Exhibit (2)
ASSET PURCHASE AGREEMENT
GREAT BEND INDUSTRIES DIVISION
OF
▇▇▇▇-▇▇▇▇▇▇ CORPORATION
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . 1
1.1. Definition of "Business". . . . . . . . . . . . . . 1
1.2. Assets to be Transferred . . . . . . . . . . . . . 1
1.3. Excluded Assets . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . 3
2.1. Liabilities to be Assumed . . . . . . . . . . . . . 3
2.2. Liabilities Not to be Assumed . . . . . . . . . . . 4
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . 5
3.1. Purchase Price . . . . . . .. . . . . . . . . . . . 5
3.2. Payment of Purchase Price . .. . . . . . . . . . . . 5
3.3. Determination of Net Asset Value . . . . . . . . . 6
3.4. Prorations . . . . . . . . . . . . . . . . . . . . 8
4. REPRESENTATIONS AND WARRANTIES OF COMPANY . .. . . . . . . 9
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . 9
4.2. Authority . . . . . . . . . . . . . . . . . . . . . 9
4.3. No Violation .. . . . . . . . . . . . . . . . . . . 10
4.4. Business Financial Statements . . . . . . . . . . . 10
4.5. Absence of Certain Changes . .. . . . . . . . . . . 10
4.6. No Litigation . . . . . . . . . . . . . . . . . . . 11
4.7. Compliance With Laws . .. . . . . . . . . . . . . . 11
4.8. Environmental . . . . . . . . . . . . . . . . . . . 11
4.9. Title to Properties . . . . .. . . . . . . . . . . . 12
4.10. Contracts and Commitments . . . . . . . . . . . . . 12
4.11. Employee Benefit Plans . . . . . . . . . . . . . . . 13
4.12. Employment Compensation . . . . . . . . . . . . . . 13
4.13. Trade Rights . . . . . . . . . . . . . . . . . . . . 14
4.14. Major Customers and Suppliers . . . . . . . . . . . 14
4.15. No Brokers or Finders . . . . . . . . . . . . . . . 14
4.16. Extraordinary Warranty Expense . . . . . . . . . . . 15
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT . . . . 15
5.1. Corporate . .. . . . . . . . . . . . . . . . . . . . 15
5.2. Authority . . . . . . . . . . . . . . . . . . . . . 15
5.3. No Violation . .. . . . . . . . . . . . . . . . . . 15
5.4. No Brokers or Finders . . . . . . . . . . . . . . . 16
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION . . . . . . . . 16
6.1. Business Employees . . . . . . . . . . . . . . . . 16
6.2. Data Processing . . . . . . . . . . . . . . . . . . 17
6.3. Payroll Tax . . . . . . . . . . . . . . . . . . . . 17
6.4. Employee Benefit Plans . . . . . . . . . . . . . . 17
6.5. Continued Supply to Company . . . . . . . . . . . . 17
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . 17
7.1. Environmental Matters . . . . . . . . . . . . . . . 17
7.2. Escrow Agreement . . . . . . . . . . . . . . . . . 19
7.3. HSR Act Filings . . . . . . . . . . . .. . . . . . . 19
7.4. Access to Information and Records . . .. . . . . . . 19
7.5. Collection of Accounts Receivable . . .. . . . . . . 20
7.6. Litigation Cooperation . . . . . . . . . . . . . . 20
7.7. Product Marking . . . . . . . . . . . . . . . . . . 21
7.8. ▇▇▇▇▇▇▇ Receivable/Inventory . . . . . . . . . . . 21
8. FURTHER COVENANTS OF COMPANY . . . . . . . . . . . . . . . 21
8.1. Conduct of Business Pending the Closing . . . . . . 21
8.2. Consents . . . . . . . . . . . . . . . .. . . . . . 22
8.3. Other Action . . . . . . . . . . . . . .. . . . . . 22
8.4. Disclosure . . . . . . . . . . . . . . .. . . . . . 22
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . .. . . . . . 22
9.1. Representations and Warranties True on
the Closing Date . . . . . . . . . . . .. . . . . . 23
9.2. Compliance With Agreement . . . . . . . .. . . . . . 23
9.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period . . . .. . . . . . 23
9.4. Termination of Lease for Airport Facility . . . . . 23
9.5. Environmental Report/Environmental Indemnity . . . 23
9.6. Absence of Certain Events/Conditions . . . . . . . 24
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . 24
10.1. Representations and Warranties True on the
Closing Date . . . . . . . . . . . . . . . . . . . 24
10.2. Compliance With Agreement . . . . . . . . . . . . . 24
10.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period . . . . . . . . . . 24
10.4. Environmental Costs . . . . . . . . . . . . . . . . 24
11. INDEMNIFICATION .. . . . . . . . . . . . . . . . . . . . . 25
11.1. By Company . . . . . . . . . . . . . . . . . . . . . 25
11.2. By Buyer and Parent . . . . . . . . . . . . . . . . 25
11.3. Indemnification of Third-Party Claims . . . . . . . 25
11.4. Payment . . . . . . . . . . . . . . . . . . . . . . 26
11.5. Limitations on Indemnification . . . . . . . . . . . 26
12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 27
12.1. Documents to be Delivered by Company . . . . . . . . 27
12.2. Documents to be Delivered by Buyer . . . . . . . . . 28
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1. Right of Termination Without Breach . . . . . . . . 29
13.2. Termination for Breach . . . . . . . . . . . . . . . 29
14. COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . 30
14.1. Non-Competition . . . . . . . . . . . . . . . . . . 30
14.2. Enforcement . . . . . . . . . . . . . . . . . . . . 30
14.3. Injunctive Relief . . . . . . . . . . . . . . . . . 30
15. RESOLUTION OF DISPUTES . . . . . . . . . . . . . . . . . . 31
15.1. Arbitration . . . . . . . . . . . . . . . . . . . . 31
15.2. Arbitrators . . . . . . . . . . . . . . . . . . . . 31
15.3. Procedures; No Appeal . . . . . . . . . . . . . . . 31
15.4. Authority . . . . . . . . . . . . . . . . . . . . . 31
15.5. Entry of Judgment . . . . . . . . . . . . . . . . . 31
15.6. Confidentiality . . . . . . . . . . . . . . . . . . 31
15.7. Continued Performance . . . . . . . . . . . . . . . 31
15.8. Tolling . . . . . . . . . . . . . . . . . . . . . . 31
15.9. Escrow Agent Unnecessary . . . . . . . . . . . . . . 32
16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 32
16.1. Further Assurance . . . . . . . . . . . . . . . . . 32
16.2. Disclosures and Announcements . . . . . . . . . . . 32
16.3. Assignment; Parties in Interest . . . . . . . . . . 32
16.4. Law Governing Agreement . . . . . . . . . . . . . . 32
16.5. Amendment and Modification . . . . . . . . . . . . . 32
16.6. Notice . . . . . . . . . . . . . . . . . . . . . . . 32
16.7. Expenses . . . . . . . . . . . . . . . . . . . . . . 34
16.8. Entire Agreement . . . . . . . . . . . . . . . . . . 34
16.9. Counterparts . . . . . . . . . . . . . . . . . . . . 35
16.10. Headings . . . . . . . . . . . . . . . . . . . . . . 35
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated April 9,
1997, by and among KAYDON CORPORATION, a Delaware corporation ("Parent"),
KAYDON ACQUISITION VIII, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Buyer"), and ▇▇▇▇-▇▇▇▇▇▇ CORPORATION, a Wisconsin
corporation ("Company").
R E C I T A L S
A. Company is engaged, through its Great Bend Industries
Division, in the manufacture and sale of hydraulic cylinders.
B. The Great Bend Industries Division business is carried on
at a leased facility located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ (the
"Main Facility") and leased facilities known as buildings H and J in the
Bestec complex of the Westport Addition to the City of Great Bend, Kansas
(the "Airport Facility) (together the Main Facility and the Airport
Facility are sometimes referred to as the "Facilities").
C. Buyer desires to purchase from Company, Parent desires to
cause Buyer to purchase from Company and Company desires to sell to Buyer,
the business and substantially all of the property and assets of Company's
Great Bend Industries Division, as set forth herein.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business". As used herein, the term "Business"
shall mean the business of the Great Bend Industries Division of Company
at the Facilities.
1.2. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, on the Closing Date (as hereinafter defined) Company
shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer
shall purchase and accept, the following assets of the Business owned by
Company:
1.2.(a) Leased Real Property. The leases of real
property with respect to the Main Facility (the "Real Property
Leases") as described in Schedule 1.2.(a) with respect to the real
property described thereon (the "Leased Real Property").
1.2.(b) Personal Property. All machinery, equipment,
vehicles, tools, supplies, spare parts, furniture and all other
personal property owned by the Company located at the Facilities
not included in inventory (other than personal property leased
pursuant to Personal Property Leases as hereinafter defined).
1.2.(c) Inventory. All inventories of raw materials,
work-in-process and finished goods of the Business owned by the
Company on the Closing Date, together with related packaging
materials (collectively the "Inventory").
1.2.(d) Personal Property Leases. All leases of
machinery, equipment, vehicles, furniture and other personal
property utilized by the Business at the Facilities (the "Personal
Property Leases") described in Schedule 1.2.(d).
1.2.(e) Trade Rights. Any Trade Rights of the
Business owned by the Company. As used herein, the term "Trade
Rights" shall mean and include: (i) all trademark rights, business
identifiers, trade dress, service marks, trade names, and brand
names, all registrations thereof and applications therefor and all
goodwill associated with the foregoing; (ii) all copyrights,
copyright registrations and copyright applications, and all other
rights associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications and all
intellectual property rights associated therewith; (iv) all
contracts or agreements granting any right, title, license or
privilege under the intellectual property rights of any third
party; (v) all inventions, mask works and mask work registrations,
know-how, discoveries, improvements, designs, trade secrets, shop
and royalty rights, employee covenants and agreements respecting
intellectual property and non-competition and all other types of
intellectual property; and (vi) all claims for infringement or
breach of any of the foregoing described in Schedule 1.2.(e).
1.2.(f) Contracts. All the Company's rights in, to
and under all contracts, purchase orders and sales orders
(hereinafter "Contracts") of the Business, including but not
limited to, the Contracts listed in Schedule 1.2(f). To the extent
that any Contract for which assignment to Buyer is provided herein
is not assignable without the consent of another party, this
Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. Company and Buyer agree to use their
reasonable best efforts (without any requirement on the part of
Buyer to pay any money or agree to any change in the terms of any
such Contract) to obtain the consent of such other party to the
assignment of any such Contract to Buyer in all cases in which such
consent is or may be required for such assignment. If any such
consent shall not be obtained, Company agrees to cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer
the benefits intended to be assigned to Buyer under the relevant
Contract.
1.2.(g) Computer Software and Hardware. Except as
described in Section 1.3.(e), all computer hardware of the Business
owned by the Company at the Facilities and all of Company's right,
title and interest, if any, in and to computer software utilized in
conjunction with such computer hardware.
1.2.(h) Literature. All sales literature,
promotional literature, catalogs and similar materials of the
Business owned by the Company.
1.2.(i) Records and Files. All records, files,
invoices, customer lists, blueprints, specifications, designs,
drawings, accounting records, business records, operating data and
other data of the Business owned by the Company.
1.2.(j) Notes and Accounts Receivable. All notes,
drafts and accounts receivable of the Business, except for those
described in Section 1.3.(f) hereof.
1.2.(k) Licenses; Permits. All licenses, permits and
approvals of the Business, including those described in Schedule
1.2.(k).
1.2.(l) Business Name. Company's right, title and
interest in the name "Great Bend Industries," and all rights to use
or allow others to use such name.
1.3. Excluded Assets. Company shall retain all of its rights,
claims and assets not described in Section 1.2. Without limiting the
generality of the foregoing, and any contrary provisions of Section 1.2
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer will not purchase or accept the following
assets of Company:
1.3.(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than ▇▇▇▇▇ cash balances at Facilities of the
Business.
1.3.(b) Consideration. The consideration delivered
by Buyer to Company pursuant to this Agreement.
1.3.(c) Tax Credits and Records. Federal, state and
local income and franchise tax credits and tax refund claims and
associated returns and records.
1.3.(d) Insurance. All policies of insurance,
including all prepaid insurance.
1.3.(e) Computer Software and Hardware. The "Symix"
software and all computer hardware utilized in connection with
"Symix" listed on Schedule 1.3.(e).
1.3.(f) Intercompany Receivable. Intercompany
accounts receivable of the Business from the Company or any
subsidiary or affiliate of the Company.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall assume and agree to perform and discharge (and
Parent shall cause Buyer to assume and agree to perform and discharge) the
following Liabilities of Company (collectively the "Assumed Liabilities"):
2.1.(a) Final Closing Balance Sheet Liabilities. The
liabilities and obligations reflected or reserved against on the
Final Closing Business Balance Sheet (as hereinafter defined).
2.1.(b) Contractual Liabilities. Company's
Liabilities arising from and after the Closing Date under and
pursuant to (i) all purchase orders and sales orders of the
Business, (ii) all contracts described in any of Schedules 1.2.(a),
1.2.(d), 1.2.(f), 4.10.(d), (iii) all other contracts entered into
in the ordinary course of business of the Business other than
contracts relating to employees or employee benefits which are
assumed only to the extent otherwise expressly assumed under this
Agreement.
The Contracts described in this subsection 2.1.(b) above are
hereinafter collectively described as the "Assumed Contracts."
2.1.(c) Liabilities Under Permits and Licenses.
Company's Liabilities arising from and after the Closing Date under
all permits or licenses of and assigned to Buyer at the Closing.
2.1.(d) Product Liability. Except as and to the
extent set forth in Section 2.2.(c), Company's liabilities and
obligations arising out of or relating to or resulting from past
and present products of the Business, for products liability, which
term shall include any liability or obligation of Company for
claims made for injury to person, damage to property or other
damage (whether made in product liability, tort, breach of warranty
or otherwise).
2.1.(e) Product Warranty. Companies liabilities and
obligations with respect to products of the Business under and
pursuant to the Business' product warranties.
2.1.(f) Environmental Liabilities. All liability
from and relating to the generation, management, handling,
transportation, treatment, storage, disposal, delivery, discharge,
release or emission of any Hazardous Substances (as hereinafter
defined) by Company, or any action, omission or condition affecting
the environment arising from the conduct of the Business, except to
the extent such liability relates to a Company Off-Site Release (as
hereinafter defined) or to the extent Company retains
responsibility pursuant to Company's indemnification in Section
11.1(d) of this Agreement or pursuant to the Environmental
Indemnity Agreement referred to in Section 9.5 of this Agreement.
2.1.(g) Other Liabilities. Except as provided in
Section 2.1(b) or 2.2, all other Liabilities of the Business
incurred in the ordinary course of business of the Business.
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1, Buyer is not assuming any
Liabilities of Company and all such Liabilities shall be and remain the
responsibility of Company. Notwithstanding the provisions of Section 2.1,
Buyer is not assuming and Company shall not be deemed to have transferred
to Buyer the following Liabilities of Company:
2.2.(a) Income and Franchise Taxes. Any Liability of
Company for Federal income taxes and any state or local income,
profit or franchise taxes (and any penalties or interest due on
account thereof) or any liability for sales, bulk sales use,
transfer, stamp or document taxes except to the extent reflected or
reserved against on the Final Closing Business Balance Sheet.
2.2.(b) Accounts Payable. Accounts payable of the
Business.
2.2.(c) Product Liability. Company's liabilities and
obligations arising out of or relating to or resulting from past
and present products of the Business manufactured and sold prior to
the Closing Date, for products liability, which term shall include
any liability or obligation of Company for claims made for injury
to person, damage to property or other damage (whether made in
product liability, tort, breach of warranty or otherwise), with
respect to occurrences on or prior to April 30, 1998.
2.2.(d) Indebtedness. Any indebtedness for borrowed
money for the Business and the capitalized leases listed on
Schedule 2.2.(d) except the Lease Agreement dated August 1, 1994
between Company and Central Kansas Development Corporation.
2.2.(e) Intercompany Payables. Intercompany payables
of the Business to the Company or any subsidiary or affiliate of
the Company.
2.2.(f) Environmental Liabilities. Liabilities of
the Company relating to a release (as that term is most broadly
defined by any federal, state or local statute pertaining to the
protection of the environment) by the Company of any Hazardous
Substances (as hereinafter defined) prior to Closing at any
location other than the Leased Real Property ("Property"),
including but not limited to any liabilities arising out of the
generation, management, handling, transportation, treatment,
storage, disposal, delivery, discharge or emission of Hazardous
Substances not at the Property. Such releases will be referred to
in this Agreement as "Company Off-Site Releases".
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price") for
the Purchased Assets shall be Twenty Two Million Dollars ($22,000,000)
plus or minus, as the case may be, the difference between Seven Million
Eight Thousand Five Hundred Nine Dollars ($7,008,509) and the Net Asset
Value at the Effective Time.
3.2. Payment of Purchase Price. Buyer and Parent, jointly and
severally, agree to pay the Purchase Price. The Purchase Price shall be
paid by Buyer (and Parent shall cause the Purchase Price to be paid by
Buyer) as follows:
3.2.(a) Assumption of Liabilities. At the Closing,
Buyer shall deliver to Company such documents and instruments as
are reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Escrow Agent. At the Closing, Buyer
shall deliver to the Escrow Agent, under the Escrow Agreement (as
defined in Section 7.2), the sum of Two Million
Dollars ($2,000,000).
3.2.(c) Cash to Company. At the Closing, Buyer shall
deliver to Company the sum of Twenty Two Million
Dollars ($22,000,000) less the amount paid to the Escrow Agent
pursuant to Subsection 3.2.(b) above, plus or minus, as the case
may be the difference between Seven Million Eight Thousand Five
Hundred Nine Dollars ($7,008,509) and the Net Asset Value as
reflected on the Estimated Business Closing Balance Sheet.
3.2.(d) Adjustment of Final Cash Purchase Price. On
or before the fifth (5th) business day following the final
determination of the Final Closing Business Balance Sheet (as
hereinafter defined) (the "Settlement Date"): (a) if the Net Asset
Value as reflected on the Estimated Business Closing Balance Sheet
exceeds the Net Asset Value as reflected on the Final Closing
Business Balance Sheet, then the Escrow Agent shall disburse to the
Buyer, an amount equal to the sum of the amount by which the Net
Asset Value as reflected on the Estimated Closing Business Balance
Sheet exceeds the Net Asset Value as reflected on the Final Closing
Business Balance Sheet plus interest on such amount accrued from
the Closing Date to the date of payment at a rate equal to the
average interest rate paid on the Escrow Fund during the period (if
the Net Asset Value as reflected on the Estimated Closing Business
Balance Sheet exceeds the Net Asset Value as reflected on the Final
Closing Business Balance Sheet (plus interest on such amount as
aforesaid) by an amount greater than the amount held in Escrow,
then the Buyer shall be entitled, in addition to amounts received
from the Escrow Agent to receive from Company a payment so that the
total amount received from the Escrow Agent, plus the payment from
Company to Buyer shall equal the amount by which the Net Asset
Value of Company as reflected on the Estimated Closing Business
Balance Sheet exceeds the Net Asset Value as reflected on the Final
Closing Business Balance Sheet, plus interest at the average
interest rate paid on the Escrow Fund during the period), (b) if
the Net Asset Value as reflected on the Final Closing Business
Balance Sheet exceeds the Net Asset Value as reflected on the
Estimated Closing Business Balance Sheet, then the Buyer shall pay
to the Company an amount equal to the sum of the amount by which
the Net Asset Value as reflected on the Final Closing Business
Balance Sheet exceeds the Net Asset Value as reflected on the
Estimated Closing Business Balance Sheet plus interest on such
amount accrued from the Closing Date to the date of payment at a
rate equal to the average interest rate paid on the Escrow Fund
during the period.
3.2.(e) Method of Payment. All payments under this
Section 3.2 shall be made in the form of certified or bank
cashier's check payable to the order of the recipient or, at the
recipient's option, by wire transfer of immediately available funds
to an account designated by the recipient not less than forty-eight
(48) hours prior to the time for payment specified herein.
3.3. Determination of Net Asset Value.
3.3.(a) Definition of "Business Balance Sheet". The
term "Business Balance Sheet" as used herein shall mean a schedule
in the form of a corporate balance sheet showing the net book
values, as of a specified time, of the respective categories of
assets and liabilities set forth in the Recent Business Balance
Sheet (as defined in Section 4.4), but reflecting only the
Purchased Assets and the Assumed Liabilities. Each Business
Balance Sheet shall be in form and level of detail as nearly as
possible identical to, and in its accounting principles and
policies consistent in every respect with, the Recent Business
Balance Sheet (except that inventory shall be based on a physical
inventory, except that there shall be no reserve for bad debts and
except that there shall be established a "Warranty Reserve" in the
amount of Two Hundred Fifty Thousand Dollars ($250,000)), and
accompanied by schedules setting forth in reasonable detail all
assets and liabilities included therein. Each Business Balance
Sheet or its accompanying schedules shall contain sufficient detail
of the Purchased Assets and Assumed Liabilities for the
determination of Net Asset Value as defined below.
3.3.(b) Definition of "Net Asset Value." The term
"Net Asset Value" shall mean the dollar amount by which the net
book value of the Purchased Assets exceeds the net book value of
the Assumed Liabilities, both as reflected in the Final Closing
Business Balance Sheet or Estimated Closing Business Balance Sheet,
as applicable. Only Purchased Assets and Assumed Liabilities shall
be considered in the calculation of Net Asset Value.
3.3.(c) Estimated Closing Business Balance Sheet.
For purposes of determining the Net Asset Value and the Purchase
Price payable by the Buyer at the Closing, not less than ten (10)
business days prior to the Closing Date, Company shall, in
consultation with the Buyer, prepare and deliver to Buyer a
Business Balance Sheet as of the close of business on the Closing
Date (hereinafter the "Effective Time") which shall represent
Company's reasonable estimate of the Final Closing Business Balance
Sheet (the "Estimated Closing Business Balance Sheet").
3.3.(d) Final Closing Business Balance Sheet. The
Final Closing Business Balance Sheet prepared as of the Effective
Time shall be prepared as follows:
(i) As of the Effective Time, Company shall take
a physical inventory. Within forty-five (45) days after the
Closing Date, Company shall deliver to Buyer a Business
Balance Sheet as of the Effective Time. Such Business Balance
Sheet shall be accompanied by detailed schedules of the
Purchased Assets (except that there shall be no reserve for
bad debts) and Assumed Liabilities and setting forth the
amount of any adjustment to the Purchase Price to be paid and
by whom pursuant to Section 3.2.(d) hereof.
(ii) Within thirty (30) days following the
delivery of the Business Balance Sheet referred to in (i)
above, Buyer may object to any of the information contained in
said balance sheet or accompanying schedules which could
affect the necessity or amount of any payment by Buyer or
Company pursuant to Section 3.2.(d) hereof. Any such
objection shall be made in writing and shall state Buyer's
determination of the amount of the Net Asset Value.
(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and
Company are unable to resolve, either party may elect to have
all such disputes or disagreements resolved by an accounting
firm of nationally recognized standing (the "Third Accounting
Firm") to be mutually selected by Company and Buyer or, if no
agreement is reached, by Company's accountants and Buyer's
accountants. The Third Accounting Firm shall make a
resolution of the Business Balance Sheet as of the Effective
Time and the calculation of Net Asset Value, which shall be
final and binding for purposes of this Article 3. The Third
Accounting Firm shall be instructed to use every reasonable
effort to perform its services within fifteen (15) days of
submission of the balance sheet to it and, in any case, as
soon as practicable after such submission. The fees and
expenses for the services of the Third Accounting Firm shall
be shared by Buyer and Company as follows:
Company shall pay a percentage of such fees and
expenses equal to A/(A+B) and Buyer shall pay a percentage of
such fees and expenses equal to B/(A+B), where A is equal to
the absolute value of the difference (in dollars) between Net
Asset Value as finally determined by the Third Accounting Firm
and Net Asset Value as reflected in the objection prepared and
delivered by Company in accordance with Section 3.3.(d)(ii),
and B is equal to the absolute value of the difference (in
dollars) between Net Asset Value as finally determined by the
Third Accounting Firm and Net Asset Value as reflected in the
report prepared and delivered by Buyer in accordance with
Section 3.3.(d)(i). As used in this Agreement, the term
"Final Closing Business Balance Sheet" shall mean the Business
Balance Sheet as of the Effective Time as finally determined
for purposes of this Article 3, whether by acquiescence of
Company in the figures supplied by Buyer in accordance with
Section 3.3.(d)(i), by negotiation and agreement of the
parties or by the Third Accounting Firm in accordance with
Section 3.3.(d)(iii).
(iv) Buyer and Company agree to permit the other,
their accountants and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of the
Business and access to representatives of their accountants,
which documents and access are necessary to prepare and review
the Business Balance Sheet. In addition, Buyer's accountants
shall have the opportunity to observe the taking of the
inventory in connection with the preparation of such balance
sheet.
3.4. Prorations. The following prorations relating to the
Purchased Assets will be made as of the Effective Time, with Company
liable to the extent such items relate to any time period up to and
including the Effective Time if not already taken into account on the
Final Closing Business Balance Sheet and Buyer liable to the extent such
items relate to periods subsequent to the Effective Time. Except as
otherwise specifically provided herein, the net amount of all such
prorations will be settled and paid on the Settlement Date as provided by
Section 3.2.(d) hereof:
3.4.(a) Personal property taxes, real estate taxes
and assessments and other taxes, if any, on or with respect to the
Purchased Assets.
3.4.(b) Rents, additional rents, taxes and other
items payable by Company under any lease, license, permit, contract
or other agreement or arrangement to be assigned to or assumed by
Buyer.
3.4.(c) The amount of rents, taxes and charges for
sewer, water, fuel, telephone, electricity and other utilities.
3.4.(d) All other items normally adjusted in
connection with similar transactions.
If the actual expense of any of the above items for the billing
period within which the Effective Time falls is not known on the
Settlement Date, the proration shall be made based on the expense incurred
in the previous billing period, for expenses billed less often than
quarterly, and on the average expense incurred in the preceding three
billing periods, for expenses billed quarterly or more often. Company
agrees to furnish Buyer with such documents and other records as shall be
reasonably requested in order to confirm all proration calculations.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to
Buyer.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
4.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) No Subsidiaries. No portion of the Business
is conducted by the Company by means of any subsidiary or any other
interest in any corporation, partnership or other entity.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company. No other or further corporate act or proceeding on
the part of Company or its shareholders is necessary to authorize this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid
binding agreements of Company, enforceable in accordance with their
respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by
general equitable principles.
4.3. No Violation. Except as set forth on Schedule 4.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto, nor
the consummation by Company of the transactions contemplated hereby and
thereby (a) except for applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), will require any
authorization, consent, approval, exemption or other action by or notice
to any government entity, or (b) subject to obtaining the necessary
consents or giving of notices, will violate or conflict with, or
constitute a default under any term or provision of the Articles of
Incorporation or By-laws of Company or of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or
character to which Company is a party or by which Company or any of its
assets or properties may be bound or affected.
4.4. Business Financial Statements. Included as Schedule 4.4. are
financial statements of the Business (the "Business Financial
Statements"), consisting of (i) balance sheets of the Business as of
December 31, 1995 and as of December 31, 1996, (the latter such balance
sheet sometimes referred to herein as "Recent Business Balance Sheet"),
and (ii) statements of income and expense of the Business for the years
then ended. All of such financial statements were prepared from and
consistent in all respects with, such financial reports as have been
prepared and used by the Company in the ordinary course in managing the
Business and measuring and reporting its operating results; have been
prepared from the financial records of the Company, which financial
records of the Company were compiled in accordance with generally accepted
accounting principles.
4.5. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 4.5, since the date of the Recent Business Balance Sheet
there has not been:
4.5.(a) No Adverse Change. Any material adverse
change in the operations of the Business;
4.5.(b) No Damage. Any material loss, damage or
destruction, whether covered by insurance or not, in connection
with or affecting the Business or the Purchased Assets;
4.5.(c) No Increase in Compensation. Any material
increase in the compensation, salaries or wages payable or to
become payable to any employee or agent of Company who is employed
in the Business or whose compensation is reflected in the Business
Financial Statements (including, without limitation, any material
increase in any bonus, pension, profit sharing, retirement or other
plan or commitment);
4.5.(d) No Labor Disputes. Any material labor
dispute or disturbance, other than routine individual grievances
which are not material to the financial condition or results of
operations of the Business;
4.5.(e) No Disposition of Property. Any material
sale, lease or other transfer or disposition of any material assets
of Company that are Purchased Assets (or would have been Purchased
Assets had no sale, lease, transfer or disposition occurred),
except for the sale of inventory items in the ordinary course of
business; or
4.5.(f) No Unusual Events. Any other material event
or condition not in the ordinary course of Company's operation of
the Business.
4.6. No Litigation. Except as set forth in Schedule 4.6 there is
no material action, suit or arbitration proceeding ("Litigation") pending
or, to the knowledge of officers of the Company, threatened against
Company or its directors (in such capacity) that involves the Business,
the Purchased Assets or the Assumed Liabilities. Except as set forth in
Schedule 4.6, neither Company, nor the Purchased Assets nor the Assumed
Liabilities is subject to any judgment, order, writ or injunction of any
court, arbitrator or governmental agency relating to the Business.
4.7. Compliance With Laws. Except as set forth in Schedule 4.7,
the Business (including each and all of its operations, practices,
properties and assets) is in substantial compliance with all material
respects with all applicable federal, state, local and foreign laws,
ordinances, orders, rules and regulations, including, without limitation,
those applicable to discrimination in employment, occupational safety and
health, building and sanitation, employment, retirement and labor
relations and product advertising; provided that there is excepted from
this representation and warranty any representation and warranty with
respect to Environmental Laws, which are the subject of Section 4.8 below.
Except as set forth in Schedule 4.7, Company has not received notice of
any violation or alleged violation of, such laws, ordinances, orders,
rules or regulations with respect to the operations of the Business. All
reports required to be filed by Company with respect to the Business with
any Government Entity have been filed, and were accurate and complete when
filed.
4.8. Environmental. To the knowledge of officers of the Company
and the President of the Great Bend Industries Division and except as
disclosed on Schedule 4.8 or in the Kejr Reports referred to in Section
7.1 or in the Environmental Report referred to in Section 7.1, with
respect to the Business:
4.8.(a) Company is in substantial compliance in all
material respects with all Environmental Laws (as hereinafter
defined).
4.8.(b) Company has received no written
communication, whether from a governmental authority, citizens
group, lender, employee or otherwise, that alleges that Company is
not in substantial compliance in all material respects with any
Environmental Law.
4.8.(c) Company does not currently hold nor is
Company obligated to hold any permits, licenses, registrations or
other federal, state or local governmental authorizations pursuant
to the Environmental Laws.
4.8.(d) Company has not received any written notice
of any civil, criminal or administrative action, claim, demand,
investigation or notice alleging violation of Environmental Laws
("Environmental Claim") pending or threatened against (i) Company,
(ii) any person or entity whose liability for any Environmental
Claim Company has or may have retained or assumed either
contractually or by operation of law, or (iii) any real or personal
property which Company owns, leases or manages or participates in
the management of, or previously owned, leased or managed, or
participated in the management of, or in which Company holds or has
previously held a security interest in connection with a loan or
loan participation, other than such as would not, either
individually or in the aggregate, have a material adverse effect on
the business, results of operations, financial condition, assets or
liabilities of Business.
4.9. Title to Properties. Company has good and marketable title to
all the Purchased Assets, free and clear of all mortgages, liens
(statutory or otherwise), security interests, claims, pledges, licenses,
equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, rights-of-way,
exceptions, limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those described in Schedule 4.9 or the
other Schedules hereto; liens which will be satisfied upon the payment of
liabilities reflected or reserved against the Final Closing Business
Balance Sheet; and, in the case of real property, Liens for taxes not yet
due or which are being contested in good faith by appropriate proceedings
(and which have been sufficiently accrued or reserved against in the
Recent Business Balance Sheet), municipal and zoning ordinances and
easements for public utilities, none of which interfere with the use of
the property as currently utilized ("Permitted Real Property Liens") and
except that Company is making no representations or warranties regarding
any intellectual property including patents, trademarks, applications
therefor, engineering and production information and know-how except as
set forth in Section 4.13.
4.10. Contracts and Commitments.
4.10.(a) Real Property Leases. Except as set forth in
Schedule 1.2.(a), Company has no leases of real property used or
held for use in connection with the Business or the Purchased
Assets.
4.10.(b) Personal Property Leases. Except as set
forth in Schedule 1.2.(d), Company has no leases of personal
property used or held for use in connection with the Business or
the Purchased Assets involving consideration or other expenditure
in excess of Twenty-Five Thousand Dollars ($25,000) involving
performance over a period of more than thirty-six (36) months after
the Effective Time.
4.10.(c) Collective Bargaining Agreements. Except as
set forth in Schedule 4.10.(c), Company is not a party to any
collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups representing or
purporting to represent employees of the Business. Copies of all
such agreements have heretofore been delivered to Buyer.
4.10.(d) Other Material Contracts. Company has no
lease, license, contract or commitment of any nature affecting the
Business and involving consideration or other expenditure in excess
of Twenty-Five Thousand Dollars ($25,000), or involving performance
over a period of more than thirty-six (36) months after the
Effective Time, except as described in Schedule 4.10.(d) or in any
other Schedule. To the knowledge of officers of the Company,
Company is not in material default under any contract or agreement
identified in Schedules 1.2.(a), 1.2.(d), 4.10.(c) or 4.10.(d).
4.11. Employee Benefit Plans.
4.11.(a) Disclosure. Schedule 4.11.(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive
bonus or other bonus, medical, dental, life, accident insurance,
benefit, employee welfare, disability, group insurance, stock
purchase, stock option, stock appreciation, stock bonus, executive
or deferred compensation, hospitalization and other similar fringe
or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and
sick leave plans, programs, arrangements and policies, including,
without limitation, all "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), for the benefit of any persons
employed by Company in its operation of the Business ("Business
Employees"). The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." A true and correct description and copies of all
the Employee Plans/Agreements, including all amendments thereto,
have heretofore been provided to Buyer. No Employee Plan/Agreement
is a "multiemployer plan" (as defined in Section 4001 of ERISA) and
the Company has never been a contributing employer to such a
multiemployer plan at a time or in a manner which could expose
Buyer, directly or indirectly, to withdrawal liability.
4.11.(b) Payments and Compliance. With respect to
each Employee Plan/Agreement, (i) all payments due from Company to
date have been made and all amounts properly accrued to date as
Liabilities of Company (and all amounts not yet accrued but which
will accrue or become due with respect to periods of employment
prior to the Closing Date) which have not been paid and will be
paid by the Company or will be reflected in the Final Closing
Balance Sheet; (ii) Company has substantially complied with, and
each such Employee Plan/Agreement conforms in all material respects
in form and operation to, all applicable laws and regulations,
including but not limited to ERISA and the Code, and (iii) there
are no actions, suits or claims pending (other than routine claims
for benefits) or threatened with respect to such Employee
Plan/Agreement or against the assets of such Employee
Plan/Agreement.
4.12. Employment Compensation. Schedule 4.12 contains a list
of all Employees of the Business as of a date not more than thirty (30)
days prior to the date hereof. Such list is substantially accurate in all
material respects. Except (i) as listed on the attached Schedule 4.12 or
in any other Schedule hereto, (ii) to the extent reflected or reserved
against on the Final Closing Business Balance Sheet, or (iii) pursuant to
Employee Plans/Agreements described in Section 4.11.(a), there is no
material claim of any employee or any former employee of Company for any
unpaid compensation or remuneration of any nature, including, without
limitation, contingent salaries, incentive payments, pension benefits
(whether or not vested), (excluding benefits to be paid in the future from
pension trusts established and administered for such purpose by Company),
medical expense reimbursement, vacation pay, severance payments and other
awards, interests and payments.
4.13. Trade Rights. Schedule 4.13 lists all Trade Rights of
the type described in clauses (i), (iii) or (iv) of Section 1.2.(e) which
are or were used, held for use, or acquired or developed for use in the
Business, or developed in the course of conducting the Business or by
persons employed in the Business, specifying whether such Trade Rights are
owned, controlled, used or held (under license or otherwise) by Company,
and also indicating which of such Trade Rights are registered. To the
knowledge of officers of the Company, in order to conduct the Business, as
such is currently being conducted or proposed to be conducted, Company
does not require any Trade Rights that it does not already have. To the
knowledge of officers of the Company, Company is not infringing and has
not infringed any Trade Rights of another in the operation of the
Business, nor is any other person infringing the Trade Rights of Company.
Company has not granted any license or made any assignment of any Trade
Right listed on Schedule 4.13, and no other person has any right to use
any such Trade Right. Company does not pay any royalties or other
consideration for the right to use any Trade Rights of others. There is
no Litigation pending or to the knowledge of officers of the Company
threatened to challenge Company's right, title and interest with respect
to its continued use and right to preclude others from using any Trade
Rights of Company.
4.14. Major Customers and Suppliers.
4.14.(a) Major Customers. Schedule 4.14.(a) contains
a list of the ten (10) largest customers of the Business for each
of the two (2) most recent fiscal years (determined on the basis of
the total dollar amount of net sales). Officers of the Company
have no knowledge or information of any facts indicating that any
of the customers listed on Schedule 4.14.(a) will not continue to
be customers of the Business after the Closing.
4.14.(b) Major Suppliers. Schedule 4.14.(b) contains
a list of the ten (10) largest suppliers to the Business for each
of the two (2) most recent fiscal years (determined on the basis of
the total dollar amount of purchases). Officers of the Company
have no knowledge or information of any facts indicating that any
of the suppliers listed on Schedule 4.14.(b) will not continue to
be suppliers to the Business after the Closing.
4.15. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, shareholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
4.16. Extraordinary Warranty Expense. Except for the
products which are the subject of the ▇▇▇▇▇▇▇ Disputed Receivable, the
Business does not have any liability under the Business' product
warranties for damaged or defective products (including products not made
to allowed tolerances) which have resulted from recurring similar defects
in materials or workmanship (as opposed to normal, occasional or usual
deficiencies), which recurring similar defects are found in a substantial
number of the same products manufactured for a single customer, which will
result in warranty expense exceeding the warranty reserve set forth on the
Final Closing Business Balance Sheet.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent, jointly and severally, make the following
representations and warranties to Company:
5.1. Corporate.
5.1.(a) Organization. Buyer and Parent are each
corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware.
5.1.(b) Corporate Power. Buyer and Parent each have
all requisite corporate power to enter into this Agreement and the
other documents and instruments to be executed and delivered by
Buyer and/or Parent and to carry out the transactions contemplated
hereby and thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
and Parent pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Buyer and the Board of Directors of Parent. No other
corporate act or proceeding on the part of Buyer or Parent or their
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer and/or
Parent pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when
executed and delivered, the other documents and instruments to be executed
and delivered by Buyer and/or Parent pursuant hereto will constitute,
valid and binding agreements of Buyer and/or Parent, as the case may be,
enforceable in accordance with their respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
5.3. No Violation. Except as set forth on Schedule 5.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Buyer and/or Parent pursuant
hereto, nor the consummation by Buyer and Parent of the transactions
contemplated hereby and thereby (a) except for applicable requirements of
the HSR Act, will require any authorization, consent, approval, exemption
or other action by or notice to any Government Entity, or (b) subject to
obtaining the necessary consents or giving of Notices, will violate or
conflict with, or constitute a default under any term or provision of the
Articles of Incorporation or By-laws of Buyer or of Parent or of any
contract, commitment, understanding, arrangement, agreement or restriction
of any kind or character to which Buyer or Parent is a party or by which
Buyer or Parent or any of their respective assets or properties may be
bound or affected.
5.4. No Brokers or Finders. Neither Buyer, Parent nor any of their
respective directors, officers, employees or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION
6.1. Business Employees. Certain of the Company's employees
("Bargaining Unit Employees") are represented by the International
Association of Machinists and Aerospace Workers District No. 70 (the
"Union"). The Union and the Company are parties to a collective
bargaining agreement effective June 19, 1995 through June 14, 1998 (the
"Collective Bargaining Agreement"). Buyer does not agree to assume the
Collective Bargaining Agreement. Instead, prior to the Effective Time,
Buyer will consult with the Union regarding modifications desired by Buyer
to the Collective Bargaining Agreement to become effective at such time as
Buyer becomes a successor employer under the National Labor Relations Act.
At Buyer's election exercised by notice to the Company at the Closing,
Buyer shall either (i) enter into a new collective bargaining agreement
with the Union incorporating the modifications agreed to by the Buyer and
the Union; or (ii) offer employment to substantially all Bargaining Unit
Employees conditioned upon their acceptance of initial terms and
conditions of employment as established by Buyer; provided, however, that
any such initial terms and conditions of employment shall include the
Bargaining Unit Employee's wage rate at the time of Closing. Buyer
represents to the Company that following the Closing it will comply with
any obligations Buyer may have under the National Labor Relations Act to
recognize the Union.
With respect to all other employees of the Business at the
Effective Time (other than employees who were represented by the Union
prior to the Effective Time), all such employees shall become employees of
Buyer (it being understood that Buyer is not making any commitment to
maintain such employees as employees for any specific period of time or at
any specific pay or benefit levels, but at their base hourly or salaried
pay rates at the Effective Time). With respect to all employees of the
Business who become employees of the Buyer at the Effective Time, Buyer
shall thereupon be solely responsible for all pay and benefits with
respect to such employees for services rendered after the Effective Time.
With respect to all employees of the Business at the Effective Time, Buyer
shall also pay or otherwise satisfy all properly accrued and disclosed
vacation, holiday and sick time due to employees of the Business at the
Effective Time. After the Effective Time, Buyer shall also be responsible
for any "COBRA" obligations for any current or former employees of the
Business and their dependents.
Buyer agrees to assume full responsibility for compliance with
any plant closing or similar laws, including WARN Act notices, if any,
which may be required as a result of employment losses caused by the
transactions provided for herein or by reason of any events occurring at
or after the Effective Time.
6.2. Data Processing. After the Effective Time and until December
31, 1997, or such earlier date as Buyer shall notify Company of its
election to terminate such assistance and services, Company agrees to
provide data processing assistance and services to the Business as
conducted by Buyer after the Effective Time. Such data processing
assistance and services shall be of substantially the same kind and amount
as Company is at the Effective Time providing to the Business from its
Waukesha Headquarters facility. Such assistance and services shall be
provided without charge to Buyer for the period from the Effective Time
through August 12, 1997. For the period August 13, 1997 through August
31, 1997, Buyer shall pay Company the amount of Four Thousand Nine Hundred
Seventy-Four ($4,974) for such assistance and services; such amount to be
due in advance on or before August 13, 1997. Thereafter, Buyer shall pay
Company the amount of Eight Thousand One Hundred Sixteen ($8,116) per
month for such assistance and services; such amount to be paid in advance
on the first day of each month during the continuance of such assistance
and services.
6.3. Payroll Tax. Company agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected Employees
paying over to the federal, state and city governments those amounts
respectively withheld or required to be withheld for employment through
the Effective Time. Company also agrees to issue, by the date prescribed
by IRS Regulations, Forms W-2 for wages paid through the Effective Time.
Except as set forth in this Agreement, Buyer shall be responsible for all
payroll and payroll tax obligations after the Effective Time for Affected
Employees.
6.4. Employee Benefit Plans.
6.4.(a) Defined Contribution Plans. Company shall
cause the interest of each of the Business' Employees as of the
Effective Time in the ▇▇▇▇-▇▇▇▇▇▇ Retirement and Savings Plan and
Trust to be fully vested and nonforfeitable as of the Effective
Time. In all other respects, each such person shall be treated as
any other terminated participant in accordance with the provisions
of said plan.
6.4.(b) No Third-Party Rights. Nothing in this
Agreement, express or implied, is intended to confer upon any of
Company's employees, former employees, collective bargaining
representatives, job applicants, any association or group of such
persons or any affected employees any rights or remedies of any
nature or kind whatsoever under or by reason of this Agreement,
including, without limitation, any rights of employment.
6.5. Continued Supply to Company. Buyer agrees following the
Closing and until Buyer provides at least ninety (90) days notice of its
termination of the arrangement, to continue to supply Company on
reasonable terms and conditions, hydraulic cylinders for use in Company's
collision repair product line.
7. OTHER MATTERS
7.1. Environmental Matters.
7.1.(a) Environmental Due Diligence. Buyer
acknowledges that Kejr Science Group, Inc. performed an
environmental site assessment of the Main Facility in 1994 (the
("Kejr Reports"). The Buyer shall prior to closing arrange and pay
for an environmental investigation and assessment (the
"Environmental Report"), of the Leased Real Property ("Property")
as set forth in Subsection 7.1.(b) below. The Environmental Report
shall be completed prior to Closing and shall be delivered to
Company not later than ten (10) days prior to Closing. Buyer
agrees that it will treat all information obtained from the Company
or otherwise obtained as a result of its review and investigation
of the Business as confidential information, and shall not, unless
otherwise required by law, disclose such information to any persons
other than the parties, their legal counsel, environmental
consultants, and institutional lenders.
7.1.(b) Contents of Environmental Report. The
Environmental Report, as directed by Buyer, shall update and
supplement the Kejr Reports, shall evaluate the Property for
compliance with Environmental Laws, shall express an opinion as to
compliance with such laws and more specifically (i) shall, to the
extent feasible, specifically identify any Hazardous Substances
released on the Property by Company or its predecessors which are
then present on, under or adjacent to the Property ("Identified
Company Releases"); (ii) shall, to the extent feasible,
specifically identify any Hazardous Substances released by a third
party which are then present on or under the Property ("Identified
Third Party Releases"); and (iii) shall, to the extent feasible,
specifically identify any Company Off-Site Releases.
Notwithstanding the foregoing, the scope and nature of the
Environmental Report and the investigation of the Property
conducted by Buyer is within Buyer's reasonable discretion. In the
event Company believes the investigation or the Environmental
Report fails to adequately characterize Hazardous Substances or
their source, or is otherwise deficient, then Company, at its own
cost and expense may undertake such additional testing, studies or
evaluation as Company deems appropriate.
7.1.(c) Company Cooperation. Company shall cooperate
with the Buyer's consultant as reasonably requested by Buyer to
prepare the Environmental Report, including but not limited to
providing reasonable access to the Property and reasonable access
to necessary records. At Buyer's reasonable request, Company shall
arrange interviews with appropriate employees of the Company.
7.1.(d) Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below.
(i) "Hazardous Substances" shall mean, without
limitation, any material or substance: (i) the presence of
which requires investigation, remediation or any other
response under any federal, state or local statute,
regulation, ordinance, order, action, policy, or common law;
or (ii) which is or becomes defined as a "hazardous waste,"
"hazardous substance," "pollutant", or "contaminant" under any
federal, state, or local statute, regulation, rule, or
ordinance or amendments thereto including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 et seq.) and/or the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.); (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic,
or otherwise hazardous or dangerous and is or becomes
regulated by any governmental authority, department,
commission, board, agency, or instrumentality of the United
States, the state of Kansas or any political subdivision
thereof; or (iv) the presence of which on the Property causes
or threatens to cause a nuisance or other damage or harm upon
such properties or to other properties, poses or threatens to
pose a hazard to the health or safety of persons on or about
the Property or other properties, or poses or threatens to
pose a harm to the environment or natural resources wherever
they may be located; or (v) the presence of which on
properties other than the Property could constitute a
trespass; or (vi) which contains gasoline, diesel fuel, or
other petroleum hydrocarbons; or (vii) which contains
polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde
foam insulation, radon gas, asbestos or asbestos-containing
materials or lead-based paint.
(ii) "Environmental Laws" shall mean, without
limitation, any federal, state, county or municipal statute,
ordinance, regulations, rule, order, judgment or decree or
common law pursuant to any federal or state court decision
applicable to the Property, including without limitation the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et
seq.) ("CERCLA"), the Hazardous Materials Transportation Act,
as amended (49 U.S.C. Section 6901 et seq.), the comparable
state laws relating to Hazardous Materials and the regulations
adopted and publications promulgated pursuant to such federal,
state or local laws and regulations.
7.2. Escrow Agreement. At the Closing, Company and Buyer shall
execute and deliver an Escrow Agreement (the "Escrow Agreement") in the
form of Exhibit 1 hereto.
7.3. HSR Act Filings. To the extent such filings have not been
completed prior to the execution of this Agreement, each of Company and
Buyer shall, in cooperation with the other, file any reports or
notifications that may be required to be filed by it under the HSR Act,
with the Federal Trade Commission and the Antitrust Division of the
Department of Justice, and shall furnish to the other all such information
in its possession as may be necessary for the completion of the reports or
notifications to be filed by the other. Prior to making any
communication, written or oral, with the Federal Trade Commission, the
Antitrust Division of the federal Department of Justice or any other
governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby,
the Company shall consult with Buyer.
7.4. Access to Information and Records.
7.4.(a) Prior to Closing. During the period prior to
the Closing, Company shall give Buyer, its counsel, accountants and
other representatives (i) reasonable access during normal business
hours to all of the properties, books, records, contracts and
documents of Company relating to the Business or the Purchased
Assets or Assumed Liabilities for the purpose of such inspection,
investigation and testing as Buyer deems appropriate (and Company
shall furnish or cause to be furnished to Buyer and its
representatives all information with respect to the Business Buyer
may request); and (ii) reasonable access to employees, agents and
representatives of the Business for the purpose of such meetings
and communications as Buyer reasonably desires; and (iii) with the
prior written consent of Company in each instance and subject to
such reasonable terms and conditions as Company shall require,
Company shall arrange for joint visits of Company and Buyer with
the four (4) largest customers (in terms of the Business' sales to
such customers during the preceding twelve (12) months) of the
Business.
7.4.(b) After Closing. After the Closing, each party
will afford the other party, its counsel, accountants and other
representatives, during normal business hours, reasonable access to
the books, records and other data in such party's possession
relating directly or indirectly to the properties, liabilities or
operations of the Business, with respect to periods prior to the
Closing, and the right to make copies and extracts therefrom, to
the extent that such access may be reasonably required by the
requesting party for any proper business purpose. Each party
agrees for a period extending eight (8) years after the Closing not
to destroy or otherwise dispose of any such records without first
offering in writing to surrender such records to the other party,
which party shall have ten (10) days after such offer to agree in
writing to take possession thereof.
7.5. Collection of Accounts Receivable. Company shall use its
commercially reasonable efforts to collect for Buyer's account all
accounts receivable balances set forth on the Final Closing Balance Sheet
and shall promptly remit to Buyer all amounts collected. To facilitate
collection of accounts receivable, Buyer agrees to reasonably discharge
its obligations under and pursuant to the Business' product warranties as
assumed by Buyer pursuant to Paragraph 2.1.(e). Company shall apply all
accounts receivable payments received from customers to the specific
invoices for which such payments are submitted if correlation of specific
invoices with such payments is reasonably possible and, if such
correlation is not reasonably possible, then such payments shall be
applied to that customer's oldest outstanding accounts receivable balance
first. Buyer shall promptly transfer, assign and deliver to the Company
all of Buyer's right, title and interest in and to any receivables
reflected in the Final Closing Business Balance Sheet which are not
collected within one hundred twenty (120) days following Closing. Buyer
shall reasonably assist in collection efforts following the transfer of
such receivables. Buyer will not adjust any accounts receivable balances
reflected on the Final Closing Business Balance Sheet without the written
consent of the Company, which consent shall not be unreasonably withheld.
Notwithstanding anything contained in this Section 7.5 to the contrary,
Company shall undertake collection efforts in substantially the same
manner after the Closing as is customary in the collection of accounts
receivable arising from Company's business prior to the Closing Date,
provided that Company shall not be required to file suit, employ the
services of a collection agency or commence any other official proceeding
in order to collect any delinquent accounts included in Company's accounts
receivable.
7.6. Litigation Cooperation. The parties agree after the Closing to
cooperate with one another in connection with any litigation, claim,
action or proceeding involving the Business including without cost (except
reimbursement of out-of-pocket expenses), providing copies of drawings and
other documents and providing employees as witnesses or otherwise to
assist in such litigation, all as reasonably requested from time to time
by the parties.
7.7. Product Marking. Buyer agrees that with respect to all
products of the Business manufactured or sold after the closing Date that
it will ▇▇▇▇ such products so that such can be clearly identified as
having been manufactured or sold after the Closing Date.
7.8. ▇▇▇▇▇▇▇ Receivable/Inventory. The Business has for several
years supplied ▇▇▇▇▇▇▇ America ("▇▇▇▇▇▇▇") and currently supplies ▇▇▇▇▇▇▇
several different hydraulic cylinders. There is presently a dispute with
▇▇▇▇▇▇▇ regarding one of the hydraulic cylinders. ▇▇▇▇▇▇▇ has debited the
receivable due from ▇▇▇▇▇▇▇ to the Business for a portion of the problem
and Company anticipates that at the Effective Time there will be a
receivable due from ▇▇▇▇▇▇▇ in the amount of approximately One Hundred
Thousand Dollars ($100,000) which as a result of the foregoing is disputed
by ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ Disputed Receivable"). ▇▇▇▇▇▇▇ has shipped back
to the company the product from which the ▇▇▇▇▇▇▇ Disputed Receivable
arose, but such product (the "▇▇▇▇▇▇▇ Disputed Product") has not been
reflected on the books of the Business as inventory. Company has agreed
to "rework" certain of the ▇▇▇▇▇▇▇ Disputed Product and subject to
▇▇▇▇▇▇▇'▇ successful testing of such reworked product, ▇▇▇▇▇▇▇ has agreed
to accept and pay for such reworked product after the Effective Time.
Buyer agrees to reasonably cooperate with Company in reworking (as and to
the extent reasonably requested by Company) the ▇▇▇▇▇▇▇ Disputed Product
and otherwise in assisting Company to collect the ▇▇▇▇▇▇▇ Disputed
Receivable. To the extent such costs are not appropriately billed to, and
actually collected from, ▇▇▇▇▇▇▇, Company shall promptly, upon the
submission of invoices therefor, reimburse Buyer for Buyer's reasonable
cost of labor and material (but not burden) incurred by Buyer in reworking
(as and to the extent reasonably requested by Company) the ▇▇▇▇▇▇▇
Disputed Product ("Buyer ▇▇▇▇▇▇▇ Reworking Costs"). At the end of one (1)
year following Closing, Company shall pay to Buyer the amount, if any, of
the ▇▇▇▇▇▇▇ Disputed Receivable out of the amount held in Escrow which is
not actually collected within one (1) year following Closing. Company and
Buyer agree that the ▇▇▇▇▇▇▇ Disputed Receivable shall be reflected on the
Estimated Closing Business balance Sheet and the Final Closing Business
Balance Sheet at its full value and that the ▇▇▇▇▇▇▇ Disputed Product
shall not be reflected as inventory on the Estimated Closing Business
Balance Sheet on the Final Closing Business Balance Sheet. The agreement
set forth in this Section 7.8 shall constitute the parties entire
agreement of the parties with respect to the matters which are the subject
hereof and shall supersede the other provisions of this Agreement that may
otherwise be applicable.
8. FURTHER COVENANTS OF COMPANY
Company covenants and agrees as follows:
8.1. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer:
8.1.(a) No Changes. Company will carry on the
Business diligently and substantially in the same manner as
heretofore and will not make or institute any material changes in
its methods of purchase, sale, management, accounting or operation.
8.1.(b) Maintain Organization. Company will use
reasonable efforts to maintain, preserve, renew and keep in favor
and effect the existence, rights and franchises of the Business and
will use reasonable efforts to preserve the Business intact, to
keep available to Buyer the present officers and employees of the
Business, and to preserve for Buyer its present relationships with
suppliers and customers and others having business relationships
with the Business.
8.1.(c) No Breach. Company will not do or omit any
act, or permit any omission to act, which may cause a material
breach of any contract, commitment or obligation material to the
Business, or any breach of any representation, warranty, covenant
or agreement made by Company herein, or which would have required
disclosure on Schedule 4.5 had it occurred after the date of the
Recent Business Balance Sheet and prior to the date of this
Agreement.
8.1.(d) New Contracts. No contract or commitment
will be entered into, and no purchase of raw materials or supplies
and no sale of goods or services (real, personal, or mixed,
tangible or intangible) will be made, by or on behalf of Company in
connection with its operation of the Business, except contracts,
commitments, purchases or sales which are in the ordinary course of
business and consistent with past practice.
8.1.(e) Maintenance of Property. Company shall use,
operate, maintain and repair all property constituting Purchased
Assets hereunder in a normal business manner.
8.1.(f) Interim Financials. Company will provide
Buyer with interim monthly financial statements of the Business as
and when they are available.
8.2. Consents. Company will use reasonable efforts prior to
Closing to obtain all consents necessary for the consummation of the
transactions contemplated hereby including those described in Schedule
8.2.
8.3. Other Action. Company shall use reasonable efforts to cause
the fulfillment at the earliest practicable date of all of the conditions
to the parties' obligations to consummate the transactions contemplated in
this Agreement.
8.4. Disclosure. Company shall have a continuing obligation to
promptly notify Buyer in writing with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in any
Schedule hereto.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company in this Agreement,
and the statements contained in the Disclosure Schedule or in any
instrument, list, certificate or writing delivered by Company pursuant to
this Agreement, shall be true and correct in all material respects when
made and shall be true and correct in all material respects at and as of
the Closing Date as though such representations and warranties were made
or given on and as of the Closing Date, except for any changes permitted
by the terms of this Agreement or consented to in writing by Buyer.
Buyer's actions pursuant to Section 6.1 with respect to the Collective
Bargaining Agreement, the Bargaining Unit Employees and other employees of
the Business shall be solely the responsibility of Buyer and Buyer and/or
Parent shall not be entitled to claim that the conditions provided for in
this Section 9.1 has not been satisfied as a result of any event, fact or
circumstance which results directly or indirectly, in whole or in part,
from any actions by Buyer and/or Parent pursuant to Section 6.1 or
otherwise.
9.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by Company
prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 12.1.
9.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
9.4. Termination of Lease for Airport Facility. Company shall have
terminated the lease with respect to the Airport Facility and all
material, equipment and other assets of Company shall be removed from the
Airport Facility and all such equipment and assets which are material to
Company's operations shall have been placed into the Main Facility in a
functional manner.
9.5. Environmental Report/Environmental Indemnity. Buyer shall
have received either of the following:
9.5.(a) The Environmental Report identified in
section 7.1(a) of this Agreement which does not identify any
recognized environmental conditions ("RECs") (as defined in the
ASTM E 1527 Standards on Environmental Site Assessments for
Commercial Real Estate, 2nd. ed.) which are also Identified Company
Releases or which are also Identified Third Party Releases which
Buyer reasonably determines to pose a substantial risk of material
cost, liability or expense to Buyer or a significant potential for
material interference with Buyer's intended uses or operations at
the Property; or
9.5.(b) An Environmental Indemnity Agreement,
substantially in the form attached hereto as Exhibit 2, in which
Company agrees to remediate or otherwise address to the reasonable
satisfaction of Buyer all RECs which are:
(i) Identified Company Releases; and
(ii) Identified Third Party Releases which Buyer
reasonably determines to pose a substantial risk of material
cost, liability or expense to Buyer or a significant potential
for material interference with Buyer's intended uses or
operations at the Property.
9.6. Absence of Certain Events/Conditions. There shall not have
been, and Buyer shall not have discovered any event, fact or circumstance
(including without limitation fire, flood, explosion, act of God, act of
any government, governmental subdivision or governmental agency, decreased
customer demand or termination or modification of an advantageous contract
or business relationship of the Business, whether or not any such event is
covered by insurance) which shows that there has been, since the date of
the Recent Business Balance Sheet any material adverse change in the
assets or operations of the Business. Buyer's actions pursuant to Section
6.1 with respect to the Collective Bargaining Agreement, the Bargaining
Unit Employees and other employees of the Business shall be solely the
responsibility of Buyer and Buyer and/or Parent shall not be entitled to
claim that the condition provided for in this Section 9.6 has not been
satisfied as a result of any event, fact or circumstance which results
directly or indirectly, in whole or in part, from any actions by Buyer
(and/or Parent) pursuant to Section 6.1 or otherwise.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
10.1. Representations and Warranties True on the Closing
Date. Each of the representations and warranties made by Buyer and Parent
in this Agreement shall be true and correct in all material respects when
made and shall be true and correct in all material respects at and as of
the Closing Date as though such representations and warranties were made
or given on and as of the Closing Date.
10.2. Compliance With Agreement. Buyer and Parent shall have
in all material respects performed and complied with all of Buyer's and
Parent's agreements and obligations under this Agreement which are to be
performed or complied with by Buyer and Parent prior to or on the Closing
Date, including the delivery of the closing documents specified in Section
12.2.
10.3. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Waiting Period. All applicable
waiting periods related to the HSR Act shall have expired.
10.4. Environmental Costs. Company's anticipated
expenditures which would be incurred under and pursuant to the proposed
Environmental Indemnity Agreement referred to in Section 9.5 shall not
exceed Fifty Thousand Dollars ($50,000).
11. INDEMNIFICATION
11.1. By Company. Subject to the terms and conditions of
this Article 11, Company hereby agrees to indemnify, defend and hold
harmless Buyer and Parent, and their respective directors, officers,
employees and controlled and controlling persons (hereinafter "Buyer's
affiliates"), from and against all Claims asserted against, resulting to,
imposed upon, or incurred by Buyer, Parent, Buyer's affiliates, the
Business or the Purchased Assets, directly or indirectly, by reason of,
arising out of or resulting from (a) the inaccuracy or breach of any
representation or warranty of Company contained in or made pursuant to
this Agreement; (b) the breach of any covenant of Company contained in
this Agreement; (c) all accounts receivable reflected on the Final Closing
Business Balance Sheet which are not actually collected within one hundred
twenty (120) days following Closing (the "Accounts Receivable
Adjustment"), (d) any Claims initiated by a third party, including,
without limitation, any federal, state or local governmental agency,
department or section against Buyer with respect to any Identified Third
Party Releases, provided such Claims are initiated prior to April 30,
2005, or (e) any Claim of or against Company, the Purchased Assets or the
Business not specifically assumed by Buyer pursuant hereto. As used in
this Article 11, the term "Claim" shall include (i) all Liabilities; (ii)
all losses, damages (including, without limitation, consequential
damages), judgments, awards, settlements, costs and expenses (including,
without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and attorneys fees and
expenses); and (iii) all demands, claims, actions, costs of investigation,
causes of action, proceedings and assessments, whether or not ultimately
determined to be valid.
11.2. By Buyer and Parent. Subject to the terms and
conditions of this Article 11, Buyer and Parent, jointly and severally,
hereby agree to indemnify, defend and hold harmless Company, its
directors, officers, employees and controlling persons, from and against
all Claims asserted against, resulting to, imposed upon or incurred by any
such person, directly or indirectly, by reason of or resulting from (a)
the inaccuracy or breach of any representation or warranty of Buyer and/or
Parent contained in or made pursuant to this Agreement; (b) the breach of
any covenant of Buyer and/or Parent contained in this Agreement; and (c)
all Claims of or against Company specifically assumed by Buyer pursuant
hereto, including any Claim under and pursuant to the WARN Act and any
Claim arising out of any liability assumed by Buyer pursuant to paragraph
2.1 of this Agreement.
11.3. Indemnification of Third-Party Claims. The obligations
and liabilities of any party to indemnify any other under this Article 11
with respect to Claims relating to third parties shall be subject to the
following terms and conditions:
11.3.(a) Notice and Defense. The party or parties to
be indemnified (whether one or more, the "Indemnified Party") will
give the party from whom indemnification is sought (the
"Indemnifying Party") prompt written notice of any such Claim, and
the Indemnifying Party will undertake the defense thereof by
representatives chosen by it. So long as the Indemnifying Party is
defending any such Claim actively and in good faith, the
Indemnified Party shall not settle such Claim. The Indemnified
Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them
and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
11.3.(b) Failure to Defend. If the Indemnifying
Party, within a reasonable time after notice of any such Claim,
fails to defend such Claim actively and in good faith, the
Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Claim or
consent to the entry of a judgment with respect to such Claim, on
behalf of and for the account and risk of the Indemnifying Party,
and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement
or consent to judgment.
11.3.(c) Indemnified Party's Rights. Anything in this
Section 11 to the contrary notwithstanding, the Indemnifying Party
shall not, without the written consent of the Indemnified Party,
settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the Indemnified
Party of a release from all Liability in respect of such Claim.
11.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11, which payment may
be accomplished in whole or in part, at the option of the Indemnified
Party, by the Indemnified Party setting off any amount owed to the
Indemnifying Party by the Indemnified Party. To the extent set-off is
made by an Indemnified Party in satisfaction or partial satisfaction of an
indemnity obligation under this Article 11 that is disputed by the
Indemnifying Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity obligation was
not owed to the Indemnified Party, the Indemnified Party shall pay the
Indemnifying Party the amount which was set off and not owed together with
interest from the date of set-off until the date of such payment at an
annual rate equal to the average annual rate in effect as of the date of
the set-off, on those three maturities of United States Treasury
obligations having a remaining life, as of such date, closest to the
period from the date of the set-off to the date of such judgment. Upon
judgment, determination, settlement or compromise of any third party
Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of any
amount theretofore required to be paid by it, the amount so determined by
judgment, determination, settlement or compromise and all other Claims of
the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party
desires to appeal from an adverse judgment, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of
the judgment pending appeal. Upon the payment in full by the Indemnifying
Party of such amounts, the Indemnifying Party shall succeed to the rights
of such Indemnified Party, to the extent not waived in settlement, against
the third party who made such third party Claim.
11.5. Limitations on Indemnification.
11.5.(a) Time Limitation. No claim or action shall be
brought under this Article 11 for breach of a representation or
warranty after the lapse of two (2) years following the Closing.
11.5.(b) Amount Limitation. An Indemnified Party
shall not be entitled to indemnification under this Article 11 for
breach of a representation or warranty except to the extent the
aggregate of the Indemnifying Party's indemnification obligations
to the Indemnified Party pursuant to this Article 11 (but for this
Section 11.5.(b)) exceeds Fifty Thousand Dollars ($50,000).
12. CLOSING
The closing of this transaction ("▇▇▇ ▇▇▇▇▇▇▇") shall take place at
the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, at 10:00 A.M. on May 12, 1997, or at such other time and place
as the parties hereto shall agree upon. Such date is referred to in this
Agreement as the "Closing Date".
12.1. Documents to be Delivered by Company. At the Closing,
Company shall deliver to Buyer the following documents, in each case duly
executed or otherwise in proper form:
12.1.(a) Bills of Sale. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as
will be sufficient in the opinion of Buyer and its counsel to
transfer, assign, convey and deliver to Buyer the Purchased Assets
as contemplated hereby.
12.1.(b) Compliance Certificate. A certificate signed
by the chief executive officer of Company that each of the
representations and warranties made by Company in this Agreement is
true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer), and that Company has performed
and complied with all of Company's obligations under this Agreement
which are to be performed or complied with on or prior to the
Closing Date.
12.1.(c) Opinion of Counsel. A written opinion of
▇▇▇▇▇ & Lardner, counsel to Company, dated as of the Closing Date,
addressed to Buyer, substantially in the form of Exhibit 3 hereto.
12.1.(d) Certified Resolutions. A certified copy of
the resolutions of the Board of Directors of Company authorizing
and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
12.1.(e) Escrow Agreement. The Escrow Agreement duly
executed by Company and the Escrow Agent in the form of Exhibit 1
hereto.
12.1.(f) Other Documents. All other documents,
instruments or writings required to be delivered to Buyer at or
prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Buyer may reasonably
request.
12.2. Documents to be Delivered by Buyer. At the Closing,
Buyer shall deliver to Company, and Parent shall cause Buyer to deliver to
Company, the following documents, in each case duly executed or otherwise
in proper form:
12.2.(a) Cash Purchase Price. To Company a certified
or bank cashier's check (or wire transfer) as required by Section
3.2.(c) hereof, and to the Escrow Agent, a certified or bank
cashier's check (or wire transfer) as required by Section 3.2.(c)
hereof.
12.2.(b) Assumption of Liabilities. Such undertakings
and instruments of assumption as will be reasonably sufficient in
the opinion of Company and its counsel to evidence the assumption
of Company debts, liabilities and obligations as provided for in
Article 2.
12.2.(c) Compliance Certificate. A certificate signed
by the chief executive officer of Buyer that the representations
and warranties made by Buyer in this Agreement are true and correct
on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Company), and that
Buyer has performed and complied with all of Buyer's obligations
under this Agreement which are to be performed or complied with on
or prior to the Closing Date.
12.2.(d) Opinion of Counsel. A written opinion of
▇▇▇▇▇, ▇▇▇▇▇▇ & Irish, counsel to Buyer and Parent, dated as of the
Closing Date, addressed to Company, in substantially the form of
Exhibit 4 hereto.
12.2.(e) Certified Resolutions. A certified copy of
the resolutions of the Board of Directors of Buyer and Parent
authorizing and approving this Agreement and the consummation of
the transactions contemplated by this Agreement.
12.2.(f) Escrow Agreement. The Escrow Agreement duly
executed by Buyer and the Escrow Agent in the form of Exhibit 1
hereto.
12.2.(g) Other Documents. All other documents,
instruments or writings required to be delivered to Company at or
prior to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Company may reasonably
request.
13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement
may be terminated without further liability of any party at any time prior
to the Closing:
13.1.(a) by written agreement of Buyer, Parent and
Company, or
13.1.(b) by either Buyer and Parent or by Company if
the Closing shall not have occurred on or before June 30, 1997,
provided the terminating party has not, through breach of a
representation, warranty or covenant, prevented the Closing from
occurring on or before such date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) there has been
a material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer and Parent, or (ii) there has
been a failure of satisfaction of a condition to the obligations of
Buyer and Parent which has not been so waived, including but not
limited to the provisions of Paragraph 9.5 hereof, or (iii) Company
shall have attempted to terminate this Agreement under this Article
13 or otherwise without grounds to do so, then Buyer and Parent
may, by written notice to Company at any time prior to the Closing
that such violation, breach, failure or wrongful termination
attempt is continuing, terminate this Agreement with the effect set
forth in Section 13.2.(c) hereof.
13.2.(b) Termination by Company. If (i) there has
been a material violation or breach by Buyer or Parent of any of
the agreements, representations or warranties contained in this
Agreement which has not been waived in writing by Company, or (ii)
there has been a failure of satisfaction of a condition to the
obligations of Company which has not been so waived, or (iii) Buyer
and/or Parent shall have attempted to terminate this Agreement
under this Article 13 or otherwise without grounds to do so, then
Company may, by written notice to Buyer and Parent at any time
prior to the Closing that such violation, breach, failure or
wrongful termination attempt is continuing, terminate this
Agreement with the effect set forth in Section 13.2.(c) hereof.
13.2.(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 13.2 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or
failed to satisfy any of the representations, warranties,
covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof. In addition to the right of
any party under common law to redress for any such breach or
violation, each party whose breach or violation has occurred prior
to termination shall jointly and severally indemnify each other
party for whose benefit such representation, warranty, covenant,
agreement or other provision was made ("indemnified party") from
and against all losses, damages (including, without limitation,
consequential damages), costs and expenses (including, without
limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs, and attorneys fees and
expenses) asserted against, resulting to, imposed upon, or incurred
by the indemnified party, directly or indirectly, by reason of,
arising out of or resulting from such breach or violation. Subject
to the foregoing, the parties' obligations under Section 16.7 of
this Agreement shall survive termination.
14. COVENANT NOT TO COMPETE
14.1. Non-Competition. Following the Closing, and for a
period of ten (10) years following the Closing, Company agrees not to
directly or indirectly engage or participate in the business of the
manufacture of hydraulic cylinders for sale to original equipment
manufacturers or, as replacement parts therefor, in competition with the
business conducted by Buyer utilizing the purchased assets and business
(a "Competing Business"). Nothing herein shall prohibit Company from
manufacturing hydraulic cylinders for its own use or the use of
subsidiaries and affiliates (and as replacement parts for products
manufactured by the Company, its subsidiaries or affiliates) in
substantially the same manner and to substantially the same extent as
Company now manufactures hydraulic cylinders for its own use or use of its
subsidiaries and affiliates. Nothing herein shall prohibit any person or
entity from owning five percent (5%) or less of a publicly traded company
which conducts a business which is competitive with Buyer's business. The
foregoing covenant not to compete shall not be deemed violated, if in
connection with an acquisition by the Company, (i) it acquires as a part
thereof a business engaged in a "Competing Business" providing that such
Competing Business comprises for the twelve (12) months prior to the
acquisition no more than twenty percent (20%) (measured by sales) of the
acquired business and Buyer disposes of such Competing Business within two
(2) years following the acquisition or (ii) it acquires as a part thereof
a business engaged in the manufacture of hydraulic cylinders utilized by
the acquired business, continues such manufacture of hydraulic cylinders
for utilization of the acquired business in substantially the same manner
and to substantially the same extent as at the date of acquisition.
14.2. Enforcement. The provisions of the covenant contained
in this Section 14 are severable and independent and shall be interpreted
and applied consistently with requirements of reasonableness and equity.
If any provision of the covenant contained in this Section 14 shall be
held to be invalid or otherwise unenforceable, in whole or in part, the
remainder of the provisions, or the enforceable parts thereof, shall not
be affected thereby.
14.3. Injunctive Relief. Buyer and Company acknowledge that
compliance by Company with the covenant contained in this Section 14 is
necessary to protect the interests of Buyer and that a breach of the
covenant contained in this Section 14 will result in irreparable and
continuing damage to Buyer for which there will be no adequate remedy at
law. Company hereby agrees, without intending to limit the remedies
available to Buyer, that Buyer and its successors and assigns shall be
entitled to injunctive relief with respect to the covenant contained in
this Section 14 in addition to such other and further relief as may be
appropriate.
15. RESOLUTION OF DISPUTES
15.1. Arbitration. Any dispute, controversy or claim arising
out of or relating to this Agreement or any contract or agreement entered
into pursuant hereto or the performance by the parties of its or their
terms shall be settled by binding arbitration held in Milwaukee, Wisconsin
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect.
15.2. Arbitrators. If the matter in controversy (exclusive
of attorney fees and expenses) shall appear, as at the time of the demand
for arbitration, to exceed One Million Dollars ($1,000,000), then the
panel to be appointed shall consist of three neutral arbitrators;
otherwise, one neutral arbitrator.
15.3. Procedures; No Appeal. The arbitrator(s) shall allow
such discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within one hundred twenty
(120) days after the selection of the arbitrator(s). The arbitrator(s)
shall give the parties written notice of the decision, with the reasons
therefor set out, and shall have thirty (30) days thereafter to reconsider
and modify such decision if any party so requests within ten (10) days
after the decision. Thereafter, the decision of the arbitrator(s) shall
be final, binding, and nonappealable with respect to all persons,
including (without limitation) persons who have failed or refused to
participate in the arbitration process.
15.4. Authority. The arbitrator(s) shall have authority to
award relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
15.5. Entry of Judgment. Judgment upon the award rendered by
the arbitrator(s) may be entered in any court having in personam and
subject matter jurisdiction. Company, Buyer and each Shareholder hereby
submit to the in personam jurisdiction of the Federal and State courts in
Wisconsin, for the purpose of confirming any such award and entering
judgment thereon.
15.6. Confidentiality. All proceedings under this Article
15, and all evidence given or discovered pursuant hereto, shall be
maintained in confidence by all parties.
15.7. Continued Performance. The fact that the dispute
resolution procedures specified in this Article 15 shall have been or may
be invoked shall not excuse any party from performing its obligations
under this Agreement and during the pendency of any such procedure all
parties shall continue to perform their respective obligations in good
faith, subject to any rights to terminate this Agreement that may be
available to any party and to the right of setoff provided in Section 11.4
hereof.
15.8. Tolling. All applicable statutes of limitation shall
be tolled while the procedures specified in this Article 15 are pending.
The parties will take such action, if any, required to effectuate such
tolling.
15.9. Escrow Agent Unnecessary. The parties agree that the
escrow agent under and as identified in the Escrow Agreement is not a
necessary party to and shall not be joined in or made party to any
arbitration proceeding commenced under this Article 15.
16. MISCELLANEOUS
16.1. Further Assurance. From time to time, at Buyer's
request and without further consideration, Company will execute and
deliver to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the
transactions contemplated hereby and to vest in Buyer good, valid and
marketable title to the business and assets being transferred hereunder.
16.2. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by either
Company, Parent or Buyer shall be subject to the approval of the other
parties in all essential respects, except that no approval shall be
required but prior written notice shall be given as to any statements and
other information which a party may submit to the Securities and Exchange
Commission, any stock exchange or such party's stockholders or be required
to make pursuant to any rule or regulation of the Securities and Exchange
Commission or otherwise required by law.
16.3. Assignment; Parties in Interest.
16.3.(a) Assignment. Except as expressly provided
herein, the rights and obligations of a party hereunder may not be
assigned, transferred or encumbered without the prior written
consent of the other party.
16.3.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other
person any right or remedy under or by reason of this Agreement.
16.4. Law Governing Agreement. This Agreement may not be
modified or terminated orally, and shall be construed and interpreted
according to the internal laws of the State of Delaware, excluding any
choice of law rules that may direct the application of the laws of another
jurisdiction.
16.5. Amendment and Modification. Buyer and Company may
amend, modify and supplement this Agreement in such manner as may be
agreed upon by them in writing.
16.6. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer or to Parent, to:
Kaydon Corporation
Arbor Shoreline Office Park
19345 ▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President
and Chief Executive Officer
Facsimile: 813/524-3629
(with a copy to)
▇▇▇▇▇, ▇▇▇▇▇▇ & Irish
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: 616/726-3404
or to such other person or address as Buyer and Parent shall furnish to
Company in writing.
(b) If to Company, to:
▇▇▇▇-▇▇▇▇▇▇ Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief
Executive Officer
Facsimile: 414/542-7890
(with a copy to)
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Company shall furnish to Buyer and
Parent in writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to
this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof
of delivery); if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
16.7. Expenses. Regardless of whether or not the
transactions contemplated hereby are consummated:
16.7.(a) Brokerage. Company represents and warrants
to Buyer and Parent, and Buyer and Parent represent and warrant to
Company, that there is no broker involved or in any way connected
with the transfer provided for herein. Buyer and Parent, jointly
and severally, agree to hold Company harmless from and against all
claims for brokerage commissions or finder's fees incurred through
any act of Buyer or Parent in connection with the execution of this
Agreement or the transactions provided for herein. Company agrees
to hold Buyer and Parent harmless from and against all claims for
brokerage commissions or finder's fees incurred through any act of
Company in connection with the execution of this Agreement or the
transactions provided for herein.
16.7.(b) Expenses to be Paid by Buyer. Buyer shall
pay, and Buyer and Parent shall jointly and severally indemnify,
defend and hold Company harmless from and against, each of the
following:
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
(ii) Environmental Audit. The fees and other
expenses relating to the environmental audit performed
pursuant to Section 7.1 hereof.
16.7.(c) Other. Except as otherwise provided herein,
each of the parties shall bear its own expenses and the expenses of
its counsel and other agents in connection with the transactions
contemplated hereby.
16.7.(d) Costs of Litigation or Arbitration. The
parties agree that (subject to the discretion, in an arbitration
proceeding, of the arbitrator as set forth in Section 15.4) the
prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled
to recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party
in connection with such action, including without limitation
attorneys' fees and prejudgment interest.
16.8. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
16.9. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
16.10. Headings. The headings in this Agreement are inserted
for convenience only and shall not constitute a part hereof.
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
▇▇▇▇-▇▇▇▇▇▇ CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and Chief
Executive Officer
KAYDON CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President and
Chief Executive Officer
KAYDON ACQUISITION VIII, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Treasurer