<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
December 3, 1996
--------------------------------------------------------------
Date of Report (Date of earliest event reported)
Chicago Rivet & Machine Co.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-1227 36-0904920
---------------------------- ---------------- -----------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
901 Frontenac Road, Naperville, Illinois 60566-7061
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(630) 357-8500
----------------------------------
(Registrant's telephone number)
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS.
On December 3, 1996, Chicago Rivet & Machine Co. (the "Registrant")
purchased substantially all of the assets and assumed certain specified
liabilities of H & L Tool Company, Inc. ("H & L Tool") of Madison Heights,
Michigan. The purchase price for the acquisition was approximately $19.0
million, subject to adjustment as provided in the Agreement (as defined below).
The $19.0 million purchase price consisted of the payment of $13.9 million in
cash by the Registrant to H & L Tool, a $4.8 million credit against the
purchase price in consideration of H & L Tool's retention of all cash and cash
equivalents and the assumption by the Registrant of approximately $300,000 in
liabilities. The purchase price was determined by arms-length negotiation and
by reference to the H & L Tool Company, Inc. Reviewed Financial Statements
Years Ended October 31, 1995 and 1994 prepared by BDO Seidman, LLP dated
January 8, 1996 and certain subsequent interim financial information provided
to the Registrant.
Reference is made to the Purchase and Sale Agreement dated September 18,
1996 by and among the Registrant, HLTC Inc., a wholly owned subsidiary of the
Registrant, H & L Tool, B&B Industries, Inc., Henry L. Brasza, Trustee, Henry
Louis Brasza Trust dated April 22, 1982 and Marie E. Brasza, Trustee, Marie
Edna Brasza Trust dated April 22, 1982 (the "Agreement") (Exhibit 2.1). The
schedules to the Agreement have been omitted in accordance with the rules of
the Securities and Exchange Commission (the "Commission"). The Registrant
hereby undertakes to furnish supplementally a copy of such schedules to the
Commission upon request.
H & L Tool used its assets to manufacture specialty cold-formed fasteners
and screw machine products. The Registrant intends to use such assets for
similar purposes.
To pay the cash portion of the purchase price, the Registrant used $4.9
million of cash generated from operations and $9.0 million in borrowings from
Bank of America Illinois.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
It is impracticable to provide the financial statements for the acquired
business required under this item at this time. The financial statements will
be filed as soon as reasonably practicable, but no later than February 17,
1997.
(b) Pro forma financial information.
The pro forma financial information required under this item can not be
prepared until the requisite audited financial statements required under Item
7(a) above have been prepared. The pro forma financial information will be
filed as soon as reasonably practicable, but no later than February 17, 1997.
-2-
<PAGE> 3
(c) Exhibits.
Exhibit 2.1 Purchase and Sale Agreement dated September 18, 1996 by
and among the Registrant, HLTC Inc., a wholly owned subsidiary of the
Registrant, H & L Tool, B&B Industries, Inc., Henry L. Brasza, Trustee, Henry
Louis Brasza Trust dated April 22, 1982 and Marie E. Brasza, Trustee, Marie
Edna Brasza Trust dated April 22, 1982.
Exhibit 99.1 Press release of the Registrant, dated December 3, 1996.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHICAGO RIVET & MACHINE CO.
/s/ John C. Osterman
-----------------------------
John C. Osterman
Dated: December 16, 1996 President, Chief Operating Officer and
Treasurer
-4-
<PAGE> 5
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- ----------------
2.1 Purchase and Sale Agreement dated September 18, 1996
by and among the Registrant, HLTC Inc., a wholly owned
subsidiary of the Registrant, H & L Tool, B&B
Industries, Inc., Henry L. Brasza,
Trustee, Henry Louis Brasza Trust dated April 22,
1982, and Marie E. Brasza, Trustee, Marie Edna Brasza
Trust dated April 22, 1982.............................
99.1 Press release of the Registrant dated December 3, 1996.
5
<PAGE> 1
EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
AGREEMENT dated September 18, 1996 by and among H & L TOOL COMPANY, INC.,
a Michigan corporation having its principal place of business at 32701
Dequindre, Madison Heights, Michigan 48071
("H & L TOOL"), B & B INDUSTRIES, INC., a Michigan corporation having its
principal place of business at 32701 Dequindre, Madison Heights, Michigan 48071
("B & B INDUSTRIES"), and HENRY L. BRASZA, TRUSTEE, HENRY LOUIS BRASZA TRUST
DATED APRIL 22, 1982, and MARIE E. BRASZA, TRUSTEE, MARIE EDNA BRASZA TRUST
DATED APRIL 22, 1982, each such TRUSTEE a principal shareholder of H & L TOOL
and B & B INDUSTRIES and each a co-owner of real estate located at 32600
Industrial Drive, Madison Heights, Michigan 48071 (the "Warehouse"), (referred
to hereinafter collectively as the "SHAREHOLDERS" and/or "TRUSTEES") and
CHICAGO RIVET & MACHINE CO., an Illinois corporation having its principal place
of business at 901 Frontenac Road, Naperville, Illinois 60566-7061 ("CHICAGO
RIVET"), and HLTC INC., an Illinois corporation ("HLTC"), a wholly owned
subsidiary of CHICAGO RIVET. H & L TOOL and B & B INDUSTRIES are sometimes
collectively referred to herein as "CORPORATE SELLERS" and individually each is
sometimes referred to as a CORPORATE SELLER.
H & L TOOL owns all of the assets (except the Warehouse) related to its
business known as H & L TOOL COMPANY, INC., operating at its manufacturing
facility at 32701 Dequindre, Madison
<PAGE> 2
Heights, Michigan (the "Facility") and is primarily engaged in the
manufacture of specialty cold formed parts and screw machine products sold to
the automotive industry.
B & B INDUSTRIES owns all of the assets (except the Warehouse) related to
its business known as B & B INDUSTRIES, INC. operating at 32701 Dequindre,
Madison Heights, Michigan and is primarily engaged in the purchase from and
sale to H & L TOOL of screw machine parts.
H & L TOOL leases the Warehouse pursuant to a lease (the "Warehouse
Lease") dated October 22, 1984, as amended August 22, 1984, August 22, 1992 and
October 22, 1994, from the TRUSTEES.
H & L TOOL is willing to sell to HLTC, and HLTC desires to purchase from H
& L TOOL, subject to the assumption of certain specific liabilities, on the
terms and conditions hereinafter set forth, all of the assets and properties
relating to the H & L TOOL business, and CHICAGO RIVET shall guarantee the
performance by HLTC Inc. of its obligations hereunder.
B & B INDUSTRIES is willing to sell to HLTC INC., and HLTC INC. desires to
purchase from B & B INDUSTRIES, all of the assets and properties relating to
the B & B INDUSTRIES business, and CHICAGO RIVET shall guarantee the
performance by HLTC Inc. of its obligations hereunder.
In consideration of the premises and the mutual representations,
warranties and covenants set forth herein, the parties hereto agree as follows:
2
<PAGE> 3
1. A. PURCHASED ASSETS. On the terms and subject to the conditions set
forth in this Agreement, CORPORATE SELLERS hereby agree to sell, convey,
assign, transfer and deliver at the Closing, as defined herein, and HLTC INC.
shall acquire and purchase from CORPORATE SELLERS, free and clear of all liens,
charges and encumbrances (other than those specifically set forth in this
Agreement or in the Schedules hereto), all of the assets and properties
comprising the business of CORPORATE SELLERS, except those specifically
excluded in Section 1B, including the following property and assets owned by
CORPORATE SELLERS (whether or not reflected on the books and records of
CORPORATE SELLERS as of the Closing Date, (as defined in Section 5A of this
Agreement) and used in, or pertaining to, the business of CORPORATE SELLERS,
wherever located, as the same shall exist at the close of business on the
Closing Date:
(1) all fixed assets, including those listed on Schedule 1A(1)
attached hereto, as well as any other machinery and equipment including
waste treatment equipment, tools, dies, furniture, furnishings, fixtures,
plant and office equipment and other tangible personal property and all
assignable warranties relating thereto (collectively, the "Purchased
Fixed Assets");
(2) all inventories, including supplies, chemicals, raw materials,
work-in-process and finished goods (collectively, the "Purchased
Inventories");
3
<PAGE> 4
(3) all accounts receivable and notes receivable and other claims
for money due CORPORATE SELLERS (collectively, the "Purchased Accounts
Receivable");
(4) all credits, prepaid supplies, security deposits, other
deposits, advances and other prepaid items (including prepaid insurance),
and deposits and deferred charges, including those pursuant to the
Contracts, as defined below (collectively, the "Purchased Prepaid
Items");
(5) all rights, including unbilled revenues in and under all
contracts, equipment leases, other leases, purchase and sale orders, and
quotations and similar arrangements (collectively, the "Contracts"),
including those listed on Schedule 1A(5);
(6) all operating data and records of CORPORATE SELLERS, in any
form or medium, including without limitation, books, records, ledgers,
files, correspondence, sales and advertising and other promotional data,
advertising materials, customer lists, credit information, cost and
pricing information, supplier lists, business plans, reference catalogs,
computer programs and disks, and electronic data processing software
related to any of the foregoing items or otherwise related to the
operations of the business of CORPORATE SELLERS (including customer and
supplier list database and any accounting and financial software program
disk), and including all data and records of H & L TOOL relating to its
employees (collectively, the "Purchased Records");
4
<PAGE> 5
(7) all engineering and production designs and processes, drawings,
blueprints, copyrights, formulae, technology, trade secrets, know-how and
other similar data of CORPORATE SELLERS (collectively, the "Purchased
Drawings");
(8) all inventions, patents, patent applications, patent
disclosures, trademarks, trademark applications and registrations, trade
names, confidential business information (consisting of ideas, formulas,
compositions, inventions, know-how, manufacturing and production
processes and techniques, research and development information, drawings,
designs, plans, proposals and technical data, financial, marketing and
business data, pricing and cost information), copyrights, copyright
applications and registrations used in the business of CORPORATE SELLERS
(including all rights to use the names or marks "H & L TOOL COMPANY,
INC." and B & B INDUSTRIES, INC." or derivatives thereof, or any other
name, mark, logo or trade dress of CORPORATE SELLERS or any affiliate of
CORPORATE SELLERS and all other rights owned, licensed or otherwise used
under permits, licenses and franchises and similar authorizations used in
the business of either Corporate Seller (collectively, the "Purchased
Rights");
(9) the business of CORPORATE SELLERS as going concerns and all
goodwill of CORPORATE SELLERS' businesses;
(10) all telephone and fax numbers assigned to or used by CORPORATE
SELLERS, including the business telephone number (810) 585-7474 and fax
number (810) 585-5774;
5
<PAGE> 6
(11) all insurance policies;
(12) all federal, state and local or other permits, licenses,
franchises, approvals, registrations, certificates, orders, variances,
exceptions and similar authorizations relating to CORPORATE SELLERS;
(13) all agreements between H & L TOOL and its sales
representatives;
(14) all land, buildings, improvements, easements and rights of way
listed on the attached Schedule 1A(14), and all easements and other
rights appurtenant thereto, including the Facility and Warehouse; and
(15) all causes of action, rights of recovery, rights of set-off and
rights of recoupment of CORPORATE SELLERS, including any rights of
CORPORATE SELLERS under any property, casualty, workers' compensation or
other insurance policy or related insurance service contract to the
extent the same relate to any Assumed Liability or any casualty affecting
any of the Purchased Assets.
B. EXCLUDED ASSETS. Notwithstanding any other provision of this
Agreement, the following assets and properties are excluded and exempted from
the sale:
(1) Cash and cash equivalents, United States Treasury Notes and
Bonds, certificates of deposit and similar cash equivalents including all
accrued, but unpaid, earnings;
(2) Two passenger motor vehicles and one multi-purpose truck and
all assignable warranties relating thereto;
6
<PAGE> 7
(3) Chemicals listed on Schedule 1B(3);
(4) Corporate records of CORPORATE SELLERS not required for the
operation of the business acquired hereunder by Chicago Rivet, including
minute books, all profit sharing plan records, all pension plan records,
all tax returns, financial information and all employee records of former
H & L TOOL Employees not employed by HLTC INC. within two (2) business
days after the Closing Date; provided, however, CORPORATE SELLERS shall
provide copies of or access to the financial statements and related work
papers for the last four (4) fiscal years and related tax returns as may
be reasonably requested by HLTC INC.
(5) Life insurance policies on the life of Henry L. Brasza and
those life insurance policies listed on Schedule 1B(5);
(6) All deposits required to be made under Internal Revenue Code
Section 444, any other prepaid tax and the right to receive any tax
refund;
(7) All real estate and any improvements thereon not situated in
Madison Heights, Michigan, all personal property located thereon or
related to such real estate and/or used in the operation of any business
activity conducted in connection with such real estate and all
information and records, wherever located, maintained by H & L TOOL in
connection with such real estate and the business activities conducted in
connection with such real estate activities;
7
<PAGE> 8
(8) The personal items of HENRY L. and MARIE E. BRASZA located at
the Facility and Warehouse on the Closing Date, including items on
display and items located in their offices;
(9) Any assets of the H & L TOOL Profit Sharing Plan (the "Profit
Sharing Plan");
(10) 1996-97 Detroit Lions Football Tickets and the rights to
purchase any play-off tickets; provided, however, that HLTC INC. shall be
assigned the rights to purchase the season tickets and any play-off
tickets for the 1997-98 season and thereafter; and
(11) All employee receivables.
C. WAREHOUSE. On the terms and subject to the conditions set forth in
this Agreement, the TRUSTEES hereby agree to sell, convey, assign, transfer and
deliver by warranty deed, and HLTC INC. shall purchase the Warehouse from the
TRUSTEES, subject only to easements and restrictions of record as disclosed in
Chicago Title Insurance Company policy #63-612813 dated September 10, 1984, and
all applicable ordinances.
D. PURCHASED ASSETS. The assets described in Sections 1A and 1C, with
the exception of the Excluded Assets listed in Section 1B, are sometimes
referred to collectively as the "Purchased Assets". No asset specifically
described in Sections 1A(1) through (15) or Section 1C shall be deemed to
include any Excluded Asset.
8
<PAGE> 9
E. AS IS CONDITION. HLTC INC. accepts the Purchased Assets in "AS IS"
condition, without warranties of any kind (except the warranties of title
specifically expressed in the applicable documents of conveyance), and
acknowledges that it has had sufficient opportunity to inspect the Purchased
Assets and all related records in connection therewith. CORPORATE SELLERS,
SHAREHOLDERS AND TRUSTEES SPECIFICALLY DISCLAIM ANY WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR PURPOSE IN CONNECTION WITH THE PURCHASED
ASSETS. Notwithstanding anything herein to the contrary, the Purchased
Inventories shall be merchantable and fit for the purpose for which procured
and manufactured, and are not damaged or defective; and the Fixed Assets
consisting of machinery and equipment shall be in good operating condition and
repair, minus ordinary wear and tear.
2. PURCHASE PRICE.
A. The purchase price payable by HLTC INC. to CORPORATE SELLERS and the
TRUSTEES for the Purchased Assets shall be equal to the sum of Nineteen Million
One Hundred Thousand Dollars ($19,100,000.00) reduced by Four Million Eight
Hundred Thousand ($4,800,000.00) Dollars in consideration of H & L TOOL's
retention of all Cash and Cash Equivalents, or Fourteen Million Three Hundred
Thousand ($14,300,000.00) Dollars (the "Purchase Price"). The portion of the
Purchase Price allocated to Purchased Assets of H & L TOOL shall be subject to
adjustment with respect to the Purchased Accounts Receivable, Purchased
Inventories, Purchased Prepaid Items, and Assumed Liabilities as provided in
Section 2C and
9
<PAGE> 10
further adjustment after the Closing Date as provided in Section
3 hereof. The portion of the Purchase Price allocated to the Facility,
Warehouse and the Purchased Assets of B & B INDUSTRIES shall not be subject to
further adjustment.
B. Adjustments shall be made between CORPORATE SELLERS and HLTC INC. for
the current Personal Property taxes paid in advance on account of the Purchased
Assets prorated on a per diem basis as of midnight of the day preceding the
Closing Date. Such taxes shall be prorated and adjusted in accordance with the
due date basis of the municipality or taxing unit in which the subject personal
property is located. Prorations shall be made on the basis of the actual
number of days of the year and month which shall have elapsed as of the Closing
Date.
C. At the Closing Date, HLTC INC. will wire transfer to a bank account
designated by CORPORATE SELLERS in federal or other immediately available
funds, an amount equal to the Purchase Price adjusted as follows: the Purchase
Price shall be (i) reduced by the amount of the Assumed Liabilities reflected
on the Pre-Closing Statement as defined in Section 3A of this Agreement not to
exceed One Million Seven Hundred Thousand Dollars ($1,700,000.00); (ii) reduced
by the positive difference, if any, between (a) the sum of the Purchased
Accounts Receivable, Purchased Inventories, and Purchased Prepaid Items as
shown on the balance sheet included in the Interim Statement as defined in
Section 8C of this Agreement and (b) the sum of the Purchased Accounts
Receivable, Purchased Inventories and Purchased Prepaid Items as shown on the
Statement of Purchased Assets and Assumed Liabilities included in the
Pre-Closing Statement; and (iii) increased by the positive difference, if any,
between (x) the sum of the Purchased Accounts Receivabe, Purchased inventories,
and Purchased Prepaid Items as shown on the Statement
10
<PAGE> 11
of Purchased Assets and Assumed Liabilities included in the Pre-Closing
Statement; and (iii) increased by the positive difference, if any,
between (x) the sum of the Purchased Accounts Receivable, Purchased
Inventories, and Purchased Prepaid Items as shown on the Statement of Purchased
Assets and Assumed Liabilities included in the Pre-Closing Statement and
(y) the sum of the Purchased Accounts Receivable, Purchased
Inventories, and Purchased Prepaid Items as shown on the balance sheet included
in the Interim Statement. CORPORATE SELLERS and TRUSTEES shall provide the
wire transfer instructions to HLTC INC. to effect such transfer.
3. ADJUSTMENT TO PURCHASE PRICE.
A. PRE-CLOSING STATEMENT. At least seven (7) days prior to the Closing
Date, H & L TOOL shall deliver to HLTC INC. an unaudited statement of Purchased
Assets and the Assumed Liabilities as of the month end prior to the Closing
Date and a statement of the results of operations for the period ended on such
date (the "Pre-Closing Statement"). The Pre-Closing Statement shall be in the
same format as the Interim Statement previously delivered by H & L TOOL to HLTC
INC. and accompanied by certification of H & L TOOL and H & L TOOL's president
and principal financial officer to the effect that (i) the accounting
principles used in preparing the Pre-Closing Statement are consistent with
those used in preparing the Interim Statement, and (ii) the Pre-Closing
Statement has been prepared from adjustments to the Interim Statement which
adjustments have been prepared from the books and records of H & L TOOL and
fairly present the financial condition of H & L TOOL as of the
11
<PAGE> 12
month end prior to the Closing Date and the results of operations for
the period ended on such prior month end date in conformity with generally
accepted accounting principles ("GAAP"). HLTC INC. shall be entitled to review
all work papers and other documentation related to preparation of the
Pre-Closing Statement and the Interim Statement.
B. CLOSING STATEMENT. On September 28, 29 and 30, 1996, HLTC INC. at its
expense shall conduct a physical inventory at the Facility and Warehouse and
promptly thereafter furnish a copy to H & L TOOL. The results of such physical
inventory at September 30, 1996, shall be rolled forward, as mutually agreed by
the parties, to the Closing Date. Within forty-five (45) days after the
Closing Date, H & L TOOL shall deliver to HLTC INC., based on such physical
inventory, an unaudited statement of Purchased Assets and Assumed Liabilities
of H & L TOOL as of the Closing Date (the "Closing Statement"). H & L TOOL
shall have the right to have a representative observe the taking of the
physical inventory and shall have the right to review all work papers and other
documentation related to preparation of the Closing Statement. The Closing
Statement shall be in the same format as the balance sheet included in the
Interim Statement and the Statement of Purchased Assets and Assumed Liabilities
included in the Pre-Closing Statement and accompanied by a certification of H &
L TOOL and H & L TOOL's president and chief financial officer (the
"Certification") to the effect that (i) the accounting principles used in
preparing the Closing Statement are consistent with those used in preparing the
12
<PAGE> 13
Interim Statement and the Pre-Closing Statement, and (ii) the Closing Statement
has been prepared from the financial statements of H & L TOOL at the Closing
Date which have been prepared from the books and records (adjusted to the
extent necessary by the aforementioned physical inventory) of H & L TOOL and
fairly represents the financial condition of H & L TOOL as of the Closing Date
and the results of operations for the year to date period ending on the Closing
Date, in conformity with generally accepted accounting principles.
C. REVIEW OF CLOSING STATEMENT. HLTC INC. shall have the right to review
the Closing Statement as to the matters covered by such Certification. If HLTC
INC. does not notify H & L TOOL to the contrary within forty-five (45) days
after the date the Closing Statement is delivered to HLTC INC., then the
Closing Statement delivered by H & L TOOL shall be deemed to be final,
conclusive and binding on the parties. If HLTC INC. notifies H & L TOOL in
writing within such forty-five (45) day period that it disputes any item on the
Closing Statement as delivered and specifies (a) the items which it so disputes
and the reason therefor (together with supporting documentation) and (b) the
amount of the adjustment it proposes with respect to each such item, the
parties will then attempt to resolve such disputed items. HLTC INC. shall not
be entitled to dispute any individual line item which involves a proposed
adjustment to the Closing Statement of less than Ten Thousand Dollars
($10,000.00) (but shall be entitled to the full amount of any line item
adjustments, even if finally determined to
13
<PAGE> 14
be less than $10,000.00). If the parties are unable to resolve their
dispute and to agree on the Closing Statement, the disputed items shall be
referred, within forty-five (45) days after the date of the Closing Statement's
delivery to HLTC INC., to BDO Seidman, certified public accountants (the
"Firm"). The decision of the Firm shall be within the disputed range and shall
be final, conclusive and binding on the parties hereto. The fees and expenses
of the Firm shall be allocated between H & L TOOL and HLTC INC. as follows:
(i) H & L TOOL shall pay all or a portion of the Firm's fees and expenses, as
determined in accordance with the following formula:
AE x AA = TE
--
BA
where: "AE" means the Firm's total fees and expenses; "AA" means the aggregate
adjustment to the Closing Statement made by the Firm; "BA" means the aggregate
adjustment to the Closing Statement that would have resulted from resolution in
HLTC INC.'s favor of all points of disagreement raised by HLTC INC. to the
Firm; and "TE" means H & L TOOL's share of the Firm's fees and expenses; and
(ii) HLTC INC. shall pay the balance of the Firm's fees and expenses, if any.
D. ACCESS TO H & L TOOL. For the purpose of preparing the Closing
Statement, representatives of H & L TOOL shall be given full and free access
during regular business hours to all books, records and other data of H & L
TOOL. Personnel of the parties hereto may be consulted from time to time by
such representatives, and the parties and their respective representatives may
confer
14
<PAGE> 15
with the representatives of the other party as to their examination and
determination procedures hereunder. The activities provided for under this
Section 3D shall not, however, unreasonably interfere with the business
operations of HLTC INC.
E. PAYMENT OF ADJUSTED AMOUNT. Within 10 days after the final
determination of the Closing Statement in accordance with Sections 3B and 3C
hereof, H & L TOOL shall pay to HLTC INC. the amount by which (i) the value of
(a) the sum of the Purchased Accounts Receivable, Purchased Inventories and
Purchased Prepaid Items reduced by the Assumed Liabilities as set forth on the
Statement of Purchased Assets and Assumed Liabilities in the Pre-Closing
Statement exceeds (ii) the value of (b) the sum of the Purchased Accounts
Receivable, Purchased Inventories, and Purchased Prepaid Items reduced by the
Assumed Liabilities as set forth on the Closing Statement, or HLTC INC. shall
pay to H & L TOOL the amount by which (x) the value of (a) the sum of the
Purchased Accounts Receivable, Purchased Inventories and Purchased Prepaid
Items reduced by the Assumed Liabilities as set forth on the Closing Statement
exceeds (y) the value of (b) the sum of the Purchased Accounts Receivable,
Purchased Inventories and Purchased Prepaid Items reduced by the Assumed
Liabilities as set forth on the Statement of Purchased Assets and Assumed
Liabilities in the Pre-Closing Statement, as the case may be. The amount of
the payment described in this Section 3E shall be paid by H & L TOOL to HLTC
INC., or by HLTC INC. to H & L TOOL, as the case may be, in federal or other
immediately available funds, with interest thereon
15
<PAGE> 16
from the Closing Date to the date of such payment, calculated at a rate
equal to eight and one-quarter (8 1/4%) percent calculated on a 360-day year in
federal or other immediately available funds remitted by wire transfer to a
bank designated by the payee thereof. In addition, within ten (10) days after
such final determination of the Closing Statement, H & L TOOL and HLTC INC.
will execute and deliver good and sufficient documents to effect any
modification of the documents delivered pursuant to Section 6B(1) necessary to
correct any inconsistencies between such documents and the Assumed Liabilities
shown on the Closing Statement.
F. ALLOCATION OF PURCHASE PRICE. CORPORATE SELLERS, TRUSTEES and HLTC
INC. agree that the Purchase Price, prior to adjustment as provided for in
Section 3 hereof, shall be allocated among the Purchased Assets as shown on
Schedule 3F attached hereto. H & L TOOL and HLTC INC. further agree that the
Purchase Price, as adjusted as provided for in Section 3 hereof, shall be
allocated among the Purchased Assets of H & L TOOL in a manner identical to the
allocation shown on Schedule 3F attached hereto. The allocation of the
Purchase Price as shown in Schedule 3F (adjusted as provided herein for the
Purchased Assets of H & L TOOL) shall be used by CORPORATE SELLERS, TRUSTEES,
CHICAGO RIVET and HLTC INC. for all tax purposes.
4. ASSUMPTION OF CERTAIN LIABILITIES.
A. CERTAIN OBLIGATIONS OF CORPORATE SELLERS' BUSINESSES. On the Closing
Date, as defined below, CORPORATE SELLERS, in
16
<PAGE> 17
further consideration of the sale of the Purchased Assets, shall assign
to HLTC INC., and HLTC INC. shall assume and agree to perform and discharge,
those obligations of CORPORATE SELLERS pertaining to their businesses only as
follows:
(1) for the sale and delivery of products not shipped and not paid
for prior to the close of business on the Closing Date under open sales
orders, open bids and sales contracts accepted or made in the ordinary
course of business of H & L TOOL;
(2) for the purchase of raw materials, supplies and repair and
maintenance materials not received prior to the Closing Date (and not
included in the Purchased Inventories) under open supply contracts,
purchase orders and commitments given or made in the ordinary course of
the business of H & L TOOL;
(3) arising under the Contracts and assigned pursuant to Section 6C
and accruing after the Closing Date; and
(4) for the accounts payable incurred in the ordinary course of the
business in an amount (including the obligations assumed in Clause (2)
above) up to One Million Seven Hundred Thousand ($1,700,000.00) Dollars
on the balance sheet of H & L TOOL on the Closing Date, provided that if
such accounts payable exceed One Million Seven Hundred Thousand
($1,700,000.00) Dollars on the Closing Date, HLTC INC. may exclude from
its obligations hereunder accounts payable (or
17
<PAGE> 18
portions thereof) that it identifies to H & L TOOL in an amount
sufficient to reduce its aggregate obligations under this clause and
Clause (2) above to One Million Seven Hundred Thousand ($1,700,000.00)
Dollars.
B. ASSUMPTION OF CERTAIN OTHER OBLIGATIONS AND LIABILITIES. From and
after the Closing Date, HLTC INC. shall assume and agree to perform and
discharge all obligations and liabilities relating to the Purchased Assets and
all costs, expenses (including costs of investigation, attorneys' fees and
court expenses), penalties, fines, damages, levies, losses and charges relating
thereto) arising out of or in connection with:
(1) suits, claims, proceedings and actions of any kind whatsoever
(including, without limitation, those instituted by any person or
governmental agency), resulting from actual or alleged liability for
personal injury, death, property damage or economic damage under a theory
of product liability, strict liability, failure to warn, design defect,
negligence or intentional tort to the extent arising from or in
connection with products sold by HLTC INC. after the Closing Date;
(2) express or implied warranties relating to products sold by HLTC
INC. after the Closing Date, including obligations to repair, replace,
rework or field test, or to make refunds of amounts paid for such
products, and any direct, incidental or consequential damages relating
thereto; and
18
<PAGE> 19
(3) programs for the recall, notification, retrofit or any other
post-manufacture remedial or corrective actions relating to products sold
by HLTC INC. after the Closing Date, whether such program is voluntary or
not.
CORPORATE SELLERS acknowledge and agree to perform and discharge all
obligations and liabilities relating to the business of CORPORATE SELLERS
arising out of or in connection with the matters described in Clauses (1), (2)
and (3) above in connection with products sold by CORPORATE SELLERS on or
before the Closing Date.
C. EXCLUDED LIABILITIES. With the exception of the liabilities expressly
assumed by HLTC INC. in accordance with the provisions of Section 3A and 3B
hereof (the "Assumed Liabilities"), HLTC INC. and CHICAGO RIVET do not assume,
and shall in no event be liable for, any debts, liabilities, taxes or
obligations of any kind or nature whatsoever of CORPORATE SELLERS or of the
SHAREHOLDERS or any other affiliates or entities, whether fixed or contingent,
known or unknown, liquidated or unliquidated, secured or unsecured, or
otherwise. Without limiting the generality of this paragraph, CORPORATE
SELLERS, HLTC INC. and CHICAGO RIVET agree that under no circumstances will
HLTC INC. or CHICAGO RIVET assume, or be liable for, any of the following:
(1) any obligation of Corporate Sellers to their respective
employees arising on or before the Closing Date including without
limitation, compensation and withholdings, deferred compensation, welfare
benefits and fringe benefits;
19
<PAGE> 20
(2) any liabilities under the Profit Sharing Plan or under any
other plans (as defined in Section 8K) as of the Closing Date; and
(3) any liabilities for federal, state or local taxes and other
accruals payable by CORPORATE SELLERS relating to their operations for
periods of time prior to and including the Closing Date.
5. THE CLOSING.
A. LOCATION AND CLOSING DATE. The purchase and sale (the "Closing")
provided for in this Agreement shall take place at the offices of H & L TOOL,
32701 Dequindre, Madison Heights, Michigan 48071, or at such other place as the
parties shall mutually agree upon, at 10:00 A.M. local time on October 31,
1996, or such other time or date as the parties shall mutually agree upon (the
"Closing Date"). Notwithstanding the foregoing, if either party by October 31,
1996 is unable to satisfy a condition precedent described in Sections 10 or 11
hereof for reason of force majeure, and such unsatisfied condition has not been
waived, the Closing Date shall be November 29, 1996, but only if all conditions
precedent described in Section 10 or 11 have been satisfied or waived. The
Closing shall be effective, and title to the Purchased Assets shall pass from
CORPORATE SELLERS and TRUSTEES to HLTC INC., as of the close of business on the
Closing Date.
6. INSTRUMENTS OF TRANSFER; ACTIONS AFTER THE CLOSING.
A. Instruments and Documents of CORPORATE SELLERS. At the Closing and
effective as of the Closing Date, H & L TOOL, B &
20
<PAGE> 21
B INDUSTRIES or the TRUSTEES shall deliver the following documents to
HLTC INC.:
(1) such bills of sale, endorsements, assignments and other good
and sufficient instruments of transfer, conveyance and assignment, in
form reasonably satisfactory to HLTC INC., as shall be effective to vest
in HLTC INC. good and marketable title, free and clear of all liens,
charges and encumbrances other than liens for taxes not yet delinquent,
to the Purchased Assets, Manufacturing Facility and the Warehouse,
including but not limited to delivery of those items specified in
Sections 12B (Covenant Not to Compete) and 18 (Title and Conveyance of
Realty;
(2) all other documents, instruments and writings required to be
delivered by CORPORATE SELLERS or the TRUSTEES on or prior to the Closing
Date pursuant to this Agreement;
(3) the lease for the Warehouse facility cancelled without further
consideration at the Closing Date;
(4) certificates by the President of each Corporate Seller listing
all items described in each of Sections 4A(1) through (4) inclusive; and
(5) such other documents as may be reasonably requested by HLTC
INC.
B. INSTRUMENTS AND DOCUMENTS OF HLTC INC.. At the Closing and effective
as of the Closing Date, HLTC INC. shall deliver the following documents to H &
L TOOL:
21
<PAGE> 22
(1) good and sufficient documents evidencing the assumption
(subject to any subsequent modification based on the Closing Statement),
pursuant to Section 4A by HLTC INC. of the Assumed Liabilities;
(2) all other documents, instruments and writings required to be
delivered by HLTC INC. on or prior to the Closing Date pursuant to this
Agreement; and
(3) such other documents as may be reasonably requested by
CORPORATE SELLERS and/or TRUSTEES.
C. CONSENTS TO ASSIGNMENT. Prior to the Closing Date, CORPORATE SELLERS
will use their best efforts to obtain any third party consents with respect to
any Contract that is required to transfer and assign such Contract to HLTC INC.
in connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, H & L TOOL will use its best efforts
to cause the Group Health Insurance Contract to be assigned to HLTC INC. on the
Closing Date, effective on the day after the Closing Date, but only to the
extent it provides coverage for former H & L TOOL Employees employed within two
(2) business days after the Closing Date by HLTC INC. (The Group Health
Insurance Contract is H & L TOOL's insurance contract dated 7/28/95 & 6/27/96
with Blue Cross and Blue Shield of Michigan under which H & L TOOL currently
maintains a group health plan for its current employees). After the Closing
Date, if any such required consent has not been obtained, H & L TOOL will
cooperate with HLTC INC. at its request to obtain such consent. This Agreement
shall not constitute an
22
<PAGE> 23
assignment or attempted assignment of any contract license, lease,
commitment, sales order or purchaser order or other agreement if an assignment
or attempted assignment of the same without the consent of the other party
thereto would constitute a breach thereof or would not effectively assign the
rights of H & L TOOL thereunder unless such consent is obtained and such rights
can be effectively assigned. If such consent is not obtained, or if any
attempted assignment would be ineffective to transfer H & L TOOL's rights
thereunder to HLTC INC., HLTC INC. shall act as the agent of H & L TOOL in
order to obtain for HLTC INC., at no cost to H & L TOOL, the benefits
thereunder.
D. APPOINTMENT AS AGENT. CORPORATE SELLERS further agree that, effective
as of the Closing Date, they will by appropriate instrument constitute and
appoint HLTC INC., its successors and assigns, CORPORATE SELLERS' agent to
collect for the account of HLTC INC. all receivables owing to CORPORATE
SELLERS. On the Closing Date, CORPORATE SELLERS shall provide to HLTC INC. a
detailed listing of such receivables. Funds received by HLTC INC. from any
customer during the foregoing agency shall be credited as designated by the
customer or if a customer does not do so to the appropriate unpaid invoice for
such customer. HLTC INC. shall notify CORPORATE SELLERS as soon as practicable
if HLTC INC. (a) becomes aware of any dispute by a customer with respect to a
receivable owing to CORPORATE SELLERS, or (b) receives payment from a customer
designated as payment of a later invoice if payment in full has not been
received of an earlier invoice in connection with
23
<PAGE> 24
which there is a receivable owing to CORPORATE SELLERS. The
Pre-Closing Statement and Closing Statement shall include a reasonable amount
mutually agreed to by the parties to reserve for Doubtful Accounts Receivable
(which shall reduce the amount of Purchased Accounts Receivable in such
statements) and HLTC INC. shall remit to H & L TOOL any such excess reserve as
determined by the actual collection rate experienced.
E. WARRANTY WORK BY HLTC INC.. From and after the Closing Date, HLTC
INC. shall notify H & L TOOL in writing of each warranty claim made by a
customer with respect to an H & L TOOL product sold prior to the Closing Date.
HLTC INC. for the benefit and account of H & L TOOL shall perform such warranty
work in the ordinary course of business. H & L TOOL shall reimburse HLTC INC.
for costs incurred in connection with such warranty work done by HLTC INC.,
including repair, replacement, rework or field testing of H & L TOOL products
sold before the Closing Date.
F. MUTUAL ASSISTANCE REGARDING TAXES. CORPORATE SELLERS and HLTC INC.
will each provide the other party with such assistance as may reasonably be
requested in connection with the preparation of any tax return, audit or other
examination by any taxing authority, or judicial or administrative proceeding
relating to liability for Taxes as defined below, will each retain and provide
to the other party all records and other information which may be relevant to
any such tax return, audit or examination, proceeding or determination, and
will each provide the other party with any final determination of any such
audit or examination,
24
<PAGE> 25
proceeding or determination that affects any amount required to be
shown on any tax return of the other party for any period. Without limiting the
generality of the foregoing, each party will retain, until the expiration of
the applicable statutes of limitation (including any extensions thereof) copies
of all tax returns, supporting work schedules and other records relating to tax
periods or portions thereof ending prior to or on the Closing Date.
G. FUTURE ASSURANCES. After the Closing Date, HLTC INC. and H & L TOOL
agree that they shall duly execute, acknowledge and deliver all such further
assignments, transfers, and conveyances and take such other actions and give
such assurances as the other party may reasonably request in order to effect
and carry out the transactions set forth and contemplated hereby.
7. ACTIONS PRIOR TO CLOSING.
A. ORDINARY COURSE. Prior to the Closing, CORPORATE SELLERS shall carry
on the business of CORPORATE SELLERS in the regular course and in substantially
the same manner as conducted by CORPORATE SELLERS prior to the date hereof. In
particular, CORPORATE SELLERS shall (a) maintain and preserve the Purchased
Fixed Assets in the regular course, ordinary wear and tear excepted, (b)
continue its current practice of identifying, by stamp or otherwise, the date
of manufacture of all finished products of CORPORATE SELLERS, (c) maintain
business records and files relating to CORPORATE SELLERS in the ordinary
course, and (d) continue in the ordinary course to seek sales orders, provide
service to and otherwise preserve the goodwill of customers and
25
<PAGE> 26
suppliers and others having business relations with CORPORATE SELLERS,
and to retain the services of employees of H & L TOOL in accordance with
current practice. Prior to the Closing, neither CORPORATE SELLERS nor the
SHAREHOLDERS shall, except with the prior consent of HLTC INC. or pursuant to
this Agreement, take, or agree to take, any of the following actions: (a)
mortgage, pledge or subject to lien or any other encumbrance, any Purchased
Assets, other than mechanics' or materialmen's liens incurred in the ordinary
course of business, (b) sell or transfer any Purchased Asset other than the
sale or transfer in the ordinary course of business, of the Purchased
Inventories, (c) sell, assign or transfer any of the Purchased Rights, (d)
increase the compensation of H & L TOOL employees or hire additional employees,
except with the consent of HLTC INC., which will not be unreasonably withheld
with respect to increases in the ordinary course of business, (e) enter into
any other transaction or agreement (including employment agreements) or incur
any other liability pertaining to H & L TOOL which is to be assumed by HLTC
INC. other than in the ordinary course of business, or (f) any action or
inaction which, if such action or inaction had occurred prior to the date
hereof, would have resulted in any representation or warranty of CORPORATE
SELLERS in this Agreement not being true and correct on the date hereof.
B. HLTC INC.'S ACCESS TO BOOKS, RECORDS AND EMPLOYEES. From and after
the date of this Agreement, CORPORATE SELLERS shall afford to the officers,
attorneys, accountants and other authorized
26
<PAGE> 27
representatives of HLTC INC. and CHICAGO RIVET access during regular
business hours to the properties, books, records and employees of CORPORATE
SELLERS, provided that (a) such access shall not unreasonably interfere with
the operations of CORPORATE SELLERS, (b) such access shall be only with prior
notice to CORPORATE SELLERS, and (c) in the reasonable opinion of CORPORATE
SELLERS, the providing of such information will not cause CORPORATE
SELLERS to be in violation of any law or waive the attorney-client
privilege. CORPORATE SELLERS shall also furnish, or cause to be furnished, to
HLTC INC. and CHICAGO RIVET such information relating to the affairs of
CORPORATE SELLERS as HLTC INC. and CHICAGO RIVET shall from time to time
reasonably request subject to the conditions heretofore mentioned. HLTC INC.
and CHICAGO RIVET shall treat all Confidential Information so obtained as
confidential, and will not use such Confidential Information for any purpose
other than the acquisition of CORPORATE SELLERS pursuant to this Agreement,
unless and until the purchase and sale provided for herein shall be
consummated. HLTC INC. and CHICAGO RIVET shall return all written Confidential
Information furnished and all copies thereof in the event such purchase and
sale shall not be consummated for any reason. "Confidential Information" shall
be defined as follows: all information, whether written or oral, pertaining to
CORPORATE SELLERS or the transaction contemplated hereby which is furnished or
has been furnished by CORPORATE SELLERS, or by any director, officer, employee,
affiliate, agent, advisor or representative (including, without limitation, any
27
<PAGE> 28
financial advisor, attorney or accountant) of CORPORATE SELLERS or any
affiliate of CORPORATE SELLERS (collectively, "Corporate Sellers'
Representatives"), to HLTC INC. or CHICAGO RIVET or their respective directors,
officers, employees, affiliates, agents, advisors, representatives (including,
without limitation, financial advisors, attorneys and accountants) or potential
sources of financing for the transaction (collectively, "HLTC INC.'s
Representatives") and all analysis, compilations, data, studies or other
documents prepared by HLTC INC.'s Representatives for H & L TOOL containing or
based on, in whole or in part, any such information or reflecting the review of
the business of CORPORATE SELLERS or the transaction contemplated herein. The
term "Confidential Information" shall not include any information which: (a) is
or becomes generally available to the public other than as a result of a
disclosure by HLTC INC. or CHICAGO RIVET; (b) becomes available to HLTC INC. or
CHICAGO RIVET on a non-confidential basis from a source other than CORPORATE
SELLERS or CORPORATE SELLERS representatives, provided that such source is
entitled to disclose the information to HLTC INC. or CHICAGO RIVET; or (c) was
known to HLTC INC. or CHICAGO RIVET on a non-confidential basis prior to the
disclosure thereof to HLTC INC. or CHICAGO RIVET by CORPORATE SELLERS or H & L
TOOL's representatives.
C. COMMUNICATION WITH SALES REPRESENTATIVES. From and after the date of
this Agreement, H & L TOOL shall afford to authorized representatives of HLTC
INC. access to those H & L TOOL sales representatives who represent H & L TOOL
Products (specialty
28
<PAGE> 29
cold form parts, screw machine products and all similar parts) in order
to facilitate the transition of H & L TOOL's customers to HLTC INC. HLTC INC.
may elect to provide such sales representatives with assurances regarding
compensation to which they will be entitled for sales orders obtained prior to
and after the Closing Date. H & L TOOL consents to such sales representatives
agreeing to represent HLTC INC. after the Closing with respect to products
formerly sold by H & L TOOL and otherwise.
8. REPRESENTATIONS AND WARRANTIES OF CORPORATE SELLERS. CORPORATE
SELLERS and the SHAREHOLDERS, jointly and severally, represent and warrant:
A. ORGANIZATION, AUTHORITY, BINDING OBLIGATION AND NO VIOLATION. Each
Corporate Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Michigan and is duly qualified and has
all requisite power and authority to own, lease and operate its properties and
to conduct its business as now conducted in, and is in good standing in, each
jurisdiction where the conduct of its business or the nature of its property
requires qualification. Neither of the CORPORATE SELLERS owns or holds any
rights to acquire any capital stock or any other security, security interest or
investment in any other person or entity other than investments which
constitute cash or cash equivalents. Neither Corporate Seller has, or has ever
had, a subsidiary. Each Corporate Seller has all necessary corporate power and
authority to enter into and deliver this Agreement and to perform the
obligations to be performed by it hereunder, and the
29
<PAGE> 30
execution, delivery and performance by each Corporate Seller of this
Agreement and the sale and all actions contemplated hereby have been duly
authorized by the Board of Directors and stockholders of each Corporate Seller
and no other corporate action of either Corporate Seller is necessary therefor.
This Agreement is valid and binding upon, and enforceable against, each
Corporate Seller in accordance with its terms. Neither the execution and
delivery of this Agreement by each Corporate Seller nor the consummation of the
transactions contemplated herein will (a) violate or create any rights under
any provision of the certificate of incorporation or bylaws of either Corporate
Seller, (b) result in the creation of any lien upon any of the Purchased Assets
under any note, bond, mortgage, indenture, permit, license, contract, lease,
agreement or other instrument (collectively, "Instruments") to which either
Corporate Seller is a party or by which any of its properties or assets are
bound or (c) result in a violation of, or require any authorization, consent,
approval, exemption or other action by or declaration or notice to any
governmental entity pursuant to the charter or bylaws of either Corporate
Seller or any agreement, instrument or other document, or any legal requirement
to which either Corporate Seller or any of its assets is subject. Without
limiting the generality of the foregoing, neither Corporate Seller, the
SHAREHOLDERS, nor any of their respective affiliates has entered into any
agreement, or is bound by any obligation of any kind whatsoever, directly or
indirectly to transfer or dispose of (whether by sale of stock or assets,
assignment, merger,
30
<PAGE> 31
consolidation or otherwise) the business of either Corporate Seller or
the Purchased Assets (except the Purchased Inventories in the ordinary course
of business) to any person or entity other than HLTC INC., and neither
Corporate Seller nor the SHAREHOLDERS has entered into any agreement or any
obligation of any kind whatsoever to issue any capital stock of either
Corporate Seller to any person or entity.
B. REPRESENTATION OF TRUSTEES. The TRUSTEES have all necessary power and
authority as such (and no other person or entity has or shares such power and
authority) to enter into and deliver this Agreement and to perform their
obligations as such hereunder and no other actions are necessary therefor. The
TRUSTEES individually have the requisite capacity necessary to enter into,
deliver and perform their obligations under this Agreement. This Agreement
constitutes a valid and binding obligation of the TRUSTEES enforceable in
accordance with its terms. Neither the execution and delivery of this
Agreement by the TRUSTEES, nor the consummation of the transactions
contemplated hereunder, will (i) violate or create any right under the
declarations of trust or other fundamental documents of the Trusts, (ii)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, give
rise to any right of termination, cancellation or acceleration with respect to,
create in any party the right to accelerate, terminate, modify, cancel or
require any notice with respect to, or result in the creation of any lien upon
31
<PAGE> 32
the Warehouse under any of the terms, conditions or provisions of any
instrument to which the TRUSTEES are parties or by which the Warehouse is
bound, except for such defaults as to which requisite waivers or consents have
been obtained, or (iii) result in a violation of, or require any authorization,
consent, approval, exemption or other action by or declaration or notice to any
governmental entity pursuant to, the declarations of trust or other fundamental
documents of the Trusts or any agreement, instrument or other document, or any
legal requirement to which the Trusts or the Warehouse is subject. Without
limiting the generality of the foregoing, neither the Trusts nor the TRUSTEES
on behalf of the Trusts have entered into any agreement, or are bound by any
obligation of any kind whatsoever, directly or indirectly, to transfer or
dispose of the Warehouse to any person or entity other than HLTC INC.
C. FINANCIAL STATEMENTS OF H & L TOOL FOR FISCAL YEARS OCTOBER 31, 1995
AND 1994. The unaudited financial statements of H & L TOOL for the years ended
October 31, 1995 and 1994, consisting of the balance sheets at such dates and
related statements of income, stockholders equity and changes in financial
position and the results of its operations for the twelve (12) months ended on
such dates, correct and complete copies (attached as Schedule 8C) of which have
heretofore been delivered to HLTC INC. and CHICAGO RIVET, present fairly the
financial position of H & L TOOL and the results of the operations and changes
in financial position as of the date and for the periods indicated, in
conformity with
32
<PAGE> 33
generally accepted accounting principles ("GAAP"). Such financial
statements for the year ended October 31, 1995 are referred to as the "Interim
Statement".
D. TITLE TO AND CONDITION OF PURCHASED ASSETS.
(1) CORPORATE SELLERS have and are transferring to HLTC INC. legal,
good and marketable title to all of the Purchased Assets and the TRUSTEES
have and are transferring to HLTC INC. legal, good and marketable title
to the Warehouse.
(2) The Purchased Inventories consist of raw materials, work in
process and finished goods purchased for or by H & L TOOL or manufactured
by H & L TOOL in the ordinary course of its business and consistent with
the requirements of its business and the volumes of purchases and
production thereof and orders therefor have not been reduced or increased
in anticipation of the transactions contemplated by this Agreement. The
Purchased Inventories are merchantable and fit for the purpose for which
procured or manufactured, and are not damaged or defective.
(3) The accounts receivable reflected on the Interim Statement are,
and all accounts receivable of H & L TOOL arising after the date of the
Interim Statement and on or prior to the Closing Date will be, bona fide
receivables, accounted for in accordance with GAAP, representing amounts
due with respect to actual transactions in the ordinary course of the
operation of H & L TOOL's business. To the best knowledge of H & L TOOL,
all such receivables are and will be
33
<PAGE> 34
fully collectible by HLTC INC. (without any requirement on the part of
HLTC INC. to perform or provide any further work, services or goods in
respect thereof) net of the reserve set forth in the Interim Statement,
which reserve was calculated consistent with past practices. The
accounts payable reflected on the face of the Interim Statement (rather
than any notes thereto) arose, and all accounts payable arising after the
date of the Interim Statement and on or before the Closing Date will have
arisen, from bona fide transactions in the ordinary course of business
and have been paid or are not yet due and payable as of the Closing Date.
(5) Except as indicated on Schedule 8D, all of the Purchased
Assets (or, in the case of intangibles, the indices or evidence
thereof) are located on the premises of the Facility or the Warehouse.
E. CONTRACTS. Except for the Contracts specifically listed on
Schedule 1A(5), CORPORATE SELLERS are not parties to, and neither
CORPORATE SELLERS nor the Purchased Assets are otherwise bound by or subject
to, any written or oral contract, agreement, instrument or other understanding
or arrangement of any kind or nature whatsoever, including, without limitation,
any mortgage, indenture, note, guarantee, letter of credit, purchase or sale
agreement or order, purchase commitment, license agreement, independent sales
representative or distributorship agreement, lease or sublease agreement,
employment or consulting agreement, collective bargaining agreement, severance
agreement, employee
34
<PAGE> 35
benefit, welfare or stock plan or arrangement, joint venture or
partnership agreement, license or sublicense agreement, or non-competition or
non-solicitation agreement. CORPORATE SELLERS have delivered or made available
to HLTC INC. correct and complete copies of each Contract listed on Schedule
1A(5) as amended to date.
To the best knowledge of CORPORATE SELLERS, each Contract is in full force
and effect and is valid, binding and enforceable against the other party
thereto in accordance with its terms, except as limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally, and except that the term "enforceable" shall not be deemed to
include the availability of the remedy of specific performance or any other
equitable remedy available in the discretion of a court in respect of any
provision thereof. Except as expressly set forth on Schedule 1A(5), to the
best knowledge of CORPORATE SELLERS, (i) neither CORPORATE SELLERS nor the
other party or parties thereto is in breach (or alleged to be in breach) of any
term of any Contract or has repudiated any term of any Contract, (ii) no event,
occurrence or condition exists which, with the lapse of time or the giving of
notice, would become a default under any Contract by CORPORATE SELLERS or any
other party thereto, (iii) CORPORATE SELLERS have not released any of their
respective rights under any Contract and (iv) no advance payments have been
made under any Contract. Except for the Warehouse Lease and this Agreement,
there are no contracts or other agreements relating to the Warehouse.
35
<PAGE> 36
F. UNDISCLOSED LIABILITIES. To the best of their knowledge, the TRUSTEES
have no liabilities or obligations relating in any way to the Warehouse and
there is no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand relating in any manner to the
Warehouse. Except for liabilities and obligations (i) reflected on the Interim
Statement, and/or (ii) arising after the date of the Interim Statement in the
ordinary course of business (none of which results from, arises out of, relates
to or was caused by any breach of contract, breach of warranty, tort,
infringement or violation of law), to the best knowledge of CORPORATE SELLERS
they have no liabilities or obligations (in each case whether absolute or
contingent, liquidated or unliquidated, or due or to become due) and there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand.
G. LITIGATION. Except as set forth on Schedule 8G attached hereto,
neither CORPORATE SELLERS nor the TRUSTEES are engaged in nor is there pending
or threatened, any claim, suit arbitration, administrative or other proceeding
which relates to the business of CORPORATE SELLERS acquired by this Agreement,
the Purchased Assets, the Warehouse or the transactions contemplated by this
Agreement, other than oral claims with respect to which unfavorable results
would not have a material adverse effect on the business of CORPORATE SELLERS.
CORPORATE SELLERS are not engaged in and there is not pending or threatened any
governmental
36
<PAGE> 37
investigation which relates to the business of CORPORATE SELLERS
acquired by this Agreement, the Purchased Assets, the Warehouse or the
transactions contemplated by this Agreement. None of the actions, suits,
proceedings, hearings and investigations set forth on Schedule 8G could result
in any material adverse change in the business, financial condition,
operations, results of operations or future prospects of the business of
CORPORATE SELLERS or otherwise have a material adverse effect on any of the
Purchased Assets or the Warehouse or any of CORPORATE SELLERS rights or
benefits under any Contract. CORPORATE SELLERS and the Warehouse are not
subject to any orders, injunctions, decrees, writs or unsatisfied judgments.
H. PATENTS AND TRADEMARKS. H & L TOOL holds sole legal title to the
inventions, patents, patent applications, patent disclosures, trademarks,
trademark applications, and registrations, copyright applications and,
registrations, and licenses listed in Schedule 8H attached hereto, free and
clear of adverse claims, liens and encumbrances except any lien of taxes not
yet payable, and H & L TOOL has not received notice of any claim by a third
party adverse or contrary to H & L TOOL's legal title thereto or any claim by a
third party that any of such patents or trademarks or any of H & L TOOL's
operations infringe on the rights of such third party. To the best knowledge
of CORPORATE SELLERS, the Purchased Assets do not infringe on the rights of any
third party. The patents, trademark registrations and copyright registrations
listed on Schedule 8H are valid and in full force and effect.
37
<PAGE> 38
H & L TOOL owns or has the right to use, and is transferring to HLTC
INC. herein, all intellectual property currently used by H & L TOOL to conduct
the business sold hereby. Except as disclosed in Schedule 8H, no royalties on
any of H & L TOOL's intellectual property are due to any third party and all of
such intellectual property is freely transferrable and its validity or use will
not be affected by the transaction contemplated herein. To the knowledge of H
& L TOOL, no third party is infringing or using without authorization any of
the intellectual property rights of H & L TOOL.
I. ABSENCE OF CERTAIN CHANGES. Except as disclosed on Schedule 8I
attached hereto, to the best knowledge of H & L TOOL there has been no material
adverse change in the business, operations or condition, financial or
otherwise, of H & L TOOL since October 31, 1995. Without limiting the
generality of the foregoing, since such date, except as expressly set forth on
Schedule 8I: (i) H & L TOOL has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, or agreed to do so, other than for a
fair consideration in the ordinary course of business; (ii) H & L TOOL has not
entered into any agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses) outside the ordinary course of
business; (iii) no party (including H & L TOOL) has accelerated, terminated,
modified or cancelled any agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses) involving more than
$10,000.00 to which H & L TOOL is a
38
<PAGE> 39
party or by which its business or the Purchased Assets are bound; (iv)
H & L TOOL has not sold or otherwise disposed of (or contracted or agreed to
sell or otherwise dispose of) any material capital assets of its business
(except for sales of inventory in the ordinary course of business) nor has H &
L TOOL imposed or allowed the imposition of any lien upon any of its assets,
tangible or intangible (including, without limitation, the Purchased Assets);
(v) H & L TOOL has not made or agreed to make any capital expenditure (or
series of related capital expenditures) either involving more than $10,000.00
or outside the ordinary course of business; (vi) H & L TOOL has not delayed or
postponed the payment of accounts payable or other liabilities or obligations;
(vii) H & L TOOL has not cancelled, compromised, waived or released any right
or claim (or series of related rights and claims) or agreed to do so either
involving more than $10,000.00 or outside the ordinary course of business;
(viii) H & L TOOL has not declared, set aside or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased or otherwise acquired any of its capital stock; (ix) H & L
TOOL has not experienced any material or substantial damage, destruction or
loss (whether or not covered by insurance) to its property and has maintained
the Purchased Assets in good operating condition and repair; (x) to the best of
H & L TOOL's knowledge, there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the ordinary course of
business, involving H & L TOOL, its business or the Purchased Assets; (xi) H &
L TOOL
39
<PAGE> 40
has not made, permitted to be made or suffered any material change in
the conduct of its business; (xii) H & L TOOL has not increased the rate or
form of compensation payable to any officer, employee, or agent of H & L TOOL
or its business or agreed to do so; (xv) to the best of H & L TOOL's knowledge,
it has not committed or omitted to take any action which caused (or upon
subsequent notice will cause) a termination of or material breach or default of
any material contract, commitment or obligation to which H & L TOOL is a party
or by which its assets are bound relating to its business, including but not
limited to the Contracts; and (xvi) H & L TOOL has not disclosed any
Confidential Information to any person or entity other than HLTC INC., CHICAGO
RIVET, H & L TOOL's attorneys, accountants or lenders.
J. BUSINESS RELATIONS. No supplier or customer of H & L TOOL has
terminated or modified adversely to H & L TOOL or threatened to terminate or so
modify its relationship with H & L TOOL, either as a result of the transactions
contemplated hereby since October 31, 1995, or otherwise.
K. ERISA, ETC. No Reportable Event (as described in Section 4043(b) of
the Employee Retirement Income Security Act of 1974 ("ERISA")) has occurred
with respect to any Plan (as defined below), and no event has occurred which
would impose any liability on HLTC INC., CHICAGO RIVET or the CORPORATE SELLERS
under ERISA. Each Plan is in compliance, and has been administered materially
in accordance with, the applicable provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and ERISA. The term "Plan"
40
<PAGE> 41
means any plan described in Section (3) of ERISA established or
maintained by either of the CORPORATE SELLERS. Each Plan is fully funded as of
the Closing Date, and no contributions will be required with respect to
benefits accrued through the Closing Date. The CORPORATE SELLERS have no
withdrawal liability under any multi-employer Plan and will not incur any such
liability as a result of the transactions contemplated by this Agreement.
L. COMPLIANCE WITH APPLICABLE LAW. To the best of its knowledge,
CORPORATE SELLERS are in compliance with all federal, state, local and foreign
laws, regulations, governmental orders or judgments applicable to their
respective businesses and has all domestic and foreign licenses, permits and
other governmental authorization necessary for the conduct of their businesses
except where the failure to have or comply with such would not have a material
adverse effect on any of the properties or business of either CORPORATE SELLERS
(such laws, regulations, orders and judgments, together with any additional
requirements imposed by any such license, permit or authorization, being herein
called the "Governmental Requirements"). To the best of their knowledge, the
TRUSTEES, with respect to their ownership of the Warehouse, are in compliance
with all Governmental Requirements except where the failure to comply with such
would not have a material adverse effect on the Warehouse. Without limiting
the generality of the foregoing, and subject to the respective materiality
standards in this Section 8L, to the best of their knowledge, CORPORATE SELLERS
have conducted their businesses and maintained their property and
41
<PAGE> 42
the TRUSTEES, to the best of their knowledge, have maintained the
Warehouse in compliance with all Governmental Requirements regulating:
(1) working conditions and workers' safety,
(2) the safety of structures, business products or business
conduct or health risks resulting therefrom,
(3) discrimination against the rights of protected categories of
persons, and
(4) the wages paid to employees or the prices of goods sold.
M. LABOR RELATIONS. There are no labor disputes, including without
limitation claims for workers' compensation, wrongful termination or violation
of employment agreements, or other labor grievances made by any former or
present employee or employee representative, pending or threatened against H &
L TOOL. To the best of its knowledge, H & L TOOL has not committed any unfair
labor practice and no unfair labor practice complaint against H & L TOOL is
pending before the National Labor Relations Board or any state or local agency.
H & L TOOL is not aware of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of its
business. There are no collective bargaining agreements relating to any
employees of its business.
N. INSURANCE. CORPORATE SELLERS keep all of their businesses and
properties which are of an insurable nature insured with responsible insurers
against loss or damage to the extent that
42
<PAGE> 43
businesses and properties of similar character are usually so insured
by parties similarly situated and conducting similar business and owning like
properties. The TRUSTEES keep the Warehouse insured with responsible insurers
against loss or damage to the extent that similar real property is usually so
insured by parties similarly situated owning similar properties.
Schedule 8N contains a description of each insurance policy maintained by
CORPORATE SELLERS with respect to their properties, assets or business, and
each insurance policy maintained by the TRUSTEES with respect to the Warehouse,
and, to the best knowledge of CORPORATE SELLERS and the TRUSTEES, each such
policy (true and correct copies of which have been provided to HLTC INC.) is
valid and enforceable and in full force and effect. Neither CORPORATE SELLERS
nor the TRUSTEES are in default of any obligation pursuant to any such
insurance policy.
O. TAX MATTERS. CORPORATE SELLERS have filed all federal, state and
local reports and returns related to taxes required to be filed and have duly
paid all Taxes required to be paid in respect of periods for which such returns
were due and have established an adequate accrual or reserve for the payment of
Taxes required to be paid in respect of the period subsequent to the last of
said periods required to be so accrued or reserved up to and including the
Closing Date. To the best knowledge of CORPORATE SELLERS, all such returns are
true and correct. As of the date of the Closing all liabilities for taxes
applicable to periods prior to the date of the closing shall have been paid or
provided for on
43
<PAGE> 44
the financial statements of CORPORATE SELLERS. There are no
liens for Taxes upon any property or assets of CORPORATE SELLERS except for
liens for Taxes not yet due and payable. Neither CORPORATE SELLERS nor any
person or entity on their behalf, has executed a waiver or extension of the
limitation period applicable to the assessment of any Taxes. No action, suit
or proceeding for the assessment or collection of any Taxes is pending against
CORPORATE SELLERS, no deficiency, assessment or other formal claim for Taxes
has been ascertained or made against CORPORATE SELLERS that has not been fully
paid or finally settled, and no issues that are currently pending have been
raised by any taxing authority in connection with any of the tax returns or
reports referred to above, and there is no pending or threatened audit,
examination, claim or dispute with respect to any Taxes. Taxes that CORPORATE
SELLERS have been required to collect or withhold have been duly withheld or
collected and, to the extent required, have been paid to the proper taxing
authority. For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments including, without limitation,
income, excise, property, withholding, sales and franchise taxes, imposed by
the United States, or any state, county, local or foreign government or
subdivision or agency thereof, and including any interest, penalties or
additions attributable thereto.
Required returns and reports (including but not limited to Form 5500) for
CORPORATE SELLERS for the periods ending on or before the Closing Date will be
prepared by CORPORATE SELLERS and
44
<PAGE> 45
timely filed, including extension, and all Taxes payable for or during
such period will be paid by CORPORATE SELLERS, except that those returns
requiring signature by HLTC INC. or CHICAGO RIVET will be submitted (together
with the funds required for any related payment) by CORPORATE SELLERS to such
entity for signature, filing and payment.
Any tax sharing agreement or arrangement to which either CORPORATE SELLERS
or any entity affiliated with either of the CORPORATE SELLERS is a party will
be terminated as of the Closing Date.
P. FIRPTA DISCLAIMER. CORPORATE SELLERS are not a foreign persons or
foreign corporations and the TRUSTEES are not foreign persons under or for
purposes of the Deficit Reduction Act of 1984, 26 U.S.C. Section 1445, et seq.,
and none of the consideration to be paid by HLTC INC. hereunder need be
withheld pursuant to such statute or the regulations promulgated thereunder.
Q. ENVIRONMENTAL AND SAFETY MATTERS. The operations of CORPORATE SELLERS
comply in all material respects with all applicable federal, state or local
environmental statutes and regulations, and
(1) neither the Warehouse nor any of the operations of CORPORATE
SELLERS are subject to any judicial or administrative proceedings or
notice alleging the violation of any federal, state or local
environmental, health or safety statute or regulation,
45
<PAGE> 46
(2) neither the Warehouse nor any of the operations of CORPORATE
SELLERS are the subject of federal, state or local investigation
evaluating whether any remedial action is needed to respond to a release
of any hazardous or toxic waste, substance or constituent, or any other
substance into the environment;
(3) CORPORATE SELLERS have not, and (with respect to the Warehouse,
the TRUSTEES have not) filed any notice under federal, state or local law
indicating past or present treatment, storage or disposal of a hazardous
waste or reporting a spill or release of a hazardous or toxic waste,
substance or constituent, or any other substance into the environment;
(4) to the best of their knowledge, neither CORPORATE SELLER has any
liabilities, contingent or otherwise, in connection with any release of
any hazardous or toxic waste, substance or constituent of any other
substance into the environment; and
(5) to the best knowledge of the TRUSTEES, the TRUSTEES and the
Trusts, have no liabilities, contingent or otherwise, relating in any way
to the Warehouse, in connection with any release of any hazardous or
toxic waste, substance or constituent of any other substance into the
environment.
R. SENSITIVE RECEIPTS OR DISBURSEMENTS. To the best of its knowledge,
CORPORATE SELLERS have not had any "sensitive" receipts or disbursements, which
are defined to mean the following
46
<PAGE> 47
types of transactions entered into (within or without of the United
States of America) for the purpose of commercial bribery or unlawful political
influence or kickbacks:
(1) receipts from or payments to government officials or employees,
(2) commercial bribes or kickbacks,
(3) amounts disbursed or received with an understanding that rebates
or refunds will be made in contravention of the laws of any jurisdiction,
(4) political contributions, or
(5) payments or commitments (regardless of form) made with the
understanding or under circumstances that would indicate that all or part
thereof is to be paid ultimately to or for the benefit of government
officials or employees or as a commercial bribe, influence payment or
kickback.
S. UNTRUE STATEMENTS. To the best knowledge of CORPORATE SELLERS, no
representation or warranty by either CORPORATE SELLERS in this Agreement nor
any information, statement or certificate furnished or to be furnished to HLTC
INC. or CHICAGO RIVET pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements contained therein not misleading.
T. TRANSACTIONS WITH AFFILIATES. Except with respect to the Warehouse,
neither CORPORATE SELLER has been involved in any business arrangement or
relationship, directly or indirectly, with
47
<PAGE> 48
the SHAREHOLDERS within the past 12 months, and the SHAREHOLDERS do
not, directly or indirectly, own any assets, tangible or intangible (including
the Purchased Assets), or provide any service which is used in the business of
either of the CORPORATE SELLERS except as employees, officers and directors of
CORPORATE SELLERS.
U. NO CONDEMNATION OR CHANGE IN ZONING OR TAXATION. H & L TOOL and the
TRUSTEES have not received any notice from any federal, state, county,
municipal or governmental authority (i) concerning the possible or anticipated
condemnation or change in the zoning classification of any part of the Facility
or the Warehouse or concerning any special assessment or taxes levied or to be
levied against the Facility and the Warehouse or (ii) proposing or announcing a
material change in the tax assessment of the Facility or the Warehouse or any
part thereof from the assessment last made;
V. SEPARATE TAX PARCELS. The Facility and the Warehouse are taxed as
separate real estate tax parcels and, to the best knowledge of H & L TOOL and
the TRUSTEES, there are not presently pending any special assessments with
respect to any portion of the Facility and the Warehouse, and neither H & L
TOOL nor the TRUSTEES have received notice of or become aware of any such
special assessment being contemplated;
W. CONDITION OF PREMISES. To the best of H & L TOOL's and the Trustees'
knowledge, there are no material defects in the Facility and the Warehouse nor
are there any major repairs needed thereto, however, neither H & L TOOL nor the
TRUSTEES make any
48
<PAGE> 49
warranties as to the condition of the Facility or the Warehouse, which
are being sold in "AS IS" condition, provided, however, CORPORATE SELLERS and
TRUSTEES shall deliver the premises in substantially the same condition at
closing as on the date of execution of this Agreement, except for ordinary wear
and tear, and HLTC within two (2) days of Closing may inspect the Warehouse and
Facility and give notice of any such material change in the condition of such
premises which shall be corrected by CORPORATE SELLERS or TRUSTEES,
respectively.
X. NO UNDISCLOSED AGREEMENTS. To the best knowledge of H & L TOOL and
the TRUSTEES, there are no obligations burdening the Facility and the Warehouse
created by annexation agreements, utility agreements, so-called recapture
agreements, unexecuted paving agreements, undertakings or bonds with any
governmental agency which will bind HLTC INC., CHICAGO RIVET or the Facility
and the Warehouse.
Y. HART-SCOTT-RODINO. The total assets of H & L TOOL's parent(s) and any
other entity or entities fifty percent (50%) or more owned or controlled by H &
L TOOL's parent(s) total less than $100,000,000.00 on a combined basis computed
in accordance with 16 CFR Section 801.11, for purposes of compliance with the
notification and reporting requirements in the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, as amended. H & L TOOL's only parents are the
SHAREHOLDERS, who own one hundred percent (100%) of its outstanding common
stock; H & L TOOL has issued no other stock or other securities, and neither H
& L TOOL nor the SHAREHOLDERS are subject
49
<PAGE> 50
to any right of any third party to acquire any stock or other securities
of H & L TOOL.
9. REPRESENTATIONS AND WARRANTIES OF HLTC INC. AND CHICAGO RIVET. HLTC
INC. and CHICAGO RIVET represent and warrant:
A. ORGANIZATION, AUTHORITY, BINDING OBLIGATION AND NO VIOLATION. HLTC
INC. and CHICAGO RIVET are corporations duly organized and validly existing and
in good standing under the laws of the State of Illinois. HLTC INC. and
CHICAGO RIVET have all necessary corporate power and authority to enter into
this Agreement and the other agreements and instruments contemplated hereby to
which it will be a party and to perform the obligations to be performed by it
hereunder and thereunder, and the execution and delivery of this Agreement and
such other agreements and instruments and the purchase and other obligations
contemplated hereby have been or will prior to the Closing Date be, duly
authorized by all requisite corporate action of HLTC INC. and CHICAGO RIVET.
This Agreement is valid and binding upon, and enforceable against, HLTC INC.
and CHICAGO RIVET in accordance with its terms. Neither the execution and
delivery of this Agreement by HLTC INC. or CHICAGO RIVET nor the consummation
of the transactions contemplated herein will violate or create any rights under
any provision of the certificates of incorporation or by-laws of HLTC INC. or
CHICAGO RIVET, respectively.
B. FINANCING. CHICAGO RIVET has funds consisting of working capital and
a borrowing sufficient in the aggregate to
50
<PAGE> 51
adequately fund HLTC INC. to enable HLTC INC. to pay the Purchase
Price and any related fees and expenses.
10. CONDITIONS TO OBLIGATIONS OF HLTC INC. The obligations of HLTC INC.
and CHICAGO RIVET under this Agreement are, at their option, subject to the
fulfillment, on or before the Closing Date, of each of the following conditions
precedent:
A. CORPORATE SELLERS' PERFORMANCE. CORPORATE SELLERS and the TRUSTEES
shall have performed and complied with all terms, covenants and conditions
required by this Agreement to be performed or complied with by it or them on or
before the Closing Date, including but not limited to the deliveries provided
for in Section 6A.
B. CORPORATE SELLERS' REPRESENTATIONS. The representations and
warranties of CORPORATE SELLERS and the TRUSTEES contained in this Agreement
shall be true and correct as of the Closing Date with the same force and effect
as though such representations and warranties had been made as of the Closing
Date.
C. OPINION OF CORPORATE SELLERS' COUNSEL. HLTC INC. shall have received
from JACK NEWCOMBE, attorney for CORPORATE SELLERS, an opinion dated the
Closing Date in a form reasonably satisfactory to HLTC INC. to the effect that:
(1) each Corporate Seller is a corporation validly existing and in
good standing under the laws of the State of Michigan, and all corporate
proceedings required on the part of CORPORATE SELLERS to authorize the
execution, delivery and
51
<PAGE> 52
performance of this Agreement and the consummation of the transactions
contemplated thereby have been duly completed;
(2) this Agreement has been duly executed and delivered by
CORPORATE SELLERS, the SHAREHOLDERS and the TRUSTEES and is valid and
binding upon, and enforceable against, each Corporate Seller, the
SHAREHOLDERS and the TRUSTEES in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization and other similar laws
affecting creditors' rights generally, and except that the term
"enforceable" shall not be deemed to include the availability of the
remedy of specific performance or any other equitable remedy available in
the discretion of a court in respect of any provision of this Agreement;
(3) all documents and instruments of transfer delivered to
HLTC INC. at the Closing are in form and substance legally sufficient
to convey to HLTC INC. the interest of H & L TOOL in the Purchased Assets
and the interest of the TRUSTEES in the Warehouse being conveyed at the
Closing; and
(4) the execution and consummation of this Agreement does
not violate the terms of any Contracts to which either Corporate Seller
is a party.
In rendering such opinion, such counsel may rely upon certificates of one
or more officers or employees of CORPORATE SELLERS, or public officials as to
factual matters. Such opinion may provide that it is governed by, and shall be
interpreted in accordance with, the Legal Opinion Accord of the American Bar
52
<PAGE> 53
Association ("ABA") Section of Business Law (1991), in which event the opinion
will be subject to the qualifications, exceptions, definitions, limitations on
coverage and other limitations described in the Accord.
D. PROHIBITION OF THE TRANSACTION. There shall not be (i) pending or
threatened in writing any claim, suit, action or other proceeding by a
governmental agency before any court or governmental agency, seeking to
prohibit or restrain the transactions contemplated by this Agreement or to
obtain material damages in connection therewith, or the result of which could
adversely affect HLTC INC.'s right to acquire or hold the Purchased Assets or
conduct CORPORATE SELLERS' businesses, or (ii) any order by a court or
governmental agency having any such effect.
E. EMPLOYMENT CONTRACTS WITH KEY EMPLOYEES. HLTC INC. shall have
executed an Employment Agreement in substantially the form attached as Schedule
10E with each of the individuals listed on Schedule 10E, to assist HLTC INC. in
an orderly transition to, and the operation of the business.
F. MATERIAL ADVERSE CHANGE OR DAMAGE. There shall not have been any
material adverse change in the business, operations or condition, financial or
otherwise, of CORPORATE SELLERS since the date hereof, or any material damage
or loss to any of the Purchased Assets or the Warehouse.
G. RETENTION OF CONTRACTS WITH KEY CUSTOMERS. HLTC INC. shall have
reasonably satisfied itself, that it will retain
53
<PAGE> 54
for a period of eighteen (18) months customer contracts with each of
the customers listed on Schedule 10G.
H. LICENSES, CONSENTS AND APPROVALS. All filings, notices, licenses,
consents, authorizations, accreditations, waivers, approvals and the like of,
to or with any governmental entity or any other person or entity that are
required for the consummation of the transactions contemplated by this
Agreement or the ownership of the Purchased Assets or the conduct of H & L
TOOL's business by HLTC INC. thereafter will have been duly made or obtained.
I. CONSULTING CONTRACTS WITH H & L TOOL'S PRINCIPAL SHAREHOLDERS. HLTC
INC. shall have executed consulting agreements in substantially the form
attached as Schedule 10I with H & L TOOL President HENRY L. BRASZA.
J. AUDITED FINANCIAL STATEMENTS OF H & L TOOL FOR THE YEARS 1996,
1995 AND 1994. HLTC INC. at its expense has engaged the independent
certified public accounting firm of BDO Seidman to prepare audited financial
statements of H & L TOOL for the 11 month period ending September 30, 1996 and
fiscal years ending October 31, 1995 and 1994 to enable HLTC INC. to comply
with and satisfy the regulations of the Securities and Exchange Commission
concerning the filing of audited financial statements required as a result of
the transaction contemplated by this Agreement. HLTC INC. shall receive on or
before the Closing Date such audited financial statements for the 11 month
period ended September 30, 1996, and
54
<PAGE> 55
the fiscal years ended October 31, 1995 and 1994, of H & L TOOL
accompanied by an unqualified certification thereto by BDO Seidman.
K. ASSIGNMENT OF CONTRACTS. The rights under the Contracts will be
transferred at the Closing to the reasonable satisfaction of HLTC INC.
The provisions of subsections A, B, D, F, H and K shall be self-executing;
CORPORATE SELLERS and the TRUSTEES, by having closed the sale of the Purchased
Assets hereunder, shall be deemed conclusively to have certified at Closing
that the conditions precedent specified in each such subsection have been
satisfied as of the Closing Date.
11. CONDITIONS TO OBLIGATIONS OF CORPORATE SELLERS. The obligations of
CORPORATE SELLERS under this Agreement are, at their option, subject to the
fulfillment, on or before the Closing Date, of each of the following conditions
precedent:
A. HLTC INC.'S PERFORMANCE. HLTC INC. shall have performed and complied
with all terms, covenants and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date, including, but
not limited to the deliveries of documents and instruments provided for in
Section 6B.
B. HLTC INC.'S REPRESENTATIONS. The representations and warranties of
HLTC INC. and CHICAGO RIVET contained in this Agreement shall be true and
correct as of the Closing Date with the same force and effect as though such
representations and warranties had been made as of the Closing Date.
55
<PAGE> 56
C. OPINION OF HLTC INC.'S COUNSEL. CORPORATE SELLERS and TRUSTEES shall
have received from SONNENSCHEIN, NATH & ROSENTHAL, counsel to HLTC INC., an
opinion dated the Closing Date in a form reasonably satisfactory to CORPORATE
SELLERS and TRUSTEES to the effect that:
(1) HLTC INC. and CHICAGO RIVET are corporations validly existing
and in good standing under the laws of the State of Illinois. All
corporate proceedings required on the part of HLTC INC. and CHICAGO RIVET
to authorize the execution, delivery and performance of this Agreement
and all agreements and instruments contemplated hereby, the purchase of
the Purchased Assets by HLTC INC. hereunder and the assumption and
performance of HLTC INC.'s and CHICAGO RIVET's other obligations
hereunder have been duly completed; and
(2) this Agreement has been duly executed and delivered by HLTC INC.
and CHICAGO RIVET and is valid and binding upon, and enforceable against,
HLTC INC. and CHICAGO RIVET in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally, and except that the term
"enforceable" shall not be deemed to include the availability of the
remedy of specific performance or any other equitable remedy available in
the discretion of a court in respect of any provision of this Agreement.
Such opinion may provide that it is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord of the ABA Section
56
<PAGE> 57
of Business Law (1991), in which event the opinion will be subject to
the qualifications, exceptions, definitions, limitations on coverage and
other limitations described in the Accord. Such opinion with respect to
HLTC INC. in the first sentence of subsection (1) shall rely solely upon
the filing of HLTC INC.'s Articles of Incorporation and a certificate of
good standing issued by the Illinois Secretary of State and with respect
to subsection (2) may be given based on an assumption that the law of
Michigan does not differ from the law of Illinois.
D. PROHIBITION OF THE TRANSACTION. There shall not be (i) pending
or threatened in writing any claim, suit, action or other proceeding by
a governmental agency before any court or governmental agency, seeking to
prohibit or restrain the transaction contemplated by this Agreement or to
obtain material damages in connection therewith, or (ii) any order by a court
or governmental agency having such effect.
The provisions of Subsections A, B and D hereof shall be
self-executing, HLTC INC. by having closed the sale of Purchased Assets
hereunder, shall be deemed conclusively to have certified at Closing that the
conditions precedent specified in each such subsection have been satisfied as
of the Closing Date.
12. OBLIGATIONS AFTER CLOSING.
A. ACCESS TO BOOKS AND RECORDS, ETC.. From and after the
Closing Date, all books, records and documents relating to the business
of CORPORATE SELLERS acquired pursuant to this Agreement
57
<PAGE> 58
by HLTC INC. shall be available during regular business hours to the
officers, attorneys, accountants and other authorized representatives of
CORPORATE SELLERS as may be necessary in connection with the business and
affairs of CORPORATE SELLERS prior to the Closing Date, provided that (i) such
access shall not unreasonably interfere with the business operations of HLTC
INC., (ii) such access shall be only with prior notice to HLTC INC., and (iii)
in the reasonable opinion of HLTC INC., the providing of such information will
not cause HLTC INC. to be in violation of any law or waive the attorney-client
privilege. HLTC INC. acknowledges that providing to CORPORATE SELLERS of any
books, records or documents acquired by this transaction will not require
waivers of the attorney-client privilege. CORPORATE SELLERS shall be permitted
to make copies of any such books, records and documents which CORPORATE
SELLERS, in their reasonable opinion, require to perform their obligations
under this Agreement or to defend any action arising out of CORPORATE SELLERS'
operation of the Purchased Assets or products sold by them prior to the Closing
Date. HLTC INC. shall, for a period of at least seven (7) years from and after
the Closing Date, maintain and preserve all such books, records and documents.
At the end of seven (7) years after the Closing Date, HLTC INC. in its
discretion may dispose without prior notice of any of such records.
B. COVENANT NOT TO COMPETE. For a period of three (3) years following
the Closing Date, CORPORATE SELLERS and the SHAREHOLDERS will not directly or
indirectly engage in any business
58
<PAGE> 59
in competition in the United States, Canada or Mexico with the business
conducted by CORPORATE SELLERS with the Purchased Assets immediately prior to
the Closing. It is understood and agreed that CORPORATE SELLERS and the
SHAREHOLDERS shall not be deemed to be in default with respect to the foregoing
covenant solely as a result of any investment or investments they may make
aggregating not more than five (5%) percent of the common stock or other units
of any security of any entity that is subject to the periodic reporting
obligations of the Securities Exchange Act of 1934. The Covenant Not To
Compete and Covenant Not To Solicit attached as Schedule 12B shall be executed
and delivered at the Closing Date.
C. NO USE OF CORPORATE NAME, ETC.. After the Closing, neither
CORPORATE SELLERS nor the SHAREHOLDERS shall engage in any business using the
name H & L TOOL COMPANY, INC., H & L TOOL COMPANY, H & L TOOL, H & L, B & B
INDUSTRIES, INC., B & B INDUSTRIES, B & B INDUSTRIES or any similar name; and
as soon as practical after the Closing and in any event within five (5) days
after the Closing, each Corporate Seller shall amend its Articles of
Incorporation to change its corporate name as listed on Schedule 12C and
thereafter CORPORATE SELLERS and the SHAREHOLDERS will cooperate with HLTC INC.
in making CORPORATE SELLERS' present corporate names (or assumed names, if any,
in the case of states other than Michigan) available to HLTC INC. in Michigan
and in each state in which either Corporate Seller is licensed or qualified to
do business as a foreign corporation.
59
<PAGE> 60
D. TERMINATION OF EMPLOYEES; COBRA. As of 11:59 p.m. on the Closing
Date, H & L TOOL will terminate the employment of all of its employees except
the SHAREHOLDERS (such terminated employees are the "Terminated H & L TOOL
Employees"), and HLTC INC. will offer employment to all Terminated H & L TOOL
Employees on the terms on which they were employed by H & L TOOL immediately
before the Closing Date effective the day after the Closing Date. All current
employees of H & L TOOL are identified on Schedule 12D, together with their
social security number, position and current rates of compensation. If
requested by HLTC INC., H & L TOOL will cooperate with HLTC INC. in hiring
Terminated H & L TOOL Employees and will not in any way attempt to dissuade any
person from accepting employment with HLTC INC. or otherwise interfere with
HLTC INC.'s employing such person. H & L TOOL shall be responsible for and
discharge all liabilities to, claims of, and employment obligations with
respect to H & L TOOL employees arising out of their employment with or
termination of employment from H & L TOOL, including, but not limited to, any
applicable rights granted under ERISA Sections 601 through 609 and Internal
Revenue Code Section 4980B, commonly known as "COBRA". Any Terminated H & L
TOOL Employees hired by HLTC INC. shall be employees at will and shall not be
credited for any purpose at HLTC INC. with any service with H & L TOOL, except
that any Terminated H & L TOOL Employee hired by HLTC INC. within two (2) days
after the Closing Date shall be credited under the Chicago Rivet & Machine Co.
Profit Sharing Plan, solely for purposes of initial eligibility to participate
and
60
<PAGE> 61
vesting, with continuous service with H & L TOOL immediately prior to
the Closing Date.
E. ASSISTANCE ON ONGOING OPERATIONS. From and after the Closing
Date, H & L TOOL and the SHAREHOLDERS shall use their best efforts to
forward to HLTC INC. all mail and refer all calls and inquiries they may
receive regarding H & L TOOL or its products.
13. ACQUAINTANCE WITH CUSTOMERS, SUPPLIERS, ETC.. For a period of
thirty-six (36) months after the Closing, H & L TOOL and the SHAREHOLDERS, upon
request and at reasonable times, will use their best efforts to introduce HLTC
INC. and its officers to, and to acquaint HLTC INC. and its officers with, its
historical customers, suppliers, creditors, dealers, and distributors, if any,
and others having business relationships with H & L TOOL, and otherwise to
assist HLTC INC. in preserving the good will of H & L TOOL contained in the
Purchased Assets.
14. NOTICES. Unless otherwise specified herein, all notices, requests
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand or when sent by fax (receipt
confirmed) or two (2) days after mailing by certified mail, postage prepaid,
return receipt requested, at the respective addresses of the parties set forth
below (or to such other address as a party may hereafter designate by notice
given in accordance with this Section 14):
A. If to CORPORATE SELLERS or TRUSTEES:
Henry L. Brasza
32900 Jefferson
St. Clair Shores, Michigan 48082
61
<PAGE> 62
Henry L. Brasza, Trustee and/or
Marie E. Brasza, Trustee
32900 Jefferson
St. Clair Shores, Michigan 48082
With a copy to:
Jack Newcombe, of Counsel
DeBona, Siebert, Lang & Witkowski, P.C.
31395 W. Seven Mile Road, Suite G
Livonia, Michigan 48152
Fax Number: (810) 442-0345
B. If to CHICAGO RIVET:
Chicago Rivet & Machine Co.
901 Frontenac Road
Naperville, Illinois 60566-7061
Attention: John C. Osterman, President
Fax Number: (630) 983-9314
With a copy to:
Walter W. Morrissey
Morrissey & Robinson
1301 W. 22nd Street, Suite 401
Oak Brook, Illinois 60521
Fax Number: (630) 573-8540
With a copy to:
Dennis N. Newman
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606-6404
Fax Number: (312) 876-7934
C. If to HLTC INC.:
HLTC INC.
c/o Chicago Rivet & Machine Co.
901 Frontenac Road
Naperville, Illinois 60566-7061
Attention: John C. Osterman, President
Fax Number: (630) 983-9314
With a copy to:
Walter W. Morrissey
Morrissey & Robinson
1301 W. 22nd Street, Suite 401
Oak Brook, Illinois 60521
Fax Number: (630) 573-8540
62
<PAGE> 63
With a copy to:
Dennis N. Newman
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606-6404
Fax Number: (312) 876-7934
15. ANNOUNCEMENTS. All notices, releases, statements and communications
to third parties (excluding employees of the parties hereto and federal, state
and local authorities) and the press relating to this Agreement shall be made
only at such time and in such manner as may be mutually agreed upon by
CORPORATE SELLERS, HLTC INC. and CHICAGO RIVET, other than as required to
comply with applicable law and as otherwise set forth in this Section 15. Each
of the CORPORATE SELLERS, HLTC INC. and CHICAGO RIVET each agree that it will
not issue or cause the issuance of, and it will use its best efforts to prevent
its employees or agents from issuing or causing the issuance of, any press
release or other information in the nature of a press release relating to this
Agreement or the transaction contemplated hereby, except (a) as may reasonably
be deemed, upon the advice of such party's counsel, to be required by law, or
(b) upon prior consultation as to the exact text of such press release with the
other party hereto and its counsel in this matter. If no agreement can be
reached after such consultation, HLTC INC. or CORPORATE SELLERS may issue its
respective press releases. CORPORATE SELLERS understand that CHICAGO RIVET
will file reports on Form 8-K with the Securities and Exchange Commission with
respect to the transactions contemplated by this
63
<PAGE> 64
Agreement and CORPORATE SELLERS will cooperate with CHICAGO RIVET in
preparation of such filing.
16. COOPERATION.
A. ASSISTANCE BY HLTC INC.. In the event either Corporate Seller is
required to defend against, or desires to prosecute, any action, suit or other
proceeding of any kind arising out of a claim pertaining to the Purchased
Assets or the business or operations of either Corporate Seller prior to or on
the Closing Date, HLTC INC. shall provide such assistance and cooperation,
including, without limitation, access to its employees and records, the
participation of its employees in any such action, suit or other proceeding of
any kind, and such other evidence as may reasonably be requested by the
affected Corporate Seller in connection with such proceeding. The affected
Corporate Seller shall reimburse HLTC INC. for its reasonable out-of-pocket
expenses incurred in providing such assistance and cooperation unless (i) it
relates to Assumed Liabilities or (ii) either Corporate Seller is entitled to
indemnity pursuant to Section 17A.
B. ASSISTANCE BY CORPORATE SELLERS. In the event HLTC INC. or CHICAGO
RIVET is required to defend against, or desires to prosecute, any action, suit
or other proceeding of any kind arising out of a claim pertaining to a
liability assumed or asset acquired by HLTC INC. pursuant to this Agreement
relating to the Purchased Assets or the business or operations of CORPORATE
SELLERS, CORPORATE SELLERS shall provide such assistance and cooperation,
including, without limitation, witnesses and documentary or other
64
<PAGE> 65
evidence, as may be reasonably requested by HLTC INC. or CHICAGO RIVET
in connection with its defense. HLTC INC. shall reimburse CORPORATE SELLERS
for their reasonable out-of-pocket expenses incurred in providing such
assistance unless (i) it relates to a claim or liability other than Assumed
Liabilities or (ii) HLTC INC. or CHICAGO RIVET is entitled to indemnity
therefor pursuant to Section 17B.
17. INDEMNIFICATIONS.
A. INDEMNITY BY HLTC INC.. HLTC INC. agrees to indemnify CORPORATE
SELLERS and their directors, officers, employees, agents, shareholders,
successors and assigns against, and to hold them harmless from, any and all
liabilities, obligations, expenses, costs or damages (including, without
limitation, fines, penalties, court costs and reasonable attorneys' fees) that
may at any time be imposed upon or incurred by any of them with respect to (i)
the Assumed Liabilities and obligations to be assumed by HLTC INC. under this
Agreement, (ii) subject to Section 19 hereof, any untrue representation or
breach of warranty set forth in Section 9 hereof, (iii) any failure to duly
perform or comply with any covenant or agreement made herein (or in any
document contemplated hereby) by HLTC INC., and (iv) brokerage commissions or
finder's fees in connection with the sale and purchase contemplated hereby to
the extent such liability shall be based upon arrangements or agreements made
or claimed by third parties to have been made by or on behalf of HLTC INC. HLTC
INC. shall have the right to defend against any such liabilities with
65
<PAGE> 66
counsel of its choice (reasonably satisfactory to Corporate Sellers) at
no cost to the indemnified parties.
B. INDEMNITY BY CORPORATE SELLERS. CORPORATE SELLERS and
the SHAREHOLDERS, jointly and severally, agree to indemnify HLTC INC. and
CHICAGO RIVET and their respective directors, officers, employees, agents and
shareholders against, and to hold them harmless from, any and all liabilities,
obligations, expenses, costs or damages (including, without limitation, fines,
penalties, court costs and reasonable attorneys' fees) that may at any time be
imposed upon or incurred by any of them with respect to (i) any and all
liabilities and obligations of CORPORATE SELLERS which are not expressly
assumed by HLTC INC. under this Agreement, (ii) subject to Section 19 hereof,
any untrue representation or breach of warranty set forth in Section 8 hereof,
(iii) any failure to duly perform or comply with any covenant or agreement made
herein (or in any document contemplated hereby) by CORPORATE SELLERS, (iv)
brokerage commissions or finder's fees in connection with the sale and purchase
contemplated hereby to the extent such liability shall be based upon
arrangements or agreements made or claimed by third parties to have been made
by or on behalf of CORPORATE SELLERS. CORPORATE SELLERS shall have the right
to defend against any such liabilities with counsel of their choice (reasonably
satisfactory to HLTC INC.) at no cost to the indemnified parties.
C. NOTICE AND ASSISTANCE. The obligations of each party under
Sections 17A and B above shall be subject to the indemnified
66
<PAGE> 67
party giving prompt written notice to the indemnifying party of any
claim threatened or made, or action or proceedings commenced, against the
indemnified party, which may result in the indemnified party seeking
indemnification under Section 17A or B, as the case may be. The indemnified
party shall assist the indemnifying party in any defense undertaken by the
indemnifying party pursuant to Section 17A and B above, by providing witnesses,
documentary or other evidence and other assistance as may be reasonably
requested by the indemnifying party in connection with its defense, provided
that the reasonable out-of-pocket costs of such assistance shall be borne by
the indemnifying party. The indemnified party shall be entitled to participate
in (but not control) the defense of any such action, with its counsel and at
its own expense. Notwithstanding the foregoing, the indemnifying party will
pay the reasonable fees and expenses of legal counsel retained by the
indemnified party (but in no case more than one law firm with respect to any
one claim or group of related claims) if (i) the indemnified party reasonably
believes that there exists or could arise a conflict of interest which, under
applicable principles of legal ethics, could prohibit a single legal counsel
from representing both the indemnified party and the indemnifying party, or
(ii) the indemnifying party has failed or is failing to prosecute or defend
vigorously such claim. No claim indemnified hereunder shall be settled without
the consent of the indemnified party if the terms of such settlement include
non-monetary remedies which cannot
67
<PAGE> 68
be performed solely by the indemnifying party, which consent shall not
be unreasonably withheld.
18. TITLE AND CONVEYANCE OF REALTY.
A. CONVEYANCE OF REALTY. The Purchased Assets include the
Facility. In addition, the Warehouse which is owned by the TRUSTEES
and leased to H & L TOOL, is being acquired hereunder by HLTC INC. The
conveyance of this real property shall be by warranty deed conveying good and
marketable title delivered at the Closing Date.
B. TITLE INSURANCE. H & L TOOL and the TRUSTEES agree to
furnish at their expense an owners policy of title insurance without
standard exceptions to HLTC INC. issued by First American Title Company, which
is a title insurance company licensed to do business in the State of Michigan,
together with copies of all instruments referred to therein as exceptions,
pursuant to which title insurance company shall agree to insure good,
marketable and indefeasible fee simple title to the real estate referred to in
Section 18A in the name of HLTC INC. in the amount of the Purchase Price
allocated to such realty and shall contain an access endorsement, a survey
endorsement and a 3.1 zoning endorsement. A commitment for said title
insurance policy shall be furnished to HLTC INC. within ten (10) days prior to
the Closing Date. Such commitment shall provide for issuance of final title
insurance policy in ALTA Owner's Form, free and clear of any and all liens,
encumbrances, highways, rights-of-way, easements, licenses, restrictions,
leases, tenancies, mineral leases, reservations or
68
<PAGE> 69
severances, agreements, covenants, conditions, limitations and other
exceptions, except current taxes which are not delinquent and such other
exceptions as HLTC INC. in its discretion elects to approve after examination
of title. If objection to the title is made that the title is not in the
condition required for performance hereunder, H & L TOOL and the TRUSTEES shall
have thirty (30) days from the date they are notified in writing of the
particular defects claimed to fulfill the requirements in the commitment or to
remedy the defects set forth in HLTC INC.'s objection.
C. SURVEY. Prior to Closing, H & L TOOL and the TRUSTEES shall, at
their expense, furnish HLTC INC. with a current ALTA staked survey of the real
estate referred to in Section 18A , prepared by a surveyor or engineer licensed
in the State of Michigan with a current certificate attached thereto executed
by the surveyor in the form of the ALTA minimum standard detail requirements
certificate for land title surveys. Such survey shall reflect all
improvements, easements, highways, rights-of-way and other matters affecting or
abutting the real estate and shall be in a form sufficient to induce the title
insurance company to delete all standard and printed exceptions contained in
the title insurance commitment described above. Said survey must reflect that
the real estate has unlimited access to abutting streets and highways, show no
encroachments onto or from the property, show all improvements within setback
and lot lines and show all utilities serving the property available through
public streets or recorded
69
<PAGE> 70
easements. Said certificate shall be dated within thirty (30) days of
the Closing Date.
D. PRE-CLOSING DOCUMENTATION. H & L TOOL and the TRUSTEES shall
deliver to HLTC INC. within ten (10) days after the date of execution of this
Agreement, all in form and substance reasonably satisfactory to HLTC INC.,
true, correct and complete copies of the following documents:
(1) all building permits, certificates of occupancy, inspection
certificates and other necessary governmental licenses or approvals
required in connection with the operation of the Facility and the Warehouse;
(2) all plans and architectural drawings in the possession of H &
L TOOL and the TRUSTEES and the most recent real estate tax bills and
notices of assessed valuation pertaining to the Facility and the Warehouse; and
(3) copies of all current insurance policies and any
architectural and engineering reports and environmental audits or surveys with
respect to the Facility and the Warehouse in the possession of H & L TOOL and
the TRUSTEES.
E. PRORATIONS. Adjustments shall be made between H & L TOOL and
the TRUSTEES and HLTC INC. for the following items (all of which, to the extent
applicable, shall be reflected on a "Real Estate Closing Statement" executed by
H & L TOOL and the TRUSTEES and HLTC INC. on the Closing Date) prorated on a
per diem basis, as of midnight of the day preceding the Closing Date:
70
<PAGE> 71
(1) general real estate taxes which have become a lien upon
the Facility and the Warehouse shall be paid by H & L TOOL and the
TRUSTEES. Current taxes shall be prorated and adjusted in accordance
with the due date basis of the municipality or taxing unit in which the
Facility and Warehouse are located.
(2) charges for water and sewer service for the Facility and
the Warehouse on the basis of the most recent available bills (subject
to readjustment on receipt of bills covering the period in which the
Closing Date occurs); provided, however, that H & L TOOL and the TRUSTEES
shall use their best efforts to procure final meter readings of such
utilities as of the Closing Date and to have such bills rendered directly
to H & L TOOL and the TRUSTEES (H & L TOOL and the TRUSTEES will deliver to
HLTC INC. copies of any such bills rendered to H & L TOOL and the TRUSTEES
within five (5) days after receipt thereof by H & L TOOL and the Trustees);
(3) all incidental expenses and other ordinary costs and
expenses for maintenance and protection of the Facility and the Warehouse;
and
(4) such other items that are customarily prorated in
transactions of this nature.
For purposes of calculating prorations, HLTC INC. shall be deemed to be
in title to the Facility and the Warehouse, and, therefore, responsible for the
expenses thereof for the entire day upon which the Closing Date occurs. All
prorations shall be made
71
<PAGE> 72
on the basis of the actual number of days of the year and month
which shall have elapsed as of the Closing Date. On the Closing Date, the
amount of the prorations and adjustments pursuant to the foregoing provisions
of this Section 18E shall be determined to the extent practicable, and
appropriate adjustments shall be made therefor on the Real Estate Closing
Statement. Further adjustment shall be made between the parties in cash on the
basis of the actual amounts for the respective items within the period
following the Closing Date.
F. ADDITIONAL CONVEYANCE DOCUMENTS. At the Closing, H & L TOOL and
the TRUSTEES shall deliver at their expense such other documents and
instruments as may be reasonably required by the title company and as may be
necessary to consummate the conveyance of the Facility and the Warehouse,
including but not limited to, state, county and local transfer tax
declarations, an affidavit of title, paid brokerage receipts, an ALTA
statement, a FIRPTA affidavit and Internal Revenue Form 1099B.
19. SURVIVAL OF REPRESENTATIONS. The parties agree that the
representations and warranties of the parties contained in this Agreement (or
documents contemplated thereby) shall survive the Closing for a period of two
(2) years except in the case of Section 8O (Tax Matters) and 8R (Sensitive
Receipts or Disbursements), which shall survive for a period of six (6) years,
and in the case of Sections 8P (FIRPTA Disclaimer), 8Q (Environmental and
Safety Methods) and 8Y (Hart-Scott-Rodino), which shall survive without
limitation, provided, however, if notice of a claim is given within
72
<PAGE> 73
such period, such claim shall survive until resolved. Neither party
shall be liable for breach of or any inaccuracy in any representation made by
it to the other party in this Agreement if such other party had actual
knowledge of such breach or inaccuracy at the time such representation was
made. For the purpose of references in this Agreement to the "knowledge of
Corporate Sellers", "to CORPORATE SELLERS' knowledge" or the phrase "Corporate
Sellers have no knowledge", the "knowledge" of "Corporate Sellers" shall be
limited to the personal knowledge, after due inquiry as of the Closing Date, of
employees of CORPORATE SELLERS' corporate office in Madison Heights, Michigan
and HENRY L. BRASZA, President, MARIE E. BRASZA, Vice President, and MARIE
BRASZA-PINCH, Secretary.
20. TERMINATION. If the Closing shall not have occurred in
accordance with Section 5, this Agreement shall thereupon terminate
provided, however, that Sections 7B (3rd, 4th and 5th sentences only)
(HLTC INC.'s and CHICAGO RIVET's duty concerning Confidential Information), 15
(Announcements) and 21B (Expenses) shall survive such termination, further
provided, that nothing contained in this Section 20, shall relieve any party
hereto from any liability for any willful breach of a representation or
warranty contained in this Agreement or the willful breach of any covenant
contained in this Agreement.
21. MISCELLANEOUS.
A. BROKER. Each party represents that it has
not engaged any broker, or financial or investment banking adviser with
73
<PAGE> 74
respect to the transactions contemplated by this Agreement, provided, however,
that HLTC INC. shall pay the fee of William Blair & Co. for its services as
investment banking adviser in connection with the transactions contemplated by
this Agreement.
B. EXPENSES. Each of the parties hereto shall pay its own
expenses in connection with this Agreement. H & L TOOL shall pay all sales,
use, stamp, registration, conveyance or transfer taxes (and file any related
returns) occasioned by the transfer of the rights, interests, assets,
properties and estates described in or contemplated by this Agreement, without
regard to whether such taxes are assessable against H & L TOOL or HLTC INC.
under applicable law. HLTC INC. shall pay all filing and recording fees
required in connection with the filing and recording of any assignments or
other instruments or documents. In the event H & L TOOL claims that the
transaction (or a portion of the transaction) contemplated hereby is exempt
from such taxes, duties or fees, it shall, at the Closing, provide HLTC INC.
with adequate proof thereof.
C. BINDING NATURE; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that neither party shall assign
this Agreement (or any interest therein) without the prior written consent of
the other party hereto, and in no event will any assignment relieve the
assigning party of its obligations hereunder.
74
<PAGE> 75
D. AMENDMENTS. This Agreement, including the Schedules attached
hereto, contains the entire agreement between the parties hereto with
respect to the purchase and sale of the Purchased Assets and the other
transactions contemplated hereby; and, further, this Agreement supersedes all
prior negotiations and oral or written understandings, if any, and may not be
amended or supplemented except by an instrument in writing signed by both
parties hereto. Neither party makes any representations or warranties except
as provided herein.
E. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Michigan.
F. VALIDITY AND SEVERABILITY. If any provision of this Agreement
shall be held to be illegal, invalid or unenforceable under any
applicable law, then such provision shall not invalidate the entire Agreement.
Such provision shall be deemed to be modified to the extent necessary to render
it legal, valid and enforceable, and if no such modification shall render it
legal, valid and enforceable, then this Agreement shall be construed as if not
containing the provision held to be invalid, and the rights and obligations of
the parties shall be construed and enforced accordingly.
G. NO THIRD PARTY RIGHTS. Nothing in this Agreement is intended to
confer any right on any person other than the parties to it and their
respective successors and assigns (and, in the case of Section 17
(Indemnifications), the persons indemnified thereby);
75
<PAGE> 76
nor is anything in this Agreement intended to modify or discharge the
obligation or liability of any third person to any party to this Agreement, nor
shall any provision give any third person any right of subrogation over or
action against any party to this Agreement.
H. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, of the parties hereto. In pleading or proving any provision of
this Agreement, it shall not be necessary to produce more than one such
counterpart.
I. DESCRIPTIVE HEADINGS. Descriptive headings are for convenience of
reference only and shall not control or affect the meanings or
construction of any provision of this Agreement.
J. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
The use of the word "including" in this Agreement means "including without
limitation" and is intended by the parties to be by way of example rather than
limitation.
22. GUARANTY BY CHICAGO RIVET & MACHINE CO. The undersigned CHICAGO
RIVET & MACHINE CO., an Illinois corporation, hereby guarantees the
full, due and punctual performance by HLTC INC. of all of its obligations and
payment of all its liabilities under and with respect to the above and
foregoing Purchase and Sale Agreement and the related agreements and
instruments entered into in connection therewith (collectively, the
"Agreements").
76
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
H & L TOOL COMPANY, INC.
SECRETARY:
/s/ Marie Edna Brasza By: /s/ Henry L. Brasza
- ------------------------- -------------------------
Henry L. Brasza
Its: President
B & B INDUSTRIES, INC.
SECRETARY:
/s/ Marie Edna Brasza By: /s/ Henry L. Brasza
- ------------------------- -------------------------
Henry L. Brasza
Its: President
HENRY LOUIS BRASZA TRUST DATED
APRIL 22, 1982
By: /s/ Henry L. Brasza
-------------------------
Henry L. Brasza, Trustee
/s/ Henry L. Brasza
----------------------------
Henry L. Brasza, Shareholder
MARIE EDNA BRASZA TRUST DATED
APRIL 22, 1982
By: /s/ Marie Edna Brasza
-------------------------
Marie Edna Brasza, Trustee
/s/ Marie Edna Brasza
-------------------------------
Marie Edna Brasza, Shareholder
77
<PAGE> 78
HLTC INC., an Illinois corporation (a
wholly owned subsidiary of CHICAGO RIVET &
ASSISTANT MACHINE CO.)
SECRETARY:
/s/ Walter W. Morrissey By: /s/ John C. Osterman
- ------------------------ ----------------------------
Its: President
CHICAGO RIVET & MACHINE CO.,
Assistant an Illinois corporation
SECRETARY:
/s/ Walter W. Morrissey By: /s/ John C. Osterman
- ------------------------ ----------------------------
Its: President
78
<PAGE> 79
SCHEDULES TO PURCHASE AND SALE AGREEMENT
Schedule 1A(1) Fixed Assets
Schedule 1A(5) Contracts
Schedule 1A(14) Land, Buildings, Improvements, Easements and Rights of
Way
Schedule 1B(3) Chemicals
Schedule 1B(5) Life Insurance Policies
Schedule 3F Purchase Price Allocation
Schedule 8C Financial Statements
Schedule 8D Location of Purchased Assets
Schedule 8G Litigation
Schedule 8H Intellectual Property
Schedule 8I Material Adverse Changes
Schedule 8N Insurance
Schedule 10E Employment Agreements
Schedule 10G Customers
Schedule 10I Consulting Agreements
Schedule 12B Covenant Not to Compete/Covenant Not to Solicit
Schedule 12C Corporate Names
Schedule 12D Current Employees
<PAGE> 1
EXHIBIT 99.1
Naperville, IL 12/3/96:
Chicago Rivet & Machine Co. (AMEX, symbol CVR) announced today that it has
closed the previously announced purchase of substantially all of the operating
assets of H & L Tool Company, Inc. of Madison Heights, Michigan. As previously
announced, the purchase price, subject to certain post-closing adjustments,
was approximately $19 million. The transaction was financed by a combination
of outside borrowing of $9 million, approximately $4.9 million of available
cash, a $4.8 million credit against the purchase price in consideration of H &
L Tool's retention of all cash and cash equivalents and the assumption of
certain liabilities of approximately $300,000. The assets purchased include
all of H & L Tool's production equipment and facilities located in Madison
Heights Michigan. Chicago Rivet intends to continue operations at that
location under the H & L Tool name.
Chicago Rivet & Machine Co. is a manufacturer of rivets, cold-formed
fasteners and automated assembly equipment primarily for the automotive and
appliance industries. H & L Tool Company Inc., established in 1946,
manufactures specialty cold-formed fasteners and screw machine products
primarily serving the automotive industry.
For further information, contact:
John C. Osterman
President, Chicago Rivet & Machine Co.
630-357-8500
