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 13, 1994
CLARK EQUIPMENT COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-5646 38-0425350
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification Number)
100 North Michigan Street
P. O. Box 7008
South Bend, Indiana
(Address of principal 46634
executive offices) (Zip Code)
Registrant's telephone number (219) 239-0100
including area code
Total Number of Pages: 43
Exhibit Index at Page: 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 13, 1994, Registrant acquired all of the outstanding capital stock
("Stock") of Blaw-Knox Construction Equipment Corporation ("BK"), a
leading producer of asphalt paving equipment located in Mattoon, Illinois.
These shares were purchased from White Consolidated Industries, Inc.
("WCI"), a wholly-owned subsidiary of AB Electrolux. In addition, on May
13, 1994, a wholly-owned subsidiary of the Registrant acquired the assets
related to WCI's asphalt paving business in the United Kingdom ("Assets").
The Assets were acquired from White Consolidated International Holdings
Ltd. and Blaw-Knox Construction Equipment Co., Limited.
Included among the assets acquired by Registrant (either directly through
the purchase of the Assets or indirectly through the purchase of the
Stock) are (1) plants in Rochester, England and Mattoon, Illinois at which
asphalt paving equipment is manufactured, (2) machinery, equipment, tools,
dies and fixtures used in the manufacture of asphalt paving equipment, (3)
finished goods, raw materials, work-in-process and other inventory,(4)
certain trademarks, patents and other intellectual property, and (5)
receivables and contract rights. It is Registrant's current intention to
continue to use these assets in the manufacture of asphalt paving
equipment.
The aggregate purchase price for the Stock and Assets was approximately
$134 million. The purchase price is subject to adjustment pursuant to the
terms of the Agreement of Purchase and Sale dated April 20, 1994 between
WCI and Registrant. In addition, Registrant paid $10 million to WCI for a
covenant not to compete.
The funds used to consummate the acquisition of the Shares and Assets and
to pay for the covenant not to compete came from Registrant's available
cash, with the exception of $40 million which was borrowed by Registrant
pursuant to Registrant's $100 Million Master Credit Agreement dated April
6, 1994. Of the amount borrowed pursuant to the Master Credit Agreement,
$25 million was borrowed from PNC Bank and $15 million from Comerica Bank.
These borrowings were repaid after two weeks upon the maturity of certain
of Registrant's short term investments which had not yet matured at the
time of the closing of the acquisition.
A copy of the Agreement of Purchase and Sale dated as of April 20, 1994
between WCI and Registrant is attached hereto as Exhibit (2).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
At this time, it is impracticable to file the financial statements and
pro-forma financial information required to be filed in this report.
These financial statements and pro-forma financial information will be
filed as soon as practicable.
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Exhibits
See attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CLARK EQUIPMENT COMPANY
/s/ John J. Moran, Jr.
John J. Moran, Jr.
Assistant Secretary
Date: May 27, 1994
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EXHIBITS LIST AND INDEX
Exhibit Filed Herewith Unless
Number Description Otherwise Indicated
(2) Agreement of Purchase and Page 5
Sale dated as of April 20,
1994 between White
Consolidated Industries Inc.
and Clark Equipment Company
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AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT dated as of April 20, 1994, by and between WHITE
CONSOLIDATED INDUSTRIES, INC. ("WCI"), a Delaware corporation, and CLARK
EQUIPMENT COMPANY ("BUYER"), a Delaware corporation.
W I T N E S S E T H :
WHEREAS, WCI is engaged through its wholly-owned subsidiaries,
BLAW-KNOX CONSTRUCTION EQUIPMENT CORPORATION, a Delaware corporation
("BK"), WHITE CONSOLIDATED INTERNATIONAL HOLDINGS, LTD, a Delaware company
("WCI-LTD"), and BLAW-KNOX CONSTRUCTION EQUIPMENT CO. LIMITED, a United
Kingdom agency company ("BK-LTD", and together with WCI-LTD., "BKL") in
the businesses of designing, manufacturing, selling and licensing of the
products described in Part 1.00 of the Disclosure Schedule to be delivered
by WCI to BUYER prior to the CLOSING (the "SCHEDULE"), a draft of which
SCHEDULE is attached hereto, and spare and replacement parts therefor (the
"PRODUCTS"), all of which businesses are collectively referred to as the
"BUSINESS".
WHEREAS, WCI desires to sell and BUYER desires to purchase all
outstanding shares of capital stock of BK (the "SHARES") and certain
rights, properties and assets of BKL pertaining to the BUSINESS, all upon
the terms and conditions hereof.
WHEREAS, subject to the mutual agreement of WCI and BUYER, the
parties may cause the BKL ACQUIRED ASSETS (defined below) to be
transferred by a separate agreement, satisfactory to both parties, for a
purchase price to be mutually agreed upon by BUYER and WCI, which amount
shall accordingly be deducted from the FINAL CASH PRICE referred to in
Section 2.1 and the PRELIMINARY CASH PRICE referred to in Sections 2.2,
7.2.8 and 8.3.3.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I - SALE OF THE SHARES AND THE BKL ACQUIRED ASSETS
1.1 Sale and Purchase of the Shares and the BKL Acquired
Assets. At the CLOSING (as defined in Section 8.1) WCI or BKL shall sell,
transfer, assign and deliver (or cause to be so done) to BUYER, and BUYER
shall purchase and acquire from WCI or BKL, the SHARES and the ACQUIRED
ASSETS (as defined below) of BKL (the "BKL ACQUIRED ASSETS"). The rights,
properties and assets used now or in the past in the conduct of the
BUSINESS (the "ACQUIRED ASSETS") shall be owned as of the CLOSING by BK or
BKL except to the extent that any thereof form a part of the EXCLUDED
ASSETS which shall have been transferred at or prior to the CLOSING to WCI
or an affiliate (as defined in Section 9.17) of WCI, which ACQUIRED ASSETS
shall include, without limitation, the following:
1.1.1 The real properties described in Part 1.1.1 of the
SCHEDULE and all interests of WCI and its affiliates in and related to the
buildings, structures, fixtures and improvements thereon and all other
appurtenances thereto (the "REAL PROPERTIES").
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1.1.2 The real property leases listed in Part 1.1.2 of the
SCHEDULE and all interests of WCI and its affiliates in and related to the
fixtures and improvements on the properties covered by such leases and all
other appurtenances thereto (the "LEASEHOLDS").
1.1.3 All machinery, equipment, tools, dies, molds, jigs,
patterns, gauges and production fixtures, material handling equipment,
vehicles (other than leased motor vehicles), business machines, office
furniture and office fixtures, and other tangible property, and all
related spare and maintenance parts therefor (the "MACHINERY & EQUIPMENT")
including, without limitation, those listed in the Fixed Asset Ledgers of
BK and BKL included as Part 1.1.3 of the SCHEDULE.
1.1.4 All of the (a) finished goods inventories; (b)
replacement and spare and component parts; and (c) raw materials, work in
process inventory, operating supplies, packaging and shipping materials
(the "INVENTORIES").
1.1.5 (a) The trademarks, service marks, trademark registra-
tions, trade names, copyrights and applications for registration thereof
listed in Part 1.1.5(a) of the SCHEDULE (the "TRADEMARKS, SERVICE MARKS,
TRADE NAMES & COPYRIGHTS"), subject to outstanding licenses (all of which
are listed in Part 1.1.5(b) of the SCHEDULE); and (b) the trademark,
service mark, trade name and copyright licenses, whether WCI or any of its
affiliates is licensor or licensee thereunder, specified in Part 1.1.5(b)
of the SCHEDULE.
1.1.6 (a) The patents and applications for patents listed in
Part 1.1.6(a) of the SCHEDULE (the "PATENTS"), subject to outstanding
licenses (all of which are listed in Part 1.1.6(b) of the SCHEDULE); and
(b) the patent licenses, whether WCI or any of its affiliates is licensor
or licensee thereunder, listed in Part 1.1.6(b) of the SCHEDULE. The
licenses listed in Parts 1.1.5(b) and 1.1.6(b) of the SCHEDULE are collec-
tively referred to hereinafter as the "LICENSES".
1.1.7 All PRODUCT related drawings (including product and
production), designs, specifications and production data.
1.1.8 All books and records of the BUSINESS (including, without
limitation, customer lists) located at the REAL PROPERTIES and copies of
any other books and records located at other facilities of WCI and its
affiliates relating to the BUSINESS subject, however, to the provisions of
Sections 5.2.1 and 5.2.5.
1.1.9 Any permits or approvals issued to WCI or its affiliates
by any federal, state, foreign, local or other jurisdiction or
instrumentality and relating to the BUSINESS, including, without
limitation, those listed in Part 1.1.9 of the SCHEDULE (the "PERMITS").
1.1.10 (a) All contracts made or orders given which relate to
the purchase of materials, parts, supplies and commodities used in the
BUSINESS; (b) all sales orders for PRODUCTS; (c) all leases of machinery
and equipment; (d) all dealer, distributor and sales representative agree-
ments relating to the BUSINESS; and (e) all other licenses, agreements,
commitments and understandings (collectively the "CONTRACTS").
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1.1.11 As of the CLOSING all trade acceptances and trade
accounts and notes receivable (and security interests from third parties
relating thereto) of the BUSINESS (the "RECEIVABLES").
1.1.12 Subject to the provisions of Article VI hereof, the
rights and entitlements of BK under the Collective Bargaining Agreement
included as Part 1.1.12(a) of the SCHEDULE (the "BK COLLECTIVE BARGAINING
AGREEMENT") and the rights and entitlement of BKL under the Collective
Bargaining Agreement included as Part 1.1.12(b) of the SCHEDULE (the "BKL
COLLECTIVE BARGAINING AGREEMENT", and together with the BK COLLECTIVE
BARGAINING AGREEMENT, the "COLLECTIVE BARGAINING AGREEMENTS").
1.1.13 All other rights, assets and properties relating to the
BUSINESS.
1.1.14 All prepaid items and deferred charges relating to the
BUSINESS.
1.1.15 All rights, assets and properties reflected on the
CURRENT BALANCE SHEET (as defined in Section 4.1.2(b)) or acquired or
manufactured after the date thereof, other than finished goods inventory
and scrap materials sold or disposed of in the ordinary course of business
after December 31, 1993 and prior to the CLOSING.
1.2 Excluded Assets. Anything hereinabove contained to the
contrary notwithstanding, the following rights, properties and assets (the
"EXCLUDED ASSETS") shall not be included in the ACQUIRED ASSETS:
1.2.1 As of the CLOSING, all cash, bank balances, monies in
possession of any banks and similar cash equivalents, and marketable
securities.
1.2.2 All self-insurance programs and all policies of insurance
and any return of premiums associated with the cancellation of any such
programs or policies.
1.2.3 Any master leases covering motor vehicles.
1.2.4 All intercompany accounts with WCI, its subsidiaries and
divisions.
1.2.5 All finished goods inventory and scrap materials
reflected on the CURRENT BALANCE SHEET or manufactured after the date
thereof which has been sold or disposed of in the ordinary course of
business after December 31, 1993 and prior to the CLOSING, and such other
properties and assets as may be agreed to in writing by BUYER.
1.2.6 The names "White Consolidated Industries, Inc." or
"White", the initials "WCI", the slogan "One of the White Consolidated
Industries WCI" or any similar corporate trade name or trademark of WCI.
1.2.7 The capital stock of WCI-LTD and BK-LTD.
1.2.8 The sports field and surplus real estate, both located in
the United Kingdom and identified on the survey attached as Part 1.2.8 of
the SCHEDULE, and the prepaid insurance items referred to in the target
net equity statement attached as Part 1.2.8 of the SCHEDULE.
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1.2.9 Those assets and properties of WCI relating to WCI's
supervisory headquarters functions located at 11770 Berea Road, Cleveland,
Ohio, as follows:
(a) the real property constituting WCI's Cleveland (Lakewood),
Ohio headquarters and the personal property and other property,
tangible and intangible, including without limitation, computer
software programs, located at WCI's Cleveland (Lakewood), Ohio
headquarters;
(b) financial, banking and other lender, accounting, tax,
internal audit, payroll and similar functions;
(c) human resources, collective bargaining, employee health,
safety and health, risk management, grievance, equal employment and
similar personnel and employee functions;
(d) pension and actuarial functions and health, life and other
employee insurance and public and private liability insurance
functions;
(e) legal functions, including without limitation, all
intellectual property registration, filing, issuance, maintenance and
renewal functions;
(f) government relations, public relations, advertising and
engineering functions (including environmental, security and similar
functions);
provided that the items specified in this Section 1.2.9 shall not include
any of the books and records referred to in Section 1.1.8 above.
1.2.10 Those assets and properties of AB Electrolux relating to
the Electrolux supervisory headquarters functions located at Luton,
England, as follows:
(a) the real property constituting the Electrolux U.K. (Luton)
headquarters and the personal property and other property, tangible
and intangible, including, without limitation, computer software
programs, located at such headquarters; and
(b) financial, banking, leasing, accounting, tax, internal
audit, insurance, legal, human resources and similar functions;
provided that the items specified in this Section 1.2.10 shall not include
any of the books and records referred to in Section 1.1.8 above.
1.2.11 Any asset or property associated with any pension plan
of WCI identified under this Agreement as not being expressly assumed by
BK, BUYER or its designee hereunder.
1.2.12 All other assets and properties of WCI and its
affiliates (other than BK and BKL) which are not now, and have not been,
used in the BUSINESS.
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1.3 Nonassignable Permits, Licenses and Contracts.
1.3.1 To the extent that any permit, approval, or the like or
any contract, license or other agreement, which would constitute a BKL
ACQUIRED ASSET but for the fact that it is not assignable or transferable
without the consent or waiver of the issuer thereof or the other party
thereto or any third party (including a government or governmental unit),
or if such assignment or transfer or attempted assignment or transfer
would constitute a breach thereof or a violation of any law, decree,
order, regulation or other governmental edict, this Agreement shall not
constitute an assignment or transfer, or an attempted assignment or
transfer, of such permit, approval, contract, license or agreement.
1.3.2 WCI and BKL shall use their reasonable best efforts, and
BUYER shall cooperate therewith, to obtain the consents and waivers
referred to in Section 1.3.1. A complete list of all permits, approvals
and the like and all contracts, licenses and other agreements requiring
such consent or waiver (other than those involving aggregate payments of
less than US$10,000 that are not otherwise material to the BUSINESS) is
set forth in Part 1.3.1 of the SCHEDULE.
1.3.3 To the extent that any consent or waiver referred to in
Section 1.3.1 is not obtained by WCI, WCI shall use its reasonable best
efforts to (i) provide to BUYER the benefits (less any related costs
incurred by WCI, including, without limitation, any applicable taxes) of
any permit, approval or the like and of any contract, license or other
agreement, all as referred to in Section 1.3.1, to the extent involving
the BUSINESS, (ii) cooperate in any reasonable and lawful arrangement
designed to provide such benefits to BUYER, without incurring any
financial obligation to BUYER other than to provide such benefits, and
(iii) at the request of BUYER, enforce at the cost of and for the account
of BUYER any right of WCI or its affiliates arising from any permit,
approval, or the like and of any contract, license and other agreement
described in Section 1.3.1 against such issuer or the other party or parties
referred to in Section 1.3.1 (including the right to elect to terminate in
accordance with the terms thereof on the advice of BUYER).
1.3.4 To the extent that BUYER is provided the benefits
pursuant to this Section 1.3 of any permit, approval or the like or any
contract, license or other agreement, BUYER shall perform for the benefit
of the issuer thereof or the other party or parties thereto, the
obligations of WCI or its affiliates thereunder or in connection
therewith, but only to the extent that (i) such performance would not
result in any default thereunder or in connection therewith and (ii) such
obligations would have been ASSUMED LIABILITIES (as defined in
Section 3.1), but for the nonassignability or nontransferability thereof.
ARTICLE II - CONSIDERATION
2.1 Sale Price. The aggregate consideration for the SHARES and
the BKL ACQUIRED ASSETS shall be the payment of the FINAL CASH PRICE (as
hereinafter defined) and the assumption of the ASSUMED LIABILITIES of BKL.
The "FINAL CASH PRICE" shall be determined by adding the NET EQUITY
ADJUSTMENT, if the NET EQUITY ADJUSTMENT is a positive number, to ONE
HUNDRED THIRTY-FOUR MILLION U.S. Dollars (US$134,000,000), or subtracting
the NET EQUITY ADJUSTMENT, if the NET EQUITY ADJUSTMENT is a negative
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number, from ONE HUNDRED THIRTY-FOUR MILLION U.S. Dollars (US$134,000,000).
The NET EQUITY ADJUSTMENT as of the CLOSING shall be determined in accor-
dance with Section 2.4. The FINAL CASH PRICE shall be paid at the times
and in the manner provided in Sections 2.2 and 2.5.
2.2 Payments of the Preliminary Cash Price. A payment of ONE
HUNDRED THIRTY-FOUR MILLION U.S. Dollars (US$134,000,000) (the
"PRELIMINARY CASH PRICE") on account of the FINAL CASH PRICE shall be paid
at the CLOSING by BUYER to WCI by a certified or official bank check drawn
on a bank satisfactory to WCI, or at WCI's election, by the transfer of
federal funds.
The PRELIMINARY CASH PRICE shall be allocated to the SHARES and
the BKL ACQUIRED ASSETS based on their respective fair market values to be
mutually agreed upon by the parties acting reasonably and in good faith.
Appropriate adjustments to be mutually agreed upon by the parties acting
reasonably and in good faith will be made to the foregoing allocations to
take into account the NET EQUITY ADJUSTMENT.
2.3 Audit of Book Value of ACQUIRED ASSETS and ASSUMED
LIABILITIES and Determination of NET EQUITY.
2.3.1 Immediately after the CLOSING, WCI shall cause Ernst &
Young ("E&Y"), certified public accountants for WCI, to conduct an audit
of the BUSINESS in respect of the ACQUIRED ASSETS (including good will)
and the ASSUMED LIABILITIES to determine the book value as of the CLOSING
of the ACQUIRED ASSETS less the book value of the ASSUMED LIABILITIES (the
"NET EQUITY") of the BUSINESS (with a representative of BUYER'S certified
public accountant Price Waterhouse ("PW") to be present to observe such
audit), on the basis of which E&Y shall prepare and deliver, within sixty
(60) days following the CLOSING, to both WCI and BUYER, an audited
schedule setting forth the book value of such ACQUIRED ASSETS and ASSUMED
LIABILITIES and NET EQUITY as of the CLOSING. Except as otherwise
specifically provided for in this Agreement, the book value of the
ACQUIRED ASSETS and the ASSUMED LIABILITIES of the BUSINESS shall be
determined in accordance with generally accepted accounting principles
except to the extent otherwise expressly set forth in the specific
Accounting Methods and Procedures described in Part 2.3.1 of the SCHEDULE
(the "ACCOUNTING METHODS AND PROCEDURES"). Such audited schedule shall be
accompanied by a certificate of E&Y to the effect set forth in the
preceding sentence, and to the further effect that such audited schedule
has been prepared in accordance with the ACCOUNTING METHODS AND PROCEDURES
and that such ACCOUNTING METHODS AND PROCEDURES comply with the
immediately following sentence. The ACCOUNTING METHODS AND PROCEDURES are
in accordance with generally accepted accounting principles, with the
following possible exceptions:
(a) the allowance for doubtful accounts will be determined
based on the formula set forth in the ACCOUNTING METHODS AND
PROCEDURES;
(b) FIFO inventory valuations will include certain capitalized
product development costs as set forth in the ACCOUNTING METHODS AND
PROCEDURES;
(c) inventory reserves, including the LIFO reserve, will be
determined based upon procedures set forth in the ACCOUNTING METHODS
AND PROCEDURES;
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(d) goodwill will be US$104,290,000;
(e) the NET EQUITY will not include any balance sheet accruals
related to FAS No. 112 to the extent such accruals have not been
recognized previously pursuant to BK's consistently applied year-end
accounting methods; and
(f) the NET EQUITY will not include any balance sheet deferred
taxes relating to the ACQUIRED ASSETS or the ASSUMED LIABILITIES.
2.3.2 In the event BUYER is in disagreement with the NET EQUITY
determined pursuant to Section 2.3.1, each specific item of disagreement
shall be set forth in writing and delivered to WCI within forty-five (45)
days from the receipt of the audited schedule of the book values of the
ACQUIRED ASSETS, the ASSUMED LIABILITIES and the NET EQUITY. If BUYER and
WCI shall not, within the next thirty (30) days, resolve each such item of
disagreement, both E&Y and BUYER's certified public accountant shall
immediately refer the unresolved items of disagreement to a firm of
independent public accountants of recognized standing which E&Y and
BUYER's certified public accountant mutually select for resolution.
Except as otherwise specifically provided for in this Agreement,
resolution of the items in dispute shall be made in accordance with
generally accepted accounting principles except to the extent otherwise
expressly set forth in the specific ACCOUNTING METHODS AND PROCEDURES, and
BUYER and WCI shall use their reasonable best efforts to assure that such
resolution is made within sixty (60) days subsequent to such referral.
Such resolution shall be conclusive and binding on the parties hereto.
2.3.3 The fees and disbursements of BUYER's certified public
accountant shall be paid by BUYER, those of E&Y shall be paid by WCI and
those of any firm to whom disagreements may be referred (in respect of any
given disagreement) shall be paid by the party against whom such
disagreement is resolved. BUYER and WCI shall cooperate fully, each at
its own expense, in the conduct of the audit by E&Y and review by BUYER's
certified public accountant and the firm of independent public accountants
selected to resolve disputes, if any, and shall make available to such
accountants all working papers, data and such other information as may be
necessary or desirable in that connection.
2.4 NET EQUITY ADJUSTMENT. The NET EQUITY ADJUSTMENT shall be
the NET EQUITY as of CLOSING determined in accordance with Section 2.3
minus ONE HUNDRED FORTY-TWO MILLION TWO HUNDRED THOUSAND U.S. Dollars
(US$142,200,000) (the "OPENING NET EQUITY"), which OPENING NET EQUITY does
not include any liabilities that constitute EXCLUDED LIABILITIES (as
defined in Section 3.2), it being understood that if the OPENING NET
EQUITY does include a liability that constitutes an EXCLUDED LIABILITY,
then the OPENING NET EQUITY shall be adjusted upward to delete therefrom
the EXCLUDED LIABILITIES.
2.5 Settlement and Payment of the FINAL CASH PRICE. Within ten
(10) days after the final determination of the NET EQUITY as of the
CLOSING (or such other date as shall be mutually agreed to in writing by
the parties) (the "SETTLEMENT DATE"), the NET EQUITY ADJUSTMENT as defined
in Section 2.4 shall be made to the PRELIMINARY CASH PRICE in satisfaction
or reconciliation of the FINAL CASH PRICE. In the event that the NET
EQUITY ADJUSTMENT is a positive number, BUYER shall pay to WCI an amount
equal to the NET EQUITY ADJUSTMENT on the SETTLEMENT DATE by means of a
bank or
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cashier's check or wire transfer of federal funds. To the extent that the
NET EQUITY ADJUSTMENT is a negative number, WCI shall pay to BUYER an
amount equal to the NET EQUITY ADJUSTMENT on the SETTLEMENT DATE by means
of a bank or cashier's check or wire transfer of federal funds.
2.6 Effect of Certain Taxes. Notwithstanding any other
provision of this Agreement, the ASSUMED LIABILITIES for purposes of this
Article II (including but not limited to the determination of the NET
EQUITY, the NET EQUITY ADJUSTMENT, and the FINAL CASH PRICE) shall not
include any liability for taxes, interest or penalties resulting from any
election filed by BK or BUYER under Section 338 of the Internal Revenue
Code of 1986, as amended (the "Code"), which liability, if any, shall
nevertheless be the sole obligation of BK.
ARTICLE III - ASSUMED LIABILITIES; INDEMNIFICATION
3.1 Assumed Liabilities.
Subject to Section 3.2 below, upon the CLOSING, and effective as
of the CLOSING, (a) BK shall be responsible for the ASSUMED LIABILITIES of
BK and (b) BUYER shall cause the entity designated by it pursuant to
Section 9.4 below to assume the ASSUMED LIABILITIES of BKL (the "BKL
ASSUMED LIABILITIES"). The "ASSUMED LIABILITIES" shall mean:
3.1.1 All liabilities and obligations, contingent, absolute,
known or unknown, of BK and BKL arising out of the conduct of the
BUSINESS, whether in existence as of the CLOSING or (in the case of BK)
arising thereafter, including but not limited to (i) all liabilities
arising out of the conduct of the BUSINESS of the type set forth on the
CURRENT BALANCE SHEET brought forward to the CLOSING; (ii) subject to
Section 1.3, the liabilities and obligations which accrue subsequent to
the CLOSING and/or remain to be performed under the CONTRACTS, the
WARRANTY OBLIGATIONS (as defined in Section 5.2.2), the LEASEHOLDS, the
LICENSES, and the COLLECTIVE BARGAINING AGREEMENTS; (iii) all liabilities
and obligations arising out of the conduct of the BUSINESS to be assumed
by BUYER elsewhere in this Agreement, including without limitation, those
described in Article VI, (iv) all other liabilities and obligations
arising out of the conduct of the BUSINESS arising after the CLOSING
whether they arise out of the conduct of the BUSINESS prior to or after
the CLOSING and (v) the amount of payroll, real estate and other non-
income TAXES assessed against BK and BKL, in the case of each such TAX, to
the extent set forth on Part 3.2(f) of the SCHEDULE, provided, however,
that the amount of each such TAX that exceeds the amount set forth on Part
3.2(f) of the SCHEDULE with respect to such TAX shall constitute EXCLUDED
LIABILITIES (as defined below) and shall not constitute ASSUMED
LIABILITIES.
3.1.2 Liabilities for post-retirement benefits under the BK
COLLECTIVE BARGAINING AGREEMENT.
3.2 Excluded Liabilities. Notwithstanding anything in this
Agreement to the contrary, there shall not be included in the ASSUMED
LIABILITIES any of the following liabilities, whether contingent,
absolute, known or unknown (each an "EXCLUDED LIABILITY" and collectively,
the "EXCLUDED LIABILITIES"), and the EXCLUDED LIABILITIES applicable to BK
(the "BK EXCLUDED LIABILITIES") shall be assumed by WCI at or prior to the
CLOSING:
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(a) Liabilities and obligations (i) arising out of Workers'
Compensation claims relating to employment by BK or BKL as of or
prior to the CLOSING, including but not limited to those claims
listed on Part 3.2(a) of the SCHEDULE or (ii) in respect of any
employees of WCI or its affiliates who are not EMPLOYEES (as defined
in Section 6.1.1) or (iii) from or in respect of any EMPLOYEES
employed by BUYER, BK or their affiliates as of CLOSING caused by any
act or failure to act by WCI or its affiliates prior to CLOSING.
(b) Liabilities, obligations and claims (contingent or
absolute) relating to or arising out of Product Liability Matters (as
defined below), whether in existence as of the CLOSING or arising
thereafter, resulting in death, injury, disease, property damage
(including, but not limited to, the loss of use thereof and con-
sequential damages therefrom) or economic loss or damage (whether
compensatory or punitive) in respect of any PRODUCTS or any other
product, accessory, attachment, component, part or service
manufactured or assembled (in whole or in part), sold, rented,
performed or delivered by WCI, BK, BK-LTD or WCI-LTD or any affiliate
thereof (or any predecessor company) prior to the CLOSING, including,
but not limited to, those claims listed on Part 3.2(b) of the
SCHEDULE; except that this Section 3.2(b) shall not include (i) any
such liabilities, obligations or damages that are judicially
determined (after expiration of any appeals) to have resulted solely
from defects caused by major rebuilding of a PRODUCT performed
directly by BK or BUYER or any affiliate of BK or BUYER after the
CLOSING, or (ii) the obligations of BK under Section 5.2.2 below to
repair or replace any defective parts in accordance with the terms,
conditions and limitations of any standard express written warranty
or the express extended or expanded warranties specifically included
in Part 5.2.2 of the SCHEDULE. "Product Liability Matters" mean any
negligence or other tort or strict or other product liability mat-
ters, other tortious acts or failures to act, breach of warranty,
whether express (other than BK's obligations under the express
written warranties described in Section 5.2.2 and the express
extended or expanded warranties specifically included in Part 5.2.2
of the SCHEDULE) or implied, or any other injury, disease or damage
(whether compensatory or punitive) caused by or attributable to the
PRODUCTS or any other product, accessory, attachment, component, part
or service (whether actual or alleged and whether relating to legal
theories, common law, statues, regulations, jurisprudence, or other
principles, now existing or hereafter created, applied, adopted or
otherwise recognized).
(c) All liabilities for benefits and benefit claims with
respect to employees and their spouses, dependents, survivors and
beneficiaries arising under the employee welfare benefit plans (as
defined in Section 3 (1) of ERISA) of WCI, regardless of when such
liabilities or claims are asserted, if they are incurred prior to the
CLOSING.
(d) Any pension liabilities with respect to employees of BK,
WCI or its affiliates, other than employees included in the BLAW-KNOX
PLAN or BKL's UNITED KINGDOM PLAN.
(e) Liabilities for post-retirement benefits other than those
under the BK COLLECTIVE BARGAINING AGREEMENT referred to in Section
3.1.2.
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(f) TAXES assessed against or payable by WCI, BK or BKL or
otherwise assessed against or payable by the BUSINESS with respect to
taxable periods or portions thereof ending on or prior to the
CLOSING, including all liabilities for TAXES resulting from the
transactions contemplated by this Agreement, except to the extent set
forth in Section 9.6, provided that any liability for TAXES resulting
from any election filed by BK or BUYER under Code Section 338 shall
not be an EXCLUDED LIABILITY, shall be the sole obligation of BK, and
shall not be regarded as having been assumed by WCI at any time.
"TAXES" shall mean any tax, fee, assessment or charge of any kind
whatsoever imposed by any governmental authority, together with any
interest or penalty imposed with respect thereto, and any liability
for such amounts as a result either of being a member of an
affiliated, combined, consolidated or unitary group (as such terms
are defined for Federal, state, local or foreign tax purposes, as the
case may be) or of a contractual obligation to indemnify any other
entity, provided, however, that TAXES shall not include the amount of
payroll, real estate and other non-income TAXES assessed against BK
and BKL, in the case of each such TAX, to the extent set forth on
Part 3.2(f) of the SCHEDULE.
(g) Any liability corresponding to an EXCLUDED ASSET.
(h) Liabilities, obligations, claims, damages, clean up or
other remedial actions relating to (i) environmental matters relating
to or arising out of any state of facts or condition existing, or
acts or omissions occurring, prior to the CLOSING at or in connection
with properties included in the ACQUIRED ASSETS, any LEASEHOLDS or
any other properties previously owned, leased or operated by WCI or
any of its affiliates or any predecessor company and (ii) the
generation, transportation, storage, handling or disposal of
hazardous materials (whether on-site or off-site) relating to or
arising out of any state of facts or condition existing, or acts or
omissions of WCI or any of its affiliates (or any predecessor
company) occurring, prior to the CLOSING.
(i) Indebtedness of BK or BKL for borrowed money, including,
without limitation, all intercompany indebtedness.
(j) Liabilities in connection with revenue bonds issued to
finance BK's present U.S. facilities (the "Revenue Bonds").
(k) Liabilities and obligations arising under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
relating to any current or former employee pension benefit plan, as
defined in Section 3(2) of ERISA, of WCI or any subsidiary or
affiliate, or any current or former trade or business (whether or not
incorporated) of WCI which is, or was at any time, by reason of
common control or otherwise, required to be aggregated with WCI or
any subsidiary or affiliate of WCI, pursuant to Section 4001(b) of
ERISA and/or Section 414(b), (c), (m) or (o) of the Code and the
regulations promulgated thereunder, including, without limitation,
all liabilities and obligations arising out of or in connection with
the litigation described in Part 3.2(k) of the SCHEDULE or any of the
facts or circumstances alleged in such litigation.
(l) Liabilities and obligations in connection with any
guarantees, recourse agreements or repurchase agreements between BK
or BKL, on the one hand, and WCI, AB Electrolux or any of their
affiliates, on the other hand.
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(m) Liabilities and obligations with respect to WCI's tax-
qualified 401(k) plan.
(n) Liabilities and obligations arising out of or relating to
the alleged patent infringement claim (the "PATENT CLAIM") set forth
in that certain letter dated March 9, 1993 from Richard W. Bethea,
Jr., of Stophel & Stophel, to David A. Tamburro, of Nies, Kurz,
Bergert & Tamburro (the "Bethea Letter").
(o) All other liabilities and obligations not arising out of
the conduct of the BUSINESS.
(p) Any extended or expanded warranty obligations other than
the standard express warranty attached as Part 5.2.2 of the SCHEDULE
and the express extended or expanded warranties specifically included
in Part 5.2.2 of the SCHEDULE.
(q) Liabilities and obligations pertaining to personal or real
property leases previously relating to the BUSINESS, which are no
longer a part of the BUSINESS, whether due to assignment by BK, BKL,
or any of their affiliates, or otherwise.
Without duplication of any amount provided for under Section
3.3.5, if BK obtains a tax deduction for federal or state income taxes for
liabilities paid by WCI specified in Section 3.2, BUYER will reimburse WCI
for the amount of such tax benefit actually realized by BK in the year in
which the liability to which such tax benefit relates is paid by WCI. Any
such tax benefit, to the extent permitted by applicable law, shall be
treated as an adjustment of the purchase price.
3.3 Indemnification.
3.3.1 Except as otherwise agreed in Section 3.3.3 below, WCI
shall indemnify and save BUYER, BK, and their affiliates harmless from and
against any and all expenses (including attorney's fees), damages (whether
compensatory or punitive), claims, liabilities or obligations whatsoever
resulting from (i) any EXCLUDED LIABILITY, (ii) any breach of any covenant
of WCI included herein, or (iii) any misrepresentations or breach of
warranty of WCI as of the date of this Agreement or as of the CLOSING with
respect to those representations and warranties of WCI contained in this
Agreement or in the SCHEDULE, subject to Section 9.12.1, provided BUYER
shall give prompt, but no more than thirty (30) days after institution,
notice to WCI of the institution of any action, suit, proceeding or demand
at any time instituted against or made upon BUYER in connection with which
BUYER could claim indemnification hereunder; provided further that the
failure of BUYER to provide such notice shall not affect the obligations
of WCI hereunder, unless such failure actually materially prejudices WCI's
right to contest such action, suit, proceeding or demand. BUYER shall, at
the same time of giving such notice, give WCI full authority to defend,
adjust, compromise or settle the action, suit, proceeding or demand of
which such notice shall have been given, in the name of BUYER or
otherwise, as WCI shall elect, provided that neither WCI nor any of its
affiliates shall, without the prior written consent of the BUYER, settle
or otherwise compromise any such action, suit, proceeding or demand in any
manner that, in the reasonable judgment of the BUYER, would adversely
affect BUYER; provided further, however, that WCI shall not be liable to
BUYER under clause (iii) of this Section 3.3.1 until the aforementioned
expenses, damages, claims, liabilities and obligations under such clause
(iii) shall
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have exceeded in the aggregate Five Hundred Thousand U.S. Dollars
(US$500,000), and no claim for an alleged misrepresentation or breach of
warranty under such clause (iii) shall be made after the third anniversary
of the CLOSING DATE (as defined in Section 8.1). WCI shall keep BUYER
fully and timely informed with respect to the commencement, status and
nature of any such action, suit, proceeding or demand. WCI shall, in good
faith, allow BUYER to make comments to WCI regarding the conduct of or
positions taken in any such action, suit, proceeding or demand. Without
limiting the generality of the foregoing, the indemnification provision of
this Section 3.3.1 shall include, with respect to the EXCLUDED LIABILITIES
described in Section 3.2(b), any and all expenses (including attorneys
fees), damages, claims, liabilities and obligations whatsoever for or
resulting from any injury or disease to persons (including death) or
damage to property (including the loss of use thereof and consequential
damages therefrom) or for economic loss, irrespective of whether such
expenses, damages, claims, liabilities and obligations are caused, or
alleged to be caused, by a breach of warranty, whether express (other than
BK's obligation under the express written warranties described in Section
5.2.2 and the express extended or expanded warranties specifically
included in Part 5.2.2 of the SCHEDULE) or implied, or the negligence or
other tort or strict or other product liability or other tortious acts or
failures to act by BK, BKL, BUYER or any of their affiliates or otherwise
caused by or attributable to the PRODUCTS or any other products,
accessory, attachment, component, part or service.
3.3.2 Except as otherwise agreed in Section 3.3.3 below, BUYER
shall indemnify and save WCI and its affiliates harmless from and against
any and all expenses (including attorney's fees), damages (whether
compensatory or punitive), claims, liabilities or obligations whatsoever
(i) resulting from any misrepresentations or breach of warranty of BUYER
set forth herein, subject to Section 9.12.1, (ii) resulting from the
ASSUMED LIABILITIES, or (iii) arising out of breach of any covenant of
BUYER herein; provided, WCI shall give prompt, but no more than thirty
(30) days after institution, notice to BUYER of the institution of any
action, suit, proceeding or demand at any time instituted against or made
upon WCI in connection with which WCI could claim indemnification
hereunder, provided further that the failure of WCI to provide such notice
shall not affect the obligations of BUYER hereunder, unless such failure
actually materially prejudices BUYER's right to contest such action, suit,
proceeding or demand. WCI shall, at the same time of giving such notice,
give BUYER full authority to defend, adjust, compromise or settle the
action, suit, proceeding or demand of which such notice shall have been
given, in the name of WCI or otherwise, as BUYER shall elect, provided
that neither BUYER nor any of its affiliates shall, without the prior
written consent of WCI, settle or otherwise compromise any such action,
suit, proceeding or demand in any manner that, in the reasonable judgment
of WCI, would adversely affect WCI, provided further, however, that BUYER
shall not be liable to WCI under clause (i) of this Section 3.3.2 until
the aforementioned expenses, damages, claims, liabilities and obligations
under such clause (i) shall have exceeded in the aggregate Five Hundred
Thousand U.S. Dollars (US$500,000), and no claim for alleged
misrepresentation or breach of warranty under such clause (i) shall be
made after the third anniversary of the CLOSING DATE. BUYER shall keep
WCI fully and timely informed with respect to the commencement, status and
nature of any such action, suit, proceeding or demand. BUYER shall, in
good faith, allow WCI to make comments to BUYER regarding the conduct of
or positions taken in any such action, suit, proceeding or demand.
Without limiting the generality of the forgoing, the indemnification
provision of this Section
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3.3.2 shall include, with respect to Product Liability Matters to the
extent (and only to the extent) included within the ASSUMED LIABILITIES
pursuant to Section 3.1.1 above, any and all expenses (including
attorneys' fees), damages, claims, liabilities and obligations whatsoever
for or resulting from any injury or disease to persons (including death)
or damage to property (including the loss of use thereof and consequential
damages therefrom) or for economic loss, irrespective of whether such
expenses, damages, claims, liabilities and obligations are caused, or
alleged to be caused, by a breach of warranty, whether express or implied,
or the negligence or other tort or strict or other product liability or
other tortious acts or failures to act by WCI or any of its affiliates or
otherwise caused by or attributable to PRODUCTS or any other products,
accessory, attachment, component, part or service.
3.3.3 Each of WCI and BUYER shall share equally any liabilities or
obligations arising out of or related to (a) the failure to inform or
consult with employees, trade unions or similar organizations with respect
to the transactions contemplated by this Agreement pursuant to the U.K.
Transfer of Undertakings (Protection of Employment) Regulations 1981
("TUPE") and (b) any "unfair dismissals" of employees as contemplated
under TUPE, in each case regardless of whether any claim relating to (a)
or (b) above ("Shared Claims") are asserted against WCI or BUYER or any of
their respective affiliates. WCI and BUYER shall cooperate with each
other in jointly defending any Shared Claims. If counsel is mutually
selected to represent both WCI and BUYER, then WCI and BUYER shall share
equally the fees and disbursements of such counsel; if counsel is selected
by WCI or BUYER to represent only WCI or BUYER, respectively, then the
fees and disbursements of such counsel shall be paid by the party
retaining such counsel.
3.3.4 In addition to WCI's other obligations set forth in this
Section 3.3, WCI shall indemnify and save BUYER, BK and their affiliates
harmless from and against any and all expenses (including attorney's
fees), damages (whether compensatory or otherwise), claims, liabilities or
obligations relating to or arising out of the Purchasers' (as defined in
the Blaw-Knox Trademark Agreement referred to below) use of the Term (as
defined in the Blaw-Knox Trademark Agreement) in the manner specified in
Section 5(ii) of the Blaw-Knox Trademark Agreement, dated as of April 20,
1994, by and among WCI, BK, Blaw-Knox Corporation, Scottdale Manufacturing
Corporation, Wheeling Machine & Foundry Company, Buffalo Technologies
Corporation, R.O.B. Realty Corporation, and Park Corporation. BUYER will
give WCI reasonably prompt notice of any claim asserted against such
Purchasers alleging facts or circumstances that would give rise to an
indemnity by WCI under this Section 3.3.4.
3.3.5 Any claims hereunder for indemnification by either party shall
be reduced to the extent of any tax benefits resulting from such
indemnified matter which are actually realized by the claiming party in
the year in which the indemnity payment is made.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of WCI. "To the best of
WCI's knowledge" shall mean the knowledge of WCI management and legal
counsel located at the Cleveland corporate headquarters and shall also
include the knowledge of the following persons: Bruno Getz, Mike Miller,
Garry Bowhall, Edgar Halton, Ron Chaston, Anthony Wardle and Gary Albin.
WCI hereby represents and warrants to BUYER as follows:
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4.1.1 Corporate Data and Authority of WCI.
(a) WCI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) BK is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is also duly
qualified and in good standing to do business as a foreign corporation in
the State of Illinois. The authorized capital stock of BK consists of 100
shares of Common Stock, par value $1.00 per share, all of which shares are
outstanding. All of the Shares have been validly issued and are fully
paid and nonassessable and are owned by WCI free and clear of all liens,
claims and encumbrances. BK has no securities reserved for issuance.
Except for the SHARES there are no shares of capital stock of BK
authorized, issued or outstanding and there are no outstanding
subscriptions, options, warrants, rights, convertible securities or other
agreements or commitments of any character providing for the purchase,
issuance or sale of any shares of capital stock of BK. The delivery to
BUYER of the SHARES pursuant to the provisions of this Agreement will
transfer to BUYER good and marketable title thereto, free and clear of all
liens, encumbrances, restrictions and claims of every kind. None of BK,
WCI-LTD or BK-LTD owns, either directly or indirectly, any equity security
or other capital stock of or ownership or proprietary interest in any
corporation, partnership, association, trust, joint venture or any other
entity, except that WCI-LTD owns all of the outstanding shares of capital
stock of BK-LTD.
(c) WCI-LTD is a corporation duly organized, validly existing
and in good standing to do business under the laws of the State of
Delaware. BK-LTD is a limited liability company duly incorporated and
subsisting under the laws of England and is not in liquidation. BK-LTD is
a wholly-owned subsidiary of WCI-LTD.
(d) WCI and its affiliates have full power and authority to
sell and transfer or to cause to be sold and transferred to BUYER the
SHARES and the BKL ACQUIRED ASSETS and to perform all other undertakings
hereunder, and the execution, delivery and performance of this Agreement
and all related documents delivered by WCI and its affiliates at the
CLOSING are and will be within the authority of the officers of WCI or its
affiliates who execute them. This Agreement constitutes and, upon
execution and delivery thereof, the other agreements and instruments to be
delivered by WCI and its affiliates pursuant to this Agreement will
constitute, valid and binding agreements of WCI or such affiliate, respec-
tively, subject to bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or the
availability of the remedy of specific performance.
(e) The consummation of the transactions by WCI and its
affiliates contemplated hereby will not conflict with the Articles of
Incorporation or By-laws of WCI, BK or WCI-LTD nor the constitutive
documents of BK-LTD and will not result in the breach of any term or
provision of, or constitute a default under, any judgment, decree,
indenture, mortgage or other agreement or instrument to which WCI, BK,
WCI-LTD or BK-LTD is a party or by which WCI, BK, WCI-LTD or BK-LTD or any
of their properties are bound.
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4.1.2 Financial Data.
(a) The consolidated and individual unaudited balance sheets
and related consolidated and individual statements of income and cash flow
of BK and BKL as of and for the years ended December 31, 1993, December
31, 1992 and December 31, 1991, together with the notes thereto (collec-
tively, the "FINANCIAL STATEMENTS"), copies of which are included in Part
4.1.2 of the SCHEDULE, fairly present the financial position of the
BUSINESS on a divisional basis as of such respective dates and the results
of operations and cash flow of the BUSINESS on a divisional basis for the
respective years then ended, in conformity with WCI's accounting
principles for its operating subsidiaries and divisions applied on a
consistent basis. Such accounting principles are in accordance with
generally accepted accounting principles, except as expressly set forth in
the notes to the FINANCIAL STATEMENTS and in the ACCOUNTING METHODS AND
PROCEDURES.
(b) The unaudited consolidated balance sheet of BK and BKL as
of December 31, 1993, and the related consolidated unaudited statements of
income and cash flow for the period ending on such date, together with the
notes thereto, are sometimes herein collectively referred to as the
"CURRENT BALANCE SHEET".
4.1.3 Properties and Operations of the BUSINESS.
(a) Except as disclosed in Part 4.1.3(a) of the SCHEDULE or in
the letter dated April 20, 1994 from Daniel R. Elliott of WCI to Bernard
D. Henely of BUYER (the "WCI LETTER"), since December 31, 1993 there has
not been any change which has had a material adverse effect on the oper-
ations, results of operations or condition (financial or otherwise) of the
BUSINESS ("MATERIAL ADVERSE EFFECT").
(b) BK has good and marketable title to all of the ACQUIRED
ASSETS of BK, and WCI-LTD has good and marketable title to all of the BKL
ACQUIRED ASSETS (which, together with the ACQUIRED ASSETS of BK,
constitute all of the ACQUIRED ASSETS), in each case free and clear of all
liens and encumbrances, except for: (i) liens disclosed in Part 4.1.3(b)
of the SCHEDULE; (ii) liens for taxes not yet due and payable or being
contested in good faith by appropriate proceedings, and for which adequate
reserves have been established; and (iii) imperfections of title,
easements, pledges, charges and encumbrances, if any, incurred in the
ordinary course of business that do not materially detract from the value
or marketability or interfere with the present use of the ACQUIRED ASSETS
or otherwise materially impair the operation of the BUSINESS and which do
not secure obligations for borrowed money or the deferred portion of the
purchase price of acquired assets ("PERMITTED LIENS").
(c) BK-LTD owns no assets or property.
4.1.4 Litigation and Other Matters.
(a) No action, suit, or proceeding is pending or, to the best
of WCI's knowledge after due inquiry, threatened against WCI, BK, WCI-LTD
or BK-LTD which could materially and adversely affect the transactions
contemplated by this Agreement. None of BK, WCI-LTD or BK-LTD is in
default with respect to any order, injunction or decree directed to BK,
WCI-LTD or BK-LTD by any court or governmental department or agency which
directly affects the operations of the BUSINESS or the use of the ACQUIRED
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ASSETS. Except as described in Part 4.1.4(a) of the SCHEDULE, since
January 1, 1994 (i) no actions, suits, proceedings, grievances or unfair
labor practices have been filed against BK, WCI-LTD or BK-LTD or any of
the properties or assets or intangible assets of BK, WCI-LTD or BK-LTD
which relate directly to the BUSINESS or the ACQUIRED ASSETS or the
transactions contemplated by this Agreement and (ii) none of BK, WCI-LTD
or BK-LTD has been subject to any order of any court or any governmental
agency which relates to or could adversely affect the BUSINESS and (iii)
no actions, suits, proceedings, grievances or unfair labor practices have
been filed against WCI or any of its affiliates which, if adversely
determined, could impose a liability on BK or the BUSINESS or could
subject the assets or properties of BK or the BUSINESS to any lien,
encumbrance or enforcement action. Part 4.1.4(a) of the SCHEDULE also
describes all such actions, suits, proceedings, grievances and unfair
labor practices and the related expenses, including indemnification and
legal fees, and reserves, incurred since January 1, 1989 and any
unresolved claims filed prior thereto, none of which individually or in
the aggregate could reasonably be expected to have a MATERIAL ADVERSE
EFFECT.
(b) Labor Matters. Each of BK and BK-LTD is currently a party
to its respective COLLECTIVE BARGAINING AGREEMENT. Except as disclosed on
Part 4.1.4(b) of the SCHEDULE or in the WCI LETTER (as defined in Sec-
tion 4.1.3(a)), since January 1, 1994 there has not been, nor was there or
is there, to best of WCI's knowledge after due inquiry, threatened or
contemplated, any strike, slowdown, picketing or work stoppage by any
employees against the BUSINESS, its assets or properties wherever located,
any secondary boycott with respect to the PRODUCTS, any lockout by WCI,
BK, WCI-LTD or BK-LTD of any of their employees or any labor trouble or
other occurrence, event or condition of a similar character affecting, or
which may affect, the business, operation, assets or properties of the
BUSINESS.
(c) Labor Disputes. Since January 1, 1994, no significant
unsettled labor dispute has affected the BUSINESS which would have a
MATERIAL ADVERSE EFFECT.
4.1.5 Warranties. Part 4.1.5 of the SCHEDULE sets forth
(i) copies of all current, express written PRODUCT warranties and written
warranty policies of BK, WCI-LTD and BK-LTD in respect of the BUSINESS,
including, without limitation, all specific guarantees with respect to
performance of any PRODUCT, (ii) to the best of WCI's knowledge after due
inquiry, each of such PRODUCT warranty or policy which is subject to any
dispute between BK, WCI-LTD and BK-LTD and any third person and (iii) the
PRODUCT warranty and policy experience of the BUSINESS for 1993.
4.1.6 Certain Governmental Matters.
(a) Taxes. All of BK's, WCI-LTD's and BK-LTD's Tax returns and
reports ("RETURNS") required by law to be filed have been duly filed. Such
RETURNS as filed are accurate in all material respects. All TAXES and
other governmental charges with respect to the BUSINESS which are due and
payable have been paid except for such, if any, as are being contested in
good faith by appropriate proceedings which are identified and described
in Part 4.1.6(a) of the SCHEDULE and adequately disclosed and fully
provided for on the CURRENT BALANCE SHEET and in the books and records of
BK and BKL. No assessments for additional TAXES have been made or
proposed which have not been provided for in the CURRENT BALANCE SHEET.
With respect to each of BK, WCI-LTD and BK-LTD (or any predecessor
company), to the best of WCI's knowledge after due inquiry, no claim has
ever been made by any
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taxing authority in a jurisdiction where such company does not file
RETURNS that such company is or may be subject to taxation relating to the
BUSINESS by that jurisdiction.
(b) Compliance. Except as identified and described in
Part 4.1.6(b) of the SCHEDULE, since July 1, 1993 the operations of the
BUSINESS have been conducted in all material respects in accordance with
and meet the applicable laws and regulations of all United States and
United Kingdom governmental authorities and, to the best of WCI's
knowledge after due inquiry, all other governmental authorities, and all
subdivisions thereof having jurisdiction over it or the PRODUCTS and of
all states, municipalities and other political subdivisions and agencies
thereof, including laws, rules, regulations, orders and ordinances
relating to (i) the environment and the generation of hazardous waste,
(ii) employee safety and (iii) discrimination against employees.
Either BK, WCI-LTD or BK-LTD has in full force and effect all
material governmental licenses and permits required for the operation of
the BUSINESS and no violations exist or have been recorded in respect of
any such existing licenses or permits and remain uncorrected as of the
CLOSING and no proceeding is pending or to the best knowledge of WCI
threatened which seeks the revocation or limitation of any such existing
licenses or permits.
4.1.7 Properties.
(a) Sufficiency. Except as disclosed in Part 4.1.7(a) of the
SCHEDULE, since July 1, 1993 none of BK, WCI-LTD or BK-LTD has disposed of
any real or personal property, tangible or intangible, associated with the
BUSINESS other than in the ordinary course. The ACQUIRED ASSETS
constitute all the assets and tangible and intangible properties necessary
to conduct the BUSINESS as presently conducted.
(b) Personal Properties. Except as identified and described in
Part 4.1.7(b) of the SCHEDULE, either BK or WCI-LTD has good and
marketable title to the personal properties used in the BUSINESS and all
of such properties which are capitalized are reflected in Part 4.1.7(b) of
the SCHEDULE, as at the date of the CURRENT BALANCE SHEET.
4.1.8 Agreements and Commitments.
(a) Material Contracts. Part 4.1.8(a) of the SCHEDULE lists
all material CONTRACTS to which BK, WCI-LTD or BK-LTD is a party,
including, without limitation:
(i) any agreement or commitment relating to the employment of
any person by BK, WCI-LTD or BK-LTD (other than those that are
terminable at will without penalty),
(ii) any agreement, indenture or other instrument which contains
restrictions with respect to payments of dividends or other
distributions in respect of its capital stock,
(iii) any agreement or commitment relating to capital
expenditures in excess of Ten Thousand U.S. Dollars (US$10,000),
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(iv) any loan or advance to, or investment in, any person or
entity or any agreement or commitment relating to the making of any
such loan, advance or investment (other than loans or commitments
made in the ordinary course of business pursuant to dealer inventory
financing programs), in excess of Ten Thousand U.S. Dollars
(US$10,000),
(v) any agreement or commitment for borrowed money by BK,
WCI-LTD or BK-LTD,
(vi) any guarantee or other contingent liability in respect of
any indebtedness or obligation of any person or entity (other than
the endorsement of negotiable instruments for collection in the
ordinary course of business) involving aggregate payments in excess
of Ten Thousand U.S. Dollars (US$10,000),
(vii) any management service, consulting or other similar type of
agreement (other than those that are terminable upon 30 days notice
without penalty) involving payments in excess of Ten Thousand U.S.
Dollars (US$10,000),
(viii) any agreement or commitment limiting the ability of BK,
WCI-LTD or BK-LTD to engage in any line of business or to compete
with any person or entity that will be binding on BK, WCI-LTD or
BK-LTD after the CLOSING,
(ix) any real or personal property lease involving annual
rentals of Ten Thousand Dollars (US$10,000) or more, and any licenses
involving intellectual property (other than computer software
licenses generally available to the public), and
(x) any agreement or commitment not entered into in the
ordinary course of business involving aggregate payments of Ten
Thousand Dollars U.S. (US$10,000) or more (other than those that are
terminable upon 30 days notice without penalty).
No default or event of default currently exists under any of the
foregoing CONTRACTS.
(b) Compensation. Except as disclosed in Part 4.1.8(b) of the
SCHEDULE and the WCI LETTER (as defined in Section 4.1.3(a)), since
July 1, 1993 none of BK, WCI-LTD or BK-LTD has paid or become committed to
pay to or for the benefit of any employees or sales representatives
compensation other than wages, salaries or sales commissions at rates then
in effect, nor have they made or been committed to make any payments
pursuant to any unusual compensatory arrangement.
(c) Employees. Part 4.1.8(c) of the SCHEDULE contains all:
(i) life insurance plans, group health and group welfare plans, retiree
life and retiree medical plans and other fringe benefit plans or
commitments (whether or not reduced to writing) which apply to personnel
of the BUSINESS (and which are not classified herein as PENSION PLANS or
OTHER EMPLOYEE PLANS) (collectively the "BENEFIT PLANS"), (ii) pension,
retirement, profit sharing, 401K and savings plans which apply in any way
to the personnel of the BUSINESS (collectively the "PENSION PLANS") and
(iii) employment, consulting, union, incentive compensation, deferred
compensation, stock option, employee stock purchase, and bonus plans and
agreements and other employee perquisites and policies which apply to the
personnel of the BUSINESS (collectively the "OTHER EMPLOYEE PLANS").
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(d) Employee Benefit Plans. Each BENEFIT PLAN and PENSION PLAN
that constitutes an employee benefit plan within the meaning of Section
3(3) of ERISA, maintained by BK or to which BK contributes or is a party
(each, a "PLAN" and collectively, the "PLANS") is in substantial
compliance with applicable law and has been administered and operated in
all material respects in accordance with its terms. Each PLAN which is
intended to be "qualified" within the meaning of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "CODE"), has received a
favorable determination letter from the Internal Revenue Service and no
event has occurred and no condition exists which could reasonably be
expected to result in the revocation of any such determination. No event
which constitutes a "Reportable Event" (as defined in Section 4043(b) of
ERISA) for which the 30-day notice requirement has not been waived by the
Pension Benefit Guaranty Corporation ("PBGC") has occurred with respect to
any PLAN. No PLAN subject to Title IV of ERISA has been terminated or is
or has been the subject of termination proceedings pursuant to Title IV of
ERISA. Full payment has been made of all amounts which WCI or any of its
subsidiaries were required under the terms of any PLAN to have paid as
contributions to such PLAN on or prior to the date hereof (excluding any
amounts not yet due) and no PLAN which is subject to Part 3 of Subtitle B
of Title I of ERISA has incurred any "accumulated funding deficiency"
(within the meaning of Section 302 of ERISA or Section 412 of the CODE),
whether or not waived. Neither WCI nor any of its subsidiaries nor any
other "disqualified person" or "party in interest" (as defined in Section
4975(e)(2) of the CODE and Section 3(14) of ERISA, respectively) has
engaged in any transaction in connection with any PLAN that could
reasonably be expected to result in the imposition of a material penalty
pursuant to Section 502(i) of ERISA, damages pursuant to Section 409 of
ERISA or a tax pursuant to Section 4975(a) of the CODE. No material
liability, claim, action or litigation has been made, commenced or
threatened with respect to any PLAN (other than for benefits payable in
the ordinary course and for the payment of PBGC insurance premiums). No
PLAN is a "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA). BK does not have any material unfunded liabilities for benefits
accrued pursuant to any PLAN, which PLAN is not intended to be qualified
under Section 401(a) of the CODE. Neither BK nor any trade or business
(whether or not incorporated) which is required to be aggregated therewith
pursuant to Section 4001(b) of ERISA and/or Section 414(b), (c), (m) or
(o) of the CODE and the regulations promulgated thereunder has or could
incur or be subject to (i) any material liability under Title IV of ERISA
(other than for the payment of PBGC insurance premiums in the ordinary
course), (ii) a security interest pursuant to Section 412(f) of the CODE
or (iii) a lien pursuant to Section 412(n) of the CODE or Section 4068 or
302(f) of ERISA.
(e) U.K. Plan. The only active members of BKL's UNITED KINGDOM
PLAN (the "UK PLAN") are employees exclusively engaged in the BUSINESS and
BKL is the only participating employer. There is no obligation or ex
gratia or voluntary arrangement to provide any relevant benefits (as
defined in Section 612 Income and Corporation Taxes Act 1988 ("ICTA")) in
respect of any employee exclusively engaged in the United Kingdom in the
BUSINESS except under the UK PLAN, and no assurances or undertakings have
been given as to the continuance or introduction or improvement of the
provision of any such benefits. The UK PLAN has exempt approved status
under Chapter I of Part XIV of the ICTA and a contracting out certificate
is in force in respect of the UK PLAN relating to the employees of the
BUSINESS in the United Kingdom, and none of WCI, WCI-LTD or BK-LTD knows
of any circumstance which might cause such approval or such certificate to
be withdrawn or to cease to apply. The UK PLAN has at all times been
operated
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in all material respects in accordance with its governing scheme documents
and the governing scheme documentation is in substantial compliance with
and has been administered in all material respects in accordance with all
applicable laws. All taxes and expenses relating to the UK PLAN have been
duly paid, and all contributions due to be made to the UK PLAN have been
duly paid. None of the UK PLAN's investments are employer-related
investments (as defined in Section 57A of the Social Security Pensions Act
1975). No material liability, claim, action or litigation has been made,
commenced or threatened with respect to the UK PLAN (other than for bene-
fits payable in the ordinary course). Death benefits payable under the UK
PLAN are insured with an insurance company authorized under the U.K.
Insurance Companies Act and all such contracts of insurance are
enforceable and all premiums thereunder have been paid. No augmentations
of benefits have been made under the UK PLAN. There have been disclosed
to BUYER material particulars of the UK PLAN, including copies of all
deeds and documents constituting the UK PLAN which are of current effect.
4.1.9 Trademarks, Service Marks, Trade Names & Copyrights.
Part 1.1.5(a) of the SCHEDULE lists all TRADEMARKS, SERVICE MARKS, TRADE
NAMES and COPYRIGHTS and applications therefor either owned by BK, WCI-LTD
or BK-LTD or otherwise used in the conduct of the BUSINESS, and all re-
newals, modifications and extensions thereof.
4.1.10 Patents. Part 1.1.6(a) of the SCHEDULE lists all
PATENTS and applications for grant of PATENTS either owned by BK, WCI-LTD
or BK-LTD or otherwise used in the conduct of the BUSINESS or pertaining
to the production, processing or design of PRODUCTS by BK or BKL.
4.1.11 Licenses. The LICENSES constitute all of the licenses
relating to or associated with the BUSINESS. Part 4.1.11 of the SCHEDULE
includes copies of all material LICENSES pertaining to the BUSINESS, to
which BK or BKL is a party or which may affect the rights of BK, WCI-LTD
or BK-LTD. Except as disclosed in Part 4.1.11 of the SCHEDULE, none of
BK, WCI-LTD or BK-LTD is aware of, or has received any notice or claim of,
any conflict with its rights or the asserted rights of others regarding
the LICENSES or any other intellectual property constituting ACQUIRED
ASSETS or otherwise used in the BUSINESS. Except as set forth in
Part 4.1.11 of the SCHEDULE, none of BK, WCI-LTD or BK-LTD has been
required to pay (nor has any third party asserted any claim for) any
royalty, license fee or similar type of compensation in connection with
the conduct of the BUSINESS as it is now or heretofore has been conducted.
The conduct of the BUSINESS by BK and BKL in the ordinary course does not
infringe upon any intellectual property of any third parties.
4.1.12 Consents, Approvals, Etc. Except for the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, no filing with or consent or approval of any court, regulatory
authority or other public body, domestic or foreign, or third party is
necessary in order for WCI and its affiliates to consummate the transac-
tions contemplated by this Agreement.
4.1.13 Liabilities. None of BK, WCI-LTD or BK-LTD has any
outstanding claims, liabilities or indebtedness, contingent or otherwise,
except as set forth in the CURRENT BALANCE SHEET or referred to in the
footnotes thereto, other than liabilities incurred subsequent to the date
of the CURRENT BALANCE SHEET in the ordinary course of business not
involving borrowings by BK or BKL and other than executory obligations of
BK, WCI-LTD or BK-LTD to be performed after the CLOSING under the
CONTRACTS
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listed in Part 4.1.8 of the SCHEDULE and under the other CONTRACTS not
required to be listed in Part 4.1.8 of the SCHEDULE due to the materiality
thresholds contained in Section 4.1.8.
4.1.14. Disclosure. None of this Agreement, the SCHEDULE, any
Exhibit or certificate attached hereto or delivered pursuant to this
Agreement or any document or statement in writing which has been supplied
by or on behalf of WCI, BK, WCI-LTD or BK-LTD in connection with the
transactions contemplated by this Agreement, taken as a whole, contains
any untrue statement of a material fact or, taken as a whole, omits any
statement of a material fact necessary in order to make the statements
contained herein or therein not misleading; provided that this Section
4.1.14 shall not apply to any facts describing (a) the construction
equipment industry generally, (b) the United States or the United Kingdom
economies generally or (c) the appropriations process of the United States
Congress under the Intermodal Surface Transportation Efficiency Act.
4.1.15. Inventory. The INVENTORIES are items of a quality
usable or saleable by the BUSINESS in the ordinary course of business
consistent with past practice, except for obsolete or defective materials
for which adequate reserves are maintained on the books of the BUSINESS.
4.1.16. Accounts Receivable; Security Interests; Product
Returns.
(a) The RECEIVABLES represent sales actually made in the
ordinary course of business consistent with past practice, and are
reflected on the books of the BUSINESS net of adequate reserves for
doubtful accounts, and none of such RECEIVABLES is subject to any
counterclaim or set-off.
(b) All security interests held by BK, WCI-LTD or BK-LTD in
respect of dealer inventory financings represent valid first priority
perfected liens on the property purported to be secured thereby.
(c) There are no liabilities for PRODUCT returns other than
those arising in the ordinary course of BUSINESS consistent with past
practice. To the best knowledge of WCI, there are no threatened claims
for any PRODUCT returns relating to the BUSINESS.
4.1.17 Confirmation. The representations and warranties of WCI
set forth in this Section 4.1 shall be true and correct in all material
respects at and as of the CLOSING (as though such representations and
warranties were made anew at and as of such date and any references,
express or implied, to the date of this Agreement shall be deemed also to
be references to the CLOSING).
4.1.18 Disclaimer of Other Warranties. BUYER acknowledges that
it has been afforded the opportunity to inspect the ACQUIRED ASSETS and
the records relating thereto and that, subject to the terms and conditions
of this Agreement, it is satisfied with the condition thereof, and OTHER
THAN AS CONTAINED IN THIS AGREEMENT AND THE SCHEDULE, WCI HAS MADE AND
MAKES NO REPRESENTATION OR WARRANTY TO BUYER OF ANY KIND WHATSOEVER.
THUS, SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE SALE AND
TRANSFER OF THE ACQUIRED ASSETS PROVIDED FOR HEREIN IS MADE "AS IS" AND
"WHERE IS"; FURTHERMORE, WITH THE EXCEPTION OF THE REPRESENTATIONS AND
WARRANTIES STATED IN THIS AGREEMENT AND THE SCHEDULE, THERE ARE NO OTHER
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WHICH ATTACH TO THE ACQUIRED
ASSETS OR AS TO
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THE CONDITION, QUALITY AND/OR PERFORMANCE CAPABILITY OF ANY OF THE
ACQUIRED ASSETS AND EXCEPT AS SET FORTH ELSEWHERE IN THIS AGREEMENT, BUYER
IS ASSUMING THE SOLE RISK OF ANY DEFECTS IN SUCH ACQUIRED ASSETS OR
DEFECTS IN SIMILAR PRODUCTS HEREAFTER MANUFACTURED BY BUYER, WHETHER OR
NOT SAID DEFECTS RESULT FROM CONSTRUCTION OR DESIGN.
4.2 Representations and Warranties of BUYER. BUYER hereby
represents and warrants to WCI as follows:
4.2.1 Corporate Data and Authority of BUYER.
(a) BUYER is a corporation duly organized, validly existing and
in good standing under the laws of Delaware.
(b) BUYER has full power and, subject to the receipt by BUYER
of the approval of its Board of Directors, authority to purchase and own
the ACQUIRED ASSETS, to assume the ASSUMED LIABILITIES, and to conduct the
BUSINESS to be transferred to BUYER hereunder at the CLOSING and to
perform its other undertakings hereunder.
(c) Subject to the receipt by BUYER of the approval of its
Board of Directors, the execution, delivery and performance of this
Agreement and all related documents delivered by BUYER at the CLOSING will
have been duly authorized by all necessary corporate action on the part of
BUYER and will constitute valid and binding agreements of BUYER,
enforceable against BUYER in accordance with the respective terms thereof,
except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws relating to or affecting the availability of
the remedy of specific performance.
(d) Subject to the receipt by BUYER of the approval of its
Board of Directors, the consummation of the transactions contemplated
hereby will not conflict with the constitutive documents of BUYER.
(e) The consummation of the transactions contemplated hereby
will not result in the breach of any term or provision of, or constitute a
default under, any judgment, decree, indenture, mortgage or other
agreement or instrument to which BUYER is a party or by which it is bound.
Neither BUYER nor any subsidiary thereof is in default with respect to any
agreement or instrument evidencing indebtedness for money borrowed or in
the performance, observance or fulfillment of any covenant or condition in
relation thereto.
4.2.2 Litigation and Other Matters. There are no actions,
suits or proceedings pending or to BUYER's knowledge threatened against or
affecting BUYER or any subsidiary thereof which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of BUYER or any subsidiary thereof.
ARTICLE V - COVENANTS
5.1 Covenants of WCI. WCI covenants as follows:
5.1.1 Between the date of this Agreement and the CLOSING, and
except as may otherwise be provided in this Agreement, WCI shall and shall
cause BK, WCI-LTD and BK-LTD to carry on the BUSINESS in the ordinary
course, consistent with its present practice and policies and WCI will not
enter into (or permit BK, WCI-LTD or BK-LTD to enter into) any agreement
or transaction except in such usual and ordinary course of business except
as
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might be otherwise provided herein without the prior written consent of
BUYER. Between the date of this Agreement and the CLOSING, WCI shall
cause BK, WCI-LTD and BK-LTD to use their reasonable best efforts, in the
ordinary course of business, to preserve intact their respective business
organizations, keep available the services of their officers and employees
and maintain satisfactory relationships with licensors, suppliers,
distributors, clients and others having business relationships with them,
and BUYER shall cooperate with WCI in the performance of WCI's obligations
in this sentence (provided that BUYER shall not be obligated to incur any
obligation or make any commitment to any person or entity in connection
with such cooperation). Prior to the CLOSING, except as may be first
approved in writing by the BUYER, WCI shall cause BK, WCI-LTD and BK-LTD
to refrain from (a) increasing the level of compensation payable to any
officer, employee or agent, except for normal merit raises in accordance
with past practice, (b) making any bonus, pension, retirement or other
employee benefit payment to or with any such persons, except those that
may accrue under plans identified in Part 4.1.8(c) of the SCHEDULE and
except as described to BUYER in the WCI LETTER (as defined in Section
4.1.3(a)), or (c) making any material amendments to any of such plans or
the benefits thereunder.
5.1.2 During the period from the date of this Agreement to the
CLOSING, WCI shall supply to BUYER such information concerning the
ACQUIRED ASSETS and the operation of the BUSINESS as BUYER shall
reasonably request. Without limiting the generality of the foregoing, WCI
shall permit BUYER and its officers, agents, lawyers, accountants and
other representatives to examine the ACQUIRED ASSETS, wherever located,
and shall furnish such representatives with all such information
concerning the ACQUIRED ASSETS and the operation of the BUSINESS as they
may reasonably request, and BUYER shall be permitted to make extracts
from, or copies of, any of the records of WCI in this regard. All
information so obtained by BUYER shall be subject to the provisions of
Section 5.2.6.
5.1.3 At the CLOSING, WCI shall transfer or cause to be
transferred title to the REAL PROPERTIES owned by WCI-LTD or BK-LTD to
BUYER by transfer, conveyance or assignment, as applicable, subject only
to PERMITTED LIENS.
5.1.4 For a period of three (3) years after the CLOSING, WCI
shall not and shall insure that its affiliates will not disclose or use
any confidential business information related to the BUSINESS; provided,
however, that WCI and such affiliates shall at all times be free to
disclose or use such information (a) as shall be necessary for the
accounting procedures and tax returns of WCI and such affiliates, (b) such
as may be required by subpoena or court or governmental proceedings or
otherwise required by law and then only with as much prior written notice
to BUYER as is practical under the circumstances, (c) which after the
CLOSING becomes generally available to the public other than as a result
of disclosure by WCI or any of WCI's affiliates or representatives or (d)
which after the CLOSING becomes available to WCI or any of such affiliates
on a non-confidential basis from a source other than BUYER, any of its
affiliates, or any of their respective representatives, provided that such
source is not bound by a confidentiality agreement with or other con-
tractual, legal or fiduciary obligation of confidentiality to BUYER or any
other party with respect to such confidential business information.
5.1.5 For a period of ten (10) years after the CLOSING and
thereafter upon proof of need therefor for legitimate business purposes,
to the extent that WCI or any successor thereto is reasonably able by
virtue
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of the availability of any books, records and qualified personnel relating
to the BUSINESS, and if it can be done without unduly disrupting WCI's or
its affiliates' businesses, WCI shall (i) make or cause to be made
available to BUYER, its related companies or successors, and permit BUYER
and its agents to inspect and copy, such books and records and (ii) assist
in arranging discussions with (and calling as witnesses of BUYER) offi-
cers, employees and agents of WCI on matters which directly relate to the
BUSINESS, subject to the reimbursement of WCI of any actual out-of-pocket
expenses incurred by WCI in the performance of its obligations under this
Section 5.1.5.
WCI shall use its best efforts to retain such books and records
to be retained for such period. Before WCI destroys any of such books
and/or records, WCI shall so advise BUYER and offer BUYER a reasonable
opportunity to take possession of all such books and records. If WCI
wishes to destroy any such books and records during such period, WCI shall
give BUYER at least sixty days' prior written notice so that BUYER may
take possession of such books and records deemed important by BUYER. If
BUYER does not take possession or otherwise remove such books and records
from WCI's premises within such sixty-day period, WCI may destroy such
books and records.
5.1.6 As soon as practicable after the CLOSING, but in no event
later than 90 days thereafter, WCI shall transfer to (and in the name of)
BK all intellectual property registrations that are in the name of WCI or
any of its affiliates (other than BK) that relate to intellectual property
included in the ACQUIRED ASSETS of BK.
5.1.7 Subject to Section 5.1.8 below, WCI shall take all steps
necessary to ensure that as of the CLOSING, BK shall be the exclusive
owner of, and shall have the exclusive right to use (other than the
limited right of the Purchasers to use the "Blaw-Knox" name as specified
in the Blaw-Knox Trademark Agreement referred to in Section 3.3.4 above),
the "Blaw-Knox" trade name and trademark and logo (both with and without
the diamond).
5.1.8 WCI shall use its best efforts to negotiate a consensual
termination of the Trademark Agreement effective June 30, 1987 between
Italimpianti of America, Incorporated ("IAI") and WCI (the "IAI Trademark
Agreement"). In the event that, notwithstanding WCI's best efforts as
specified in the preceding sentence, WCI is unable to negotiate a con-
sensual termination of the IAI Trademark Agreement prior to the CLOSING,
then (a) the FINAL CASH PRICE and the PRELIMINARY CASH PRICE shall
automatically be reduced by US$250,000 and (b) WCI shall cause the IAI
Trademark Agreement to be assigned to BK, at no cost to BK.
5.1.9 Prior to the CLOSING, WCI shall cause the master
equipment lease dated May 6, 1988 between WCI and XL/Datacomp, Inc.
("Datacomp"), and any software or other licenses or agreements entered
into by WCI or any of its affiliates (other than BK) that constitute
ACQUIRED ASSETS of BK to be assigned to BK, at no cost to BK, and shall
deliver to BUYER an acknowledgment of Datacomp consenting to such
assignment.
5.1.10 Prior to the CLOSING, WCI shall cause the trademark
agreement referred to in Part 1.1.5(b) of the SCHEDULE, and the patent
license referred to in Part 1.6(b) of the SCHEDULE, each between BK and
BK-LTD, to be terminated in full, at no cost to BK, pursuant to
documentation reasonably satisfactory to BUYER or, at BUYER's election, to
be assigned to BUYER or its designee(s), at no cost to BUYER or such
designee(s), pursuant to documentation reasonably satisfactory to BUYER.
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5.1.11 WCI will and will cause its affiliates and advisors to
immediately cease any existing discussions or negotiations with any third
parties conducted prior to the date hereof with respect to any merger,
business combination, sale of assets (other than sales of inventory in the
ordinary course of business consistent with past practice), purchase of
assets (other than purchases permitted by this Agreement), sale or
purchase of shares of capital stock or other securities or similar
transaction involving any third party and the BUSINESS (an "ACQUISITION
TRANSACTION"). WCI will not and will ensure that none of its affiliates
or any directors, officers, employees or advisors shall, directly or in-
directly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation,
partnership, person or other entity or group (other than BUYER or its
respective affiliates, directors, officers and employees) concerning any
ACQUISITION TRANSACTION. WCI will immediately communicate to BUYER any
inquiries or proposals received by it or its affiliates or advisors that
are brought to the attention of Daniel Elliott or Wayne Schierbaum of WCI
or Henri Talerman of Lehman Brothers regarding an ACQUISITION TRANSACTION
and the terms thereof.
5.2 Covenants of BUYER. BUYER covenants as follows:
5.2.1 For a period of ten (10) years after the CLOSING, and
thereafter upon proof of need therefor for legitimate business purposes,
to the extent that BUYER or any successor thereto is reasonably able by
virtue of the availability of any books, records and qualified personnel
relating to the BUSINESS, and if it can be done without unduly disrupting
BUYER's or its affiliates' businesses, BUYER shall, (i) make or cause to
be made available to WCI all books and records included in the ACQUIRED
ASSETS that are needed by WCI or any of its related companies and permit
WCI and its agents to inspect and copy such books and records and
(ii) assist in arranging discussions with (and the calling as witnesses of
WCI) officers, employees and agents of BUYER and its affiliated companies
on matters which directly relate to the BUSINESS subject to the
reimbursement of BUYER for any actual out-of-pocket expenses incurred by
BUYER in the performance of its obligations under this Section 5.2.1.
BUYER shall use its best efforts to retain such books and
records to be retained for such period. In the event BUYER should
discontinue the manufacture or sale of the PRODUCTS or similar products,
before BUYER destroys any of the books and/or records constituting part of
the ACQUIRED ASSETS transferred to BUYER by WCI pursuant to this Agree-
ment, BUYER shall so advise WCI and offer WCI a reasonable opportunity to
take possession of all such books and records. If BUYER wishes to destroy
any such books and records during such period, Buyer shall give WCI at
least sixty days' prior written notice so that WCI may take possession of
such books and records deemed important by WCI. If WCI does not take
possession or otherwise remove such books and records from Buyer's
premises within such sixty-day period, Buyer may destroy such books and
records.
5.2.2 After the CLOSING, and for the remainder of any standard
express written warranty period or express extended or expanded warranty
period relating to the PRODUCTS referred to below, BUYER acknowledges that
BK (or a successor company) shall have the obligation to BK's distributors
to perform BK's standard express written warranties and express written
extended and expanded warranties for those PRODUCTS manufactured and/or
sold by BK prior to the CLOSING by repairing and/or replacing the
defective part or parts of the affected PRODUCT in accordance with and
subject to the
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limitations of the standard express written warranty terms and conditions
and the express written extended and expanded warranty terms and
conditions, respectively, applicable to those PRODUCTS (the "WARRANTY
OBLIGATIONS"); provided, however, that neither BK nor any successor
company shall have any obligations with respect to such PRODUCTS for (i)
implied warranties, if any, whether imposed as a matter of law or
otherwise or (ii) any express warranties other than the standard express
warranty attached as Part 5.2.2 of the SCHEDULE or (iii) any extended or
expanded warranties other than the express written extended or expanded
warranties specifically included in Part 5.2.2 of the SCHEDULE.
5.2.3 After the CLOSING neither BUYER nor any successor to the
BUSINESS shall use or make reference to the names "White Consolidated
Industries, Inc." or "White", the initials WCI, the slogan "One of The
White Consolidated Industries WCI" or any other trade names or trademarks
of WCI or any affiliated company thereof, other than those included in the
ACQUIRED ASSETS, nor state or imply that BUYER is an agent of WCI, or that
WCI or any affiliated company thereof is in any way responsible for
products produced by BUYER; any reference to WCI shall be obliterated from
all printed materials and facilities relating to the BUSINESS; and BUYER
shall, to the extent practical and as soon as possible after the CLOSING,
take steps to add language to its products, letterheads, warranty and
advertising literature or other printed public materials constituting
ACQUIRED ASSETS and to take such other actions at the facilities included
in the ACQUIRED ASSETS to indicate clearly that the BUSINESS is being
operated, and that the ACQUIRED ASSETS are owned, by BUYER or an affiliate
thereof.
5.2.4 BUYER shall establish new bank accounts in the name of
the companies in which it intends to continue the BUSINESS in the United
States and the United Kingdom and, effective the first business day after
the CLOSING, such new bank account and appropriate check stock therefor
shall be used for all funds pertaining to the conduct of the BUSINESS
after the CLOSING by the BUYER. WCI will cooperate and will cause its
affiliates to cooperate with BUYER in establishing such new bank accounts
promptly after execution of this Agreement to the extent necessary to
permit BUYER to establish such new bank accounts as of the date of the
CLOSING.
5.2.5 BUYER shall use its reasonable best efforts from time to
time, at the reasonable request of WCI, to cooperate with WCI in providing
WCI access to the records of BUYER's business and, through qualified
employees of BUYER, with information and technical assistance in respect
of any existing claims or litigation or claims or litigation subsequently
brought against WCI (including, without limitation, any Workers'
Compensation claims included in the Excluded Liabilities) involving the
conduct of the BUSINESS prior to the CLOSING or any PRODUCTS manufactured
and/or sold by WCI prior to the CLOSING, including requests for the
production of documents, supplying literature and information, providing
answers to interrogatories, product inspections and reports thereon and
the consultation and appearance of such qualified employees of BUYER on a
reasonable basis as an expert or fact witness in trials subject only to
the reimbursement of BUYER for reasonable actual out-of-pocket expenses
incurred by BUYER in the performance of its obligations under this Sec-
tion 5.2.5. BUYER shall use its best efforts to retain such documents and
records set forth in Part 5.2.5 of the SCHEDULE for 10 years after the
CLOSING DATE as are necessary or useful in defending the foregoing types
of claims and provide WCI with reasonable access thereto.
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5.2.6 In the event the transactions contemplated by this
Agreement shall not be consummated, BUYER shall keep strictly confidential
all of the information that BUYER, its representatives or affiliates shall
have obtained, either before or after the date of this Agreement, about
WCI and the BUSINESS, and BUYER shall promptly deliver to WCI all infor-
mation, work papers, copies of documents and all other items generated or
obtained by BUYER, its representatives and affiliates in its
investigations, and all copies thereof and BUYER shall refrain from using
or disclosing to others any such information, papers, or documents.
The obligation to keep such information confidential and to
refrain from using such information shall not apply to any information
which (a) becomes generally available to the public other than as a result
of a disclosure by BUYER or any of its representatives, (b) is necessary
for the accounting procedures and tax returns of BUYER and its affiliates,
(c) may be required by subpoena or court or governmental proceedings or
otherwise required by law and then only with as much prior written notice
to WCI as is practical under the circumstances, (d) was in the possession
of BUYER prior to it being furnished to BUYER by or on behalf of WCI,
provided that the source of such information was not known by BUYER to be
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to WCI or any other party with
respect to such information or (e) becomes available to BUYER on a non-
confidential basis from a source other than WCI or any of WCI's
representatives, provided that such source is not bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to WCI or any other party with respect to
such information.
5.2.7 BUYER shall provide WCI with a copy of any notice that
BUYER submits to any governmental agency in respect of matters referred to
in Section 3.2(h) above and, to the extent reasonably practicable, shall
give WCI an opportunity to comment on the substance of such notice and/or
to file such supplemental notices with the relevant governmental agencies
as WCI shall deem appropriate, provided that nothing contained in this
Section 5.2.7 shall limit or otherwise affect BUYER's or BK's ability to
take such actions as it may deem appropriate under applicable law or its
internal policies or procedures.
5.2.8 With respect to the PATENT CLAIM referred to in Section
3.2(n) above, in the event that BK or BUYER or any other entity conducting
the BUSINESS shall at any time be prohibited or limited in its use of any
of the intellectual property referred to in the Bethea Letter because of
an actual or alleged infringement occurring in whole or in part prior to
the CLOSING, then WCI will obtain for BK or BUYER or such other entity, as
applicable, at WCI's own cost, an indefinite, royalty-free right to use
such intellectual property in the conduct of the BUSINESS. BUYER shall
cooperate with WCI in the performance of WCI's obligations under this
Section 5.2.8 to the extent described in Section 5.2.5.
5.2.9 In the event that Electrolux Finance Ltd. ("ELECTROLUX
FINANCE") shall take possession of any PRODUCTS leased by ELECTROLUX
FINANCE to customers of the BUSINESS as a result of a default by such
customers under such leasing arrangement, then, for so long as BUYER shall
control the entity conducting the UK portion of the BUSINESS, BUYER will
cause such entity to cooperate with ELECTROLUX FINANCE with respect to the
possible resale or other disposition of such repossessed PRODUCTS.
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5.3 Mutual Covenants. WCI and BUYER covenant as follows:
5.3.1 In the event that WCI is in receipt after the CLOSING of
funds due BUYER, WCI shall forthwith pay the amount it received to BUYER,
and if BUYER is in receipt of funds due WCI, BUYER shall forthwith pay the
amount it received to WCI. In the event that WCI is legally required to
pay and makes a payment after the CLOSING for an obligation of BUYER,
BUYER shall forthwith reimburse WCI for such payment, and if BUYER is
legally required to pay and makes a payment for an obligation of WCI, WCI
shall forthwith reimburse BUYER.
5.3.2 WCI and BUYER will cooperate with each other in the
development and distribution of all news releases and other public
information disclosures relating to the proposed purchase and sale
transaction and any material transactions incident thereto. Neither BUYER
nor WCI will promulgate any such release or make any other public
disclosures without the prior consent of the other party or its authorized
representative. The two preceding sentences shall not apply to any
disclosure that is required to be made by applicable law, rule or
regulation, including rules and regulations of applicable securities
exchanges, provided that before any party shall make any such disclosure,
to the extent reasonably practicable such party shall provide the other
party with prior notice of such disclosure.
ARTICLE VI - EMPLOYEES AND EMPLOYEE BENEFITS
6.1 Provisions relating to All Employees.
6.1.1 All employees exclusively engaged in the BUSINESS
immediately prior to the CLOSING (the "EMPLOYEES") shall either remain
employees of BK or become employees of BUYER or one of its subsidiaries on
and as of the CLOSING. If BUYER at any time within sixty (60) days after
the CLOSING engages in a "mass layoff" or "plant closing" as these terms
are defined in the Worker Adjustment and Retraining Notification Act of
1988 ("WARN"), BUYER shall be fully responsible for and indemnify and hold
WCI harmless against any liability arising as a result of such "mass
layoff" or "plant closing" under WARN. If BK at any time within sixty
(60) days before the CLOSING engages in such a "mass layoff" or "plant
closing," WCI shall be fully responsible for and indemnify and hold BK and
BUYER harmless against any liability arising as a result of such "mass
layoff" or "plant closing."
6.1.2 (a) Prior to the CLOSING, BK and BKL have each provided
benefits (other than pension benefits) to EMPLOYEES and to former
employees of the BUSINESS and retirees of certain predecessors
(collectively "FORMER EMPLOYEES") and their eligible dependents (where
applicable) under the BENEFIT PLANS identified in Part 4.1.8(c) of the
SCHEDULE. Except as otherwise expressly provided in this Agreement, all
benefits and coverages provided to such EMPLOYEES and their eligible
dependents under the BENEFIT PLANS shall terminate as of the CLOSING
except for those claims and expenses incurred prior to the CLOSING that
are eligible for payment under the terms of WCI's BENEFIT PLANS.
(b) BUYER shall provide or cause one of its affiliates to
provide, effective as of the CLOSING, for all EMPLOYEES and their
dependents, employee benefits which BUYER determines are appropriate under
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the circumstances. Without limiting the scope of the foregoing, BUYER
shall provide or cause one of its affiliates to provide, beginning as of
the CLOSING, to all EMPLOYEES and FORMER EMPLOYEES and their eligible
dependents, such group health benefit coverage as may be required to
eliminate any and all obligations of WCI or its subsidiaries or other
affiliates to provide "continuation coverage" for such persons under
Sections 601 through 607 of ERISA or under Section 4980B of the CODE (as a
condition to the avoidance of a tax thereunder).
6.1.3 BUYER shall furnish WCI any payroll data necessary to
enable WCI to properly report WCI's Federal, State and local, Social
Security and other payroll tax data with respect to BK for the period
January 1, 1994 through the CLOSING. Upon WCI's request, BUYER shall
deliver to the EMPLOYEES Federal and State W-2 forms required to be furn-
ished by WCI for the period January 1, 1994 through the CLOSING.
6.2 Benefits Relating to USA Salaried Employees (NON-UNION
PLANS).
6.2.1 BK's Non-Union Plans. EMPLOYEES located in the United
States who are not covered by a COLLECTIVE BARGAINING AGREEMENT ("USA Non-
Union Employees") are covered by the White Consolidated Industries, Inc.
Pension Plan For Non-Bargaining Salaried Employees, a tax-qualified
defined benefit pension plan ("WCI's Non-Union Pension Plan") and the
White Consolidated Industries, Inc. Retirement Savings Plan for Non-
Bargaining Employees, a tax-qualified 401(k) plan ("WCI's Non-Union
Savings Plan"), copies of which have been furnished to BUYER.
(a) BUYER shall neither adopt nor become a sponsoring employer
of WCI's Non-Union Pension and Savings Plans.
(b) WCI has informed BUYER that each USA Non-Union Employee
shall be considered by WCI to have terminated participation in WCI's Non-
Union Pension and Savings Plans as of the CLOSING. Accordingly, the
eligibility of each such USA Non-Union Employee for a benefit under WCI's
Non-Union Pension and Savings Plans and the amount of such benefits shall
be determined under the terms of WCI's Non-Union Pension and Savings Plans
as in effect as of the CLOSING (as such Plans may be amended by WCI) on
the same basis as such determination would be made for any other employee
covered by such Plans whose participation in such plans with WCI
completely and finally terminates as of the CLOSING without regard to the
transactions contemplated by this Agreement.
6.3 Collective Bargaining Agreements and Hourly Employees
Covered Thereby.
6.3.1 Collective Bargaining Agreement. Hourly Employees of the
BUSINESS are covered by the COLLECTIVE BARGAINING AGREEMENTS.
6.3.2 BK Retirement Benefit Plan.
For employees who are covered by the BK COLLECTIVE BARGAINING
AGREEMENT ("Union Employees"), WCI currently maintains the Blaw-Knox
Construction Equipment Retirement Plan ("BLAW-KNOX PLAN"), a copy of which
is set forth in Part 6.3.2 of the SCHEDULE.
(a) On the CLOSING DATE, BUYER shall adopt and assume or cause
BK to adopt and assume, and shall replace or cause BK to replace WCI as
the sole sponsoring employer of the BLAW-KNOX PLAN, subject to any
amendments which BUYER may adopt to the BLAW-KNOX PLAN after the CLOSING.
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(b) Effective as of the CLOSING DATE, WCI shall cause Mellon
Bank, N.A., as master trustee pursuant to a Master Trust Agreement with
WCI effective January 2, 1992 (the "Master Trust"), to segregate from all
other assets held in the Master Trust a cash amount equal to the equitable
share of the assets of the BLAW-KNOX PLAN in such Master Trust and,
pursuant to Section 22.1 of the Master Trust, to hold such assets as
trustee of a separate trust for the BLAW-KNOX PLAN (the "Pension Trust").
The equitable share of the BLAW-KNOX PLAN in the Master Trust shall be
determined by Mellon Bank, N.A. in accordance with the terms of the Master
Trust. On the CLOSING DATE, or within 90 days thereafter, BUYER shall
establish a separate trust, or a separate plan trust account within
BUYER'S master pension trust, for the BLAW-KNOX PLAN ("BUYER'S TRUST")
which satisfies the requirements for tax exemption pursuant to Section
501(a) of the CODE (as part of a plan which is qualified under Section
401(a) of the CODE). On or within 90 days of the establishment of BUYER'S
TRUST, WCI shall direct Mellon Bank, N.A. to transfer to BUYER'S TRUST in
cash all of the assets of the BLAW-KNOX PLAN then held by Mellon Bank,
N.A. in the Pension Trust. Prior to the transfer of assets, WCI will
provide to BUYER a written schedule of the amount of such assets (and the
methodology used in determining such amount), prepared by Mellon Bank,
N.A., which schedule shall be subject to review by BUYER's actuary for the
purpose of confirming that the calculation was made in accordance with the
terms of the Master Trust Agreement and the actuarial assumptions des-
cribed in the Schedule entitled "White Consolidated Industries Inc. Blaw-
Knox Construction Equipment Corporation Hourly Pension Plan (040)-
Statement of Actuarial Assumptions and Actuarial Cost Method" (attached
hereto as Part 6.3.2(b) of the SCHEDULE). In the event that BUYER does
not send WCI written notice of its objections within 45 days following
receipt of Mellon Bank, N.A.'s schedule, then such evidence shall be
deemed to be approved. In the event that BUYER does send WCI written
notice of its objections within 45 days as described above, then WCI's
actuary and BUYER's actuary will attempt to reach agreement as to any
disputed matter relating to the transfer. In the event they do not reach
agreement, then WCI's actuary and BUYER's actuary will select a third
actuary, the expense of which shall be borne equally by BUYER and WCI, to
make a final and conclusive determination of the amount of the transfer.
(c) WCI shall adopt appropriate amendments to the BLAW-KNOX
PLAN and the Pension Trust, and BUYER and WCI shall take all other
actions, as may be necessary or appropriate to establish BUYER as
successor to WCI as to all powers, duties and obligations under or with
respect to the BLAW-KNOX PLAN and, effective as of the CLOSING DATE, BUYER
shall assume such powers, duties and obligations, provided that all such
amendments and actions shall be subject to the prior review and approval
of BUYER. BUYER shall amend the BLAW-KNOX PLAN to comply with the
requirements of the CODE relating to the qualifications of such PLAN under
Section 401(a) of the CODE and exemption of its related trust from income
taxation pursuant to Section 501(a) of the CODE. Such amendment shall be
made effective retroactively to the dates that are required pursuant to
the Tax Reform Act of 1986 (P.L. 99-514), the Omnibus Budget
Reconciliation Act of 1986 (P.L. 99-509), the Omnibus Budget
Reconciliation Act of 1987 (P.L. 100-203), the Technical and Miscellaneous
Revenue Act of 1988 (P.L. 100-647), the Omnibus Budget Reconciliation Act
of 1989 (P.L. 101-239), the Revenue Reconciliation Act of 1990 (P.L.
101-508) and the regulations and rulings under such laws (collectively
referred to as "TRA '86 Requirements"); shall be adopted by the BUYER not
later than the time permitted pursuant to the provisions of Section 401(b)
of the CODE, Treasury Regulations Section
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1.401(b)-1, IRS Notice 90-73, IRS Announcement 92-29, IRS Notice 92-36,
and other pronouncements made pursuant to Treasury Regulation Section
1.401(b)-1(e); and shall include therein provisions which reflect all of
the administrative practices pertinent to the TRA '86 Requirements that
have been implemented prior to the CLOSING DATE with respect to the BLAW-
KNOX PLAN. WCI shall cooperate with BUYER in determining which
administrative procedures, if any, have been implemented prior to the
CLOSING DATE.
(d) After adopting and assuming the BLAW-KNOX PLAN as of the
CLOSING DATE, (i) BUYER shall have full responsibility for the
maintenance, operation or termination of the BLAW-KNOX PLAN and (ii)
without limiting the generality of the foregoing, BUYER shall be
responsible for and shall indemnify and hold WCI harmless against any
liability, obligation, claim, expense, loss, tax or penalty arising out of
the BLAW-KNOX PLAN, including (A) any and all pension and survivor
benefits provided for or which the sponsoring employer is obligated to
provide under the BK COLLECTIVE BARGAINING AGREEMENT, (B) all claims for
benefits under the BLAW-KNOX PLAN, (C) compliance with the reporting and
disclosure requirements of the CODE and ERISA for Plan Years ending after
December 31, 1993 with respect to the BLAW-KNOX PLAN (except that any such
report or disclosure required to be made prior to the CLOSING shall be the
responsibility of WCI), (D) satisfaction of the minimum funding standards
arising under the CODE and ERISA with respect to the BLAW-KNOX PLAN for
Plan Years ending after December 31, 1993, (E) any and all liability
relating to the termination of the BLAW-KNOX PLAN and (F) any amendment
adopted by BUYER to the BLAW-KNOX PLAN that adversely affects the
qualification of the BLAW-KNOX PLAN under Section 401(a) of the CODE for
any year, and (G) the failure to comply with the requirements of Section
6.3.2(c).
(e) If BUYER causes BK to assume the BLAW-KNOX PLAN, then all
references to BUYER in this Section 6.3 (other than the reference in the
first line of Section 6.3.2(a), the fourteenth line of Section 6.3.2(b),
and the first and second lines of this Section 6.3.2.(e)) shall be deemed
to be references to BK.
6.4 Pension Benefits Relating to United Kingdom Employees.
6.4.1 Information Concerning the White Consolidated
International Holdings Pension Plan. With respect to employees of BKL
("UK EMPLOYEES"), WCI-LTD presently maintains the White Consolidated
International Holdings Pension Plan, including a supplemental Executive
Pension Plan (collectively the "BKL's UNITED KINGDOM PLAN"), a copy of
which is set forth in Part 6.4.1 of the SCHEDULE.
6.4.2 Assumption of BKL's UNITED KINGDOM PLAN. (a) As of the
CLOSING, BUYER shall adopt and assume or cause the entity designated by it
to adopt and assume BKL'S UNITED KINGDOM PLAN and shall succeed or cause
such entity to succeed to all rights and obligations of WCI or its nominee
thereunder.
(b) Notwithstanding anything contained in this Agreement to the
contrary, WCI agrees to cause the value of the assets of BKL's UNITED
KINGDOM PLAN on the CLOSING DATE to be no more than U.K. 23,000 pound sterling
less than the accrued liabilities (allowing for, inter alia, projected salary
increases) of BKL's UNITED KINGDOM PLAN on the CLOSING DATE, as determined
by applying the actuarial and financial assumptions and methods described
in the letter from David L. Lindsay of C E Health (Employee Benefits) Ltd.
to Mr. E. B. Halton of BK-LTD, dated February 28, 1992 (attached hereto as
Part 6.4.2 of the SCHEDULE) to BKL's UNITED KINGDOM PLAN benefit
provisions
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in effect on the CLOSING DATE, but with such alterations as may be
necessary to ensure that the benefit provisions comply with Article 119 of
the Treaty of Rome. Any dispute between the parties arising out of this
Section 6.4.2(b) shall be resolved in a manner similar to the dispute
resolution procedures set forth in Section 6.3.2(b) above.
(c) BUYER shall have full responsibility for the maintenance
and administration of BKL's UNITED KINGDOM PLAN and the trust thereunder,
and for all expenses, liabilities and obligations with respect thereto,
whether contingent, absolute, known or unknown, and WCI shall not have any
such responsibility.
(d) If BUYER causes an entity designated by it to assume BKL's
UNITED KINGDOM PLAN, then all references to BUYER in Section 6.4 (other
than the reference in the second line of Section 6.4.2(a) and the first
and second lines of this Section 6.4.2(d)) shall be deemed to be
references to such entity.
6.5 The provisions of Sections 6.2.1 shall be subject in all
respects to such modifications in WCI's Non-Union Pension and Savings
Plans as may be required to comply with applicable law and to satisfy the
requirements for tax qualification. The provisions of Section 6.3.2 shall
be subject in all respects to such modifications in BUYER's or BK's plans,
as applicable, as may be required to comply with applicable law and to
satisfy the requirements for tax qualification. The provisions of Section
6.4.2 shall be subject in all respects to such modifications in BKL's
UNITED KINGDOM PLAN as may be required to enable BUYER or its designee to
become the principal employer and to satisfy all requirements for Inland
Revenue exempt approval.
6.6 Required Contributions. WCI shall cause BK and BKL to
discharge any liabilities of BK and BKL on account of any expenses or
liabilities of the BENEFIT PLANS, PENSION PLANS and OTHER EMPLOYEE PLANS
for the period up to and including the date of the CLOSING.
ARTICLE VII - CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of BUYER.
The obligations of BUYER to purchase the SHARES and the BKL
ACQUIRED ASSETS under this Agreement are subject to the following
conditions (unless waived in writing in whole or in part by BUYER):
7.1.1 WCI shall have furnished to BUYER:
(a) Certificate of Good Standing for WCI certified as of a
recent date by the Secretary of State of Delaware; and
(b) Certificate of Good Standing for BK certified as of a
recent date by the Secretary of State of Illinois; and
(c) Certificate of Good Standing for BK and WCI-LTD, each
certified as of a recent date by the Secretary of State of Delaware;
and
(d) A certificate of the Secretary or an Assistant Secretary of
WCI certifying (i) as to the absence of amendments to the
constitutive documents of BK; (ii) as to the absence of proceedings
for dissolution
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or liquidation of BK; (iii) a copy of the resolution or resolutions
adopted by the Board of Directors of WCI, authorizing the execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby, and of AB Electrolux, authorizing
the ELECTROLUX INDEMNITY AGREEMENT referred to below and the other
transactions contemplated hereby; and (iv) as to the incumbency and
signatures of officers; and
(e) A certificate of the Secretary or an Assistant Secretary of
BK-LTD certifying (i) as to the absence of amendments to the
constitutive documents of BK-LTD; (ii) as to the absence of
proceedings for dissolution or liquidation of BK-LTD; (iii) a copy of
the resolution or resolutions adopted by the Board of Directors of
BK-LTD, authorizing the consummation of the transactions contemplated
hereby; and (iv) as to the incumbency and signatures of officers; and
(f) A certificate of the Secretary or an Assistant Secretary of
WCI-LTD certifying (i) as to the absence of amendments to the
constitutive documents of WCI-LTD; (ii) as to the absence of
proceedings for dissolution or liquidation of WCI-LTD; (iii) a copy
of the resolution or resolutions adopted by the Board of Directors of
WCI-LTD, authorizing the consummation of the transactions
contemplated hereby; and (iv) as to the incumbency and signatures of
officers.
7.1.2 WCI shall have performed in all material respects all of
its agreements and covenants which are required to have been performed by
it at or prior to the CLOSING.
7.1.3 The representations and warranties of WCI set forth in
this Agreement and the SCHEDULE shall be correct in all material respects
on and as of the CLOSING.
7.1.4 At the CLOSING, BUYER shall have received from the Senior
Vice President-Law and General Counsel of WCI (with respect to U.S. law
matters) and from Julie O'Niell, counsel to WCI-LTD and BK-LTD (with
respect to U.K. law matters) an opinion dated the CLOSING, in form and
substance reasonably satisfactory to BUYER, to the effect set forth in
Subsections 4.1.1(a) through (e) and to the best knowledge of such counsel
to the effect set forth in Subsection 4.1.4(a).
7.1.5 At the CLOSING, BUYER shall have received a certificate
dated the CLOSING and signed by an authorized officer of WCI which
evidences the compliance by WCI with the conditions contained in Sections
7.1.2, 7.1.3, 7.1.8 and 7.1.9.
7.1.6 The filing and waiting period requirements, if any, of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
relating to the transactions contemplated by this Agreement shall have
been complied with.
7.1.7 BUYER shall have received certificates representing the
SHARES, duly executed in blank, with all necessary transfer stamps affixed
thereto and cancelled.
7.1.8 No action or proceeding shall have been instituted or, to
the knowledge of WCI, threatened before a court or other government body
or by any public authority to restrain or prohibit any of the transactions
contemplated hereby.
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7.1.9 All indebtedness of WCI and its affiliates (and of
directors, officers and employees of WCI, BK, WCI-LTD and BK-LTD, other
than customary travel advances) to BK, WCI-LTD and BK-LTD shall have been
repaid in full.
7.1.10 BUYER shall have received resignations of officers and
directors of BK as designated by BUYER.
7.1.11 All legal matters relating to this Agreement and the
consummation of the transactions contemplated hereby shall have been
completed to the reasonable satisfaction of counsel to BUYER.
7.1.12 AB Electrolux shall have executed and delivered to BUYER
the Electrolux Indemnity Agreement in form and in substance as set forth
in Exhibit A hereto ("ELECTROLUX INDEMNITY AGREEMENT"), and BUYER shall
have further received an opinion of counsel to AB Electrolux, in form and
in substance, and from counsel, acceptable to BUYER in its sole
discretion.
7.1.13 The Board of Directors of BUYER shall have adopted
resolutions approving this Agreement and the transactions contemplated
hereby.
7.1.14 BUYER shall have received a complete, final SCHEDULE,
which SCHEDULE shall be reasonably satisfactory to BUYER in form and in
substance.
7.1.15 BUYER shall have completed its due diligence in respect
of the BUSINESS and the transactions contemplated by this Agreement, and
the results of such due diligence shall be reasonably satisfactory to
BUYER.
7.2 Conditions to the Obligations of WCI.
The obligations of WCI to sell the SHARES and the BKL ACQUIRED
ASSETS under this Agreement are subject to the following conditions
(unless waived in writing in whole or in part by WCI):
7.2.1 BUYER shall have furnished WCI:
(a) a Certificate of Good Standing of BUYER, certified as of a
recent date by the Secretary of State of Delaware; and
(b) a certificate of the Secretary or an Assistant Secretary of
BUYER certifying (i) a copy of BUYER's By-laws; (ii) a copy of the
articles of incorporation of BUYER; (iii) as to the absence of
proceedings for dissolution or liquidation of BUYER; (iv) a copy of
the resolution or resolutions adopted by the Board of Directors of
BUYER, authorizing the execution, delivery and performance of this
Agreement by BUYER; and (v) as to the incumbency and signatures of
officers.
7.2.2 BUYER shall have performed in all material respects all
of its agreements and covenants which are required to have been performed
by it at or prior to the CLOSING.
7.2.3 The representations and warranties of BUYER set forth in
this Agreement shall be correct in all material respects on and as of the
CLOSING.
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7.2.4 At the CLOSING, WCI shall have received from Bernard D.
Henely, Esq., Vice President and General Counsel of BUYER, an opinion
dated the CLOSING, in form and substance reasonably satisfactory to WCI,
to the effect set forth in Subsections 4.2.1(a) through (e) and to the
best knowledge of such counsel to the effect set forth in Section 4.2.2.
7.2.5 At the CLOSING, WCI shall have received a certificate
dated the CLOSING and signed by an authorized officer of BUYER which
evidences the compliance by BUYER with the conditions contained in
Sections 7.2.2, 7.2.3 and 7.2.9.
7.2.6 All legal matters relating to this Agreement and the
consummation of the transactions contemplated hereby shall have been
completed to the reasonable satisfaction of counsel to WCI.
7.2.7 The filing and waiting period requirements, if any, of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
relating to the transactions contemplated by this Agreement shall have
been complied with.
7.2.8 At the CLOSING, WCI shall have received from BUYER the
PRELIMINARY CASH PRICE.
7.2.9 No action or proceeding shall have been instituted or, to
the best knowledge of BUYER, threatened before a court or other government
body or by any public authority to restrain or prohibit any of the
transactions contemplated hereby.
ARTICLE VIII - CLOSING
8.1 Closing. The "CLOSING" hereunder shall take place on the
third business day following the satisfaction of the conditions set forth
in Sections 7.1.6, 7.1.12, 7.1.13, 7.1.14, 7.1.15 and 7.2.7 above (such
date, the "CLOSING DATE"), at 10:00 A.M., E.S.T., at the offices of White
& Case, 1155 Avenue of the Americas, New York, New York (or at such other
place and/or time as may be mutually agreed upon by the parties) and shall
be effective as of twelve o'clock (12:00) midnight after the close of
business on the day immediately preceding the CLOSING DATE. Notwithstand-
ing the foregoing, in the event the CLOSING shall not have occurred on or
prior to June 30, 1994, then either party may terminate this Agreement
upon prior written notice to the other party.
8.2 WCI's Obligations. At the CLOSING, WCI shall deliver to
BUYER the following:
8.2.1 The opinion of counsel for WCI specified in Section
7.1.4.
8.2.2 The certificates specified in Sections 7.1.1 and 7.1.5.
8.2.3 Appropriate instruments of transfer for the REAL
PROPERTIES of BKL and any LEASEHOLDS of BKL, in form and substance
satisfactory to BUYER.
8.2.4 A Bill of Sale and General Assignment (or other
appropriate instruments of transfer) for the remainder of the ACQUIRED
ASSETS of BKL, in form and substance satisfactory to BUYER.
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8.2.5 To the extent required by applicable law, an Assignment
of the BKL COLLECTIVE BARGAINING AGREEMENT, in form and substance
satisfactory to BUYER.
8.2.6 The unissued stock certificates, minute book and other
corporate records of BK.
8.2.7 The Transitional Services Agreement in form and in
substance as set forth in Exhibit B hereto ("TRANSITIONAL SERVICES
AGREEMENT"), executed by WCI.
8.2.8 The Non-competition Agreement in form and in substance as
set forth in Exhibit C hereto ("NON-COMPETITION AGREEMENT"), executed by
WCI.
8.2.9 A non-foreign person affidavit as required by Section
1445 of the CODE.
8.2.10 The ELECTROLUX INDEMNITY AGREEMENT, executed by AB
Electrolux, together with the opinion of counsel referred to in Section
7.1.12.
8.2.11 A certificate signed by an authorized officer of WCI to
the effect that all liens (other than PERMITTED LIENS) on any of the
ACQUIRED ASSETS, including any liens relating to the Revenue Bonds, have
been fully released.
8.3 BUYER'S Obligations. At the CLOSING, BUYER shall deliver
to WCI the following:
8.3.1 The opinion of counsel for BUYER specified in Section
7.2.4.
8.3.2 The certificates specified in Sections 7.2.1 and 7.2.5.
8.3.3 Evidence of transfer of Federal Funds or a certified or
official bank check drawn on a bank satisfactory to WCI and payable to the
order of WCI in the amount of the PRELIMINARY CASH PRICE as specified in
Section 2.2.
8.3.4 The TRANSITIONAL SERVICES AGREEMENT, executed by BUYER.
8.3.4. The NON-COMPETITION AGREEMENT, executed by BUYER.
ARTICLE IX - MISCELLANEOUS
9.1 Further Assurance. At any time and from time to time after
the CLOSING, WCI shall, upon the request and at the expense of BUYER, do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged or delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney or assurances as may be
required for the better assigning, transferring, granting, conveying,
assuring and confirming to BUYER, or for aiding and assisting in the
collection of or reducing to possession by BUYER, any of the ACQUIRED
ASSETS or the SHARES.
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9.2 Expenses. Except as otherwise provided herein, WCI and
BUYER each shall bear their own expenses incurred in connection with this
Agreement and the transactions contemplated herein, whether or not such
transactions shall be consummated, including, without limitation, all fees
of its counsel, actuaries and accountants.
9.3 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been fully given
by the parties if addressed and delivered by hand or facsimile and
confirmed by certified U.S. mail, with postage prepaid, to the addresses
set forth below in this Section 9.3 for the parties (or to such other
addresses as may be given by written notice in accordance with this
Section 9.3).
If to WCI, to:
White Consolidated Industries, Inc.
11770 Berea Road
Cleveland, Ohio 44111
Attn: Legal Department
Facsimile: 216/252-8158
If to BUYER, to:
Clark Equipment Company
100 North Michigan Street
South Bend, Indiana
Attn: General Counsel
Facsimile: (219) 239-0237
9.4 Assignment. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of all of the parties hereto,
but shall not be assignable by either party without the prior written
consent of the other, except that each of WCI and BUYER may engage in
statutory mergers where it is the surviving company, and WCI may assign
all or any part of its rights under this Agreement to any parent,
affiliated or related company of WCI, provided that WCI shall remain
primarily liable for all its obligations under this Agreement.
Notwithstanding the foregoing, BUYER may at any time at or before the
CLOSING designate one or more of its direct or indirect subsidiaries to
acquire all or a portion of the SHARES and/or BKL ACQUIRED ASSETS or to
assume all or a portion of the obligations or rights of BUYER hereunder;
provided that such designation shall not relieve BUYER of any obligations
expressly assumed by it hereunder.
9.5 Bulk Sales. BUYER hereby waives compliance by WCI with the
provisions of the so-called bulk sales law of any jurisdiction, if and to
the extent any such law may be held to apply to the transactions
contemplated hereby, and WCI shall indemnify BUYER for any claim or
liability on account of noncompliance with any such bulk sales laws.
9.6 Taxes. BUYER and WCI shall each pay one-half of any sales
or other use, stamp, excise or transfer taxes (including those pertaining
to the transfer of the REAL PROPERTIES) imposed by law in connection with
the sales made to BUYER or its designee pursuant to this Agreement.
9.7 Severability. If any Section, Subsection, clause or
provision of this Agreement shall be unenforceable, then such Section,
Subsection, clause or provision shall be deemed to be deleted from this
Agreement but every other Section, Subsection, clause and provision shall
continue in full force and effect.
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9.8 Complete Agreement. This Agreement, the SCHEDULE, the
Exhibits hereto, the waiver dated as of the date hereof between the
parties hereto, the WCI LETTER (as defined in Section 4.1.3(a)), and the
other documents and certificates delivered pursuant to the terms hereof
set forth the entire understanding of the parties hereto with respect to
the subject matters covered hereby and thereby and supersede all prior
agreements, covenants, arrangements, communications, representations or
warranties, whether verbal or written, by any officer, employee or
representative of either party with respect to such subject matters.
9.9 Amendment and Termination. This Agreement may not be
amended or terminated verbally, but only as expressly provided herein or
by an instrument in writing duly executed by the parties hereto.
9.10 Brokers and Finders. Except as disclosed in Part 9.10 of
the Schedule, WCI and BUYER each represents to the other that it has not
dealt with, incurred any obligation or entered into any agreement with any
person which might result in an obligation of the other party to pay a
sales or brokerage commission or finder's fee in connection with the
transactions dealt with and covered by this Agreement. Each party shall
indemnify and hold harmless the other from any claim or demand for
commission or other compensation by any broker, finder or similar agent
claiming to have been employed by or on behalf of such party or arising
out of a breach of the foregoing representation.
9.11 Waivers. Waiver by WCI or BUYER of any breach of or
failure to comply with any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such
provision, or a waiver of any other breach of, or failure to comply with,
any other provision of this Agreement.
9.12 Survival of Representations, Warranties, Covenants, Etc.
9.12.1 All of the representations and warranties of WCI and
BUYER contained herein and in the certificates or documents delivered in
connection herewith shall survive for a period of three (3) years after
the CLOSING.
9.12.2 The covenants, agreements and obligations of the parties
in this Agreement and in the documents delivered in connection herewith
shall survive the CLOSING.
9.13 Applicable Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the
laws of the State of New York.
9.14 Headings. The headings of the Articles and Sections of
this Agreement are inserted for convenience only and shall not be deemed
to constitute a part hereof.
9.15 Counterparts. More than one counterpart of this Agreement
may be executed by the parties hereto, and each fully executed counterpart
shall be deemed an original.
9.16 Third Party Beneficiaries. Each party hereto intends that
this Agreement shall not inure to the benefit or create any right or cause
of action in or on behalf of any person or entity, other than (a) the
parties hereto, (b) their respective successors, assigns and designees to
the extent set forth in Section 9.4, and (c) the indemnified persons
described in Section 3.3.
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9.17 Affiliates. Except as otherwise expressly set forth in
this Agreement, an "affiliate" of, or a person or entity "affiliated"
with, a specified person or entity, shall mean a person that directly, or
indirectly through one or more intermediaries, controls, is controlled by,
or is under common control with, the person specified.
9.18 Draft SCHEDULE. For purposes of Section 7.1.14 above, the
parties acknowledge that by attaching the draft SCHEDULE to this
Agreement, BUYER shall not be deemed to have accepted such SCHEDULE or any
item identified therein, it being understood that the final SCHEDULE must
be reasonably acceptable to BUYER.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers.
WHITE CONSOLIDATED INDUSTRIES, INC.
By: /s/Daniel R. Elliott
Title:
CLARK EQUIPMENT COMPANY
By: /s/ Bernard D. Henely
Title:
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