ASSET PURCHASE AGREEMENT
XXXXXX CO., INC.
Buyer
XXXXX MACHINE CO., INC.
Company
June 14, 1997
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . 1
1.1. Assets to be Transferred . . . . . . . . . . . . . . . 1
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . 4
2.1. Liabilities to be Assumed . . . . . . . . . . . . . . . 4
2.2. Liabilities Not to be Assumed . . . . . . . . . . . . . 5
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . 7
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . 7
3.2. Payment of Purchase Price . . . . . . . . . . . . . . . 7
3.3. Determination of Net Working Capital . . . . . . . . . 9
3.4. Prorations . . . . . . . . . . . . . . . . . . . . . . 11
3.5. Other Payments and Adjustments . . . . . . . . . . . . 12
3.6. Intentionally Left Blank . . . . . . . . . . . . . . . 13
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS . . 13
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . 14
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . 14
4.4. Financial Statements . . . . . . . . . . . . . . . . . 14
4.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . 15
4.6. Accounts Receivable . . . . . . . . . . . . . . . . . . 16
4.7. Inventory . . . . . . . . . . . . . . . . . . . . . . . 16
4.8. Absence of Certain Changes . . . . . . . . . . . . . . 17
4.9. Absence of Undisclosed Liabilities . . . . . . . . . . 18
4.10. No Litigation . . . . . . . . . . . . . . . . . . . . . 18
4.11. Compliance With Laws and Orders . . . . . . . . . . . . 18
4.12. Title to and Condition of Properties . . . . . . . . . 20
4.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . 22
4.14. Contracts and Commitments . . . . . . . . . . . . . . . 23
4.15. Labor Matters . . . . . . . . . . . . . . . . . . . . . 24
4.16. Employee Benefit Plans . . . . . . . . . . . . . . . . 25
4.17. Employment Compensation . . . . . . . . . . . . . . . . 29
4.18. Trade Rights . . . . . . . . . . . . . . . . . . . . . 29
4.19. Major Customers and Suppliers . . . . . . . . . . . . . 29
4.20. Product Warranty and Product Liability . . . . . . . . 30
4.21. Affiliates' Relationships to Company . . . . . . . . . 31
4.22. Shareholder List . . . . . . . . . . . . . . . . . . . 31
4.23. Assets Necessary to Business . . . . . . . . . . . . . 31
4.24. No Brokers or Finders . . . . . . . . . . . . . . . . . 31
4.25. Disclosure . . . . . . . . . . . . . . . . . . . . . . 31
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 32
5.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . 32
5.2. Authority . . . . . . . . . . . . . . . . . . . . . . . 32
5.3. No Brokers or Finders . . . . . . . . . . . . . . . . . 32
5.4. Disclosure . . . . . . . . . . . . . . . . . . . . . . 32
5.5. Financial Statements . . . . . . . . . . . . . . . . . 32
6. EMPLOYEES - EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . 33
6.1. Affected Employees . . . . . . . . . . . . . . . . . . 33
6.2. Retained Responsibilities . . . . . . . . . . . . . . . 33
6.3. Payroll Tax . . . . . . . . . . . . . . . . . . . . . . 33
6.4. Termination Benefits . . . . . . . . . . . . . . . . . 33
6.5. Employee Benefit Plans . . . . . . . . . . . . . . . . 33
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 35
7.1. Title Insurance . . . . . . . . . . . . . . . . . . . . 35
7.2. Surveys . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3. Environmental Audits . . . . . . . . . . . . . . . . . 35
7.4. Escrow Agreement . . . . . . . . . . . . . . . . . . . 35
7.5. Consulting and Noncompetition Agreements . . . . . . . 35
7.6. Noncompetition . . . . . . . . . . . . . . . . . . . . 36
7.7. Confidential Information . . . . . . . . . . . . . . . 37
7.8. Intentionally Left Blank . . . . . . . . . . . . . . . 37
7.9. Intentionally Left Blank . . . . . . . . . . . . . . . 37
7.10. Intentionally Left Blank . . . . . . . . . . . . . . . 37
7.11. Use of Company's Name . . . . . . . . . . . . . . . . . 37
7.12. Sales Tax Matters . . . . . . . . . . . . . . . . . . . 37
7.13. Unemployment Compensation . . . . . . . . . . . . . . . 38
8. FURTHER COVENANTS OF COMPANY AND SHAREHOLDERS . . . . . . . . 38
8.1. Access to Information and Records . . . . . . . . . . . 38
8.2. Intentionally Left Blank . . . . . . . . . . . . . . . 38
8.3. Conduct of Business Pending the Closing . . . . . . . . 38
8.4. Change of Corporate Name . . . . . . . . . . . . . . . 39
8.5. Consents . . . . . . . . . . . . . . . . . . . . . . . 39
8.6. Other Action . . . . . . . . . . . . . . . . . . . . . 40
8.7. Disclosure . . . . . . . . . . . . . . . . . . . . . . 40
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . 40
9.1. Representations and Warranties True on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.2. Compliance With Agreement . . . . . . . . . . . . . . . 40
9.3. Absence of Litigation . . . . . . . . . . . . . . . . . 40
9.4. Consents and Approvals . . . . . . . . . . . . . . . . 40
9.5. Title Insurance . . . . . . . . . . . . . . . . . . . . 41
9.6. Estoppel Certificates . . . . . . . . . . . . . . . . . 41
9.7. Intentionally Left Blank . . . . . . . . . . . . . . . 41
9.8. Section 1445 Affidavit . . . . . . . . . . . . . . . . 41
9.9. Environmental Audit . . . . . . . . . . . . . . . . . . 41
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . . 41
10.1. Representations and Warranties True on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2. Compliance With Agreement . . . . . . . . . . . . . . . 42
10.3. Absence of Litigation . . . . . . . . . . . . . . . . . 42
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 42
11.1. By Company and Shareholders . . . . . . . . . . . . . . 42
11.2. By Buyer . . . . . . . . . . . . . . . . . . . . . . . 43
11.3. Indemnification of Third-Party Claims . . . . . . . . . 43
11.4. Payment . . . . . . . . . . . . . . . . . . . . . . . . 44
11.5. Indemnification for Environmental Matters . . . . . . . 45
11.6. Limitations on Indemnification . . . . . . . . . . . . 45
11.7. No Waiver . . . . . . . . . . . . . . . . . . . . . . . 46
12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.1. Documents to be Delivered by Company and
Shareholders . . . . . . . . . . . . . . . . . . . . . . 46
12.2. Documents to be Delivered by Buyer . . . . . . . . . . 47
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.1. Right of Termination Without Breach . . . . . . . . . . 48
13.2. Termination for Breach . . . . . . . . . . . . . . . . 49
14. INTENTIONALLY LEFT BLANK . . . . . . . . . . . . . . . . . . . 50
15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 50
15.1. Disclosure Schedule . . . . . . . . . . . . . . . . . . 50
15.2. Further Assurance . . . . . . . . . . . . . . . . . . . 50
15.3. Disclosures and Announcements . . . . . . . . . . . . . 50
15.4. Assignment; Parties in Interest . . . . . . . . . . . . 50
15.5. Equitable Relief . . . . . . . . . . . . . . . . . . . 50
15.6. Law Governing Agreement . . . . . . . . . . . . . . . . 51
15.7. Amendment and Modification . . . . . . . . . . . . . . 51
15.8. Notice . . . . . . . . . . . . . . . . . . . . . . . . 51
15.9. Expenses . . . . . . . . . . . . . . . . . . . . . . . 52
15.10. Entire Agreement . . . . . . . . . . . . . . . . . . . 53
15.11. Counterparts . . . . . . . . . . . . . . . . . . . . . 53
15.12. Headings . . . . . . . . . . . . . . . . . . . . . . . 53
15.13. Glossary of Terms . . . . . . . . . . . . . . . . . . . 53
Disclosure Schedule
Schedule 1.1.(a) - Owned Real Property
Schedule 1.1.(b) - Leased Real Property
Schedule 1.1.(e) - Personal Property Leases
Schedule 1.1.(g)(i) - Contracts
Schedule 1.1.(g)(ii) - Purchase Orders
Schedule 1.1.(g)(iii) - Sales Orders
Schedule 4.1.(c) - Foreign Corporation Qualification
Schedule 4.3 - Violation, Conflict, Default
Schedule 4.4 - Business Financial Statements
Schedule 4.5.(b) - Tax Returns
Schedule 4.5.(c) - Tax Audits
Schedule 4.5.(d) - Consolidated Group
Schedule 4.5.(e) - Other
Schedule 4.6 - Accounts Receivable (Aged Schedule)
Schedule 4.7 - Inventory Off Premises
Schedule 4.8 - Certain Changes
Schedule 4.9 - Off-Balance Sheet Liabilities
Schedule 4.10 - Litigation Matters
Schedule 4.11.(a) - Non-Compliance with Laws
Schedule 4.11.(b) - Licenses and Permits
Schedule 4.11.(c) - Environmental Matters (Exceptions to
Representations)
Schedule 4.12.(a)(i) - Pre-Closing Liens
Schedule 4.12.(a)(ii) - Post-Closing Liens
Schedule 4.12.(b) - Asset Condition
Schedule 4.12.(c) - Underground Storage Tanks
Schedule 4.13 - Insurance
Schedule 4.14.(g) - Collective Bargaining Agreements
Schedule 4.14.(h) - Loans
Schedule 4.14.(i) - Guarantees
Schedule 4.14.(k) - Burdensome or Restrictive Agreements
Schedule 4.14.(l) - Material Contracts
Schedule 4.15 - Labor Matters
Schedule 4.16.(a) - Employee Plans/Agreements
Schedule 4.16.(g) - Post-Retirement Benefits
Schedule 4.17 - Employment Compensation
Schedule 4.18 - Trade Rights
Schedule 4.19.(a) - Major Customers
Schedule 4.19.(b) - Major Suppliers
Schedule 4.19.(c) - Dealers and Distributors
Schedule 4.20 - Product Warranty, Warranty Expense and
Liability Claims
Schedule 4.21.(a) - Contracts with Affiliates
Schedule 4.21.(c) - Obligations
Schedule 4.22 - Shareholder List
Exhibit Schedule
Exhibit 3.2.(d) - Note
Exhibit 5.5 - Buyer's Financial Statements
Exhibit 7.4 - Escrow Agreement
Exhibit 7.5 - Consulting and Noncompetition Agreement
Exhibit 12.1.(c) - Opinion of Company Counsel
Exhibit 12.2.(d) - Opinion of Buyer's Counsel
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated June ___,
1997, by and among Xxxxxx Co., Inc., a Wisconsin corporation ("Buyer"),
and Xxxxx Machine Co., Inc., a Connecticut corporation ("Company") and F.
Xxxxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx (individually "Shareholder" and
together the "Shareholders").
RECITALS
A. Company is engaged in the manufacturing and selling of
machined components for the jet engine industry (the "Business").
Shareholders own eighty-six percent (86%) of the issued and outstanding
capital stock of Company and will deliver the consent of the third party
owning the remainder of the issued and outstanding capital stock of the
Company.
B. Company's facilities consist of a plant and office
located at 00 Xxxxxx Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx (the
"Facilities").
C. Buyer desires to purchase from Company, Company desires
to sell to Buyer, and the Shareholders desire to cause Company to sell to
Buyer the Business and substantially all of the property and assets of
Company.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Assets to be Transferred. Subject to the terms and
conditions of this Agreement, on the Closing Date (as hereinafter defined)
Company shall, and Shareholders shall cause Company to, sell, transfer,
convey, assign, and deliver to Buyer (or upon Buyer's request, to one or
more wholly-owned subsidiaries of Buyer as designated by Buyer), and Buyer
shall purchase and accept all of the business, rights, claims and assets
(of every kind, nature, character and description, whether real, personal
or mixed, whether tangible or intangible, whether accrued, contingent or
otherwise, and wherever situated) of Company, together with all rights and
privileges associated with such assets and with the business of the
Company, other than the Excluded Assets (as hereinafter defined)
(collectively the "Purchased Assets"). The Purchased Assets shall
include, but not be limited to, the following:
1.1.(a) Owned Real Property. All of the real property,
including fixtures, buildings, improvements, and all appurtenant
rights owned by Company, including the real property described on
Schedule 1.1.(a) (the "Owned Real Property").
1.1.(b) Leased Real Property. All of the leases of real
property with respect to real property leased by Company, including
the leases (the "Real Property Leases") described on Schedule
1.1.(b) with respect to the real property described thereon (the
"Leased Real Property").
1.1.(c) Personal Property. All machinery, equipment,
vehicles, supplies, spare parts, furniture and all other personal
property (other than personal property leased pursuant to Personal
Property Leases as hereinafter defined) owned, utilized or held for
use by Company on the Closing Date.
1.1.(d) Inventory. All inventories of raw materials,
work-in-process and finished goods (including all such in transit),
tooling and service and repair parts, supplies and components held
for resale by Company on the Closing Date, together with related
packaging materials (collectively the "Inventory").
1.1.(e) Personal Property Leases. All leases of machinery,
equipment, vehicles, furniture and other personal property leased
by Company except for leases of property for the use of the
Shareholders, including all such leases (the "Personal Property
Leases") described in Schedule 1.1.(e) .
1.1.(f) Trade Rights. All the Company's interest in any
Trade Rights. As used herein, the term "Trade Rights" shall mean
and include: (i) all trademark rights, business identifiers, trade
dress, service marks, trade names, and brand names; (ii) all
copyrights and all other rights associated therewith and the
underlying works of authorship; (iii) all patents and all
proprietary rights associated therewith; (iv) all contracts or
agreements granting any right, title, license or privilege under
the intellectual property rights of any third party; (v) all
inventions, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other
types of intellectual property; and (vi) all registrations of any
of the foregoing, all applications therefor, all goodwill
associated with any of the foregoing, and all claims for
infringement or breach thereof.
1.1.(g) Contracts. All the Company's rights in, to and
under all contracts ("Contracts") purchase orders ("Purchase
Orders") and sales orders ("Sales Orders") described in Schedules
1.1.(g)(i), 1.1.(g)(ii) and 1.1.(g)(iii) of the Disclosure
Schedule, respectively, as well as every Purchase Order or Sales
Order entered into by Company after the date of this Agreement in
the ordinary course of business and in accordance with past
practice to the extent that such Contracts, Purchase Orders and
Sales Orders individually exceed One Thousand Dollars ($1,000) or
in the aggregate exceed Twenty-Five Thousand Dollars ($25,000). At
the Closing, Company shall update the Disclosure Schedule to
include all Contracts, Purchase Orders and Sales Orders entered
into by the Company after the date of this Agreement in the
ordinary course of business which involve consideration or other
expenditures in each case by Company in excess of Fifty Thousand
and 00/100 Dollars ($50,000) or performance over a period of more
than twelve (12) months from the date of the Contract, Purchase
Order or Sales Order. Prior to Closing, Buyer shall have the
opportunity to review the updated Disclosure Schedule and should
Buyer elect not to assume any Contract, Purchase Order or Sales
Order disclosed thereon, Buyer may terminate this Agreement without
incurring any liability pursuant to Section 13 of this Agreement.
1.1.(h) Computer Software. All computer source and object
codes, programs and other software owned or licensed by Company,
including all machine readable code, printed listings of code,
documentation and related property and information of Company.
1.1.(i) Literature. All sales literature, promotional
literature, catalogs and similar materials of Company.
1.1.(j) Records and Files. All records and files of Company
of every kind including, without limitation, invoices, customer and
vendor lists, blueprints, specifications, designs, drawings, and
operating and marketing plans, and all other documents, tapes,
discs, programs or other embodiments of information of Company.
1.1.(k) Notes and Accounts Receivable. All notes, drafts
and accounts receivable of Company, except for those described in
Section 1.2.(e) hereof.
1.1.(l) Licenses; Permits. All licenses, permits,
approvals, certifications and listings of Company.
1.1.(m) Corporate Name. The name "Xxxxx Machine Co., Inc.,"
and all rights to use or allow others to use such name.
1.1.(n) General Intangibles. All prepaid items, all causes
of action arising out of occurrences before or after the Closing,
and other intangible rights and assets.
1.2. Excluded Assets. The provisions of Section 1.1
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer will not purchase or accept the following
assets of Company (collectively the "Excluded Assets"):
1.2.(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than xxxxx cash balances at Company's various
places of business.
1.2.(b) Consideration. The consideration delivered by Buyer
to Company pursuant to this Agreement.
1.2.(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and
associated returns and records. Buyer shall have reasonable access
to such returns and records and may make excerpts therefrom and
copies thereof.
1.2.(d) Corporate Franchise. Company's franchise to be a
corporation, its certificate of incorporation, corporate seal,
stock books, minute books and other corporate records having
exclusively to do with the corporate organization and
capitalization of Company. Buyer shall have reasonable access to
such books and records and may make excerpts therefrom and copies
thereof.
1.2.(e) Obligations of Affiliates. Notes, drafts, accounts
receivable or other obligations for the payment of money, made or
owed by any Affiliate of Company. For purposes of this Agreement,
the term "Affiliate" shall mean and include all shareholders,
directors and officers of Company; the spouse of any such person;
any person who would be the heir or descendant of any such person
if he or she were not living; and any entity in which any of the
foregoing has a direct or indirect interest (except through
ownership of less than 5% of the outstanding shares of any entity
whose securities are listed on a national securities exchange or
traded in the national over-the-counter market).
1.2.(f) Insurance Refund. Unearned premiums on policies of
insurance purchased by Company before the Closing Date providing
such unearned premiums are not used in determining Net Working
Capital under Article 3 hereof.
1.2.(g) Health Insurance Trust Account. Any balance in
Company's health insurance trust account, providing said balance is
not used in determining Net Working Capital under Article 3 hereof,
and Company and Shareholders apply said balance to the retained
responsibilities in Section 6.2 prior to utilizing the balance for
any other purpose.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall assume and agree to perform and discharge the
following, and only the following Liabilities of Company (collectively the
"Assumed Liabilities"):
2.1.(a) Closing Business Balance Sheet Liabilities. The
accounts payable and accrued Liabilities reflected or reserved
against on the Closing Business Balance Sheet (as hereinafter
defined), but only in the amounts so reflected or reserved.
2.1.(b) Contractual Liabilities. Company's Liabilities
arising from and after the Closing Date under and pursuant to the
following:
(i) The Real Property Leases described on
Schedule 1.1.(b) of the Disclosure Schedule.
(ii) The Personal Property Leases described on
Schedule 1.1.(e) of the Disclosure Schedule.
(iii) The Contracts described on Schedule
1.1.(g)(i) of the Disclosure Schedule.
(iv) The unfilled Purchase Orders described on
Schedule 1.1.(g)(ii).
(v) The unfilled Sales Orders described on
Schedule 1.1.(g)(iii).
(vi) Every other Purchase Order or Sales Order
constituting a Purchased Asset under Section 1.1.(g).
The Real Property Leases, Personal Property Leases, Contracts,
Purchase Orders and Sales Orders described in this Section 2.1.(b)
are hereinafter collectively described as the "Assumed Contracts."
2.1.(c) Liabilities Under Permits and Licenses. Company's
Liabilities arising from and after the Closing Date under any
permits or licenses listed in Schedule 4.11.(b) and assigned to
Buyer at the Closing.
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1, Buyer is not assuming any
Liabilities of Company and all such Liabilities shall be and remain the
responsibility of Company. Notwithstanding the provisions of Section 2.1,
Buyer is not assuming and Company shall not be deemed to have transferred
to Buyer the following Liabilities of Company:
2.2.(a) Certain Contracts. The Liabilities of Company under
and pursuant to the following contracts and leases:
(i) Any and all institutional financing
obligations or Liabilities of the Company which exist at the
time of the Closing.
(ii) Any and all Liabilities of the Company to the
Shareholders.
(iii) Any obligation or Liability of the Company
with respect to wages or benefits for the Shareholders or to
any third party on behalf of the Shareholders except as set
forth in the Consulting and Noncompetition Agreements attached
hereto as Exhibits 7.5.
2.2.(b) Taxes Arising from Transaction. Any taxes
applicable to, imposed upon or arising out of the sale or transfer
of the Purchased Assets to Buyer and the other transactions
contemplated by this Agreement, including but not limited to any
income, transfer, sales, use (except for use taxes associated with
relicensing Company automobiles, gross receipts or documentary
stamp taxes.
2.2.(c) Income and Franchise Taxes. Any Liability of
Company for Federal income taxes and any state or local income,
profit or franchise taxes (and any penalties or interest due on
account thereof).
2.2.(d) Insured Claims. Any Liability of Company insured
against, to the extent such Liability is or will be paid by an
insurer.
2.2.(e) Product Liability. Any Liability of Company arising
out of or in any way relating to or resulting from any product
manufactured, assembled or sold prior to the Closing Date
(including any Liability of Company for claims made for injury to
person, damage to property or other damage, whether made in product
liability, tort, breach of warranty or otherwise), except only that
Buyer is assuming Company's Liabilities under and pursuant to
Company's standard written product warranty on products currently
produced by the Company as set forth in Schedule 4.20, to the
extent of the reserve carried on the Closing Business Balance
Sheet. Provided further, that with respect to product liability
claim arising under this Section 2.2.(e) to the extent Buyer can
repair or replace the defective product Buyer shall do so on behalf
of Company and Company and Shareholders shall reimburse Buyer for
the cost and expenses associated with said repair or replacement.
2.2.(f) Litigation Matters. Any Liability with respect to
any action, suit, proceeding, arbitration, investigation or
inquiry, whether civil, criminal or administrative ("Litigation")
brought prior to the Closing Date or arising from events occurring
prior to the Closing Date, whether or not described in Schedule
4.10.
2.2.(g) Infringements. Any Liability to a third party for
infringement of such third party's Trade Rights.
2.2.(h) Transaction Expenses. All Liabilities incurred by
Company in connection with this Agreement and the transactions
contemplated herein.
2.2.(i) Liability For Breach. Liabilities of Company for
any breach or failure to perform any of Company's covenants and
agreements contained in, or made pursuant to, this Agreement, or,
prior to the Closing, any other contract, whether or not assumed
hereunder, including breach arising from assignment of contracts
hereunder without consent of third parties.
2.2.(j) Liabilities to Affiliates. Liabilities of Company
to its present or former Affiliates.
2.2.(k) Violation of Laws or Orders. Liabilities of Company
for any violation of or failure to comply with any statute, law,
ordinance, rule or regulation (collectively, "Laws") or any order,
writ, injunction, judgment, plan or decree (collectively, "Orders")
of any court, arbitrator, department, commission, board, bureau,
agency, authority, instrumentality or other body, whether federal,
state, municipal, foreign or other (collectively, "Government
Entities").
2.2.(l) Xxxxxxx Contract. Any contractual liability of
Company to its employee Xxxxxxx X. Xxxxxxx.
2.2.(m) Uninsured Health Claims. Uninsured health claims
incurred prior to the Closing Date, whether submitted or not, which
arose prior to the Closing Date will be paid by the Company and
will not be reflected on the Closing Business Balance Sheet.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price")
for the Purchased Assets shall be (i) the assumption of the Assumed
Liabilities, and (ii) Nine Million Five Hundred Thousand Dollars
($9,500,000.00).
3.2. Payment of Purchase Price. The Purchase Price shall be paid
by Buyer as follows:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Escrow Agent. At the Closing, Buyer shall
deliver to the Escrow Agent, under the Escrow Agreement (as defined
in Section 7.4), the sum of One Hundred Thousand Dollars
($100,000.00) plus the excess of the cash and cash equivalents on
hand at the Company on the Closing Date over One Hundred Fifty
Thousand Dollars ($150,000.00) (collectively the "Escrow Funds").
The Escrow Funds are held to guarantee Company's portion of any
post closing adjustment pursuant to Section 3.2.(e) of this
Agreement.
3.2.(c) Cash to Company. At the Closing, Buyer shall
deliver to Company Eight Million Five Hundred Thousand Dollars
($8,500,000.00), less the amount paid to the Escrow Agent pursuant
to Subsection 3.2.(b) above.
3.2.(d) Note to Company. At the Closing, Buyer shall
deliver to the Company a promissory note (the "Note") in the amount
of One Million Dollars ($1,000,000.00). The Note shall have a
three-year term and will bear interest at the rate of 7% per annum,
calculated on a 365-day year. Interest payments shall be made
quarterly beginning ninety days after the closing. The principal
of the Note shall be repaid in three installments on the first
three anniversaries of the Closing. The first installment shall be
in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00).
The second and third installments shall each be in the amount of
Three Hundred Seventy-Five Thousand Dollars ($375,000.00). The
Note shall be in the form of Exhibit 3.2.(d) hereto.
3.2.(e) Adjustment of Cash Purchase Price on Settlement
Date. On or before the fifth business day following the final
determination of the Closing Business Balance Sheet (as hereinafter
defined) (such date being hereinafter referred to as the
"Settlement Date"):
(i) either (A) Company shall pay to Buyer the
amount, if any, by which Net Working Capital on the Recent
Business Balance Sheet (as hereinafter defined) exceeds Net
Working Capital on the Closing Business Balance Sheet (as
hereinafter defined), or (B) Buyer shall pay to Company the
amount, if any, by which Net Working Capital on the Closing
Business Balance Sheet exceeds Net Working Capital on the
Recent Business Balance Sheet, in each case together with
interest from the Closing Date to the date of payment at the
rate of seven percent (7%) per annum from the Closing Date.
(ii) Company shall pay to Buyer, or Buyer shall
pay to Company, as the case may be, an amount equal to the net
of any reconciliation of the prorations as provided in Section
3.4 below.
3.2.(f) Method of Payment. All payments under this Section
3.2 shall be made in the form of certified or bank cashier's check
payable to the order of the recipient or, at the recipient's
option, by wire transfer of immediately available funds to an
account designated by the recipient not less than 48 hours prior to
the time for payment specified herein. The first payments made by
Company pursuant to Section 3.2.(e)(i)(A) shall be from the Escrow
Funds.
3.3. Determination of Net Working Capital.
3.3.(a) Definition of Net Working Capital. The term "Net
Working Capital" shall mean the dollar amount by which the net book
value of the Purchased Assets constituting accounts and notes
receivable, prepaid expenses and inventory exceeds the net book
value of the Assumed Liabilities constituting accounts payable and
accrued expenses, as reflected in the Recent Business Balance Sheet
or Closing Business Balance Sheet, as applicable.
3.3.(b) Closing Business Balance Sheet. The balance sheet
of Company prepared as of the Closing Date shall be prepared as
follows:
(i) Within 45 days after the Closing Date, Buyer
shall deliver to Company a balance sheet of Company as of the
Closing Date (the "Closing Business Balance Sheet"), prepared
in accordance with generally accepted accounting principles
from the books and records of Company, on a basis consistent
with the generally accepted accounting principles theretofore
followed by Company in the preparation of the Recent Business
Balance Sheet as of December 31, 1996 ("Recent Business
Balance Sheet") and in accordance with this Section 3.3, and
fairly presenting the financial position of Company as of the
Closing Date. The Closing Business Balance Sheet shall be
accompanied by detailed schedules of the Purchased Assets and
Assumed Liabilities and by a report (1) setting forth the
amount of Net Working Capital (as defined above) reflected in
the Closing Business Balance Sheet, (2) stating that (a) the
examination of the Closing Business Balance Sheet has been
made in accordance with generally accepted auditing standards
and (b) the Closing Business Balance Sheet has been prepared
in accordance with generally accepted accounting principles,
on a basis consistent with the accounting principles
theretofore followed by Company, except as otherwise provided
in this Section 3.3, and (3) setting forth the amount of any
adjustment to the Purchase Price to be paid and by whom
pursuant to Section 3.2.(e) hereof.
(ii) Within 30 days following the delivery of the
balance sheet referred to in (i) above, Company may object to
any of the information contained in said balance sheet or
accompanying schedules which could affect the necessity or
amount of any payment by Buyer or Company pursuant to Section
3.2.(e) hereof. Any such objection shall be made in writing
and shall state Company's determination of the amount of the
Net Working Capital.
(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and
Company are unable to resolve, either party may elect to have
all such disputes or disagreements resolved by an accounting
firm of nationally recognized standing (the "Third Accounting
Firm") to be mutually selected by Company and Buyer or, if no
agreement is reached, by Company's Accountants and Buyer's
Accountants. The Third Accounting Firm shall make a
resolution of the balance sheet of Company as of the Closing
Date and the calculation of Net Working Capital, which shall
be final and binding for purposes of this Article 3. The
Third Accounting Firm shall be instructed to use every
reasonable effort to perform its services within 15 days of
submission of the Closing Business Balance Sheet to it and, in
any case, as soon as practicable after such submission. The
fees and expenses for the services of the Third Accounting
Firm shall be shared by Buyer and Company as follows:
Company shall pay a percentage of such fees and
expenses equal to A/(A+B) and Buyer shall pay a percentage of
such fees and expenses equal to B/(A+B), where A is equal to
the absolute value of the difference (in dollars) between Net
Working Capital as finally determined by the Third Accounting
Firm and Net Working Capital as reflected in the objection
prepared and delivered by Company in accordance with Section
3.3.(b)(ii), and B is equal to the absolute value of the
difference (in dollars) between Net Working Capital as finally
determined by the Third Accounting Firm and Net Working
Capital as reflected in the report prepared and delivered by
Buyer in accordance with Section 3.3.(b)(i). As used in this
Agreement, the term "Closing Business Balance Sheet" shall
mean the balance sheet of Company as of the Closing Date as
finally determined for purposes of this Article 3, whether by
acquiescence of Company in the figures supplied by Buyer in
accordance with Section 3.3.(b)(i), by negotiation and
agreement of the parties or by the Third Accounting Firm in
accordance with Section 3.3.(b)(iii).
(iv) Buyer agrees to permit Company, Company's
accountants, and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of Company,
including but not limited to the books, records, schedules,
work papers and audit programs of Buyer and Buyer's
Accountants and access to representatives of Buyer's
Accountants, which documents and access are necessary to
review the balance sheet delivered by Buyer in accordance with
Section 3.3.(b)(i). In addition, Company's Accountants shall
have the opportunity to observe the taking of the inventory in
connection with the preparation of the Closing Business
Balance Sheet. Company similarly agrees to permit Buyer's
Accountants and their respective representatives, during
normal business hours, to have reasonable access to any books
and records of Company which do not constitute Purchased
Assets, in order to enable them to prepare such balance sheet.
(v) Notwithstanding any provision contained herein
requiring that the Closing Business Balance Sheet be prepared
in a manner consistent with Company's past practices or in
accordance with generally accepted accounting principles, the
Closing Business Balance Sheet shall be prepared utilizing the
following criteria:
(A) Prepaid expenses shall be valued at not
more than the net realizable value which Buyer can
obtain from such assets.
(B) Inventory shall be calculated by adding
to the December 31, 1996, inventory as set forth on the
Recent Business Balance Sheet, the cost of forgings
received by the Company into inventory from January 1,
1997, to the closing Date, and subtracting therefrom
the cost of forgings shipped or otherwise transferred
to customers or forgings scrapped between January 1,
1997, and the Closing Date. To the extent that there
is a difference between the actual inventory on hand on
the Closing Date and the foregoing calculation, the
method of valuation set forth herein shall prevail.
(C) All accrued liabilities shall be
sufficient for the payment in full of the liabilities
to which they relate and accrued expenses shall reflect
all accruals of a character that would be reflected in
a manner consistent with a year-end balance sheet.
(D) Accounts receivable and notes receivable
shall be the book value of all receivables on the
Closing Date minus the book value of all receivables
over 120 days at the Closing Date, the book value of
which receivables shall be retained by the Company.
(E) No insurance claim relating to damage to
or full or partial loss of any property occurring after
the date of the Recent Business Balance Sheet shall be
valued in excess of the book value (net of accumulated
depreciation) of such property as reflected in the
Recent Balance Sheet.
3.4. Prorations. The following prorations relating to the
Purchased Assets will be made as of the Closing Date, with Company liable
to the extent such items relate to any time period up to and including the
Closing Date if not already taken into account on the Closing Business
Balance Sheet and Buyer liable to the extent such items relate to periods
subsequent to the Closing Date. Except as otherwise specifically provided
herein, the net amount of all such prorations will be settled and paid on
the Settlement Date as provided by Section 3.2.(e) hereof:
3.4.(a) Personal property taxes, real estate taxes and
assessments, and other taxes, if any, on or with respect to the
Purchased Assets; provided that special assessments for work
actually commenced or levied prior to the date of this Agreement
shall be paid by Company.
3.4.(b) Rents, additional rents, taxes and other items
payable by Company under any lease, license, permit, contract or
other agreement or arrangement to be assigned to or assumed by
Buyer.
3.4.(c) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities; provided
that if practicable, meter readings shall be taken at the Closing
Date and the respective obligations of the parties determined in
accordance with such readings.
3.4.(d) All other items normally adjusted in connection with
similar transactions.
If the actual expense of any of the above items for the billing
period within which the Closing Date falls is not known on or before the
Settlement Date, the proration shall be made based on the expense incurred
in the previous billing period, for expenses billed less often than
quarterly, and on the average expense incurred in the preceding three
billing periods, for expenses billed quarterly or more often. Company
agrees to furnish Buyer with such documents and other records as shall be
reasonably requested in order to confirm all proration calculations.
3.5. Other Payments and Adjustments. The amount of wages and
other remuneration due in respect of periods to and including the Closing
Date to employees of Company and the amount of bonuses due to such
employees for all such periods will be paid by Company directly to such
employees. Except to the extent taken into account on the Closing
Business Balance Sheet, Buyer shall receive a credit on the Settlement
Date in an amount equal to all vacation, holiday and sick pay unpaid by
Company as of the Closing Date attributable to any period or partial
period of employment by Company prior to the Closing Date, plus employee
payroll taxes applicable thereto due or to become due, for those employees
of Company who will be employed by Buyer after the Closing and (i) who
have not as of the Closing Date taken vacation, holiday or sick time
earned prior to Closing, or (ii) who have not earned vacation, holiday or
sick time as of the Closing Date but who would have earned vacation,
holiday or sick time for any such period or partial period of employment
prior to the Closing (on a pro rata basis) had they continued as employees
of Company to the date when such vacation, holiday or sick pay would have
accrued to them. Notwithstanding the foregoing, the Company and the Buyer
agree that the accrual of a pro rata portion of vacation pay for the
employees of the Company on the Closing Business Balance Sheet shall
satisfy the requirements of this subsection 3.5 and shall require no
further adjustment or credit to Buyer hereunder. For purposes of the
foregoing, the term "pro rata" shall mean an amount equal to the total
vacation pay actually paid or to be paid to all employees of the Company
who became employees of Buyer during 1997, multiplied by a fraction, the
numerator of which shall be the number of days from January 1, 1997, to
the Closing Date, and the denominator of which shall be the number of days
from the Closing Date to December 31, 1997.
3.6. Intentionally Left Blank.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
Company and Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct
on the date hereof, shall remain true and correct to and including the
Closing Date, shall be unaffected by any investigation heretofore or
hereafter made by Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedule delivered to Buyer at
the time of the execution of this Agreement, and shall survive the Closing
of the transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Connecticut.
4.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) Qualification. Company is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the
properties owned or leased by it, or the nature of its business,
makes such licensing or qualification necessary. The states in
which Company is licensed or qualified to do business are listed in
Schedule 4.1.(c).
4.1.(d) No Subsidiaries. Company does not own any interest
in any corporation, partnership or other entity.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors and shareholders of Company. No other or further corporate act
or proceeding on the part of Company is necessary to authorize this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid
binding agreements of Company, enforceable in accordance with their
respective terms.
4.3. No Violation. Except as set forth on Schedule 4.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto, nor
the consummation by Company of the transactions contemplated hereby and
thereby (a) will violate any applicable Law or Order, (b) will require any
authorization, consent, approval, exemption or other action by or notice
to any Government Entity (including, without limitation, under any "plant-
closing" or similar law), or (c) subject to obtaining the consents
referred to in Schedule 4.3, will violate or conflict with, or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by, or result in the creation of any
Lien (as defined in Section 4.12.(a)) upon any of the assets of Company
under, any term or provision of the Articles of Incorporation or By-laws
of Company or of any contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Company is a
party or by which Company or any of its assets or properties may be bound
or affected.
4.4. Financial Statements. Included as Schedule 4.4 are true and
complete copies of the financial statements of Company consisting of
balance sheets of Company as of December 31, 1994, 1995 and 1996, and the
related statements of income and cash flows for the years then ended
(including the notes contained therein or annexed thereto), which
financial statements have been reported on, and are accompanied by, the
signed, unqualified opinions of Ernst & Young LLP, independent auditors
for Company for such years. All of such financial statements (including
all notes and schedules contained therein or annexed thereto) are true,
complete and accurate, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, for the absence of footnote disclosure) applied on a
consistent basis, have been prepared in accordance with the books and
records of Company, and fairly present, in accordance with generally
accepted accounting principles, the assets, liabilities and financial
position, the results of operations and cash flows of Company as of the
dates and for the years and periods indicated. The Recent Business
Balance Sheet and the Closing Business Balance Sheet shall be in
accordance with the specifications set forth in Article 3; the books and
records of the Company utilized to prepare such Closing Business Balance
Sheet shall accurately reflect the transactions of the Company from
January 1, 1997 to the Closing Date on a basis consistent with the Recent
Business Balance Sheet.
4.5. Tax Matters.
4.5.(a) Provision for Taxes. To the best of Company's
knowledge, the provision made for taxes on the Recent Balance Sheet
is sufficient for the payment of all federal, state, foreign,
county, local and other income, ad valorem, excise, profits,
franchise, occupation, property, payroll, sales, use, gross
receipts and other taxes (and any interest and penalties) and
assessments, whether or not disputed at the date of the Recent
Balance Sheet, and for all years and periods prior thereto. Since
the date of the Recent Balance Sheet, Company has not incurred any
taxes other than taxes incurred in the ordinary course of business
consistent in type and amount with past practices of Company.
4.5.(b) Tax Returns Filed. Except as set forth on Schedule
4.5.(b), all federal, state, foreign, county, local and other tax
returns required to be filed on or on behalf of Company have been
timely filed and when filed were true and correct in all material
respects, and the taxes shown as due thereon were paid or
adequately accrued. To the best of Company's knowledge, Company
has duly withheld and paid all taxes which it is required to
withhold and pay relating to salaries and other compensation
heretofore paid to the employees of Company.
4.5.(c) Tax Audits. The federal and state income tax
returns of Company have been audited by the Internal Revenue
Service and appropriate state taxing authorities for the periods
and to the extent set forth in Schedule 4.5.(c), and Company has
not received from the Internal Revenue Service or from the tax
authorities of any state, county, local or other jurisdiction any
notice of underpayment of taxes or other deficiency which has not
been paid nor any objection to any return or report filed by
Company, except for a sales and use tax deficiency for years prior
to September, 1990 which deficiency has been paid in full. There
are outstanding no agreements or waivers extending the statutory
period of limitations applicable to any tax return or report.
4.5.(d) Consolidated Group. Schedule 4.5.(d) lists every
year Company was a member of an affiliated group of corporations
that filed a consolidated tax return on which the statute of
limitations does not bar a federal tax assessment, and each
corporation that has been part of such group.
4.5.(e) Other. Except as set forth in Schedule 4.5.(e),
since December 31, 1996 Company has not (i) filed any consent or
agreement under Section 341(f) of the Code, (ii) applied for any
tax ruling, (iii) entered into a closing agreement with any taxing
authority, (iv) filed an election under Section 338(g) or Section
338(h)(10) of the Code (nor has a deemed election under Section
338(e) of the Code occurred), (v) made any payments, or been a
party to an agreement (including this Agreement) that under any
circumstances could obligate it to make payments that will not be
deductible because of Section 280G of the Code, or (vi) been a
party to any tax allocation or tax sharing agreement.
4.6. Accounts Receivable. All accounts receivable of Company
reflected on the Recent Business Balance Sheet, and as incurred in the
normal course of business since the date thereof, represent arm's length
sales actually made in the ordinary course of business; are collectible in
the ordinary course of business without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in
dispute. Schedule 4.6 contains an aged schedule of accounts receivable
included in the Recent Business Balance Sheet. All accounts receivable of
Company reflected on the Closing Business Balance Sheet will represent
arm's length sales actually made in the ordinary course of business and
will be collected in the ordinary course of business. Provided, that for
those accounts receivable reflected on the Closing Business Balance Sheet
which are not collected in 120 days after the invoice date of the
receivable, Company and Shareholders shall pay Buyer the amount of such
accounts receivable and Buyer shall assign said accounts receivable to
Company and Shareholders.
4.7. Inventory. All inventory of Company reflected on the Recent
Business Balance Sheet, including goods that are imperfect, slow moving,
obsolete or unusable are stated at amounts not in excess of their good
faith estimated net realizable values and are valued in accordance with
generally accepted accounting principles at the lower of cost on a LIFO
basis or market. All inventory purchased since the date of the Recent
Business Balance Sheet consists of a quality and quantity usable and
saleable in the ordinary course of business. Except as set forth in
Schedule 4.7, all inventory of Company is located on premises owned or
leased by Company as reflected in this Agreement. Except as set forth in
Schedule 4.7, all work-in-process contained in inventory constitutes items
in process of production pursuant to contracts or open orders taken in the
ordinary course of business, from regular customers of Company with no
recent history of credit problems with respect to Company; to the best of
Company's knowledge, neither Company nor any such customer is in material
breach of the terms of any obligation to the other and no valid grounds
exist for any set-off of amounts billable to such customers on the
completion of orders to which work-in-process relates. Except as set
forth in Schedule 4.7, all work-in-process is of a quality ordinarily
produced in accordance with the requirements of the orders to which such
work-in-process is identified.
4.8. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 4.8, since the date of the Recent Business Balance Sheet
there has not been:
4.8.(a) No Adverse Change. Any adverse change in the
financial condition, assets, Liabilities, business, prospects or
operations of Company;
4.8.(b) No Damage. Any loss, damage or destruction, whether
covered by insurance or not, affecting Company's business or
properties;
4.8.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other
employee benefit granted, made or accrued;
4.8.(d) No Labor Disputes. Any labor dispute or
disturbance, other than routine individual grievances which are not
material to the business, financial condition or results of
operations of Company;
4.8.(e) No Commitments. Any commitment or transaction by
Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business
consistent with past practice;
4.8.(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of
Company's capital stock; any redemption, purchase or other
acquisition by Company of any capital stock of Company, or any
security relating thereto; or any other payment to any shareholder
of Company as such a shareholder, except for a Subchapter S
distribution to Shareholders on April 17, 1997;
4.8.(g) No Disposition of Property. Any sale, lease or
other transfer or disposition of any properties or assets of
Company, except for the sale of inventory items in the ordinary
course of business;
4.8.(h) No Indebtedness. Any indebtedness for borrowed
money incurred, assumed or guaranteed by Company;
4.8.(i) No Liens. Any Lien made on any of the properties or
assets of Company;
4.8.(j) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract, or any waiver
of material rights thereunder, other than in the ordinary course of
business;
4.8.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance with past practice) to any person
including, but not limited to, any officer, director or employee of
Company, or any Shareholder or Affiliate;
4.8.(l) Credit. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which
have been extended to such customer or distributor in the past, any
other change in the terms of any credit heretofore extended, or any
other change of Company's policies or practices with respect to the
granting of credit; or
4.8.(m) No Unusual Events. Any other event or condition not
in the ordinary course of business of Company.
4.9. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Business Balance Sheet, or in
Schedule 4.9, to the best of Company's knowledge Company does not have any
Liabilities other than commercial liabilities and obligations incurred
since the date of the Recent Business Balance Sheet in the ordinary course
of business and consistent with past practice and none of which has or
will have a material adverse effect on the business, financial condition
or results of operations of Company. Except as and to the extent
described in the Recent Business Balance Sheet or in Schedule 4.9, neither
Company nor any Shareholder has knowledge of any basis for the assertion
against Company of any Liability and there are no circumstances,
conditions, happenings, events or arrangements, contractual or otherwise,
which may give rise to Liabilities, except commercial liabilities and
obligations incurred in the ordinary course of Company's business and
consistent with past practice.
4.10. No Litigation. Except as set forth in Schedule 4.10 there
is no Litigation pending or threatened against Company, its directors (in
such capacity), its business or any of its assets, nor does Company or any
Shareholder know, or have grounds to know, of any basis for any
Litigation. Except as set forth in Schedule 4.10, neither Company nor its
business or assets is subject to any Order.
4.11. Compliance With Laws and Orders.
4.11.(a) Compliance. To the best of Company's knowledge,
except as set forth in Schedule 4.11.(a), Company (including each
and all of its operations, practices, properties and assets) is in
compliance with all applicable Laws and Orders, including, without
limitation, those applicable to discrimination in employment, and
the Company has received no notice of any occupational safety and
health, trade practices, competition and pricing, product
warranties, zoning, building and sanitation, employment, retirement
and labor relations, product advertising and the Environmental Laws
as hereinafter defined. Except as set forth in Schedule 4.11.(a),
Company has not received notice of any violation or alleged
violation of, and to the best of Company's knowledge is subject to
no Liability for past or continuing violation of, any Laws or
Orders. All reports and returns required to be filed by Company
with any Government Entity have been filed, and were accurate and
complete when filed. Without limiting the generality of the
foregoing:
(i) To the best of Company's knowledge the operation
of Company's business as it is now conducted does not, nor
does any condition existing at any of the Facilities, in any
manner constitute a nuisance or other tortious interference
with the rights of any person or persons in such a manner as
to give rise to or constitute the grounds for a suit, action,
claim or demand by any such person or persons seeking
compensation or damages or seeking to restrain, enjoin or
otherwise prohibit any aspect of the conduct of such business
or the manner in which it is now conducted.
(ii) Company has made all required payments to its
unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it is
required to maintain such accounts, and each of such accounts
has a positive balance.
(iii) Company has delivered to Buyer copies of all
reports of Company for the past five (5) years filed under the
federal Occupational Safety and Health Act of 1970, as
amended, and under all other applicable health and safety laws
and regulations.
4.11.(b) Licenses and Permits. Company has all licenses,
permits, approvals, authorizations and consents of all Government
Entities and all certification organizations required for the
conduct of business (as presently conducted and as proposed to be
conducted) and operation of the Facilities. All such licenses,
permits, approvals, authorizations and consents are described in
Schedule 4.11.(b), are in full force and effect and except as set
forth in Schedule 4.11.(b) are assignable to Buyer in accordance
with the terms hereof. Except as set forth in Schedule 4.11.(b),
Company (including its operations, properties and assets) is and
has been in compliance with all such permits and licenses,
approvals, authorizations and consents.
4.11.(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws
relating to emissions, discharges, generation, storage, releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes ("Waste") into the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste including, without
limitation, the Clean Water Act, the Clean Air Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and
the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws".
Without limiting the generality of the foregoing provisions of this
Section 4.11, the Business is in full compliance with all
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any regulations, code, plan,
order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated or approved thereunder. Except as set
forth in Schedule 4.11.(c), there is no Litigation nor any demand,
claim, hearing or notice of violation pending or to the best of
Company's knowledge threatened against Company relating in any way
to the Environmental Laws or any Order issued, entered, promulgated
or approved thereunder. Except as set forth in Schedule 4.11.(c),
there are no past or present (or, to the best of Company's and the
Shareholders' knowledge, future) events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which
may interfere with or prevent compliance or continued compliance
with the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder, or which may give rise to any
Liability, including, without limitation, Liability under CERCLA or
similar state or local Laws, or otherwise form the basis of any
Litigation, hearing, notice of violation, study or investigation,
based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the
environment, of any Waste.
4.12. Title to and Condition of Properties.
4.12.(a) Marketable Title. Company has good and marketable
title to all the Purchased Assets, free and clear of all mortgages,
liens (statutory or otherwise), security interests, claims,
pledges, licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens")
except those described in Schedule 4.12.(a)(i); and, in the case of
real property, Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings (and which have
been sufficiently accrued or reserved against in the Recent Balance
Sheet), municipal and zoning ordinances and easements for public
utilities, none of which interfere with the use of the property as
currently utilized ("Permitted Real Property Liens"). None of the
Purchased Assets are subject to any restrictions with respect to
the transferability thereof. Company has complete and unrestricted
power and right to sell, assign, convey and deliver the Purchased
Assets to Buyer as contemplated hereby. At Closing, Buyer will
receive good and marketable title to all the Purchased Assets, free
and clear of all Liens of any nature whatsoever except those
described in Schedule 4.12.(a)(ii) and Permitted Real Property
Liens.
4.12.(b) Condition. Except as set forth in Schedule
4.12.(b), all tangible assets (real and personal) constituting
Purchased Assets hereunder are in good operating condition and
repair, free from any defects (except such minor defects as do not
interfere with the use thereof in the conduct of the normal
operations of Company), have been maintained consistent with the
standards generally followed in the industry and are sufficient to
carry on the business of Company as conducted during the preceding
12 months. To the best of Company's knowledge all buildings,
plants and other structures owned or otherwise utilized by Company
are in good operating condition and repair and have no structural
defects or defects materially affecting the plumbing, electrical,
sewerage, or heating, ventilating or air conditioning systems.
4.12.(c) Real Property. Schedules 1.1.(a) and 1.1.(b) set
forth all real property owned, used or occupied by Company (the
"Real Property"), including a description of all land, and all
encumbrances, easements or rights of way of record (or, if not of
record, of which Company has notice or knowledge) granted on or
appurtenant to or otherwise affecting such Real Property, the
zoning classification thereof, and all plants, buildings or other
structures located thereon. Schedule 1.1.(b) also sets forth, with
respect to each parcel of Real Property which is leased, the
material terms of such lease. There are now in full force and
effect duly issued certificates of occupancy permitting the Real
Property and improvements located thereon to be legally used and
occupied as the same are now constituted. All of the Real Property
has permanent rights of access to dedicated public highways. No
fact or condition exists which would prohibit or adversely affect
the ordinary rights of access to and from the Real Property from
and to the existing highways and roads and there is no pending or
threatened restriction or denial, governmental or otherwise, upon
such ingress and egress. There is not (i) any claim of adverse
possession or prescriptive rights involving any of the Real
Property, (ii) any structure located on any Real Property which
encroaches on or over the boundaries of neighboring or adjacent
properties or (iii) any structure of any other party which
encroaches on or over the boundaries of any of such Real Property.
None of the Real Property is located in a flood plain, flood hazard
area, wetland or lakeshore erosion area within the meaning of any
Law. No public improvements have been commenced and to Company's
and Shareholders' knowledge none are planned which in either case
may result in special assessments against or otherwise materially
adversely affect any Real Property. To the best of Company's
knowledge no portion of any of the Real Property has been used as a
landfill or for storage or landfill of hazardous or toxic
materials. Neither Company nor any Shareholder has notice or
knowledge of any (i) planned or proposed increase in assessed
valuations of any Real Property, (ii) Order requiring repair,
alteration, or correction of any existing condition affecting any
Real Property or the systems or improvements thereat, (iii)
condition or defect which could give rise to an order of the sort
referred to in "(ii)" above, or (iv) except as set forth in
Schedule 4.12.(c), underground storage tanks, or any structural,
mechanical, or other defects of material significance affecting any
Real Property or the systems or improvements thereat (including,
but not limited to, inadequacy for normal use of mechanical systems
or disposal or water systems at or serving the Real Property).
4.12.(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of Company is
subject to any Order to be sold or is being condemned, expropriated
or otherwise taken by any Government Entity with or without payment
of compensation therefor, nor to the best of Company's and
Shareholders' knowledge has any such condemnation, expropriation or
taking been proposed.
4.12.(e) No Certified Survey Map Required. No certified
survey map or other state, municipal, or other governmental
approval regarding the division, platting, or mapping of real
estate is required as a prerequisite to the conveyance by Company
to Buyer (or as a prerequisite to the recording of any conveyance
document) of any Owned Real Property or Leased Real Property
pursuant to the terms hereof.
4.13. Insurance. Set forth in Schedule 4.13 is a complete and
accurate list and description of all policies of fire, liability, product
liability, workers compensation, health and other forms of insurance
presently in effect with respect to the business and properties of
Company, true and correct copies of which have heretofore been delivered
to Buyer. Schedule 4.13 includes, without limitation, the carrier, the
description of coverage, the limits of coverage, retention or deductible
amounts, amount of annual premiums, date of expiration and the date
through which premiums have been paid with respect to each such policy,
and any pending claims in excess of Ten Thousand Dollars ($10,000.00).
All such policies are valid, outstanding and enforceable policies and
provide insurance coverage for the properties, assets and operations of
Company, of the kinds, in the amounts and against the risks customarily
maintained by organizations similarly situated; and no such policy (nor
any previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or
partially out of events arising prior to the date hereof. Schedule 4.13
indicates each policy as to which (a) the coverage limit has been reached
or (b) the total incurred losses to date equal 75% or more of the coverage
limit. No notice of cancellation or termination has been received with
respect to any such policy, and neither Company nor any Shareholder has
knowledge of any act or omission of Company which could result in
cancellation of any such policy prior to its scheduled expiration date.
Company has not been refused any insurance with respect to any aspect of
the operations of the business nor has its coverage been limited by any
insurance carrier to which it has applied for insurance or with which it
has carried insurance during the last three years. Company has duly and
timely made all claims it has been entitled to make under each policy of
insurance. Since January 1, 1994 all general liability policies
maintained by or for the benefit of Company have been "occurrence"
policies and not "claims made" policies. There is no claim by Company
pending under any such policies as to which coverage has been questioned,
denied or disputed by the underwriters of such policies, and neither
Company nor any of the Shareholders knows of any basis for denial of any
claim under any such policy. Company has not received any written notice
from or on behalf of any insurance carrier issuing any such policy that
insurance rates therefor will hereafter be substantially increased (except
to the extent that insurance rates may be increased for all similarly
situated risks) or that there will hereafter be a cancellation or an
increase in a deductible (or an increase in premiums in order to maintain
an existing deductible) or nonrenewal of any such policy. Such policies
are sufficient in all material respects for compliance by Company with all
requirements of law and with the requirements of all material contracts to
which Company is a party.
4.14. Contracts and Commitments.
4.14.(a) Real Property Leases. Except as set forth in
Schedule 1.1.(b), Company has no leases of real property.
4.14.(b) Personal Property Leases. Except as set forth in
Schedule 1.1.(e), Company has no leases of personal property
involving consideration or other expenditure in excess of Five
Thousand Dollars ($5,000.00) or involving performance over a period
of more than 12 months.
4.14.(c) Purchase Commitments. Company has no purchase
commitments for inventory items or supplies that, together with
amounts on hand, constitute an amount in excess of that required to
fulfill firm Sales Contracts, or which are at an excessive price.
4.14.(d) Sales Commitments. Company has no sales contracts
or commitments except those made in the ordinary course of
business, at arm's length, and no such contracts or commitments are
for a sales price which are anticipated to result in a loss to the
Company.
4.14.(e) Contracts for Services. Company has no agreement,
understanding, contract or commitment (written or oral) with any
officer, employee, agent, consultant, distributor, dealer or
franchisee that is not cancelable by Company on notice of not
longer than 30 days without liability, penalty or premium of any
nature or kind whatsoever.
4.14.(f) Powers of Attorney. The Company has not given a
power of attorney, which is currently in effect, to any person,
firm or corporation for any purpose whatsoever.
4.14.(g) Collective Bargaining Agreements. Except as set
forth in Schedule 4.14.(g), Company is not a party to any
collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups. Copies of all
such agreements have heretofore been delivered to Buyer.
4.14.(h) Loan Agreements. Except as set forth in Schedule
4.14.(h), Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of
indebtedness as a signatory, guarantor or otherwise.
4.14.(i) Guarantees. Except as disclosed on Schedule
4.14.(i), Company has not guaranteed the payment or performance of
any person, firm or corporation, agreed to indemnify any person or
act as a surety, or otherwise agreed to be contingently or
secondarily liable for the obligations of any person.
4.14.(j) Contracts Subject to Renegotiation. Company is not
a party to any contract with any governmental body which is subject
to renegotiation.
4.14.(k) Burdensome or Restrictive Agreements. Except as set
forth on Schedule 4.14.(k), Company is not a party to nor is it
bound by any agreement, deed, lease or other instrument which is so
burdensome as to materially affect or impair the operation of
Company. Without limiting the generality of the foregoing, Company
is not a party to nor is it bound by any agreement requiring
Company to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting Company from competing
in any business or geographical area or soliciting customers or
otherwise restricting it from carrying on its business anywhere in
the world.
4.14.(l) Other Material Contracts. Except for Purchase
Orders and Sales Orders, Company has no lease, license, contract or
commitment of any nature involving consideration or other
expenditure in excess of Five Thousand Dollars ($5,000.00), or
involving performance over a period of more than 12 months, or
which is otherwise individually material to the operations of
Company, except as explicitly described in Schedule 4.14.(l) or in
any other Schedule.
4.14.(m) No Default. To the best of Company's knowledge,
Company is not in default under any lease, contract or commitment,
nor has any event or omission occurred which through the passage of
time or the giving of notice, or both, would constitute a default
thereunder or cause the acceleration of any of Company's
obligations or result in the creation of any Lien on any of the
assets owned, used or occupied by Company. To the best of
Company's knowledge no third party is in default under any lease,
contract or commitment to which Company is a party, nor has any
event or omission occurred which, through the passage of time or
the giving of notice, or both, would constitute a default
thereunder or give rise to an automatic termination, or the right
of discretionary termination, thereof.
4.15. Labor Matters. Except as set forth in Schedule 4.15, within
the last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule
4.15 to the best of Company's knowledge, (a) Company is in compliance with
all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and is not engaged in
any unfair labor practice; (b) there is no unfair labor practice charge or
complaint against Company pending or to the best of Company's knowledge
threatened; (c) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or to the best of
Company's knowledge threatened against or affecting Company nor any
secondary boycott with respect to products of Company; (d) no notice of
any question concerning representation has been raised or to the best of
Company's knowledge is threatened respecting the employees of Company; (e)
no grievance which might have a material adverse effect on Company, nor
any arbitration proceeding arising out of or under collective bargaining
agreements, is pending and no such claim therefor exists; and (f) there
are no administrative charges or court complaints against Company
concerning alleged employment discrimination or other employment related
matters pending or threatened before the U.S. Equal Employment Opportunity
Commission or any Government Entity.
4.16. Employee Benefit Plans.
4.16.(a) Disclosure. Schedule 4.16.(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive
bonus or other bonus, medical, dental, life, accident insurance,
benefit, employee welfare, disability, group insurance, stock
purchase, stock option, stock appreciation, stock bonus, executive
or deferred compensation, hospitalization and other similar fringe
or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and
sick leave plans, programs, arrangements and policies, including,
without limitation, all "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), all employee manuals, and all written
or binding oral statements of policies, practices or understandings
relating to employment, which are provided to, for the benefit of,
or relate to, any persons ("Company Employees") employed by
Company. The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to Buyer. Each of the Employee Plans/Agreements is
identified on Schedule 4.16.(a), to the extent applicable, as one
or more of the following: an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), a "defined benefit plan" (as
defined in Section 414 of the Code), an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA), and/or as a plan
intended to be qualified under Section 401 of the Code. No
Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and Company has never contributed nor been
obligated to contribute to any such multiemployer plan.
4.16.(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without
limitation, the Employee Plans/Agreements) that is subject to the
provisions of Title IV of ERISA and with respect to which the
Company or any of its assets may, directly or indirectly, be
subject to any Liability, contingent or otherwise, or the
imposition of any Lien (whether by reason of the complete or
partial termination of any such plan, the funded status of any such
plan, any "complete withdrawal" (as defined in Section 4203 of
ERISA) or "partial withdrawal" (as defined in Section 4205 of
ERISA) by any person from any such plan, or otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any assets of Company to any Liability
or the imposition of any Lien under Title IV of ERISA;
(ii) no proceeding has been initiated or threatened by
any person (including the Pension Benefit Guaranty Corporation
("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of Company to any Liability or the
imposition of any Lien under Title IV of ERISA, whether to the
PBGC or to any other person or otherwise on account of the
termination of any such plan;
(iv) if any such plan were to be terminated as of the
Closing Date, no assets of Company would be subject, directly
or indirectly, to any Liability or the imposition of any Lien
under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code, respectively), whether or not waived;
and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
4.16.(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407
of ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any
Employee Plan/Agreement, and no event or omission has occurred in
connection with which the Company or any of its assets or any
Employee Plan/Agreement, directly or indirectly, could be subject
to any Liability under ERISA, the Code or any other Law or Order
applicable to any Employee Plan/Agreement, or under any agreement,
instrument, Law or Order pursuant to which Company is required to
indemnify any person against liability incurred under any such Law
or Order.
4.16.(d) Full Funding. The funds available under each
Employee Benefit Plan which is intended to be a funded plan exceed
the amounts required to be paid, or which would be required to be
paid if such Plan were terminated, on account of rights vested or
accrued as of the Closing Date (using the actuarial methods and
assumptions then used by Company's actuaries in connection with the
funding of such Plan).
4.16.(e) Controlled Group; Affiliated Service Group; Leased
Employees. Company is not and never has been a member of a
controlled group of corporations as defined in Section 414(b) of
the Code or in common control with any unincorporated trade or
business as determined under Section 414(c) of the Code. Company
is not and never has been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. There are not
and never have been any leased employees within the meaning of
Section 414(n) of the Code who perform services for Company, and no
individuals are expected to become leased employees with the
passage of time.
4.16.(f) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company to date
have been made and all amounts properly accrued to date as
Liabilities of Company which have not been paid have been properly
recorded on the books of Company and are reflected in the Recent
Balance Sheet; (ii) to the best of Company's knowledge Company has
complied with, and each such Employee Plan/Agreement conforms in
form and operation to, all applicable laws and regulations,
including but not limited to ERISA and the Code, in all respects
and all reports and information relating to such Employee
Plan/Agreement required to be filed with any governmental entity
have been timely filed; (iii) all reports and information relating
to each such Employee Plan/Agreement required to be disclosed or
provided to participants or their beneficiaries have been timely
disclosed or provided; (iv) each such Employee Plan/Agreement which
is intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service
with respect to such qualification, its related trust has been
determined to be exempt from taxation under Section 501(a) of the
Code, and nothing has occurred since the date of such letter that
has or is likely to adversely affect such qualification or
exemption; (v) there are no actions, suits or claims pending (other
than routine claims for benefits) or to the best of Company's
knowledge threatened with respect to such Employee Plan/Agreement
or against the assets of such Employee Plan/Agreement; and (vi) no
Employee Plan/Agreement is a plan which is established and
maintained outside the United States primarily for the benefit of
individuals substantially all of whom are nonresident aliens.
4.16.(g) Post-Retirement Benefits. Except as set forth in
Schedule 4.16.(g), no Employee Plan/Agreement provides benefits,
including, without limitation, death or medical benefits (whether
or not insured) with respect to current or former Company Employees
beyond their retirement or other termination of service other than
(i) coverage mandated by applicable law, (ii) death or retirement
benefits under any Employee Plan/Agreement that is an employee
pension benefit plan, (iii) deferred compensation benefits accrued
as liabilities on the books of the Company (including the Recent
Balance Sheet), (iv) disability benefits under any Employee
Plan/Agreement that is an employee welfare benefit plan and which
have been fully provided for by insurance or otherwise or (v)
benefits in the nature of severance pay.
4.16.(h) No Triggering of Obligations. The consummation of
the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of Company to severance pay,
unemployment compensation unless not hired by Buyer or any other
payment, except as expressly provided in this Agreement, (ii)
except for certain payments the Company may owe to Xxxxxxx X.
Xxxxxxx, accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or former employee
or (iii) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code for which an exemption is
not available.
4.16.(i) Delivery of Documents. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for
the last two years;
(ii) a copy of the summary plan description, together
with each summary of material modifications, required under
ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is
embodied entirely in an insurance policy to which Company is a
party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through
a trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each
Employee Plan/Agreement that is intended to be a "qualified
plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which
an annual report has been filed and delivered to Buyer
pursuant to clause (i) of this Section 4.16.(i), no material
adverse change has occurred with respect to the matters
covered by the latest such annual report since the date
thereof.
4.16.(j) Future Commitments. Company has no announced plan
or legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
4.17. Employment Compensation. Schedule 4.17 contains a true and
correct list as of December 31, 1996 of all employees to whom the Company
is paying compensation, including bonuses and incentives, for services
rendered or otherwise; and such list identifies the current annual rate of
compensation for each employee and in the case of hourly or commission
employees identifies certain reasonable ranges of rates, reflecting any
increases in compensation since December 31, 1996.
4.18. Trade Rights. Schedule 4.18 lists all Trade Rights of the
type described in clauses (i), (ii), (iii) or (iv) of Section 1.1.(f) in
which Company now has any interest, specifying whether such Trade Rights
are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered.
All Trade Rights shown as registered in Schedule 4.18 have been properly
registered, all pending registrations and applications have been properly
made and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current. In order to
conduct the business of Company, as such is currently being conducted or
proposed to be conducted, Company does not require any Trade Rights that
it does not already have. Company is not infringing and has not infringed
any Trade Rights of another in the operation of the business of Company,
nor is any other person infringing the Trade Rights of Company. Company
has not granted any license or made any assignment of any Trade Right
listed on Schedule 4.18, and no other person has any right to use any
Trade Right owned or held by Company. Company does not pay any royalties
or other consideration for the right to use any Trade Rights of others.
There is no Litigation pending or to the best of Company's knowledge
threatened to challenge Company's right, title and interest with respect
to its continued use and right to preclude others from using any Trade
Rights of Company. All Trade Rights of Company are valid, enforceable and
in good standing, and to the best of Company's knowledge there are no
equitable defenses to enforcement based on any act or omission of Company.
4.19. Major Customers and Suppliers.
4.19.(a) Major Customers. Schedule 4.19.(a) contains a list
of the ten largest customers, including distributors, of Company
for each of the two (2) most recent fiscal years (determined on the
basis of the total dollar amount of net sales) showing the total
dollar amount of net sales to each such customer during each such
year. Except as set forth on Schedule 4.19.(a), neither Company
nor any Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the
customers listed on Schedule 4.19.(a) will not continue to be
customers of the business of Company after the Closing at
substantially the same level of purchases as heretofore.
4.19.(b) Major Suppliers. Schedule 4.19.(b) contains a list
that includes the ten largest suppliers to Company for each of the
two (2) most recent fiscal years (determined on the basis of the
total dollar amount of purchases) showing the total dollar amount
of purchases from each such supplier during each such year.
Neither Company nor any Shareholder has any knowledge or
information of any facts indicating, nor any other reason to
believe, that any of the suppliers listed on Schedule 4.19.(b) will
not continue to be suppliers to the business of Company after the
Closing and will not continue to supply the business with
substantially the same quantity and quality of goods at competitive
prices.
4.19.(c) Dealers and Distributors. Schedule 4.19.(c)
contains a list by product line of all sales representatives,
dealers, distributors and franchisees of Company, together with
representative copies of all sales representative, dealer,
distributor and franchise contracts and policy statements, and a
description of all substantial modifications or exceptions.
4.20. Product Warranty and Product Liability. The Company has no
express standard warranty with respect to the sale of its Products (as
defined below). Schedule 4.20 contains a true, correct and complete copy
of those warranty or warranties for sales of Products incorporated in the
standard terms and conditions imposed by General Electric and Xxxxx &
Whitney and, except as stated therein, there are no warranties,
commitments or obligations with respect to the return, repair or
replacement of Products except those specified in the Uniform Commercial
Code as enacted in the relevant jurisdictions and under such
jurisdictions' Common Law. Schedule 4.20 sets forth the estimated
aggregate annual cost to Company of performing warranty obligations for
customers for each of the three (3) preceding fiscal years and the current
fiscal year to the date of the Recent Business Balance Sheet. Schedule
4.20 contains a description of all product liability claims and similar
Litigation relating to Products manufactured or sold, or services
rendered, which are presently pending or which to Company's or any
Shareholder's knowledge are threatened, or which have been asserted or
commenced against Company within the last three (3) years, in which a
party thereto either requests injunctive relief or alleges damages. To
the best of Company's knowledge there are no defects in manufacture of
Products which would adversely affect performance or create an unusual
risk of injury to persons or property. None of the Products has been the
subject of any field fix, retrofit, modification or recall campaign
requiring the Company to incur costs with respect thereto and, to
Company's or any Shareholder's knowledge, no facts or conditions exist
which could reasonably be expected to result in such a recall campaign.
The Products have been manufactured so as to meet and comply with all
customer standards and specifications at time of manufacture. As used in
this Section 4.20, the term "Products" means any and all products
currently or at any time previously manufactured, distributed or sold by
Company prior to the Closing Date.
4.21. Affiliates' Relationships to Company.
4.21.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company and any Affiliate
are described on Schedule 4.21.(a).
4.21.(b) No Adverse Interests. No Affiliate has any direct
or indirect interest in (i) any entity which does business with
Company or is competitive with the Company's business, or (ii) any
property, asset or right which is used by Company in the conduct of
its business.
4.21.(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company to any Affiliate, are
listed on Schedule 4.21.(c).
4.22. Shareholder List. Schedule 4.22 sets forth a complete list
of all the holders of capital stock of Company issued and outstanding on
the date hereof, together with the number of shares held by each
shareholder. Except as set forth in Schedule 4.22, each person so listed
is a competent adult and is the record and the beneficial owner of all
shares so listed in his or her name, with the sole right to vote, dispose
of, and receive dividends or distributions with respect to such shares.
4.23. Assets Necessary to Business. The Purchased Assets include
all property and assets (except for the Excluded Assets), tangible and
intangible, and all leases, licenses and other agreements, which are
necessary to permit Buyer to carry on, or currently used or held for use
in, the business of Company as presently conducted.
4.24. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, Shareholders or agents have retained,
employed or used any broker or finder in connection with the transactions
provided for herein or the negotiation thereof, except for Duff & Xxxxxx
LLC and Xxxxx Xxxxxxxxx. Company is solely liable for the payment of any
fees and expenses of Duff & Xxxxxx LLC and Xxxxx Xxxxxxxxx.
4.25. Disclosure. No representation or warranty by Company and/or
the Shareholders in this Agreement, nor any statement, certificate,
schedule, document or exhibit hereto furnished or to be furnished by or on
behalf of Company or Shareholders pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading. All statements and information contained in any certificate,
instrument, Disclosure Schedule or document delivered by or on behalf of
Company and/or Shareholders shall be deemed representations and warranties
by the Company and the Shareholders.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company
and the Shareholders, each of which is true and correct on the date
hereof, shall remain true and correct to and including the Closing Date,
shall be unaffected by any investigation heretofore or hereafter made by
Company or any notice to Company, and shall survive the Closing of the
transactions provided for herein.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
5.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out
the transactions contemplated hereby and thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Buyer. No other corporate act or proceeding on the part of Buyer or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by Buyer
pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
5.3. No Brokers or Finders. Neither Buyer nor any of its
directors, officers, employees or agents have retained, employed or used
any broker or finder in connection with the transactions provided for
herein or the negotiation thereof.
5.4. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Buyer pursuant to
this Agreement or in connection with transactions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained
therein not misleading.
5.5. Financial Statements. Included as Exhibit 5.5 are true and
complete copies of the financial statements of Buyer as of December 31,
1995 and 1996 and the related Statements of income and cash flows for the
years then ended, which financial statements will be accompanies by
signed, unqualified opinions of Xxxxxx Xxxxxxxx.
6. EMPLOYEES - EMPLOYEE BENEFITS
6.1. Affected Employees. "Affected Employees" shall mean
employees of the Company who are employed by Buyer immediately after the
Closing.
6.2. Retained Responsibilities. Company agrees to satisfy, or
cause its insurance carriers to satisfy, all claims for benefits, whether
insured or otherwise (including, but not limited to, workers'
compensation, life insurance, medical and disability programs), under
Company's employee benefit programs brought by, or in respect of, Affected
Employees and other employees and former employees of the Company, which
claims were incurred prior to the Closing Date, in accordance with the
terms and conditions of such programs or applicable workers' compensation
statutes without interruption as a result of the employment by Buyer of
any such employees after the Closing Date.
6.3. Payroll Tax. Company agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected Employees
paying over to the federal, state and city governments those amounts
respectively withheld or required to be withheld for periods ending on or
prior to the Closing Date. Company also agrees to issue, by the date
prescribed by IRS Regulations, Forms W-2 for wages paid through the
Closing Date. Except as set forth in this Agreement, Buyer shall be
responsible for all payroll and payroll tax obligations after the Closing
Date for Affected Employees.
6.4. Termination Benefits. Buyer shall be solely responsible
for, and shall pay or cause to be paid, severance payments and other
termination benefits, if any, to Affected Employees who may become
entitled to such benefits by reason of any events occurring after Closing.
If any action on the part of Company prior to the Closing, or if the sale
to Buyer of the business and assets of Company pursuant to this Agreement
or the transactions contemplated hereby, or if the failure by Buyer to
hire as a permanent employee of Buyer any employee of Company, shall
directly or indirectly result in any Liability (i) for severance payments
or termination benefits or (ii) by virtue of any state, federal or local
"plant-closing" or similar law, such Liability shall be the sole
responsibility of Company, and Company and Shareholders shall, jointly and
severally, indemnify and hold harmless Buyer against such Liability.
6.5. Employee Benefit Plans.
6.5.(a) Defined Contribution Plans. Within 90 days after
the Closing Date, Buyer shall elect, with respect to each employee
pension benefit plan that is not a defined benefit plan ("defined
contribution plan") maintained by Company for any Affected
Employee, either (i) or (ii).
(i) If this option is elected by Buyer, Company shall
vest and make non-forfeitable as of the Closing Date the
interest of each Affected Employee in each such defined
contribution plan.
(ii) If this option is elected by Buyer, as soon as
practicable after receipt by Buyer of a favorable
determination letter with respect to a successor plan of any
such defined contribution plan that is established by Buyer
("successor defined contribution plan"), Company shall
transfer to such successor defined contribution plan the
account of any Affected Employee still existing in such
defined contribution plan. Pending such transfer, Company
shall: (1) maintain the accounts of such Affected Employees
on the same basis as other employees; (2) accept new funds
into the accounts of such Affected Employees; and (3) make
payments from the accounts of such Affected Employees to or
for the benefit of the Affected Employees as Buyer may direct.
6.5.(b) Intentionally Left Blank.
6.5.(c) Delivery of Records. Company shall deliver to Buyer
not less than 10 days prior to the Closing Date, with respect to
each Employee Plan/Agreement, information adequate to determine the
liability thereunder, whether or not contingent, to any Affected
Employee or other employee or former employee who is or was
employed by Company and with respect to whom Buyer may have any
liability, and any beneficiary or dependent of any such Affected
Employee, employee or former employee, together with data, records
and other documentation adequate to determine the existence and
amount of such liability. Delivery of such data, records and other
documentation shall be made in machine readable form, if existing,
and shall be made by Company or any other person at the time
providing or who has provided services with respect to the Employee
Plan/Agreement. Company or persons designated by Company prior to
the Closing Date will have reasonable access after the Closing Date
to such items.
6.5.(d) No Third-Party Rights. Nothing in this Agreement,
express or implied, is intended to confer upon any of Company's
employees, former employees, collective bargaining representatives,
job applicants, any association or group of such persons or any
Affected Employees any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement, including, without
limitation, any rights of employment.
7. OTHER MATTERS
7.1. Title Insurance. Not less than 15 days prior to the
Closing, Company, at its expense, shall provide to Buyer title insurance
commitments, issued by a title insurance company or companies reasonably
satisfactory to Buyer, agreeing to issue to Buyer standard form owner's
(or lessee's, as the case may be) policies of title insurance with respect
to all Owned Real Property and Leased Real Property, together with a copy
of each document to which reference is made in such commitments. In the
case of Owned Real Property, such policies shall be standard ALTA Form
1990 owner's policies in the full amount of that portion of the Purchase
Price allocated respectively to each subject parcel of Owned Real Property
under Section 3.6 hereof, insuring good and marketable title thereto
(expressly including all easements and other appurtenances). In the case
of Leased Real Property, such policies shall be upon standard ALTA Form
1990 leasehold owner's policies and in such amounts as such shall be
reasonably acceptable to Buyer. In either case, all policies shall insure
title in full accordance with the representations and warranties set forth
herein and shall be subject only to such conditions and exceptions as
shall be reasonably acceptable to Buyer, and shall contain such
endorsements as Buyer shall reasonably request (including, but not limited
to, an endorsement over rights of creditors, if requested by Buyer or
Buyer's lender).
7.2. Surveys. Not less than 15 days prior to the Closing,
Company, shall provide to Buyer surveys of all Owned Real Property and all
Leased Real Property prepared in accordance with ALTA/ASCM standards, each
dated no more than ninety (90) days prior to the Closing and each
detailing the legal description, the perimeter boundaries, all
improvements located thereon, all easements and encroachments affecting
each such parcel of Owned Real Property and such other matters as may be
reasonably requested by Buyer or the title insurance companies, each
containing a surveyor certificate reasonably acceptable to Buyer and the
title insurance companies, and each prepared by a registered land surveyor
satisfactory to Buyer. Company and Buyer shall equally pay for the cost
of the survey.
7.3. Environmental Audits. Buyer will promptly retain a firm
engaged in the regular business of environmental engineering to conduct
such environmental audits of Company's operations and the real estate
occupied by Company as Buyer or Company in their respective discretion
shall consider necessary or appropriate.
7.4. Escrow Agreement. At the Closing, Company and Buyer shall
execute and deliver an Escrow Agreement (the "Escrow Agreement") in the
form of Exhibit 7.4 hereto.
7.5. Consulting and Noncompetition Agreements. At the Closing,
Company shall cause to be delivered to Buyer an Consulting and
Noncompetition Agreements, substantially in the form of Exhibit 7.5
hereto, duly executed by F. Xxxxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx.
7.6. Noncompetition. Subject to the Closing, and as an
inducement to Buyer to execute this Agreement and complete the
transactions contemplated hereby, and in order to preserve the goodwill
associated with the business of Company being acquired pursuant to this
Agreement, and in addition to and not in limitation of any covenants
contained in any agreement executed and delivered pursuant to Section 7.5
hereof, Company hereby covenants and agrees that for a period of three (3)
years from the Closing Date, it will not, directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or controlling any financial
interest in any corporation, partnership, firm or other form
of business organization which is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Buyer in any aspect with respect to
the Business including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with
any such competitor;
(iii) hire, offer to hire, or solicit for employment
any Affected Employee, without the prior consent of Buyer,
until such person has been separated from employment by the
Buyer for at least 180 days; or
(iv) engage in any practice the purpose of which is
to evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Business, Purchased
Assets or Assumed Liabilities;
provided, however, that the foregoing shall not prohibit the ownership of
securities of corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount
which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the geographic scope of this covenant
not to compete shall extend for North America and Europe. The parties
agree that Buyer may sell, assign or otherwise transfer this covenant not
to compete, in whole or in part, to any person, corporation, firm or
entity that purchases all or part of the Business or the Purchased Assets,
being acquired by Buyer hereunder. In the event a court of competent
jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or
activity, it is expressly agreed that this covenant not to compete shall
be construed so that the remaining provisions shall not be affected, but
shall remain in full force and effect, and any such over broad provisions
shall be deemed, without further action on the part of any person, to be
modified, amended and/or limited, but only to the extent necessary to
render the same valid and enforceable in such jurisdiction.
7.7. Confidential Information. Neither Company nor any
Shareholder shall at any time subsequent to the Closing, except as
explicitly requested by Buyer, use for any purpose, disclose to any
person, or keep or make copies of documents, tapes, discs, programs or
other information storage media ("records") containing, any confidential
information concerning the Business, the Purchased Assets, or the Assumed
Liabilities, all such information being deemed to be transferred to the
Buyer hereunder. For purposes hereof, "confidential information" shall
mean and include, without limitation, all Trade Rights in which Company
has an interest, all customer and vendor lists and related information,
all information concerning Company's processes, products, costs, prices,
sales, marketing and distribution methods, properties and assets,
liabilities, finances, employees, all privileged communications and work
product, and any other information not previously disclosed to the public
directly by Company. The foregoing provisions shall not apply to any
information which is an "Excluded Asset" as defined in Section 1.2, or
which relates solely to one or more Excluded Assets. If at any time after
Closing Company or any Shareholder should discover that it is in
possession of any records containing the confidential information of
Buyer, then the party making such discovery shall immediately turn such
records over to Buyer, which shall upon request make available to the
surrendering party any information contained therein which is not
confidential information. Company and each Shareholder severally agree
that they will not assert a waiver or loss of confidential or privileged
status of the information based upon such possession or discovery.
Company hereby consents to Buyer's consultation with legal, accounting and
other professional advisors to Company prior to the Closing regarding the
Business, the Purchased Assets or the Assumed Liabilities, excluding,
however, the negotiation and drafting of this Agreement and the
transactions entered into pursuant hereto.
7.8. Intentionally Left Blank.
7.9. Intentionally Left Blank.
7.10. Intentionally Left Blank.
7.11. Use of Company's Name. Following the Closing, neither
Company nor any Affiliate shall, without the prior written consent of
Buyer, make any use of the name "Xxxxx Machine Company, Incorporated" or
any other name confusingly similar thereto, except as may be necessary for
Company to pay its liabilities, prepare tax returns and other reports, and
to otherwise wind up and conclude its business.
7.12. Sales Tax Matters. At or prior to the Closing, Company
shall obtain a sales tax clearance certificate from the Connecticut
Department of Revenue. At or prior to the Closing Company shall surrender
to the Connecticut Department of Revenue its Connecticut seller's permit
so as to cause Company to qualify for an occasional sale exemption.
7.13. Unemployment Compensation. Company shall cooperate with
Buyer in any efforts by Buyer to obtain the transfer of Company's rate
under the Connecticut unemployment compensation fund applicable to
Affected Employees. In connection therewith, Company will execute such
documents as Buyer may reasonably request in order to effectuate such
transfer.
8. FURTHER COVENANTS OF COMPANY AND SHAREHOLDERS
Company and Shareholders covenant and agree as follows:
8.1. Access to Information and Records. During the period prior
to the Closing:
8.1.(a) Company shall, and shall cause its officers,
employees, agents, independent accountants and advisors to, furnish
to Buyer, its officers, employees, agents, independent accountants
and advisors, at reasonable times and places, all information in
their possession concerning Company as may be requested, and give
such persons access to all of the properties, books, records,
contracts and other documents of or pertaining to Company that
Company or its officers, employees, agents, independent accountants
or advisors shall have in their custody.
8.1.(b) With the prior consent of Company in each
instance (which consent shall not be unreasonably withheld), Buyer
and its officers, employees, agents, independent accountants and
advisors, shall have access to vendors, customers, and others
having business dealings with Company for the purpose of performing
Buyer's due diligence investigation.
8.2. Intentionally Left Blank.
8.3. Conduct of Business Pending the Closing. From the date
hereof until the Closing, except as otherwise approved in writing by the
Buyer:
8.3.(a) No Changes. Company will carry on its business
diligently and in the same manner as heretofore and will not make
or institute any changes in its methods of purchase, sale,
management, accounting or operation.
8.3.(b) Maintain Organization. Company will take such
action as may be necessary to maintain, preserve, renew and keep in
favor and effect the existence, rights and franchises of Company
and will use its best efforts to preserve the business organization
of Company intact, to keep available to Buyer the present officers
and employees, and to preserve for Buyer its present relationships
with suppliers and customers and others having business
relationships with Company.
8.3.(c) No Breach. Company and Shareholders will not do or
omit any act, or permit any omission to act, which may cause a
breach of any material contract, commitment or obligation, or any
breach of any representation, warranty, covenant or agreement made
by Company and/or the Shareholders herein, or which would have
required disclosure on Schedule 4.8 had it occurred after the date
of the Recent Balance Sheet and prior to the date of this
Agreement.
8.3.(d) No Material Contracts. No contract or commitment
will be entered into, and no purchase of raw materials or supplies
and no sale of goods or services (real, personal, or mixed,
tangible or intangible) will be made, by or on behalf of Company,
except contracts, commitments, purchases or sales which are in the
ordinary course of business and consistent with past practice, and
would not have been required to be disclosed in the Disclosure
Schedule had they been in existence on the date of this Agreement.
8.3.(e) No Corporate Changes. Company shall not amend its
Articles of Incorporation or By-Laws or make any changes in
authorized or issued capital stock.
8.3.(f) Maintenance of Insurance. Company shall maintain
all of the insurance in effect as of the date hereof and shall
procure such additional insurance as shall be reasonably requested
by Buyer.
8.3.(g) Maintenance of Property. Company shall use,
operate, maintain and repair all property of Company in a normal
business manner.
8.3.(h) Interim Financials. Company will provide Buyer with
interim monthly financial statements and other management reports
as and when they are available.
8.3.(i) No Negotiations. Neither Company nor any
Shareholder will directly or indirectly (through a representative
or otherwise) solicit or furnish any information to any prospective
buyer, commence, or conduct presently ongoing, negotiations with
any other party or enter into any agreement with any other party
concerning the sale of Company, Company's assets or business or any
part thereof or any equity securities of Company (an "acquisition
proposal"), the Company and Shareholders shall immediately advise
Buyer of the receipt of any acquisition proposal.
8.4. Change of Corporate Name. Concurrently with the Closing,
Company shall change its corporate name to a new name bearing no
resemblance to its present name so as to permit the use of its present
name by Buyer.
8.5. Consents. Company and Shareholders will obtain all consents
necessary for the consummation of the transactions contemplated hereby.
8.6. Other Action. Company and Shareholders shall use their best
efforts to cause the fulfillment at the earliest practicable date of all
of the conditions to the parties' obligations to consummate the
transactions contemplated in this Agreement.
8.7. Disclosure. Company and Shareholders shall have a
continuing obligation to promptly notify Buyer in writing with respect to
any matter hereafter arising or discovered which, if existing or known at
the date of this Agreement, would have been required to be set forth or
described in the Disclosure Schedule, but no such disclosure shall cure
any breach of any representation or warranty which is inaccurate.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
9.1. Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Company and
Shareholders in this Agreement, and the statements contained in the
Disclosure Schedule or in any instrument, list, certificate or writing
delivered by Company pursuant to this Agreement, shall be true and correct
in all material respects when made and shall be true and correct in all
material respects at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date, except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer.
9.2. Compliance With Agreement. Company and Shareholders shall
have in all material respects performed and complied with all of its
agreements and obligations under this Agreement which are to be performed
or complied with by them prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 12.1.
9.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
9.4. Consents and Approvals. All approvals, consents and waivers
that are required to effect the transactions contemplated hereby shall
have been received, and executed counterparts thereof shall have been
delivered to Buyer not less than two business days prior to the Closing.
Notwithstanding the foregoing, receipt of the consent of any third party
to the assignment of a Contract which is not (and is not required to be)
disclosed in the Disclosure Schedule shall not be a condition to Buyer's
obligation to close, provided that the aggregate of all such Contracts
does not represent a material portion of Company's sales or expenditures.
After the Closing, Company and Shareholders will continue to use their
best efforts to obtain any such consents or approvals, and neither Company
nor any Shareholder shall hereby be relieved of any liability hereunder
for failure to perform any of their respective covenants or for the
inaccuracy of any representation or warranty.
9.5. Title Insurance. Buyer shall have obtained good and valid
title insurance policies or, in final form, irrevocable title insurance
binders, dated as of the Closing Date, conforming to the specifications
set forth in Section 7.1 hereof.
9.6. Estoppel Certificates. Company shall have delivered to
Buyer on or prior to the Closing Date an estoppel certificate or status
letter from the landlord under each lease of real property which estoppel
certificate or status letter certify (i) the lease is valid and in full
force and effect; (ii) the amounts payable by Company under the lease and
the date to which the same have been paid; (iii) whether there are, to the
knowledge of said landlord, any defaults thereunder, and, if so,
specifying the nature thereof; and (iv) that the transactions contemplated
by this Agreement will not constitute default under the lease and that the
landlord consents to the assignment of the lease to Buyer.
9.7. Intentionally Left Blank.
9.8. Section 1445 Affidavit. Company shall have delivered to
Buyer an affidavit, in form satisfactory to Buyer, to the effect that
Company is not a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate" under Section 1445 of
the Code, and containing all such other information as is required to
comply with the requirements of such Section.
9.9. Environmental Audit. The results of the environmental audit
conducted pursuant to Section 7.3 shall not have disclosed any past or
present condition, process or practice with respect to Company or any
property owned, occupied or operated by Company which is not in full
compliance with all applicable Environmental Laws or which otherwise
requires remediation under any Environmental Law, if a reasonable estimate
by Buyer of the cost of remediation, or the potential liability to third
persons arising from such condition, process or practice, or the cost of
bringing Company or such property into full compliance with all applicable
Environmental Laws, would exceed $25,000 in the aggregate with respect to
all matters described in this Section.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company and Shareholders to be
performed on the Closing Date shall be subject to the satisfaction prior
to or at the Closing of the following conditions:
10.1. Representations and Warranties True on the Closing Date.
Each of the representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date.
10.2. Compliance With Agreement. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and
obligations under this Agreement which are to be performed or complied
with by Buyer prior to or on the Closing Date, including the delivery of
the closing documents specified in Section 12.2.
10.3. Absence of Litigation. No Litigation shall have been
commenced or threatened, and no investigation by any Government Entity
shall have been commenced, against Buyer, Company or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby.
11. INDEMNIFICATION
11.1. By Company and Shareholders. Subject to the terms and
conditions of this Article 11, Company and each Shareholder, jointly and
severally, hereby agrees to indemnify, defend and hold harmless Buyer, and
its directors, officers, employees and controlled and controlling persons
(hereinafter "Buyer's Affiliates"), from and against all Claims asserted
against, resulting to, imposed upon, or incurred by Buyer, Buyer's
Affiliates or the business and assets transferred to Buyer pursuant to
this Agreement, directly or indirectly, by reason of, arising out of or
resulting from
(a) the inaccuracy or breach of any representation or
warranty of Company or any Shareholder contained in or made
pursuant to this Agreement (regardless of whether such breach is
deemed "material");
(b) the breach of any covenant of Company or any
Shareholder contained in this Agreement (regardless of whether such
breach is deemed "material");
(c) any Claim brought by or on behalf of any broker or
finder retained, employed or used by Company or any of its
directors, officers, employees, Shareholders or agents in
connection with the transactions provided for herein or the
negotiation thereof, whether or not disclosed herein; or
(d) any Claim of or against Company, the Purchased Assets
or the business of Company not specifically assumed by Buyer
pursuant hereto.
As used in this Article 11, the term "Claim" shall include (i) all
Liabilities; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, penalties and settlements;
(iii) all demands, claims, suits, actions, causes of action, proceedings
and assessments, whether or not ultimately determined to be valid; and
(iv) all costs and expenses (including, without limitation, interest
(including prejudgment interest in any litigated or arbitrated matter),
court costs and fees and expenses of attorneys and expert witnesses) of
investigating, defending or asserting any of the foregoing or of enforcing
this Agreement.
11.2. By Buyer. Subject to the terms and conditions of this
Article 11, Buyer hereby agrees to indemnify, defend and hold harmless
Company, its directors, officers, employees and controlling persons, and
each Shareholder from and against all Claims asserted against, resulting
to, imposed upon or incurred by any such person, directly or indirectly,
by reason of or resulting from
(a) the inaccuracy or breach of any representation or
warranty of Buyer contained in or made pursuant to this Agreement
(regardless of whether such breach is deemed "material");
(b) the breach of any covenant of Buyer contained in this
Agreement (regardless of whether such breach is deemed "material");
or
(c) all Claims of or against Company specifically assumed
by Buyer pursuant hereto.
11.3. Indemnification of Third-Party Claims. The following
provisions shall apply to any Claim subject to indemnification which is
(i) a suit, action or arbitration proceeding filed or instituted by any
third party, or (ii) any other form of proceeding or assessment instituted
by any Government Entity:
11.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will
give the party from whom indemnification is sought (the
"Indemnifying Party") prompt written notice of any such Claim, and
the Indemnifying Party will undertake the defense thereof by
representatives chosen by it. The assumption of defense shall not
constitute an admission by the Indemnifying Party of its
indemnification obligation hereunder with respect to such Claim,
and its undertaking to pay directly all costs, expenses, damages,
judgments, awards, penalties and assessments incurred in connection
therewith. Failure to give such notice shall not affect the
Indemnifying Party's duty or obligations under this Article 11,
except to the extent the Indemnifying Party is prejudiced thereby.
So long as the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party shall not settle
such Claim. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by them and in the possession or under the
control of the Indemnified Party, for the use of the Indemnifying
Party and its representatives in defending any such Claim, and
shall in other respects give reasonable cooperation in such
defense.
11.3.(b) Failure to Defend. If the Indemnifying Party,
within a reasonable time after notice of any such Claim, fails to
defend such Claim actively and in good faith, the Indemnified Party
will (upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the
account and risk of the Indemnifying Party, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to judgment.
11.3.(c) Indemnified Party's Rights. Anything in this
Article 11 to the contrary notwithstanding, (i) if there is a
reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money
damages or other money payments, the Indemnified Party shall have
the right to defend, compromise or settle such Claim, and (ii) the
Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all Liability in respect of
such Claim.
11.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11, which payment may
be accomplished in whole or in part, at the option of the Indemnified
Party, by the Indemnified Party setting off any amount owed to the
Indemnifying Party by the Indemnified Party. To the extent set-off is
made by an Indemnified Party in satisfaction or partial satisfaction of an
indemnity obligation under this Article 11 that is disputed by the
Indemnifying Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity obligation was
not owed to the Indemnified Party, the Indemnified Party shall pay the
Indemnifying Party the amount which was set off and not owed together with
interest from the date of set-off until the date of such payment at an
annual rate equal to the prime lending rate then being published by money
center banks. Upon judgment, determination, settlement or compromise of
any third party Claim, the Indemnifying Party shall pay promptly on behalf
of the Indemnified Party, and/or to the Indemnified Party in reimbursement
of any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all
other Claims of the Indemnified Party with respect thereto, unless in the
case of a judgment an appeal is made from the judgment. If the
Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond to
stay execution of the judgment pending appeal. Upon the payment in full
by the Indemnifying Party of such amounts, the Indemnifying Party shall
succeed to the rights of such Indemnified Party, to the extent not waived
in settlement, against the third party who made such third party Claim.
11.5. Indemnification for Environmental Matters.
11.5.(a) Indemnification. Without limiting the generality of
the foregoing, Company and each Shareholder, jointly and severally
(hereinafter collectively referred to in this Section 11.5 jointly
and severally as "Sellers"), agree to indemnify, reimburse, hold
harmless and defend Buyer for, from, and against all Claims
asserted against, imposed on, or incurred by Buyer, directly or
indirectly, in connection with any pollution, threat to the
environment, or exposure to, or manufacture, processing,
distribution, use, treatment, generation, transport or handling,
disposal, emission, discharge, storage or release of Waste that (A)
is related in any way to Company's or any previous owner's or
operator's ownership, operation or occupancy of the business,
properties and assets being transferred to Buyer, and (B) in whole
or in part occurred, existed, arose out of conditions or
circumstances that existed, or was caused on or before the Closing
Date.
11.5.(b) Transfers of Permits. Except with respect to those
matters disclosed in the Disclosure Schedules. Sellers agree to
indemnify, reimburse, defend, and hold harmless Buyer from, for and
against all demands, claims, actions or causes of action arising
from or in connection with the operation of the Purchased Assets by
Buyer in the absence of a permit required by law, subsequent to the
Closing Date and prior to transfer to the Buyer of any permits
currently applicable to the Purchased Assets.
11.6. Limitations on Indemnification. Except for any willful or
knowing breach or misrepresentation, as to which claims may be brought
without limitation as to time or amount:
11.6.(a) Time Limitation. No claim or action shall be
brought under this Article 11 for breach of a representation or
warranty after the lapse of two (2) years following the Closing or
for a claim under Section 11.5 after the lapse of five (5) years
following the Closing. Regardless of the foregoing, however, or
any other provision of this Agreement:
(i) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5
may be brought at any time until the underlying tax obligation
is barred by the applicable period of limitation under federal
and state laws relating thereto (as such period may be
extended by waiver).
(ii) Any claim made by a party hereunder by filing a
suit or action in a court of competent jurisdiction or a court
reasonably believed to be of competent jurisdiction for breach
of a representation or warranty prior to the termination of
the survival period for such claim shall be preserved despite
the subsequent termination of such survival period.
(iii) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of more
than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving.
11.6.(b) Amount Limitation. Except with respect to claims
for breaches of representations or warranties contained in Sections
4.24 or 5.3, an Indemnified Party shall not be entitled to
indemnification under this Article 11 for breach of a
representation or warranty unless the aggregate of the Indemnifying
Party's indemnification obligations to the Indemnified Party
pursuant to this Article 11 (but for this Section 11.6.(b)) exceeds
$50,000; but in such event, the Indemnified Party shall be entitled
to indemnification in full up to a maximum amount of $750,000,
except for indemnification pursuant to Section 11.5.(a) with
respect to which there shall be no limit.
11.7. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the Closing,
and regardless of whether such breach, violation or failure is deemed to
be "material."
12. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall take place at
the offices of Sorokin Sorokin Gross Hyde & Xxxxxxxx PC, One Corporate
Center, Hartford, Connecticut, at 9:00 A.M. on June 16, 1997, or at such
other time and place as the parties hereto shall agree upon. Such date is
referred to in this Agreement as the "Closing Date."
12.1. Documents to be Delivered by Company and Shareholders. At
the Closing, Company and Shareholders shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
12.1.(a) Deeds, Bills of Sale. Warranty deeds to real estate
and bills of sale and such other instruments of assignment,
transfer, conveyance and endorsement as will be sufficient in the
opinion of Buyer and its counsel to transfer, assign, convey and
deliver to Buyer the Purchased Assets as contemplated hereby.
12.1.(b) Compliance Certificate. A certificate signed by the
chief executive officer of Company that each of the representations
and warranties made by Company and Shareholders in this Agreement
is true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations
and warranties had been made or given on and as of the Closing Date
(except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer), and that Company and
Shareholders have performed and complied with all of Company's and
Shareholders' obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
12.1.(c) Opinion of Counsel. A written opinion of Sorokin
Sorokin Gross Hyde & Xxxxxxxx PC, counsel to Company and
Shareholders, dated as of the Closing Date, addressed to Buyer,
substantially in the form of Exhibit 12.1.(c) hereto.
12.1.(d) Employment and Noncompetition Agreements. The
Employment and Noncompetition Agreements referred to in Section
7.5, duly executed by the persons referred to in such Section.
12.1.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors and the Shareholders of
Company authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
12.1.(f) Escrow Agreement. The Escrow Agreement duly
executed by Company and the Escrow Agent in the form of Exhibit 7.4
hereto.
12.1.(g) Articles; By-laws. A copy of the By-laws of Company
certified by the secretary of Company, and a copy of the Articles
of Incorporation of Company certified by the Secretary of State of
the state of incorporation of Company.
12.1.(h) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Buyer pursuant to the terms hereof.
12.1.(i) Intentionally Left Blank.
12.1.(j) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Buyer may reasonably request.
12.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to Company the following documents, in each case duly
executed or otherwise in proper form:
12.2.(a) Cash Purchase Price. To Company a certified or bank
cashier's check or wire transfer as required by Section 3.2.(c)
hereof, and to the Escrow Agent, a certified or bank cashier's
check or wire transfer as required by Section 3.2.(b) hereof.
12.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company Liabilities as provided for in Article 2.
12.2.(c) Compliance Certificate. A certificate signed by the
chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Company), and that
Buyer has performed and complied with all of Buyer's obligations
under this Agreement which are to be performed or complied with on
or prior to the Closing Date.
12.2.(d) Opinion of Counsel. A written opinion of Xxxxx X.
Xxxxxx, counsel to Buyer, dated as of the Closing Date, addressed
to Company, in substantially the form of Exhibit 12.2.(d) hereto.
12.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.2.(f) Escrow Agreement. The Escrow Agreement duly
executed by Buyer and the Escrow Agent in the form of Exhibit 7.4
hereto.
12.2.(g) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Company by Buyer pursuant to the terms hereof.
12.2.(h) Other Documents. All other documents, instruments
or writings required to be delivered to Company at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.
12.2.(i) Promissory Note. The Note described in Section
3.2.(d) of this Agreement.
13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
13.1.(a) by mutual written agreement of Buyer and Company, or
13.1.(b) by either Buyer or Company if the Closing shall not
have occurred on or before August 1, 1997, provided the terminating
party has not, through breach of a representation, warranty or
covenant, prevented the Closing from occurring on or before such
date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer
which has not been so waived, or (iii) Company shall have attempted
to terminate this Agreement under this Article 13 or otherwise
without grounds to do so, then Buyer may, by written notice to
Company at any time prior to the Closing that such violation,
breach, failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in Section
13.2.(c) hereof.
13.2.(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Company, or (ii) there has been a
failure of satisfaction of a condition to the obligations of
Company which has not been so waived, or (iii) Buyer shall have
attempted to terminate this Agreement under this Article 13 or
otherwise without grounds to do so, then Company may, by written
notice to Buyer at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 13.2.(c) hereof.
13.2.(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 13.2 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or
failed to satisfy any of the representations, warranties,
covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof. In addition to the right of
any party under common law to redress for any such breach or
violation, each party whose breach or violation has occurred prior
to termination shall jointly and severally indemnify each other
party for whose benefit such representation, warranty, covenant,
agreement or other provision was made ("indemnified party") from
and against all losses, damages (including, without limitation,
consequential damages), costs and expenses (including, without
limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs, and attorneys fees and
expenses) asserted against, resulting to, imposed upon, or incurred
by the indemnified party, directly or indirectly, by reason of,
arising out of or resulting from such breach or violation. Subject
to the foregoing, the parties' obligations under Section 15.9 of
this Agreement shall survive termination.
14. INTENTIONALLY LEFT BLANK
15. MISCELLANEOUS
15.1. Disclosure Schedule. The Schedules referenced from time to
time in the body of this Agreement are sometimes collectively referred to
herein as the "Disclosure Schedule." The Disclosure Schedule in its
entirety constitutes a part of this Agreement. Information set forth in
any portion of the Disclosure Schedule shall be deemed disclosed for all
purposes hereunder, so long as its import is clearly stated or summarized.
15.2. Further Assurance. From time to time, at Buyer's request
and without further consideration, Company and Shareholders will execute
and deliver to Buyer such documents, instruments and consents and take
such other action as Buyer may reasonably request in order to consummate
more effectively the transactions contemplated hereby, to discharge the
covenants of Company and the Shareholders and to vest in Buyer good, valid
and marketable title to the business and assets being transferred
hereunder.
15.3. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by either
Company or Buyer shall be subject to the approval of the other in all
essential respects, except that Company's approval shall not be required
as to any statements and other information which Buyer may submit to
Buyer's stockholders.
15.4. Assignment; Parties in Interest.
15.4.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be
assigned, transferred or encumbered without the prior written
consent of the other parties. Notwithstanding the foregoing, Buyer
may, without consent of any other party, cause one or more
subsidiaries of Buyer to carry out all or part of the transactions
contemplated hereby; provided, however, that Buyer shall,
nevertheless, remain liable for all of its obligations, and those
of any such subsidiary, to Company hereunder.
15.4.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the parties hereto.
Nothing contained herein shall be deemed to confer upon any other
person any right or remedy under or by reason of this Agreement.
15.5. Equitable Relief. Company and each Shareholder agree that
any breach of the Company's obligation to consummate the sale of the
Purchased Assets on the Closing Date, any breach of any noncompetition
obligation imposed by Section 7.6 hereof or by any agreement delivered to
Buyer pursuant to Section 7.5 hereof, or any breach by Company or any
Shareholder of its or their obligations imposed by Section 7.7 hereof,
will result in irreparable injury to Buyer for which a remedy at law would
be inadequate; and that, in addition to any relief at law which may be
available to Buyer for such breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive and
other equitable relief as a court may grant. This Section 15.5 shall not
be construed to limit Buyer's right to obtain equitable relief for other
breaches of this Agreement under general equitable standards.
15.6. Law Governing Agreement. This Agreement shall be construed
and interpreted according to the internal laws of the State of Wisconsin,
excluding any choice of law rules that may direct the application of the
laws of another jurisdiction. Process and pleadings mailed to a party at
the address provided in Section 15.8 shall be deemed properly served and
accepted for all purposes.
15.7. Amendment and Modification. Buyer, and Company and
Shareholders may amend, modify and supplement this Agreement in such
manner as may be agreed upon by them in writing.
15.8. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer, to:
Ladish Co., Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: X. X. Xxxxx
Facsimile: (000) 000-0000
(with a copy to)
Ladish Co., Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to Company in
writing.
(b) If to Company or Shareholders, to:
Xxxxxxx X. Xxxxxxxxx
000 Xxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
(and)
F. Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
(with a copy to)
Sorokin Sorokin Gross Hyde & Xxxxxxxx PC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as Company shall furnish to Buyer in
writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to
this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof
of delivery); if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
15.9. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
15.9.(a) Expenses to be Paid by Company. Company shall pay,
and shall indemnify, defend and hold Buyer harmless from and
against, each of the following:
(i) Transfer Taxes. Any sales, use (except for use
taxes associated with relicensing Company automobiles),
excise, transfer or other similar tax imposed with respect to
the transactions provided for in this Agreement, and any
interest or penalties related thereto.
(ii) Title Insurance Premiums. All premiums for the
issuance of the title insurance policies issued pursuant to
Section 9.5 hereof, and one-half the cost of surveys performed
pursuant to Section 7.2.
(iii) Environmental Audit. One-half of the fees and
other expenses relating to the environmental audit performed
pursuant to Section 7.3 hereof.
(iv) Professional Fees. All fees and expenses of
Company's legal, accounting, investment banking and other
professional counsel in connection with the transactions
contemplated hereby.
15.9.(b) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
15.9.(c) Costs of Litigation or Arbitration. The parties
agree that the prevailing party in any action brought with respect
to or to enforce any right or remedy under this Agreement shall be
entitled to recover from the other party or parties all reasonable
costs and expenses of any nature whatsoever incurred by the
prevailing party in connection with such action, including without
limitation attorneys' fees and prejudgment interest.
15.10. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
15.11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.12. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
15.13. Glossary of Terms. The following sets forth the location of
definitions of capitalized terms defined in the body of this Agreement:
"Affected Employees" - Section 6.1
"Affiliate" - Section 1.2.(e)
"Assumed Contracts" - Section 2.1.(b)
"Assumed Liabilities" - Section 2.1
"Buyer's Affiliates" - Section 11.1
"CERCLA" - Section 4.11.(c)
"Claim" - Section 11.1
"Closing" - Preamble to Article 12
"Closing Date" - Section 12
"Closing Business Balance Sheet" - Section 3.3.(b)(i)
"Code" - Section 3.6
"Company Employees" - Section 4.16.(a)
"Contracts" - Section 1.1.(g)
"Disclosure Schedule" - Article 15.1
"Employee Plans/Agreements" - Section 4.16.(a)
"Environmental Laws" - Section 4.11.(c)
"ERISA" - Section 4.16.(a)
"Escrow Agreement" - Section 7.4
"Escrow Funds" - Section 3.2.(b)
"Excluded Assets" - Section 1.2
"Government Entities" - Section 2.2.(k)
"IRS" - Section 3.6
"Indemnified Party" - Section 11.3.(a)
"Indemnifying Party" - Section 11.3.(a)
"Inventory" - Section 1.1.(d)
"Laws" - Section 2.2.(k)
"Leased Real Property" - Section 1.1.(b)
"Liability" - Section 2.1
"Lien" - Section 4.12.(a)
"Litigation" - Section 2.2.(f)
"Net Working Capital" - Section 3.3.(a)
"Note" - Section 3.2.(d)
"Orders" - Section 2.2.(k)
"Owned Real Property" - Section 1.1.(a)
"PBGC" - Section 4.16.(b)
"Permitted Real Property Liens" - Section 4.12.(a)
"Personal Property Leases" - Section 1.1.(e)
"Products" - Section 4.20
"Purchased Assets" - Section 1.1
"Purchase Orders" - Section 1.1.(g)
"Purchase Price" - Section 3.1
"Real Property" - Section 4.12.(c)
"Real Property Leases" - Section 1.1.(b)
"Recent Business Balance Sheet" - Section 3.3.(b)(i)
"Sales Orders" - Section 1.1.(g)
"Settlement Date" - Section 3.2.(e)
"Third Accounting Firm" - Section 3.3.(b)(iii)
"Trade Rights" - Section 1.1.(f)
"Waste" - Section 4.11.(c)
Where any group or category of items or matters is defined collectively in
the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
XXXXX MACHINE COMPANY, XXXXXX CO., INC.
INCORPORATED
By: /s/ By: /s/
Attest: /s/ Attest: /s/
/s/ F. Xxxxxx Xxxxxxxxx
F. Xxxxxx Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx