting any Claim which the
Indemnifying Party elects to contest or, if appropriate, in making any
counterclaim against the person asserting the Claim, or any cross-complaint
against any person, but the Indemnifying Party will reimburse the Indemnified
Party for reasonable out-of-pocket costs (but not the cost of employee time
expended) incurred by the Indemnified Party in so cooperating.
4. The Indemnified Party agrees to use its reasonable efforts to afford
the Indemnifying Party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Claim against the Indemnified Party or conferences
with representatives of or counsel for such persons. Unless the Indemnifying
Party approves in writing the settlement of a Claim effected by the Indemnified
Party, no conclusive right to indemnification under Section 10.1 or Section 10.2
shall be established by such settlement.
ARTICLE 11
TERMINATION
-----------
11.1 TERMINATION OF AGREEMENT. This Agreement may be terminated on or before the
Closing Date:
(1) by the mutual written consent of Seller and Buyer;
(2) by Buyer, if there has been a material violation or breach by
Seller of any of Seller's agreements, representations or
warranties contained in this Agreement which has not been waived
in writing or, in the event of Major Damage to the Assets (as
described in Section 8.4B);
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(3) by Seller, if there has been a material violation or breach by
Buyer of any of Buyer's agreements, representations or warranties
contained in this Agreement which has not been waived in writing;
or
(4) by either Buyer or Seller, if the other party files on or before
the Closing Date a petition in bankruptcy, reorganization,
liquidation or receivership or a petition in bankruptcy,
reorganization, liquidation or receivership is filed on or before
the Closing Date against such other party.
11.2 RIGHT TO PROCEED. Anything in this Agreement to the contrary
notwithstanding, if any of the conditions specified in ARTICLE 8 hereof have not
been satisfied, Buyer shall have the right to waive one or more conditions
precedent and proceed with the transactions contemplated hereby without waiving
any of its other rights hereunder, and if any of the conditions specified in
ARTICLE 9 hereof have not been satisfied, Seller shall have the right to waive
one or more conditions precedent and proceed with the transactions contemplated
hereby without waiving any of its other rights hereunder; PROVIDED, HOWEVER,
that if a party shall so elect to proceed, such party shall not thereafter
attempt to hold the other party responsible for damages, liabilities, losses, or
expenses resulting from the condition or conditions waived and such other party
shall not be responsible for such damage, liabilities, losses or expenses.
11.3 CONFIDENTIALITY OF INFORMATION AND DOCUMENTS. If this Agreement terminates
and the transactions contemplated hereby are not consummated as described above,
the parties hereto shall immediately return to the source party all documents,
analyses, memoranda or other materials embodying the confidential information of
such party and all copies thereof, and shall keep all such information
confidential and shall not use or otherwise disclose to third parties, in any
manner, any such confidential information obtained from the other parties unless
required to do so pursuant to a legal requirement, or unless such information is
readily ascertainable from public or published information or trade sources.
Notwithstanding the foregoing, however, in the event that Buyer should be
required pursuant to a legal requirement to disclose any Confidential
Information of the Seller, Buyer shall provide Seller with prompt notice of such
requirement so that Seller shall have the opportunity to seek an appropriate
protective order. If, failing the entry of a protective order, Buyer is
compelled to disclose any Confidential Information of Seller, Buyer may disclose
that portion of the Confidential Information of Seller which it is compelled to
disclose without any liability on the part of the Buyer hereunder. In any event,
Buyer will not oppose an action of Seller to obtain an appropriate protective
order or other reliable assurance that confidential treatment will be accorded
the Confidential Information of Seller. The provisions of this Section shall
survive the termination of this Agreement for any reason
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ARTICLE 12
CLOSING OF TRANSACTION
----------------------
12.1 CLOSING. The Closing shall take place at the offices of Kahn, Kleinman,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Co., L.P.A., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Tower at ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ at 9:30 a.m. local time on July 31, 1997 or at such
other place, time and date as the parties may mutually agree in writing (such
time and date being referred to as the "Closing Date"); PROVIDED, HOWEVER, that
the Closing Date shall in all events take place not later than August 14, 1997.
The obligations of Seller described in the Exclusivity Letter (defined in
Section 13.6) shall automatically be extended through the Closing Date.
12.2 CLOSING CERTIFICATE. Upon Closing, the parties shall execute a certificate
in the form attached hereto as EXHIBIT "M" confirming the Effective Time of
Closing (the "Closing Certificate") and such Closing shall be deemed effective
as of the Effective Time.
12.3 RISK OF LOSS. Risk of Loss with respect to the Assets shall pass to Buyer
at the Effective Time.
ARTICLE 13
MISCELLANEOUS
-------------
13.1 BINDING EFFECT. This Agreement shall be binding upon, and the benefit
thereof shall inure to the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, that this Agreement may not be assigned by either
party without the prior written consent of the other, which consent will not be
unreasonably withheld by the other party, except that consent by Seller to
assignment shall not be required in connection with the sale by Buyer of
substantially all its assets. Notwithstanding any assignment of this Agreement,
the assigning party shall remain liable directly and in the first instance to
the non-assigning party following such assignment as if no such assignment had
occurred.
13.2 RECITALS; SCHEDULES AND EXHIBITS. The recitals contained at the beginning
of this Agreement, and all Schedules and Exhibits attached hereto shall be
deemed an integral part of this Agreement and shall be incorporated herein by
reference. The Schedules and Exhibits hereto shall be delivered separately upon
execution hereof or on the Closing Date and initialed by the parties hereto and
shall be deemed delivered under this Agreement.
13.3 GOVERNING LAW. This Agreement is made and entered into, and shall be
governed by, and construed in accordance with, the laws of the State of Ohio.
13.4 NOTICES. All notices, requests, demands, and other communications hereunder
shall be in writing and shall be either: (1) personally delivered; (2) mailed by
certified mail, return receipt requested; or (3) mailed by overnight courier
addressed as follows:
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To Buyer: Monarch Lathes, L.P.
c/o Lucas Precision, Inc., General Partner
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
With copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Kahn, Kleinman, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ Co., L.P.A.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
To Seller: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
The Monarch Machine Tool Company
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or to such other address as either party notifies the other by certified mail.
Notice shall be deemed given when personally delivered or when deposited in the
United States mail or with the overnight courier.
13.5 FURTHER ASSURANCES. Buyer and Seller each agree that they will, at any time
and from time to time, do, execute, acknowledge and deliver all such further
acts, deeds, assignments, transfers, conveyances, powers of attorneys and
assurances as may be required for the better assigning, transferring, granting,
conveying, or assuring to Buyer, or its successors or assigns, any or all of the
Assets.
13.6 ENTIRE AGREEMENT. Except for other agreements or instruments executed by
the parties hereto in connection herewith, this Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations, and discussions whether oral or written. Notwithstanding anything
in the preceding sentence to the contrary, Seller's obligations pursuant to a
letter dated June 18, 1997 (negotiation with others) (the "Exclusivity Letter")
are independent of the obligations contained in this Agreement and shall survive
the execution of this Agreement for the period of time stated therein. In the
event of any conflict or inconsistency, whether latent or patent, between the
terms and conditions of this Agreement and of any Related Document, this
Agreement shall control.
13.7 WAIVERS. No waiver of any of the provisions of this Agreement shall
constitute a waiver of any other provisions (whether or not similar), nor shall
such waiver constitute a continuing waiver unless otherwise expressly provided.
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13.8 HEADINGS. Paragraph and subparagraph headings are not to be considered
part of this Agreement; they are included solely for convenience and are not
intended to be full or accurate descriptions of the contents hereof.
13.9 SEVERABILITY. All clauses of this Agreement are distinct and severable and
if any clause shall be held to be invalid or illegal, that shall not affect the
validity or legality of the remainder of the Agreement.
13.10 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original for all purposes, but all of
which shall constitute one and the same instrument.
13.11 PUBLIC ANNOUNCEMENTS; NON-DISCLOSURE. The parties hereto covenant and
agree that, except as provided for hereinbelow, each will not from and after the
date hereof and until the Closing Date make, issue, or release any public
announcement, press release, statement, acknowledgment or other public
revelation (a "Public Statement") regarding the existence, terms, conditions or
status of, the transactions provided for herein, without the prior written
consent of the other party as to the content and time of release of and the
media in which such statement or announcement is to be made; PROVIDED, HOWEVER,
that in the case of Public Statements which either party is required by law to
make (a "Legally Required Public Statement"), the making of such Legally
Required Public Statement by the party so required to do so by law shall not
constitute a breach of this Agreement if such party shall have attempted, to the
extent reasonably possible, to clear such Legally Required Public Statement with
the other party. Each party hereto agrees that it will not unreasonably withhold
any such consent or clearance. Prior to the Closing Date, Buyer, Seller, or any
Affiliate of either of them will mutually agree on any announcement or
correspondence with or to the public or customers, suppliers, or employees of
the transactions contemplated hereby. The parties acknowledge that this
Agreement will be filed with the Securities and Exchange Commission as part of
the Report on Form 8-K required to be filed by Seller pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
13.12 COSTS AND EXPENSES. Each party shall be responsible for and bear its
respective costs and expenses in connection with, or arising out of, the
negotiation and execution of this Agreement and consummation of the transactions
provided for herein; PROVIDED, HOWEVER, that Seller and Buyer shall bear and be
equally responsible for any and all sales or transfer taxes applicable to the
transfer of Assets provided for herein.
13.13 TIME OF THE ESSENCE. Time is of the essence in the performance of the
terms and conditions of this Agreement.
13.14 ARBITRATION. Any dispute arising between the parties hereto shall be
resolved by arbitration in Columbus, Ohio (or such other location as otherwise
agreed) in accordance with the Rules of the American Arbitration Association,
and the award of the arbitrator(s) shall be final and binding upon the parties.
In the event a demand for arbitration is filed pursuant hereto, the parties
shall have the same rights to discovery under the Ohio Rules of Civil Procedure
as if the dispute had been filed as an original action in an Ohio Court of
original jurisdiction, and any Court located in Columbus, Ohio or elsewhere
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shall have jurisdiction and shall be authorized to enforce said rights as if the
entire dispute were pending before said Court. All parties consent, agree and
submit to Ohio personal jurisdiction.
13.15 NO THIRD PARTY BENEFICIARIES. Nothing contained in this Agreement or in
any Related Documents shall give rise to any rights or obligations in favor of
any person or entity that is not a party to this Agreement, and no third party
shall be entitled to rely on any of the term s and conditions of this Agreement.
The assumption of the Assumed Liabilities by Buyer pursuant to this Agreement
shall not enlarge any rights of third parties under contracts or arrangements
with Seller.
[THIS SPACE LEFT BLANK INTENTIONALLY.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
THE MONARCH MACHINE TOOL COMPANY, MONARCH LATHES, L.P., an Ohio
an Ohio corporation limited partnership
By: ▇▇▇▇▇ PRECISION, INC.,
By: ______________________________ an Ohio corporation
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President Its: General Partner
By: _________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
And by:
_________________________
T. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Secretary