ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (the "Agreement"), dated October 16, 1997,
is entered into by and between Astec Industries, Inc., a Tennessee corporation
("Buyer"), and Portec, Inc., a Delaware corporation ("Seller").
WHEREAS, Seller, through its Construction Equipment Division (the
"Division"), manufactures, sells and distributes equipment used in the
construction industry and the environmental remediation industry; and
WHEREAS, Buyer desires to purchase, and Seller desires to sell, those
assets and properties of Seller that constitute a significant portion of the
assets of the Division, for the consideration specified herein and subject to
the assumption by Buyer of certain liabilities and obligations of and relating
to the Division;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
each intending to be legally bound, hereto agree as follows:
ARTICLE 1. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
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1.1 Purchase and Sale of Assets. Subject to the provisions of this
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Agreement, Seller agrees to sell, transfer, convey and assign to Buyer or a
designated subsidiary of Buyer, and Buyer agrees to purchase, accept and acquire
directly or through a designated subsidiary from Seller for the consideration
specified herein, at the Closing (as hereinafter defined) all of Seller's
right, title and interest in and to the assets and properties used by it
exclusively in connection with the business of the Division and owned or
leased by it immediately prior to the time of the Closing, of every kind,
nature and description, real, personal or mixed, tangible or intangible,
wherever located, except for the Excluded Assets described in Section 1.2
(collectively, the "Subject Assets"). Without in any way limiting the
generality of the foregoing, the Subject Assets shall include all of the
assets and properties of Seller reflected on the Division's Balance Sheet
dated as of August 31, 1997 (the "August 31, 1997 Balance Sheet"), plus all
assets and properties relating to the business of the Division that may have
been acquired in the ordinary course of business by Seller subsequent to the
date of the August 31, 1997 Balance Sheet, less all assets and properties
relating to the business of the Division that may have been disposed of in the
ordinary course of business subsequent to the date of the August 31, 1997
Balance Sheet, and shall include all of the following types of assets and
properties held or used by Seller in the conduct of the business of the
Division and owned or leased by it immediately prior to the time of the
Closing:
(a) All notes and accounts receivable, trade accounts, contract
receivables, employee advances and other debts owing to Seller in connection
with the Division;
(b) All machinery and equipment, vehicles, tools, office furniture,
supplies, and all other tangible personal property owned or leased by Seller
and used exclusively in connection with the Division at Seller's Yankton,
South Dakota facility (the "Tangible Personal Property"), including, without
limitation, the Tangible Personal Property set forth on Schedule 1.1(b);
(c) All real property set forth on Schedule 1.1(c), together with the
buildings, structures and other improvements thereon and other interests
therein owned by Seller and used in connection with the Division (the "Real
Estate");
(d) All inventories, including raw materials, work-in-process and
finished goods, and supplies owned by Seller and relating to the Division (the
"Inventories");
(e) All prepaid claims, prepaid taxes and other prepaid expense items
and deferred charges, credits, advance payments, security and other deposits
of Seller relating exclusively to the Division;
(f) To the extent transferable, all of Seller's rights and interests
under all contracts, agreements, leases, mortgages, licenses, unfilled
purchase orders and unfilled sales orders relating exclusively to the
Division, including but not limited to the Significant Contracts (as
hereinafter defined) set forth on Schedule 3.10;
(g) To the extent transferable, all consents, registrations,
approvals, permits, licenses, orders or authorizations issued to Seller by any
governmental or regulatory authority of the United States, the several states
or any foreign jurisdiction and relating exclusively to the Division
("Permits");
(h) All trademarks, trade names, brand names, logos, service marks,
copyrights, designs, inventions, patents, patent applications, patent rights,
licenses, sublicenses, franchises, formulas, processes, product
specifications, research records, trade secrets, technology, know-how and
other proprietary rights and intellectual property owned by Seller or in which
Seller has rights and used by Seller exclusively in connection with the
Division, excluding all trademarks, trade names, brand names, logos, service
marks and other intellectual property which use the name "Portec"
(collectively, the "Intellectual Property");
(i) All the books and records of Seller, including items stored on
magnetic tape or on microfiche, relating exclusively to the Division, and
necessary for the operation of the Division in the ordinary course, including,
without limitation, customer lists and records, sales information, advertising
and marketing materials, supplier records, cost and pricing information,
production data, employment and personnel records and other records; provided,
however, that Buyer shall give Seller access to such records as Seller may
reasonably require from time to time following the Closing Date; and
(j) All the goodwill of Seller relating to the Division except as set
forth in Section 1.2.
1.2 Excluded Assets. The Subject Assets shall not include, and Seller
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shall not be obligated to sell and Buyer shall not be obligated to purchase,
any right, title or interest of Seller in or to the following assets or
properties of and or relating to the Division (collectively, the "Excluded
Assets"):
(a) Subject to the License Agreement described in Section
2.4(a), all right, title and interest in and to any
trademark, trade names, brand names, logos, service marks or
other intellectual property which use the name "Portec", and
all derivatives thereof and all goodwill generated thereby
or associated therewith;
(b) All cash and cash equivalents on hand or in bank accounts;
and
(c) All Seller Refunds (as hereinafter defined) with respect to
Income Taxes (as hereinafter defined) as set forth in
Section 7.6.
1.3 Assumption of Liabilities. Buyer agrees that, from and after the
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Closing, except for the liabilities and obligations of Seller specifically
provided for in Section 1.4 as being retained by Seller, Seller shall not have
any liability or responsibility for any liability or obligation of or arising
out of or relating to the Division, or the ownership or operation by Seller of
the Division, of whatever kind or nature, whether contingent or absolute,
whether arising prior to or on or after, and whether determined or
indeterminable on, the Closing Date, and whether or not specifically referred
to in this Agreement (such liabilities and obligations, except for the
Excluded Liabilities (as hereinafter defined), being collectively referred to
as the "Assumed Liabilities"), including but not limited to the Assumed
Liabilities set forth on Schedule 1.3. Accordingly, Buyer agrees that,
effective upon the Closing, Buyer shall assume and be responsible for any
liability, loss, damage, claim (including third party claims), cost or expense
(including reasonable attorneys' fees and disbursements) incurred or suffered
by Seller arising out of any of the Assumed Liabilities.
1.4 Excluded Liabilities. Buyer shall not assume, pay or discharge
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any of the obligations or liabilities of Seller set forth on Schedule 1.4 (the
"Excluded Liabilities"). Seller shall be responsible for the payment,
performance and discharge of all of the obligations and liabilities set forth
on Schedule 1.4 and shall be responsible for any liability, loss, damage,
claim (including third party claims), cost or expense (including reasonable
attorneys' fees and disbursements) incurred or suffered by Buyer arising out
of any of the Excluded Liabilities.
1.5 Purchase Price. In full consideration of the sale, transfer,
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conveyance and assignment of the Subject Assets to Buyer, Buyer will assume
the Assumed Liabilities as of the Closing and pay to Seller in cash, a
purchase price (the "Purchase Price") in the amount of $25,500,000, subject to
adjustment as set forth in Section 1.7.
1.6 Allocation of Purchase Price. The Purchase Price will be
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allocated among the Subject Assets in the manner set forth in an allocation
schedule mutually agreed to by Buyer and Seller within ninety (90) days after
the Closing Date. Buyer and Seller each hereby agrees that it will not take
any position that varies from or is inconsistent with such allocation in any
filing made by such party for federal, state or local income tax purposes.
1.7 Purchase Price Adjustment.
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(a) Within 10 days after the Closing Date, Seller shall prepare and
deliver to Buyer a closing balance sheet of the Division as of the close of
business on the Closing Date (the "Closing Balance Sheet"). The Closing
Balance Sheet shall fairly present the items listed thereon as of the Closing
Date on a basis consistent with the accounting principles, practices,
procedures and policies that were used in preparing the August 31, 1997
Balance Sheet, except that the Closing Balance Sheet shall reflect (i) a
proper accrual under FAS 106, (ii) a corporate accrual for salaried vacation
and holidays relating to Employees (as hereinafter defined), and (iii) the
results of a physical inventory to be taken by Seller at October 31, 1997
consistent with its past practices, with Buyer and its representatives
entitled to observe such physical inventory and review all ledgers and
supporting information for the financial statements, and have full access to
and the cooperation of Seller's accounting personnel. Buyer shall have a
period of 10 days after delivery of the Closing Balance Sheet to review it and
make any objections it may have in writing to Seller. If no written
objections are made by Buyer within such ten-day period, then the Closing
Balance Sheet shall be final and binding on the parties hereto. If Buyer
delivers written objections to Seller within such ten-day period, then the
parties shall have an additional five business days within which to resolve
any disputed matters. If they are unable to do so, the specific matters in
dispute shall be submitted to a Big Six independent accounting firm (other
than Ernst & Young L.L.P. and Price Waterhouse L.L.P.) as may be approved by
Seller and Buyer, which firm shall render its opinion as to such matters as
expeditiously as possible and in any event within 10 days of submission.
Based on such opinion, such independent accounting firm will then send to
Seller and Buyer its determination on the specified matters in dispute, which
determination shall be final and binding on the parties hereto. The fees and
expenses of such independent accounting firm shall be borne one-half by Seller
and one-half by Buyer.
(b) In the event "Total Proprietary Interest," as shown on the Closing
Balance Sheet, is less than $23,414,502, the Purchase Price shall be reduced
dollar-for-dollar by the amount by which $23,414,502 exceeds "Total
Proprietary Interest," and Seller shall promptly pay the amount of such
difference to Buyer, together with interest thereon from the Closing Date to
the date of such payment at a rate per annum equal to 8%. In the event "Total
Proprietary Interest" exceeds $23,414,502, the Purchase Price shall be
increased dollar-for-dollar by the amount by which $23,414,502 is less than
"Total Proprietary Interest," and Buyer shall promptly pay the amount of such
difference to Seller, together with interest thereon from the Closing Date to
the date of such payment at a rate per annum equal to 8%.
(c) Seller agrees to reduce the Purchase Price in an amount equal to
(i) the average of the accumulated benefit obligation and the projected
benefit obligation, in each case determined for a continuing plan and as
defined for financial statement disclosure purposes under Statement of
Financial Accounting Standards No. 87 as of the Closing Date using actuarial
assumptions to be mutually agreed upon by Seller and Buyer, less (ii) the
assets to be transferred as contemplated in Section 7.2, and less (iii)
$150,000; provided, however, that there shall be no such reduction in the
Purchase Price if the amount computed in the preceding clauses (i), (ii) and
(iii) is less than zero.
ARTICLE 2. THE CLOSING.
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2.1 Time and Place of Closing. The closing of the purchase and sale
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provided for in this Agreement (the "Closing") shall be held at 9:00 A.M.,
local time, on the first business day following the date on which the last of
the conditions set forth in Article 6 shall be fulfilled or waived in
accordance with this Agreement, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place, date or time as
may be fixed by mutual agreement of the parties (the "Closing Date").
2.2 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause
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to be delivered to Seller:
(a) The Purchase Price in immediately available funds by wire transfer
to an account of Seller, subject to the establishment of an escrow under
Section 2.4(b).
(b) An Agreement for Assumption of Liabilities substantially in the
form attached hereto as Exhibit A.
(c) The officer's certificate referred to in Section 6.2.
(d) Such other instruments of assumption and transfer, certificates
and documents, in form and substance satisfactory to counsel for Seller, as
Seller may reasonably request.
2.3 Deliveries by Seller. At the Closing, Seller shall deliver or
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cause to be delivered to Buyer:
(a) An Assignment and ▇▇▇▇ of Sale, substantially in the form attached
hereto as Exhibit B.
(b) The officer's certificate referred to in Section 6.1.
(c) A legal opinion of Seller's counsel in form and substance
reasonably satisfactory to Buyer.
(d) Such other assignments, deeds, conveyances and other instruments
of transfer, certificates and documents including but not limited to title
insurance policies, in form and substance reasonably satisfactory to counsel
for Buyer, as Buyer may reasonably request to effect the sale to Buyer of the
Subject Assets and to convey good title to the same as contemplated by this
Agreement.
(e) A Covenant Not to Compete substantially in the form attached
hereto as Exhibit C.
2.4 Deliveries by Seller and Buyer. At the Closing, Seller and Buyer
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shall deliver:
(a) A License Agreement which Buyer and Seller agree to execute as of
the Closing Date, in form and substance reasonably satisfactory to Buyer and
Seller, by which Seller will grant Buyer a perpetual, royalty-free license to
use certain trademarks, trade names, brand names, logos, service marks and
other intellectual property which use the name "Portec" in connection with the
business of the Division, as identified in the License Agreement.
(b) An Escrow Agreement which Buyer and Seller agree to execute as of
the Closing Date, in form and substance reasonably satisfactory to Buyer and
Seller, by which Seller will establish an escrow in an amount not to exceed
$1,000,000, to be funded by a letter of credit or such other arrangement as
determined by Seller, subject to Buyer's reasonable approval, for the purpose
of securing Seller's obligation under Section 1.7(c).
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
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Seller hereby represents and warrants to Buyer that the following
statements are true and correct as of the date hereof:
3.1 Corporate Organization and Qualification. Seller is a corporation
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duly organized, validly existing and in good standing under the laws of the
State of Delaware and is in good standing as a foreign corporation in each
jurisdiction where the properties owned, leased or operated or the business
conducted by the Division requires such qualification and where failure so to
qualify or be in good standing would have a material adverse effect on the
business or financial condition of the Division (a "Material Adverse Effect").
Seller has the corporate power and authority to carry on its business
substantially as it is now being conducted. Seller has delivered to Buyer a
complete and correct copy of its certificate of incorporation and by-laws, in
each case as amended to date, and such certificate of incorporation and by-
laws are in full force and effect as of the date hereof.
3.2 Corporate Authority. The execution, delivery and performance of
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this Agreement has been duly authorized by the Board of Directors of Seller in
conformity with the requirements of Seller's certificate of incorporation and
by-laws and applicable law. Seller warrants that shareholder approval is not
required as a prerequisite to Seller's having the authority to enter into and
consummate this Agreement. Seller has the requisite corporate power and
authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Seller and
is a valid and binding agreement of Seller, enforceable against Seller in
accordance with its terms, subject to applicable laws relating to bankruptcy,
insolvency, fraudulent transfer, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity.
3.3 No Violation. Subject to compliance with the HSR Act (as defined
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in Section 3.4), the execution and delivery of this Agreement by Seller do
not, and the consummation of the transactions contemplated hereby by Seller
will not, constitute or result in (a) a breach or violation of the certificate
of incorporation or by-laws of Seller, (b) a breach or violation of, or a
default (with or without the giving of notice or the passage of time) under,
or the creation of a lien, pledge, security interest or other encumbrance on
assets pursuant to, any provision of any agreement reflecting obligations of
Seller for borrowed money, or (c) a violation of any law, rule, ordinance or
regulation, or judgment, ruling, order, writ, injunction, or decree, or
governmental or nongovernmental permit or license, applicable to Seller or the
Subject Assets, other than breaches, violations, defaults or encumbrances
which would not have a Material Adverse Effect.
3.4 Governmental Consents. Other than as required under the ▇▇▇▇-
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▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇"), no notices,
reports or other filings are required to be made by Seller with, and no
consents, registrations, approvals, permits, licenses, orders or
authorizations are required to be obtained by Seller from, any governmental or
regulatory authorities of the United States, the several states or any foreign
jurisdiction in connection with the execution and delivery of this Agreement
by Seller and the consummation of the transactions contemplated by this
Agreement.
3.5 Financial Statements. Seller has delivered to Buyer the balance
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sheets of the Division as of August 31, 1997 (a copy of which is set forth in
Schedule 3.5), December 31, 1996 and December 31, 1995 and statements of
income of the Division for the periods then ended (the "Financial
Statements"). The Financial Statements are not separately audited but, in the
case of the December 31 statements, have been prepared in connection with the
preparation of Seller's audited financial statements and, in all cases, in
accordance with generally accepted accounting principles applied consistently
during the periods covered thereby except as set forth therein. Together with
the notes thereto, the Financial Statements present fairly the financial
condition of the Division at the dates of said statements and the results of
its operations for the periods covered thereby.
3.6 Absence of Undisclosed Liabilities. Seller has no material
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liabilities (whether accrued, absolute, contingent or otherwise) with respect
to the Division that exist or arise out of any transaction or state of facts
existing on the date hereof that would be required by generally accepted
accounting principles to be reflected on a balance sheet prepared as of the
date hereof other than (a) liabilities as and to the extent reflected or
reserved against in the August 31, 1997 Balance Sheet or the Financial
Statements (or disclosed in a footnote thereto), (b) liabilities incurred in
the ordinary course of business since the date of the August 31, 1997 Balance
Sheet, (c) liabilities arising under Significant Contracts listed in
Schedule 3.10 or other contracts entered into in the ordinary course of
business but not required to be listed in Schedule 3.10 or (d) liabilities
which individually or in the aggregate do not have a Material Adverse Effect.
3.7 Inventories. Except as set forth on Schedule 3.7, (i) Inventories
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reflected in the Financial Statements have been valued at the lower of cost
(first in, first out method) or market in accordance with generally accepted
accounting principles applied on a consistent basis and (ii) substantially all
of the Inventories (except for items previously written off but remaining in
Seller's manufacturing facilities) are of good quality and saleable or usable
for their intended purposes, conform to applicable specifications, and do not
exceed Seller's normal requirements.
3.8 Taxes. All tax returns, declarations and other reports required
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to be filed by Seller with respect to the Division have been timely filed or a
request for extension has been made, and all taxes shown as due thereon,
together with any applicable interest and penalties, have been paid or
reserved for in the accounting records of the Division except for taxes that
are being contested in good faith and except for unpaid taxes that would not
have a Material Adverse Effect.
3.9 Properties.
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(a) Real Property. Schedule 1.1(c) sets forth a complete and accurate
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list of the Real Estate. Seller has good title, free and clear of all
security interests, mortgages, liens, pledges, encumbrances, easements,
restrictions and other title defects to all of the Real Estate, except (i) as
specifically identified in Schedule 1.1(c) or reflected in the August 31, 1997
Balance Sheet, (ii) liens for taxes or assessments not yet due or being
contested in good faith, (iii) easements for public utilities and (iv) liens
and imperfections of title which do not render title unmarketable or
substantially interfere with the use and enjoyment of the property in the
manner now being used by Seller (collectively, the "Permitted Liens").
(b) Personal Property. Schedule 1.1(b) sets forth a list of
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substantially all of the Tangible Personal Property owned by Seller included
in the Subject Assets. To Seller's knowledge, except for assets that are not
in the aggregate necessary or material to the operation of the business of the
Division, all items of Tangible Personal Property included in the Subject
Assets are in workable condition, normal wear and tear excepted. Seller has
good title, free and clear of all security interests, mortgages, liens,
pledges, encumbrances or other charges, to the Tangible Personal Property
included in the Subject Assets, except for (i) liens which do not
substantially interfere with the use and enjoyment of the property in the
manner now being used by Seller, (ii) liens for taxes or assessments not yet
due or being contested in good faith, (iii) liens which individually or in the
aggregate do not have a Material Adverse Effect, and (iv) property as to which
Seller has a valid leasehold interest.
3.10 Significant Contracts. Schedule 3.10 sets forth a complete and
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accurate list of all contracts and commitments of a material nature under
which Seller is obligated on the date hereof and relating to the Division (the
"Significant Contracts"), including the following:
(a) Each order to or contract with a supplier for the future purchase
of materials, supplies or services which involves the expenditure by Seller of
more than $10,000 or which will not be fully performed within six months after
the date hereof;
(b) Each contract for the sale of products by Seller under which the
undelivered balance of such products has a selling price in excess of $10,000
or under which the date for completing delivery or performance is more than
six months after the date hereof;
(c) Any contract authorizing others to manufacture, sell or distribute
any of the products of Seller;
(d) Any contract under which Seller has granted or is obligated to
grant rights to others to use any trademark, patent, invention, secret process
or know-how of Seller;
(e) Any contract under which Seller manufactures, sells, markets or
distributes products or services for others or is granted rights by others
under any trademark, patent, invention, secret process or know-how;
(f) All consulting arrangements, and contracts for professional,
advisory, and other services, including contracts under which Seller performs
services for others;
(g) All leases of real estate or personal property with annual rentals
of greater than $10,000 or a remaining term in excess of one year, except for
leases which can be canceled by the Division within 60 days without liability;
(h) All contracts relating to the employment, engagement, compensation
or termination of officers or employees of the Division and all pension,
retirement, profit sharing, stock option, stock purchase, stock appreciation,
insurance or similar plans or arrangements for the benefit of any officers or
employees of the Division, including all benefit plans described in
Section 3.14;
(i) All loans, loan commitments, letters of credit or other financial
accommodations, arrangements or evidences of indebtedness, including
modifications or amendments thereof, extended to or for the benefit of Seller;
(j) Each other material contract to which Seller is a party or under
which it is obligated, whether or not made in the usual or ordinary course of
business, and which either contemplates the expenditure by Seller of more than
$10,000 or calls for the performance by Seller of obligations which will not
be fully performed within six months after the date hereof;
(k) All contracts containing covenants of Seller with respect to the
business of the Division not to compete in any line of business or with any
person in any geographical area; and
(l) Each other contract made other than in the ordinary course of
business of the Division to which Seller is a party or under which Seller is
obligated.
3.11 No Defaults. Seller has fulfilled or taken all action reasonably
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necessary to date to enable it to fulfill when due, all material obligations
under all of the Significant Contracts, and there have not occurred any
defaults or other events which with the lapse of time or election of any other
party, will become defaults under such Significant Contracts.
3.12 Compliance with Laws. To the knowledge of Seller, the Division
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conducts business in compliance in all material respects with all applicable
laws, regulations and requirements of each jurisdiction in which the business
of the Division is carried on, except where the failure to comply therewith,
individually or in the aggregate, does not have a Material Adverse Effect.
Except as set forth in Schedule 3.12, Seller has all Permits necessary for the
operation of the Division as presently conducted, except where the absence
thereof, individually or in the aggregate, does not have a Material Adverse
Effect.
3.13 Litigation. Except as set forth on Schedule 3.13, there is no
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claim, action, suit or proceeding pending or, to the knowledge of Seller,
threatened against Seller which, individually or in the aggregate, or in the
future, insofar as can reasonably be foreseen, will have, a Material Adverse
Effect or which would prevent, delay or hinder the consummation of the
transactions contemplated by this Agreement.
3.14 Employee Benefits. (a) For purposes of this Agreement, the
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following capitalized terms have the meanings set forth below:
(i) "Employee" means any individual who, on the Closing Date, is
employed by Seller in the Division in any active or inactive status, and whose
current employment in the Division has not been terminated and, if applicable,
any beneficiary thereof.
(ii) "Former Employee" means any individual employed or formerly
employed in the Division by Seller and whose employment has been terminated
prior to the Closing Date and if applicable, any beneficiary thereof.
(iii) "Division Benefit Arrangement" means any employment, severance or
similar contract, arrangement or policy, or any plan or arrangement providing
for severance benefits, insurance coverage (including any self-insured
arrangements), worker's compensation, disability benefits, supplemental
unemployment benefits, vacation or holiday benefits, pension or retirement
benefits, deferred compensation, profit sharing, bonuses, stock options, stock
appreciation rights, fringe benefits or other forms of compensation or any
post-retirement or post-employment benefits that (i) is not a Division
Employee Plan, (ii) is entered into or maintained, as the case may be, by
Seller or any of its affiliates, and (iii) covers any Employee or Former
Employee.
(iv) "Division Employee Plan" means any employee pension benefit plan,
as defined in Section 3(3) of ERISA, that (i) is subject to any provision of
ERISA, (ii) is administered, maintained or contributed to by Seller and (iii)
covers any Employee or Former Employee.
(b) Schedule 3.14 identifies each Division Employee Plan and each
Division Benefit Arrangement. Each such Division Employee Plan and Division
Benefit Arrangement has been maintained in compliance, in all material
respects, with its terms and with the requirements prescribed by any
applicable statutes and regulations. There are no actions, suits,
arbitrations or other proceedings pending (other than routine claims for
benefits) with respect to any Division Employee Plan or Division Benefit
Arrangement.
3.15 Environmental Protection. (a) Except as set forth in Schedule
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3.15, to the knowledge of Seller, the Division has obtained all required
Permits with respect to the Division under any Environmental Laws, and the
Division is in material compliance with all terms and conditions of all
required Permits. Seller makes no representation or warranty as to the
compliance of the business of the Division with Environmental Laws after the
Closing, as to the nature, extent or cost of any cleanup or other remedial
action that may be required in connection with any notifications and
violations, if any, disclosed in Schedule 3.15, or as to the availability to
Buyer of Permits under Environmental Laws having the same terms and conditions
as those held by Seller in connection with the Division.
(b) With respect to certain real estate in Minnesota on which Seller
currently holds two mortgage notes (which are included in the Subject Assets),
Seller represents that all known environmental clean-up obligations have been
fulfilled and that there are no known additional clean-up obligations
pertaining to that real estate.
(c) As used in this Agreement, the term "Environmental Laws" means all
federal, state and local laws and regulations, court and administrative
orders, permits and approvals relating to environmental protection and
pollution control, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, ("CERCLA"), the
Resource Conversation and Recovery Act ("RCRA"), the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act of 1986, and the Safe Drinking Water Act.
3.16 Labor Matters. The Division is in compliance in all material
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respects with all applicable laws relating to the employment of labor,
including those relating to wages, hours, the withholding and payment of taxes
and contributions, safety and civil rights. The Division has not at any time
in the last five years had any walkout, labor strike, dispute, slowdown or
stoppage and, to the knowledge of Seller, no such walkout, labor strike,
dispute, slowdown or stoppage is threatened. There are no collective
bargaining agreements in effect covering any employees of the Division.
3.17 Intellectual Property. Schedule 3.17 sets forth a complete and
---------------------
correct list of the Intellectual Property. Except as set forth in Schedule
3.17, Seller owns the entire right, title and interest in and to the same and
has not entered into any license or similar agreements authorizing its use by
others. No director, officer, shareholder or employee of Seller owns,
directly or indirectly in whole or in part, any patent, trademark, trade name,
service ▇▇▇▇, copyright or application therefor which is being used in or is
necessary to the conduct of the business of the Division. Neither the
validity of any such item nor the use thereof by Seller is the subject of any
litigation, nor has Seller received notice that any such litigation is
threatened. To the knowledge of Seller, the conduct of the business of the
Division as currently operated does not conflict with the valid patent,
trademark or copyright rights of others in any way that materially and
adversely affects or, insofar as reasonably can be foreseen, will materially
and adversely affect the Division, and Seller has not received any written
notification that any such conflict has been asserted by any third party.
3.18 Absence of Material Changes. Since August 31, 1997, the Division
---------------------------
has been operated only in the ordinary course of business and Seller has not
and prior to the Closing Date shall not have:
(a) Except as contemplated by this Agreement, transferred, assigned,
conveyed, or liquidated any of the Subject Assets or its interest in the
Division, except in the ordinary course of its business;
(b) Suffered any change in its business, operations, or financial
condition which may have a Material Adverse Effect, or become aware of any
event which may result in any such Material Adverse Effect;
(c) Suffered any material destruction, damage, or loss relating to the
Subject Assets or the Division whether or not covered by insurance;
(d) Suffered, permitted, or incurred the imposition of any lien,
charge, encumbrance (including any mortgage, deed of trust, conveyance to
secure debt, or security interest) or claim upon any of the Subject Assets or
the Division except in the ordinary course of business, except for any current
year lien with respect to personal or real property taxes not yet due and
payable and except for materialmen's and workmen's liens securing obligations
for which Seller is not in default;
(e) Committed, suffered, permitted or incurred any default in any
liability or obligation which, in the aggregate, have had or will have a
Material Adverse Effect;
(f) Made or agreed to any change in the terms of any contract or
instrument to which it is a party which is likely to have a Material Adverse
Effect;
(g) Waived, cancelled, sold, or otherwise disposed of, for less than
its face amount, any claim or right relating to the Subject Assets or the
Division which it has against others, except for routine settlements or
resolutions of disputed customer or supplier accounts, none of which
individually or in the aggregate is material to the Division;
(h) Paid, agreed to pay, or incurred any obligation for any payment,
contribution or other amount to, or with respect to, any benefit plan, or paid
a bonus to, or granted an increase in the compensation of, any of Seller's
officers, agents, or employees who are employed in the Division, or made any
increase in the pension, retirement, or other benefits of Seller's officers,
agents, field representatives, or other employees of the Division, except for
normal accruals under benefit plans and normal compensation adjustments in
accordance with past practices of the Division;
(i) Incurred any other material liability or obligation, or entered
into any material transaction on behalf of the Division, other than in the
ordinary course of business;
(j) Received any written notice, or have actual knowledge, that any
supplier or customer of the Division has taken, or contemplates taking, any
steps which could result in the material diminution in the value of the
Division as a going concern;
(k) Incurred any strike or work stoppage which had, or will have, a
Material Adverse Effect;
(l) Made any purchase commitments, except for purchase commitments in
the ordinary course of business and consistent with the historical purchase
commitment practices of the Division; or
(m) Except as otherwise set forth in Schedule 3.13, there is no suit,
action, proceeding, claim, or investigation pending or, to the knowledge of
Seller, threatened against, or affecting, the Subject Assets or the Division.
3.19 Brokers and Finders' Fee. Seller has not employed any broker or
------------------------
finder or incurred any liability for brokerage fees, commissions or finders'
fees in connection with the transactions contemplated herein, except for
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., the fees and expenses of which will be paid by
Seller.
3.20 Complete Rights. The Subject Assets include all assets and
---------------
properties, and all rights, used for the conduct of the business of the
Division and are sufficient to permit Buyer to conduct the business of the
Division as heretofore conducted by Seller, in each case other than the
Excluded Assets.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
--------- ---------------------------------------
Buyer hereby represents and warrants to Seller that the following
statements are true and correct as of the date hereof:
4.1 Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the State
of Tennessee. Buyer has the corporate power and authority to carry on its
business substantially as it is now being conducted. Buyer has delivered to
Seller a complete and correct copy of Buyer's articles of incorporation and
by-laws, in each case as amended to date, and such articles of incorporation
and by-laws are in full force and effect as of the date hereof.
4.2 Corporate Authority. The execution, delivery and performance of
-------------------
this Agreement has been duly authorized by the Board of Directors of Buyer in
conformity with the requirements of Buyer's articles of incorporation and by-
laws and applicable law. Buyer has the requisite corporate power and
authority, and has taken all corporate action necessary, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Buyer and
is a valid and binding agreement of Buyer, enforceable against Buyer in
accordance with its terms, subject to applicable laws relating to bankruptcy,
insolvency, fraudulent transfer, moratorium or other similar laws affecting
creditors' rights generally and to general principles of equity.
4.3 No Violation. Subject to obtaining any required consents referred
------------
to in Section 4.4, the execution and delivery of this Agreement by Buyer do
not, and the consummation of the transactions contemplated hereby by Buyer
will not, constitute or result in (a) a breach or violation of the articles of
incorporation or by-laws of Buyer or (b) a breach or violation of, or a
default (with or without the giving of notice or the passage of time) under,
or the creation of a lien, pledge, security interest or other encumbrance on
assets pursuant to, any provision of any agreement affecting obligations of
Buyer for borrowed money, or (c) a violation of any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or
nongovernmental permit or license applicable to Buyer, other than breaches,
violations, defaults or encumbrances which would not prevent, delay or hinder
the consummation of the transactions contemplated by this Agreement.
4.4 Governmental Consents. Other than as required under the HSR Act,
---------------------
no notices, reports or other filings are required to be made by Buyer with,
and no consents, registrations, approvals, permits, licenses, orders or
authorizations are required to be obtained by Buyer from, any governmental or
regulatory authorities of the United States, the several states or any foreign
jurisdiction in connection with the execution and delivery of this Agreement
by Buyer and the consummation of the transactions contemplated by this
Agreement.
4.5 Litigation. There is no claim, action, suit or proceeding pending
----------
or, to the knowledge of Buyer, threatened against Buyer which would or may
prevent, delay or hinder the consummation of the transactions contemplated by
this Agreement.
4.6 Commitment for Funds. Buyer has financial resources or financing
--------------------
commitments from investors or financial institutions, sufficient to enable
Buyer to pay the Purchase Price at the Closing.
4.7 Finders' Fee. Buyer has not employed any broker or finder or
------------
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated herein.
ARTICLE 5. AGREEMENTS PRIOR TO THE CLOSING.
--------- -------------------------------
The parties hereto covenant and agree as follows:
5.1 Actions Pending Closing. Except as otherwise contemplated by this
-----------------------
Agreement and as Buyer may otherwise consent, pending the Closing:
(a) Seller shall conduct and carry on the business of the Division in
the ordinary course consistent with past practice;
(b) Seller shall use reasonable efforts to preserve the Subject Assets
and the Division's relationships with employees, customers, suppliers and
others having business relationships with the Division;
(c) Seller shall not sell, lease, mortgage, pledge or otherwise
acquire or dispose of any material amount of assets or properties used in
connection with the Division except in the ordinary course of business;
(d) Except as may be required by the Significant Contracts listed on
Schedule 3.10 and except for increases or changes in the ordinary course of
business consistent with past practice, Seller shall not increase or otherwise
change the rate or nature of the compensation (including, without limitation,
wages, salaries, bonuses and other benefits) paid or payable to any employee
of the Division;
(e) Seller shall not enter into, or become obligated under, any
contract, agreement, commitment, arrangement or plan with respect to the
Division except in the ordinary course of business or as contemplated by this
Agreement;
(f) Except for changes occurring through performance in the ordinary
course of business, Seller shall not change, amend, terminate or otherwise
modify any of the Significant Contracts listed in Schedule 3.10; and
(g) Seller shall use reasonable efforts to maintain in full force and
effect policies of insurance of the same type, character and coverage as the
policies of insurance relating to the Division in effect on the date of this
Agreement and shall give Buyer prompt written notice of any and all changes
that may occur between the date hereof and the Closing Date with respect to
the insurance coverages thereunder, provided that Seller shall not be
obligated to maintain any insurance with respect to the Subject Assets or the
Division after the Closing.
5.2 Access and Rights of Inspection. Buyer and its counsel,
-------------------------------
accountants and other representatives shall have reasonable access, during
normal business hours and so as not to interfere with the business operations
of Seller, to all properties, contracts, books and records used in or relating
to the Division. Seller will furnish Buyer copies of such documents relating
to the Division as Buyer may reasonably request from time to time prior to the
Closing.
5.3 Confidentiality. All data and information received by Buyer in
---------------
connection with this transaction shall be held in strict confidence by Buyer,
and, unless and until the transactions contemplated by this Agreement shall
have been consummated, Buyer shall not use such data or information or
disclose the same to others (other than counsel, accountants and other
representatives of Buyer engaged in connection with this transaction, who
shall be subject to the provisions of this Section 5.3), except with the
written permission of Seller; provided, however, that the foregoing
restrictions shall not apply to any such information (a) that is or becomes in
the public domain by publication or otherwise through no action of Buyer or
any of its officers, agents, representatives or employees, (b) that was known
to Buyer at the time of disclosure thereof, (c) that is rightfully obtained
by Buyer from a third party that has the legal right to disclose such
information, or (d) that Buyer is required by any legal process or proceeding
to disclose. In the event that this Agreement is terminated, Buyer shall
return to Seller, at Seller's request, all data and information received by
Buyer, including copies thereof, and Buyer shall continue to maintain the
confidentiality of all such information.
5.4 HSR Act. Promptly after the execution of this Agreement, Buyer
-------
and Seller shall file their respective notification forms under the HSR Act
with respect to the purchase and sale of the Subject Assets and shall
thereafter make any other required submissions under the HSR Act in connection
therewith.
5.5 Fulfillment of Conditions. Each party hereto shall use its
-------------------------
reasonable best efforts to take or cause to be taken all actions reasonably
necessary or appropriate to cause the conditions set forth in Article 6 to be
satisfied at or prior to Closing.
5.6 Notice. Buyer and Seller shall each promptly notify the other of
------
any material occurrence, event or other change which would cause the
representations and warranties made herein by either party to be untrue,
incomplete or incorrect or if either party receives notice or reason to
believe that the agreements to be performed hereunder prior to the Closing
shall not be fully performed.
ARTICLE 6. CONDITIONS.
--------- ----------
6.1 Conditions to the Obligations of Buyer. The obligations of Buyer
--------------------------------------
to consummate the transactions contemplated by this Agreement are subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Representations and Warranties True; Covenants Performed. Each of
--------------------------------------------------------
the representations and warranties of Seller set forth in this Agreement shall
be true and correct in all material respects as of the Closing Date as if
repeated as of the Closing Date. All actions to be taken or performed
hereunder by Seller or its agents at or prior to the Closing Date shall have
been fully performed in all material respects.
(b) Certificate. Buyer shall have received a certificate dated the
-----------
Closing Date signed by the President or any Vice President of Seller stating
that:
(i) the representations and warranties of Seller made herein are
true and correct in all material respects as of the Closing Date; and
(ii) Seller has performed in all material respects all agreements
required to be performed by it at or prior to the Closing Date.
(c) Consents. Seller shall have made any and all filings and
--------
registrations, and received any and all material consents, approvals, waivers,
permits and authorizations, required to be made or obtained by it in
connection with the transactions contemplated by this Agreement (including
under the HSR Act), and all such consents, approvals, waivers, permits and
authorizations shall be in full force and effect.
(d) Consents to Assignments. Written consents and releases of liens,
-----------------------
in form and substance satisfactory to counsel for Buyer, to the assignment of
such of the contracts and other assets included in the Subject Assets and to
release all liens thereon, as counsel for Buyer shall deem reasonably appro-
priate, shall have been received.
(e) Litigation. No suit or other action shall have been instituted by
----------
any third party before any court or threatened seeking to restrain, prohibit
or obtain substantial damages in connection with the transactions contemplated
by this Agreement.
(f) Estimated Accrual. Within 30 days prior to the Closing Date,
-----------------
Seller shall deliver to Buyer an estimated accrual under FAS 106 as of
December 31, 1997.
6.2 Conditions to the Obligations of Seller. The obligations of
---------------------------------------
Seller to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or at the Closing, of the following
conditions precedent:
(a) Representations and Warranties True; Covenants Performed. Each of
--------------------------------------------------------
the representations and warranties of Buyer set forth in this Agreement shall
be true and correct in all material respects as of the Closing Date as if
repeated as of the Closing Date. All agreements to be performed hereunder by
Buyer at or prior to the Closing Date shall have been fully performed in all
material respects.
(b) Certificate. Seller shall have received a certificate dated the
-----------
Closing Date signed by the President or any Vice President of Buyer stating
that:
(i) the representations and warranties of Buyer made herein are
true and correct in all material respects as of the Closing Date; and
(ii) Buyer has performed in all material respects all agreements
required to be performed by it at or prior to the Closing Date.
(c) Consents. Buyer shall have made any and all filings and
--------
registrations, and received any and all material consents, approvals, waivers,
permits and authorizations, required to be made or obtained by it in
connection with the transactions contemplated by this Agreement (including
under the HSR Act), and all such consents, approvals, waivers, permits and
authorizations shall be in full force and effect.
(d) Litigation. No suit or other action shall have been instituted by
----------
any third party before any court or threatened seeking to restrain, prohibit
or obtain substantial damages in connection with the transactions contemplated
by this Agreement.
ARTICLE 7. ADDITIONAL AGREEMENTS.
--------- ---------------------
7.1 Further Assurance; Nonassignable Contracts. From time to time
------------------------------------------
after the Closing, at the request of Buyer and without further consideration,
Seller shall execute and deliver such further instruments of transfer and
assignment (in addition to those delivered under Section 2.3) and take such
other action as Buyer may reasonably request to more effectively transfer and
assign to, and vest in or license to, Buyer each of the Subject Assets. From
time to time after the Closing, at the request of Seller and without
compensation, Buyer shall execute and deliver such further instruments of
assumption (in addition to those delivered under Section 2.2) and take such
other action as Seller may reasonably request to more effectively evidence
and assure Buyer's assumption of the Assumed Liabilities. In the event that
the assignment of any lease, contract or other written instrument included in
the Subject Assets shall require the consent of other parties thereto, this
Agreement shall not constitute a contract for the assignment thereof to the
extent that an attempted assignment would constitute a breach thereof;
however, Seller shall use all reasonable efforts before the Closing, if
possible, and after the Closing, as needed, to obtain any necessary consents
or waivers to assure Buyer of the benefits of any such lease, contract, or
instrument and shall hold for the benefit of Buyer, to the extent consented to
by Buyer, any lease, contract or instrument that may not be assigned to Buyer.
7.2 Employees and Employee Benefits. (a) Buyer agrees to offer
-------------------------------
employment effective upon the Closing to all employees of Seller employed by
Seller in connection with the Division immediately prior to the Closing upon
terms and conditions of employment substantially equivalent to those provided
by Seller immediately prior to the Closing. Buyer further agrees not to take
any action, from the date hereof through 60 days after the Closing that could
be construed as a "plant closing" or a "mass layoff," as those terms are
defined in the Worker Adjustment and Retraining Notification Act, 29 U.S.C.
Section Section 2101-2109 (the "WARN Act"). In the event of an employment
action by Buyer upon or following the Closing for which notice is required
under the WARN Act, Buyer agrees to indemnify and hold Seller harmless with
respect to any liabilities, assessments, penalties, costs and/or attorneys'
fees incurred by Seller as a result of any failure, or alleged failure, to
provide notice as may be required under said Act. In the event that Buyer
terminates the employment of any former employee of Seller employed by Buyer
after the Closing, Buyer shall have sole responsibility for providing any
applicable unemployment compensation and severance benefits. This Section 7.2
is not intended to be a guarantee of employment to any person, and the
employees of the Division shall not be entitled to enforce this Section as
third party beneficiaries.
(b) Retirement Plan. Certain Employees and Former Employees
---------------
participate in the Portec, Inc. Employees' Retirement Program, a qualified
defined benefit pension plan (the "Retirement Plan"). Seller shall cause the
appropriate assets and liabilities of the Retirement Plan attributable to such
Employees and Former Employees to be transferred from the Retirement Plan to a
qualified defined benefit pension plan to be established by Buyer or any of
its affiliates ("Buyer's Retirement Plan"), as more fully described in this
Section 7.2. Buyer's Retirement Plan shall comply with applicable
requirements of the Internal Revenue Code of 1986, as amended (the "Code"),
and regulations issued thereunder. Buyer shall apply for a favorable
determination from the Internal Revenue Service ("IRS") stating that the
Buyer's Retirement Plan meets such requirements. Buyer shall take all actions
necessary to secure such favorable determination, including any revisions to
Buyer's Retirement Plan required by the IRS as a condition to the issuance of
such favorable determination. Buyer shall provide Seller with a copy of such
favorable determination immediately upon receipt thereof. Buyer represents
and warrants that Buyer's Retirement Plan will be maintained in compliance in
all material respects with its terms, and with the requirements prescribed in
any applicable statutes, orders, rules and regulations, including, but not
limited to, ERISA and the Code. Buyer's Retirement Plan will provide that (i)
such Employees' and Former Employees' accrued benefits under the Retirement
Plan as of the Closing Date will be transferred to and credited under Buyer's
Retirement Plan, and (ii) such Employees' and Former Employees' periods of
vesting service and eligibility service under the Retirement Plan as of the
Closing Date will be credited for purposes of determining vesting and
eligibility under Buyer's Retirement Plan; provided however, that credited
service under the Retirement Plan prior to the Closing Date will not be
credited for purposes of determining benefit accruals on and after the Closing
Date under Buyer's Retirement Plan. Buyer's Retirement Plan shall, as of the
Closing Date, provide, with respect to service with Seller and its affiliates
before the Closing Date, benefits, rights and features that are identical in
all material respects to those provided by the Retirement Plan to such
Employees and Former Employees as of the Closing Date. Buyer's Retirement
Plan shall, as of the Closing Date provide, with respect to service with Buyer
and its affiliates after the Closing Date, such Employees and Former Employees
who participate in the Retirement Plan with either (i) benefits that are
identical in all material respects to those provided by the Retirement Plan to
the Employees and Former Employees as of the Closing Date, or (ii) benefits on
the same terms as those applicable to similarly situated employees of Buyer
and its affiliates who participate in Buyer's Retirement Plan. Subject to the
preceding provisions of this paragraph, Buyer shall retain the right to
terminate or amend Buyer's Retirement Plan at any time after the Closing Date
as it pertains to the Employees and Former Employees, in Buyer's sole
discretion.
Assets of the Retirement Plan shall be allocated as of the Closing Date
in two portions-(1) those to be retained in the Retirement Plan, and (2) those
attributable to such Employees and Former Employees and to be transferred to
the Buyer's Retirement Plan. Such allocation shall be performed in accordance
with the provisions of Section 414(l) of the Code and the regulations issued
thereunder. The Retirement Plan's actuaries will make all necessary
calculations for determining such allocation of assets of the Retirement Plan,
in accordance with the actuarial assumptions used by the Pension Benefit
Guaranty Corporation ("PBGC") for purposes of valuing annuities of trustee
plans, as set forth in section 4044.52(a)(1-4) of current PBGC regulations
issued under section 4044 of ERISA. In addition, the Retirement Plan's
actuaries will provide Seller (at Seller's expense) with an actuarial
statement drawn up in accordance with Internal Revenue Service regulations
issued under Section 414(l) of the Code, to be filed with Internal Revenue
Service Form 5310-A, and the underlying information necessary to prepare the
statement. Upon receiving this information from the Retirement Plan's
actuaries, Seller shall immediately deliver to Buyer for its review a copy of
the actuarial statement and such underlying information. Buyer shall have 14
days to notify Seller in writing of any objections regarding such
determination of the allocation of Retirement Plan assets. If Buyer does not
timely notify Seller of any objections, the calculations shall be final and
binding on all parties. If Buyer timely notifies Seller of any objections
resulting from Buyer's review of the statement by the Retirement Plan's
actuaries, which Buyer and Seller cannot resolve within 30 days of the date
Buyer notifies Seller of such objections, Seller and Buyer shall appoint an
actuarial firm satisfactory to both parties (the cost of which shall be shared
equally by Seller and Buyer) to resolve such objections, which resolution
shall be final and binding on all parties. As soon as practicable following
the Closing Date, but not prior to the date on which (i) Buyer and Seller
reach agreement on the amount to be transferred, (ii) Buyer has provided all
documentation required by the trustee of the Retirement Plan and (iii) the
aforementioned favorable IRS determination is received with respect to Buyer's
Retirement Plan, Seller shall cause assets of the Retirement Plan attributable
to such Employees and Former Employees, as determined above, plus interest at
the actual rate of return on the investment of the Retirement Plan assets from
the first day of the month coinciding with or next following the Closing Date
to the last day of the month preceding the asset transfer date, and interest
at the actual rate of return for the month preceding the asset transfer date
from the last day of the month preceding the asset transfer date to the asset
transfer date. Until the assets of the Retirement Plan are transferred to
Buyer's Retirement Plan, Seller will continue to process distributions
required to be made to Employees and Former Employees under the Retirement
Plan on and after the Closing Date in accordance with its terms and
procedures; furthermore, the Retirement Plan asset amount to be transferred to
the Buyer's Retirement Plan described in the preceding sentence shall be
adjusted to account for all such distributions following the Closing Date and
prior to the date of transfer.
(c) Savings Plan.
------------
(i) Certain Employees and Former Employees participate in the Portec,
Inc. Savings and Investment Plan ("Savings Plan"), a qualified 401(k) defined
contribution plan. Seller shall cause the assets and liabilities of the
Savings Plan attributable to such Employees and Former Employees to be
transferred from the Savings Plan to a qualified 401(k) plan maintained by
Buyer or any of its affiliates which complies with applicable requirements of
the Code and regulations issued thereunder, and has received a favorable
determination from the Internal Revenue Service stating that the plan meets
such requirements ("Buyer's Savings Plan"). Buyer represents and warrants
that Buyer's Savings Plan has been maintained in compliance in all material
respects with its terms and with the requirements prescribed in any applicable
statutes, orders, rules and regulations, including but not limited to ERISA
and the Code. Buyer's Savings Plan shall provide that such Employees' and
Former Employees' periods of service credited under the Savings Plan as of the
Closing Date will be transferred to and credited for all purposes under
Buyer's Savings Plan. With respect to all amounts transferred to Buyer's
Savings Plan, and investments earnings credited thereto, Buyer's Savings Plan
shall at the Closing Date provide loans, withdrawals and distributions on
terms that are similar in all material respects to those provided by the
Savings Plan to the Employees and Former Employees as of the Closing Date.
With respect to service after the Closing Date, Buyer's Savings Plan shall at
the Closing Date provide coverage to said Employees and Former Employees on
the same terms as those applicable to similarly situated employees of Buyer
who participate in Buyer's Saving Plan. Subject to the preceding provisions
of this paragraph, Buyer shall retain the right to terminate or amend Buyer's
Savings Plan at any time after the Closing Date as it pertains to the
Employees and Former Employees, in Buyer's sole discretion.
(ii) The assets and liabilities of the Savings Plan to be conveyed to
Buyer's Savings Plan shall be the total of all account balances of said
Employees and Former Employees under the Savings Plan calculated as of the
valuation date next following the Closing Date (the "Savings Plan Transfer
Date"). Such account balances shall reflect all contributions earned under
the Savings Plan by said Employees and Former Employees as of the Closing
Date. Such assets and liabilities of the Savings Plan, plus or minus
estimated investment returns from the Savings Plan Transfer Date to the date
such assets and liabilities are actually conveyed, shall be conveyed in cash
to Buyer's Savings Plan as soon as practicable following the Savings Plan
Transfer Date, but no later than the last day of the month following the month
in which the Closing Date occurs. The estimated investment returns shall be
based on procedures to be mutually agreed upon by Seller and Buyer. Until the
assets of the Savings Plan are transferred to Buyer's Savings Plan, Seller
will continue to process distributions, withdrawals and loan repayments
required to be made to or by Employees and Former Employees under the Savings
Plan on and after the Closing Date in accordance with its terms and
procedures.
(d) Welfare Benefit Plans. Certain Employees and Former Employees and
---------------------
their dependents are covered by welfare benefit plans maintained by Seller or
its affiliates providing medical, dental, life insurance, long term
disability, short term disability, accidental death and dismemberment and
severance benefits ("Seller's Welfare Benefit Plans"). Such Employees and
Former Employees and their dependents shall be entitled to benefits under
Seller's Welfare Benefit Plans with respect to claims made thereunder on or
before the Closing Date. Effective as of the Closing Date, Buyer shall
provide welfare benefits to Employees and Former Employees and their
dependents under welfare benefit plans maintained by Buyer ("Buyer's Welfare
Benefit Plans"). Buyer's Welfare Benefit Plans shall provide Employees and
Former Employees and their dependents with welfare benefits that are
substantially similar to those, from time to time, provided to similarly
situated employees and former employees of Buyer and its affiliates and their
dependents. Buyer shall waive any pre-existing condition exclusions for
conditions existing on the Closing Date, and actively-at-work requirements for
periods ending on the Closing Date contained in Buyer's Welfare Benefit Plans
as they apply to Employees and Former Employees and their dependents. Any
expenses incurred on or before the Closing Date by an Employee or Former
Employee, or his dependent, under Seller's Welfare Benefit Plans, shall be
taken into account for purposes of satisfying applicable deductible, co-
insurance and maximum out-of-pocket provisions under Buyer's Welfare Benefit
Plans.
(e) Service. Each of Buyer's employee benefit plans shall recognize
-------
service of Employees with Seller and its affiliates, and their respective
predecessors, prior to the Closing Date, for all purposes for which such
service was recognized under any Division Employee Plan; provided, however, an
Employee's service with Seller shall not be recognized for the purpose of
determining any benefit accruals under any defined benefit plan of Buyer.
7.3 Collection of Receivables. After the Closing, Buyer shall have
-------------------------
the right and authority to collect all receivables and other items transferred
and assigned to it by Seller hereunder and to deliver to Seller for immediate
endorsement any checks payable to Seller that are received on account of such
receivables or other items, and Seller agrees that it will promptly transfer
or deliver to Buyer from time to time any cash or other property that Seller
may receive with respect to any claims, contracts, licenses, leases, commit-
ments, sales orders, purchase orders, receivables of any character or any
other items included in the Subject Assets required to be transferred by it to
Buyer pursuant to the provisions hereof. Payments received from customers of
the Division having unpaid invoices as of the Closing shall be applied to such
invoices in the order they were issued, unless otherwise specified by the
customer.
7.4 Bulk Sales Laws. Buyer and Seller agree to waive compliance by
---------------
Seller with the obligations imposed on vendors under any applicable bulk sales
laws applicable to the transactions contemplated by this Agreement.
7.5 Cooperation. After the Closing, each of Buyer and Seller, at its
-----------
own cost, shall make available to the other (and to the other's representa-
tives), and shall give the other (and the other's representatives) access to,
all personnel and all facilities included in the Subject Assets reasonably
required by the other in connection with contesting any claim or obligation
retained by Seller as an Excluded Liability or contesting any claim or
obligation transferred to Buyer as an Assumed Liability.
7.6 Tax Matters.
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(a) Seller shall be responsible for (i) all federal, state, local and
foreign income taxes and franchise taxes which are based on net income, and
any interest or penalties thereon ("Income Taxes"), of the Division with
respect to tax periods or portions of periods ending before the Closing Date
and (ii) except to the extent provided in Section 7.6.
(b) Seller will include in 1997 income tax returns the results of
operations of the Division from January 1, 1997 through the close of business
on the day prior to the Closing Date, and Seller shall bear any income tax
liability associated therewith. Buyer and Seller agree to furnish or cause to
be furnished to each other such other assistance as may be reasonably
requested by the other in connection with income tax matters, including, but
not limited to, any audit or any other proceeding relating to the
determination of any tax liabilities.
(c) Any refunds or credits of Income Taxes (including any interest
thereon) received by or credited to the Seller related to the Division
attributable to periods or portions of periods ending prior to the Closing
Date (including any interest thereof) received by or credited to Seller
("Seller's Refunds"), shall be for the benefit of Seller, and Seller shall
have the sole right, at its expense, to pursue any Seller's Refunds (including
filing amended returns and applying for analogous relief) and Buyer shall pay
over to Seller any Seller's Refunds immediately upon receipt thereof.
7.7 Confidential Information. Following the Closing, Seller shall
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hold in strict confidence, and not use for the benefit of Seller all
confidential information relating exclusively to the Division, including, but
not limited to trade secrets, customer lists, operational methods, marketing
plans or strategies, product development techniques or plans, equipment
design, methods of manufacture, technical processes, designs and design
projects, inventions and research projects and other business affairs relating
to the Division; provided, however, that the foregoing restrictions shall not
apply to any such information (a) that is or becomes in the public domain by
publication or otherwise through no action of Seller or any of its officers,
agents, representatives or employees, (b) that is rightfully obtained by
Seller from a third party that has the legal right to disclosure of such
information, or (c) that Seller is required by any legal process or proceeding
to disclose.
ARTICLE 8. TERMINATION OF AGREEMENT.
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8.1 Termination. At any time prior to the Closing, this Agreement may
-----------
be terminated (a) by mutual consent of the parties, (b) by either party if
there has been a material misrepresentation, breach of warranty or breach of
covenant by the other party in its representations, warranties and covenants
set forth herein that cannot be cured in all material respects on or prior to
the anticipated Closing Date, (c) by Buyer if the conditions stated in Section
6.1 have not been satisfied at or prior to the Closing Date, (d) by Seller if
the conditions stated in Section 6.2 have not been satisfied at or prior to
the Closing Date, or (e) by Buyer or Seller if the Closing has not occurred by
December 31, 1997, provided that the delay is not caused by the willful action
of the terminating party.
8.2 Effect of Termination. If this Agreement shall be terminated
---------------------
pursuant to Section 8.1, all obligations of the parties hereunder (except the
obligations set forth in Sections 5.3, 8.2 and 9.1) shall terminate. If such
termination shall result from the willful failure of a party to perform a
condition or covenant of this Agreement or from a willful breach by either
party to this Agreement, such party shall be liable for any and all costs and
expenses (including but not limited to reasonable attorneys' fees) incurred by
the other party.
ARTICLE 9. MISCELLANEOUS.
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9.1 Fees and Expenses. Except as provided in Section 9.2, each of the
-----------------
parties will bear its own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement.
9.2 Special Taxes. The transfer, sales and other taxes, if any, re-
-------------
quired to be paid in connection with the sale, transfer, conveyance, and
assignment of any of the Subject Assets pursuant hereto shall be borne equally
by Buyer and Seller.
9.3 Amendment. This Agreement may be modified, amended and
---------
supplemented only by mutual written agreement of the parties hereto at any
time prior to the Closing.
9.4 Waiver. Any party may waive any condition intended to be for its
------
benefit, provided each such waiver shall be in writing signed by the waiving
party or parties.
9.5 Correspondence. Seller authorizes and empowers Buyer after the
--------------
Closing: (i) to open all mail and other communications addressed to the
Division which are received by Buyer and (ii) to deal with the contents of
such communications in a proper manner. Seller will promptly deliver to Buyer
the original of any mail or other communication received by Seller pertaining
to the operation of the Division after the Closing Date or the Subject Assets
and any monies, checks or other instruments of payment to which Buyer is
entitled. Buyer will promptly deliver to Seller the original of any mail or
other communication received by Buyer pertaining to the operation of the
Division prior to the Closing Date.
9.6 Governing Law. This Agreement shall be construed under and
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governed by the laws of the State of Illinois, without giving effect to the
principles of conflicts of laws thereof.
9.7 Notices. All notices, requests, demands and other communications
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in connection with this Agreement shall be made in writing addressed as
follows:
To Seller:
---------
Portec, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and CEO
Copy to:
-------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
To Buyer:
--------
Astec Industries, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Copy to:
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Telsmith, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Each notice, request, demand and other communication shall be effective and
deemed to have been received (i) if given by mail, the earlier of actual
receipt or 72 hours after such communication is deposited in the mails with
registered first class postage prepaid, addressed as aforesaid, (ii) if given
by an overnight courier service of national recognition, the business day
following the business day of deposit with such service, together with a
proper air ▇▇▇▇ affixed, addressed as aforesaid and shipping charges prepaid
or prearranged, or (iii) if given by any other means, when delivered to the
aforesaid address. Either party may change the address to which notices are
to be delivered to it by giving written notice of such other address to the
other party.
9.8 Non-survival of Representations, Warranties, Covenants and
----------------------------------------------------------
Agreements. None of the representations, warranties, covenants and agreements
of this Agreement or any instrument delivered pursuant to this Agreement shall
survive the Closing Date except for the agreements contained in Article 1,
Section 5.3, Article 7 and Article 9. The sole remedy of either party in
connection with any breach or any inaccuracy of any representation or warranty
contained in Articles 3 and 4 hereof shall be to terminate this Agreement
without further liability or obligation prior to the Closing.
9.9 Entire Agreement. This Agreement, including the Exhibits and
----------------
Schedules hereto, constitutes the entire agreement of the parties with respect
to the subject matter hereof and supersedes all prior promises,
representations, understandings, warranties and agreements, whether written or
oral, with reference to the subject matter hereof, except for the
Confidentiality Agreement between the parties dated July 15, 1997, which shall
remain in full force and effect. The invalidity or unenforceability of any
provision herein shall not affect the enforceability of any other provision
hereof. Unless otherwise defined in the Exhibits or Schedules, all
capitalized terms in the Exhibits and Schedules are defined as set forth in
the Agreement.
9.10 Assignability. This Agreement shall be binding upon, and shall
-------------
inure to the benefit of the parties hereto and their respective successors.
This Agreement may not be assigned by Buyer or Seller without the prior
written consent of the other party.
9.11 Publicity and Disclosures. Each party hereto shall furnish to the
-------------------------
other advance copies of any press releases that it proposes to make concerning
the transactions contemplated hereby and shall not disclose the terms of this
Agreement without the prior consent of the other party, except for disclosures
required under federal or state securities laws.
9.12 Headings. The headings of the Articles and Sections of this
--------
Agreement have been inserted for the convenience of reference only and shall
not be deemed to explain, limit or amplify or affect the interpretation of any
of the provisions of this Agreement.
9.13 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
PORTEC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President And CEO
ASTEC INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Secretary
LIST OF EXHIBITS AND SCHEDULES TO THE
ASSET PURCHASE AGREEMENT BETWEEN ASTEC INDUSTRIES, INC.
AND PORTEC, INC.
DATED OCTOBER 16, 1997
----------------------
EXHIBITS
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A. Agreement for Assumption of Liabilities
B. Assignment and ▇▇▇▇ of Sale
C. Covenant Not to Compete
SCHEDULES
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1.1 (b) Tangible Personal Property
1.1 (c) Real Estate and Permitted Liens
1.3 Assumed Liabilities
1.4 Excluded Liabilities
3.5 Financial Statements
3.7 Inventories
3.10 Significant Contracts
3.12 Compliance with Laws
3.13 Litigation
3.14 Employee Benefit Plans
3.15 Environmental Matters
3.17 Intellectual Property