<PAGE> 1
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: June 23, 1997
BUTLER MANUFACTURING COMPANY
BMA Tower - Penn Valley Park
Post Office Box 419917
Kansas City, Missouri 64141-0917
Phone: (816) 968-3000
Incorporated in the State of Delaware
Commission File No. 001-12335
IRS Employer Identification Number: 44-0188420
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INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
INFORMATION INCLUDED IN FORM 8-K REPORT
ITEM 2. Acquisition or Disposition of Assets 3
ITEM 7. Financial Statements and Exhibits 3
(b) Pro Forma Financial Information of Butler Manufacturing Company
Condensed Consolidation Financial Statements (unaudited):
Consolidated Statement of Operations for the Three Month Period
Ended March 31, 1997 4
Consolidated Statement of Operations for the Twelve Month Period
Ended December 31, 1996 5
Consolidated Balance Sheet as of March 31, 1997 6
(c) Exhibits 7
</TABLE>
Page 2
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Item 2. Acquisition or Disposition of Assets
On June 23, 1997, Butler Manufacturing Company (the "Company") sold the
business and substantially all of the assets and liabilities used in the
business of the Grain Systems Division, an unincorporated division of the
Company, to CTB, Inc., a privately owned company in Indiana, for an agreed upon
price of approximately $34 million in cash. The net cash proceeds of
approximately $24 million will be used to fund investments in Butler's core
building products businesses and share repurchases, which will be made from
time to time in the open market or in private negotiated transactions.
The sale was consummated pursuant to the Asset Purchase Agreement (the
"Agreement") dated March 31, 1997 which provides for an adjustment of the cash
portion of the purchase price after the date of close based on changes in the
net asset value at the date of close from a targeted net asset value of $10.1
million. The Agreement is attached as Exhibit 2.
The purchased assets include the business of the Grain Division, all
account and trade receivables, prepaid items, inventories, factory machinery
and equipment, all office furniture and furnishings, all patents and trademarks
used exclusively by the Grain Division, leasehold interests in real estate and
personal property, all books and records of the division, and the assumption of
certain liabilities of the business. CTB, Inc. is licensed to use the Butler
oval trademark and "Butler" trademark for two years and three years,
respectively with respect to the business acquired.
ITEM 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information of Butler Manufacturing Company
The following pro forma consolidated statements of operations of the
Company is intended to show the effects of the transaction as described in Item
2 above for the year ended December 31, 1996 and the three months ended March
31, 1997 as if it had occurred on January 1, 1996 and January 1, 1997,
respectively. A consolidated balance sheet for the Company as of March 31,
1997 is presented to show the effects of the transaction as if it had occurred
on March 31, 1997.
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BUTLER MANUFACTURING COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
- ---------------------------------
Historical Pro Forma As
(Unaudited) Adjustments(a) Adjusted
---------- -------------- ----------
<S> <C> <C> <C>
Net sales $ 188,102 $ (6,575) $ 181,527
Cost of sales 156,025 (4,977) 151,048
---------- ---------- ----------
Gross profit 32,077 (1,598) 30,479
Selling, general and administrative costs 27,427 (639) 26,788
---------- ---------- ----------
Operating income 4,650 (959) 3,691
International joint venture income (loss) 156 --- 156
Other income (expense), net (290) (26) (316)
---------- ---------- ----------
Expense before interest and taxes (loss) 4,516 (985) 3,531
Interest expense 1,279 (389) 890
---------- ---------- ----------
Pretax earnings 3,237 (596) 2,641
Income tax expense (benefit) 1,341 (238) 1,103
---------- ---------- ----------
Net earnings (loss) $ 1,896 $ (358) $ 1,538
========== ========== ==========
Earnings (loss) per common share $ .25 $ (.05) $ .20
========== ========== ==========
Common share equivalents-average
outstanding 7,671,458 7,671,458 7,671,458
</TABLE>
(a) To reflect: 1. The sale of the Grain Division as if it had occurred on
January 1, 1997, therefore excluding the financial results of that
division in the "As Adjusted" column in the above statement. 2. The
reduction of interest expense related to the repayment of short-term
borrowings from the $24.2 million net proceeds of the sale.
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BUTLER MANUFACTURING COMPANY
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31, 1996
- -------------------------------------
Pro Forma As
Historical Adjustments(a) Adjusted
---------- -------------- ----------
<S> <C> <C> <C>
Net sales $ 870,162 $ (41,693) $ 828,469
Cost of sales 714,116 (32,301) 681,815
---------- ---------- ----------
Gross profit 156,046 (9,392) 146,654
Selling, general and administrative costs 106,548 (3,335) 103,213
---------- ---------- ----------
Operating income 49,498 (6,057) 43,441
International joint venture income (loss) (137) --- (137)
Other income (expense), net 987 802 1,789
---------- ---------- ----------
Expense before interest and taxes (loss) 50,348 (5,255) 45,093
Interest expense 4,344 (424) 3,920
---------- ---------- ----------
Pretax earnings 46,004 (4,831) 41,173
Income tax expense (benefit) 20,241 (1,932) 18,309
---------- ---------- ----------
Net earnings (loss) $ 25,763 $ (2,899) $ 22,864
========== ========== ==========
Earnings (loss) per common share $ 3.35 $ (.38) $ 2.97
========== ========== ==========
Common share equivalents-average
outstanding 7,692,803 7,692,803 7,692,803
</TABLE>
(a) To reflect: 1. The sale of the Grain Division as if it had occurred on
January 1, 1996, therefore excluding the financial results of that
division in the "As Adjusted" column in the above statement. 2. The
reduction of interest expense related to the repayment of short-term
borrowings from the $24.2 million net proceeds of the sale and interest
income related to the investment of cash during the period when the
Company had no outstanding short-term debt.
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BUTLER MANUFACTURING COMPANY
PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
- --------------------
Historical Pro Forma As
(Unaudited) Adjustments(a) Adjusted
---------- -------------- ----------
<S> <C> <C> <C>
Assets:
Cash and equivalents $ 14 $ 9,500 $ 9,514
Receivables, net 98,598 (1,901) 96,697
Inventories 67,931 (8,025) 59,906
Real estate developments in progress 38,516 --- 38,516
Prepaid income taxes 8,878 --- 8,878
Other current assets 7,800 (12) 7,788
---------- --------- ----------
Total current assets 221,737 (438) 221,299
Investments and other assets 27,792 --- 27,792
Assets held for sale 13,260 --- 13,260
Property, plant and equipment, net 80,823 (4,046) 76,777
---------- --------- ----------
Total assets $ 343,612 $ (4,484) $ 339,128
========== ========= ==========
Liabilities and shareholders' equity
Notes payable $ 36,260 $ (24,248) $ 12,012
Current portion of long-term debt 5,712 --- 5,712
Accounts payable 64,174 (1,458) 62,716
Dividends payable 910 --- 910
Accrued liabilities 48,940 (919) 48,021
Taxes on income 9,175 8,956 18,131
---------- --------- ----------
Total current liabilities 165,171 (17,669) 147,502
Deferred income taxes 3,837 --- 3,837
Other non-current liabilities 9,813 --- 9,813
Long-term debt 39,243 --- 39,243
Shareholders' equity 125,548 13,185 138,733
---------- --------- ---------
Total liabilities and equity $ 343,612 $ (4,484) $ 339,128
========== ========= =========
</TABLE>
(a) To reflect: 1. The sale of the Grain Division as if it had occurred
on March 31, 1997 therefore excluding the assets and liabilities of that
division in the "As Adjusted" column in the above statement. 2. The
$24.2 million net proceeds of the sale used to repay short-term debt. 3.
The investments of cash during the period when the Company had no
outstanding short-term debt.
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(c) Exhibits
-------------
(2) Asset Purchase Agreement, dated March 31, 1997, between Butler
Manufacturing Company (seller) and CTB, Inc. (purchaser).
(20) Press release of the Company dated June 23, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Butler Manufacturing Company
July 3, 1997 /s/ John J. Holland
- ---------------------------- -------------------------------
Date John J. Holland
Vice President - Finance
and Chief Financial Officer
July 3, 1997 /s/Richard O. Ballentine
- ---------------------------- -------------------------------
Date Richard O. Ballentine
Vice President - General
Counsel and Secretary
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ASSET PURCHASE AGREEMENT, dated as of the close of business on March 31,
1997 (this "AGREEMENT"), between BUTLER MANUFACTURING COMPANY, a Delaware
corporation ("SELLER") and CTB, INC., an Indiana corporation ("BUYER").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of manufacturing and marketing
grain storage bins and marketing grain conditioning and handling equipment
through its Grain Systems Division (the "DIVISION");
WHEREAS, upon and subject to the terms and conditions set forth herein,
Buyer desires to buy and Seller desires to sell the business, assets and other
rights of the Division (collectively, the "BUSINESS"), and Buyer is willing to
assume certain related ordinary course liabilities and obligations of Seller
related to the Business, all as hereinafter set forth (such acquisition and
assumption is collectively referred to as the "ACQUISITION");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
SECTION 1. PURCHASE AND SALE OF ASSETS, ASSUMPTION OF CERTAIN LIABILITIES
1.1 TRANSFER OF ASSETS. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction (or waiver
by the party whose obligations hereunder are subject to such satisfaction) of
the conditions set forth in this Agreement, on the Closing Date (as defined in
Section 2.1), Seller shall sell, convey, assign, transfer and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, all of Seller's right, title
and interest in and to the properties, assets and other rights (other than the
Excluded Assets) owned or leased by, or licensed to Seller and used exclusively
in the Business, including, without limitation, the following:
(a) all copyrights, trademarks, tradenames, service marks, patents
and other similar rights or intellectual property of Seller which is
listed on Schedule 1.1(a), including all goodwill associated therewith
and all applications and registrations therefor and all licenses,
sublicenses, covenants or other agreements with respect thereto
(collectively, the "INTELLECTUAL PROPERTY");
(b) all contracts and agreements of Seller for the conduct of the
Business, including leases of real and personal property, license and
distributorship agreements, dealer agreements, supply agreements,
purchase agreements and purchase orders, outstanding quotations and
agency agreements, listed on Schedule 1.1(b) and such other contracts and
agreements of Seller for the conduct of the Business entered into prior
to the date hereof and not listed on Schedule 1.1(b) the benefits of
which Buyer elects to assume in its sole discretion, together with all
such contracts and agreements for the conduct of the Business that are
entered into in the ordinary course of business of the Business between
the date hereof and the Closing Date other than in violation of Section
4.2 and other than express or implied product warranties ("PRODUCT
WARRANTIES") issued in connection with the sale of goods by the Business
(the "ASSUMED CONTRACTS");
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(c) all real property used by the Business that is owned by Seller
and listed on Schedule 1.1(c) and all buildings, structures and other
improvements and fixtures located on such real property and any
additions, improvements, replacements and alterations thereto between the
date of this Agreement and the Closing Date;
(d) all leasehold interests in real property relating to the
Business leased by Seller listed on Schedule 1.1(d), including all
buildings, structures and other improvements located on such real
property and any additions, improvements, replacements and alterations
thereto between the date of this Agreement and the Closing Date;
(e) all office furniture, furnishings and fixtures of Seller that is
used exclusively in the Business and that is located on the real
property or leaseholds listed on Schedules 1.1(c) and 1.1(d) and any
additions, improvements, replacements and alterations thereto between the
date of this Agreement and the Closing Date and all warranties and
guarantees, if any, express or implied in respect of the foregoing;
(f) all equipment, machinery and vehicles of Seller used exclusively
by the Business, including, without limitation, all equipment, machinery
and vehicles listed on Schedule 1.1(f) and any additions, improvements,
replacements and alterations thereto between the date of this Agreement
and the Closing Date, and all warranties and guarantees, if any, express
or implied in respect of the foregoing;
(g) all management information systems and software, customer,
subscriber and vendor lists, catalogs, research material, technical
information and technology used exclusively by the Business;
(h) all prepayments and prepaid expenses made exclusively for the
Business unless the same relate to contracts or agreements that are not
included in the Assumed Contracts and Assumed Liabilities;
(i) all advertising, promotional, marketing and other similar
agreements entered into exclusively for the benefit of the Business and
all sales promotion and selling literature and promotional and
advertising materials used exclusively by the Business;
(j) all books, records and accounts of Seller used exclusively for
the Business;
(k) all right, title and interest of the Seller under or in respect
of the Plans (as defined below) and all assets relating to the Plans, if
such Plans are assumed by Buyer in its sole discretion;
(l) all accounts receivable of the Business;
(m) all franchises, permits and non-governmental licenses or
sublicenses of Seller used for the exclusive benefit of the Business;
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(n) to the extent transferable under applicable law, all franchises,
approvals, permits, licenses, orders, registrations, certificates,
variances and similar rights obtained from government authorities used
for the exclusive benefit of the Business;
(o) all telephone numbers of Seller used for the exclusive benefit
of the Business to the extent that the numbers may be transferred without
interference to Seller's use of telephone numbers beginning with the 968
prefix for its operations other than those of the Business;
(p) all inventories, raw materials, office supplies, production
supplies, packaging materials and other supplies, spare parts, work in
process, goods consigned to third parties, finished goods and other
tangible property used exclusively by the Business of any kind;
(q) all claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind of the Seller arising out of
or held for the benefit of the Business (other than those related to
Excluded Assets or Excluded Liabilities);
(r) all goodwill of the Business as a going concern including,
without limitation, all goodwill associated with the Intellectual
Property;
(s) all other properties, assets and rights owned by the Seller
which are exclusively used in the Business (other than those related to
Excluded Assets or Excluded Liabilities); and
(t) all right, title and interest of Seller to those items listed on
Schedule 1.2(k) which are marked to be sold and conveyed to Buyer.
The assets being sold, conveyed, assigned, transferred and delivered to Buyer
by Seller hereunder are sometimes hereinafter referred to as the ("ASSETS.")
All Schedules hereto shall be prepared as of the date of this Agreement as
specified above unless otherwise specified in the Schedule.
1.2 EXCLUDED ASSETS. It is expressly understood and agreed that the
Assets shall not include the following (the "EXCLUDED ASSETS"):
(a) all corporate minute books, stock transfer books, corporate tax
returns, checks, check registers and insurance polices of Seller;
(b) all intercompany receivables;
(c) all contracts other than the Assumed Contracts ("EXCLUDED
CONTRACTS"), including, without limitation, those listed or described on
Schedule 1.2(c);
(d) Seller's rights under or pursuant to this Agreement;
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(e) all prepayments and prepaid expenses related to other Excluded
Assets or Excluded Liabilities;
(f) all right, title and interest in and to the "Butler" tradename
and trademark and to the trademarks 'BUTLER AGRI-BUILDER,' 'BUTLER
AGRI-CONTRACTOR,' 'AGRI-BUILDER' and 'AGRI-CONTRACTOR,' which shall
remain the property of Seller and will be subject to a Trademark License
Agreement to be entered into between Seller and Buyer (the "TRADEMARK
LICENSE AGREEMENT") on the Closing Date, substantially in the form
attached hereto as Exhibit E, and all other trade names, trade marks,
service marks, copyrights, patents, and similar rights as well as
applications and registrations therefor and all licenses, sublicenses,
covenants or other agreements with respect thereto, not specifically
included on Schedule 1.1(a);
(g) all claims, causes of action, choses in action, rights of
recovery, rights of set-off, counterclaims, cross claims and defenses of
any kind related to other Excluded Assets or Excluded Liabilities;
(h) all right, title and interest of the Seller under or in respect
of the Plans which are not included in the Assumed Liabilities;
(i) all reserves established for (a) the nonpayment of accounts
receivable and (b) warranty claims and obligations and other claims or
suits or any future claims and suits not included in the Assumed
Liabilities;
(j) all of Seller's assets which are used exclusively in Seller's
other businesses;
(k) all of Seller's books, records and information which are used in
Seller's other businesses and in the Business, which shall be made
available to Buyer for inspection and copying at all reasonable times,
and properties, assets and other rights jointly used by the Business and
Seller's other business which are listed on Schedule 1.2(k) and
designated as being retained by Seller, the continued joint use of which
shall be governed by the terms set forth on Schedule 1.2(k) (all of which
excluded assets under this subsection are referred to as the "JOINTLY
USED ASSETS");
(l) all contracts of insurance and any claims or rights of Seller
thereunder, including, without limitation, any claims or rights of Seller
to reserves, unearned premiums or return of premiums arising thereunder;
(m) all cash in payroll accounts and other accounts established
specifically for the payment of obligations that are not included in the
Assumed Liabilities;
(n) Real Estate described on Schedule 1.2(n); and
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(o) all cash and cash equivalents on hand in bank accounts
maintained for or otherwise held for the Business on the Closing Date.
1.3 INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the Closing Date,
Seller shall (a) deliver or cause to be delivered to Buyer such deeds, bills of
sale, endorsements, consents, assignments, and other good and sufficient
instruments of conveyance and assignment, all in recordable form, where
applicable, as shall be effective to vest in Buyer all right, title and
interest of Seller in and to the Assets, and as shall otherwise be in the form
and substance reasonably satisfactory to Buyer and Buyer's counsel, and (b)
transfer to Buyer originals of all contracts, agreements, commitments, books,
records, files, certificates, licenses, permits, plans and specifications and
other data of Seller relating to the Business, including, without limitation,
computer tapes and computer-generated records. All materials referred to in
clause (b) of the immediately preceding sentence shall be delivered to Buyer in
the form and order in which they are maintained by Seller on the date hereof.
1.4 FURTHER ASSURANCES. From time to time after the Closing Date,
Seller and any person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
Seller (an "AFFILIATE") shall execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such other instruments of conveyance,
assignment, transfer and delivery and will take or cause to be taken such other
actions as Buyer may reasonably request in order more effectively to sell,
convey, assign, transfer, and deliver to Buyer any of the Assets, or to enable
Buyer to protect, exercise and enjoy all rights and benefits of Seller with
respect thereto, and as otherwise may be appropriate to carry out the
transactions herein contemplated.
1.5 ASSUMED LIABILITIES.
(a) The Assets shall be sold and conveyed to Buyer free and clear of
all Liens (as defined below), except Permitted Liens (as defined below).
Subject to Section 1.5(b) below, at the Closing, Buyer will assume and
agree to fully pay, perform or discharge in a timely manner, fully in
accordance with the respective terms thereof, as and when they become
due, (i) all liabilities and obligations of Seller relating to the Assets
or the Business arising from, or in connection with, the conduct of the
Business or the ownership of the Assets by Buyer or any other person
after the Closing Date; (ii) all liabilities and obligations of Seller
under the terms of the Assumed Contracts, except for (A) those
liabilities and obligations which Seller is required to satisfy prior to
the Closing (except to the extent such liabilities or obligations are
reflected on the Final Closing Balance Sheet) or (B) which arise due to a
breach by Seller of an Assumed Contract prior to the Closing; (iii) all
accounts payable and other current liabilities of the Seller as of the
Closing Date in each case incurred in the ordinary course of the Business
to the extent reflected on the Final Closing Balance Sheet; (iv) to the
extent that the FANAV exceeds the Cap, any liabilities or obligations
under Assumed Contracts, accounts payable and other current liabilities
of the Seller not set forth in clauses (i), (ii) or (iii) above that were
incurred in the ordinary course of the Business as of the Closing Date
and of the type reflected as liabilities on the Pro Forma Balance Sheet
(but any such additional obligations and liabilities shall be assumed
only to the extent of the amount by which
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FANAV exceeds the Cap); (v) all liabilities and obligations of Seller to
Employees of the Business to the extent provided in Section 6; and (vi)
all other liabilities and obligations of the Seller incurred in the
ordinary course of the Business to the extent expressly accrued or
reserved for on the Final Closing Balance Sheet (collectively, the
"ASSUMED LIABILITIES"). Except as set forth in this Section 1.5, Buyer
will assume no other liabilities in connection with the Assets, the
Business or the transactions contemplated hereby. All liabilities and
obligations which are not Assumed Liabilities are "EXCLUDED LIABILITIES"
and each is an "EXCLUDED LIABILITY." On the basis of the representations,
warranties and covenants and agreements and subject to the satisfaction of
the conditions set forth in this Agreement, on the Closing Date, Buyer
shall deliver to Seller an undertaking to assume the Assumed Liabilities
in substantially the form attached hereto as Exhibit A (the "ASSUMPTION
AGREEMENT").
(b) Without limiting the generality of Section 1.5(a), and
notwithstanding any other provision hereof, each of the following is an
Excluded Liability:
(i) all intercompany payables;
(ii) any of Seller's obligations hereunder;
(iii) any liability or obligation of Seller arising from, or
in connection with, the conduct of the Business or the ownership of
the Assets by the Seller or any other person prior to the Closing
Date except for liabilities and obligations set forth in clauses
(ii), (iii), (iv) (if applicable), (v) and (vi) of Section 1.5(a)
(which shall constitute Assumed Liabilities);
(iv) any liability of Seller arising from indebtedness for
borrowed money;
(v) any liability of Seller for Taxes owed to any taxing
authority except to the extent included in current liabilities on
the Final Closing Balance Sheet and tax liabilities referred to in
Section 9.3;
(vi) any liability or obligation arising out of or related to
past, present or future litigation or other claims to the extent
arising out of or relating to the ownership or operation of the
Assets or the Business prior to the Closing Date including, without
limitation, claims with respect to Product Warranties and any other
claims with respect to defective products or services, alleged
improper sales practices, warranty claims, claims for any loss,
damage or cost arising out of any property damage or personal
injury due to the use of any product manufactured or sold by or
services furnished by the Business prior to the Closing Date;
(vii) any of Seller's liabilities or obligations, the
existence of which constitutes a breach of a representation or
warranty set forth in this Agreement (without regard to the
survival period, if any, associated therewith);
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(viii) any liability of any other division of Seller or any
Affiliate of Seller (including, without limitation, any owner of
capital stock of Seller);
(ix) except as provided in Section 6, all obligations and
liabilities arising out of or relating to the Plans or any other
employee benefit plan, program, policy or arrangement presently or
formerly maintained or contributed by any member of the controlled
group of companies (as such term is defined in Section 414 of the
Code) of which Seller is or was a member, or with respect to which
Seller or such controlled group member has any liability;
(x) any liability or obligation relating to workers
compensation claims which are filed on or before the Closing Date
or which are filed after the Closing Date and which relate to
occurrences or events on or before the Closing Date;
(xi) any claim, liability or obligation to the extent such
claim, liability or obligation arises out of or relates to
Materials of Environmental Concern existing on, at or under any
Asset before the Closing Date, or otherwise arises from, or in
connection with, the conduct of the Business or the ownership of
the Assets by the Seller or any other person prior to the Closing
Date; and
(xii) any obligations or liabilities arising out of or
relating to all claims and causes of action under federal, state
and/or municipal civil rights and/or employment law statutes
including, but without limitation, Title VII of the Civil Rights
Acts of 1964, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Fair Labor Standards Act, the
Occupational Health & Safety Act, the National Labor Relations Act,
or the Missouri Civil Rights Act for actions of Seller arising
prior to the Closing Date.
SECTION 2. CLOSING, PAYMENT OF PURCHASE PRICE
2.1 CLOSING DATE. On and subject to the conditions herein set forth,
the closing with respect to the transactions provided for in this Agreement
(the "CLOSING") shall take place at the offices of Simpson Thacher & Bartlett
located at 425 Lexington Avenue, New York, New York at 10:00 a.m., Eastern
time, on the earlier of (x) June 30, 1997 or (y) such earlier date as shall be
designated by Buyer on at least three business days prior written notice to
Seller, or at such other time and place as shall be agreed upon by the parties
hereto. The actual time and date of the Closing are herein referred to as the
("CLOSING DATE.")
2.2 PRELIMINARY PURCHASE PRICE AND PAYMENT. As consideration for the
Assets, and subject to the terms and conditions of this Agreement, including,
without limitation, Sections 2.3 and 9.3, Buyer shall on the Closing Date (a)
assume the Assumed Liabilities as provided in Section 1.5, (b) deposit the
amount of $300,000 into an account to be maintained with Commerce Bank of
Kansas City, N.A. (the "ESCROW AGENT"), pursuant to an Escrow Agreement to be
entered into on or prior to the Closing Date among Buyer, Seller and the Escrow
Agent, substantially in the form attached hereto as Exhibit B (the "ESCROW
AGREEMENT") and (c) transfer to the order of Seller in immediately available
funds an amount equal to the sum of $32,200,000
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minus the amount by which the Preliminary Adjusted Net Asset Value (as defined
below) is less than $10,100,000 or, if the Preliminary Adjusted Net Asset Value
is greater than $10,100,000, plus the lesser of (x) the amount by which the
Preliminary Adjusted Net Asset Value exceeds $10,100,000 or (y) $2,500,000 (the
"Cap"). The sum of (b) and (c) is herein referred to as the "PRELIMINARY CASH
PURCHASE PRICE."
2.3 CASH PURCHASE PRICE ADJUSTMENT AND PAYMENT.
(a) Not later than four (4) business days prior to the Closing Date,
Seller shall deliver to Buyer a certificate setting forth its good faith
estimate of the Closing Balance Sheet (the "ESTIMATED CLOSING BALANCE
SHEET"). The Estimated Closing Balance Sheet shall be derived from
Seller's internal books and records. The amount of the Adjusted Net
Asset Value reflected on the Estimated Closing Balance Sheet is
hereinafter referred to as "SELLER'S ADJUSTED NET ASSET VALUE
CALCULATION." Buyer shall have the right to review, approve and copy
the computations and work papers (including accountant's work papers) and
underlying books and records used in connection with Seller's preparation
of the Estimated Closing Balance Sheet and the determination of Seller's
Adjusted Net Asset Value Calculation and to have access to Seller's
employees and accountants, and their respective books and records, in
connection therewith. Seller's Adjusted Net Asset Value Calculation,
with such changes, if any, as are agreed upon by Seller and Buyer not
later than the business day prior to the Closing Date shall be referred
to as the "PRELIMINARY ADJUSTED NET ASSET VALUE".
(b) Not later than the 45th day following the Closing Date, Buyer
shall provide to Seller a certificate setting forth its good faith
determination of the Closing Balance Sheet (the "BUYER'S CLOSING BALANCE
SHEET"). The Buyer's Closing Balance Sheet shall be derived from the
books and records of the Business. Seller will give Buyer and its
representatives access during the normal business hours of Seller to the
personnel, books and records of the Seller relating to the Business to
assist Buyer in the preparation of Buyer's Closing Balance Sheet. Seller
shall notify Buyer in writing ("SELLER'S DISPUTE NOTICE") within fifteen
(15) days after receiving Buyer's Closing Balance Sheet if Seller
disagrees with Buyer's calculation of the final Adjusted Net Asset Value,
which notice shall set forth in reasonable detail each item which Seller
disputes, the amount in dispute and the basis for its disagreement.
Buyer will give Seller and its representatives access during the normal
business hours of Buyer to the personnel, books and records of the
Business to assist Seller in the preparation of Seller's Dispute Notice.
If no Seller's Dispute Notice is received by Buyer within such fifteen
(15) day period, Buyer's determination of the final Adjusted Net Asset
Value as of the Closing Date as set forth in Buyer's Closing Balance
Sheet shall be the final Adjusted Net Asset Value ("FANAV") and shall be
final and binding on the parties and Buyer's Closing Balance Sheet shall
be the Closing Balance Sheet.
(c) Seller and Buyer shall negotiate in good faith to resolve any
disagreement with respect to the FANAV. To the extent Buyer and Seller
are unable to agree with respect to the FANAV within thirty (30) days
after the receipt by Buyer of the Seller's Dispute Notice, Buyer and
Seller shall select a mutually acceptable partner at any "big
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six" accounting firm other than Arthur Andersen LLP, KPMG Peat Marwick LLP
or Deloitte & Touche LLP mutually selected by Buyer and Seller (the
"INDEPENDENT ACCOUNTING FIRM"), and submit their dispute to the
Independent Accounting Firm. The Independent Accounting Firm will be
requested to review only the disputed items identified in Seller's Dispute
Notice and not previously resolved by Seller and Buyer. The Independent
Accounting Firm shall resolve such dispute after reviewing written
submissions of Buyer and Seller supporting their respective determinations
of the items in dispute and stating each of their estimates of Adjusted
Net Asset Value. The Independent Accounting Firm shall make an
independent determination of all disputed items and then calculate a FANAV
based upon such independent determination and Seller's and Buyer's
determination of all amounts not in dispute. In its determination, the
Independent Accounting Firm shall be entitled to rely on presentations
prepared by Buyer and Seller. The decision of the Independent Accounting
Firm shall be conclusive between, and final and binding on, the parties
hereto. The fees and expenses of the Independent Accounting Firm will be
paid by the party (either Buyer or Seller) whose calculation of the
Adjusted Net Asset Value would result in a Cash Purchase Price that
deviates the furthest from the final Cash Purchase Price determined based
upon the Adjusted Net Asset Value as calculated by the Independent
Accounting Firm. If the Closing Balance Sheet is not produced under the
preceding subsection (b), then the Buyer's Closing Balance Sheet as
adjusted by the final resolution of the dispute under this subsection
shall be the Closing Balance Sheet and the Accountant's determination of
the Adjusted Net Asset Value shall be the FANAV.
(d) Upon the final determination of FANAV in accordance herewith
(i) Buyer shall pay to Seller the amount by which the Cash Purchase Price
(as defined below) exceeds the Preliminary Cash Purchase Price or, (y) if
the Cash Purchase Price shall be less than the Preliminary Cash Purchase
price, Seller shall pay to Buyer the amount by which the Preliminary Cash
Purchase Price exceeds the Cash Purchase Price, in either case, together
with interest thereon from the Closing Date at a rate of interest equal
to the prime rate established by The Chase Manhattan Bank, N.A., on the
date of payment. In either case, such payment shall be made within five
business days after all disputes, if any, have been resolved as set forth
above, or, if Seller shall have accepted (or shall have been deemed to
have accepted) Buyer's determination of the FANAV, within five business
days after such acceptance. Such payment shall be made by wire transfer
of immediately available funds to a bank account specified by the
recipient not less than two business days prior to such payment date.
(e) "ADJUSTED NET ASSET VALUE" means, with respect to each of the
Estimated Closing Balance Sheet, the Buyer's Closing Balance Sheet and
the Closing Balance Sheet, the amount by which the assets exceed the
liabilities reflected on such balance sheet.
(f) "CASH PURCHASE PRICE" shall mean the sum of (i) $32,200,000 plus
(ii) the $300,000 escrow and (to the extent FANAV does not equal
$10,100,000) (iii) minus the amount by which the FANAV is less than
$10,100,000 or, if the FANAV is greater than $10,100,000, plus the lesser
of (x) the amount by which the FANAV exceeds $10,100,000 or (y)
$2,500,000.
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(g) "CLOSING BALANCE SHEET" means a balance sheet of the Business
reflecting the Assets and Assumed Liabilities as of the close of business
on the day immediately preceding the Closing Date. Except as set forth
in this Section 2.3(g), the Closing Balance Sheet shall be prepared in
accordance with generally accepted accounting principles as in effect in
the United States ("GAAP") as if such date were the Business's normal
year end, applied on a basis consistent with the financial statements of
the Business referenced in Section 3.1(d). Notwithstanding the
foregoing, the Closing Balance Sheet (i) will contain a liability of
$180,000 for post-retirement health and life insurance obligations for
active employees of the Business (and no other liability for such
obligations) if such obligations are assumed by Buyer in its sole
discretion, (ii) will not contain any reserve for liabilities not being
assumed by Buyer, (iii) will contain all accounts payable and other
current liabilities as of the Closing incurred in the ordinary course of
business of the type reflected in the Pro Forma Balance Sheet and (iv)
will include all other liabilities and obligations of the Seller incurred
in the ordinary course of business as of the Closing of the kind accrued
or reserved for in the Pro Forma Balance Sheet. The Closing Balance
Sheet will be prepared in the form of the balance sheet attached hereto
as Schedule 2.3(g) (the "PRO FORMA CLOSING BALANCE SHEET"), which Pro
Forma Closing Balance Sheet reflects the form of the Closing Balance
Sheet as if the Closing Date had occurred on April 1, 1997.
2.4 ALLOCATION OF PURCHASE PRICE.
(a) Buyer and Seller agree that they shall allocate the sum of the
Cash Purchase Price and the Assumed Liabilities among the Assets and the
covenant not to compete (set forth in Section 4.9 of this Agreement) as
of the Closing Date on Internal Revenue Service ("IRS") Form 8594, in
accordance with Section 1060 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and the Treasury regulations promulgated
thereunder. The allocation described in the preceding sentence shall be
determined by the joint agreement of Buyer and Seller based upon the fair
market value of the Assets and such covenant not to compete, as of the
Closing Date. Buyer shall provide Seller with a copy of Buyer's proposed
fair market value allocation (the "ALLOCATION") as promptly as reasonably
practicable; provided, however, that Buyer shall provide Seller with a
copy of the Allocation within 30 days after the determination of the Cash
Purchase Price pursuant to Section 2.3. In the event that Buyer and
Seller are unable to agree on the Allocation within 90 days after the
determination of the Cash Purchase Price pursuant to Section 2.3, a
third-party appraiser jointly selected by Buyer and Seller, the cost of
which shall be borne equally by Buyer and Seller, shall resolve all items
with respect to the Allocation to which there is a dispute between the
parties.
(b) Buyer and Seller shall timely file with the appropriate Tax
authorities copies of the agreed upon IRS Form 8594 and shall use the
Allocation in the preparation of all Tax Returns (including any
attachments thereto) and for all other Tax purposes. In the event any
party hereto receives notice of an audit in respect of the Allocation,
such party shall notify the other party in writing as to the date and
subject of such audit as promptly as reasonably practicable.
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(c) If any Tax Return filed by Buyer or Seller relating to the
transactions contemplated hereby is challenged by the Tax authority with
which such Tax Return was filed on the basis of the Allocation, as
finally adjusted, the filing party shall assert in good faith the
validity and correctness of the Allocation and such party shall not agree
to any adjustment to the Allocation without obtaining the prior written
consent of the other party (which consent shall not be unreasonably
withheld). If any such Tax Return is challenged as herein described, the
party filing such Tax Return shall keep the other party apprised of its
decisions and the current status and progress of all administrative and
judicial proceedings, if any, that are undertaken at the election of such
party with respect thereto.
2.5 ACCOUNTS RECEIVABLE. All accounts received by Seller subsequent to
12:01 A.M., Kansas City Time, on the date of Closing and pertaining to the
Business and/or the Assets, shall be the property of Buyer, and Seller shall
promptly remit the same plus all documentation regarding said payment to Buyer.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes the
following representations and warranties to Buyer:
(a) DUE ORGANIZATION, POWER; CAPACITY, GOOD STANDING, OWNERSHIP.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of Delaware and has the requisite corporate power
and authority to own, lease and operate its properties and assets and to
conduct its business as now conducted by it. Seller has all requisite
corporate and other power and authority to enter into this Agreement, the
Assumption Agreement, the Trademark License Agreement, the Supply
Purchase Agreement between Buyer and Seller whereby Buyer shall have the
right to purchase certain raw materials with and through Seller for a
fixed period of time as contemplated by Section 4.16 (the "SUPPLY
PURCHASE AGREEMENT"), the Escrow Agreement and any other agreements
contemplated hereby to which it is a party (collectively, the "SELLER
ACQUISITION DOCUMENTS") and to perform its obligations hereunder and
thereunder.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Seller of this Agreement and the other Seller Acquisition
Documents and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action. This Agreement has been, and on the Closing Date each other
Seller Acquisition Document will be, duly executed and delivered by
Seller and this Agreement constitutes, and each other Seller Acquisition
Document will upon execution and delivery thereof constitute, a legal,
valid and binding obligation of Seller, enforceable against it in
accordance with their respective terms, except as affected by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding
in equity or at law) or by an implied covenant of good faith and fair
dealing.
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(c) NO GOVERNMENTAL APPROVALS OR NOTICES REQUIRED; NO CONFLICT.
Except for (1) the expiration or termination of all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR ACT"), (2) provisions contained in Assumed Contracts
which require the consent of third parties to the assignment thereof
where the failure to obtain such consents would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below) and none
of which individually and all of which collectively are not material to
the conduct of the Business, and (3) as set forth in Schedule 3.1(c), the
execution, delivery and performance of this Agreement and the other
Seller Acquisition Documents by Seller and the consummation by Seller of
the transactions contemplated hereby and thereby (i) will not violate
(with or without the giving of notice or the lapse of time or both), or
require any consent, approval, filing or notice under any provision of
any License (as defined in Section 3.1(g)), law, rule or regulation,
court or administrative order, writ, judgment or decree applicable to
Seller, the Business or any of the Assets or the Assumed Liabilities and
(ii) will not (with or without the giving of notice or the lapse of time
or both) (x) violate or conflict with, or result in the breach,
suspension or termination of any provision of, or constitute a default
under, or result in the acceleration of the performance of the
obligations of Seller under, or (y) result in the creation of any lien,
mortgage, pledge, security interest, claim, charge or encumbrance or
other restriction of any kind or nature (collectively, "LIENS") upon the
Business or the Assets of Seller pursuant to the charter or by-laws of
Seller, or any indenture, mortgage, deed of trust, lease, agreement,
contract or instrument to which Seller is a party or by which Seller, the
Business or the Assets is bound.
(d) FINANCIAL INFORMATION, LIABILITIES.
(i) The audited balance sheets of the Business as at December
31, 1995 and 1996 (such latest balance sheet being referred to
herein as the "BALANCE SHEET") and the related statements of
earnings, division equity and cash flows for each of the years in
the three year period ending on December 31, 1996, copies of which
have been furnished to Buyer and which are attached hereto as
Schedule 3.1(d)(i)(a), present fairly the financial condition of
the Business as at December 31, 1995 and 1996, and the results of
its operations for each of the years in the three year period
ending on December 31, 1996 (the "YEAR-END FINANCIAL STATEMENTS").
The balance sheet of the Business as at March 31, 1997 and the
related statement of earnings of the Business for the three-month
period then ended, copies of which have been furnished to Buyer and
which are attached hereto as Schedule 3.1(d)(i)(b), present fairly
the financial condition of the Business as at March 31, 1997 and
the results of its operations for the three-month period ending on
March 31, 1997 (the "INTERIM FINANCIAL STATEMENTS"). All Year-End
Financial Statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP, consistently
applied. The Interim Financial Statements were prepared in
accordance with GAAP consistently applied. Seller did not have
with respect to the Business, at December 31, 1996, any material
contingent obligation, contingent liability or liability for taxes,
or any
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long-term lease or unusual forward or long-term commitment not
reflected in the Balance Sheet or in a footnote thereto.
(ii) Except to the extent set forth in the Balance Sheet, the
Business does not have any liabilities or obligations (absolute,
accrued, contingent or otherwise), whether due or to become due
which would be required, in accordance with GAAP, to be set forth
on a consolidated balance sheet of the Business, other than any
such liabilities or obligations incurred since December 31, 1996 in
the ordinary course of business consistent with past practice and,
to the extent applicable, the requirements of Section 4.2.
(e) TITLE AND CONDITION OF PROPERTIES, ABSENCE OF LIENS. Except as
specifically disclosed on the Schedules:
(i) Seller has, and Buyer on the Closing Date will receive,
good, marketable and insurable fee simple title to all real
property, and good and marketable title to all personal property
(tangible and intangible), constituting Assets, free and clear of
all Liens, except (1) with respect to Assets leased, licensed or
not owned by Seller or other contractual rights of Seller (and
which are not reflected on the Balance Sheet or the Closing Balance
Sheet as owned) for contractual restrictions or claims on such
Assets pursuant to the lease, license or other Assumed Contract
relating to such Assets and restrictions imposed by any law or
regulation with respect to licenses, permits, copyrights,
trademarks and the like, (2) Liens for current property taxes not
yet due and payable or being contested in good faith by appropriate
proceedings, (3) statutory liens of landlords, carriers,
warehousemen, and other liens imposed by law incurred in the
ordinary course of business for amounts not then delinquent and (4)
with respect to real property, easements, rights-of-way,
restrictions and other similar charges or encumbrances and other
title defects or irregularities which, individually or in the
aggregate, do not interfere with the ordinary conduct of the
Business or the use of any such real property for its current uses
or diminish the value of such real property for its current use
("PERMITTED LIENS").
(ii) All tangible Assets taken as a whole are in good
operating condition and state of repair (ordinary wear and tear
excepted) other than machinery and equipment temporarily out of
repair or out of service for routine maintenance in the ordinary
course of the Business, and are adequate and sufficient for the
current operations of the Business as conducted in the year ended
December 31, 1996, and, subject to the last sentence of Section
3.1(f), conform to all applicable laws, statutes, ordinances and
regulations.
(f) GOVERNMENTAL REGULATIONS. To the Seller's knowledge, the Seller
is complying with all laws, statutes, rules, regulations, ordinances,
decrees or orders of any federal, state, local or foreign authority
applicable to the Business, including, without limitation, zoning, wage
and hour, equal employment opportunity or occupational safety and health
laws or regulations, and the Seller has and holds all governmental
permits and
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authorizations necessary to entitle it to own and operate the
properties of the Business and to conduct the operations of the
Business. There are no proceedings pending or, to the best knowledge of
Seller, threatened, or any notices received, with respect to a violation
of any such law, rule, regulation, decree or order or which might result
in the revocation, cancellation, suspension or adverse modification of
any such governmental permits or authorizations. Seller makes no
representation or warranty that the Real Property included in the Assets
or the operations conducted thereon comply with requirements of the
Americans with Disabilities Act (the "ADA").
(g) LICENSES AND GOVERNMENT APPROVALS. Schedule 3.1(g) includes all
licenses, permits, approvals, consents, certificates of public
convenience, orders, franchises and other authorizations of any federal,
state, local or foreign governmental authority ("LICENSES") possessed by
or granted to the Seller with respect to the Business or the Assets.
Except as disclosed on Schedule 3.1(g), Seller is not aware of any
impediment to the renewal of such Licenses. All such Licenses are valid
and in full force and effect and no proceeding is pending or threatened
seeking the suspension, modification, revocation or limitation of any
such License. No other Licenses are required to permit the continued
operation after the date hereof of the Business as now conducted, except
where the failure to have such License, individually or in the aggregate,
would not have a Material Adverse Effect (as defined below).
(h) CONTRACTS, LIST OF PROPERTIES, PERMITS AND OTHER DATA. Schedule
1.1(b) hereto accurately lists the following contracts, leases,
agreements, plans and arrangements, whether written or oral, express or
implied, or having any other legally binding basis undertaken by or for
the Business and to which the Seller or any of its Affiliates is a party
or by which they or any of their property is bound:
(1) any such contract, lease, agreement, plan or arrangement
involving commitments to others to make capital expenditures or
purchases or sales involving $25,000 or more in any one case except
commitments which may be terminated without liability or penalty by
the Buyer on not more than 30 days' notice;
(2) any such contract, lease, agreement, plan or arrangement
relating to any direct or indirect indebtedness for borrowed money
(including but not limited to loan agreements, lease-purchase
arrangements, guarantees, agreements to purchase goods or services
or to supply funds or other undertakings on which others rely in
extending credit), or any conditional sales contracts, chattel
mortgages, equipment lease agreements, and other security
arrangements with respect to personal property with a value in
excess of $25,000 in each instance used or owned by the Seller;
(3) any such contract, lease, agreement, plan or arrangement
with or for the benefit, directly or indirectly, of any business or
operation of the Seller or any Affiliate of the Seller that is not
included within the Business and that is also for the benefit,
directly or indirectly of the Business;
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(4) any contract containing covenants limiting the freedom of
the Business to compete in any line of business with any person or
in any area or territory;
(5) any license agreement, either as licensor or licensee, or
any other agreement of any type relating to any of the patents,
trademarks or trade names or other assets listed on Schedule 1.1(a)
hereto;
(6) any contract or arrangement of any kind whatsoever,
whether exclusive or otherwise, containing expressed terms and
conditions with any sales agent, representative, franchisee or
distributor of any of the products of the Business;
(7) any contract or arrangement of any kind whatsoever which
requires the payment of royalties in connection with the Business;
and
(8) any other legally binding contract, lease, agreement, plan
or arrangement not of the type covered by any of the other items of
this Section 3.1(h) which is not in the ordinary course of business
or which is material to the business, operations, properties,
liabilities, condition (financial or otherwise) or prospects of the
Business.
True and complete copies of all documents (including all amendments
thereto and waivers in respect thereof) referred to in the foregoing
Schedules have been delivered or made available to Buyer. Summaries of
all oral contracts listed on the foregoing schedules previously provided
to the Buyer are correct and do not omit to state any fact necessary to
make the statements therein complete or not misleading. No contract,
agreement, plan or arrangement exists between the Seller and any other
party based upon a past course of dealing. All contracts, agreements,
leases, licenses, sublicenses, permits and franchises referred to in such
Schedules are in full force and effect. Seller is not (and to the best
knowledge of Seller, each other party thereto is not) in breach or default
in the performance of any obligation thereunder, and, to the best
knowledge of Seller, no event has occurred or has failed to occur whereby,
with or without the giving of notice or the lapse of time or both, a
default or breach will be deemed to have occurred thereunder or any of the
other parties thereto have been or will be released therefrom or will be
entitled to refuse to perform thereunder, except for such breaches,
defaults and events which, either individually or in the aggregate, could
not have a material adverse effect on the condition (financial or other),
results of operations, assets, properties or prospects of the Business,
the Assets or the Assumed Liabilities or have a material adverse effect on
Seller's ability to perform its obligations hereunder or under any other
Seller Acquisition Document (each of such effects is herein called a
"MATERIAL ADVERSE EFFECT").
(i) REAL ESTATE. Schedule 1.1(c), Schedule 1.1(d) and Schedule
3.1(i) hereto accurately list all real property relating to the Business
owned or leased by the Seller ("REAL PROPERTY") and identify whether each
such item of Real Property is owned or
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leased by Seller. Except as disclosed on such Schedules and in the Title
Commitment and the Survey to be delivered to Buyer pursuant to Section
4.15:
(1) The Seller has good and marketable title to all such owned
Real Property and good and valid leasehold interests in all such
leased Real Property, in each case free and clear of all Liens
except for Permitted Liens and as set forth on Schedule 3.1(i).
(2) There are no condemnation proceedings or eminent domain
proceedings of any kind pending or, to the best knowledge of the
Seller, threatened against the Real Property.
(3) To the knowledge of Seller all of the Real Property is
occupied under a valid and current certificate of occupancy or
similar permit, if required, the sale of the Assets hereunder will
not, except as required by the City of Kansas City, Missouri,
require the issuance of any new or amended certificate of occupancy
and there are no facts which would prevent the Real Property from
being occupied and used by the Seller after the Closing Date in the
same manner as before.
(4) All improvements on the Real Property constructed by or on
behalf of the Seller or any other person were constructed in
compliance with all then applicable federal, state, local or
foreign statutes, laws, ordinances, regulations, rules, codes,
orders or requirements (including, but not limited to, any
building, zoning or environmental laws or codes) affecting such
Real Property.
(5) All improvements on the Real Property and the present use
and conditions thereof do not violate any applicable deed
restrictions or other applicable covenants, restrictions,
agreements, existing site plan approvals and, to the knowledge of
seller, zoning or subdivision regulations or urban redevelopment
plans as modified by any duly issued variances, and no permits,
licenses or
certificates pertaining to the ownership or operation of all
improvements on the Real Property by the Seller are required by any
governmental agency having jurisdiction over the Real Property, it
being understood that Seller makes no representation concerning the
transferability of Seller's existing licenses and permits or those
which Buyer may be required to obtain.
(6) All improvements on the Real Property are wholly within
the lot limits of such Real Property and do not encroach on any
adjoining premises and there are no encroachments on any Real
Property by any improvements located on any adjoining premises.
(7) There have been no improvements made to or constructions
on any Real Property within the period provided by law for the
filing of mechanic's liens except in the ordinary course of the
Business.
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(8) The Seller enjoys peaceful and quiet possession of each
parcel of Real Property, and there is not under any lease of any of
the leased Real Property (a "LEASE") any default by the Seller
thereunder or any condition which notice or the passage of time or
both would constitute such a default, and Seller has not received
notice asserting the existence of any such default or condition.
Seller has no knowledge of any default under any Lease by the
landlord thereunder.
(9) The Seller has heretofore furnished to the Buyer a true
and complete copy of each Lease and all amendments thereto
pertaining to any leased Real Property.
(10) Each Lease is valid and binding and in full force and
effect.
(11) The rental set forth in each Lease is the actual rental
being paid, and there are not separate agreements or understandings
with respect to the same.
(12) There are no renewal options contained in the respective
Leases.
(13) Neither the execution of this Agreement nor the sale of
the Assets hereunder shall cause a default under any Lease or
require the prior written consent of any landlord under any Lease.
(j) LEGAL PROCEEDINGS. There is no litigation, proceeding or
governmental investigation to which Seller is a party pending or, to the
best knowledge of Seller, threatened against it that relates to the
Business, the Assets, the Assumed Liabilities or the transactions
contemplated by this Agreement which could, either individually or in the
aggregate, result in a Material Adverse Effect or which seeks to restrain
or enjoin the consummation of any of the transactions contemplated
hereby. Seller is not in violation of any term of any judgment, writ,
decree, injunction or order entered by any court or governmental
authority (domestic or foreign) and outstanding against Seller or with
respect to the Business or any of the Assets, except for such violations
which could not, individually or in the aggregate, have a Material
Adverse Effect. To the best knowledge of Seller, there are no facts
which would provide a basis for any successful prosecution of any such
litigation, proceeding or investigation.
(k) INSURANCE. The properties and assets of Seller which are of an
insurable character and are used or useful in the Business are insured
against loss or damage by fire or other risks, and Seller maintains
liability insurance, to the extent and in the manner and covering such
risks as is customary for companies engaged in a business similar to the
Business or owning assets similar to the Assets. The coverage under each
such policy and binder is in full force and effect, and no notice
cancellation or nonrenewal with respect to any such policy or binder has
been received by Seller. Schedule 3.1(k) lists insurance maintained by
Seller on the Assets and with respect to the employees and
representatives of the Business and the operations of the Business.
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(l) LABOR. Except as set forth on Schedule 3.1(1), (i) there have
been no labor strikes, grievances, slow-downs, work stoppages,
administrative, arbitration or court proceedings or other material labor
controversies or disputes during the past three (3) years, nor is any
such strike, grievance, slow-down, work stoppage administrative,
arbitration or court proceeding or other material labor controversy or
dispute pending or, to the best knowledge of Seller, threatened between
Seller and any of the employees, prospective employees, former employees,
retirees or labor unions now employed or formerly employed by the
Business or affecting the Business, (ii) no unfair labor charges or
complaints have been filed against Seller with respect to its operations
related to the Business, and Seller has not received any notice or
communication reflecting an intention or a threat to file any such
charges or complaints, (iii) Seller is not party to any labor contract,
collective bargaining agreement ("CBA"), contract, letter of
understanding or, to Seller's knowledge, any other agreement, formal or
informal with any labor union or organization respecting the operation of
the Business, nor are any of the employees of the Business represented by
any labor union or organization nor have there been any labor union
organizing activities at the facilities of the Business within the last
three (3) years, (iv) Seller has paid in full to all of its employees now
employed or formerly employed by the Business all wages, salaries,
commissions, bonuses, benefits and other compensation due to such
employees, (v) Seller has not closed any facility, effectuated any
layoffs within the meaning of the Worker Adjustment & Retraining
Notification Act ("WARN") of employees or implemented any early
retirement, separation or window program within the past three years with
respect to its operations related to the Business, nor has Seller planned
or announced any such action or program relating to the Business other
than as contemplated by the Transaction for the future, (vi) no promises
of benefit improvements under the Plans (as defined in Section 3.1(r)
have been made by Seller or any Affiliate thereof to any employee now
employed or formerly employed by the Business of Seller, and (vii) Seller
is not party to any written and/or undisclosed severance benefit
applicable to any employees of the Business except as referred to in
Schedule 3.1(l), Section 6 or Section 6.1.
Seller has provided to Buyer true, correct and complete copies of
the executed CBAs relating to the Business, including true, correct and
complete copies of any and all written modifications and interpretations
thereof and descriptions of any and all oral modifications and
interpretations thereof. No representations have been made by Seller or
its employees or agents to employees of Seller with respect to Buyer's
intentions to employ, or not to employ, any of Seller's employees, or to
assume, or not to assume, any CBA, or to change or to maintain any wages
or benefits. Seller has or will notify any labor union or organization
representing any of its employees of the decision to sell and will
satisfy its obligations, if any, to negotiate concerning that decision
and its obligation to bargain concerning the effects of that decision.
Between December 31, 1996 and the date hereof, no person employed by
the Business was transferred to any other business or operation of Seller
or any of its Affiliates.
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(m) ACCOUNTS RECEIVABLE. Seller's accounts receivable reflected on
the Balance Sheet are, and those reflected on the "FINAL CLOSING BALANCE
SHEET" will be valid receivables arising in the ordinary course of
business. No person or entity has any lien on such receivables or any
part thereof, no agreement for deduction, free goods, discount or other
deferred price or quantity adjustment has been made with respect to any
such receivables and to the knowledge of Seller such receivables are not
subject to any valid counterclaims or setoffs.
(n) INVENTORIES. The inventories of the Business reflected on the
Balance Sheet (except the inventories which have been sold or disposed of
in the ordinary course of business since the date of the Balance Sheet
and except for excess and obsolete inventory which has been written off)
and the inventories thereafter acquired or manufactured in connection
with the Business and not subsequently sold or disposed of in the
ordinary course of business do, and the inventories reflected on the
Final Closing Balance Sheet will, consist of items of a quality and
quantity which in the aggregate are (i) usable in the ordinary course of
the Business or (ii) saleable in the ordinary course of the Business at
net realizable values (i.e., normal selling price less all applicable
discounts, commissions and shipping costs) not less than their respective
book value amounts. Inventory on the Balance Sheet is, and Inventory on
the Final Closing Balance Sheet will be, except for obsolete and
below-standard quality inventory described below, stated at the lower of
cost (determined by the FIFO method) or market in accordance with GAAP,
consistently applied. The value of excess and obsolete inventory and
inventory of below standard quality reflected on the Balance Sheet has
been, and to be reflected on the Final Closing Balance Sheet will be,
written down to net realizable marketable value or written off or
adequate reserves in accordance with GAAP, consistently applied, have
been provided therefor. The inventory on hand is, and as of the Closing
Date shall be, at levels consistent with expected customer demand and
consistent with the Business's past practice.
(o) PRODUCT AND SERVICE WARRANTY. Each product repaired or
delivered and each service rendered by the Business has been in
conformity in all material respects with all applicable contractual
commitments and all express and implied warranties, and neither Seller
nor any of its Affiliates has any liabilities or obligations for
replacement or repair thereof or other damages in connection therewith in
excess of past custom and practice. No product repaired or delivered or
service rendered by the Business prior to the date hereof is subject to
any guaranty, warranty or other indemnity for a term in excess of the
periods specified on express warranties delivered to Buyer hereunder from
the date such product was repaired or delivered or such service rendered.
Prior to the date hereof, Seller has delivered to Buyer copies of the
standard terms and conditions of sale for products delivered and services
rendered by the Business (containing applicable guaranty, warranty, and
indemnity provisions).
(p) INTELLECTUAL PROPERTY. Seller has, and will transfer to Buyer
on the Closing Date, good and marketable title to all the Intellectual
Property, free and clear of all Liens, except as provided for in Section
1.2(f) above. No claims have been asserted against Seller to the effect
that the use of the Intellectual Property by Seller infringes on
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any intellectual property of any other person. The use of all
Intellectual Property by Seller (and by Buyer in connection with the
operation after the Closing of the Business in the manner currently
operated) does not (and will not, as of the Closing Date) infringe on the
rights of any person. There is no infringing use of any of such
trademarks and trade names (or brandmarks, brand names or trade dress) or
infringement of any of such copyrights and patents by any other person,
either within or outside the United States. Seller owns or has a license
to use all Intellectual Property used in the Business as presently
conducted.
(q) COMPLIANCE WITH LAW AND REQUIREMENTS. Except as set forth in
Schedule 3.1(q), Seller has conducted the Business in compliance with all
applicable laws, ordinances, regulations, rights of concession, licenses,
know how or other proprietary rights of others, the failure to comply
with which could, individually or in the aggregate, have a Material
Adverse Effect.
(r) EMPLOYEE BENEFIT PROGRAMS. Except as otherwise provided in
Schedule 3.1(r):
(i) Schedule 3.1(r) sets forth all of the "employee benefit
plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), employment,
change-in-control, incentive, deferred compensation and severance
policies, plans and arrangements, and all other employee benefit,
fringe benefit plans and programs maintained or contributed to by
the Seller with respect to current or former employees of the
Business (the "PLANS"). Seller has provided or made available to
Buyer (a) a copy of each of the Plans, including all amendments
thereto, (b) any trust agreements thereunder, (c) each summary plan
description, (d) the most recent favorable determination letter
issued by the Internal Revenue Service, if applicable, and (e) for
the three most recent years, the Form 5500 and attached schedules,
audited financial statements, and actuarial valuation reports.
(ii) To the knowledge of Seller, each Plan is in all material
respects, in compliance with the applicable requirements of law,
including, if applicable, ERISA and the Code, and has been
established and administered in accordance with its terms.
(iii) Each Employee Pension Benefit Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter that it is so qualified, and, to the knowledge
of Seller, no facts or circumstances exist which would cause any of
such favorable determination letters to be revoked. In addition,
to the knowledge of Seller, no such Plan has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), and to the knowledge of Seller,
no "reportable event" (as defined in Section 4043(c) of ERISA) has
occurred with respect to any such Plan.
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(iv) Except as set forth in Schedule 3.1(r), and to the
knowledge of Seller, no plan or arrangement exists which would be
reasonably likely to result in the payment to any employee or
former employee of the Business of any money or other property or
rights or accelerate or provide any other rights or benefits to any
employee or former employee of the Business as a result of the
transactions contemplated by this Agreement, whether or not such
payment would constitute a parachute payment within the meaning of
Section 280G of the Code, and there are no contracts, agreements or
other arrangements which would be reasonably likely to result in
the payment to any such employee of an excess parachute payment" as
that term is used in Section 280G of the Code.
(v) Except as set forth in Schedule 3.1(r). Seller has not
contributed to or participated in any pension plan which is a
"multiemployer plan", as defined in Section 3(37) of ERISA, or in
any "multiple employer" plan within the meaning of Section 4063 or
4064 of ERISA, in respect of Business employees.
(vi) To the knowledge of Seller all contributions with respect
to employees of the Business required to be made on or prior to
Closing under the terms of any Plan have been (or will by Closing
be) timely made by Seller.
(vii) There are no pending or, to the knowledge of Seller
threatened, claims (other than with respect to benefits in the
normal course), lawsuits, investigations, administrative
proceedings or other actions arising out of, or in connection with
the operation or administration of any Plan with respect to the
Business or the employment of any current or former employee of the
Business.
(viii) As of March 31, 1997, the assets of the Seller's
Pension Plan for Hourly Paid Factory Employees of the Kansas City
Plant are at least equal in value to the present value of the
vested and unvested accrued benefits obligations, based on
actuarial assumptions of Seller's actuaries as contained in the
January 1, 1997 actuarial valuation; provided that this warranty
shall not be deemed to have been given unless Buyer in its sole
discretion assumes the Pension Plan. Between March 31, 1997 and
the Closing Date there will have been no material adverse change in
the funding of the Pension Plan.
(s) CERTAIN FEES. Neither Seller nor any of its respective
officers, directors or employees or Affiliates has employed any broker or
finder or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby except for fees to be paid by Seller to George K.
Baum & Co., which fees and all related expenses shall be the
responsibility of Seller.
(t) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996
and except as otherwise disclosed herein or set forth in Schedule 3.1(t)
or the other Schedules hereto, there has not been (i) any Material
Adverse Effect with respect to the Business, the Assets, the Assumed
Liabilities or in the condition (financial or other), results of
operations or prospects of the Business, (ii) any material damage,
destruction or loss
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relating to the Business or the Assets, whether or not insured, (iii) any
liability created or incurred which Buyer will assume under the Assumption
Agreement except for liabilities accruing after December 31, 1996 in the
ordinary course of business in a manner consistent with past practice and,
to the extent applicable, the requirements of Section 4.2, (iv) any Lien
created on any Asset except Permitted Liens, (v) any increase in, or
commitment or plan adopted to increase, the wages, salaries, compensation,
pension or other benefits or payments to any of the Business's employees,
(vi) any capital expenditures or commitment to make any such expenditures
with respect to the Assets or as to which Buyer will become obligated
after the Closing pursuant to the Assumption Agreement, except (A) with
respect to any such expenditures or commitments incurred prior to the date
hereof, to the extent such expenditures and commitments do not exceed
$200,000 in the aggregate and (B) with respect to any such expenditures or
commitments incurred on or after the date hereof as permitted under
Section 4.2, (vii) any condemnation proceedings commenced with respect to
any Asset or notice received by Seller as to the proposed commencement of
any such proceedings, (viii) any rights of substantial value knowingly
waived with respect to the Assets or the Business or (ix) any sale or
transfer of any Assets other than dispositions of inventory and obsolete
or worn out equipment in the ordinary course of business. Since December
31, 1996, other than acts relating to the transactions contemplated by
this Agreement, the Business has been conducted in all significant
respects only in the ordinary course, consistent with past practice and,
to the extent applicable, Section 4.2.
(u) ENVIRONMENTAL MATTERS. Except as set forth on Schedule 3.1(u),
with respect to the Business and the Assets: (i) Seller complies and has
complied in all material respects with all applicable Environmental Laws,
and possesses and complies in all material respects with and has
possessed and complied with all Environmental Permits; (ii) there are and
have been no Materials of Environmental Concern, or, to the knowledge of
Seller other conditions, at any property owned or leased by Seller and
included in the Assets that could give rise to any liability under any
Environmental Law or result in costs arising out of any Environmental
Law; (iii) no judicial, administrative, or arbitral proceeding (including
any notice of violation or alleged violation) under any Environmental Law
to which Seller is, or to the knowledge of Seller will be, named as a
party is pending or, to the knowledge of Seller, threatened, nor is
Seller the subject of any investigation in connection with any such
proceeding or potential proceeding; (iv) there are no past or present
conditions, circumstances, practices, plans, or legal requirements that
to the knowledge of Seller would be expected to prevent, or materially
increase the burden on the Business of complying with applicable
Environmental Laws or of obtaining, renewing, or complying with all
Environmental Permits required under such laws; and (v) Seller has
provided to Buyer true and complete copies of all Environmental Reports
relating to the Business in its possession or control.
"ENVIRONMENTAL LAWS" shall mean any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or
other legally enforceable requirement (including, without limitation,
common law) of the United States, or any state, local, municipal or
other governmental authority,
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regulating, relating to or imposing liability or standards of
conduct concerning protection of the environment or of human health,
or employee health and safety.
"ENVIRONMENTAL PERMITS" shall mean any and all permits,
licenses, registrations, notifications, exemptions and any other
authorization required under any Environmental Law.
"ENVIRONMENTAL REPORT" shall mean any report, study,
assessment, audit, or other similar document that addresses any
issue of actual or potential noncompliance with, or actual or
potential liability under or cost arising out of, any Environmental
Law that may in any way affect the Business or the Assets.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any gasoline
or petroleum (including crude oil or any fraction thereof) or
petroleum products, polychlorinated biphenyls, urea-formaldehyde
insulation, asbestos, pollutants, contaminants and radioactivity,
and any other substances of any kind that are regulated pursuant to
or could give rise to liability under any Environmental Law.
(v) ENTIRE BUSINESS. The Assets, when taken together with the
Excluded Assets listed in Section 1.2 hereof, constitute all of the
properties, assets and other rights of Seller and its Affiliates used in
or necessary for the conduct of the Business as currently conducted. On
the Closing Date, subject to the provisions hereof, Seller will transfer
to Buyer all of the properties, assets and other rights used in or
necessary for the conduct by Buyer of the Business as currently conducted
by Seller, except for the Excluded Assets listed in Section 1.2 hereof.
(w) TAX MATTERS. All Tax Returns required to be filed by Seller on
or before the Closing Date with respect to the Business or its
activities, properties or employees have been or shall be timely filed
and all Taxes which are due or which may be claimed to be due with
respect to the Business or its activities, properties or employees have
been or shall be timely paid or accrued within the prescribed period,
including any extension thereof. All such Tax Returns are complete and
accurate in all material respects. There are no Liens upon any of the
Assets in respect of Taxes except for Liens for current Taxes that are
not yet due and payable. All Taxes required to be withheld by Seller
with respect to the Business or its activities, properties or employees
have been withheld and paid over to the appropriate Tax authority.
Seller (or any predecessor of Seller) is not a party to and has not
received any notice with respect to any proposed or pending action by any
governmental authority for assessment or collection of Taxes with respect
to the Business or its activities, properties or employees, nor is Seller
a party to any dispute or threatened dispute in which action or dispute
an adverse determination reasonably could be expected to result in a
foreclosure of the Assets and no such claim for assessment or collection
of Taxes has been made upon Seller. Seller is not a "foreign person"
within the meaning of section 1445 of the Code, and Seller will furnish
Buyer with an affidavit that satisfies the requirements of section
1445(b)(2) of the Code. For purposes of this Agreement, (i) the term
"TAX" or "TAXES" shall mean all United States federal, state, provincial,
local and foreign income, profits, franchise, gross receipts, payroll,
sales,
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employment, use, property, excise, value added, net worth,
intangible, privilege, business, license, transfer, estimated, stamp,
alternative or add-on minimum, environmental, withholding and any other
taxes, duties or assessments, together with all interest, penalties and
additions imposed with respect to such amounts, (ii) the term "TAX
RETURNS" shall mean any return (including any consolidated combined or
unitary return), declaration, estimated, installment, report, claim for
refund or information return or statement relating to Taxes which is
required to be filed with the appropriate governmental agency, including
any schedule or attachment thereto, and including any amendment thereof
and (iii) the term "TAX AUTHORITY" shall mean any authority having
jurisdiction over Taxes.
(x) AFFILIATE TRANSACTIONS. Except as set forth in Schedule 3.1(x),
there are no agreements, arrangements, undertakings or other transactions
between the Business and any other division or business of Seller or any
Affiliate of Seller (including, without limitation, any owner of capital
stock of Seller).
(y) DISCLOSURE. Section 3.1 of this Agreement and the related
Schedules hereto contain no untrue statement of any material fact nor
omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were
made, not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
(a) DUE ORGANIZATION AND POWER. Buyer is a corporation duly
organized and validly existing under the laws of the State of Indiana.
Buyer has all requisite corporate and other power and authority to enter
into this Agreement, the Assumption Agreement, the Trademark License
Agreement, the Supply Purchase Agreement, the Escrow Agreement and any
other agreement contemplated hereby to which it is a party (collectively,
the "BUYER ACQUISITION DOCUMENTS") and to perform its obligations
hereunder and thereunder. Buyer is duly authorized, qualified or
licensed to do business as a foreign corporation, and is in good
standing, in each of the jurisdictions in which its right, title or
interest in or to any asset, or the conduct of its business, requires
such authorization, qualification or licensing, except where the failure
to so qualify or to be in good standing could not have an adverse effect
on the ability of Buyer to perform its obligations hereunder or under any
other Buyer Acquisition Document.
(b) AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Buyer of this Agreement and the other Buyer Acquisition
Documents and the consummation by Buyer of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate
action. This Agreement has been, and on the Closing date each other
Buyer Acquisition Document will be, duly executed and delivered by Buyer
and this Agreement constitutes, and each other Buyer Acquisition Document
will upon execution and delivery thereof constitute, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with
their respective terms, except as affected by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, by general equitable principles
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(regardless of whether such enforceability is considered in a proceeding
in equity or at law) or by an implied covenant of good faith and fair
dealing.
(c) GOVERNMENTAL APPROVALS; NO CONFLICT. Except for the expiration
or termination of all applicable waiting periods under the HSR Act and as
set forth in Schedule 3.2(c), the execution, delivery and performance of
this Agreement and the other Buyer Acquisition Documents by Buyer and the
consummation by Buyer of the transactions contemplated hereby and thereby
(i) will not violate (with or without the giving of notice or the lapse
of time or both), or require any consent, approval, filing or notice
under any provision of any law, rule or regulation, court or
administrative order, writ, judgment or decree applicable to Buyer or its
assets or properties and (ii) will not (with or without the giving of
notice or the lapse of time or both) (x) violate or conflict with, or
result in the breach, suspension or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of Buyer under, or (y) result in the
creation of any Liens upon the assets or properties of Buyer pursuant to
the charter or by-laws of Buyer or any indenture, mortgage, deed of
trust, lease, agreement, contract or instrument to which Buyer is a party
or by which Buyer or any of its assets or properties is bound.
(d) BROKERS' FEES. Neither Buyer nor any of its officers, directors
or employees, on behalf of Buyer, has employed any broker or finder or
incurred any other liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby
except for fees to be paid by Buyer to American Securities Capital
Partners, L.P., which fees and all related expenses shall be the
responsibility of Buyer.
(e) DISCLOSURE. Section 3.2 of this Agreement and the related
Schedules hereto contain no untrue statement of any material fact nor
omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made,
not misleading.
(f) FINANCING. Buyer has delivered to Seller a copy of a bank
commitment received by Buyer from KeyBank, N.A. in such amount and for
such duration so as to enable Buyer, without disruption of the Closing
schedule contemplated by this Agreement, to consummate the purchase of
the Assets for the Cash Purchase Price and under the payment and other
terms described in this Agreement. Although Buyer may be planning a
public offering of its capital stock, Buyer warrants that the
transactions contemplated by this Agreement are not dependent upon the
progress or success of any such offering.
(g) CONFIDENTIAL INFORMATION. Buyer warrants and represents that
the requirements of Section 4.12 concerning Confidential Information
have been and will be satisfied through any termination or Closing of the
transactions contemplated by this Agreement.
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3.3 SURVIVAL OF REPRESENTATIONS. The representations and warranties
contained in Sections 3.1 and 3.2 of this Agreement shall survive the Closing
until April 30, 1998, at which time they shall terminate, provided that the
representations and warranties contained in Sections 3.1(a), 3.1(b), 3.1(e)(i),
3.1(u), 3.1(w), 3.2(a) and 3.2(b) shall survive indefinitely and shall not
terminate. The Escrow shall be terminated on April 30, 1998, and all funds
contained therein at such date shall be paid to the Seller.
3.4 DISCLOSURE SCHEDULES. Any matter disclosed on any Schedule to
Section 3.1 (the "EXPRESS DISCLOSURE SCHEDULE") will be deemed disclosed and
incorporated by reference onto all other Schedules of Section 3.1 to which such
matter is applicable (the "OTHER DISCLOSURE SCHEDULES") if the specific matter
which is disclosed on the Express Disclosure Schedule also must be disclosed on
the applicable Other Disclosure Schedule.
SECTION 4. AGREEMENTS
4.1 ACCESS TO INFORMATION. Prior to Closing, Seller agrees to (a) give
or cause to be given to Buyer and its employees, advisors and other
representatives such access, during normal business hours, to the offices,
employees, properties, books and records of Seller and its Affiliates relating
to the Business, the Assets and the Assumed Liabilities as Buyer may from time
to time reasonably request and (b) furnish or cause to be furnished to Buyer
such financial and operating data and other information with respect to the
Business, the Assets and the Assumed Liabilities as Buyer may from time to time
reasonably request. After the Closing Date, Buyer shall, at reasonable times,
permit Seller to make reasonable examination of the books and records of the
Business relating to time periods ending at or prior to the Closing Date and
shall permit Seller to make copies of the relevant portions of such books and
records at Seller's expense, in each case to the extent necessary for Seller or
its Affiliates to comply with applicable legal, tax or accounting requirements.
After the Closing Date, Seller shall, at reasonable times, permit Buyer to
make reasonable examination of the books and records of the Seller relating to
the Business and shall permit Buyer to make copies of the relevant portions of
such books and records at Buyer's expense to the extent necessary for Buyer or
its Affiliates to comply with applicable legal, tax or accounting requirements.
In addition to the foregoing, (A) Buyer shall make available to Seller at
Seller's expense (x) all documents and records of the Business for copying and
inspection and (y) all Buyer personnel employed or formerly employed by the
Business to interview or use as a witness, which Seller shall reasonably
request for the prosecution or defense of any claim or demand arising out of or
relating to any Excluded Liability or Excluded Assets of the Business or to
otherwise satisfy its obligations to Buyer under Section 8.1 and (B) Seller
shall make available to Buyer at Buyer's expense (x) all documents and records
relating to the Business for copying and inspection and (y) all Seller
personnel formerly employed by the Business to interview or use as a witness,
which Buyer shall reasonably request for the prosecution or defense of any
claim or demand arising out of or relating to any Assets or the Business or to
otherwise satisfy its obligations to Seller under Section 8.2. Any use of
Buyer's personnel by Seller, or Seller's personnel by Buyer, for more than one
half a day shall be charged at a per diem rate equal to a pro rata portion of
the employee's total compensation, plus any travel expenses.
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4.2 CONDUCT OF THE BUSINESS. Seller agrees that, except as expressly
required by this Agreement or otherwise consented to in writing by Buyer,
during the period commencing March 31, 1997 and ending on the Closing Date,
Seller shall, and shall cause its Affiliates to, with respect to the Business,
the Assets and the Assumed Liabilities:
(a) operate the Business only in the usual, regular and ordinary
manner, on a basis consistent with past practice and, to the extent
consistent with such operation, use its reasonable best efforts to
preserve its present business organization intact, keep available the
services of its present employees, preserve its present business
relationships and maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of the Business;
(b) maintain its inventory of supplies, parts and other materials
and keep its books, accounts, files and records in the usual, regular and
ordinary manner, on a basis consistent with past practice, and comply
with and perform in all material respects all laws and contractual and
other obligations applicable to the Business, the Assets or the Assumed
Liabilities;
(c) maintain in full force and effect adequate insurance with
respect to the Business, the Assets and the employees of the Business
covering risks customarily insured by similar businesses;
(d) not (i) enter into any contract, agreement or other commitment
which is not terminable by the parties upon 30 days' notice or less and
without penalty or which involves aggregate consideration in excess of
$25,000 except as set forth in Schedule 4.2(d) and except for purchases
and sales of inventories in the ordinary course of business consistent
with past practice, (ii) amend, supplement, waive or otherwise modify any
contract or agreement included in the Assets, other than in the ordinary
course of business consistent with past practice or (iii) permit any of
its Affiliates to do, or agree, in writing or otherwise, to do, any of
the foregoing;
(e) except as set forth on Schedule 4.2(e) or as required by
applicable law or to the extent required under existing employee benefit
plans, agreements or arrangements as in effect on the date of this
Agreement, not (i) increase the compensation or fringe benefits of any of
the Business's officers or employees, except for increases, in the
ordinary course of business, in salary or wages of employees who are not
officers, (ii) except in the ordinary course of business grant any
severance or termination pay, (iii) hire, except in the ordinary course
of business, any new employees or consultants, or (iv) enter into or
amend or terminate any collective bargaining, bonus, profit sharing,
thrift, compensation, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any past or present officers or
employees;
(f) not (i) dispose of or abandon any of the Assets, other than the
disposition of obsolete or worn-out equipment or machinery in the
ordinary course of business, consistent with past practice, (ii) enter
into or engage in any transaction with or for the
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benefit of any other division or business of Seller or any Affiliate of
Seller except as is required by an existing written agreement set forth in
Schedule 3.1(x) or (iii) permit any of its Affiliates to do, or agree, in
writing or otherwise, to do, any of the foregoing;
(g) not (i) permit or allow any of the Assets to become subject to
any Liens, except for Permitted Liens, (ii) waive any material claims or
rights relating to the Business or the Assets, (iii) grant any increase
in the compensation or benefits of the employees of the Business
(including any such increase pursuant to any deferred compensation,
severance, bonus, pension, profit-sharing or other plan or commitment)
except for annual salary increases in the ordinary course of business
consistent with past practice, except as otherwise required by applicable
law, (iv) establish, enter into or adopt any employment agreement or
collective bargaining agreement with employees of the Business or other
Employee Benefits Programs or modify or terminate any Employee Benefits
Programs or (v) permit any of its Affiliates to do, or agree, in writing
or otherwise, to do, any of the foregoing;
(h) not acquire or agree to acquire outside the ordinary course of
business any assets that are material, individually or in the aggregate,
to the Business, or make or agree to make any capital expenditures except
for capital expenditures not in excess of $25,000 for any individual
expenditure and $100,000 in the aggregate;
(i) not pay, discharge or satisfy any claims, liabilities or
obligations of the Business (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction, of liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms
as in effect on the date hereof (including scheduled principal payments
on the Seller Indebtedness), or transfer any rights of material value of
the Business or modify or change in any material respect any existing
license, lease, contract or other document relating to the operations of
the Business, other than in the ordinary course of business consistent
with past practice;
(j) not change any material accounting principle that would affect
the Balance Sheet or Final Closing Balance Sheet;
(k) not acquire or agree to acquire, by merging or consolidating the
Division with, or by using any of the Assets to purchase a substantial
portion of the stock or assets of, or by incurring a liability which is
an Assumed Liability, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof;
(l) not (i) incur any indebtedness for borrowed money, or guarantee
any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
Seller, guarantee any debt securities of another person, enter into any
"keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, or (ii) make any loans, advances
or capital contributions to, or
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investments in, any other person, where any such action under clause (i)
or (ii) would create an Assumed Liability or have a Material Adverse
Effect; and
(m) not authorize any of, or commit or agree to take any of, the
foregoing actions.
4.3 FURTHER ACTIONS. Subject to the terms and conditions hereof,
Seller and Buyer agree to use their reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts (without payment of
money, commencement of litigation, the assumption of any material obligation or
the entering of any agreement to divest or hold separate any assets): (i) to
obtain at the earliest practicable date prior to the Closing Date (pursuant to
instruments reasonably satisfactory to Buyer in form and substance) all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of governmental authorities and parties to contracts, leases, licenses
or agreements with Seller or its Affiliates as are necessary for the
consummation of the transactions contemplated hereby (including, without
limitation, the expiration or termination of all applicable waiting periods
under the HSR Act); (ii) to effect all necessary registrations and filings
(including, without limitation, all filings under the HSR Act); (iii) to
furnish to each other such information and assistance as reasonably may be
requested in connection with the foregoing; and (iv) to obtain, prior to the
Closing Date, all governmental licenses, permits, consents, approvals,
authorizations, qualifications and orders as are necessary in order to enable
Buyer to conduct the Business in the ordinary course as of and from the opening
of business on the Closing Date. Notwithstanding anything to the contrary set
forth in this Agreement, to the extent that any consent or approval is not
obtained with respect to any contract, lease, license or agreement as
contemplated above, this Agreement shall not constitute an assignment or an
attempted assignment thereof and the failure to obtain such consent shall not
be deemed a breach by Seller of any obligation hereunder so long as reasonable
arrangements may be made as otherwise contemplated in this paragraph. In each
such case, Seller agrees to cooperate with Buyer in any reasonable arrangement
designed to (i) provide for Buyer the benefits under any such contract, lease,
license or agreement, including enforcement at the cost and for the account of
Buyer of any and all rights of Seller against the other party or otherwise and
(ii) insure performance by Buyer of Seller's obligations thereunder to the
extent Buyer receives such benefits. If and to the extent that such
arrangement cannot be made, Buyer shall not have any obligation with respect to
any such contract, lease, license or agreement. Seller shall vacate and cease
to occupy as of the close of business on the Closing Date all Real Property
included in the Assets used and shall deliver possession of all such Real
Property to Buyer as of the close of business on the Closing Date, except for
office space leased to Bucon at the Kansas City Plant.
4.4 ANTITRUST LAWS. The Buyer and the Seller shall each file with the
U.S. Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice (the "ANTITRUST DIVISION") any
notifications required to be filed by themselves or their respective "ultimate
parent" companies (as such term is defined in the HSR Act and the regulations
promulgated thereunder) under the HSR Act with respect to the transactions
contemplated by this Agreement. Subject to the terms of this Agreement the
parties hereto will use their respective best efforts to make such filings
promptly, to respond to any requests for
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additional information made by either of such agencies and to cause the waiting
periods under the HSR Act to terminate or expire at the earliest possible date.
Each party hereto shall promptly inform the other of any material communication
from the FTC, the Antitrust Division or any other domestic or foreign
governmental authority regarding the sale of the Business or any of the other
transactions contemplated by this Agreement. If either party hereto or any of
their respective Affiliates receives a request for additional information or
documentary material from any such government or authority with respect to the
sale of the Business or the other transactions contemplated by this Agreement,
then such party will endeavor in good faith to make, or cause to be made, as
soon as reasonably practicable and after consultation with the other party
hereto, an appropriate response in compliance with such request.
4.5 NOTIFICATION. Seller shall notify Buyer and keep it advised of (i)
any litigation or administrative proceeding pending or, to the best knowledge
of Seller, threatened against Seller or affecting the Business which could, if
adversely determined, have a Material Adverse Effect, (ii) any material damage
or destruction of any of the Assets, and (iii) any material adverse change in
the Business or the condition (financial or other), results of operations,
assets or prospects of Seller or the Business.
4.6 NO INCONSISTENT ACTION. Subject to Sections 7.1 and 7.2, the
parties hereto shall not take any action inconsistent with their obligations
under this Agreement or which could materially hinder or delay the consummation
of the transactions contemplated by this Agreement. None of the parties hereto
shall take or omit to take any action that could result in any of their
respective representations and warranties not being true in all material
respects on the Closing Date.
4.7 REPRESENTATIONS AND WARRANTIES. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller prior to the Closing, of
(a) any representation or warranty made by it or them contained in this
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any material respect or any such representation or warranty that is not so
qualified becoming untrue or inaccurate in any material respect or (b) the
failure by it or them to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it or them
under this Agreement; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this agreement.
4.8 EXECUTION OF ADDITIONAL ACQUISITION AGREEMENTS. On the Closing
Date, each of the Buyer and Seller shall execute and deliver each of the
Assumption Agreement, the Trademark License Agreement, the Supply Purchase
Agreement and the Escrow Agreement (the "ADDITIONAL ACQUISITION AGREEMENTS").
4.9 COVENANT NOT TO COMPETE.
(a) In consideration of the Buyer entering into this Agreement with
the Seller, the Seller hereby agrees effective as of the Closing Date,
and for a period of five years thereafter (the "NONCOMPETE PERIOD"), that
the Seller shall not, and the Seller shall cause each of its controlled
Affiliates to not, directly or indirectly, either for itself or through
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any other Person, engage in, or provide any technical or marketing
assistance to, or permit its name to be used by any enterprise engaging
in, the production, sale or distribution anywhere in the world of any
grain storage bin or of any grain conditioning or handling equipment of
the general type produced, sold or distributed by the Business on the
date hereof (collectively, "Relevant Products"). For purposes of this
Agreement, the phrase "directly or indirectly engage in" shall include
any direct or indirect ownership or profit participation interest in such
enterprise, whether as an owner, stockholder, partner, joint venturer of
otherwise, and shall include any direct or indirect participation in such
enterprise as a consultant, licensor of technology or otherwise.
Notwithstanding the foregoing, the provisions of this Section 4.9 shall
not prohibit the direct or indirect acquisition by the Seller or any of
its Affiliates of less than 5% of the outstanding voting securities of
any publicly-traded corporation. Seller agrees that this covenant is
reasonably designed to protect Buyer's substantial investment and is
reasonable with respect to its duration, geographical area and scope.
Notwithstanding the foregoing, Buyer and Seller acknowledge that Seller
is in the business of manufacturing and distributing throughout the world
farm buildings and other commercial structures with wooden or structural
steel frames which may be used and are used for the "flat storage" and
handling of grain or other materials and that such activities are not
intended to be prohibited by this Section 4.9. Buyer also agrees that no
business activity of Seller as described in its 1996 Annual Report to
Stockholders and in its Form 10-K for the year ended December 31, 1996,
involves any activity proscribed by this Section 4.9 other than the
activities of the Business and that following the Closing Seller may
continue to engage in all of its other businesses as now conducted.
Buyer also acknowledges that Seller distributes farm buildings with
wooden or structural steel frames used for grain storage and other
products not included within the Business through dealers and other
agents that also market, distribute and erect grain bins and grain drying
and handling equipment for the Business and that this covenant is not
intended to cause Seller to terminate its relationships with any such
dealers or agents, to preclude such dealers or agents from continuing to
use the Butler name and trademark (other than in connection with the sale
of Relevant Products which are labelled with a trademark or tradename
subject to the Trademark License Agreement or which otherwise purport to
be Seller's products) or to otherwise cease the conduct of such activity.
(b) Notwithstanding the foregoing, if at any time a court holds that
the restrictions stated in this section are unreasonable or otherwise
unenforceable under circumstances then existing, Buyer and Seller agree
that the maximum period, scope or geographic area determined to be
reasonable under such circumstances by such court will be substituted for
the stated period, scope or area. Buyer and Seller agree that money
damages will be an inadequate remedy for any breach of the agreements
described in this section. In the event of a breach or threatened breach
of the agreements described in this section, the Buyer or its successors
or assigns may, in addition to other rights and remedies existing in
their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive relief in order to enforce, or prevent any
violations of, the provisions hereof (without the posting of a bond or
other security).
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4.10 TERMINATION OF AFFILIATE TRANSACTIONS. Except as disclosed on
Schedule 4.10, all agreements, arrangements, undertakings or other transactions
set forth in Schedule 3.l(x) shall be terminated on or prior to the Closing
Date at no cost to the Business or Buyer.
4.11 CUSTOMER CLAIMS ON PRODUCT WARRANTIES AND PURCHASE OF PAST DUE
ACCOUNTS RECEIVABLE.
(a) In furtherance of the administrative convenience of the parties
and subject to the next sentence and the procedures outlined on Schedule
4.11, Buyer shall, after the Closing Date, satisfy Product Warranty
claims made by customers or purchaser of products of the Business which
arise under the express warranties of the Business as delivered to Buyer
under Section 3.1(o). Anything in this Agreement to the contrary
notwithstanding, Seller shall, in accordance with Section 8 indemnify and
hold Buyer harmless, on a dollar for dollar basis, from and against all
obligations or liabilities of the nature described in this Section 4.11.
Anything in this Agreement or generally accepted accounting principles to
the contrary notwithstanding, the Final Closing Balance Sheet shall not
include any reserve for liabilities or obligations of the nature
contemplated by this Section 4.11.
(b) Anything in this Agreement to the contrary notwithstanding,
Seller shall, in accordance with Section 8, indemnify and hold Buyer
harmless, on a dollar for dollar basis, from and against any contract
back charges that are incurred by Buyer before the Closing or for any
items past due as of the Closing Date. Anything in this Agreement or
generally accepted accounting principles to the contrary notwithstanding,
the Final Closing Balance sheet shall not include any reserve for
contract back charges.
(c) The Accounts Receivable reflected on the Final Closing Balance
Sheet will not include as an Asset any reserve for uncollected accounts
receivable. As a consequence, Seller shall purchase from Buyer each
account receivable that has not been paid in full within 150 days
following the date of the of the original invoice or other initial
demand for payment. The amount of the purchase price shall be 100% of
the balance due plus interest but excluding late fees. Seller shall
remit the price to Buyer within thirty days following a tender of the
receivable. Upon such purchase, Seller shall have the right to require
Buyer to continue its routine collection efforts with respect to such
receivable for Seller in exchange for a collection fee equal to 5% of the
amount collected. Routine collection efforts shall not require the
filing of any suit or proceeding or the placement of the account with an
attorney or other professional collector.
4.12 CONFIDENTIALITY. Buyer confirms that it is bound by the terms of
the confidentiality agreement between Seller and American Securities Capital
Partners, L.P., dated January 23, 1997, as if it were a signatory thereto and
that, subject to Section 9.1 hereto, it will keep and treat the evaluation
material and all other items of confidential information provided by Seller to
Buyer hereunder and under the Letter of Intent dated February 21, 1997, in
accordance with the terms of that confidentiality agreement.
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4.13 RIGHT TO CHALLENGE. Seller acknowledges that although Buyer has
agreed to pay for KPMG Peat Marwick's audit of the Business's financial
statements, Buyer in no way takes responsibility therefor.
4.14 CERTAIN LOSSES. Seller agrees that in the event of any property
or casualty losses or damage prior to the Closing to any of the Assets included
in the Balance Sheet, Seller shall make any necessary repairs or replacement or
pay to Buyer any payment necessary so that the Buyer receives such Assets (or a
comparable replacement thereof) in the same condition as such Assets were in on
December 31, 1996 (other than for normal wear and tear subsequent to such
date).
4.15 TITLE COMMITMENT AND SURVEY.
(a) TITLE COMMITMENT. Seller agrees, at Seller's sole expense, to
use commercially reasonable efforts to cause to be furnished and
delivered to Buyer on or before June 13, 1997 a current title commitment
(the "TITLE COMMITMENT"), for an Owner's Title Insurance Policy (1992
form ALTA policy) to be issued by Chicago Title Insurance Company or, at
Seller's option, by such other company as Buyer may approve (the "TITLE
INSURER"), setting forth the status of title of the owned real property
listed on Schedule 1.1(c) (the "OWNED REAL PROPERTY") and all other
exceptions, including rights-of-way, easements, restrictions, covenants,
reservations, and other conditions, if any, affecting the Owned Real
Property which would appear in an owner's title policy, if issued,
together with copies of all instruments referred to in the Title
Commitment affecting the title to the Owned Real Property.
(b) SURVEY. Seller shall cause to be prepared, at Seller's sole
expense, a current as-built survey of the Owned Real Property and to use
commercially reasonably efforts to cause the same to be furnished to
Buyer and the Title Insurer on or before June 18, 1997
(the "SURVEY"). The Survey shall be made in accordance with the 1992
Minimum Standard Detail Requirements for Land Title Surveys as jointly
established and adopted by the American Land Title Association and the
American Congress on Surveying and Mapping, certified to Buyer and the
Title Insurer in a manner reasonably satisfactory to Buyer and the Title
Insurer and prepared by Blue Valley Engineers and Surveyors, Inc. or, at
Seller's option, such other independent professional licensed land
surveyor as may be reasonably satisfactory to Buyer and the Title
Insurer.
(c) REVIEW OF TITLE AND SURVEY. Buyer shall have a period (the
"REVIEW PERIOD") ending five (5) days after the date on which Buyer
receives the last to be received of the following: (i) the Title
Commitment, (ii) copies of all instruments referred to in the Title
Commitment which affect title to the Owned Real Property and (iii) the
Survey required in paragraph (b) above, in which to notify Seller of any
objections Buyer has to any matter shown or referred to on the Survey or
in the Title Commitment which are reasonably unacceptable to Buyer. Any
matters to which Buyer does not object by written notice delivered to
Seller prior to the end of the Review Period, as well as utility
easements and other easements, rights of way, covenants, reservations and
restrictions of record which, individually or in the aggregate, do not
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interfere with the ordinary conduct of the Business or the use of any
such real property for its current uses, diminish the value of such real
property shall be considered Permitted Liens. Liens of an ascertainable
amount shall not be considered to be matters rendering title
unmarketable, and shall be paid and discharged by Seller at or before the
Closing, except for liens for taxes and assessments which shall be
accrued on the Final Closing Balance Sheet. In the event Buyer notifies
Seller in writing prior to the end of the Review Period of any objections
to any matters shown or referred to in the Title Commitment or the
Survey, Seller shall eliminate or modify the conditions giving rise to
such objections to the reasonable satisfaction of Buyer prior to the
Closing. Without limiting the foregoing, any matter will be reasonably
objectionable by Buyer if it reflects that the Buyer will not receive
good and marketable title to all real property currently used by the
Seller in the conduct of the Business other than the leased Real Property
and the Excluded Assets.
4.16 OTHER AGREEMENTS. Buyer and Seller shall negotiate in good faith
to agree to a form of Supply Purchase Agreement satisfying the requirements of
this Section 4.16 on or prior to May 30, 1997. Buyer and Seller shall
negotiate in good faith to agree to a form of lease agreement with Bucon,
d.b.a. Butler Construction ("BUCON"), on or prior to May 30, 1997. Said lease
agreement will govern the lease by Buyer to Bucon of that portion of the Real
Property to be occupied by Bucon following Closing. The Supply Purchase
Agreement will contain terms and conditions satisfactory to both Buyer and
Seller providing Buyer the option for a period of four years after the Closing
Date to purchase steel for the Business and for any other storage bins
manufactured by Buyer and on the same terms and conditions as Seller purchases
steel. To the extent so negotiated, the Supply Purchase Agreement will also
contain terms and conditions relating to the purchase of steel for all the
business and operations of Buyer.
4.17 ENVIRONMENTAL REVIEW. Buyer and Seller shall use commercially
reasonable efforts to complete their environmental "due diligence" review of
the Real Property by June 30, 1997.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES. The respective
obligations of the parties hereto to consummate the Acquisition shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) NO INJUNCTION, ETC. No preliminary or permanent injunction or
other order issued by any federal or state court of competent
jurisdiction in the United States or by any United States federal or
state governmental or regulatory body nor any statute, rule, regulation
or executive order promulgated or enacted by any United States federal or
state governmental authority which restrains, enjoins or otherwise
prohibits any of the transactions contemplated hereby shall be in effect;
(b) HSR ACT. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the
HSR Act shall have been terminated or shall have expired;
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(c) GOVERNMENT ACTIONS. No action shall have been taken, and no
statute, rule or regulation shall have been enacted, by any state or
Federal government or governmental agency which would prevent the
consummation of the transactions contemplated by this Agreement or impose
material conditions with respect thereto;
(d) PENSION BENEFIT GUARANTY CORPORATION. No action shall have been
taken or threatened by the Pension Benefit Guaranty Corporation to
terminate any defined benefit pension plan maintained by Seller or its
Affiliates with respect to the Business which has not been resolved or
discontinued without material conditions with respect thereto; and
(e) SUPPLY PURCHASE AGREEMENT. The Seller and the Buyer shall have
agreed to the form of Supply Purchase Agreement as contemplated by
Section 4.16.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the Acquisition are subject to the satisfaction (or waiver
by Buyer) at or prior to the Closing Date of each of the following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Seller contained herein or in any certificate,
instrument or other document delivered to Buyer pursuant hereto shall be
true and correct in all material respects on and as of the Closing Date,
with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except to the
extent that any such representation and warranty is made as of a
specified date, in which case such representation and warranty shall have
been true and correct as of such date;
(b) PERFORMANCE OF OBLIGATIONS. Seller shall have performed in all
material respects all obligations and agreements, and complied in all
material respects with all covenants contained in this Agreement to be
performed or complied with by it prior to the Closing Date;
(c) OFFICER'S CERTIFICATE. Buyer shall have received a certificate,
dated the Closing Date, of the President of Seller to the effect that the
conditions specified in paragraphs (a) and (b) above have been fulfilled;
(d) OPINIONS. Buyer shall have received an opinion dated the
Closing Date from Richard O. Ballentine, General Counsel to Seller, in
substantially the form attached hereto as Exhibit C;
(e) CONSENTS, ETC. All licenses, permits, consents, approvals,
authorizations and orders of governmental authorities and other third
parties necessary for the consummation of the transactions contemplated
hereby and the transfer to the Buyer of all rights, title and interest of
the Seller in and to all of the Assets and the conduct of the Business by
Buyer after the Closing shall have been obtained or otherwise adequately
provided for pursuant to Section 4.3;
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(f) ADDITIONAL ACQUISITION AGREEMENTS. Seller shall have executed
and delivered to Buyer each of the Additional Acquisition Agreements to
the reasonable satisfaction of Buyer;
(g) TITLE INSURANCE; SURVEYS. Buyer shall have received, with
respect to each parcel of real property listed on Schedule 1.1(c), a 1992
form ALTA policy of title insurance (collectively, the "TITLE POLICIES")
issued by the Title Insurer dated as of the Closing Date in an amount
equal to the value of such parcel of real property, as reasonably agreed
to by the parties prior to the Closing Date. The Title Policies shall be
issued at ordinary rates and shall insure fee simple title to such real
property to be vested in the Buyer or its nominee subject only to the
Permitted Liens. The Buyer shall have received the Title Commitment and
the Survey as provided in Section 4.15 and the obligations of Seller
under Section 4.15(c) shall have been satisfied in a manner that does not
preclude Buyer from receiving the financing contemplated by Section
3.2(f) on the terms contemplated by the commitment letter of KeyBank,
N.A. (it being understood that the Real Property will be mortgaged to
secure such financing). Seller shall have resolved in a manner
reasonably satisfactory to Buyer the matters referenced in the memorandum
dated March 10, 1997 by Patricia L. Wilson described in Schedule 1.1 (c)
and in the memorandum dated November 15, 1993 by An Bergstrom attached
thereto; and
(h) ENVIRONMENTAL MATTERS. Buyer shall have completed its
environmental "due diligence" review of the Business and, based upon such
review, shall not in good faith believe that the aggregate cost of any
necessary or appropriate remediation of Materials of Environmental
Concern or other environmental-related expenditures is likely to cost in
excess of $3,000,000, it being understood and agreed that Seller will
under all circumstances be responsible for the cost of such remediation.
5.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER. The obligations
of Seller to consummate the Acquisition are subject to the satisfaction (or
waiver by Seller) at or prior to the Closing Date of each of the following
conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Buyer contained herein, or in any certificate,
instrument or other document delivered to Seller pursuant hereto shall be
true and correct in all material respects on and as of the Closing Date,
with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except to the
extent that any such representation and warranty is made as of a
specified date, in which case such representation and warranty shall have
been true and correct as of such date;
(b) PERFORMANCE OF OBLIGATIONS. Buyer shall have performed all
obligations in all material respects and agreements, and complied in all
material respects with all covenants, contained in this Agreement to be
performed or complied with by each of them prior to the Closing Date;
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(c) OFFICER'S CERTIFICATE. Seller shall have received a
certificate, dated the Closing Date, of the President of Buyer to the
effect that the conditions specified in paragraphs (a) and (b) above have
been fulfilled;
(d) OPINIONS. Seller shall have received an opinion dated the
Closing Date from Michael J. Kissane, General Counsel of Buyer, in
substantially the form attached hereto as Exhibit D;
(e) ADDITIONAL ACQUISITION AGREEMENTS. Buyer shall have executed
and delivered to Seller each of the Additional Acquisition Agreements;
and
(f) ENVIRONMENTAL ISSUES. Buyer shall have completed its
environmental "due diligence" review of the Business and Seller shall
have completed its own due diligence review of any environmental issues
raised by Buyer's review, and Seller shall not in good faith believe that
the aggregate cost of any necessary or appropriate remediation of
Materials of Environmental Concern or other environmental-related
expenditures relating to the Business and identified in such reviews is
likely to cost in excess of $2,000,000.
SECTION 6. EMPLOYEES AND EMPLOYEE BENEFITS
6.1 EMPLOYMENT AGREEMENTS. Except as provided on Schedule 6.1, Seller
has no employment agreements with the employees of the Business and all such
employees are employed on an "at will" basis. Seller intends to terminate all
of the employees of the Business ("Seller's Employees" or an "Employee") at
Closing. Except for liabilities assumed by Buyer hereunder pursuant to this
Section 6 and Section 1.5 above, Seller is responsible for, and shall indemnify
and hold harmless Buyer from and against any and all claims of Seller's
employees with respect to employment prior to the Closing, and Seller shall
retain sole responsibility for and fully and timely pay all salaries, wages,
and benefits that have accrued to its employees through the Closing Date,
whether or not such amounts are payable prior to the Closing Date. Except for
liabilities retained by Seller hereunder pursuant to this Section 6 and Section
1.5 above, Buyer is responsible for, and shall indemnify and hold harmless
Seller from and against any and all claims of Seller's employees with respect
to (a) employment of such employees by Buyer subsequent to the Closing, (b)
matters covered by the CBA based on facts that arise after the Closing Date,
(c) claims for accrued vacation pay or vacation benefits and (d) any claims by
employees of the Business (i) under WARN, (ii) for severance benefits under the
CBA, or Seller's severance guidelines for Salaried Employees as shown on
Schedule 3.1(r), due to the termination of an employee of the Business by
Seller at the Closing whether or not rehired by Buyer, (iii) due to any
termination of any new employment relationship between Buyer and an employee of
the Business following the Closing, (iv) only to the extent expressly agreed to
by Buyer, for any amount or the cost of any benefit that Seller may provide to
any Hourly Employees following the Closing due to agreements made by Seller in
order to satisfy its obligations under Section 6.2 and (v) for any other claim
of a Salaried or Hourly Employee due to Seller's termination of any such
Employee in connection with the Closing, including any claim arising out of
Seller's termination of the CBA or Seller's termination of its employment
relationship with any Salaried Employee (with (i) through (v) referred to as
"SEVERANCE CLAIMS"). Notwithstanding the foregoing, Seller shall be
responsible for, and shall indemnify
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and hold harmless Buyer from and against any and all claims of Salaried
Employees for severance benefits under Seller's severance guidelines for
Salaried Employees and any other claim of a Salaried Employee due to Seller's
termination of any such Employee in connection with the Closing, if such
Salaried Employee is offered employment by Buyer at a position and level of
compensation comparable to the position and level of compensation at which such
Salaried Employee was employed by Seller immediately prior to Closing (all such
claims retained by Buyer shall not constitute Severance Claims).
6.2 COLLECTIVE BARGAINING AGREEMENTS. Seller shall be solely liable
and responsible for any liability under the National Labor Relations Act
arising from any failure by Seller to satisfy its obligations to notify (other
than as to WARN obligations) and/or bargain with any union prior to the
Closing. Seller agrees to indemnify and hold Buyer and its Affiliates harmless
against any loss, damage, claim, obligation or liability arising out of or
relating to Seller's failure to satisfy such obligations, subject to Buyer's
obligations under 6.1(d).
6.3 OFFER OF EMPLOYMENT TO OTHER EMPLOYEES. Buyer or its designated
Affiliate may, but shall not be required to, extend an offer of employment to
some or all of the employees employed by the Business. Buyer shall have the
exclusive right to set the initial levels of wages, benefits, and other terms
and conditions of employment for any such employees. Those employees not
covered by a CBA are referred to as "SALARIED EMPLOYEES" and those employees
covered by a CBA are referred to as "HOURLY EMPLOYEES". Buyer may interview
Seller's Salaried and Hourly Employees for purposes of determining whether to
extend an offer of employment to such employees.
6.4 COMPLIANCE WITH "WARN". Buyer covenants and agrees that it shall,
in connection with succeeding Seller as an employer in accordance with this
Section 6, comply fully with the Worker Adjustment and Retraining Notification
Act ("WARN"), taking into account all relevant employment activities of Seller
disclosed on Schedule 6.4 which Seller represents and warrants to Buyer fully
describes for purposes of evaluating potential liabilities under WARN all
hirings, recalls, terminations and lay-offs of employees of the Business during
the one year period preceding the Closing Date.
6.5 NON-SOLICITATION OF EMPLOYEES; NO TRANSFERS. Seller agrees that
neither it nor any of its Affiliates will, for a period commencing on the date
hereof and ending on the 18 month anniversary of the Closing Date, without the
prior written consent of Buyer, whether directly or indirectly, solicit the
employment of any person who is at that time an employee, representative or
officer of the Business and who was prior to the Closing an employee of Seller
at the Business and had a salary in excess of $50,000 per year. Prior to the
Closing Date, Seller shall not transfer the employment of any employee of the
Business to any other business or operation of Seller or to any Affiliate of
Seller.
6.6 EMPLOYEE BENEFITS AND COMPENSATION.
(a) HOURLY EMPLOYEES--HOURLY EMPLOYEES' PENSION PLAN AND RETIREE
MEDICAL BENEFITS. Subject to the provisions of this Section 6, effective
as of the Closing Date Seller shall freeze or make other lawful provision
for the merger, termination,
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cessation or other disposition of Seller's existing Pension Plan for
Hourly Employees of the Kansas City Plant of the Business (the "PENSION
PLAN") unless, on or prior to the Closing, Buyer in its sole discretion
assumes all of Seller's obligations under the Pension Plan and receives
all Pension Plan assets, whether arising before or after the Closing, and
agrees to indemnify and hold Seller harmless against any loss, damage,
claim, obligation or liability arising out of or relating to Buyer's
failure to satisfy any of Seller's obligations under or with respect to
the Pension Plan, subject to Seller's representations and warranties
pursuant to Section 3.1(r)(viii) and Seller's indemnification of Buyer,
pursuant to Section 8.1, with respect to the design, operation and funding
of the Pension Plan through the Closing Date. Seller and Buyer shall take
all steps reasonably necessary to facilitate Buyer's assumption of the
Pension Plan if Buyer in its sole discretion elects to assume the Plan.
If Buyer does not assume the Pension Plan, Seller shall retain all
obligations and liability with respect to the Pension Plan, including the
payment of benefits to Hourly Employees attributable to their service
prior to the Closing Date. Seller shall retain any liability to provide
retiree medical benefits with respect to Hourly Employees of Seller who
retire before or on the Closing Date.
(b) TRANSFERRED EMPLOYEES - BENEFITS AFTER THE CLOSING. Hourly and
Salaried Employees that are hired by Buyer after the Closing
("TRANSFERRED EMPLOYEES") will be provided such employee benefits and
compensation, after the Closing Date, as Buyer, in its sole discretion,
may determine or otherwise negotiate with the Union; provided, however,
and notwithstanding any other provision contained herein to the contrary,
Transferred Employees shall be given credit for past service with Seller
for purposes of service eligibility requirements as to any retiree
medical benefit plan or vacation plan provided by Buyer for such
Employees. Subject to Section 6.1(a) and the preceding sentence, after
the Closing Date, nothing herein shall, with respect to Transferred
Employees who are Salaried Employees, (i) require Buyer to maintain any
particular plan or arrangement, (ii) prevent or preclude Buyer from
continuing any requirements for employee contributions under any employee
benefit plans in the same proportions as the employee-paid portion under
such plans constituted prior to the Closing Date, (iii) prevent the
amendment or termination of any plan, program or arrangement established
or maintained by Buyer, or (iv) interfere with Buyer's right or
obligation to take any action or refrain from taking any action which
Seller could take or refrain from taking prior to the Closing Date. In
addition, in administering any plans, programs or arrangements
established or maintained by the Buyer, the Buyer may cause a reduction
of benefits under any such plans, programs or arrangements, specifically
including any vacation plan, to the extent Buyer deems necessary to avoid
duplication of benefits with respect to the same covered matter or years
of service or otherwise. Seller and Buyer shall agree on the
responsibilities for payroll taxes with respect to Transferred Employees.
(c) EMPLOYEES-OBLIGATIONS WITH RESPECT TO RETIREE AND OTHER BENEFITS
PRE CLOSING AND SEVERANCE CLAIMS. Seller shall retain any liability to
provide retiree medical benefits with respect to retired Employees of the
Business who qualify for such coverage as of the Closing Date. Seller
shall also remain responsible for any benefits to Salaried Employees
under stock option or cash bonus plans, commission agreements, automobile
allowances, tuition reimbursement plans, vacation pay plans, welfare or
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pension benefits, Sellers' 401(k) plan, Sellers' Employee Stock Ownership
Plan, life insurance, death benefits and health supplement benefits with
respect to Salaried Employees in relation to their service prior to the
Closing Date. With respect to Salaried Employees, Buyer shall not
assume any employment contracts, wage rates, work practices, health,
welfare or pension benefit plans, or any other employment arrangements or
understanding to which Seller is or has been a party, except to the
extent required by law, except for any benefits arising out of Severance
Claims or as set forth on Schedule 6.1.
(d) COBRA COVERAGE. Seller shall be responsible for satisfying
"continuation coverage" requirements for all plans under Section 4980B of
the Code or Part 6 of Title I of ERISA (COBRA) for all Employees for
qualifying events occurring on or before the Closing Date. Seller shall
offer "continuation coverage" under its plans to all employees and shall
comply with all notice and other requirements under COBRA or similar
state statutes as a result of qualifying events occurring prior to the
Closing Date or as a result of the transactions contemplated under this
agreement to the Employees or any of their respective beneficiaries.
Buyer shall assume all liability for satisfying the obligations under
COBRA to provide continuation coverage to or with respect to any
Transferred Employee in accordance with law with respect to any
"qualifying event" occurring after the Closing Date and shall waive
pre-existing conditions and any eligibility waiting period.
(e) WORKERS' COMPENSATION, DISABILITY AND UNEMPLOYMENT COMPENSATION
CLAIMS. Seller shall be responsible for any and all liabilities arising
in connection with workers' compensation, disability and unemployment
compensation claims which are incurred prior to the Closing Date with
respect to all Employees (whether or not such claims have been filed
prior to the Closing Date). Buyer shall be responsible for any and all
liabilities arising in connection with workers' compensation, disability
and unemployment compensation claims which are incurred on or after the
Closing Date with respect to any Hourly Employee and with respect to any
Transferred Employee who is a Salaried Employee. Seller shall be
responsible for any and all long term disability benefits (and all other
disability-related welfare benefits for Salaried Employees) which become
payable after the Closing Date to any Salaried Employee who met the plan
requirements for long term disability as of the Closing Date.
(f) RECORD KEEPING. To the extent that service with Seller or Buyer
is relevant for purposes of providing benefits to Employees, Buyer and
Seller shall keep and provide each other with reasonable records and
notification of such information as may be necessary to provide benefits
to such Employees.
(g) PAYMENT OF REGULAR PAYROLL ACCRUED AS OF THE CLOSING DATE AND
VACATION. Seller shall pay according to its normal business schedule or
the provisions of the Plans (i) all liabilities, obligations and
commitments relating to all regular wages, salaries, commissions and
other forms of regular monthly payroll and related expenses with respect
to Employees, including without limitation, obligations for all
applicable payroll taxes, attributable to the period ending on the close
of business on the day prior
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to the Closing Date and (ii) all employee benefits under any and all
plans, programs or arrangements maintained or contributed to by Seller on
behalf of the Transferred Employees for all claims incurred during the
period ending on the close of business on the day prior to the Closing
Date (whether or not a claim for such benefits has been filed prior to the
Closing Date). Notwithstanding the foregoing, Buyer shall assume Seller's
liability to Salaried Employees of the Business with respect to any
accrued vacation and Severance Claims.
(h) NO THIRD PARTY BENEFICIARIES. No employee of Seller or the
Business, whether or not hired by Buyer, shall be construed as a third
party beneficiary under this Agreement, and no provision in this
Agreement shall create any right in any such employee (or his or her
beneficiary or dependent) for any reason, including, without limitation,
in respect of employment, continued employment, or resumed employment
with Seller or Buyer (or any of their Affiliates) or in respect of any
benefits that may be provided, directly or indirectly, under any plan or
arrangement maintained by Seller or Buyer (or any of their Affiliates).
SECTION 7. TERMINATION
7.1 GENERAL. This Agreement may be terminated and the transactions
contemplated herein abandoned (a) by mutual consent of Buyer and Seller, (b) by
Buyer, if there has been a material breach of Seller's representations,
covenants or agreements hereunder, (c) by Seller, if there has been a material
breach of Buyer's representations, covenants or agreements hereunder, (d) by
any party by notice to the other parties in the event that the Closing Date, as
extended by agreement of the parties, shall not have occurred on or before June
30, 1997, or (e) by Buyer or Seller if the Form of Supply Purchase Agreement
has not been agreed to in writing by June 1, 1997.
7.2 NO LIABILITIES IN EVENT OF TERMINATION. In the event of any
termination of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become null and void and of no further force or effect and there
shall be no liability on the part of Buyer or Seller, except that Sections
4.12, 8 and 9 of this Agreement shall remain in full force and effect and that
termination shall not preclude any party from suing any other party for breach
of this Agreement.
SECTION 8. INDEMNIFICATION
8.1 SELLER INDEMNITY. Seller agrees to indemnify and hold harmless
Buyer, its Affiliates, each of their respective directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, "BUYER INDEMNIFIED PERSONS") from and against (i)
all Excluded Liabilities, (ii) any claim, cost, loss, liability or damage
incurred or sustained by any Buyer Indemnified Person as a result of any
misrepresentation or breach of warranty by Seller or a breach by Seller of any
covenant or other agreement contained herein or under any other agreement or
certificate executed and delivered by the parties in furtherance of the
transactions described herein, (iii) any and all liabilities for sales, use,
income and other Taxes arising at any time out of the operation of the Business
prior to the opening of business on the Closing Date to the extent not included
in the Assumed
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Liabilities, (iv) any claim, cost, loss, liability or damage arising out of or
relating to any governmental or other third party claim or action against any
Buyer Indemnified Person to the extent arising out of or relating to the
ownership or operation of the Business or Assets by Seller or any other person
prior to the Closing Date other than an Assumed Liability, (v) any claim,
liability or obligation arising out of or relating to any Materials of
Environmental Concern existing on, at or under any Asset before the Closing
Date, or otherwise arising from, or in connection with, the conduct of the
Business or the ownership of the Assets by the Seller or any other person prior
to the Closing Date and (vi) all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by any Buyer Indemnified
Party in connection with any action, suit, proceeding, demand, assessment or
judgment incident to any of the matters indemnified against in this Section 8.1.
Seller shall have no obligation to indemnify any Buyer Indemnified Person with
respect to any claim, liability or obligation relating to Real Property found
not to be in compliance with the ADA.
8.2 BUYER INDEMNITY. Buyer agrees to indemnify and hold harmless
Seller and its Affiliates, each of their respective directors, officers,
employees and agents, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "SELLER INDEMNIFIED PERSONS" and
each a "SELLER INDEMNIFIED PERSON") from and against (i) any claim, cost, loss,
liability or damage arising out of or relating to any Assumed Liabilities, (ii)
any claim, cost, loss, liability or damage incurred or sustained by any Seller
Indemnified Person as a result of any misrepresentation or breach of warranty
by Buyer or a breach by Buyer of any covenant or other agreement contained
herein, or under any other agreement executed and delivered by the parties in
furtherance of the transactions described herein, (iii) any claim, cost, loss,
liability or damage arising out of or relating to any governmental or other
third party claim or action against any Seller Indemnified Person to the extent
arising out of or relating to the ownership or operation of the Business or
Assets by Buyer or any other person following the Closing Date, other than any
Excluded Liability, (iv) any claim, liability or obligation arising out of or
relating to any Materials of Environmental Concern existing on, at or under any
Asset after the Closing Date or otherwise arising from, or in connection with,
the conduct of the Business by the Buyer or any other person after the Closing
Date, in each case except for any Excluded Liability set forth in Section
1.5(b)(xi) and (v) all reasonable costs and expenses (including reasonable
attorneys' fees and disbursements) incurred by any Seller Indemnified Person in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 8.2.
8.3 THIRD PARTY CLAIMS. If a claim by a third party is made against an
indemnified person hereunder, and if such indemnified person intends to seek
indemnity with respect thereto under this Article, such indemnified person
shall promptly notify the indemnifying person in writing of such claims setting
forth such claims in reasonable detail, provided that failure of such
indemnified person to give prompt notice as provided herein shall not relieve
the indemnifying person of any of its obligations hereunder, except to the
extent that the indemnifying person is materially prejudiced by such failure.
With respect to any such claim relating solely to the payment of money damages
and which will not result in the indemnified party's becoming subject to
injunctive or other equitable relief and as to which the indemnifying party
shall have acknowledged in writing its obligation to indemnify the indemnified
party hereunder, the indemnifying person shall have twenty (20) days after
receipt of such notice to undertake,
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through counsel of its own choosing, subject to the reasonable approval of such
indemnified person, and at its own expense, the settlement or defense thereof,
and the indemnified person shall cooperate with it in connection therewith;
provided, however, that the indemnified person may participate in such
settlement or defense through counsel chosen by such indemnified person,
provided that the fees and expenses of such counsel shall be borne by such
indemnified person. If the indemnifying person shall assume the defense of a
claim, it shall not settle or compromise such claim without the prior written
consent of the indemnified person, (i) unless such settlement or compromise
includes as an unconditional term thereof the giving by the claimant of a
release of the indemnified person from all liability with respect to such claim
or (ii) if such settlement or compromise involves the imposition of equitable
remedies or the imposition of any material obligations on such indemnified party
will be indemnified hereunder. If the indemnifying person shall assume the
defense of a claim, the fees of any separate counsel retained by the indemnified
person shall be borne by such indemnified person unless there exists a conflict
between them as to their respective legal defenses (other than one that is of a
monetary nature), in which case the indemnified person shall be entitled to
retain separate counsel, the reasonable fees and expenses of which shall be
reimbursed by the indemnifying person. If the indemnifying person does not
notify the indemnified person within twenty (20) days after the receipt of the
indemnified person's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof and acknowledges its obligation to indemnify the
indemnified person hereunder, or if the claim does not relate solely to the
payment of money damages, the indemnified person shall have the right to
contest, settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
8.4 ADDITIONAL AGREEMENTS.
(a) The obligations to indemnify and hold harmless a party hereto,
pursuant to Section 8.1(ii) and 8.2(ii) with respect to any
misrepresentation or breach of warranty shall terminate when the
applicable representation or warranty terminates pursuant to Section 3.3;
provided, however, that such obligation to indemnify and hold harmless
shall not terminate with respect to any item as to which the person to be
indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice (stating in reasonable
detail the basis of such claim) to the indemnifying party.
(b) The parties agree that any indemnification payments made
pursuant to this Agreement shall be treated for tax purposes as an
adjustment to the Purchase Price, unless otherwise required by applicable
law.
(c) Whenever any claim for indemnification shall arise under this
Section 8, other than a Third Party Claim as defined in Section 8.3
(each, a "CLAIM"), the party seeking indemnification (the "INDEMNITEE")
shall notify in writing the party from which indemnification is sought
(the "INDEMNITOR") of the Claim within sixty (60) days after the
Indemnitee becomes aware of the Claim's existence, with such notice to
contain the factual basis for the Claim and the amount or an estimate
(if known or reasonably determinable) of the liability that may arise
therefrom, provided that the failure to provide
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such notice shall not affect the Indemnitor's right to indemnification
hereunder except to the extent that the Indemnitor is actually
prejudiced by such failure.
(d) Anything in this Agreement to the contrary notwithstanding,
Seller shall have no obligation to indemnify Buyer with respect to any
claim arising from or relating to (a) Seller's breach of the
representations and warranties in Section 3.1 hereto or (b) Seller's
breach of its covenants and agreements in Section 4 that are required to
be performed prior to the Closing other than a Tax Claim, Environmental
Claim, Customer Claim or "Section 3.1(v) Claim" (all of which shall not
be subject to this Section 8.1(d)) until such time as, and to the extent
that, all such claims exceed $300,000. A "CUSTOMER CLAIM" means any
claim for indemnification by Buyer in connection with any liability or
obligation (including any contract back charge) imposed upon Buyer with
respect to the matters contemplated in Section 4.11. A "TAX CLAIM" means
any claim under Section 3.1(w). An "ENVIRONMENTAL CLAIM", means any
claim for breach of representation or warranty under Section 3.1(u). A
"SECTION 3.1(V) CLAIM" means any claim for breach of representation or
warranty under Section 3.1(v).
(e) In the event that Seller has in Buyer's judgment failed or
refused to pay an amount properly demanded by Buyer as due under this
Section 8 within 30 days of Buyer's written demand for indemnification
hereunder, Buyer may, to the extent of the Escrow Amount, satisfy such
claim from the Escrow Amount pursuant to the Escrow Agreement, provided
that the exhaustion or release of the Escrow Amount shall not limit or
otherwise affect any rights of a Buyer Indemnified Person hereunder.
Anything in this Agreement to the contrary notwithstanding, Buyer's
satisfaction of any claim from the Escrow Amount shall not mean Buyer is
entitled to indemnification hereunder and in the event Seller contests
such indemnification claim, following any arbitration judgment pursuant
to Section 9.13 the Buyer will deposit promptly (and in any event within
three business days) with the Escrow Agent (or return to the Seller if
the Escrow Amount has been released) any amount withdrawn from the Escrow
Amount in respect of a claim for which the arbitrator rules the Buyer was
not entitled to indemnification.
SECTION 9. MISCELLANEOUS
9.1 PUBLIC ANNOUNCEMENTS. No news release or other public announcement
pertaining in any way to the transactions contemplated by this Agreement will
be made by any party without the prior written consent of the other parties,
unless in the opinion of counsel to such party (after consultation with counsel
to the other parties) such release or announcement is required by law.
Notwithstanding the foregoing, Buyer shall be entitled (a) to include in any
registration statement filed with the Securities and Exchange Commission such
information relating to the transactions contemplated hereby as the Buyer shall
deem necessary or appropriate and that does not constitute trade secrets or
other than information that could reasonably be expected to have a Material
Adverse Effect which has not previously been disclosed to the public by Seller
("CONFIDENTIAL INFORMATION") and (b) to disclose such information that is not
Confidential Information as it shall deem necessary or appropriate in
connection with the sale or solicitation of offers to purchase any securities
being registered pursuant to any such registration statement. For purposes of
any registration statement filed by Buyer with the Securities and
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Exchange Commission prior to the Closing, Confidential Information shall not be
deemed to include the Financial Statements, any Closing Balance Sheet and such
other information about the Business as Seller agrees does not reveal trade
secrets of the Business.
9.2 EXPENSES. Subject to Section 9.3, whether or not the transactions
contemplated by this Agreement are completed, each of the parties hereto shall
pay the fees and expenses incurred by it in connection with the negotiation,
preparation, execution and performance of this Agreement, including, without
limitation, attorneys' and accountants' fees, and, in no event, shall any such
fees and expenses of Seller constitute Assumed Liabilities under this
Agreement. The foregoing shall not affect the legal right, if any, that any
party hereto may have to recover expenses from any other party that breaches
its obligations hereunder.
9.3 TRANSFER TAXES AND RECORDING EXPENSES. Seller and Buyer shall
share equally all sales, motor vehicle, transfer and similar taxes and
recording expenses, if any, required to be paid in connection with the transfer
of the Assets.
9.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly giver if delivered personally or mailed,
first class mail, postage prepaid, return receipt requested, as follows:
(a) If to Seller:
Butler Manufacturing Company
BMA Tower, Penn Valley Park
Post Office Box 419917
Kansas City, MO 64141-0917
Telephone No.: 816-968-3206
Telecopy No.: 816-968-3211
Attention: Vice President and General Counsel
(b) If to Buyer:
CTB, Inc.
State Road 15 North
P.O. Box 2000
Milford, Indiana 46542-2000
Telephone No.:
Telecopy No.:
Attention: General Counsel
with a copy to (which shall not constitute notice to Buyer):
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Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telephone No.: (212) 455-2000
Telecopy No.: (212) 455-2502
Attention: Richard Capelouto, Esq.
or to such other address or to the attention of such other person as any party
shall have specified by notice in writing to the other parties. All such
notices, requests, demands and communications shall be deemed to have been
received on the date of personal delivery or on the third business day after
the mailing thereof.
9.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) constitutes the entire agreement between the parties hereto
and supersedes all prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject matter hereof including,
without limitation, the letter of intent, dated February 21, 1997, between
Buyer and Seller.
9.6 BINDING EFFECT; BENEFIT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective
successors and assigns and any person entitled to indemnification under Section
8.1 or 8.2, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
9.7 BULK SALES LAW. The parties agree to waive compliance with the
provisions of the bulk sales laws of any jurisdiction. Seller agrees to
indemnify and hold harmless Buyer from and against any and all liabilities
(including any liability in respect of Taxes) which may be asserted by third
parties against Buyer as a result of such noncompliance other than the Assumed
Liabilities.
9.8 ASSIGNABILITY. This Agreement shall not be assignable, in whole or
in part, by any party hereto without the prior written consent of the other
party hereto except that Buyer may assign its rights hereunder at any time to
any of its Affiliates without the consent of the Seller, provided that no such
assignment shall relieve the Buyer of its obligations hereunder.
9.9 AMENDMENT; WAIVER. This Agreement may be amended, supplemented or
otherwise modified only by a written instrument executed by the parties hereto.
No waiver by any party of any of the provisions hereof shall be effective
unless explicitly set forth in writing and executed by the party so waiving.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants, or
agreements contained herein, or in any documents delivered or to be delivered
pursuant to this Agreement or in connection with the Closing hereunder. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
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9.10 SECTION HEADINGS; TABLE OF CONTENTS. The section headings
contained in this Agreement and the Table of Contents to this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
9.11 SEVERABILITY. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, all other provisions of this Agreement shall not be affected and
shall remain in full force and effect.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
9.13 ARBITRATION. Any dispute (including without limitation, a
dispute as to the validity of this Agreement or the enforceability of this
Section of this Agreement) arising under or pertaining to this Agreement
(including any subsequent verbal or written modifications thereof, all of which
shall hereinafter in this Section be collectively referred to as the
"Agreement"), or arising with respect to any performance of any of the parties
under this Agreement, whether sounding in tort, contract, violation of statute
or otherwise, shall be settled by arbitration by a single arbitrator pursuant
to the Commercial Arbitration Rules of the American Arbitration Association.
Such arbitration proceeding shall be held in Chicago, Illinois. The arbitrator
shall be required to be an attorney licensed to practice law in Illinois and
shall have been in practice for more than five years. A judgment on the award
of the arbitrator shall be binding on the parties and may be entered in any
court of competent jurisdiction.
9.14 APPLICABLE LAW; JURISDICTION; VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF INDIANA
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND ANY RELATED DOCUMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATES OF INDIANA AND MISSOURI,
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF INDIANA AND THE WESTERN DISTRICT OF MISSOURI, AND
APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS, AND WAIVES TRIAL BY JURY AND ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION
OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING
WAS BROUGHT IN
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AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO THE PARTY AT ITS ADDRESS SET FORTH IN
SUBSECTION 9.4 OR AT SUCH OTHER ADDRESS OR TO THE ATTENTION OF SUCH
OTHER PERSON AS ANY PARTY SHALL HAVE SPECIFIED BY NOTICE IN WRITING
TO THE OTHER PARTIES;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN PARAGRAPH (i) ABOVE.
9.15 KNOWLEDGE. As used herein, the "knowledge" of a party is deemed
to be the knowledge of any (a) officer or director of the party, (b) officer of
the Grain Systems Division of Seller or (c) manager or other executive of a
Party or of the Grain Systems Division that has compliance responsibility for
the matter in question.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES
BUTLER MANUFACTURING COMPANY
By: Donald H. Pratt
---------------------------
Name: Donald H. Pratt
---------------------------
Title: President
---------------------------
CTB, INC.
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
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AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED
OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO THE PARTY AT ITS ADDRESS SET FORTH IN
SUBSECTION 9.4 OR AT SUCH OTHER ADDRESS OR TO THE ATTENTION OF SUCH
OTHER PERSON AS ANY PARTY SHALL HAVE SPECIFIED BY NOTICE IN WRITING
TO THE OTHER PARTIES;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING REFERRED TO IN PARAGRAPH (i) ABOVE.
9.15 KNOWLEDGE. As used herein, the "knowledge" of a party is deemed
to be the knowledge of any (a) officer or director of the party, (b) officer of
the Grain Systems Division of Seller or (c) manager or other executive of a
Party or of the Grain Systems Division that has compliance responsibility for
the matter in question.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION
PROVISION WHICH MAY BE ENFORCED BY THE PARTIES
BUTLER MANUFACTURING COMPANY
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
CTB, INC.
By: J. Christopher Chocola
-------------------------------------
Name: J. Christopher Chocola
-------------------------------------
Title:President and Chief Executive Officer
-------------------------------------
48
<PAGE> 50
SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 1.1(a) -- Intellectual Property
Schedule 1.1(b) -- Assumed Contracts
Schedule 1.1(c) -- Real Property
Schedule 1.1(d) -- Leaseholds
Schedule 1.1(f) -- Equipment, Machinery and Vehicles
Schedule 1.2(c) -- Excluded Contracts
Schedule 1.2(k) -- Jointly Used Assets
Schedule 1.2(n) -- Excluded Real Estate
Schedule 2.3(g) -- Pro Forma Closing Balance Sheet
Schedule 3.1(c) -- Consents, Approvals, etc.
Schedule 3.1(d)(i)(a) -- Year-End Financial Statements
Schedule 3.1(d)(i)(b) -- Interim Financial Statements
Schedule 3.1(g) -- Licenses, Permits and Franchises
Schedule 3.1(i) -- Liens on Real Property
Schedule 3.1(k) -- Insurance
Schedule 3.1(l) -- Labor Issues
Schedule 3.1(q) -- Compliance With Law
Schedule 3.1(r) -- Employee Benefit Programs
Schedule 3.1(t) -- Certain Changes and Events
Schedule 3.1(u) -- Environmental Matters
Schedule 3.1(x) -- Affiliate Transactions
Schedule 3.2(c) -- Consents, Approvals, etc.
Schedule 4.2(d) -- Permitted Contracts
Schedule 4.2(e) -- Permitted Employment Agreements
Schedule 4.10 -- Termination of Affiliate Transactions
Schedule 4.11 -- Procedure for Customer Claims
Schedule 6.1 -- Employment Agreements
Schedule 6.4 -- WARN Pre-Closing Activities
</TABLE>
v
<PAGE> 1
[BUTLER LETTERHEAD]
FOR IMMEDIATE RELEASE
BUTLER MANUFACTURING COMPANY
COMPLETES SALE OF GRAIN SYSTEMS DIVISION;
BOARD AUTHORIZES 800,000 SHARE REPURCHASE
KANSAS CITY, MO, JUNE 23, 1997 -- Butler Manufacturing Company announced today
that it has completed the sale of its Grain Systems division to CTB, Inc., for
a approximately $34 million in cash. CTB, Inc. is a privately-owned company
that owns several agricultural equipment entities, including Brock
Manufacturing, a grain storage business based in Indiana.
Butler also announced that its Board of Directors authorized the repurchase of
up to 800,000 shares of the Company's common stock. This share repurchase
authorization replaces a prior 500,000 share authorization granted in
September, 1995. Butler had repurchased 88,000 shares under the 1995
authorization at an average cost of $29 per share and currently has 7.8 million
shares outstanding.
The sale of the Grain Systems division will generate an after-tax gain
of about $13 million, or $1.70 per share, for Butler. The net proceeds of
the sale of approximately $23 million will be used to fund investments in
Butler's core building products businesses and share repurchases, which will be
made from time to time in the open market or in privately negotiated
transactions. The shares purchased under the authorization will be used for
general corporate purposes, including the Company's employee stock plans, stock
option plans and other appropriate uses.
Butler Manufacturing Company is the world's leading producer of pre-engineered
building systems and is a supplier of specialty components and construction
services for the nonresidential construction market.
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