SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1995
TSI Incorporated
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of incorporation)
0-2958
(Commission File Number)
41-0843524
(IRS Employer Identification No.)
500 Cardigan Road, St. Paul, Minnesota 55126
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 612/483-0900
<PAGE>
Item Two. Acquisition or Disposition of Assets.
Pursuant to the Purchase Agreement dated April 27, 1995,
which is attached hereto as an exhibit, Registrant, on May 1,
1995, acquired, through a wholly owned subsidiary, the net
operating assets and business of Alnor Instrument Company (a
Delaware corporation), which is a wholly owned subsidiary of
Studsvik AB, a Swedish Corporation. The net operating assets
purchased included cash, accounts receivable, inventory,
machinery and equipment located in Skokie, Illinois, patents and
other intangible assets and certain other operating assets.
Registrant also acquired Alnor AB of Uppsala, Sweden, which
provides sales and service support for Alnor products in Europe.
The consideration paid by Registrant for the purchased net
assets was a cash payment of $4,393,000 and assumption of certain
operating liabilities associated with the acquired business.
Registrant also paid an additional $600,000 pursuant to
consulting and noncompetition agreements with Alnor Instrument
Company, Alnor, Inc. and Studsvik AB. The consideration paid was
determined by arms-length negotiations between Registrant and the
selling companies. No prior relationship existed between
Registrant and Alnor Instrument Company or their shareholders,
directors, officers, and associates.
For payment of the purchase price, Registrant applied its
own accumulated funds. No loans or debt instruments were
involved.
Alnor Instrument Company is a maker of air flow, safety and
indoor environmental monitoring products. In its fiscal year
ended December 31, 1994, sales were approximately $8.5 million.
Registrant intends to use the purchased assets to continue
the business previously conducted by the Alnor Instrument Company
substantially as before Registrant's acquisition.
<PAGE>
Item Seven. Financial Statements, Pro Forma Financial
Information and Exhibits.
a. and b. The audited financial statements of Alnor
Instrument Company and the pro forma financial information
required by this item are not currently available. They will be
filed by amendment as soon as practicable but, in any event, no
later than July 14, 1995.
c. The Asset Purchase Agreement dated April 27, 1995 by and
among a wholly owned subsidiary of Registrant and Alnor
Instrument Company and its shareholders is attached as Exhibit 2
to this current report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on behalf by the undersigned hereto duly authorized.
TSI INCORPORATED
By /s/LOWELL D. NYSTROM
Lowell D. Nystrom
Vice President & CFO
<PAGE>
EXHIBIT INDEX
Item
601(b) Sequential
Number Description Page Number
(2) Asset Purchase Agreement
____________
Schedules and exhibits to the Purchase Agreement as referred
to therein are omitted. Upon request, the registrant will file
with the Commission a copy of any omitted schedule or exhibit.
ASSET PURCHASE AGREEMENT
AGREEMENT, (hereinafter, together with the Exhibits annexed
hereto the "Agreement") made and entered into as of the 27th day
of April, 1995, by and among TSI INTERNATIONAL, INC., a Minnesota
corporation ("Purchaser"), and ALNOR INSTRUMENT COMPANY, a
Delaware corporation, ("Seller") and ALNOR, INC., a Delaware
corporation, which is the sole shareholder of Seller ("Alnor"),
and Studsvik AB, a Swedish corporation which is the sole
shareholder of Alnor ("Studsvik"); (hereinafter Alnor and
Studsvik are sometimes collectively referred to as the
"Shareholders").
RECITALS
1. Seller is engaged in the business of designing,
developing, manufacturing and selling various types of
instruments and monitoring products, including but not limited to
air flow, safety and monitoring products and indoor environment
products. Seller's offices and manufacturing operations are
located at a plant (the "Plant") located at 7555 North Linder
Avenue, Skokie, Illinois 60077.
2. Purchaser desires to purchase and acquire all the
assets and business of Seller, and Seller is willing to sell said
assets and business to Purchaser, upon the terms and conditions
hereinafter set forth.
3. Contemporaneously with the closing of the purchase
provided for herein, Purchaser will acquire the stock of Alnor
AB, a wholly-owned subsidiary of Studsvik located in Uppsala,
Sweden ("Alnor AB").
NOW, THEREFORE, in consideration of the purchase and sale of
the assets and of the premises and the mutual promises, covenants
and conditions hereinafter set forth, Seller and Shareholders,
jointly and severally, and Purchaser, hereby agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the meanings
set forth below, and where said meanings are intended, said terms
shall be capitalized:
1.1 "Business" shall mean Seller's business, including
Seller's business of designing, developing, manufacturing and
selling various types of sensors, transducers, measuring and/or
controlling instruments and systems, including but not limited to
temperature, humidity, dewpoint, pressure, velocity, airflow,
safety parameters and other monitoring products.
1.2 "Cash" shall mean all of Seller's cash and cash
equivalents.
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1.3 "Inventory" shall mean all of Seller's inventory and
supplies, including parts, supplies, raw materials, work in
process, finished goods and goods held for sale to customers.
1.4 "Receivables" shall mean Seller's accounts receivable
arising from sales of merchandise or services to customers in the
ordinary course of Seller's business.
1.5 "Equipment" means all of Seller's tangible assets,
other than the Inventory, including but not limited to furniture,
machinery, equipment, tooling, leasehold improvements and
fixtures, computers and the software utilized therewith, and
vehicles, specifically including but not limited to the items
listed on Exhibit A.
1.6 "Real Estate" shall mean the real property on which the
Plant is located, which is leased by Seller and more particularly
described on Exhibit B attached hereto, including the buildings
and improvements located thereon.
1.7 "Contracts" shall mean all of Seller's right, title and
interest in and to all contracts, commitments and agreements
which relate to the Assets or the Business, all of which are
listed on an Exhibit C attached hereto. Those Contracts which
Purchaser elects to acquire as provided herein--which are
intended to be the operating Contracts for the Business--are
referred to as the "Acquired Contracts".
1.8 "Orders" shall mean all Seller's orders from customers.
Exhibit D attached hereto lists all of Seller's Orders as of the
date set forth on said Exhibit D.
1.9 "Permits and Approvals" shall mean all licenses,
permits, franchises, approvals and authorizations by governmental
authorities or third parties held by Seller and/or needed for
operation of the Business.
1.10 "Books and Records" shall mean all of Seller's books
and records relating to the Assets or the Business (other than
Seller's tax returns) including without limitation, lists of
customers and suppliers, and records with respect to pricing,
volume, payment history, cost, inventory, machinery and
equipment, mailing lists, distribution and customer lists, sales,
purchasing and materials, and including any such records which
are maintained on computer.
1.11 "Plans" shall mean all plans, blueprints, designs,
processes, computer programs and related documents, formulae,
process sheets, drawings, instructions, machine manuals, any
non-expired warranties and guarantees, and similar items used or
required by Seller in its business, including, but not limited
to, such items used in production of Products, and such items
relating to equipment and its operation.
1.12 "Products" shall mean the products, and all rights
thereto, which are presently marketed by Seller, which have been
marketed by Seller in the past and which are planned or under
development by Seller. Exhibit E hereto lists the Products which
are currently marketed by Seller. Said Exhibit also lists
Products which were marketed in the past by Seller but which
<PAGE>
Seller ceased to market within the past seven (7) years, Products
under development and Products that are planned for development
during the next three (3) years.
1.13 "Intellectual Property Rights" shall mean all patents,
copyrights, trademarks, trade names (including but not limited to
"Alnor" and its variants), trade secrets, and know-how utilized
by Seller or the Business, including but not limited to those
items listed on Exhibit F attached hereto.
1.14 "Goodwill" shall mean all goodwill, going concern value
and similar assets of Seller.
1.15 "Assets" shall mean all of the assets, properties and
rights of Seller, including but not limited to the Cash,
Receivables, Inventory, Equipment, Acquired Contracts, Orders,
Permits and Approvals, Products, Books and Records, Plans,
Intellectual Property Rights, the Business and Goodwill and
including those assets shown as "Other Assets" on the Interim
Statements, excluding only the Excluded Assets.
1.16 "Excluded Assets and Liabilities" shall mean only the
assets and liabilities listed on Exhibit G attached hereto.
1.17 "Closing Date" shall mean the date on which the Closing
hereunder is held. The Closing shall be held at 10:00 a.m., then
current central daylight savings time, on May 1, 1995, or at such
other time or date as the parties may mutually agree upon in
writing, unless delayed by a party for failure to satisfy
conditions precedent to said party's obligations hereunder, in
which case Closing shall be held as soon as practicable after
such conditions are satisfied.
1.18 "Seller Statements" shall mean the balance sheets of
Seller as of December 31, 1994, December 31, 1993, December 31,
1992, December 31, 1991, and December 31, 1990, and statements of
income and retained earnings of the Seller for the fiscal years
ending on said dates, reviewed by Gilson Labus & Silverman,
certified public accountants, copies of which have been provided
to Purchaser.
1.19 "Interim Statements" shall mean the unaudited balance
sheet of Seller as of March 31, 1995, (the "Interim Balance
Sheet") and related unaudited statements of income and retained
earnings of Seller for the fiscal period ending on said date,
compiled by Seller, copies of which have been provided to Seller.
1.20 "Liabilities" shall mean any indebtedness, claim,
obligation or liability of any kind or nature whatsoever, whether
absolute or contingent, liquidated or unliquidated, due or to
become due, accrued or not accrued, or otherwise.
<PAGE>
ARTICLE II
PURCHASE AND SALE
2.1 Purchase Price. On the Closing Date, subject to the
terms and conditions set forth in this Agreement, Seller agrees
to sell and convey to Purchaser, and Purchaser agrees to
purchase, the Assets, for an amount (the "Purchase Price") equal
to $4,393,000.
The parties agree that the Purchase Price shall be allocated
among the Assets as specified on a document to be executed by the
Parties at the closing. Exhibit H attached hereto sets forth the
allocation which would be applied if the Interim Balance Sheet
were the final Balance Sheet. The parties agree that the final
allocation shall be prepared in a manner consistent with the
allocation made on Exhibit H.
Each of the parties hereto agrees to report this transaction
consistently with such allocation, specifically including for
income tax purposes.
2.2 Minimum Book Value. Seller represents that the Closing
Book Value, as defined below, of the Assets acquired less
liabilities assumed by Purchaser as of the Closing Date shall be
$3,000,000 or more. In the event that the Closing Book Value is
determined to be less than $3,000,000, Seller shall, promptly
after such determination, pay the amount of the difference to
Purchaser, together with interest on said amount from the Closing
Date at the rate of 9 percent per annum.
For these purposes "Closing Book Value" shall mean the book
value of the Assets acquired by Purchaser at closing less the
book value of any liabilities assumed by Purchaser at closing
under this Agreement. Said book values shall be determined in
accordance with generally accepted accounting principles applied
on a consistent basis. Intercompany receivables, except those
from Alnor AB, are excluded assets.
(a) Promptly on or after the Closing Date, Purchaser or its
accountants shall carry out a normal closing of the books to
determine Closing Book Value. As part of this, Purchaser and its
accountants may do spot checks, samples and selected counts of
inventory and check other items, including verifying cash
balances, or Purchaser, at its sole election, shall determine
whether there will be an audit to assure that Closing Book Value
is greater than $3,000,000. If Purchaser chooses to proceed with
an audit, the procedures set forth below shall apply. Such audit
would be at Purchaser's expense.
(b) If an audit of Closing Book Value is conducted, then
Purchaser or its accountants shall prepare a balance sheet (the
"Closing Balance Sheet") setting forth Closing Book Value, which
balance sheet shall be prepared in accordance with generally
accepted accounting principles applied on a consistent basis and
which shall fairly present the assets and liabilities included
thereon. In conjunction with the preparation of the Closing
<PAGE>
Balance Sheet, an inventory count shall be taken by Purchaser
with representatives of Seller participating if desired by
Seller, as soon as practicable after the full-scale audit is
commenced. The inventory count thus taken shall be appropriately
adjusted for inventory received and shipments made between the
date of the Closing Date and the date on which the inventory
count is taken. The valuation of the inventory included in said
count shall be undertaken jointly by Seller and Purchaser at the
Plant. Said valuation shall start promptly after the inventory
count is taken and shall be completed as soon as possible.
Purchaser will endeavor to have the Closing Balance Sheet
completed no later than twenty (20) days after Closing. In the
event that the Closing Balance Sheet is not completed within
twenty (20) days after Closing, then any interest payment
provided for under this Article 2.2 shall be suspended until said
Closing Balance sheet is provided by Purchaser. Following
completion of the Closing Balance Sheet, Purchaser and Seller
shall have ten (10) days to review said Balance Sheet and all
documents and information relevant to the preparation of or
supporting said Balance Sheet. Following the completion of said
ten-day period, the parties shall meet and determine whether they
agree with the Closing Book Value as shown on such Balance Sheet.
If the parties agree, the Closing Book Value shall be utilized to
determine the payment, if any, required in accordance with this
section. If the parties do not agree, then they shall, for a
period of ten days negotiate in an effort to reach agreement as
to the Closing Book Value.
If unable to reach such agreement, the parties shall appoint
an independent and qualified firm of certified public accountants
to resolve any disputed items. A "Big 6" firm or other firm
acceptable to both parties, which does not currently provide
services, and has not within the preceding three years provided
services to either of Purchaser or Seller shall be utilized.
Purchase and Seller shall agree upon the firm to be utilized
subject to the foregoing requirements. The firm which is
selected shall thereupon attempt to resolve all disputed items
within 30 days after said firm's selection and the
recommendations made by said firm shall be final. The expenses
charged by said firm shall be borne equally by Purchaser and
Seller.
2.3 Limited Assumption of Liabilities. Purchaser shall not
assume or become liable for any Liabilities of Seller; except
only that Purchaser shall be responsible for:
(a) Obligations arising under Acquired Contracts
designated on Exhibit C, but only with respect to
actions and transactions occurring under said Acquired
Contracts from and after the Closing Date (the "Post-
Closing Contract Liabilities"); provided, however, that
if consent to assignment of an Acquired Contract is
required under the terms thereof, but such consent is
not obtained, Purchaser shall have no responsibility
for obligations not performable due to lack of such
consent; provided, further, that if consent is not
obtained, Purchaser and Seller shall endeavor to work
together to perform the obligations under the Acquired
Contract for which consent was not obtained by
Purchaser performing such obligations on Seller's
behalf and in Seller's name.
(b) The operating liabilities specifically set
forth on the Closing Balance Sheet, as finally
determined pursuant to Section 2.2 above; provided,
however, that (i) only liabilities in the indicated
categories specified on Exhibit C- 1 attached hereto
are to be assumed, (ii) no intercompany liabilities to
Studsvik will be assumed, and (iii) in no event shall
Purchaser be required to assume liabilities in an
amount which exceeds, in any material respect, the
amount of the operating liabilities shown on the
Interim Balance Sheet.
<PAGE>
(c) Purchaser, at Closing, will extend offers of
employment to Seller's employees, except that Purchaser
shall not be required to extend offers of employment to
Mr. Stephen Grover or to employees hired by Seller on
or after January 1, 1995. A list of such excluded
employees will be provided at Closing. It is
understood that as a condition of extending employment
to employees, Purchaser will require that the employees
execute the forms of Confidentiality Agreement and
Business Ethics Agreement which are required of
substantially all of Purchaser's employees, but
Purchaser shall not require this of those employees
governed by the Union Agreement if this would violate
such Agreement.
(d) Seller shall be responsible for any and all
Liabilities owed to its employees in connection with
their employment by Seller, including but not limited
to any termination payments, accrued vacation pay,
unpaid wages, including those for the current period
which includes the Closing Date, and otherwise;
provided, however, that where Liabilities to employees
(but not including any severance, termination,
parachute or other special payments to Mr. Grover) are
specifically reflected on the Closing Balance Sheet, as
finally determined, Purchaser shall be responsible for
such Liabilities. All such Liabilities of Seller to
employees shall be satisfied, or arrangements for the
satisfaction thereof acceptable to Purchaser shall be
made, on or before the Closing Date.
(e) Purchaser has no obligation with respect to
Seller's warranty obligations for products sold by
Seller before the Closing Date ("Seller's Warranty
Obligations"), except that Purchaser shall perform
warranty obligations in an amount up to one and a half
times the normal annual warranty cost incurred by
Seller (the "Warranty Cost"). The Warranty Cost shall
be determined based on the average of the normal
warranty cost incurred by Seller per year for the two-
year period ending March 31, 1995. To the extent the
amount of Seller's warranty obligations exceed the
Warranty Cost, Purchaser, in order to preserve
relationships with the customers, may perform such
warranty obligations and charge the same to Seller.
However, all warranty obligations in excess of the
Warranty Cost are Seller's responsibility and must
either be satisfied by Seller or satisfied by Purchaser
with the costs for the same to be paid to Purchaser by
Seller. If requested by Seller, Purchaser will provide
warranty service on Seller's behalf at Purchaser's then
standard cost for such service.
(f) Purchaser shall have no liability, for the
one year period starting with the month end nearest to
the Closing Date, for returns of inventory or credits
for returns of inventory sold to customers, including
OEM customers of Seller, prior to the Closing Date,
except that Purchaser will bear the cost of such
returns in an amount up to one and one half times the
normal annual cost incurred by Seller (the "Return
Cost"). The Return Cost shall be determined based on
the average of the normal Return Cost per year for the
two year period ending March 31, 1995. For these
<PAGE>
purposes, Return Costs shall be equal to the net
difference between the amount credited to the customer
and the amount by which inventory is increased plus the
cost of refurbishment, repair and any other direct
costs involved in accomplishing the return. If the
return is only for refurbishing and/or repair and not
returned to inventory, then the Repair Cost is the cost
of refurbishment, repair and any other direct cost
involved in the process. Measurement of costs will
be done on a consistent basis for all the periods
involved. Notwithstanding the foregoing, Purchaser
shall be liable for any such returns from customers
which are initiated by Purchaser.
(g) In no event shall Purchaser have any
liability for product liability or other liabilities of
Seller (other than warranty obligations to the extent
provided above) relating to products sold by Seller
before the Closing Date.
Sellers shall satisfy all Liabilities not specifically
assumed by Purchaser in accordance with the terms and
conditions applicable thereto, where the nonsatisfaction of
such Liabilities might have an adverse effect upon the
Assets or Business acquired by Purchaser. Such Liabilities
would include obligations to suppliers and any amounts owed
to Tooling Holders, as defined in Section 6.12 hereof
(excluding, however, Liabilities specifically assumed by
Purchaser hereunder).
2.4 Indemnification against Non-Assumed Liabilities.
Excepting solely the Liabilities specifically assumed by
Purchaser under the preceding section, each of Seller and the
Shareholders, jointly and severally, shall indemnify, defend and
hold Purchaser harmless from and against all claims, demands,
losses, expenses, and liabilities, including but not limited to
reasonable attorneys' fees, arising in any fashion out of any
non-assumed Liabilities of Seller.
2.5 Non-Compete and Consulting. At the closing, Purchaser
and Seller and the Shareholders shall enter into a Non-Compete
Agreement in the form of Exhibit I attached hereto, pursuant to
which each of Seller and the Shareholders and all subsidiaries
and affiliates of Shareholders and Seller will agree not to
compete with Purchaser for a period of five (5) years after the
Closing. In return for said Agreement, Purchaser shall pay a
total of $500,000, payable $300,000 to Studsvik and $200,000 to
Seller. Said amounts are payable in full at Closing.
At Closing, Purchaser and Seller also shall enter into a
Consulting Agreement substantially in the form of Exhibit J
attached hereto for consulting services during the first year
after Closing. Said Consulting Agreement shall include the
obligation of Seller to provide the services of Mr. Stephen
Grover for not less than thirty (30) days during the first ninety
(90) days following the Closing Date. A total of $100,000 shall
be payable under said Consulting Agreement, with said amount to
be payable in full at Closing.
2.6 Payment at Closing. The Purchase Price shall be paid
as follows:
(a) By payment of $3,893,000 at Closing; and
<PAGE>
(b) By payment of $500,000 to American National
Bank and Trust Co. of Chicago (the "Escrow Agent") to
be held by the Escrow Agent pursuant to the terms and
conditions of the Escrow Agreement between the Escrow
Agent, Purchaser and Seller in the form attached hereto
as Exhibit K.
The payment at Closing shall be made in the form of a
cashiers or certified check or by wire transfer.
All payments made hereunder are subject to the terms and
conditions herein set forth, and will be made by Purchaser in
reliance upon the representations, warranties, covenants and
agreements contained herein.
2.7 Accounts Receivable. During the 120 days following the
Closing Date, Purchaser shall endeavor to collect the Receivables
in the ordinary course of business. It is specifically
understood that in endeavoring to collect such Receivables,
Purchaser is not required to take any extraordinary actions or
take any steps which are inappropriate as a matter of customer
relations. If, at the end of said 120-day period, some of the
Receivables remain uncollected, and the uncollected amount
exceeds the reserve against Receivables reflected on the Closing
Balance Sheet, as finally determined, then, promptly upon demand
of Purchaser, Seller shall pay to Purchaser the amount by which
the uncollected Receivables exceed said reserve. Upon receipt of
said payment, Purchaser shall assign to Seller the uncollected
Receivables, subject to Seller's choice of which Receivables are
offset against reserves delivered at Closing. Seller shall then
be free to pursue collection of the uncollected Receivables.
2.8 Real Estate Matters.
(a) To the extent available, including to the extent
reasonably available from the landlord, Seller shall provide
Purchaser copies of any title insurance policies or title
insurance commitments which have been issued with respect to the
Real Estate and of any surveys which have been made of the Real
Estate.
(b) Audit. As soon as practicable after the execution of
this Agreement, Seller, at its sole expense, shall provide a
currently dated phase one environmental audit ("Environmental
Audit") of the Real Estate addressed to Purchaser. The
Environmental Audit shall be prepared by a qualified third party
environmental consultant selected by Seller and approved by
Purchaser, and shall meet the guidelines for a Phase I
Environmental Site Assessment Process established by the American
Society for Testing and Materials. Purchaser's approval of the
consultant will not be unreasonably withheld. The cost for such
Environmental Audit (the phase one audit) shall not exceed
$5,000. If the cost is in excess of such amount, Seller, at its
option, can elect not to proceed with this transaction, unless
Purchaser agrees to pay the excess cost or the parties reach
another acceptable agreement regarding payment of such excess
cost.
If such Environmental Audit either (i) recommends that
additional tests or investigations be performed and the same are
not performed or (ii) reveals, or the additional tests or
investigations reveal, matters which might constitute a breach of
<PAGE>
the warranties set forth in Section 6.11 hereof, and such matters
or omissions are not cured or corrected at Seller's cost within
thirty (30) days of notice from Purchaser, Purchaser, by written
notice given to Seller may declare this Agreement null and void,
in which event neither Purchaser nor Seller shall be liable for
damages hereunder to the other.
(c) If the provisions of Article 2.8(a) and (b), above, are
not complied with, either Purchaser or Seller, by written notice
to the other, may declare this Agreement null and void, in which
event neither Purchaser nor Seller shall be liable for damages to
the other.
2.9 Prorations, Etc. Seller and Purchaser agree to the
following prorations and allocation of costs in connection with
this Agreement and the transactions contemplated hereby:
(a) All amounts payable under the lease for the
Real Estate, including the rent, real estate taxes and
installments on special assessments, if any, in the
year of closing shall be prorated between Seller and
Purchaser as of the Date of Closing so that Seller pays
that part of said amounts due and payable in the year
of closing which is equal to a fraction which has as a
denominator the number "365" and which has as a
numerator a number equal to the number of days which
have passed in the calendar year of closing to, and
including, the Date of Closing, and so that Purchaser
pays the remainder thereof.
(b) All other operating costs of the Assets, such
as but not limited to utilities, shall be allocated
between Seller and Purchaser based upon the Date of
Closing, such that Seller shall pay that portion of the
operating costs pertaining to that period of time up to
and including the Date of Closing, and Purchaser shall
pay that portion of the operating costs from and after
the actual Date of Closing. Prepaid license fees or
permit fees, if any, relating to licenses or permits
assigned to Purchaser as provided above shall be
prorated and credited to Seller and paid for by
Purchaser as of the Date of Closing.
Notwithstanding the foregoing, (i) if there is an item which
under the proration rules set forth above will be Purchaser's
responsibility to pay, but said item is reflected as an asset in
the Closing Balance Sheet (meaning that Seller has already paid
for such item), Purchaser shall not, to the extent the asset is
so reflected, be required to pay for it again under this Section,
and (ii) to the extent Seller is responsible to pay for an item
under the foregoing prorations, but such item is reflected as a
liability assumed by Purchaser on the Closing Balance Sheet,
Seller shall not be required to pay for it under this Section.
ARTICLE III
DELIVERIES BY SELLER
3.1 Seller's Deliveries. On the Closing Date, subject to
the terms and conditions set forth in this Agreement, Seller
shall make the following deliveries:
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(a) Bill of Sale, Assignments, certificates of
title, and other instruments of conveyance reasonably
requested by Purchaser;
(b) Assignments in recordable form of all
registered Intellectual Property such as patents,
registered trademarks or registered copyrights.
(c) A current certified search dated no more than
ten (10) days before the Closing Date showing all
financing statements on file against the Assets,
together with appropriate releases or termination
statements for any security interests in the Assets,
except to the extent waived by Purchaser;
(d) Non-Compete duly executed by Seller and the
Shareholders;
(e) Consulting Agreement duly executed by Seller;
(f) Assignments from Seller of all Seller's
rights to Acquired Contracts and Consents to Assignment
of the Lease and the Union Agreement from the other
parties thereto;
(g) A Non-Disturbance Agreement from all lenders
who hold mortgages on the Real Estate, limited to the
best efforts of the Seller to be in due course.
(h) All other items or documents necessary or
appropriate hereunder.
3.2 Purchaser's Deliveries. On the Closing Date, subject
to the terms and conditions set forth in this Agreement,
Purchaser shall make the following deliveries:
(a) Payment of the Purchase Price payable at
Closing, to Seller and to the Escrow Agent.
(b) Purchaser shall execute and deliver the
Non-Compete Agreement and the Consulting Agreement.
(c) All other items or documents necessary or
appropriate hereunder.
3.3 Post-Closing Search. Within ten (10) days after
the Closing, Seller shall deliver a certified search current
for all filings through the Closing Date, showing all
financing statements on file against the Assets, together
with appropriate releases or termination statements for any
security interest in the Assets revealed by such search,
except to the extent waived by Purchaser.
<PAGE>
ARTICLE IV
CLOSING
The Closing hereunder shall take place at the Law Offices
Gerhard E. W. Kelter, Jr., 135 South LaSalle Street, Chicago,
Illinois 60603 on the Closing Date, or at such other place as
may be mutually agreed upon in writing by Purchaser and Seller.
ARTICLE V
INVESTIGATION
From and after the date hereof and through the Closing Date,
Seller shall afford to the officers and representatives of
Purchaser free access to the properties and records of Seller in
order that Purchaser may have full opportunity to make such
investigation at reasonable times as it shall desire of the
assets and of the affairs of Seller, and Seller shall provide to
Purchaser reasonable assistance in the conduct of said
investigation by Purchaser.
Seller shall also provide Purchaser, originals or
reproductions of plans and specifications for the building
located on the Real Estate (to the extent the same exist and are
accessible to Alnor), including any available "as built"
drawings, maintenance records, licenses, permits, reports and
certificates and such other items relating to the construction,
operation or environmental assessment of the Real Estate as may
be in the possession of Seller, all of such items being
considered Plans as defined herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND SHAREHOLDERS
Seller and Shareholders, jointly and severally,
represent and warrant to Purchaser that, except as specifically
set forth on Exhibit L annexed hereto, entitled Representations
and Warranties: Exceptions and Disclosures, the following
statements are true and correct as of the date of this Agreement
and will be true and correct on the Closing Date as if made on
said Date:
6.1 Seller. Seller is a corporation duly organized and
existing and in good standing under the laws of the state of
Delaware and is entitled to own or lease its properties and to
carry on its business as and in the places where such properties
are now owned, leased or operated, or such business is now
conducted. Seller has full power and authority to sell, convey,
assign, transfer and deliver the Assets as herein provided, and
all corporate and other proceedings necessary to be taken by
Seller in connection with the transactions provided for by this
Agreement and necessary to make the same effective have been duly
and validly taken, and this Agreement has been duly and validly
executed and delivered by each of Seller and Shareholders and
constitutes a valid and binding obligation of each of Seller and
Shareholders enforceable in accordance with its terms.
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Seller is qualified to do business as a foreign corporation
in all jurisdictions in which the nature of Seller's business,
the location of its assets or other factors require it to be so
qualified.
Alnor is the only shareholder of Seller, and no other
persons or entities hold stock or other equity interests in
Seller. (At the Closing, there may be an additional minority
shareholder or shareholders of Seller which shall be acceptable
to Purchaser, provided that Purchaser is advised of the identity
and holdings of said additional shareholder(s) before the
Closing.) Studsvik is the only shareholder of Alnor, and no
other persons or entities hold stock or other equity interests in
Alnor. Seller does not have any subsidiaries, nor does it have
any equity interest in any corporation, partnership, limited
liability company, or other business entity.
6.2 Title. Except as set forth on Exhibit L, Seller has
good and marketable title to the Assets, free and clear of any
mortgages, liens, security interests, pledges, easements or
encumbrances of any kind or nature whatsoever. At the Closing,
Seller will convey good and marketable title to the Assets to be
sold hereunder, free and clear of any and all mortgages, liens,
security interests, pledges, easements, or encumbrances of any
kind or nature whatsoever.
6.3 Financial Statements. The Seller Statements are true,
complete and correct and have been prepared in accordance with
generally accepted accounting principles consistently followed
throughout the periods indicated. The Seller Statements fairly
present the financial condition and assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Seller as
of the dates indicated, and the results of operations of Seller
for the periods then ended.
6.4 Interim Statements. The Interim Statements are true,
complete and correct, have been prepared in accordance with
generally accepted accounting principles, consistently followed,
and fairly and accurately present the financial condition and
assets and liabilities (whether accrued, absolute, contingent or
otherwise) of Seller as of the dates indicated and the results of
operations of Seller for the periods then ended.
6.5 Liabilities. As of the date of this Agreement, Seller
is not subject to and does not have any Liabilities, (i) except
as disclosed in the Interim Statement, (ii) except for such
Liabilities as have arisen in the ordinary course of business of
Seller since the date of said Interim Statement, none of which
newly arisen Liabilities have a material adverse effect upon the
Assets, Business, or Seller, its organization, properties or
financial condition, and (iii) except for Liabilities which
Purchaser will not become subject to or obligated to pay or
satisfy under or in connection with this Agreement.
6.6 Other Operations. Each of Seller and Shareholders does
not have any divisions or other operations, nor do any
subsidiaries or other affiliated (as defined by Article 5.2 of
the Non-Compete Agreement, Exhibit I, attached hereto) or
controlled corporations or entities of Seller or Shareholders
have any divisions or operations, which produce products similar
to those sold by Seller. It is affirmatively acknowledged that
Shareholders operate Studsvik Instrument AB and Studsvik Eco &
Safety AB.
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During the past four years, each of Seller and Shareholders,
and any subsidiaries or affiliated or controlled entities of
Seller or Shareholders, have not sold, transferred or otherwise
disposed of companies, assets or businesses selling products
which compete with the products produced by Seller, except for
the sale of Alnor OY in Finland, Alnor Nuclear Corporation in the
United States, and the discontinuance of operations of Alnor SA
in France.
6.7 Non-Breach, Etc. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby by Seller and each of Shareholders will not (a) result in
a breach of any of the terms or conditions of, or constitute a
default under, any mortgage, note, bond, indenture, agreement,
license or other instrument or obligation (including any
"Contracts") to which Seller or each Shareholder is now a party
or by which it or any of its properties or assets may be bound or
affected, or (b) violate any order, writ, injunction or decree of
any court, administrative agency or governmental body.
6.8 Contracts. Except as listed in Exhibit C, Seller is
not a party to any written or oral:
(i) contract, agreement or understanding for the
employment of any officer, consultant, director or
employee;
(ii) contract, agreement or understanding with any
labor union;
(iii) contract, agreement or understanding for
$1,000 or more for the purchase of any materials,
supplies or equipment;
(iv) contract, agreement or understanding for
$1,000 or more for the sale of products or performance
of services;
(v) license or franchise agreement, either as
licensor or licensee or franchisor or franchisee,
including any related to intellectual property, or
distributor, dealership or sales agency contract,
agreement or understanding;
(vi) lease for real or personal property under
which Seller is a lessor or lessee, or contract,
agreement or understanding to purchase or sell real
property or a material amount of personal property;
(vii) pension, profit-sharing, bonus, deferred
compensation, retirement, stock option, stock purchase,
or other employee benefit plan (including any welfare
benefit plans) in effect with respect to employees or
others;
(viii) contract or agreement granting to any
person the right to use any property or property right
of Seller, or any property or property right of
Shareholders, their subordinates or affiliates which
relate to the Business, including any trademark or
patent licensing agreement, contract or understanding;
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(ix) plan or contract or other arrangement
providing for insurance for any officer, director or
employee or member of their families;
(x) construction contract;
(xi) contract or agreement containing covenants by
Seller not to compete in any line of business or with
any person;
(xii) joint venture contract or partnership or
arrangement or other agreement involving a sharing of
profits; or
(xiii) contract or agreement relating to the
borrowing or lending of money by Seller, providing for
letters of credit, or providing for any mortgage, lien
or security interest upon any of the Assets; or
(xiv) any guaranties or indemnifications by
Seller, except for Seller's obligations resulting from
the endorsement of checks deposited for collection;
(xv) any contracts calling for payments by Seller
in excess of $5,000;
(xvi) other material contract, agreement or
understanding.
(The foregoing are referred to herein as "Contracts".)
Seller has provided to Purchaser true, current, correct and
complete copies of all of the Contracts, including all items
specified in the preceding paragraph.
Seller has performed all obligations required to be
performed by it to date under, and Seller and each other party to
each Contract is not in default under, each of the Contracts, all
of which are in full force and effect. Upon request of
Purchaser, Seller shall assign to Purchaser any or all of the
Contracts. Except as stated on Exhibit C each of said Contracts
are assignable without consent.
6.9 Inventory. The Inventory reflected on the Interim
Balance Sheet is valued in accordance with generally accepted
accounting principles and has not been written up or down since
the date of the Interim Balance Sheet. The cost of all such
inventory is determined using the FIFO method, in accordance with
generally accepted accounting principles.
Except to the extent of reserves for excess and obsolete
inventory reflected on the Closing Balance Sheet in accordance
with generally accepted accounting principles, (a) the items of
Inventory which will be sold to Purchaser hereunder will be in
good condition, not obsolete, and usable or salable as part of
the current lines being sold by Seller, and all raw materials,
parts and work-in-process Inventories will be of a quality and
quantity usable by Seller in the ordinary course of its business,
and (b) the quantities of all finished goods, raw materials,
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parts and work in process Inventories to be acquired by Purchaser
will be reasonable in relationship to the orders and the
anticipated business for Seller.
6.10 Equipment. Except as may be set forth on Exhibit L,
all items included in the Equipment are located on the Real
Estate, and are in good condition and repair, ordinary wear and
tear excepted.
6.11 Real Estate.
(a) Seller's lease for the Real Estate (the
"Lease") is in full force and effect and Seller and the
Landlord thereunder are not in default under the Lease.
Pursuant to said Lease, Seller holds a valid leasehold
estate in the Real Estate, free and clear of all
encumbrances, charges, easements, restrictions, rights
and conditions, other than as reflected in Exhibit B.
(b) Seller's present use of the Real Estate, and
the other Assets located thereon, complies with all
federal, state and local laws, regulations, zoning and
other ordinances, and private restrictions which are
applicable to the Real Estate and the other Assets
located thereon.
(c) To the best of Seller's knowledge, after
reasonable investigation, there are no pending,
proposed or threatened changes in any zoning ordinances
which apply to the Real Estate. If Seller becomes
aware of any pending, proposed or threatened zoning
changes before closing, it will immediately notify
Purchaser of such zoning changes.
(d) Except as set forth in Exhibit L attached
hereto, no condition exists and no activity has ever
been conducted at the Real Estate (i) during the time
period that Seller has leased the Real Estate, and (ii)
to Seller's best knowledge prior to said time period,
which has given rise to, or may give rise to, any
liability under any applicable federal, state or local
environmental protection, health, safety or similar
law, statutory or common.
(e) To the best of Seller's knowledge, after
reasonable investigation, there are no public
improvements (water, sewer, sidewalk, street, alley,
curbing, etc.) or condemnation actions affecting the
Real Estate or other Assets thereon which have been
completed or are in progress and for which assessments
may be levied after closing. Seller has no knowledge
of any planned improvements which may result in
assessments or condemnation actions. If Seller becomes
aware of any planned improvements or condemnation
actions before closing, it will immediately notify
Purchaser of such planned improvements or condemnation
actions.
(f) All utilities, including but not limited to,
telephone, city sewer, city water, electricity, gas and
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any other utilities necessary for the operations of the
Assets, are available, connected and operational, and
adequate for conducting the present operations of the
Real Estate and the other Assets.
(g) Except for the Lease, no portion of the Real
Estate is the subject of any lease or leasehold
interest contract or agreement for use of the Real
Estate, except for about 500 square feet subleased
(the "Sublease") to Studsvik under a sublease which
Purchaser will permit to continue, subject to the
requirements elsewhere set forth herein, for up to one
year after the Closing Date at a rent of $400 per month
plus directly related costs.
(h) The Real Estate has direct legal access to,
abuts, and is served by a publicly dedicated and
maintained road. This road provides a valid means of
ingress and egress to and from the Real Estate,
sufficient for the present operation of the Real Estate
and the Assets thereon.
(i) To the best of Seller's knowledge, after
reasonable investigation, the building, structures and
improvements included in the Real Estate are in good
condition and repair, ordinary wear and tear excepted,
and there is no material defect or wear and tear to any
such building, structure or improvement, or any other
deterioration, damage or defect, which would prohibit
or impair the continued use of such buildings,
structures or improvements for the purposes for which
they are now employed, or which would require any
material expenditure for repair or replacement.
(j) Any existing easements, including, but not
limited to, those upon, above or below the Real Estate,
will not interfere with the current use of the Real
Estate and the Assets thereon.
(k) There are no underground tanks on the Real
Estate, nor are there any transformers, capacitors or
other appliances in use or stored upon the Real Estate
which contain PCB's. There is no urea-formaldehyde
insulation and no friable asbestos on the Real Estate.
Seller will advise Purchaser of the locations of
asbestos on the Real Estate known to Seller. There is
no hazardous substance or hazardous waste (hereinafter
a "Hazardous Substance"), as defined in the
Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA"), or the Resource
Conservation and Recovery Act of 1976 ("RCRA") or any
other applicable federal, state or local environmental
laws, statutes or regulations or as defined in 42
U.S.C. 3251, as amended, located anywhere in or on the
Real Estate. No condition exists, and no activity has
ever been conducted at the Real Estate which has given
rise to, or may give rise to, any liability or
obligation under any applicable federal, state or local
environmental protection, health, safety, or similar
law, whether statutory or common law provided, however,
that any representation with regard to owners or
occupiers prior to Seller is limited to Seller's best
knowledge, after reasonable investigation.
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(l) Except in the ordinary course of its own
business where Seller has complied with the legal
requirements applicable thereto, Seller has not engaged
in the business of generating, transporting, storing,
treating or disposing of Hazardous Substances in or on
the Real Estate; the Real Estate has not been used for
the storing or disposal of waste or for storing or
disposal of Hazardous Substances or during, or to the
best of Seller's knowledge, after reasonable
investigation, prior to, the period that Seller has
been an occupier of the Real Estate; neither the Real
Estate nor any of its various components contains, is
composed of, or emits any hazardous, toxic, or
contaminated chemicals, substances, materials or
pollutants or other Hazardous Substances. Seller and
Shareholders hereby agree, jointly and severally, to
indemnify, save and hold Purchaser harmless from and
against any and all liability which is the result of a
release or threatened release of Hazardous Substances
deposited, stored, disposed of, placed on or which
otherwise came to be located on the Real Estate, or
which is the result of the existence or emission of any
hazardous, toxic or contaminated chemicals, substances,
materials or pollutants or other Hazardous Substances
in, on or from the Real Estate during, or to the best
of Seller's knowledge, after reasonable investigation,
prior to, the period of Seller's use or possession of
the Real Estate.
(m) Seller is not a party to, and is not
currently threatened with, any legal action or other
proceeding before any court or administrative agency
relating to or affecting the Real Estate or any portion
thereof. Seller has not been charged with, and is not
under investigation regarding any violation of any law
or administrative regulation, federal, state or local
concerning the Real Estate.
6.12 Assets Complete, Etc. The Assets which will be
acquired by Purchaser at Closing include (i) all Assets used in
or necessary for the operation of the present Business, and (ii)
except for assets leased under leases disclosed herein, except
for inventory and supplies utilized in the ordinary course of
business, and except non-material items of personal property
owned by employees, all assets presently located at the Plant.
No tooling, fixtures or any manufacturing operation for any
Products currently manufactured or serviced by Seller is located
other than at the Plant, except that tooling is held by third
parties who perform manufacturing operations for Seller as is
specified on Exhibit L-1 attached hereto. The third parties
holding the tooling (hereinafter the "Tooling Holders") have been
paid all amounts owed to them, or will be paid such amounts on or
before Closing, so that as of the Closing, no amounts will be
owed to the Tooling Holders by Seller, except only for amounts
owed to Tooling Holders included in the Liabilities specifically
assumed by Purchaser and shown on the Closing Balance Sheet, as
finally determined. There are no contracts, agreements, or
understandings with the Tooling Holders except as referenced on
Exhibit L-1. At the Closing, Seller will send notices to the
Tooling Holders advising them that the Tooling is the property of
Purchaser, and will take such other actions as may be reasonably
required to give Purchaser ownership and control of the tooling
held by the Tooling Holders.
<PAGE>
Seller does not lease or otherwise use any property owned by
third parties in its operations, except as may occur under leases
disclosed as Contracts hereunder.
Since January 1, 1995, no assets of any kind used by the
Seller or located at or on the Real Estate, have been removed,
transferred or disposed of except for sales of inventory and
utilization of supplies in the ordinary course of business of
Seller.
6.13 Litigation. There are no claims, actions, suits,
proceedings or investigations (whether or not purportedly on
behalf of Seller) pending or threatened against or affecting
Seller, the Business or the Assets, at law or in equity or
admiralty or before or by any federal, state, municipal or other
governmental department, commission, board, agency or
instrumentality, domestic or foreign, nor has any such action,
suit, proceeding or investigation been pending during the
12-month period preceding the date hereof; and Seller is not
operating under or subject to, or in default with respect to, any
order, writ, injunction or decree of any court or federal, state,
municipal or other governmental department, commission, board,
agency or instrumentality, domestic or foreign.
6.14 Compliance with Laws. The Assets comply with, and to
Seller's best knowledge, Seller's conduct of the Business has
complied with, all applicable laws, regulations and orders
applicable, including without limitation CERCLA, RCRA, MERLA, the
Occupational Safety & Health Act, the Clean Air Act, the Clean
Water Act, the Toxic Substances Control Act, the Safe Drinking
Water Act, the Refuse Act, and that Seller has complied with the
rules and regulations of the Nuclear Regulatory Commission (NRC)
and the Illinois Department of Nuclear Safety (IDNS), and the
present uses by Seller of the Assets do not violate any such
laws, regulations and orders. Provided, however, that any
representation nor warranty as it pertains to the NRC and IDNS,
which might include money damages, and any claim which may result
from such representation or warranty, is subrogated to Seller's
rights under the Price Anderson Act.
Seller has used and presently uses limited quantities of nuclear
materials in connection with its instrumentation and related
activities, and from time to time in the past, Seller has
developed and manufactured instrumentation for detection of
radiation, which activities included having nuclear materials on
site for purposes of calibration and related purposes. All such
nuclear materials were handled in compliance with applicable
laws.
6.15 Intellectual Property. Exhibit L lists all service
marks, patents, trademarks, trade names, trademark and trade name
registrations, brand names, copyright registrations, all pending
applications for any of the foregoing, and any other proprietary
rights, inventions, trade secrets, or know-how or processes
(hereinafter the foregoing are collectively referred to as
"Intellectual Property") used in the Business, or owned by
Seller, and any licenses granted by or to Seller, and any other
agreements to which it is a party, which relate, in whole or in
part, to Intellectual Property. Without limiting the generality
of the foregoing, said Exhibit specifically lists any items of
Intellectual Property which are owned by Shareholders or any
subsidiaries or affiliates of Shareholder but which are used or
utilizable in the Business. Said Exhibit further includes a
brief description of the filing, registration or issuance dates
of any such Intellectual Property. Seller owns or is licensed to
use, all Intellectual Property used by it in the conduct of its
business as currently conducted. The use by Seller of any such
<PAGE>
Intellectual Property, and the conduct by Seller of its business,
does not infringe on the rights of any third party, and no claim
has been asserted to such effect or otherwise affecting any
Intellectual Property of Seller. The Intellectual Property to be
assigned, transferred or conveyed to Purchaser hereunder
constitutes all the Intellectual Property used by Seller in the
conduct of its business, or in connection with the Assets.
6.16 Labor Controversies. There are no controversies
pending or to the best knowledge of Seller, threatened, between
Seller and (i) any union or (ii) any of Seller's employees.
Seller is not currently subject to (i) any threats of strikes or
work stoppages, or (ii) any organizational efforts or demands for
collective bargaining or any union organization. Seller is in
substantial compliance with applicable labor laws. Seller is not
party to any collective bargaining agreements, other than that
certain Labor Agreement dated December 1, 1993 (the "Union
Agreement") between Seller and the Brotherhood of I.T.L.
Production Employees (the "Union").
Except as set forth on Exhibit L, during the two-year period
preceding the date hereof, there have been no unfair labor
practices alleged against Seller and no arbitrations under the
Union Agreement.
6.17 Pension and Profit Sharing Plans; Benefits. Seller has
no pension or profit sharing plans which cover any of its
employees, except as referenced on Exhibit L. In any event,
Seller is not party to any defined benefit pension plans or any
multi-employer plans, including but not limited to multi-employee
plans involving the Union. All contributions required to be made
or accrued prior to the Closing Date to any such plans shall have
been paid prior to the Closing Date, or provisions satisfactory
to Purchaser for such payment shall have been made.
Exhibit L contains a complete list of all benefit plans and
employee benefits provided by Seller to its employees including
but not limited to any disability, medical, dental, workers
compensation, health insurance, life insurance, vacation,
benefits plans, incentive plans, fringe benefit plans and any
other material plans, programs, agreements or arrangements which
provide benefits to any current or former employee of Seller.
Exhibit L also contains a listing of all Employees of
Seller, together with their current compensation, including any
bonuses or incentive compensation plans or arrangements. Except
as set forth in said Exhibit, said compensation shall not be
increased by Seller from and after the date hereof.
All the accrued obligations of Seller, whether arising by
operation of law, by contract or by past custom, for payments by
it to trust or other funds or any governmental agency with
respect to unemployment compensation benefits, social security
benefits or any other benefits for employees of Seller shall
have been paid prior to Closing or, if due after Closing, shall
be paid when due under applicable laws, regulations, or
provisions of benefit plans or policies as the case may be. All
other accrued benefits, and all other reasonably anticipated
obligations of Seller, whether arising by operation of law, by
contract or by past custom, for holiday pay, bonuses or other
<PAGE>
forms of compensation or benefits which are and may become
payable to employees of Seller shall be paid in accordance with
the provisions of applicable laws, regulations, benefit plans or
policies, as the case may be. In no event shall Purchaser assume
or be responsible for past or future obligations of Seller to any
employee, including any obligations to pay salary, benefits,
severance pay, vacation pay or other benefits to any employee,
regardless of whether such employees are hired by Purchaser,
except only to the extent of liabilities for such payments
specifically assumed by Purchaser and specified on the Closing
Balance Sheet.
6.18 Changes in Suppliers and Customers. Seller is not
aware of any facts which indicate that any of the material
customers of Seller intends to cease being a customer of Seller
(or intends to not continue as customer with Purchaser after the
Closing hereunder), nor is Seller aware of any facts which
indicate that any material supplier to Seller intends to cease
doing business with Seller, or to not do business with Purchaser
after the Closing hereunder, whether as a result of the
transactions contemplated hereby or otherwise.
6.19 Conduct of Business. Since the ending date of the most
recent Seller Statement and until the Closing Date, Seller has
not and will not have:
(i) incurred any Liabilities (absolute or
contingent), except for Liabilities disclosed in the
Interim Statement, or in the Exhibits annexed hereto,
and except for such Liabilities as have arisen in the
ordinary course of business of Seller since the date of
the Interim Statement, none of which newly arisen
Liabilities have a material adverse effect upon Seller,
the Assets, or Seller's organization, business,
properties, or financial condition;
(ii) mortgaged, pledged or subjected to any lien,
charge or other encumbrance, any of the Assets,
tangible or intangible;
(iii) sold or transferred any assets included
in the Assets, other than sales of inventory or
utilization of supplies in the ordinary course of
business;
(iv) sold, assigned or transferred any
Intellectual Property, or other intangible assets of
Seller or relating to the Assets or Seller's business,
or included in the Assets;
(v) suffered any extraordinary losses or waived
any rights of substantial value relating to Seller's
business or the Assets;
(vi) suffered any damage, destruction or loss in
excess of $1,000 per item to any Assets, whether or not
covered by insurance;
(vii) entered into any transaction involving
or relating to Seller's business or the Assets other
than in the ordinary course of business;
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(viii) increased the compensation payable, or
to become payable by Seller to any of its employees
including, but not limited to, any bonus payment or
deferred compensation other than in the ordinary course
of business and as disclosed in Exhibit L;
(ix) made or suffered any amendment or termination
of any Contracts other than in the ordinary course of
business;
(x) increased any benefits to employees of Seller
under pension, insurance or other employee benefit
programs other than in the ordinary course of business;
(xi) changed its methods of accounting in any
respect;
(xii) acquired a significant portion of the
assets or stock of any person or business entity; or
(xiii) suffered a termination of, or amended,
any license or permit other than in the ordinary course
of business, with no significant adverse effect on
Seller or the Business.
6.20 Employees. Seller is not aware that any employees of
Seller intend to cease their employment with Seller, or to not
accept employment with Purchaser (other than Mr. Stephen Grover)
whether as a result of the transactions contemplated hereby or
otherwise.
6.21 Licenses and Permits. All licenses, permits,
franchises, approvals and governmental authorizations required
for Seller, its business, the Assets, or their operations, are
listed on Exhibit L. No other licenses, permits, franchises,
approvals or other governmental authorizations are required for
Seller, the Business, the Assets or their operations as
heretofore conducted by Seller. True, current, correct and
complete copies of such licenses, permits, franchises, approvals,
and governmental authorizations have been delivered by Seller to
Purchaser. Seller has performed in all material respects all
obligations required to be performed by it to date under, and is
not in default under, any such licenses, permits, franchises,
approvals, or governmental authorizations or the laws,
regulations and requirements of the licensing and permit
authorities. All such licenses, permits, franchises, approvals,
and governmental authorizations are in full force and effect.
Except as set forth on Exhibit L, all such licenses, permits,
franchises, approvals, and governmental authorizations will be
assigned to Purchaser at the Closing.
6.22 Plans. To the best of Seller's knowledge subject to
normal industry standards, the Plans relating to products
produced by Seller are complete and of such quality that
competent personnel by use of such Plans can produce, manufacture
and assemble such products so that they meet the specifications
and requirements applicable thereto.
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6.23 Suppliers. Exhibit L attached hereto lists all
significant suppliers of products or services to Seller.
6.24 Products and Warranties. Except as listed on
Exhibit L, all products sold or leased by Seller during the last
two years complied, and all finished goods included in Seller's
inventory on the Closing Date will comply, with Seller's standard
warranties applicable thereto and with all requirements in any
applicable agreements of sale as to such products. True,
complete and correct copies of Seller's standard warranties have
been provided to Purchaser.
The Products currently sold by Seller comply with the
specifications applicable thereto, and there are no material
defects in such Products.
During the last two years, Seller has not had any product
recalls or any other unusual expenses or problems associated with
products sold by Seller (hereinafter "Product Events"). Seller
will promptly advise Purchaser of any Product Events which occur
from the date hereof through the Closing Date.
6.25 Material Change. Since the date of the most recent
Seller Statement there has been no material change in the
condition, financial or otherwise, of Seller, Seller's business,
or the Assets from that shown in said Statement, except changes
occurring in the ordinary course of business, which changes have
not materially adversely affected the Assets, or Seller's
organization, business, properties or financial condition.
To the best of Seller's knowledge, after reasonable
investigation, no statute, order, judgment, writ, injunction,
decree, permit, rule or regulation of any court or governmental
or regulatory body has been adopted or entered, or is proposed to
be adopted or entered, which may materially and adversely affect
Seller, the Assets or the Business. To the best of Seller's
knowledge, after reasonable investigation, there has been no
event or occurrence affecting Seller, the Assets, or the Business
which Seller reasonably expects will have a material adverse
effect upon Seller's business, prospects or Assets.
6.26 Disclosure. No representation or warranty made by
Seller or Shareholders herein or in any agreements, certificates
or documents delivered in connection with this Agreement contains
any untrue statement of a material fact or, to Seller's best
knowledge, omits to state a material fact necessary to make such
representation or warranty not misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES BY PURCHASER
Purchaser represents and warrants to Seller that the
following statements are true and correct as of the date of this
Agreement and will be true and correct on the Closing Date as if
made on said date:
7.1 Organization and Standing. Purchaser is a corporation
duly organized, existing and in good standing under the laws of
the State of Minnesota.
<PAGE>
7.2 No Conflict. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby will not (a) result in a breach of any of the terms or
conditions of, or constitute a default under, any mortgage, note,
bond, indenture, agreement, license or other instrument or
obligation to which Purchaser is a party or by which it or any of
its properties or assets may be bound or affected, or (b) violate
any order, writ, injunction or decree of any court,
administrative agency or governmental body, or (c) conflict with
or result in the breach of the terms, conditions or provisions of
the Articles of Incorporation or By-Laws of the Purchaser.
7.3 Authority. Purchaser has full power and authority to
enter into this Agreement and to carry out the transactions
contemplated hereby, and all corporate and other proceedings
required to be taken by Purchaser in connection with this
Agreement and the transactions contemplated hereby and necessary
to make the same effective have been duly and validly taken.
This Agreement constitutes a valid and binding obligation of
Purchaser and is enforceable in accordance with its terms.
7.4 SEC Filings. During the period from January 1, 1994
through the date hereof, TSI has filed with the Securities &
Exchange Commission ("SEC") all reports and statements, including
its Annual Report, its Quarterly Reports, and its Proxy
Statement, which it was required to file with the SEC pursuant to
the Securities & Exchange Act of 1934 (the "1934 Act"). None of
such reports and statements filed by TSI with the SEC since
January 1, 1994, when filed, contained any untrue statement of a
material fact or to TSI's best knowledge, omitted to state a
material fact required to be stated therein or necessary to make
the statements made therein, under the circumstances under which
they were made, not misleading.
7.5 Purchaser covenants it will maintain Alnor AB at its
present level of employment, or greater, for a period of three
(3) years from the date of this Agreement.
7.6 Disclosure. No representation or warranty made by
Purchaser herein or in any agreements, certificates or documents
delivered in connection with this Agreement contains any untrue
statement of a material fact or, to Purchaser's best knowledge,
omits to state a material fact necessary to make such
representation or warranty not misleading.
ARTICLE VIII
COVENANTS
8.1 Action by Seller. Seller will not take or permit to be
taken any action or do or permit to be done anything in the
conduct of its business or otherwise, which would be contrary to
or in breach of any of the terms, conditions or provisions of
this Agreement, or which would cause any of the representations
and warranties of Seller to be untrue as of the Closing Date or
any time thereafter.
8.2 Fees. Each party shall pay all fees and disbursements
of counsel and accountants for said party arising in connection
with this Agreement and the transactions contemplated hereby.
<PAGE>
8.3 Further Assurances. On the Closing Date, and from time
to time thereafter, at the request of Purchaser, Seller will
execute and deliver to Purchaser all such assignments,
endorsements and other documents, and take such other action as
Purchaser may reasonably request in order more effectively to
transfer and assign to Purchaser the Assets transferred to
Purchaser pursuant to this Agreement, to confirm the title of
Purchaser thereto and to assist Purchaser in exercising its
rights with respect thereto and under this Agreement.
8.4 Non-Compete Agreement; Consulting Agreement. At the
Closing, Purchaser and Seller shall enter into the Non-Compete
Agreement in the form of Exhibit G annexed hereto. At the
Closing, Purchaser and Seller shall enter into a Consulting
Agreement in the form of Exhibit H attached hereto.
8.5 Alnor AB. At or contemporaneously with the Closing,
Purchaser shall, and Sellers and Shareholders agree that Studsvik
shall close the Stock Purchase Agreement providing for the
acquisition of the stock of Alnor AB.
8.6 Consents to Assignment. Seller shall use its best
efforts to obtain consents to assignment of all Acquired
Contracts.
8.7 Change of Name. Promptly after the Closing, each of
Seller and Alnor will change their names so that the names do not
include, nor do they bear any significant resemblance to,
"Alnor." From and after the Closing Date, no other Affiliates
(as defined in the Non-Compete Agreement, Exhibit I hereto) of
Seller or Shareholder will have "Alnor" or a name which bears any
significant resemblance to "Alnor" in their name.
8.8 The Sublease. Seller and Shareholders warrant that
none of the items located at, and none of the activities
conducted at the space leased pursuant to the Sublease will be
harmful, dangerous, or in violation of law. Seller and
Shareholders jointly and severally agree to indemnify, save and
hold Purchaser harmless from and against any and all liabilities,
losses, damages, claims, deficiencies, costs and expenses arising
out of or in connection with the Sublease, and waive, release and
forgive any claim that they may have against Purchaser for any
loss or other damage that may occur to property held in the space
subject to the Sublease. In this connection, it is understood
that Seller and Shareholders will look solely to the insurance,
if any, that they may carry against any loss or damage and will
require that any such insurers waive any rights of subrogation
against Purchaser.
ARTICLE IX
NO BROKERS OR FINDERS
Seller and Purchaser represent and warrant to each other
that each did not directly or indirectly engage any person,
corporation or partnership to bring about the consummation of the
transactions contemplated herein, and, that no person,
corporation or partnership is entitled to a broker's commission,
finder's fee or any similar compensation upon the consummation of
the transactions contemplated herein, except that Purchaser
utilized the services of Enterprise Investments, Inc., and
<PAGE>
Purchaser agrees that it shall be responsible for any fees owed
to Enterprise Investments, Inc. If this representation and
warranty is breached by either Seller or Purchaser, the breaching
party shall indemnify and hold harmless the other party from any
and all claims, demands, liabilities and obligations (and any and
all expenses and costs incurred in connection with or in
defending against the same), which may arise due to any third
party's claim as a broker or finder.
ARTICLE X
CONDITIONS PRECEDENT OF PURCHASER
The obligations of Purchaser hereunder are subject to the
conditions that, on or before the Closing Date:
10.1 Representations and Warranties True at Closing. The
representations and warranties of Seller and Shareholders
contained in this Agreement or in any certificate or document
delivered pursuant to the provisions hereof or in connection with
the transactions contemplated hereby shall be true on and as of
the Closing Date as though such representations and warranties
were made at and as of such date.
10.2 Compliance with the Agreement. Seller and Shareholders
shall have performed and complied with all agreements, covenants
and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
10.3 Seller's Certificate. Seller shall deliver to
Purchaser a certificate of an officer of Seller and of
Shareholders dated the Closing Date, certifying in such detail as
Purchaser may request to the fulfillment of the conditions
specified in sections 10.1 and 10.2.
10.4 Deliveries. The documents required under Article III
hereof shall be tendered by Seller for delivery to Purchaser at
the Closing.
10.5 Opinion of Seller's Counsel. Purchaser shall have
received an opinion of counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit M hereto.
10.6 Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or any
order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of
them not be consummated as herein provided.
10.7 Casualty. Prior to the Closing Date, the business and
the Assets of Seller, or any portion thereof, shall not have been
adversely affected in any material way as a result of any fire,
accident, flood or other casualty or act of God or the public
enemy.
10.8 Adverse Development. There shall have been no
developments in the business of Seller, or in the Assets, between
the date of the Interim Statement and the Closing Date which
would have a materially adverse effect on Seller's business or
the Assets.
<PAGE>
10.9 Non-Compete Agreement. The Non-Compete Agreement
(Exhibit I) shall have been executed and delivered by Seller and
Shareholders to Purchaser.
10.10 Consulting Agreement. The Consulting Agreement
(Exhibit J) shall have been executed and delivered by Seller to
Purchaser.
10.11 Union. Provided that Purchaser has offered
employment on terms and conditions reasonably equivalent to those
offered by Seller, Purchaser shall have reached an agreement or
arrangement satisfactory to Purchaser with the Union.
10.12 Lease and Real Estate. All requirements relating
to the Lease and Real Estate shall have been satisfied.
10.13 Investigations. Purchaser shall be satisfied with
the results of its legal, accounting, business, environmental and
other due diligence review of Seller's business and the Assets.
10.14 Satisfaction of Liabilities. On or before
Closing, Seller shall provide evidence to Purchaser that Seller
has satisfied, or made acceptable arrangements to satisfy its
obligations as addressed in Section 2.3 hereof.
10.15 Board Approval. This Agreement and the
transactions contemplated hereby shall have been approved by
Purchaser's Board and by the Board of Purchaser's parent company,
TSI Incorporated.
ARTICLE XI
CONDITIONS PRECEDENT OF THE SELLER
The obligations of the Seller hereunder are subject to the
conditions that, on or before the Closing Date:
11.1 Representations and Warranties True at Closing. The
representations and warranties of Purchaser contained in this
Agreement or in any certificate or document delivered pursuant to
the provisions hereof or in connection with the transactions
contemplated hereby, shall be true on and as of the Closing Date
as though such representations and warranties were made at and as
of such date.
11.2 Purchaser's Compliance with the Agreement. Purchaser
shall have performed and complied with all agreements, covenants
and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing Date.
11.3 Officers' Certificate. Purchaser shall deliver to the
Seller a certificate of an officer or authorized signer of
Purchaser, dated the Closing Date, certifying in such detail as
the Seller may request to the fulfillment of the conditions
specified in sections 11.1 and 11.2.
<PAGE>
11.4 Injunction. There shall be no effective injunction,
restraining order or order of any nature issued by a court of
competent jurisdiction which shall direct that this Agreement, or
any of the transactions provided for herein, not be consummated
as herein provided.
11.5 Purchaser's Insurance. Purchaser shall deliver to the
Seller a certificate of product liability insurance and proof
said insurance is an occurrence based policy in full force and as
of the Closing Date and covers Seller's products acquired under
this Agreement.
ARTICLE XII
INDEMNIFICATION
12.1 Indemnification. Seller and Shareholders hereby agree
that, notwithstanding the Closing, the delivery of instruments of
conveyance, and regardless of any investigation at any time made
by or on behalf of any party hereto or of any information any
party hereto may have in respect thereof, each of Seller and the
Shareholders, jointly and severally, will indemnify, save and
hold Purchaser harmless from and against any and all liabilities,
losses, damages, claims, deficiencies, costs and expenses
(including, without limitation, reasonable attorney fees and
other costs and expenses incident to any suit, action or
proceeding) arising out of or resulting from and will pay to
Purchaser the amount of damages suffered thereby together with
any amount which it may pay or become obligated to pay on account
of:
(a) the breach or inaccuracy of any warranty or
representation by Seller or Shareholders herein or any
misstatement of a fact or facts herein made by the
Seller or Shareholders;
(b) any failure of the Seller or Shareholders to
perform or observe any term, provision, covenant or
condition hereunder on the part of any of them to be
performed or observed;
(c) any act performed, transaction entered into,
or state of facts suffered to exist by Seller or
Shareholders in violation of the terms of this
Agreement;
(d) all Liabilities of Seller, or the Business,
arising before the Closing Date, except for liabilities
specifically assumed by Purchaser hereunder; and
In the event of any claim by Purchaser under this Section
12.1, Purchaser shall be entitled to exercise all remedies
provided by law and/or equity with respect thereto; in addition
Purchaser shall be entitled to offset the amount of such claim
against any amounts due Seller or any of Shareholders.
12.2 Time Limit. Each of the covenants, representations and
warranties made by the Company and the Shareholders in this
Agreement shall survive for a period of three (3) years after the
Closing Date; provided, however, that the representations and
warranties made in Section 6.2 shall survive for five (5) years,
and that those made in Sections 6.11(d), (k) and (l), Section
6.14 and the covenant in Section 8.3, shall survive for seven (7)
<PAGE>
years after the Closing Date. After the expiration date of any
covenants, representations and warranties, no claim for
indemnification based on such covenants, representations or
warranties may be asserted, except that claims first asserted in
writing with reasonable detail before the expiration date may be
pursued until they are finally resolved.
12.3 Limitation on Indemnity. Notwithstanding any previous
language to the contrary, the obligation of Seller and
Shareholders under this Agreement shall be limited to the
Purchase Price for any and all claims except claims related to
product liability, liability arising out of Section 6.14 and
liability for taxes found due and payable.
ARTICLE XIII
NATURE AND SURVIVAL OF REPRESENTATIONS
All statements contained in any documents, certificates or
other instruments delivered by or on behalf of Seller or
Purchaser pursuant to this Agreement or in connection with the
trans- actions contemplated hereby shall be deemed
representations and warranties by Seller or Purchaser hereunder.
Subject to the limitations in Section 12.2, all representations
and warranties and agreements made by Seller or Purchaser in this
Agreement or in any documents, certificates, or other instruments
delivered pursuant hereto shall survive the Closing hereunder
(and any investigation at any time made by or on behalf of Seller
or Purchaser).
ARTICLE XIV
NOTICES
All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed first-class postage prepaid:
(a) To the Seller or Shareholders:
Studsvik AB
c/o Law Offices Gerhard E. W. Kelter, Jr.
135 South LaSalle Street, Suite 1905
Chicago, IL 60603
with a copy thereof to:
Patrick J. Kronenwetter
c/o Law Offices Gerhard E. W. Kelter, Jr.
135 South LaSalle Street, Suite 1905
Chicago, IL 60603
<PAGE>
(b) To Purchaser:
TSI Incorporated
P.O. Box 64394
500 Cardigan Road
St. Paul, MN 55164
Attention: Lowell Nystrom
with a copy thereof to:
John E. Brower
Gray, Plant, Mooty, Mooty & Bennett, P.A.
3400 City Center
33 South Sixth Street
Minneapolis, MN 55402
or to such other address or to such other person as Purchaser or
Seller shall have last designated by notice to the other.
ARTICLE XV
MODIFICATION
This Agreement contains the entire agreement between the
parties hereto with respect to the transactions contemplated
herein and shall not be modified or amended except by an
instrument in writing signed by or on behalf of the parties
hereto.
ARTICLE XVI
EXPENSES
Whether or not the transactions contemplated hereby are
consummated, each of the parties hereto shall pay its own
expenses incurred in connection with the authorization,
preparation, execution or performance of this Agreement and all
transactions contemplated hereby, including without limitation
all fees and expenses of agents, representatives, counsel and
accountants.
ARTICLE XVII
ASSIGNMENT
This Agreement shall not be assignable by any party hereto
without the prior written consent of the other party.
ARTICLE XVIII
ILLINOIS LAW TO GOVERN
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois.
<PAGE>
ARTICLE XIX
COUNTERPARTS
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
ARTICLE XX
HEADINGS
The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any
provision thereof. Reference to numbered "articles," "sections,"
"paragraphs" and "subparagraphs," and to lettered "Exhibits"
refer to articles, sections, paragraphs and subparagraphs of this
Agreement and Exhibits annexed thereto.
ARTICLE XXI
ACCESS TO BOOKS AND RECORDS
Under the terms of this Agreement, Purchaser is receiving
some of the books and records which relate to Seller's business
relating to the Assets, while Seller is retaining other records.
Each party agrees that for a period of three (3) years from the
Closing Date, or longer if required by applicable tax or
governmental authorities, said party shall preserve any books and
records relating to the Assets and the related business, and that
during such period it will afford to the other party access to
all such books and records at reasonable business hours and upon
reasonable notice. After the termination of said three-year
period each party shall be free to dispose of any such records in
such form as it pleases, unless the other party has requested
said records. If the other party has made such a request, the
party receiving the request either shall give to the requesting
party the originals or copies of such records, or may retain such
records subject to the requesting party's continuing right to
inspect the same.
ARTICLE XXII
ARBITRATION
Any controversy, claim or dispute arising out of this
Agreement, the agreements and documents executed in connection
herewith, or the actions contemplated by this Agreement and said
agreements and documents shall be settled by binding arbitration
in the County of Cook, in the State of Illinois, in accordance
with the rules and procedures then obtaining of the American
Arbitration Association. The award by the arbitrator shall be
enforceable in any court having jurisdiction. Any award shall be
a conclusive determination of the matter and shall be binding
upon the parties and shall not be contested by any of them.
ARTICLE XXIII
JOINT AND SEVERAL LIABILITY
All agreements, covenants, representations, warranties and
obligations of Seller and Shareholders hereunder shall be joint
and several obligations of Seller and Shareholders.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
PURCHASER:
TSI INTERNATIONAL, INC.
By /s/ LOWELL D. NYSTROM
Its V. President
SELLER:
ALNOR INSTRUMENT COMPANY
By /s/ STEPHEN F. GROVER
Its President
SHAREHOLDERS:
ALNOR, INC.
By /s/ STEPHEN F. GROVER
Its President
STUDSVIK AB
By /s/ JERRY ERICSSON
Its V. President
