1
EXHIBIT 10.03
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
between
▇▇▇▇▇▇ MANUFACTURING COMPANY
and
CTB, INC.
Dated as of March 31, 1997
--------------------------------------------------------------------------------
2
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Assets, Assumption of Certain Liabilities........................................... 1
1.1 Transfer of Assets........................................................................... 1
1.2 Excluded Assets.............................................................................. 3
1.3 Instruments of Conveyance and Transfer....................................................... 5
1.4 Further Assurances........................................................................... 5
1.5 Assumed Liabilities.......................................................................... 5
2. Closing, Payment of Purchase Price....................................................................... 7
2.1 Closing Date................................................................................. 7
2.2 Preliminary Purchase Price and Payment....................................................... 7
2.3 Cash Purchase Price Adjustment and Payment................................................... 8
2.4 Allocation of Purchase Price................................................................. 10
2.5 Accounts Receivable.......................................................................... 11
3. Representations and Warranties........................................................................... 11
3.1 Representations and Warranties of Seller..................................................... 11
(a) Due Organization, Power; Capacity, Good Standing, Ownership........................... 11
(b) Authorization and Validity............................................................ 11
(c) No Governmental Approvals or Notices Required; No Conflict............................ 12
(d) Financial Information, Liabilities.................................................... 12
(e) Title and Condition of Properties, Absence of Liens................................... 13
(f) Governmental Regulations.............................................................. 13
(g) Licenses and Government Approvals..................................................... 14
(h) Contracts, List of Properties, Permits and Other Data................................. 14
(i) Real Estate........................................................................... 15
(j) Legal Proceedings..................................................................... 17
(k) Insurance............................................................................. 17
(l) Labor................................................................................. 18
(m) Accounts Receivable................................................................... 19
(n) Inventories........................................................................... 19
(o) Product and Service Warranty.......................................................... 19
(p) Intellectual Property................................................................. 19
(q) Compliance with Law and Requirements.................................................. 20
(r) Employee Benefit Programs............................................................. 20
(s) Certain Fees.......................................................................... 21
(t) Absence of Certain Changes or Events.................................................. 21
(u) Environmental Matters................................................................. 22
(v) Entire Business....................................................................... 23
(w) Tax Matters........................................................................... 23
(x) Affiliate Transactions................................................................ 24
(y) Disclosure............................................................................ 24
i
3
3.2 Representations and Warranties of Buyer...................................................... 24
(a) Due Organization and Power............................................................ 24
(b) Authorization and Validity............................................................ 24
(c) Governmental Approvals; No Conflict................................................... 25
(d) Brokers' Fees......................................................................... 25
(e) Disclosure............................................................................ 25
(f) Financing............................................................................. 25
(g) Confidential Information.............................................................. 25
3.3 Survival of Representations.................................................................. 26
3.4 Disclosure Schedules......................................................................... 26
4. Agreements............................................................................................... 26
4.1 Access to Information........................................................................ 26
4.2 Conduct of the Business...................................................................... 27
4.3 Further Actions.............................................................................. 29
4.4 Antitrust Laws............................................................................... 29
4.5 Notification................................................................................. 30
4.6 No Inconsistent Action....................................................................... 30
4.7 Representations and Warranties............................................................... 30
4.8 Execution of Additional Acquisition Agreements............................................... 30
4.9 Covenant Not to Compete...................................................................... 30
4.10 Termination of Affiliate Transactions........................................................ 32
4.11 Customer Claims on Product Warranties and Purchase of Past Due
Accounts Receivable...................................................................... 32
4.12 Confidentiality.............................................................................. 32
4.13 Right to Challenge........................................................................... 33
4.14 Certain Losses............................................................................... 33
4.15 Title Commitment and Survey.................................................................. 33
(a) Title Commitment...................................................................... 33
(b) Survey................................................................................ 33
(c) Review of Title and Survey............................................................ 33
4.16 Other Agreements............................................................................. 34
4.17 Environmental Review......................................................................... 34
5. Conditions Precedent..................................................................................... 34
5.1 Conditions Precedent to Obligations of Parties............................................... 34
(a) No Injunction, etc.................................................................... 34
(b) HSR Act............................................................................... 34
(c) Government Actions.................................................................... 35
(d) Pension Benefit Guaranty Corporation.................................................. 35
(e) Supply Purchase Agreement. .......................................................... 35
5.2 Conditions Precedent to Obligations of Buyer................................................. 35
(a) Accuracy of Representations and Warranties............................................ 35
(b) Performance of Obligations............................................................ 35
ii
4
(c) Officer's Certificate................................................................. 35
(d) Opinions.............................................................................. 35
(e) Consents, etc......................................................................... 35
(f) Additional Acquisition Agreements..................................................... 36
(g) Title Insurance; Surveys.............................................................. 36
(h) Environmental Matters................................................................. 36
5.3 Conditions Precedent to the Obligations of Seller............................................ 36
(a) Accuracy of Representations and Warranties............................................ 36
(b) Performance of Obligations............................................................ 36
(c) Officer's Certificate................................................................. 37
(d) Opinions.............................................................................. 37
(e) Additional Acquisition Agreements..................................................... 37
(f) Environmental Issues.................................................................. 37
6. Employees and Employee Benefits.......................................................................... 37
6.1 Employment Agreements........................................................................ 37
6.2 Collective Bargaining Agreements............................................................. 38
6.3 Offer of Employment to Other Employees....................................................... 38
6.4 Compliance with "WARN"....................................................................... 38
6.5 Non-Solicitation of Employees; No Transfers.................................................. 38
6.6 Employee Benefits and Compensation........................................................... 38
(a) Hourly Employees--Hourly Employees' Pension Plan...................................... 38
(b) Transferred Employees - Benefits After the Closing.................................... 39
(c) Employees-Obligations With Respect to Retiree and Other Benefits
Pre Closing and Severance Claims................................................... 39
(d) COBRA Coverage........................................................................ 40
(e) Workers' Compensation, Disability and Unemployment
Compensation Claims................................................................ 40
(f) Record Keeping........................................................................ 40
(g) Payment of Regular Payroll Accrued As of the Closing Date and
Vacation........................................................................... 40
(h) No Third Party Beneficiaries.......................................................... 41
7. Termination.............................................................................................. 41
7.1 General...................................................................................... 41
7.2 No Liabilities in Event of Termination....................................................... 41
8. Indemnification.......................................................................................... 41
8.1 Seller Indemnity............................................................................. 41
8.2 Buyer Indemnity.............................................................................. 42
8.3 Third Party Claims........................................................................... 42
8.4 Additional Agreements........................................................................ 43
iii
5
9. Miscellaneous............................................................................................ 44
9.1 Public Announcements......................................................................... 44
9.2 Expenses..................................................................................... 45
9.3 Transfer Taxes and Recording Expenses........................................................ 45
9.4 Notices...................................................................................... 45
9.5 Entire Agreement............................................................................. 46
9.6 Binding Effect; Benefit...................................................................... 46
9.7 Bulk Sales Law............................................................................... 46
9.8 Assignability................................................................................ 46
9.9 Amendment; Waiver............................................................................ 46
9.10 Section Headings; Table of Contents.......................................................... 47
9.11 Severability................................................................................. 47
9.12 Counterparts................................................................................. 47
9.13 Arbitration.................................................................................. 47
9.14 APPLICABLE LAW; JURISDICTION; VENUE.......................................................... 47
9.15 Knowledge.................................................................................... 48
iv
6
SCHEDULES
Schedule 1.1(a) -- Intellectual Property
Schedule 1.1(b) -- Assumed Contracts
Schedule 1.1(c) -- Real Property
Schedule 1.1(d) -- Leaseholds
Schedule 1.1(f) -- Equipment, Machinery and Vehicles
Schedule 1.2(c) -- Excluded Contracts
Schedule 1.2(k) -- Jointly Used Assets
Schedule 1.2(n) -- Excluded Real Estate
Schedule 2.3(g) -- Pro Forma Closing Balance Sheet
Schedule 3.1(c) -- Consents, Approvals, etc.
Schedule 3.1(d)(i)(a) -- Year-End Financial Statements
Schedule 3.1(d)(i)(b) -- Interim Financial Statements
Schedule 3.1(g) -- Licenses, Permits and Franchises
Schedule 3.1(i) -- Liens on Real Property
Schedule 3.1(k) -- Insurance
Schedule 3.1(1) -- Labor Issues
Schedule 3.1(q) -- Compliance With Law
Schedule 3.1(r) -- Employee Benefit Programs
Schedule 3.1(t) -- Certain Changes and Events
Schedule 3.1(u) -- Environmental Matters
Schedule 3.1(x) -- Affiliate Transactions
Schedule 3.2(c) -- Consents, Approvals, etc.
Schedule 4.2(d) -- Permitted Contracts
Schedule 4.2(e) -- Permitted Employment Agreements
Schedule 4.10 -- Termination of Affiliate Transactions
Schedule 4.11 -- Procedure for Customer Claims
Schedule 6.1 -- Employment Agreements
Schedule 6.4 -- WARN Pre-Closing Activities
v
7
EXHIBITS
Exhibit A -- Form of Assumption Agreement
Exhibit B -- Form of Escrow Agreement
Exhibit C -- Form of Opinion of Seller's General Counsel
Exhibit D -- Form of Opinion of Buyer's General Counsel
Exhibit E -- Form of Trademark License Agreement
vi
8
INDEX OF DEFINED TERMS
Acquisition ....................................... 1
ADA ............................................... 14
Additional Acquisition Agreements ................. 30
Adjusted Net Asset Value .......................... 9
Affiliate ......................................... 5
Agreement ......................................... 1
Allocation ........................................ 10
Antitrust Division ................................ 29
Assets ............................................ 3
Assumed Contracts ................................. 1
Assumed Liabilities ............................... 6
Assumption Agreement .............................. 6
Balance Sheet ..................................... 12
Bucon ............................................. 34
Business .......................................... 1
Buyer ............................................. 1
Buyer Acquisition Documents ....................... 24
Buyer Indemnified Persons ......................... 41
Buyer's Closing Balance Sheet ..................... 8
Cash Purchase Price ............................... 9
Claim ............................................. 43
Closing ........................................... 7
Closing Balance Sheet ............................. 10
Closing Date ...................................... 7
Code .............................................. 10
Confidential Information .......................... 44
Customer Claim .................................... 44
Division .......................................... 1
Environmental Claim ............................... 44
Environmental Laws ................................ 22
Environmental Permits ............................. 23
Environmental Report .............................. 23
ERISA ............................................. 20
Escrow Agent ...................................... 7
Escrow Agreement .................................. 7
Estimated Closing Balance Sheet ................... 8
Excluded Assets ................................... 3
Excluded Contracts ................................ 3
Excluded Liabilities .............................. 6
Excluded Liability ................................ 6
Express Disclosure Schedule ....................... 26
Final Closing Balance Sheet ....................... 19
vii
9
FTC ......................................................... 29
GAAP ........................................................ 10
Hourly Employees ............................................ 38
HSR Act ..................................................... 12
Indemnitee .................................................. 43
Indemnitor .................................................. 43
Independent Accounting Firm ................................. 9
Intellectual Property ....................................... 1
IRS ......................................................... 10
Jointly Used Assets ......................................... 4
Lease ....................................................... 17
Licenses .................................................... 14
Liens ....................................................... 12
Material Adverse Effect ..................................... 15
Materials of Environmental Concern .......................... 23
Noncompete Period ........................................... 30
Other Disclosure Schedules .................................. 26
Owned Real Property ......................................... 33
Pension Plan ................................................ 39
Permitted Liens ............................................. 13
Plans ....................................................... 20
Preliminary Adjusted Net Asset Value ........................ 8
Preliminary Cash Purchase Price ............................. 8
Pro Forma Closing Balance Sheet ............................. 10
Product Warranties .......................................... 1
Real Property ............................................... 15
Review Period ............................................... 33
Salaried Employees .......................................... 38
Seller ...................................................... 1
Seller Acquisition Documents ................................ 11
Seller Indemnified Person(s) ................................ 42
Seller's Adjusted Net Asset Value Calculation ............... 8
Seller's Dispute Notice ..................................... 8
Severance Claims ............................................ 37
Supply Purchase Agreement ................................... 11
Survey ...................................................... 33
Tax authority ............................................... 24
Tax Claim ................................................... 44
Tax Returns ................................................. 24
Tax(es) ..................................................... 23
Title Commitment ............................................ 33
Title Insurer ............................................... 33
Title Policies .............................................. 36
Trademark License Agreement ................................. 4
Transferred Employees ....................................... 39
viii
10
ASSET PURCHASE AGREEMENT, dated as of the close of business on March
31, 1997 (this "AGREEMENT"), between ▇▇▇▇▇▇ MANUFACTURING COMPANY, a Delaware
corporation ("SELLER") and CTB, INC., an Indiana corporation ("BUYER").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of manufacturing and
marketing grain storage bins and marketing grain conditioning and handling
equipment through its Grain Systems Division (the "DIVISION");
WHEREAS, upon and subject to the terms and conditions set forth herein,
Buyer desires to buy and Seller desires to sell the business, assets and other
rights of the Division (collectively, the "BUSINESS"), and Buyer is willing to
assume certain related ordinary course liabilities and obligations of Seller
related to the Business, all as hereinafter set forth (such acquisition and
assumption is collectively referred to as the "ACQUISITION");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS, ASSUMPTION OF CERTAIN LIABILITIES
1.1 TRANSFER OF ASSETS. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction (or waiver
by the party whose obligations hereunder are subject to such satisfaction) of
the conditions set forth in this Agreement, on the Closing Date (as defined in
Section 2.1), Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, all of Seller's right, title
and interest in and to the properties, assets and other rights (other than the
Excluded Assets) owned or leased by, or licensed to Seller and used exclusively
in the Business, including, without limitation, the following:
(a) all copyrights, trademarks, tradenames, service marks,
patents and other similar rights or intellectual property of Seller
which is listed on Schedule 1.1(a), including all goodwill associated
therewith and all applications and registrations therefor and all
licenses, sublicenses, covenants or other agreements with respect
thereto (collectively, the "INTELLECTUAL PROPERTY");
(b) all contracts and agreements of Seller for the conduct of
the Business, including leases of real and personal property, license
and distributorship agreements, dealer agreements, supply agreements,
purchase agreements and purchase orders, outstanding quotations and
agency agreements, listed on Schedule 1.1(b) and such other contracts
and agreements of Seller for the conduct of the Business entered into
prior to the date hereof and not listed on Schedule 1.1(b) the benefits
of which Buyer elects to assume in its sole discretion, together with
all such contracts and agreements for the conduct of the Business that
are entered into in the ordinary course of business of the Business
between the date hereof and the Closing Date other than in violation of
Section 4.2 and other than express or implied product warranties
("PRODUCT WARRANTIES") issued in connection with the sale of goods by
the Business (the "ASSUMED CONTRACTS");
11
(c) all real property used by the Business that is owned by
Seller and listed on Schedule 1.1(c) and all buildings, structures and
other improvements and fixtures located on such real property and any
additions, improvements, replacements and alterations thereto between
the date of this Agreement and the Closing Date;
(d) all leasehold interests in real property relating to the
Business leased by Seller listed on Schedule 1.1(d), including all
buildings, structures and other improvements located on such real
property and any additions, improvements, replacements and alterations
thereto between the date of this Agreement and the Closing Date;
(e) all office furniture, furnishings and fixtures of Seller
that is used exclusively in the Business and that is located on the
real property or leaseholds listed on Schedules 1.1(c) and 1.1(d) and
any additions, improvements, replacements and alterations thereto
between the date of this Agreement and the Closing Date and all
warranties and guarantees, if any, express or implied in respect of the
foregoing;
(f) all equipment, machinery and vehicles of Seller used
exclusively by the Business, including, without limitation, all
equipment, machinery and vehicles listed on Schedule 1.1(f) and any
additions, improvements, replacements and alterations thereto between
the date of this Agreement and the Closing Date, and all warranties and
guarantees, if any, express or implied in respect of the foregoing;
(g) all management information systems and software, customer,
subscriber and vendor lists, catalogs, research material, technical
information and technology used exclusively by the Business;
(h) all prepayments and prepaid expenses made exclusively for
the Business unless the same relate to contracts or agreements that are
not included in the Assumed Contracts and Assumed Liabilities;
(i) all advertising, promotional, marketing and other similar
agreements entered into exclusively for the benefit of the Business and
all sales promotion and selling literature and promotional and
advertising materials used exclusively by the Business;
(j) all books, records and accounts of Seller used exclusively
for the Business;
(k) all right, title and interest of the Seller under or in
respect of the Plans (as defined below) and all assets relating to the
Plans, if such Plans are assumed by Buyer in its sole discretion;
(l) all accounts receivable of the Business;
(m) all franchises, permits and non-governmental licenses or
sublicenses of Seller used for the exclusive benefit of the Business;
2
12
(n) to the extent transferable under applicable law, all
franchises, approvals, permits, licenses, orders, registrations,
certificates, variances and similar rights obtained from government
authorities used for the exclusive benefit of the Business;
(o) all telephone numbers of Seller used for the exclusive
benefit of the Business to the extent that the numbers may be
transferred without interference to Seller's use of telephone numbers
beginning with the 968 prefix for its operations other than those of
the Business;
(p) all inventories, raw materials, office supplies,
production supplies, packaging materials and other supplies, spare
parts, work in process, goods consigned to third parties, finished
goods and other tangible property used exclusively by the Business of
any kind;
(q) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind of the Seller arising out of
or held for the benefit of the Business (other than those related to
Excluded Assets or Excluded Liabilities);
(r) all goodwill of the Business as a going concern including,
without limitation, all goodwill associated with the Intellectual
Property;
(s) all other properties, assets and rights owned by the
Seller which are exclusively used in the Business (other than those
related to Excluded Assets or Excluded Liabilities); and
(t) all right, title and interest of Seller to those items
listed on Schedule 1.2(k) which are marked to be sold and conveyed to
Buyer.
The assets being sold, conveyed, assigned, transferred and delivered to Buyer by
Seller hereunder are sometimes hereinafter referred to as the ("ASSETS.") All
Schedules hereto shall be prepared as of the date of this Agreement as specified
above unless otherwise specified in the Schedule.
1.2 EXCLUDED ASSETS. It is expressly understood and agreed that the
Assets shall not include the following (the "EXCLUDED ASSETS"):
(a) all corporate minute books, stock transfer books,
corporate tax returns, checks, check registers and insurance polices of
Seller;
(b) all intercompany receivables;
(c) all contracts other than the Assumed Contracts ("EXCLUDED
CONTRACTS"), including, without limitation, those listed or described
on Schedule 1.2(c);
(d) Seller's rights under or pursuant to this Agreement;
3
13
(e) all prepayments and prepaid expenses related to other
Excluded Assets or Excluded Liabilities;
(f) all right, title and interest in and to the "▇▇▇▇▇▇"
tradename and trademark and to the trademarks '▇▇▇▇▇▇ AGRI-BUILDER,'
'▇▇▇▇▇▇ AGRI-CONTRACTOR,' 'AGRI-BUILDER' and 'AGRI-CONTRACTOR,' which
shall remain the property of Seller and will be subject to a Trademark
License Agreement to be entered into between Seller and Buyer (the
"TRADEMARK LICENSE AGREEMENT") on the Closing Date, substantially in
the form attached hereto as Exhibit E, and all other trade names, trade
marks, service marks, copyrights, patents, and similar rights as well
as applications and registrations therefor and all licenses,
sublicenses, covenants or other agreements with respect thereto, not
specifically included on Schedule 1.1(a);
(g) all claims, causes of action, choses in action, rights of
recovery, rights of set-off, counterclaims, cross claims and defenses
of any kind related to other Excluded Assets or Excluded Liabilities;
(h) all right, title and interest of the Seller under or in
respect of the Plans which are not included in the Assumed Liabilities;
(i) all reserves established for (a) the nonpayment of
accounts receivable and (b) warranty claims and obligations and other
claims or suits or any future claims and suits not included in the
Assumed Liabilities;
(j) all of Seller's assets which are used exclusively in
Seller's other businesses;
(k) all of Seller's books, records and information which are
used in Seller's other businesses and in the Business, which shall be
made available to Buyer for inspection and copying at all reasonable
times, and properties, assets and other rights jointly used by the
Business and Seller's other business which are listed on Schedule
1.2(k) and designated as being retained by Seller, the continued joint
use of which shall be governed by the terms set forth on Schedule
1.2(k) (all of which excluded assets under this subsection are referred
to as the "JOINTLY USED ASSETS");
(l) all contracts of insurance and any claims or rights of
Seller thereunder, including, without limitation, any claims or rights
of Seller to reserves, unearned premiums or return of premiums arising
thereunder;
(m) all cash in payroll accounts and other accounts
established specifically for the payment of obligations that are not
included in the Assumed Liabilities;
(n) Real Estate described on Schedule 1.2(n); and
4
14
(o) all cash and cash equivalents on hand in bank accounts
maintained for or otherwise held for the Business on the Closing Date.
1.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the Closing Date, Seller
shall (a) deliver or cause to be delivered to Buyer such deeds, bills of sale,
endorsements, consents, assignments, and other good and sufficient instruments
of conveyance and assignment, all in recordable form, where applicable, as shall
be effective to vest in Buyer all right, title and interest of Seller in and to
the Assets, and as shall otherwise be in the form and substance reasonably
satisfactory to Buyer and Buyer's counsel, and (b) transfer to Buyer originals
of all contracts, agreements, commitments, books, records, files, certificates,
licenses, permits, plans and specifications and other data of Seller relating to
the Business, including, without limitation, computer tapes and
computer-generated records. All materials referred to in clause (b) of the
immediately preceding sentence shall be delivered to Buyer in the form and order
in which they are maintained by Seller on the date hereof.
1.4 FURTHER ASSURANCES. From time to time after the Closing Date,
Seller and any person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
Seller (an "AFFILIATE") shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such other instruments of conveyance,
assignment, transfer and delivery and will take or cause to be taken such other
actions as Buyer may reasonably request in order more effectively to sell,
convey, assign, transfer, and deliver to Buyer any of the Assets, or to enable
Buyer to protect, exercise and enjoy all rights and benefits of Seller with
respect thereto, and as otherwise may be appropriate to carry out the
transactions herein contemplated.
1.5 ASSUMED LIABILITIES.
(a) The Assets shall be sold and conveyed to Buyer free and
clear of all Liens (as defined below), except Permitted Liens (as
defined below). Subject to Section 1.5(b) below, at the Closing, Buyer
will assume and agree to fully pay, perform or discharge in a timely
manner, fully in accordance with the respective terms thereof, as and
when they become due, (i) all liabilities and obligations of Seller
relating to the Assets or the Business arising from, or in connection
with, the conduct of the Business or the ownership of the Assets by
Buyer or any other person after the Closing Date; (ii) all liabilities
and obligations of Seller under the terms of the Assumed Contracts,
except for (A) those liabilities and obligations which Seller is
required to satisfy prior to the Closing (except to the extent such
liabilities or obligations are reflected on the Final Closing Balance
Sheet) or (B) which arise due to a breach by Seller of an Assumed
Contract prior to the Closing; (iii) all accounts payable and other
current liabilities of the Seller as of the Closing Date in each case
incurred in the ordinary course of the Business to the extent reflected
on the Final Closing Balance Sheet; (iv) to the extent that the FANAV
exceeds the Cap, any liabilities or obligations under Assumed
Contracts, accounts payable and other current liabilities of the Seller
not set forth in clauses (i), (ii) or (iii) above that were incurred in
the ordinary course of the Business as of the Closing Date and of the
type reflected as liabilities on the Pro Forma Balance Sheet (but any
such additional obligations and liabilities shall be assumed only to
the extent of the amount by which
5
15
FANAV exceeds the Cap); (v) all liabilities and obligations of Seller
to Employees of the Business to the extent provided in Section 6; and
(vi) all other liabilities and obligations of the Seller incurred in
the ordinary course of the Business to the extent expressly accrued or
reserved for on the Final Closing Balance Sheet (collectively, the
"ASSUMED LIABILITIES"). Except as set forth in this Section 1.5, Buyer
will assume no other liabilities in connection with the Assets, the
Business or the transactions contemplated hereby. All liabilities and
obligations which are not Assumed Liabilities are "EXCLUDED
LIABILITIES" and each is an "EXCLUDED LIABILITY." On the basis of the
representations, warranties and covenants and agreements and subject to
the satisfaction of the conditions set forth in this Agreement, on the
Closing Date, Buyer shall deliver to Seller an undertaking to assume
the Assumed Liabilities in substantially the form attached hereto as
Exhibit A (the "ASSUMPTION AGREEMENT").
(b) Without limiting the generality of Section 1.5(a), and
notwithstanding any other provision hereof, each of the following is an
Excluded Liability:
(i) all intercompany payables;
(ii) any of Seller's obligations hereunder;
(iii) any liability or obligation of Seller arising
from, or in connection with, the conduct of the Business or
the ownership of the Assets by the Seller or any other person
prior to the Closing Date except for liabilities and
obligations set forth in clauses (ii), (iii), (iv) (if
applicable), (v) and (vi) of Section 1.5(a) (which shall
constitute Assumed Liabilities);
(iv) any liability of Seller arising from indebtedness
for borrowed money;
(v) any liability of Seller for Taxes owed to any
taxing authority except to the extent included in current
liabilities on the Final Closing Balance Sheet and tax
liabilities referred to in Section 9.3;
(vi) any liability or obligation arising out of or
related to past, present or future litigation or other claims
to the extent arising out of or relating to the ownership or
operation of the Assets or the Business prior to the Closing
Date including, without limitation, claims with respect to
Product Warranties and any other claims with respect to
defective products or services, alleged improper sales
practices, warranty claims, claims for any loss, damage or
cost arising out of any property damage or personal injury due
to the use of any product manufactured or sold by or services
furnished by the Business prior to the Closing Date;
(vii) any of Seller's liabilities or obligations, the
existence of which constitutes a breach of a representation or
warranty set forth in this Agreement (without regard to the
survival period, if any, associated therewith);
6
16
(viii) any liability of any other division of Seller or
any Affiliate of Seller (including, without limitation, any
owner of capital stock of Seller);
(ix) except as provided in Section 6, all obligations
and liabilities arising out of or relating to the Plans or any
other employee benefit plan, program, policy or arrangement
presently or formerly maintained or contributed by any member
of the controlled group of companies (as such term is defined
in Section 414 of the Code) of which Seller is or was a
member, or with respect to which Seller or such controlled
group member has any liability;
(x) any liability or obligation relating to workers
compensation claims which are filed on or before the Closing
Date or which are filed after the Closing Date and which
relate to occurrences or events on or before the Closing Date;
(xi) any claim, liability or obligation to the extent
such claim, liability or obligation arises out of or relates
to Materials of Environmental Concern existing on, at or under
any Asset before the Closing Date, or otherwise arises from,
or in connection with, the conduct of the Business or the
ownership of the Assets by the Seller or any other person
prior to the Closing Date; and
(xii) any obligations or liabilities arising out of or
relating to all claims and causes of action under federal,
state and/or municipal civil rights and/or employment law
statutes including, but without limitation, Title VII of the
Civil Rights Acts of 1964, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, the Fair Labor
Standards Act, the Occupational Health & Safety Act, the
National Labor Relations Act, or the Missouri Civil Rights Act
for actions of Seller arising prior to the Closing Date.
SECTION 2. CLOSING, PAYMENT OF PURCHASE PRICE
2.1 CLOSING DATE. On and subject to the conditions herein set forth,
the closing with respect to the transactions provided for in this Agreement (the
"CLOSING") shall take place at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ located
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m., Eastern time, on the
earlier of (x) June 30, 1997 or (y) such earlier date as shall be designated by
Buyer on at least three business days prior written notice to Seller, or at such
other time and place as shall be agreed upon by the parties hereto. The actual
time and date of the Closing are herein referred to as the ("CLOSING DATE.")
2.2 PRELIMINARY PURCHASE PRICE AND PAYMENT. As consideration for the
Assets, and subject to the terms and conditions of this Agreement, including,
without limitation, Sections 2.3 and 9.3, Buyer shall on the Closing Date (a)
assume the Assumed Liabilities as provided in Section 1.5, (b) deposit the
amount of $300,000 into an account to be maintained with Commerce Bank of Kansas
City, N.A. (the "ESCROW AGENT"), pursuant to an Escrow Agreement to be entered
into on or prior to the Closing Date among Buyer, Seller and the Escrow Agent,
substantially in the form attached hereto as Exhibit B (the "ESCROW AGREEMENT")
and (c) transfer to the order of Seller in immediately available funds an amount
equal to the sum of $32,200,000
7
17
minus the amount by which the Preliminary Adjusted Net Asset Value (as defined
below) is less than $10,100,000 or, if the Preliminary Adjusted Net Asset Value
is greater than $10,100,000, plus the lesser of (x) the amount by which the
Preliminary Adjusted Net Asset Value exceeds $10,100,000 or (y) $2,500,000 (the
"Cap"). The sum of (b) and (c) is herein referred to as the "PRELIMINARY CASH
PURCHASE PRICE."
2.3 CASH PURCHASE PRICE ADJUSTMENT AND PAYMENT.
(a) Not later than four (4) business days prior to the Closing
Date, Seller shall deliver to Buyer a certificate setting forth its
good faith estimate of the Closing Balance Sheet (the "ESTIMATED
CLOSING BALANCE SHEET"). The Estimated Closing Balance Sheet shall be
derived from Seller's internal books and records. The amount of the
Adjusted Net Asset Value reflected on the Estimated Closing Balance
Sheet is hereinafter referred to as "SELLER'S ADJUSTED NET ASSET VALUE
CALCULATION." Buyer shall have the right to review, approve and copy
the computations and work papers (including accountant's work papers)
and underlying books and records used in connection with Seller's
preparation of the Estimated Closing Balance Sheet and the
determination of Seller's Adjusted Net Asset Value Calculation and to
have access to Seller's employees and accountants, and their respective
books and records, in connection therewith. Seller's Adjusted Net Asset
Value Calculation, with such changes, if any, as are agreed upon by
Seller and Buyer not later than the business day prior to the Closing
Date shall be referred to as the "PRELIMINARY ADJUSTED NET ASSET
VALUE".
(b) Not later than the 45th day following the Closing Date,
Buyer shall provide to Seller a certificate setting forth its good
faith determination of the Closing Balance Sheet (the "BUYER'S CLOSING
BALANCE SHEET"). The Buyer's Closing Balance Sheet shall be derived
from the books and records of the Business. Seller will give Buyer and
its representatives access during the normal business hours of Seller
to the personnel, books and records of the Seller relating to the
Business to assist Buyer in the preparation of Buyer's Closing Balance
Sheet. Seller shall notify Buyer in writing ("SELLER'S DISPUTE NOTICE")
within fifteen (15) days after receiving Buyer's Closing Balance Sheet
if Seller disagrees with Buyer's calculation of the final Adjusted Net
Asset Value, which notice shall set forth in reasonable detail each
item which Seller disputes, the amount in dispute and the basis for its
disagreement. Buyer will give Seller and its representatives access
during the normal business hours of Buyer to the personnel, books and
records of the Business to assist Seller in the preparation of Seller's
Dispute Notice. If no Seller's Dispute Notice is received by Buyer
within such fifteen (15) day period, Buyer's determination of the final
Adjusted Net Asset Value as of the Closing Date as set forth in Buyer's
Closing Balance Sheet shall be the final Adjusted Net Asset Value
("FANAV") and shall be final and binding on the parties and Buyer's
Closing Balance Sheet shall be the Closing Balance Sheet.
(c) Seller and Buyer shall negotiate in good faith to resolve
any disagreement with respect to the FANAV. To the extent Buyer and
Seller are unable to agree with respect to the FANAV within thirty (30)
days after the receipt by Buyer of the Seller's Dispute Notice, Buyer
and Seller shall select a mutually acceptable partner at any "big
8
18
six" accounting firm other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, KPMG Peat Marwick
LLP or Deloitte & Touche LLP mutually selected by Buyer and Seller (the
"INDEPENDENT ACCOUNTING FIRM"), and submit their dispute to the
Independent Accounting Firm. The Independent Accounting Firm will be
requested to review only the disputed items identified in Seller's
Dispute Notice and not previously resolved by Seller and Buyer. The
Independent Accounting Firm shall resolve such dispute after reviewing
written submissions of Buyer and Seller supporting their respective
determinations of the items in dispute and stating each of their
estimates of Adjusted Net Asset Value. The Independent Accounting Firm
shall make an independent determination of all disputed items and then
calculate a FANAV based upon such independent determination and
Seller's and Buyer's determination of all amounts not in dispute. In
its determination, the Independent Accounting Firm shall be entitled to
rely on presentations prepared by Buyer and Seller. The decision of the
Independent Accounting Firm shall be conclusive between, and final and
binding on, the parties hereto. The fees and expenses of the
Independent Accounting Firm will be paid by the party (either Buyer or
Seller) whose calculation of the Adjusted Net Asset Value would result
in a Cash Purchase Price that deviates the furthest from the final Cash
Purchase Price determined based upon the Adjusted Net Asset Value as
calculated by the Independent Accounting Firm. If the Closing Balance
Sheet is not produced under the preceding subsection (b), then the
Buyer's Closing Balance Sheet as adjusted by the final resolution of
the dispute under this subsection shall be the Closing Balance Sheet
and the Accountant's determination of the Adjusted Net Asset Value
shall be the FANAV.
(d) Upon the final determination of FANAV in accordance
herewith (i) Buyer shall pay to Seller the amount by which the Cash
Purchase Price (as defined below) exceeds the Preliminary Cash Purchase
Price or, (y) if the Cash Purchase Price shall be less than the
Preliminary Cash Purchase price, Seller shall pay to Buyer the amount
by which the Preliminary Cash Purchase Price exceeds the Cash Purchase
Price, in either case, together with interest thereon from the Closing
Date at a rate of interest equal to the prime rate established by The
Chase Manhattan Bank, N.A., on the date of payment. In either case,
such payment shall be made within five business days after all
disputes, if any, have been resolved as set forth above, or, if Seller
shall have accepted (or shall have been deemed to have accepted)
Buyer's determination of the FANAV, within five business days after
such acceptance. Such payment shall be made by wire transfer of
immediately available funds to a bank account specified by the
recipient not less than two business days prior to such payment date.
(e) "ADJUSTED NET ASSET VALUE" means, with respect to each of
the Estimated Closing Balance Sheet, the Buyer's Closing Balance Sheet
and the Closing Balance Sheet, the amount by which the assets exceed
the liabilities reflected on such balance sheet.
(f) "CASH PURCHASE PRICE" shall mean the sum of (i)
$32,200,000 plus (ii) the $300,000 escrow and (to the extent FANAV does
not equal $10,100,000) (iii) minus the amount by which the FANAV is
less than $10,100,000 or, if the FANAV is greater than $10,100,000,
plus the lesser of (x) the amount by which the FANAV exceeds
$10,100,000 or (y) $2,500,000.
9
19
(g) "CLOSING BALANCE SHEET" means a balance sheet of the
Business reflecting the Assets and Assumed Liabilities as of the close
of business on the day immediately preceding the Closing Date. Except
as set forth in this Section 2.3(g), the Closing Balance Sheet shall be
prepared in accordance with generally accepted accounting principles as
in effect in the United States ("GAAP") as if such date were the
Business's normal year end, applied on a basis consistent with the
financial statements of the Business referenced in Section 3.1(d).
Notwithstanding the foregoing, the Closing Balance Sheet (i) will
contain a liability of $180,000 for post-retirement health and life
insurance obligations for active employees of the Business (and no
other liability for such obligations) if such obligations are assumed
by Buyer in its sole discretion, (ii) will not contain any reserve for
liabilities not being assumed by Buyer, (iii) will contain all accounts
payable and other current liabilities as of the Closing incurred in the
ordinary course of business of the type reflected in the Pro Forma
Balance Sheet and (iv) will include all other liabilities and
obligations of the Seller incurred in the ordinary course of business
as of the Closing of the kind accrued or reserved for in the Pro Forma
Balance Sheet. The Closing Balance Sheet will be prepared in the form
of the balance sheet attached hereto as Schedule 2.3(g) (the "PRO FORMA
CLOSING BALANCE SHEET"), which Pro Forma Closing Balance Sheet reflects
the form of the Closing Balance Sheet as if the Closing Date had
occurred on April 1, 1997.
2.4 ALLOCATION OF PURCHASE PRICE.
(a) Buyer and Seller agree that they shall allocate the sum of
the Cash Purchase Price and the Assumed Liabilities among the Assets
and the covenant not to compete (set forth in Section 4.9 of this
Agreement) as of the Closing Date on Internal Revenue Service ("IRS")
Form 8594, in accordance with Section 1060 of the Internal Revenue Code
of 1986, as amended (the "CODE"), and the Treasury regulations
promulgated thereunder. The allocation described in the preceding
sentence shall be determined by the joint agreement of Buyer and Seller
based upon the fair market value of the Assets and such covenant not to
compete, as of the Closing Date. Buyer shall provide Seller with a copy
of Buyer's proposed fair market value allocation (the "ALLOCATION") as
promptly as reasonably practicable; provided, however, that Buyer shall
provide Seller with a copy of the Allocation within 30 days after the
determination of the Cash Purchase Price pursuant to Section 2.3. In
the event that Buyer and Seller are unable to agree on the Allocation
within 90 days after the determination of the Cash Purchase Price
pursuant to Section 2.3, a third-party appraiser jointly selected by
Buyer and Seller, the cost of which shall be borne equally by Buyer and
Seller, shall resolve all items with respect to the Allocation to which
there is a dispute between the parties.
(b) Buyer and Seller shall timely file with the appropriate
Tax authorities copies of the agreed upon IRS Form 8594 and shall use
the Allocation in the preparation of all Tax Returns (including any
attachments thereto) and for all other Tax purposes. In the event any
party hereto receives notice of an audit in respect of the Allocation,
such party shall notify the other party in writing as to the date and
subject of such audit as promptly as reasonably practicable.
10
20
(c) If any Tax Return filed by Buyer or Seller relating to the
transactions contemplated hereby is challenged by the Tax authority
with which such Tax Return was filed on the basis of the Allocation, as
finally adjusted, the filing party shall assert in good faith the
validity and correctness of the Allocation and such party shall not
agree to any adjustment to the Allocation without obtaining the prior
written consent of the other party (which consent shall not be
unreasonably withheld). If any such Tax Return is challenged as herein
described, the party filing such Tax Return shall keep the other party
apprised of its decisions and the current status and progress of all
administrative and judicial proceedings, if any, that are undertaken at
the election of such party with respect thereto.
2.5 ACCOUNTS RECEIVABLE. All accounts received by Seller subsequent to
12:01 A.M., Kansas City Time, on the date of Closing and pertaining to the
Business and/or the Assets, shall be the property of Buyer, and Seller shall
promptly remit the same plus all documentation regarding said payment to Buyer.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes the
following representations and warranties to Buyer:
(a) DUE ORGANIZATION, POWER; CAPACITY, GOOD STANDING,
OWNERSHIP. Seller is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties
and assets and to conduct its business as now conducted by it. Seller
has all requisite corporate and other power and authority to enter into
this Agreement, the Assumption Agreement, the Trademark License
Agreement, the Supply Purchase Agreement between Buyer and Seller
whereby Buyer shall have the right to purchase certain raw materials
with and through Seller for a fixed period of time as contemplated by
Section 4.16 (the "SUPPLY PURCHASE AGREEMENT"), the Escrow Agreement
and any other agreements contemplated hereby to which it is a party
(collectively, the "SELLER ACQUISITION DOCUMENTS") and to perform its
obligations hereunder and thereunder.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Seller of this Agreement and the other Seller
Acquisition Documents and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action. This Agreement has been, and on the Closing
Date each other Seller Acquisition Document will be, duly executed and
delivered by Seller and this Agreement constitutes, and each other
Seller Acquisition Document will upon execution and delivery thereof
constitute, a legal, valid and binding obligation of Seller,
enforceable against it in accordance with their respective terms,
except as affected by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) or by an implied covenant of good faith and fair dealing.
11
21
(c) NO GOVERNMENTAL APPROVALS OR NOTICES REQUIRED; NO
CONFLICT. Except for (1) the expiration or termination of all
applicable waiting periods under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), (2) provisions
contained in Assumed Contracts which require the consent of third
parties to the assignment thereof where the failure to obtain such
consents would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below) and none of which individually and
all of which collectively are not material to the conduct of the
Business, and (3) as set forth in Schedule 3.1(c), the execution,
delivery and performance of this Agreement and the other Seller
Acquisition Documents by Seller and the consummation by Seller of the
transactions contemplated hereby and thereby (i) will not violate (with
or without the giving of notice or the lapse of time or both), or
require any consent, approval, filing or notice under any provision of
any License (as defined in Section 3.1(g)), law, rule or regulation,
court or administrative order, writ, judgment or decree applicable to
Seller, the Business or any of the Assets or the Assumed Liabilities
and (ii) will not (with or without the giving of notice or the lapse of
time or both) (x) violate or conflict with, or result in the breach,
suspension or termination of any provision of, or constitute a default
under, or result in the acceleration of the performance of the
obligations of Seller under, or (y) result in the creation of any lien,
mortgage, pledge, security interest, claim, charge or encumbrance or
other restriction of any kind or nature (collectively, "LIENS") upon
the Business or the Assets of Seller pursuant to the charter or by-laws
of Seller, or any indenture, mortgage, deed of trust, lease, agreement,
contract or instrument to which Seller is a party or by which Seller,
the Business or the Assets is bound.
(d) FINANCIAL INFORMATION, LIABILITIES.
(i) The audited balance sheets of the Business as at
December 31, 1995 and 1996 (such latest balance sheet being
referred to herein as the "BALANCE SHEET") and the related
statements of earnings, division equity and cash flows for
each of the years in the three year period ending on December
31, 1996, copies of which have been furnished to Buyer and
which are attached hereto as Schedule 3.1(d)(i)(a), present
fairly the financial condition of the Business as at December
31, 1995 and 1996, and the results of its operations for each
of the years in the three year period ending on December 31,
1996 (the "YEAR-END FINANCIAL STATEMENTS"). The balance sheet
of the Business as at March 31, 1997 and the related statement
of earnings of the Business for the three-month period then
ended, copies of which have been furnished to Buyer and which
are attached hereto as Schedule 3.1(d)(i)(b), present fairly
the financial condition of the Business as at March 31, 1997
and the results of its operations for the three-month period
ending on March 31, 1997 (the "INTERIM FINANCIAL STATEMENTS").
All Year-End Financial Statements, including the related
schedules and notes thereto, have been prepared in accordance
with GAAP, consistently applied. The Interim Financial
Statements were prepared in accordance with GAAP consistently
applied. Seller did not have with respect to the Business, at
December 31, 1996, any material contingent obligation,
contingent liability or liability for taxes, or any
12
22
long-term lease or unusual forward or long-term commitment not
reflected in the Balance Sheet or in a footnote thereto.
(ii) Except to the extent set forth in the Balance
Sheet, the Business does not have any liabilities or
obligations (absolute, accrued, contingent or otherwise),
whether due or to become due which would be required, in
accordance with GAAP, to be set forth on a consolidated
balance sheet of the Business, other than any such liabilities
or obligations incurred since December 31, 1996 in the
ordinary course of business consistent with past practice and,
to the extent applicable, the requirements of Section 4.2.
(e) TITLE AND CONDITION OF PROPERTIES, ABSENCE OF LIENS.
Except as specifically disclosed on the Schedules:
(i) Seller has, and Buyer on the Closing Date will
receive, good, marketable and insurable fee simple title to
all real property, and good and marketable title to all
personal property (tangible and intangible), constituting
Assets, free and clear of all Liens, except (1) with respect
to Assets leased, licensed or not owned by Seller or other
contractual rights of Seller (and which are not reflected on
the Balance Sheet or the Closing Balance Sheet as owned) for
contractual restrictions or claims on such Assets pursuant to
the lease, license or other Assumed Contract relating to such
Assets and restrictions imposed by any law or regulation with
respect to licenses, permits, copyrights, trademarks and the
like, (2) Liens for current property taxes not yet due and
payable or being contested in good faith by appropriate
proceedings, (3) statutory liens of landlords, carriers,
warehousemen, and other liens imposed by law incurred in the
ordinary course of business for amounts not then delinquent
and (4) with respect to real property, easements,
rights-of-way, restrictions and other similar charges or
encumbrances and other title defects or irregularities which,
individually or in the aggregate, do not interfere with the
ordinary conduct of the Business or the use of any such real
property for its current uses or diminish the value of such
real property for its current use ("PERMITTED LIENS").
(ii) All tangible Assets taken as a whole are in good
operating condition and state of repair (ordinary wear and
tear excepted) other than machinery and equipment temporarily
out of repair or out of service for routine maintenance in the
ordinary course of the Business, and are adequate and
sufficient for the current operations of the Business as
conducted in the year ended December 31, 1996, and, subject to
the last sentence of Section 3.1(f), conform to all applicable
laws, statutes, ordinances and regulations.
(f) GOVERNMENTAL REGULATIONS. To the Seller's knowledge, the
Seller is complying with all laws, statutes, rules, regulations,
ordinances, decrees or orders of any federal, state, local or foreign
authority applicable to the Business, including, without limitation,
zoning, wage and hour, equal employment opportunity or occupational
safety and health laws or regulations, and the Seller has and holds all
governmental permits and
13
23
authorizations necessary to entitle it to own and operate the
properties of the Business and to conduct the operations of the
Business. There are no proceedings pending or, to the best knowledge of
Seller, threatened, or any notices received, with respect to a
violation of any such law, rule, regulation, decree or order or which
might result in the revocation, cancellation, suspension or adverse
modification of any such governmental permits or authorizations. Seller
makes no representation or warranty that the Real Property included in
the Assets or the operations conducted thereon comply with requirements
of the Americans with Disabilities Act (the "ADA").
(g) LICENSES AND GOVERNMENT APPROVALS. Schedule 3.1(g)
includes all licenses, permits, approvals, consents, certificates of
public convenience, orders, franchises and other authorizations of any
federal, state, local or foreign governmental authority ("LICENSES")
possessed by or granted to the Seller with respect to the Business or
the Assets. Except as disclosed on Schedule 3.1(g), Seller is not aware
of any impediment to the renewal of such Licenses. All such Licenses
are valid and in full force and effect and no proceeding is pending or
threatened seeking the suspension, modification, revocation or
limitation of any such License. No other Licenses are required to
permit the continued operation after the date hereof of the Business as
now conducted, except where the failure to have such License,
individually or in the aggregate, would not have a Material Adverse
Effect (as defined below).
(h) CONTRACTS, LIST OF PROPERTIES, PERMITS AND OTHER DATA.
Schedule 1.1(b) hereto accurately lists the following contracts,
leases, agreements, plans and arrangements, whether written or oral,
express or implied, or having any other legally binding basis
undertaken by or for the Business and to which the Seller or any of its
Affiliates is a party or by which they or any of their property is
bound:
(1) any such contract, lease, agreement, plan or
arrangement involving commitments to others to make capital
expenditures or purchases or sales involving $25,000 or more
in any one case except commitments which may be terminated
without liability or penalty by the Buyer on not more than 30
days' notice;
(2) any such contract, lease, agreement, plan or
arrangement relating to any direct or indirect indebtedness
for borrowed money (including but not limited to loan
agreements, lease-purchase arrangements, guarantees,
agreements to purchase goods or services or to supply funds or
other undertakings on which others rely in extending credit),
or any conditional sales contracts, chattel mortgages,
equipment lease agreements, and other security arrangements
with respect to personal property with a value in excess of
$25,000 in each instance used or owned by the Seller;
(3) any such contract, lease, agreement, plan or
arrangement with or for the benefit, directly or indirectly,
of any business or operation of the Seller or any Affiliate of
the Seller that is not included within the Business and that
is also for the benefit, directly or indirectly of the
Business;
14
24
(4) any contract containing covenants limiting the
freedom of the Business to compete in any line of business
with any person or in any area or territory;
(5) any license agreement, either as licensor or
licensee, or any other agreement of any type relating to any
of the patents, trademarks or trade names or other assets
listed on Schedule 1.1(a) hereto;
(6) any contract or arrangement of any kind
whatsoever, whether exclusive or otherwise, containing
expressed terms and conditions with any sales agent,
representative, franchisee or distributor of any of the
products of the Business;
(7) any contract or arrangement of any kind
whatsoever which requires the payment of royalties in
connection with the Business; and
(8) any other legally binding contract, lease,
agreement, plan or arrangement not of the type covered by any
of the other items of this Section 3.1(h) which is not in the
ordinary course of business or which is material to the
business, operations, properties, liabilities, condition
(financial or otherwise) or prospects of the Business.
True and complete copies of all documents (including all
amendments thereto and waivers in respect thereof) referred to in the
foregoing Schedules have been delivered or made available to Buyer.
Summaries of all oral contracts listed on the foregoing schedules
previously provided to the Buyer are correct and do not omit to state
any fact necessary to make the statements therein complete or not
misleading. No contract, agreement, plan or arrangement exists between
the Seller and any other party based upon a past course of dealing. All
contracts, agreements, leases, licenses, sublicenses, permits and
franchises referred to in such Schedules are in full force and effect.
Seller is not (and to the best knowledge of Seller, each other party
thereto is not) in breach or default in the performance of any
obligation thereunder, and, to the best knowledge of Seller, no event
has occurred or has failed to occur whereby, with or without the giving
of notice or the lapse of time or both, a default or breach will be
deemed to have occurred thereunder or any of the other parties thereto
have been or will be released therefrom or will be entitled to refuse
to perform thereunder, except for such breaches, defaults and events
which, either individually or in the aggregate, could not have a
material adverse effect on the condition (financial or other), results
of operations, assets, properties or prospects of the Business, the
Assets or the Assumed Liabilities or have a material adverse effect on
Seller's ability to perform its obligations hereunder or under any
other Seller Acquisition Document (each of such effects is herein
called a "MATERIAL ADVERSE EFFECT").
(i) REAL ESTATE. Schedule 1.1(c), Schedule 1.1(d) and Schedule
3.1(i) hereto accurately list all real property relating to the
Business owned or leased by the Seller ("REAL PROPERTY") and identify
whether each such item of Real Property is owned or
15
25
leased by Seller. Except as disclosed on such Schedules and in the
Title Commitment and the Survey to be delivered to Buyer pursuant to
Section 4.15:
(1) The Seller has good and marketable title to all
such owned Real Property and good and valid leasehold
interests in all such leased Real Property, in each case free
and clear of all Liens except for Permitted Liens and as set
forth on Schedule 3.1(i).
(2) There are no condemnation proceedings or eminent
domain proceedings of any kind pending or, to the best
knowledge of the Seller, threatened against the Real Property.
(3) To the knowledge of Seller all of the Real
Property is occupied under a valid and current certificate of
occupancy or similar permit, if required, the sale of the
Assets hereunder will not, except as required by the City of
Kansas City, Missouri, require the issuance of any new or
amended certificate of occupancy and there are no facts which
would prevent the Real Property from being occupied and used
by the Seller after the Closing Date in the same manner as
before.
(4) All improvements on the Real Property constructed
by or on behalf of the Seller or any other person were
constructed in compliance with all then applicable federal,
state, local or foreign statutes, laws, ordinances,
regulations, rules, codes, orders or requirements (including,
but not limited to, any building, zoning or environmental laws
or codes) affecting such Real Property.
(5) All improvements on the Real Property and the
present use and conditions thereof do not violate any
applicable deed restrictions or other applicable covenants,
restrictions, agreements, existing site plan approvals and, to
the knowledge of seller, zoning or subdivision regulations or
urban redevelopment plans as modified by any duly issued
variances, and no permits, licenses or certificates pertaining
to the ownership or operation of all improvements on the Real
Property by the Seller are required by any governmental agency
having jurisdiction over the Real Property, it being
understood that Seller makes no representation concerning the
transferability of Seller's existing licenses and permits or
those which Buyer may be required to obtain.
(6) All improvements on the Real Property are wholly
within the lot limits of such Real Property and do not
encroach on any adjoining premises and there are no
encroachments on any Real Property by any improvements located
on any adjoining premises.
(7) There have been no improvements made to or
constructions on any Real Property within the period provided
by law for the filing of mechanic's liens except in the
ordinary course of the Business.
16
26
(8) The Seller enjoys peaceful and quiet possession
of each parcel of Real Property, and there is not under any
lease of any of the leased Real Property (a "LEASE") any
default by the Seller thereunder or any condition which notice
or the passage of time or both would constitute such a
default, and Seller has not received notice asserting the
existence of any such default or condition. Seller has no
knowledge of any default under any Lease by the landlord
thereunder.
(9) The Seller has heretofore furnished to the Buyer
a true and complete copy of each Lease and all amendments
thereto pertaining to any leased Real Property.
(10) Each Lease is valid and binding and in full
force and effect.
(11) The rental set forth in each Lease is the actual
rental being paid, and there are not separate agreements or
understandings with respect to the same.
(12) There are no renewal options contained in the
respective Leases.
(13) Neither the execution of this Agreement nor the
sale of the Assets hereunder shall cause a default under any
Lease or require the prior written consent of any landlord
under any Lease.
(j) LEGAL PROCEEDINGS. There is no litigation, proceeding or
governmental investigation to which Seller is a party pending or, to
the best knowledge of Seller, threatened against it that relates to the
Business, the Assets, the Assumed Liabilities or the transactions
contemplated by this Agreement which could, either individually or in
the aggregate, result in a Material Adverse Effect or which seeks to
restrain or enjoin the consummation of any of the transactions
contemplated hereby. Seller is not in violation of any term of any
judgment, writ, decree, injunction or order entered by any court or
governmental authority (domestic or foreign) and outstanding against
Seller or with respect to the Business or any of the Assets, except for
such violations which could not, individually or in the aggregate, have
a Material Adverse Effect. To the best knowledge of Seller, there are
no facts which would provide a basis for any successful prosecution of
any such litigation, proceeding or investigation.
(k) INSURANCE. The properties and assets of Seller which are
of an insurable character and are used or useful in the Business are
insured against loss or damage by fire or other risks, and Seller
maintains liability insurance, to the extent and in the manner and
covering such risks as is customary for companies engaged in a business
similar to the Business or owning assets similar to the Assets. The
coverage under each such policy and binder is in full force and effect,
and no notice cancellation or nonrenewal with respect to any such
policy or binder has been received by Seller. Schedule 3.1(k) lists
insurance maintained by Seller on the Assets and with respect to the
employees and representatives of the Business and the operations of the
Business.
17
27
(l) LABOR. Except as set forth on Schedule 3.1(1), (i) there
have been no labor strikes, grievances, slow-downs, work stoppages,
administrative, arbitration or court proceedings or other material
labor controversies or disputes during the past three (3) years, nor is
any such strike, grievance, slow-down, work stoppage administrative,
arbitration or court proceeding or other material labor controversy or
dispute pending or, to the best knowledge of Seller, threatened between
Seller and any of the employees, prospective employees, former
employees, retirees or labor unions now employed or formerly employed
by the Business or affecting the Business, (ii) no unfair labor charges
or complaints have been filed against Seller with respect to its
operations related to the Business, and Seller has not received any
notice or communication reflecting an intention or a threat to file any
such charges or complaints, (iii) Seller is not party to any labor
contract, collective bargaining agreement ("CBA"), contract, letter of
understanding or, to Seller's knowledge, any other agreement, formal or
informal with any labor union or organization respecting the operation
of the Business, nor are any of the employees of the Business
represented by any labor union or organization nor have there been any
labor union organizing activities at the facilities of the Business
within the last three (3) years, (iv) Seller has paid in full to all of
its employees now employed or formerly employed by the Business all
wages, salaries, commissions, bonuses, benefits and other compensation
due to such employees, (v) Seller has not closed any facility,
effectuated any layoffs within the meaning of the Worker Adjustment &
Retraining Notification Act ("WARN") of employees or implemented any
early retirement, separation or window program within the past three
years with respect to its operations related to the Business, nor has
Seller planned or announced any such action or program relating to the
Business other than as contemplated by the Transaction for the future,
(vi) no promises of benefit improvements under the Plans (as defined in
Section 3.1(r) have been made by Seller or any Affiliate thereof to any
employee now employed or formerly employed by the Business of Seller,
and (vii) Seller is not party to any written and/or undisclosed
severance benefit applicable to any employees of the Business except as
referred to in Schedule 3.1(l), Section 6 or Section 6.1.
Seller has provided to Buyer true, correct and complete copies
of the executed CBAs relating to the Business, including true, correct
and complete copies of any and all written modifications and
interpretations thereof and descriptions of any and all oral
modifications and interpretations thereof. No representations have been
made by Seller or its employees or agents to employees of Seller with
respect to Buyer's intentions to employ, or not to employ, any of
Seller's employees, or to assume, or not to assume, any CBA, or to
change or to maintain any wages or benefits. Seller has or will notify
any labor union or organization representing any of its employees of
the decision to sell and will satisfy its obligations, if any, to
negotiate concerning that decision and its obligation to bargain
concerning the effects of that decision.
Between December 31, 1996 and the date hereof, no person
employed by the Business was transferred to any other business or
operation of Seller or any of its Affiliates.
18
28
(m) ACCOUNTS RECEIVABLE. Seller's accounts receivable
reflected on the Balance Sheet are, and those reflected on the "FINAL
CLOSING BALANCE SHEET" will be valid receivables arising in the
ordinary course of business. No person or entity has any lien on such
receivables or any part thereof, no agreement for deduction, free
goods, discount or other deferred price or quantity adjustment has been
made with respect to any such receivables and to the knowledge of
Seller such receivables are not subject to any valid counterclaims or
setoffs.
(n) INVENTORIES. The inventories of the Business reflected on
the Balance Sheet (except the inventories which have been sold or
disposed of in the ordinary course of business since the date of the
Balance Sheet and except for excess and obsolete inventory which has
been written off) and the inventories thereafter acquired or
manufactured in connection with the Business and not subsequently sold
or disposed of in the ordinary course of business do, and the
inventories reflected on the Final Closing Balance Sheet will, consist
of items of a quality and quantity which in the aggregate are (i)
usable in the ordinary course of the Business or (ii) saleable in the
ordinary course of the Business at net realizable values (i.e., normal
selling price less all applicable discounts, commissions and shipping
costs) not less than their respective book value amounts. Inventory on
the Balance Sheet is, and Inventory on the Final Closing Balance Sheet
will be, except for obsolete and below-standard quality inventory
described below, stated at the lower of cost (determined by the FIFO
method) or market in accordance with GAAP, consistently applied. The
value of excess and obsolete inventory and inventory of below standard
quality reflected on the Balance Sheet has been, and to be reflected on
the Final Closing Balance Sheet will be, written down to net realizable
marketable value or written off or adequate reserves in accordance with
GAAP, consistently applied, have been provided therefor. The inventory
on hand is, and as of the Closing Date shall be, at levels consistent
with expected customer demand and consistent with the Business's past
practice.
(o) PRODUCT AND SERVICE WARRANTY. Each product repaired or
delivered and each service rendered by the Business has been in
conformity in all material respects with all applicable contractual
commitments and all express and implied warranties, and neither Seller
nor any of its Affiliates has any liabilities or obligations for
replacement or repair thereof or other damages in connection therewith
in excess of past custom and practice. No product repaired or delivered
or service rendered by the Business prior to the date hereof is subject
to any guaranty, warranty or other indemnity for a term in excess of
the periods specified on express warranties delivered to Buyer
hereunder from the date such product was repaired or delivered or such
service rendered. Prior to the date hereof, Seller has delivered to
Buyer copies of the standard terms and conditions of sale for products
delivered and services rendered by the Business (containing applicable
guaranty, warranty, and indemnity provisions).
(p) INTELLECTUAL PROPERTY. Seller has, and will transfer to
Buyer on the Closing Date, good and marketable title to all the
Intellectual Property, free and clear of all Liens, except as provided
for in Section 1.2(f) above. No claims have been asserted against
Seller to the effect that the use of the Intellectual Property by
Seller infringes on
19
29
any intellectual property of any other person. The use of all
Intellectual Property by Seller (and by Buyer in connection with the
operation after the Closing of the Business in the manner currently
operated) does not (and will not, as of the Closing Date) infringe on
the rights of any person. There is no infringing use of any of such
trademarks and trade names (or brandmarks, brand names or trade dress)
or infringement of any of such copyrights and patents by any other
person, either within or outside the United States. Seller owns or has
a license to use all Intellectual Property used in the Business as
presently conducted.
(q) COMPLIANCE WITH LAW AND REQUIREMENTS. Except as set forth
in Schedule 3.1(q), Seller has conducted the Business in compliance
with all applicable laws, ordinances, regulations, rights of
concession, licenses, know how or other proprietary rights of others,
the failure to comply with which could, individually or in the
aggregate, have a Material Adverse Effect.
(r) EMPLOYEE BENEFIT PROGRAMS. Except as otherwise provided in
Schedule 3.1(r):
(i) Schedule 3.1(r) sets forth all of the "employee
benefit plans" (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
employment, change-in-control, incentive, deferred
compensation and severance policies, plans and arrangements,
and all other employee benefit, fringe benefit plans and
programs maintained or contributed to by the Seller with
respect to current or former employees of the Business (the
"PLANS"). Seller has provided or made available to Buyer (a) a
copy of each of the Plans, including all amendments thereto,
(b) any trust agreements thereunder, (c) each summary plan
description, (d) the most recent favorable determination
letter issued by the Internal Revenue Service, if applicable,
and (e) for the three most recent years, the Form 5500 and
attached schedules, audited financial statements, and
actuarial valuation reports.
(ii) To the knowledge of Seller, each Plan is in all
material respects, in compliance with the applicable
requirements of law, including, if applicable, ERISA and the
Code, and has been established and administered in accordance
with its terms.
(iii) Each Employee Pension Benefit Plan which is
intended to qualify under Section 401(a) of the Code has
received a favorable determination letter that it is so
qualified, and, to the knowledge of Seller, no facts or
circumstances exist which would cause any of such favorable
determination letters to be revoked. In addition, to the
knowledge of Seller, no such Plan has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), and to the knowledge of
Seller, no "reportable event" (as defined in Section 4043(c)
of ERISA) has occurred with respect to any such Plan.
20
30
(iv) Except as set forth in Schedule 3.1(r), and to
the knowledge of Seller, no plan or arrangement exists which
would be reasonably likely to result in the payment to any
employee or former employee of the Business of any money or
other property or rights or accelerate or provide any other
rights or benefits to any employee or former employee of the
Business as a result of the transactions contemplated by this
Agreement, whether or not such payment would constitute a
parachute payment within the meaning of Section 280G of the
Code, and there are no contracts, agreements or other
arrangements which would be reasonably likely to result in the
payment to any such employee of an excess parachute payment"
as that term is used in Section 280G of the Code.
(v) Except as set forth in Schedule 3.1(r). Seller
has not contributed to or participated in any pension plan
which is a "multiemployer plan", as defined in Section 3(37)
of ERISA, or in any "multiple employer" plan within the
meaning of Section 4063 or 4064 of ERISA, in respect of
Business employees.
(vi) To the knowledge of Seller all contributions with
respect to employees of the Business required to be made on or
prior to Closing under the terms of any Plan have been (or
will by Closing be) timely made by Seller.
(vii) There are no pending or, to the knowledge of
Seller threatened, claims (other than with respect to benefits
in the normal course), lawsuits, investigations,
administrative proceedings or other actions arising out of, or
in connection with the operation or administration of any Plan
with respect to the Business or the employment of any current
or former employee of the Business.
(viii) As of March 31, 1997, the assets of the Seller's
Pension Plan for Hourly Paid Factory Employees of the Kansas
City Plant are at least equal in value to the present value of
the vested and unvested accrued benefits obligations, based on
actuarial assumptions of Seller's actuaries as contained in
the January 1, 1997 actuarial valuation; provided that this
warranty shall not be deemed to have been given unless Buyer
in its sole discretion assumes the Pension Plan. Between March
31, 1997 and the Closing Date there will have been no material
adverse change in the funding of the Pension Plan.
(s) CERTAIN FEES. Neither Seller nor any of its respective
officers, directors or employees or Affiliates has employed any broker
or finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby except for fees to be paid by Seller to ▇▇▇▇▇▇ ▇.
▇▇▇▇ & Co., which fees and all related expenses shall be the
responsibility of Seller.
(t) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1996 and except as otherwise disclosed herein or set forth in Schedule
3.1(t) or the other Schedules hereto, there has not been (i) any
Material Adverse Effect with respect to the Business, the Assets, the
Assumed Liabilities or in the condition (financial or other), results
of operations or prospects of the Business, (ii) any material damage,
destruction or loss
21
31
relating to the Business or the Assets, whether or not insured, (iii)
any liability created or incurred which Buyer will assume under the
Assumption Agreement except for liabilities accruing after December 31,
1996 in the ordinary course of business in a manner consistent with
past practice and, to the extent applicable, the requirements of
Section 4.2, (iv) any Lien created on any Asset except Permitted Liens,
(v) any increase in, or commitment or plan adopted to increase, the
wages, salaries, compensation, pension or other benefits or payments to
any of the Business's employees, (vi) any capital expenditures or
commitment to make any such expenditures with respect to the Assets or
as to which Buyer will become obligated after the Closing pursuant to
the Assumption Agreement, except (A) with respect to any such
expenditures or commitments incurred prior to the date hereof, to the
extent such expenditures and commitments do not exceed $200,000 in the
aggregate and (B) with respect to any such expenditures or commitments
incurred on or after the date hereof as permitted under Section 4.2,
(vii) any condemnation proceedings commenced with respect to any Asset
or notice received by Seller as to the proposed commencement of any
such proceedings, (viii) any rights of substantial value knowingly
waived with respect to the Assets or the Business or (ix) any sale or
transfer of any Assets other than dispositions of inventory and
obsolete or worn out equipment in the ordinary course of business.
Since December 31, 1996, other than acts relating to the transactions
contemplated by this Agreement, the Business has been conducted in all
significant respects only in the ordinary course, consistent with past
practice and, to the extent applicable, Section 4.2.
(u) ENVIRONMENTAL MATTERS. Except as set forth on Schedule
3.1(u), with respect to the Business and the Assets: (i) Seller
complies and has complied in all material respects with all applicable
Environmental Laws, and possesses and complies in all material respects
with and has possessed and complied with all Environmental Permits;
(ii) there are and have been no Materials of Environmental Concern, or,
to the knowledge of Seller other conditions, at any property owned or
leased by Seller and included in the Assets that could give rise to any
liability under any Environmental Law or result in costs arising out of
any Environmental Law; (iii) no judicial, administrative, or arbitral
proceeding (including any notice of violation or alleged violation)
under any Environmental Law to which Seller is, or to the knowledge of
Seller will be, named as a party is pending or, to the knowledge of
Seller, threatened, nor is Seller the subject of any investigation in
connection with any such proceeding or potential proceeding; (iv) there
are no past or present conditions, circumstances, practices, plans, or
legal requirements that to the knowledge of Seller would be expected to
prevent, or materially increase the burden on the Business of complying
with applicable Environmental Laws or of obtaining, renewing, or
complying with all Environmental Permits required under such laws; and
(v) Seller has provided to Buyer true and complete copies of all
Environmental Reports relating to the Business in its possession or
control.
"ENVIRONMENTAL LAWS" shall mean any and all laws,
rules, orders, regulations, statutes, ordinances, guidelines,
codes, decrees, or other legally enforceable requirement
(including, without limitation, common law) of the United
States, or any state, local, municipal or other governmental
authority,
22
32
regulating, relating to or imposing liability or standards of
conduct concerning protection of the environment or of human
health, or employee health and safety.
"ENVIRONMENTAL PERMITS" shall mean any and all
permits, licenses, registrations, notifications, exemptions
and any other authorization required under any Environmental
Law.
"ENVIRONMENTAL REPORT" shall mean any report, study,
assessment, audit, or other similar document that addresses
any issue of actual or potential noncompliance with, or actual
or potential liability under or cost arising out of, any
Environmental Law that may in any way affect the Business or
the Assets.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any
gasoline or petroleum (including crude oil or any fraction
thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants,
contaminants and radioactivity, and any other substances of
any kind that are regulated pursuant to or could give rise to
liability under any Environmental Law.
(v) ENTIRE BUSINESS. The Assets, when taken together with the
Excluded Assets listed in Section 1.2 hereof, constitute all of the
properties, assets and other rights of Seller and its Affiliates used
in or necessary for the conduct of the Business as currently conducted.
On the Closing Date, subject to the provisions hereof, Seller will
transfer to Buyer all of the properties, assets and other rights used
in or necessary for the conduct by Buyer of the Business as currently
conducted by Seller, except for the Excluded Assets listed in Section
1.2 hereof.
(w) TAX MATTERS. All Tax Returns required to be filed by
Seller on or before the Closing Date with respect to the Business or
its activities, properties or employees have been or shall be timely
filed and all Taxes which are due or which may be claimed to be due
with respect to the Business or its activities, properties or employees
have been or shall be timely paid or accrued within the prescribed
period, including any extension thereof. All such Tax Returns are
complete and accurate in all material respects. There are no Liens upon
any of the Assets in respect of Taxes except for Liens for current
Taxes that are not yet due and payable. All Taxes required to be
withheld by Seller with respect to the Business or its activities,
properties or employees have been withheld and paid over to the
appropriate Tax authority. Seller (or any predecessor of Seller) is not
a party to and has not received any notice with respect to any proposed
or pending action by any governmental authority for assessment or
collection of Taxes with respect to the Business or its activities,
properties or employees, nor is Seller a party to any dispute or
threatened dispute in which action or dispute an adverse determination
reasonably could be expected to result in a foreclosure of the Assets
and no such claim for assessment or collection of Taxes has been made
upon Seller. Seller is not a "foreign person" within the meaning of
section 1445 of the Code, and Seller will furnish Buyer with an
affidavit that satisfies the requirements of section 1445(b)(2) of the
Code. For purposes of this Agreement, (i) the term "TAX" or "TAXES"
shall mean all United States federal, state, provincial, local and
foreign income, profits, franchise, gross receipts, payroll, sales,
23
33
employment, use, property, excise, value added, net worth, intangible,
privilege, business, license, transfer, estimated, stamp, alternative
or add-on minimum, environmental, withholding and any other taxes,
duties or assessments, together with all interest, penalties and
additions imposed with respect to such amounts, (ii) the term "TAX
RETURNS" shall mean any return (including any consolidated combined or
unitary return), declaration, estimated, installment, report, claim for
refund or information return or statement relating to Taxes which is
required to be filed with the appropriate governmental agency,
including any schedule or attachment thereto, and including any
amendment thereof and (iii) the term "TAX AUTHORITY" shall mean any
authority having jurisdiction over Taxes.
(x) AFFILIATE TRANSACTIONS. Except as set forth in Schedule
3.1(x), there are no agreements, arrangements, undertakings or other
transactions between the Business and any other division or business of
Seller or any Affiliate of Seller (including, without limitation, any
owner of capital stock of Seller).
(y) DISCLOSURE. Section 3.1 of this Agreement and the related
Schedules hereto contain no untrue statement of any material fact nor
omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which
they were made, not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
(a) DUE ORGANIZATION AND POWER. Buyer is a corporation duly
organized and validly existing under the laws of the State of Indiana.
Buyer has all requisite corporate and other power and authority to
enter into this Agreement, the Assumption Agreement, the Trademark
License Agreement, the Supply Purchase Agreement, the Escrow Agreement
and any other agreement contemplated hereby to which it is a party
(collectively, the "BUYER ACQUISITION DOCUMENTS") and to perform its
obligations hereunder and thereunder. Buyer is duly authorized,
qualified or licensed to do business as a foreign corporation, and is
in good standing, in each of the jurisdictions in which its right,
title or interest in or to any asset, or the conduct of its business,
requires such authorization, qualification or licensing, except where
the failure to so qualify or to be in good standing could not have an
adverse effect on the ability of Buyer to perform its obligations
hereunder or under any other Buyer Acquisition Document.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Buyer of this Agreement and the other Buyer Acquisition
Documents and the consummation by Buyer of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate action. This Agreement has been, and on the Closing
date each other Buyer Acquisition Document will be, duly executed and
delivered by Buyer and this Agreement constitutes, and each other Buyer
Acquisition Document will upon execution and delivery thereof
constitute, a legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with their respective terms, except as
affected by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, by general equitable principles
24
34
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) or by an implied covenant of good faith
and fair dealing.
(c) GOVERNMENTAL APPROVALS; NO CONFLICT. Except for the
expiration or termination of all applicable waiting periods under the
HSR Act and as set forth in Schedule 3.2(c), the execution, delivery
and performance of this Agreement and the other Buyer Acquisition
Documents by Buyer and the consummation by Buyer of the transactions
contemplated hereby and thereby (i) will not violate (with or without
the giving of notice or the lapse of time or both), or require any
consent, approval, filing or notice under any provision of any law,
rule or regulation, court or administrative order, writ, judgment or
decree applicable to Buyer or its assets or properties and (ii) will
not (with or without the giving of notice or the lapse of time or both)
(x) violate or conflict with, or result in the breach, suspension or
termination of any provision of, or constitute a default under, or
result in the acceleration of the performance of the obligations of
Buyer under, or (y) result in the creation of any Liens upon the assets
or properties of Buyer pursuant to the charter or by-laws of Buyer or
any indenture, mortgage, deed of trust, lease, agreement, contract or
instrument to which Buyer is a party or by which Buyer or any of its
assets or properties is bound.
(d) BROKERS' FEES. Neither Buyer nor any of its officers,
directors or employees, on behalf of Buyer, has employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby except for fees to be paid by Buyer to American
Securities Capital Partners, L.P., which fees and all related expenses
shall be the responsibility of Buyer.
(e) DISCLOSURE. Section 3.2 of this Agreement and the related
Schedules hereto contain no untrue statement of any material fact nor
omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they
were made, not misleading.
(f) FINANCING. Buyer has delivered to Seller a copy of a bank
commitment received by Buyer from KeyBank, N.A. in such amount and for
such duration so as to enable Buyer, without disruption of the Closing
schedule contemplated by this Agreement, to consummate the purchase of
the Assets for the Cash Purchase Price and under the payment and other
terms described in this Agreement. Although Buyer may be planning a
public offering of its capital stock, Buyer warrants that the
transactions contemplated by this Agreement are not dependent upon the
progress or success of any such offering.
(g) CONFIDENTIAL INFORMATION. Buyer warrants and represents
that the requirements of Section 4.12 concerning Confidential
Information have been and will be satisfied through any termination or
Closing of the transactions contemplated by this Agreement.
25
35
3.3 SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in Sections 3.1 and 3.2 of this Agreement shall survive the Closing
until April 30, 1998, at which time they shall terminate, provided that the
representations and warranties contained in Sections 3.1(a), 3.1(b), 3.1(e)(i),
3.1(u), 3.1(w), 3.2(a) and 3.2(b) shall survive indefinitely and shall not
terminate. The Escrow shall be terminated on April 30, 1998, and all funds
contained therein at such date shall be paid to the Seller.
3.4 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
Section 3.1 (the "EXPRESS DISCLOSURE SCHEDULE") will be deemed disclosed and
incorporated by reference onto all other Schedules of Section 3.1 to which such
matter is applicable (the "OTHER DISCLOSURE SCHEDULES") if the specific matter
which is disclosed on the Express Disclosure Schedule also must be disclosed on
the applicable Other Disclosure Schedule.
SECTION 4. AGREEMENTS
4.1 ACCESS TO INFORMATION. Prior to Closing, Seller agrees to (a) give
or cause to be given to Buyer and its employees, advisors and other
representatives such access, during normal business hours, to the offices,
employees, properties, books and records of Seller and its Affiliates relating
to the Business, the Assets and the Assumed Liabilities as Buyer may from time
to time reasonably request and (b) furnish or cause to be furnished to Buyer
such financial and operating data and other information with respect to the
Business, the Assets and the Assumed Liabilities as Buyer may from time to time
reasonably request. After the Closing Date, Buyer shall, at reasonable times,
permit Seller to make reasonable examination of the books and records of the
Business relating to time periods ending at or prior to the Closing Date and
shall permit Seller to make copies of the relevant portions of such books and
records at Seller's expense, in each case to the extent necessary for Seller or
its Affiliates to comply with applicable legal, tax or accounting requirements.
After the Closing Date, Seller shall, at reasonable times, permit Buyer to make
reasonable examination of the books and records of the Seller relating to the
Business and shall permit Buyer to make copies of the relevant portions of such
books and records at Buyer's expense to the extent necessary for Buyer or its
Affiliates to comply with applicable legal, tax or accounting requirements.
In addition to the foregoing, (A) Buyer shall make available to Seller
at Seller's expense (x) all documents and records of the Business for copying
and inspection and (y) all Buyer personnel employed or formerly employed by the
Business to interview or use as a witness, which Seller shall reasonably request
for the prosecution or defense of any claim or demand arising out of or relating
to any Excluded Liability or Excluded Assets of the Business or to otherwise
satisfy its obligations to Buyer under Section 8.1 and (B) Seller shall make
available to Buyer at Buyer's expense (x) all documents and records relating to
the Business for copying and inspection and (y) all Seller personnel formerly
employed by the Business to interview or use as a witness, which Buyer shall
reasonably request for the prosecution or defense of any claim or demand arising
out of or relating to any Assets or the Business or to otherwise satisfy its
obligations to Seller under Section 8.2. Any use of Buyer's personnel by Seller,
or Seller's personnel by Buyer, for more than one half a day shall be charged at
a per diem rate equal to a pro rata portion of the employee's total
compensation, plus any travel expenses.
26
36
4.2 CONDUCT OF THE BUSINESS. Seller agrees that, except as expressly
required by this Agreement or otherwise consented to in writing by Buyer, during
the period commencing March 31, 1997 and ending on the Closing Date, Seller
shall, and shall cause its Affiliates to, with respect to the Business, the
Assets and the Assumed Liabilities:
(a) operate the Business only in the usual, regular and
ordinary manner, on a basis consistent with past practice and, to the
extent consistent with such operation, use its reasonable best efforts
to preserve its present business organization intact, keep available
the services of its present employees, preserve its present business
relationships and maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of the Business;
(b) maintain its inventory of supplies, parts and other
materials and keep its books, accounts, files and records in the usual,
regular and ordinary manner, on a basis consistent with past practice,
and comply with and perform in all material respects all laws and
contractual and other obligations applicable to the Business, the
Assets or the Assumed Liabilities;
(c) maintain in full force and effect adequate insurance with
respect to the Business, the Assets and the employees of the Business
covering risks customarily insured by similar businesses;
(d) not (i) enter into any contract, agreement or other
commitment which is not terminable by the parties upon 30 days' notice
or less and without penalty or which involves aggregate consideration
in excess of $25,000 except as set forth in Schedule 4.2(d) and except
for purchases and sales of inventories in the ordinary course of
business consistent with past practice, (ii) amend, supplement, waive
or otherwise modify any contract or agreement included in the Assets,
other than in the ordinary course of business consistent with past
practice or (iii) permit any of its Affiliates to do, or agree, in
writing or otherwise, to do, any of the foregoing;
(e) except as set forth on Schedule 4.2(e) or as required by
applicable law or to the extent required under existing employee
benefit plans, agreements or arrangements as in effect on the date of
this Agreement, not (i) increase the compensation or fringe benefits of
any of the Business's officers or employees, except for increases, in
the ordinary course of business, in salary or wages of employees who
are not officers, (ii) except in the ordinary course of business grant
any severance or termination pay, (iii) hire, except in the ordinary
course of business, any new employees or consultants, or (iv) enter
into or amend or terminate any collective bargaining, bonus, profit
sharing, thrift, compensation, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
past or present officers or employees;
(f) not (i) dispose of or abandon any of the Assets, other
than the disposition of obsolete or worn-out equipment or machinery in
the ordinary course of business, consistent with past practice, (ii)
enter into or engage in any transaction with or for the
27
37
benefit of any other division or business of Seller or any Affiliate of
Seller except as is required by an existing written agreement set forth
in Schedule 3.1(x) or (iii) permit any of its Affiliates to do, or
agree, in writing or otherwise, to do, any of the foregoing;
(g) not (i) permit or allow any of the Assets to become
subject to any Liens, except for Permitted Liens, (ii) waive any
material claims or rights relating to the Business or the Assets, (iii)
grant any increase in the compensation or benefits of the employees of
the Business (including any such increase pursuant to any deferred
compensation, severance, bonus, pension, profit-sharing or other plan
or commitment) except for annual salary increases in the ordinary
course of business consistent with past practice, except as otherwise
required by applicable law, (iv) establish, enter into or adopt any
employment agreement or collective bargaining agreement with employees
of the Business or other Employee Benefits Programs or modify or
terminate any Employee Benefits Programs or (v) permit any of its
Affiliates to do, or agree, in writing or otherwise, to do, any of the
foregoing;
(h) not acquire or agree to acquire outside the ordinary
course of business any assets that are material, individually or in the
aggregate, to the Business, or make or agree to make any capital
expenditures except for capital expenditures not in excess of $25,000
for any individual expenditure and $100,000 in the aggregate;
(i) not pay, discharge or satisfy any claims, liabilities or
obligations of the Business (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction, of liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their
terms as in effect on the date hereof (including scheduled principal
payments on the Seller Indebtedness), or transfer any rights of
material value of the Business or modify or change in any material
respect any existing license, lease, contract or other document
relating to the operations of the Business, other than in the ordinary
course of business consistent with past practice;
(j) not change any material accounting principle that would
affect the Balance Sheet or Final Closing Balance Sheet;
(k) not acquire or agree to acquire, by merging or
consolidating the Division with, or by using any of the Assets to
purchase a substantial portion of the stock or assets of, or by
incurring a liability which is an Assumed Liability, any business or
any corporation, partnership, joint venture, association or other
business organization or division thereof;
(l) not (i) incur any indebtedness for borrowed money, or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of Seller, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, or (ii) make any
loans, advances or capital contributions to, or
28
38
investments in, any other person, where any such action under clause
(i) or (ii) would create an Assumed Liability or have a Material
Adverse Effect; and
(m) not authorize any of, or commit or agree to take any of,
the foregoing actions.
4.3 FURTHER ACTIONS. Subject to the terms and conditions hereof, Seller
and Buyer agree to use their reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including using its reasonable efforts (without payment of money,
commencement of litigation, the assumption of any material obligation or the
entering of any agreement to divest or hold separate any assets): (i) to obtain
at the earliest practicable date prior to the Closing Date (pursuant to
instruments reasonably satisfactory to Buyer in form and substance) all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts, leases, licenses or
agreements with Seller or its Affiliates as are necessary for the consummation
of the transactions contemplated hereby (including, without limitation, the
expiration or termination of all applicable waiting periods under the HSR Act);
(ii) to effect all necessary registrations and filings (including, without
limitation, all filings under the HSR Act); (iii) to furnish to each other such
information and assistance as reasonably may be requested in connection with the
foregoing; and (iv) to obtain, prior to the Closing Date, all governmental
licenses, permits, consents, approvals, authorizations, qualifications and
orders as are necessary in order to enable Buyer to conduct the Business in the
ordinary course as of and from the opening of business on the Closing Date.
Notwithstanding anything to the contrary set forth in this Agreement, to the
extent that any consent or approval is not obtained with respect to any
contract, lease, license or agreement as contemplated above, this Agreement
shall not constitute an assignment or an attempted assignment thereof and the
failure to obtain such consent shall not be deemed a breach by Seller of any
obligation hereunder so long as reasonable arrangements may be made as otherwise
contemplated in this paragraph. In each such case, Seller agrees to cooperate
with Buyer in any reasonable arrangement designed to (i) provide for Buyer the
benefits under any such contract, lease, license or agreement, including
enforcement at the cost and for the account of Buyer of any and all rights of
Seller against the other party or otherwise and (ii) insure performance by Buyer
of Seller's obligations thereunder to the extent Buyer receives such benefits.
If and to the extent that such arrangement cannot be made, Buyer shall not have
any obligation with respect to any such contract, lease, license or agreement.
Seller shall vacate and cease to occupy as of the close of business on the
Closing Date all Real Property included in the Assets used and shall deliver
possession of all such Real Property to Buyer as of the close of business on the
Closing Date, except for office space leased to Bucon at the Kansas City Plant.
4.4 ANTITRUST LAWS. The Buyer and the Seller shall each file with the
U.S. Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "ANTITRUST DIVISION") any notifications
required to be filed by themselves or their respective "ultimate parent"
companies (as such term is defined in the HSR Act and the regulations
promulgated thereunder) under the HSR Act with respect to the transactions
contemplated by this Agreement. Subject to the terms of this Agreement the
parties hereto will use their respective best efforts to make such filings
promptly, to respond to any requests for
29
39
additional information made by either of such agencies and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date.
Each party hereto shall promptly inform the other of any material communication
from the FTC, the Antitrust Division or any other domestic or foreign
governmental authority regarding the sale of the Business or any of the other
transactions contemplated by this Agreement. If either party hereto or any of
their respective Affiliates receives a request for additional information or
documentary material from any such government or authority with respect to the
sale of the Business or the other transactions contemplated by this Agreement,
then such party will endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other party
hereto, an appropriate response in compliance with such request.
4.5 NOTIFICATION. Seller shall notify Buyer and keep it advised of (i)
any litigation or administrative proceeding pending or, to the best knowledge of
Seller, threatened against Seller or affecting the Business which could, if
adversely determined, have a Material Adverse Effect, (ii) any material damage
or destruction of any of the Assets, and (iii) any material adverse change in
the Business or the condition (financial or other), results of operations,
assets or prospects of Seller or the Business.
4.6 NO INCONSISTENT ACTION. Subject to Sections 7.1 and 7.2, the
parties hereto shall not take any action inconsistent with their obligations
under this Agreement or which could materially hinder or delay the consummation
of the transactions contemplated by this Agreement. None of the parties hereto
shall take or omit to take any action that could result in any of their
respective representations and warranties not being true in all material
respects on the Closing Date.
4.7 REPRESENTATIONS AND WARRANTIES. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller prior to the Closing, of (a)
any representation or warranty made by it or them contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any
material respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect or (b) the failure by it
or them to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it or them under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this agreement.
4.8 EXECUTION OF ADDITIONAL ACQUISITION AGREEMENTS. On the Closing
Date, each of the Buyer and Seller shall execute and deliver each of the
Assumption Agreement, the Trademark License Agreement, the Supply Purchase
Agreement and the Escrow Agreement (the "ADDITIONAL ACQUISITION AGREEMENTS").
4.9 COVENANT NOT TO COMPETE.
(a) In consideration of the Buyer entering into this Agreement
with the Seller, the Seller hereby agrees effective as of the Closing
Date, and for a period of five years thereafter (the "NONCOMPETE
PERIOD"), that the Seller shall not, and the Seller shall cause each of
its controlled Affiliates to not, directly or indirectly, either for
itself or through
30
40
any other Person, engage in, or provide any technical or marketing
assistance to, or permit its name to be used by any enterprise engaging
in, the production, sale or distribution anywhere in the world of any
grain storage bin or of any grain conditioning or handling equipment of
the general type produced, sold or distributed by the Business on the
date hereof (collectively, "Relevant Products"). For purposes of this
Agreement, the phrase "directly or indirectly engage in" shall include
any direct or indirect ownership or profit participation interest in
such enterprise, whether as an owner, stockholder, partner, joint
venturer of otherwise, and shall include any direct or indirect
participation in such enterprise as a consultant, licensor of
technology or otherwise. Notwithstanding the foregoing, the provisions
of this Section 4.9 shall not prohibit the direct or indirect
acquisition by the Seller or any of its Affiliates of less than 5% of
the outstanding voting securities of any publicly-traded corporation.
Seller agrees that this covenant is reasonably designed to protect
Buyer's substantial investment and is reasonable with respect to its
duration, geographical area and scope. Notwithstanding the foregoing,
Buyer and Seller acknowledge that Seller is in the business of
manufacturing and distributing throughout the world farm buildings and
other commercial structures with wooden or structural steel frames
which may be used and are used for the "flat storage" and handling of
grain or other materials and that such activities are not intended to
be prohibited by this Section 4.9. Buyer also agrees that no business
activity of Seller as described in its 1996 Annual Report to
Stockholders and in its Form 10-K for the year ended December 31, 1996,
involves any activity proscribed by this Section 4.9 other than the
activities of the Business and that following the Closing Seller may
continue to engage in all of its other businesses as now conducted.
Buyer also acknowledges that Seller distributes farm buildings with
wooden or structural steel frames used for grain storage and other
products not included within the Business through dealers and other
agents that also market, distribute and erect grain bins and grain
drying and handling equipment for the Business and that this covenant
is not intended to cause Seller to terminate its relationships with any
such dealers or agents, to preclude such dealers or agents from
continuing to use the ▇▇▇▇▇▇ name and trademark (other than in
connection with the sale of Relevant Products which are labelled with a
trademark or tradename subject to the Trademark License Agreement or
which otherwise purport to be Seller's products) or to otherwise cease
the conduct of such activity.
(b) Notwithstanding the foregoing, if at any time a court
holds that the restrictions stated in this section are unreasonable or
otherwise unenforceable under circumstances then existing, Buyer and
Seller agree that the maximum period, scope or geographic area
determined to be reasonable under such circumstances by such court will
be substituted for the stated period, scope or area. Buyer and Seller
agree that money damages will be an inadequate remedy for any breach of
the agreements described in this section. In the event of a breach or
threatened breach of the agreements described in this section, the
Buyer or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive relief in order
to enforce, or prevent any violations of, the provisions hereof
(without the posting of a bond or other security).
31
41
4.10 TERMINATION OF AFFILIATE TRANSACTIONS. Except as disclosed on
Schedule 4.10, all agreements, arrangements, undertakings or other transactions
set forth in Schedule 3.l(x) shall be terminated on or prior to the Closing Date
at no cost to the Business or Buyer.
4.11 CUSTOMER CLAIMS ON PRODUCT WARRANTIES AND PURCHASE OF PAST DUE
ACCOUNTS RECEIVABLE.
(a) In furtherance of the administrative convenience of the
parties and subject to the next sentence and the procedures outlined on
Schedule 4.11, Buyer shall, after the Closing Date, satisfy Product
Warranty claims made by customers or purchaser of products of the
Business which arise under the express warranties of the Business as
delivered to Buyer under Section 3.1(o). Anything in this Agreement to
the contrary notwithstanding, Seller shall, in accordance with Section
8 indemnify and hold Buyer harmless, on a dollar for dollar basis, from
and against all obligations or liabilities of the nature described in
this Section 4.11. Anything in this Agreement or generally accepted
accounting principles to the contrary notwithstanding, the Final
Closing Balance Sheet shall not include any reserve for liabilities or
obligations of the nature contemplated by this Section 4.11.
(b) Anything in this Agreement to the contrary
notwithstanding, Seller shall, in accordance with Section 8, indemnify
and hold Buyer harmless, on a dollar for dollar basis, from and against
any contract back charges that are incurred by Buyer before the Closing
or for any items past due as of the Closing Date. Anything in this
Agreement or generally accepted accounting principles to the contrary
notwithstanding, the Final Closing Balance sheet shall not include any
reserve for contract back charges.
(c) The Accounts Receivable reflected on the Final Closing
Balance Sheet will not include as an Asset any reserve for uncollected
accounts receivable. As a consequence, Seller shall purchase from Buyer
each account receivable that has not been paid in full within 150 days
following the date of the of the original invoice or other initial
demand for payment. The amount of the purchase price shall be 100% of
the balance due plus interest but excluding late fees. Seller shall
remit the price to Buyer within thirty days following a tender of the
receivable. Upon such purchase, Seller shall have the right to require
Buyer to continue its routine collection efforts with respect to such
receivable for Seller in exchange for a collection fee equal to 5% of
the amount collected. Routine collection efforts shall not require the
filing of any suit or proceeding or the placement of the account with
an attorney or other professional collector.
4.12 CONFIDENTIALITY. Buyer confirms that it is bound by the terms of
the confidentiality agreement between Seller and American Securities Capital
Partners, L.P., dated January 23, 1997, as if it were a signatory thereto and
that, subject to Section 9.1 hereto, it will keep and treat the evaluation
material and all other items of confidential information provided by Seller to
Buyer hereunder and under the Letter of Intent dated February 21, 1997, in
accordance with the terms of that confidentiality agreement.
32
42
4.13 RIGHT TO CHALLENGE. Seller acknowledges that although Buyer has
agreed to pay for KPMG Peat Marwick's audit of the Business's financial
statements, Buyer in no way takes responsibility therefor.
4.14 CERTAIN LOSSES. Seller agrees that in the event of any property or
casualty losses or damage prior to the Closing to any of the Assets included in
the Balance Sheet, Seller shall make any necessary repairs or replacement or pay
to Buyer any payment necessary so that the Buyer receives such Assets (or a
comparable replacement thereof) in the same condition as such Assets were in on
December 31, 1996 (other than for normal wear and tear subsequent to such date).
4.15 TITLE COMMITMENT AND SURVEY.
(a) TITLE COMMITMENT. Seller agrees, at Seller's sole expense,
to use commercially reasonable efforts to cause to be furnished and
delivered to Buyer on or before June 13, 1997 a current title
commitment (the "TITLE COMMITMENT"), for an Owner's Title Insurance
Policy (1992 form ALTA policy) to be issued by Chicago Title Insurance
Company or, at Seller's option, by such other company as Buyer may
approve (the "TITLE INSURER"), setting forth the status of title of the
owned real property listed on Schedule 1.1(c) (the "OWNED REAL
PROPERTY") and all other exceptions, including rights-of-way,
easements, restrictions, covenants, reservations, and other conditions,
if any, affecting the Owned Real Property which would appear in an
owner's title policy, if issued, together with copies of all
instruments referred to in the Title Commitment affecting the title to
the Owned Real Property.
(b) SURVEY. Seller shall cause to be prepared, at Seller's
sole expense, a current as-built survey of the Owned Real Property and
to use commercially reasonably efforts to cause the same to be
furnished to Buyer and the Title Insurer on or before June 18, 1997
(the "SURVEY"). The Survey shall be made in accordance with the 1992
Minimum Standard Detail Requirements for Land Title Surveys as jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping, certified to Buyer and the
Title Insurer in a manner reasonably satisfactory to Buyer and the
Title Insurer and prepared by Blue Valley Engineers and Surveyors, Inc.
or, at Seller's option, such other independent professional licensed
land surveyor as may be reasonably satisfactory to Buyer and the Title
Insurer.
(c) REVIEW OF TITLE AND SURVEY. Buyer shall have a period (the
"REVIEW PERIOD") ending five (5) days after the date on which Buyer
receives the last to be received of the following: (i) the Title
Commitment, (ii) copies of all instruments referred to in the Title
Commitment which affect title to the Owned Real Property and (iii) the
Survey required in paragraph (b) above, in which to notify Seller of
any objections Buyer has to any matter shown or referred to on the
Survey or in the Title Commitment which are reasonably unacceptable to
Buyer. Any matters to which Buyer does not object by written notice
delivered to Seller prior to the end of the Review Period, as well as
utility easements and other easements, rights of way, covenants,
reservations and restrictions of record which, individually or in the
aggregate, do not
33
43
interfere with the ordinary conduct of the Business or the use of any
such real property for its current uses, diminish the value of such
real property shall be considered Permitted Liens. Liens of an
ascertainable amount shall not be considered to be matters rendering
title unmarketable, and shall be paid and discharged by Seller at or
before the Closing, except for liens for taxes and assessments which
shall be accrued on the Final Closing Balance Sheet. In the event Buyer
notifies Seller in writing prior to the end of the Review Period of any
objections to any matters shown or referred to in the Title Commitment
or the Survey, Seller shall eliminate or modify the conditions giving
rise to such objections to the reasonable satisfaction of Buyer prior
to the Closing. Without limiting the foregoing, any matter will be
reasonably objectionable by Buyer if it reflects that the Buyer will
not receive good and marketable title to all real property currently
used by the Seller in the conduct of the Business other than the leased
Real Property and the Excluded Assets.
4.16 OTHER AGREEMENTS. Buyer and Seller shall negotiate in good faith
to agree to a form of Supply Purchase Agreement satisfying the requirements of
this Section 4.16 on or prior to May 30, 1997. Buyer and Seller shall negotiate
in good faith to agree to a form of lease agreement with Bucon, d.b.a. ▇▇▇▇▇▇
Construction ("BUCON"), on or prior to May 30, 1997. Said lease agreement will
govern the lease by Buyer to Bucon of that portion of the Real Property to be
occupied by Bucon following Closing. The Supply Purchase Agreement will contain
terms and conditions satisfactory to both Buyer and Seller providing Buyer the
option for a period of four years after the Closing Date to purchase steel for
the Business and for any other storage bins manufactured by Buyer and on the
same terms and conditions as Seller purchases steel. To the extent so
negotiated, the Supply Purchase Agreement will also contain terms and conditions
relating to the purchase of steel for all the business and operations of Buyer.
4.17 ENVIRONMENTAL REVIEW. Buyer and Seller shall use commercially
reasonable efforts to complete their environmental "due diligence" review of the
Real Property by June 30, 1997.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES. The respective
obligations of the parties hereto to consummate the Acquisition shall be subject
to the satisfaction at or prior to the Closing Date of the following conditions:
(a) NO INJUNCTION, ETC. No preliminary or permanent injunction
or other order issued by any federal or state court of competent
jurisdiction in the United States or by any United States federal or
state governmental or regulatory body nor any statute, rule, regulation
or executive order promulgated or enacted by any United States federal
or state governmental authority which restrains, enjoins or otherwise
prohibits any of the transactions contemplated hereby shall be in
effect;
(b) HSR ACT. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired;
34
44
(c) GOVERNMENT ACTIONS. No action shall have been taken, and
no statute, rule or regulation shall have been enacted, by any state or
Federal government or governmental agency which would prevent the
consummation of the transactions contemplated by this Agreement or
impose material conditions with respect thereto;
(d) PENSION BENEFIT GUARANTY CORPORATION. No action shall have
been taken or threatened by the Pension Benefit Guaranty Corporation to
terminate any defined benefit pension plan maintained by Seller or its
Affiliates with respect to the Business which has not been resolved or
discontinued without material conditions with respect thereto; and
(e) SUPPLY PURCHASE AGREEMENT. The Seller and the Buyer shall
have agreed to the form of Supply Purchase Agreement as contemplated by
Section 4.16.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the Acquisition are subject to the satisfaction (or waiver
by Buyer) at or prior to the Closing Date of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Seller contained herein or in any
certificate, instrument or other document delivered to Buyer pursuant
hereto shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date, except to the extent that any such representation and warranty is
made as of a specified date, in which case such representation and
warranty shall have been true and correct as of such date;
(b) PERFORMANCE OF OBLIGATIONS. Seller shall have performed in
all material respects all obligations and agreements, and complied in
all material respects with all covenants contained in this Agreement to
be performed or complied with by it prior to the Closing Date;
(c) OFFICER'S CERTIFICATE. Buyer shall have received a
certificate, dated the Closing Date, of the President of Seller to the
effect that the conditions specified in paragraphs (a) and (b) above
have been fulfilled;
(d) OPINIONS. Buyer shall have received an opinion dated the
Closing Date from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, General Counsel to Seller, in
substantially the form attached hereto as Exhibit C;
(e) CONSENTS, ETC. All licenses, permits, consents, approvals,
authorizations and orders of governmental authorities and other third
parties necessary for the consummation of the transactions contemplated
hereby and the transfer to the Buyer of all rights, title and interest
of the Seller in and to all of the Assets and the conduct of the
Business by Buyer after the Closing shall have been obtained or
otherwise adequately provided for pursuant to Section 4.3;
35
45
(f) ADDITIONAL ACQUISITION AGREEMENTS. Seller shall have
executed and delivered to Buyer each of the Additional Acquisition
Agreements to the reasonable satisfaction of Buyer;
(g) TITLE INSURANCE; SURVEYS. Buyer shall have received, with
respect to each parcel of real property listed on Schedule 1.1(c), a
1992 form ALTA policy of title insurance (collectively, the "TITLE
POLICIES") issued by the Title Insurer dated as of the Closing Date in
an amount equal to the value of such parcel of real property, as
reasonably agreed to by the parties prior to the Closing Date. The
Title Policies shall be issued at ordinary rates and shall insure fee
simple title to such real property to be vested in the Buyer or its
nominee subject only to the Permitted Liens. The Buyer shall have
received the Title Commitment and the Survey as provided in Section
4.15 and the obligations of Seller under Section 4.15(c) shall have
been satisfied in a manner that does not preclude Buyer from receiving
the financing contemplated by Section 3.2(f) on the terms contemplated
by the commitment letter of KeyBank, N.A. (it being understood that the
Real Property will be mortgaged to secure such financing). Seller shall
have resolved in a manner reasonably satisfactory to Buyer the matters
referenced in the memorandum dated March 10, 1997 by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
described in Schedule 1.1 (c) and in the memorandum dated November 15,
1993 by An ▇▇▇▇▇▇▇▇▇ attached thereto; and
(h) ENVIRONMENTAL MATTERS. Buyer shall have completed its
environmental "due diligence" review of the Business and, based upon
such review, shall not in good faith believe that the aggregate cost of
any necessary or appropriate remediation of Materials of Environmental
Concern or other environmental-related expenditures is likely to cost
in excess of $3,000,000, it being understood and agreed that Seller
will under all circumstances be responsible for the cost of such
remediation.
5.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The obligations
of Seller to consummate the Acquisition are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing Date of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Buyer contained herein, or in any
certificate, instrument or other document delivered to Seller pursuant
hereto shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing
Date, except to the extent that any such representation and warranty is
made as of a specified date, in which case such representation and
warranty shall have been true and correct as of such date;
(b) PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all
obligations in all material respects and agreements, and complied in
all material respects with all covenants, contained in this Agreement
to be performed or complied with by each of them prior to the Closing
Date;
36
46
(c) OFFICER'S CERTIFICATE. Seller shall have received a
certificate, dated the Closing Date, of the President of Buyer to the
effect that the conditions specified in paragraphs (a) and (b) above
have been fulfilled;
(d) OPINIONS. Seller shall have received an opinion dated the
Closing Date from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Counsel of Buyer, in
substantially the form attached hereto as Exhibit D;
(e) ADDITIONAL ACQUISITION AGREEMENTS. Buyer shall have
executed and delivered to Seller each of the Additional Acquisition
Agreements; and
(f) ENVIRONMENTAL ISSUES. Buyer shall have completed its
environmental "due diligence" review of the Business and Seller shall
have completed its own due diligence review of any environmental issues
raised by Buyer's review, and Seller shall not in good faith believe
that the aggregate cost of any necessary or appropriate remediation of
Materials of Environmental Concern or other environmental-related
expenditures relating to the Business and identified in such reviews is
likely to cost in excess of $2,000,000.
SECTION 6. EMPLOYEES AND EMPLOYEE BENEFITS
6.1 EMPLOYMENT AGREEMENTS. Except as provided on Schedule 6.1, Seller
has no employment agreements with the employees of the Business and all such
employees are employed on an "at will" basis. Seller intends to terminate all of
the employees of the Business ("Seller's Employees" or an "Employee") at
Closing. Except for liabilities assumed by Buyer hereunder pursuant to this
Section 6 and Section 1.5 above, Seller is responsible for, and shall indemnify
and hold harmless Buyer from and against any and all claims of Seller's
employees with respect to employment prior to the Closing, and Seller shall
retain sole responsibility for and fully and timely pay all salaries, wages, and
benefits that have accrued to its employees through the Closing Date, whether or
not such amounts are payable prior to the Closing Date. Except for liabilities
retained by Seller hereunder pursuant to this Section 6 and Section 1.5 above,
Buyer is responsible for, and shall indemnify and hold harmless Seller from and
against any and all claims of Seller's employees with respect to (a) employment
of such employees by Buyer subsequent to the Closing, (b) matters covered by the
CBA based on facts that arise after the Closing Date, (c) claims for accrued
vacation pay or vacation benefits and (d) any claims by employees of the
Business (i) under WARN, (ii) for severance benefits under the CBA, or Seller's
severance guidelines for Salaried Employees as shown on Schedule 3.1(r), due to
the termination of an employee of the Business by Seller at the Closing whether
or not rehired by Buyer, (iii) due to any termination of any new employment
relationship between Buyer and an employee of the Business following the
Closing, (iv) only to the extent expressly agreed to by Buyer, for any amount or
the cost of any benefit that Seller may provide to any Hourly Employees
following the Closing due to agreements made by Seller in order to satisfy its
obligations under Section 6.2 and (v) for any other claim of a Salaried or
Hourly Employee due to Seller's termination of any such Employee in connection
with the Closing, including any claim arising out of Seller's termination of the
CBA or Seller's termination of its employment relationship with any Salaried
Employee (with (i) through (v) referred to as "SEVERANCE CLAIMS").
Notwithstanding the foregoing, Seller shall be responsible for, and shall
indemnify
37
47
and hold harmless Buyer from and against any and all claims of Salaried
Employees for severance benefits under Seller's severance guidelines for
Salaried Employees and any other claim of a Salaried Employee due to Seller's
termination of any such Employee in connection with the Closing, if such
Salaried Employee is offered employment by Buyer at a position and level of
compensation comparable to the position and level of compensation at which such
Salaried Employee was employed by Seller immediately prior to Closing (all such
claims retained by Buyer shall not constitute Severance Claims).
6.2 COLLECTIVE BARGAINING AGREEMENTS. Seller shall be solely liable and
responsible for any liability under the National Labor Relations Act arising
from any failure by Seller to satisfy its obligations to notify (other than as
to WARN obligations) and/or bargain with any union prior to the Closing. Seller
agrees to indemnify and hold Buyer and its Affiliates harmless against any loss,
damage, claim, obligation or liability arising out of or relating to Seller's
failure to satisfy such obligations, subject to Buyer's obligations under
6.1(d).
6.3 OFFER OF EMPLOYMENT TO OTHER EMPLOYEES. Buyer or its designated
Affiliate may, but shall not be required to, extend an offer of employment to
some or all of the employees employed by the Business. Buyer shall have the
exclusive right to set the initial levels of wages, benefits, and other terms
and conditions of employment for any such employees. Those employees not covered
by a CBA are referred to as "SALARIED EMPLOYEES" and those employees covered by
a CBA are referred to as "HOURLY EMPLOYEES". Buyer may interview Seller's
Salaried and Hourly Employees for purposes of determining whether to extend an
offer of employment to such employees.
6.4 COMPLIANCE WITH "WARN". Buyer covenants and agrees that it shall,
in connection with succeeding Seller as an employer in accordance with this
Section 6, comply fully with the Worker Adjustment and Retraining Notification
Act ("WARN"), taking into account all relevant employment activities of Seller
disclosed on Schedule 6.4 which Seller represents and warrants to Buyer fully
describes for purposes of evaluating potential liabilities under WARN all
hirings, recalls, terminations and lay-offs of employees of the Business during
the one year period preceding the Closing Date.
6.5 NON-SOLICITATION OF EMPLOYEES; NO TRANSFERS. Seller agrees that
neither it nor any of its Affiliates will, for a period commencing on the date
hereof and ending on the 18 month anniversary of the Closing Date, without the
prior written consent of Buyer, whether directly or indirectly, solicit the
employment of any person who is at that time an employee, representative or
officer of the Business and who was prior to the Closing an employee of Seller
at the Business and had a salary in excess of $50,000 per year. Prior to the
Closing Date, Seller shall not transfer the employment of any employee of the
Business to any other business or operation of Seller or to any Affiliate of
Seller.
6.6 EMPLOYEE BENEFITS AND COMPENSATION.
(a) HOURLY EMPLOYEES--HOURLY EMPLOYEES' PENSION PLAN AND
RETIREE MEDICAL BENEFITS. Subject to the provisions of this Section 6,
effective as of the Closing Date Seller shall freeze or make other
lawful provision for the merger, termination,
38
48
cessation or other disposition of Seller's existing Pension Plan for
Hourly Employees of the Kansas City Plant of the Business (the "PENSION
PLAN") unless, on or prior to the Closing, Buyer in its sole discretion
assumes all of Seller's obligations under the Pension Plan and receives
all Pension Plan assets, whether arising before or after the Closing,
and agrees to indemnify and hold Seller harmless against any loss,
damage, claim, obligation or liability arising out of or relating to
Buyer's failure to satisfy any of Seller's obligations under or with
respect to the Pension Plan, subject to Seller's representations and
warranties pursuant to Section 3.1(r)(viii) and Seller's
indemnification of Buyer, pursuant to Section 8.1, with respect to the
design, operation and funding of the Pension Plan through the Closing
Date. Seller and Buyer shall take all steps reasonably necessary to
facilitate Buyer's assumption of the Pension Plan if Buyer in its sole
discretion elects to assume the Plan. If Buyer does not assume the
Pension Plan, Seller shall retain all obligations and liability with
respect to the Pension Plan, including the payment of benefits to
Hourly Employees attributable to their service prior to the Closing
Date. Seller shall retain any liability to provide retiree medical
benefits with respect to Hourly Employees of Seller who retire before
or on the Closing Date.
(b) TRANSFERRED EMPLOYEES - BENEFITS AFTER THE CLOSING. Hourly
and Salaried Employees that are hired by Buyer after the Closing
("TRANSFERRED EMPLOYEES") will be provided such employee benefits and
compensation, after the Closing Date, as Buyer, in its sole discretion,
may determine or otherwise negotiate with the Union; provided, however,
and notwithstanding any other provision contained herein to the
contrary, Transferred Employees shall be given credit for past service
with Seller for purposes of service eligibility requirements as to any
retiree medical benefit plan or vacation plan provided by Buyer for
such Employees. Subject to Section 6.1(a) and the preceding sentence,
after the Closing Date, nothing herein shall, with respect to
Transferred Employees who are Salaried Employees, (i) require Buyer to
maintain any particular plan or arrangement, (ii) prevent or preclude
Buyer from continuing any requirements for employee contributions under
any employee benefit plans in the same proportions as the employee-paid
portion under such plans constituted prior to the Closing Date, (iii)
prevent the amendment or termination of any plan, program or
arrangement established or maintained by Buyer, or (iv) interfere with
Buyer's right or obligation to take any action or refrain from taking
any action which Seller could take or refrain from taking prior to the
Closing Date. In addition, in administering any plans, programs or
arrangements established or maintained by the Buyer, the Buyer may
cause a reduction of benefits under any such plans, programs or
arrangements, specifically including any vacation plan, to the extent
Buyer deems necessary to avoid duplication of benefits with respect to
the same covered matter or years of service or otherwise. Seller and
Buyer shall agree on the responsibilities for payroll taxes with
respect to Transferred Employees.
(c) EMPLOYEES-OBLIGATIONS WITH RESPECT TO RETIREE AND OTHER
BENEFITS PRE CLOSING AND SEVERANCE CLAIMS. Seller shall retain any
liability to provide retiree medical benefits with respect to retired
Employees of the Business who qualify for such coverage as of the
Closing Date. Seller shall also remain responsible for any benefits to
Salaried Employees under stock option or cash bonus plans, commission
agreements, automobile allowances, tuition reimbursement plans,
vacation pay plans, welfare or
39
49
pension benefits, Sellers' 401(k) plan, Sellers' Employee Stock
Ownership Plan, life insurance, death benefits and health supplement
benefits with respect to Salaried Employees in relation to their
service prior to the Closing Date. With respect to Salaried Employees,
Buyer shall not assume any employment contracts, wage rates, work
practices, health, welfare or pension benefit plans, or any other
employment arrangements or understanding to which Seller is or has been
a party, except to the extent required by law, except for any benefits
arising out of Severance Claims or as set forth on Schedule 6.1.
(d) COBRA COVERAGE. Seller shall be responsible for satisfying
"continuation coverage" requirements for all plans under Section 4980B
of the Code or Part 6 of Title I of ERISA (COBRA) for all Employees for
qualifying events occurring on or before the Closing Date. Seller shall
offer "continuation coverage" under its plans to all employees and
shall comply with all notice and other requirements under COBRA or
similar state statutes as a result of qualifying events occurring prior
to the Closing Date or as a result of the transactions contemplated
under this agreement to the Employees or any of their respective
beneficiaries. Buyer shall assume all liability for satisfying the
obligations under COBRA to provide continuation coverage to or with
respect to any Transferred Employee in accordance with law with respect
to any "qualifying event" occurring after the Closing Date and shall
waive pre-existing conditions and any eligibility waiting period.
(e) WORKERS' COMPENSATION, DISABILITY AND UNEMPLOYMENT
COMPENSATION CLAIMS. Seller shall be responsible for any and all
liabilities arising in connection with workers' compensation,
disability and unemployment compensation claims which are incurred
prior to the Closing Date with respect to all Employees (whether or not
such claims have been filed prior to the Closing Date). Buyer shall be
responsible for any and all liabilities arising in connection with
workers' compensation, disability and unemployment compensation claims
which are incurred on or after the Closing Date with respect to any
Hourly Employee and with respect to any Transferred Employee who is a
Salaried Employee. Seller shall be responsible for any and all long
term disability benefits (and all other disability-related welfare
benefits for Salaried Employees) which become payable after the Closing
Date to any Salaried Employee who met the plan requirements for long
term disability as of the Closing Date.
(f) RECORD KEEPING. To the extent that service with Seller or
Buyer is relevant for purposes of providing benefits to Employees,
Buyer and Seller shall keep and provide each other with reasonable
records and notification of such information as may be necessary to
provide benefits to such Employees.
(g) PAYMENT OF REGULAR PAYROLL ACCRUED AS OF THE CLOSING DATE
AND VACATION. Seller shall pay according to its normal business
schedule or the provisions of the Plans (i) all liabilities,
obligations and commitments relating to all regular wages, salaries,
commissions and other forms of regular monthly payroll and related
expenses with respect to Employees, including without limitation,
obligations for all applicable payroll taxes, attributable to the
period ending on the close of business on the day prior
40
50
to the Closing Date and (ii) all employee benefits under any and all
plans, programs or arrangements maintained or contributed to by Seller
on behalf of the Transferred Employees for all claims incurred during
the period ending on the close of business on the day prior to the
Closing Date (whether or not a claim for such benefits has been filed
prior to the Closing Date). Notwithstanding the foregoing, Buyer shall
assume Seller's liability to Salaried Employees of the Business with
respect to any accrued vacation and Severance Claims.
(h) NO THIRD PARTY BENEFICIARIES. No employee of Seller or the
Business, whether or not hired by Buyer, shall be construed as a third
party beneficiary under this Agreement, and no provision in this
Agreement shall create any right in any such employee (or his or her
beneficiary or dependent) for any reason, including, without
limitation, in respect of employment, continued employment, or resumed
employment with Seller or Buyer (or any of their Affiliates) or in
respect of any benefits that may be provided, directly or indirectly,
under any plan or arrangement maintained by Seller or Buyer (or any of
their Affiliates).
SECTION 7. TERMINATION
7.1 GENERAL. This Agreement may be terminated and the transactions
contemplated herein abandoned (a) by mutual consent of Buyer and Seller, (b) by
Buyer, if there has been a material breach of Seller's representations,
covenants or agreements hereunder, (c) by Seller, if there has been a material
breach of Buyer's representations, covenants or agreements hereunder, (d) by any
party by notice to the other parties in the event that the Closing Date, as
extended by agreement of the parties, shall not have occurred on or before June
30, 1997, or (e) by Buyer or Seller if the Form of Supply Purchase Agreement has
not been agreed to in writing by June 1, 1997.
7.2 NO LIABILITIES IN EVENT OF TERMINATION. In the event of any
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become null and void and of no further force or effect and there shall
be no liability on the part of Buyer or Seller, except that Sections 4.12, 8 and
9 of this Agreement shall remain in full force and effect and that termination
shall not preclude any party from suing any other party for breach of this
Agreement.
SECTION 8. INDEMNIFICATION
8.1 SELLER INDEMNITY. Seller agrees to indemnify and hold harmless
Buyer, its Affiliates, each of their respective directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, "BUYER INDEMNIFIED PERSONS") from and against (i)
all Excluded Liabilities, (ii) any claim, cost, loss, liability or damage
incurred or sustained by any Buyer Indemnified Person as a result of any
misrepresentation or breach of warranty by Seller or a breach by Seller of any
covenant or other agreement contained herein or under any other agreement or
certificate executed and delivered by the parties in furtherance of the
transactions described herein, (iii) any and all liabilities for sales, use,
income and other Taxes arising at any time out of the operation of the Business
prior to the opening of business on the Closing Date to the extent not included
in the Assumed
41
51
Liabilities, (iv) any claim, cost, loss, liability or damage arising out of or
relating to any governmental or other third party claim or action against any
Buyer Indemnified Person to the extent arising out of or relating to the
ownership or operation of the Business or Assets by Seller or any other person
prior to the Closing Date other than an Assumed Liability, (v) any claim,
liability or obligation arising out of or relating to any Materials of
Environmental Concern existing on, at or under any Asset before the Closing
Date, or otherwise arising from, or in connection with, the conduct of the
Business or the ownership of the Assets by the Seller or any other person prior
to the Closing Date and (vi) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by any Buyer Indemnified
Party in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this Section 8.1.
Seller shall have no obligation to indemnify any Buyer Indemnified Person with
respect to any claim, liability or obligation relating to Real Property found
not to be in compliance with the ADA.
8.2 BUYER INDEMNITY. Buyer agrees to indemnify and hold harmless Seller
and its Affiliates, each of their respective directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "SELLER INDEMNIFIED PERSONS" and each a "SELLER
INDEMNIFIED PERSON") from and against (i) any claim, cost, loss, liability or
damage arising out of or relating to any Assumed Liabilities, (ii) any claim,
cost, loss, liability or damage incurred or sustained by any Seller Indemnified
Person as a result of any misrepresentation or breach of warranty by Buyer or a
breach by Buyer of any covenant or other agreement contained herein, or under
any other agreement executed and delivered by the parties in furtherance of the
transactions described herein, (iii) any claim, cost, loss, liability or damage
arising out of or relating to any governmental or other third party claim or
action against any Seller Indemnified Person to the extent arising out of or
relating to the ownership or operation of the Business or Assets by Buyer or any
other person following the Closing Date, other than any Excluded Liability, (iv)
any claim, liability or obligation arising out of or relating to any Materials
of Environmental Concern existing on, at or under any Asset after the Closing
Date or otherwise arising from, or in connection with, the conduct of the
Business by the Buyer or any other person after the Closing Date, in each case
except for any Excluded Liability set forth in Section 1.5(b)(xi) and (v) all
reasonable costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by any Seller Indemnified Person in connection with any
action, suit, proceeding, demand, assessment or judgment incident to any of the
matters indemnified against in this Section 8.2.
8.3 THIRD PARTY CLAIMS. If a claim by a third party is made against an
indemnified person hereunder, and if such indemnified person intends to seek
indemnity with respect thereto under this Article, such indemnified person shall
promptly notify the indemnifying person in writing of such claims setting forth
such claims in reasonable detail, provided that failure of such indemnified
person to give prompt notice as provided herein shall not relieve the
indemnifying person of any of its obligations hereunder, except to the extent
that the indemnifying person is materially prejudiced by such failure. With
respect to any such claim relating solely to the payment of money damages and
which will not result in the indemnified party's becoming subject to injunctive
or other equitable relief and as to which the indemnifying party shall have
acknowledged in writing its obligation to indemnify the indemnified party
hereunder, the indemnifying person shall have twenty (20) days after receipt of
such notice to undertake,
42
52
through counsel of its own choosing, subject to the reasonable approval of such
indemnified person, and at its own expense, the settlement or defense thereof,
and the indemnified person shall cooperate with it in connection therewith;
provided, however, that the indemnified person may participate in such
settlement or defense through counsel chosen by such indemnified person,
provided that the fees and expenses of such counsel shall be borne by such
indemnified person. If the indemnifying person shall assume the defense of a
claim, it shall not settle or compromise such claim without the prior written
consent of the indemnified person, (i) unless such settlement or compromise
includes as an unconditional term thereof the giving by the claimant of a
release of the indemnified person from all liability with respect to such claim
or (ii) if such settlement or compromise involves the imposition of equitable
remedies or the imposition of any material obligations on such indemnified party
will be indemnified hereunder. If the indemnifying person shall assume the
defense of a claim, the fees of any separate counsel retained by the indemnified
person shall be borne by such indemnified person unless there exists a conflict
between them as to their respective legal defenses (other than one that is of a
monetary nature), in which case the indemnified person shall be entitled to
retain separate counsel, the reasonable fees and expenses of which shall be
reimbursed by the indemnifying person. If the indemnifying person does not
notify the indemnified person within twenty (20) days after the receipt of the
indemnified person's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof and acknowledges its obligation to indemnify the
indemnified person hereunder, or if the claim does not relate solely to the
payment of money damages, the indemnified person shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
8.4 ADDITIONAL AGREEMENTS.
(a) The obligations to indemnify and hold harmless a party
hereto, pursuant to Section 8.1(ii) and 8.2(ii) with respect to any
misrepresentation or breach of warranty shall terminate when the
applicable representation or warranty terminates pursuant to Section
3.3; provided, however, that such obligation to indemnify and hold
harmless shall not terminate with respect to any item as to which the
person to be indemnified shall have, before the expiration of the
applicable period, previously made a claim by delivering a notice
(stating in reasonable detail the basis of such claim) to the
indemnifying party.
(b) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Purchase Price, unless otherwise required by
applicable law.
(c) Whenever any claim for indemnification shall arise under
this Section 8, other than a Third Party Claim as defined in Section
8.3 (each, a "CLAIM"), the party seeking indemnification (the
"INDEMNITEE") shall notify in writing the party from which
indemnification is sought (the "INDEMNITOR") of the Claim within sixty
(60) days after the Indemnitee becomes aware of the Claim's existence,
with such notice to contain the factual basis for the Claim and the
amount or an estimate (if known or reasonably determinable) of the
liability that may arise therefrom, provided that the failure to
provide
43
53
such notice shall not affect the Indemnitor's right to indemnification
hereunder except to the extent that the Indemnitor is actually
prejudiced by such failure.
(d) Anything in this Agreement to the contrary
notwithstanding, Seller shall have no obligation to indemnify Buyer
with respect to any claim arising from or relating to (a) Seller's
breach of the representations and warranties in Section 3.1 hereto or
(b) Seller's breach of its covenants and agreements in Section 4 that
are required to be performed prior to the Closing other than a Tax
Claim, Environmental Claim, Customer Claim or "Section 3.1(v) Claim"
(all of which shall not be subject to this Section 8.1(d)) until such
time as, and to the extent that, all such claims exceed $300,000. A
"CUSTOMER CLAIM" means any claim for indemnification by Buyer in
connection with any liability or obligation (including any contract
back charge) imposed upon Buyer with respect to the matters
contemplated in Section 4.11. A "TAX CLAIM" means any claim under
Section 3.1(w). An "ENVIRONMENTAL CLAIM", means any claim for breach of
representation or warranty under Section 3.1(u). A "SECTION 3.1(V)
CLAIM" means any claim for breach of representation or warranty under
Section 3.1(v).
(e) In the event that Seller has in Buyer's judgment failed or
refused to pay an amount properly demanded by Buyer as due under this
Section 8 within 30 days of Buyer's written demand for indemnification
hereunder, Buyer may, to the extent of the Escrow Amount, satisfy such
claim from the Escrow Amount pursuant to the Escrow Agreement, provided
that the exhaustion or release of the Escrow Amount shall not limit or
otherwise affect any rights of a Buyer Indemnified Person hereunder.
Anything in this Agreement to the contrary notwithstanding, Buyer's
satisfaction of any claim from the Escrow Amount shall not mean Buyer
is entitled to indemnification hereunder and in the event Seller
contests such indemnification claim, following any arbitration judgment
pursuant to Section 9.13 the Buyer will deposit promptly (and in any
event within three business days) with the Escrow Agent (or return to
the Seller if the Escrow Amount has been released) any amount withdrawn
from the Escrow Amount in respect of a claim for which the arbitrator
rules the Buyer was not entitled to indemnification.
SECTION 9. MISCELLANEOUS
9.1 PUBLIC ANNOUNCEMENTS. No news release or other public announcement
pertaining in any way to the transactions contemplated by this Agreement will be
made by any party without the prior written consent of the other parties, unless
in the opinion of counsel to such party (after consultation with counsel to the
other parties) such release or announcement is required by law. Notwithstanding
the foregoing, Buyer shall be entitled (a) to include in any registration
statement filed with the Securities and Exchange Commission such information
relating to the transactions contemplated hereby as the Buyer shall deem
necessary or appropriate and that does not constitute trade secrets or other
than information that could reasonably be expected to have a Material Adverse
Effect which has not previously been disclosed to the public by Seller
("CONFIDENTIAL INFORMATION") and (b) to disclose such information that is not
Confidential Information as it shall deem necessary or appropriate in connection
with the sale or solicitation of offers to purchase any securities being
registered pursuant to any such registration statement. For purposes of any
registration statement filed by Buyer with the Securities and
44
54
Exchange Commission prior to the Closing, Confidential Information shall not be
deemed to include the Financial Statements, any Closing Balance Sheet and such
other information about the Business as Seller agrees does not reveal trade
secrets of the Business.
9.2 EXPENSES. Subject to Section 9.3, whether or not the transactions
contemplated by this Agreement are completed, each of the parties hereto shall
pay the fees and expenses incurred by it in connection with the negotiation,
preparation, execution and performance of this Agreement, including, without
limitation, attorneys' and accountants' fees, and, in no event, shall any such
fees and expenses of Seller constitute Assumed Liabilities under this Agreement.
The foregoing shall not affect the legal right, if any, that any party hereto
may have to recover expenses from any other party that breaches its obligations
hereunder.
9.3 TRANSFER TAXES AND RECORDING EXPENSES. Seller and Buyer shall share
equally all sales, motor vehicle, transfer and similar taxes and recording
expenses, if any, required to be paid in connection with the transfer of the
Assets.
9.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly giver if delivered personally or mailed, first
class mail, postage prepaid, return receipt requested, as follows:
(a) If to Seller:
▇▇▇▇▇▇ Manufacturing Company
BMA Tower, Penn Valley Park
Post Office Box 419917
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Vice President and General Counsel
(b) If to Buyer:
CTB, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone No.:
Telecopy No.:
Attention: General Counsel
with a copy to (which shall not constitute notice to
Buyer):
45
55
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address or to the attention of such other person as any party
shall have specified by notice in writing to the other parties. All such
notices, requests, demands and communications shall be deemed to have been
received on the date of personal delivery or on the third business day after the
mailing thereof.
9.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof including,
without limitation, the letter of intent, dated February 21, 1997, between Buyer
and Seller.
9.6 BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
assigns and any person entitled to indemnification under Section 8.1 or 8.2, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
9.7 BULK SALES LAW. The parties agree to waive compliance with the
provisions of the bulk sales laws of any jurisdiction. Seller agrees to
indemnify and hold harmless Buyer from and against any and all liabilities
(including any liability in respect of Taxes) which may be asserted by third
parties against Buyer as a result of such noncompliance other than the Assumed
Liabilities.
9.8 ASSIGNABILITY. This Agreement shall not be assignable, in whole or
in part, by any party hereto without the prior written consent of the other
party hereto except that Buyer may assign its rights hereunder at any time to
any of its Affiliates without the consent of the Seller, provided that no such
assignment shall relieve the Buyer of its obligations hereunder.
9.9 AMENDMENT; WAIVER. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so waiving. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or agreements
contained herein, or in any documents delivered or to be delivered pursuant to
this Agreement or in connection with the Closing hereunder. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach.
46
56
9.10 SECTION HEADINGS; TABLE OF CONTENTS. The section headings
contained in this Agreement and the Table of Contents to this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
9.11 SEVERABILITY. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.13 ARBITRATION. Any dispute (including without limitation, a dispute
as to the validity of this Agreement or the enforceability of this Section of
this Agreement) arising under or pertaining to this Agreement (including any
subsequent verbal or written modifications thereof, all of which shall
hereinafter in this Section be collectively referred to as the "Agreement"), or
arising with respect to any performance of any of the parties under this
Agreement, whether sounding in tort, contract, violation of statute or
otherwise, shall be settled by arbitration by a single arbitrator pursuant to
the Commercial Arbitration Rules of the American Arbitration Association. Such
arbitration proceeding shall be held in Chicago, Illinois. The arbitrator shall
be required to be an attorney licensed to practice law in Illinois and shall
have been in practice for more than five years. A judgment on the award of the
arbitrator shall be binding on the parties and may be entered in any court of
competent jurisdiction.
9.14 APPLICABLE LAW; JURISDICTION; VENUE. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF INDIANA WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
THEREOF.
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND ANY
RELATED DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION
AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATES
OF INDIANA AND MISSOURI, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE NORTHERN DISTRICT OF INDIANA AND THE WESTERN
DISTRICT OF MISSOURI, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS, AND WAIVES TRIAL BY JURY AND ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
ACTION OR PROCEEDING WAS BROUGHT IN
47
57
AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM
THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION
OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID, TO THE PARTY AT ITS ADDRESS
SET FORTH IN SUBSECTION 9.4 OR AT SUCH OTHER ADDRESS OR TO THE
ATTENTION OF SUCH OTHER PERSON AS ANY PARTY SHALL HAVE
SPECIFIED BY NOTICE IN WRITING TO THE OTHER PARTIES;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER
JURISDICTION; AND
(v) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING REFERRED TO IN PARAGRAPH (i) ABOVE.
9.15 KNOWLEDGE. As used herein, the "knowledge" of a party is deemed to
be the knowledge of any (a) officer or director of the party, (b) officer of the
Grain Systems Division of Seller or (c) manager or other executive of a Party or
of the Grain Systems Division that has compliance responsibility for the matter
in question.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES
▇▇▇▇▇▇ MANUFACTURING COMPANY
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
CTB, INC.
By: /s/ J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: J. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
Title: President & CEO
-------------------------------------
48