<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 18, 1997
---------------------
Chemi-Trol Chemical Co.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-18797 34-4439286
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
if incorporation) File Number) Identification No.)
2776 C.R. 69 Gibsonburg, Ohio 43431
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (419) 665-2367
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
This document contains 31 pages.
The Exhibit Index is located on page number 8.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 18, 1997 Chemi-Trol Chemical Co. "Chemi-Trol" completed the sale
of certain assets of its Cal-Van Tools Division "Cal-Van" to Eagle Tools, Inc.
"Eagle" an Ohio Corporation having its principal office in Guilford County,
North Carolina. Eagle is a newly-formed corporation having common ownership
with Horizon Tool, Inc. "Horizon" a privately owned company located in
Greensboro, North Carolina. Eagle purchased inventory, machinery, equipment,
fixtures, dies and the Cal-Van Tools name for a cash payment of $1.5 million
and a note of approximately $2.4 million. Chemi-Trol retained accounts
receivable of approximately $4.8 million and inventory having an estimated net
market value of $400,000. The majority of retained receivables and inventory
are expected to be liquidated within six months in accordance with
Chemi-Trol's plans to exit this business. Eagle signed a related one year
lease for the Cal-Van land and building not sold as a part of the business.
All of the obligations of Eagle under the acquisition agreement, the lease and
the note have been guaranteed by Horizon and certain obligations have been
guaranteed by Eagle's and Horizon's principle shareholders.
Chemi-Trol plans to use the sale proceeds and the subsequent cash collected
from accounts receivable and inventory net of payments on accounts payable and
accrued liabilities related to the discontinued business to reduce current
outstanding long-term debt and fund future working capital needs.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Not applicable
(b) Proforma Financial Information
The following unaudited pro forma condensed financial statements are filed with
this report:
Page
----
Unaudited Pro forma Condensed Balance Sheet as of
September 30, 1997 4
Unaudited Pro forma Condensed Statements of Income:
Fiscal Year Ended December 31, 1996 5
Nine Months Ended September 30, 1997 5
Notes to Unaudited Pro forma Financial Information 6-7
The Pro forma Condensed Balance Sheet and Notes as of September 30, 1997 reflect
the financial position of Chemi-Trol Chemical Co. after giving effect to the
disposition of the Cal-Van Tools Division discussed in Item 2 and assumes the
disposition of certain inventories and equipment and liquidation of remaining
inventories, accounts receivable, accounts payable and accrued liabilities took
place on September 30, 1997. The Pro
<PAGE> 3
forma Condensed Statements of Income and Notes for the year ended December 31,
1996 and for the nine months ended September 30, 1997 assumes that the
disposition and liquidation occurred on January 1, 1996, and are based on the
operations of Chemi-Trol Chemical Co. for the year ended December 31, 1996 and
for the nine months ended September 30, 1997.
The unaudited pro forma condensed financial statements have been prepared by
Chemi-Trol Chemical Co. based upon assumptions deemed reasonable. The unaudited
pro forma condensed financial statements presented herein are shown for
illustrative purposes only and are not necessarily indicative of the future
financial position or future operating results of Chemi-Trol Chemical Co., or of
the financial position or operating results of Chemi-Trol Chemical Co. that
would have actually occurred had the transaction been in effect as of the date
or for the periods presented.
The unaudited pro forma financial information should be read in conjunction with
Chemi-Trol Chemical Co.'s historical financial statements and notes thereto
contained in the 1996 Annual Report on Form 10-K as of December 31, 1996 and the
Quarterly Report on Form 10-Q as of September 30, 1997.
(c) Exhibits
Exhibit 2.1 -Agreement of Purchase and Sale of Assets dated
November 18, 1997.
Exhibit 99 - Chemi-Trol Chemical Co. press release dated
November 18, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHEMI-TROL CHEMICAL CO.
-----------------------
(Registrant)
Date: November 24, 1997 By: /s/ Robert W. Woolf
---------------------- ---------------------
(Registrant)
Name: Robert W. Woolf
---------------------
Title: President
---------------------
Date: November 24, 1997 By: /s/ Kevin D. Lauck
---------------------- --------------------
(Registrant)
Name: Kevin D. Lauck
---------------------
Title: Secretary/Treasurer and Controller
-----------------------------------
<PAGE> 4
<TABLE>
<CAPTION>
CHEMI-TROL CHEMICAL CO.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET (A)
September 30, 1997
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
--------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C> <C>
Cash $ 186,178 $ 1,500,000 (B) $ 186,178
(1,500,000)(C)
Notes and accounts receivable 21,290,063 (5,325,000)(C) 15,965,063
Inventories 8,281,142 (4,092,211)(B) 3,788,931
(400,000)(C)
Other assets 1,264,976 1,264,976
--------------------------------------------------------
Total current assets 31,022,359 (9,817,211) 21,205,148
Investments and other assets 3,263,007 3,263,007
Notes receivable 2,707,000 (B) 2,707,000
Property, plant and equipment, net 9,537,897 (779,000)(B) 8,758,897
--------------------------------------------------------
$43,823,263 $(7,889,211) $35,934,052
========================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 2,364,063 $(2,364,063)(C) $ -
Accounts payable 6,536,964 (794,000)(C) 5,742,964
Income taxes 85,173 85,173
Accrued liabilities 2,153,055 852,000 (B) 1,865,055
(1,140,000)(C)
Long-term debt due within one year 2,990,978 (1,161,000)(C) 1,829,978
--------------------------------------------------------
14,130,233 (4,607,063) 9,523,170
Long-term debt 4,547,968 (1,766,148)(C) 2,781,820
Other long-term liabilities 695,331 695,331
Deferred federal income tax 876,000 (606,000)(B) 270,000
Shareholders' equity:
Common stock, without par value
6,000,000 shares authorized
2,009,930 shares issued and outstanding 4,590,767 4,590,767
Retained earnings 18,982,964 (910,000)(B) 18,072,964
--------------------------------------------------------
Total shareholders' equity 23,573,731 (910,000) 22,663,731
--------------------------------------------------------
$43,823,263 $(7,889,211) $35,934,052
========================================================
</TABLE>
See accompanying notes to unaudited pro forma financial information.
4
<PAGE> 5
<TABLE>
<CAPTION>
CHEMI-TROL CHEMICAL CO.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF INCOME (A)
For the Fiscal Year Ended December 31, 1996
PRO FORMA
HISTORICAL(D) ADJUSTMENTS PRO FORMA
----------------------------------------------------------
Revenues:
<S> <C> <C> <C>
Net sales $63,894,000 $(17,338,000)(E) $46,556,000
Interest and financing income 883,000 883,000
----------------------------------------------------------
64,777,000 (17,338,000) 47,439,0000
Costs and expenses:
Cost of sales 54,912,000 (13,986,000)(E) 40,926,000
Selling 3,202,000 (2,051,000)(E) 1,151,000
General and administrative expenses 3,015,000 (840,000)(E) 2,175,000
Interest 1,455,000 (456,000)(E) 999,000
----------------------------------------------------------
62,584,000 (17,333,000) 45,251,000
----------------------------------------------------------
Income (loss) from continuing operations
before income taxes 2,193,000 (5,000) 2,188,000
Provision (benefit) for income taxes 875,000 (1,000)(F) 874,000
----------------------------------------------------------
Income (loss) from continuing operations $ 1,318,000 $ (4,000) $ 1,314,000
==========================================================
Income per share of common stock - continuing
operations $0.66 $0.66
==========================================================
Weighted average common shares outstanding 2,004,930 2,004,930
==========================================================
<CAPTION>
For the Nine-Month Period Ended September 30, 1997
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------------- ----------------------- ----------------
Revenues:
<S> <C> <C> <C>
Net sales $48,630,000 $(11,128,000)(E) $37,502,000
Interest and financing income 638,000 638,000
----------------------------------------------------------
49,268,000 (11,128,000) 38,140,000
Costs and expenses:
Cost of sales 41,881,000 (9,104,000)(E) 32,777,000
Selling 2,225,000 (1,430,000)(E) 795,000
General and administrative expenses 2,172,000 (522,000)(E) 1,650,000
Interest 614,000 (192,000)(E) 422,000
----------------------------------------------------------
46,892,000 (11,248,000) 35,644,000
----------------------------------------------------------
Income (loss) from continuing operations
before income taxes 2,376,000 120,000 2,496,000
Provision (benefit) for income taxes 930,000 46,000 (F) 976,000
----------------------------------------------------------
Income (loss) from continuing operations $ 1,446,000 $ 74,000 $1,520,000
==========================================================
Income per share of common stock- continuing
operations $0.72 $0.76
==========================================================
Weighted average common shares outstanding 2,004,930 2,004,930
==========================================================
</TABLE>
See accompanying unaudited notes to pro forma financial information.
<PAGE> 6
CHEMI-TROL CHEMICAL CO.
NOTES TO PRO FORMA FINANCIAL INFORMATION
(A) The Pro forma Condensed Statements of Income for the year ended December
31, 1996 and for the nine-month period ended September 30, 1997 present
the operating results of Chemi-Trol Chemical Co. "Chemi-Trol", assuming
that the sale of certain assets and liquidation of certain assets and
liabilities of the Cal-Van Tools Division "Cal-Van" had taken place as of
January 1, 1996. The statements include all material adjustments
necessary to present the historical results to reflect the assumptions.
The Pro forma Condensed Balance Sheet as of September 30, 1997 presents
Chemi-Trol's financial position assuming the sale and subsequent
liquidations had taken place at September 30, 1997.
The pro forma information is not necessarily indicative of operating
results or the financial position which may have actually been obtained
if the sale transaction had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be
indicative of operating results or financial position which may be
obtained in the future. Chemi-Trol has prepared these proforma financial
statements based upon assumptions deemed reasonable by management. The
pro forma financial information should be read in conjunction with
Chemi-Trol's historical financial statements and notes thereto contained
in the 1996 Annual Report on Form 10-K as of December 31, 1996 and the
Quarterly Report on Form 10-Q as of September 30, 1997.
(B) Included in this adjustment was cash received of $1,500,000, inventory
and fixed assets sold of $4,871,000, notes received of $2,707,000,
liabilities incurred as a result of sale of $852,000, estimated income
tax benefit of $606,000 and the estimated after tax loss on sale of
$910,000. The change in net assets sold between the actual sale date and
September 30, 1997, was reflected through an increase in the pro forma
notes receivable adjustment of approximately $307,000 over the actual
note received at November 18, 1997.
(C) In conjunction with Chemi-Trol's disposition of Cal-Van, the liquidation
of the remaining assets and liabilities were recorded as having taken
place on September 30, 1997. Included in this adjustment was collection
of accounts receivable of $5,325,000, sale of remaining inventory of
$400,000, payment of accounts payable of $794,000, and payment of accrued
liabilities of $1,140,000. The net cash effect of these receipts and
payments plus the $1,500,000 of proceeds from Note (B) above were used to
eliminate short-term borrowings of $2,364,000 and reduce long-term debt
by $2,927,000.
(D) The presentation of the historical Statement of Income has been revised
from the 1996 Annual Report on Form 10-K as of December 31, 1996 to
reflect the
6
<PAGE> 7
discontinued operations of the Cory Orchard and Turf Division which was
sold on March 25, 1997.
(E) Revenue, cost of sales, selling expenses, and general and administrative
expenses for Cal-Van were eliminated based on actual results of
operations. The adjustment in interest expense was calculated based on
the ratio net assets of Cal-Van operations to the total net assets of
Chemi-Trol plus existing outstanding debt.
(F) The income tax effects of the pro forma adjustments referred to in Notes
(B) and (E) were recorded at 40 percent, the combined Federal and State
statutory income tax rate.
7
<PAGE> 8
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page
------
<S> <C> <C>
2.1 Agreement of Purchase and Sale of Assets dated November 18, 1997 9
99.1 Chemi-Trol Chemical Co. press release dated November 18, 1997 31
</TABLE>
8
<PAGE> 1
Exhibit 2.1
AGREEMENT OF PURCHASE AND SALE OF ASSETS
THIS AGREEMENT, made this 18th day of November, 1997, by and among
Chemi-Trol Chemical Co., an Ohio corporation having its principal office in
Fremont, Ohio ("Seller"), and Eagle Tools, Inc., an Ohio corporation having its
principal office in Guilford County, North Carolina ("Purchaser").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
1. DEFINITIONS.
(a) In addition to the terms defined elsewhere in this Agreement, as
used in this Agreement, the following terms shall have the following meanings:
"Bill of Sale" means the Bill of Sale substantially in the form of
Exhibit 1 hereto.
"Closing" means the consummation of the purchase and sale of the
Purchased Assets and the related transactions, all as described in this
Agreement.
"Encumbrance" means any pledge, lien, encumbrance, security interest,
restriction, lease, license, or adverse claim.
"Inventory" shall have the meaning set forth in Section 2(a)
of this Agreement.
"B Inventory" means overstocked, obsolete, or discontinued product
manufactured, distributed, or sold by the Seller and in its possession at
Closing.
9
<PAGE> 2
"Overstocked" inventory means any item for which there is more than a
one year supply based on sales for the period beginning November 1, 1996,
through October 31, 1997.
"Lease Agreement" means the Lease Agreement substantially in the form
of Exhibit 2 hereto.
"Lifts" means products which are not manufactured, distributed or sold
by the Seller in the regular course of its business but are in its possession as
a result of receiving the same from customers or potential customers.
"Promissory Note" means the Purchaser's Promissory Note substantially
in the form of Exhibit 3 hereto.
2. PURCHASE AND SALE OF ASSETS.
(a) Subject to and upon the terms and conditions set forth in this
Agreement, Seller will sell, transfer, convey, assign and deliver to
Purchaser, and Purchaser will purchase, at the Closing, all of the
equipment, machinery, tooling, fixtures, dies and patterns, vehicles,
office equipment, furniture, shelving, the name "Cal-Van Tools",
goodwill, a list of past, present, and prospective customers and
suppliers, patents, trade names, trade marks, and service marks, to the
extent the same exist as of the Closing except for those items listed
on the attached Schedule 1, hereinafter referred to collectively as
"Equipment", and finished inventory, work in progress, and raw
material, all of which is good and saleable, excluding B Inventory and
Lifts, hereinafter referred to collectively as "Inventory", all of
10
<PAGE> 3
which is located at the office and plant of the Seller at 1500 Walter
Avenue, Fremont, Ohio and referred to herein as the "Purchased Assets".
(b) The Purchased Assets shall be conveyed free and clear of all
encumbrances.
(c) The assets purchased pursuant to this Agreement do not include
Lifts which shall be consigned to the Purchaser to be sold subject to
the prior approval of the Seller. The Purchaser shall make a good faith
effort to sell the Lifts at the best price possible. The Seller shall
pay the Purchaser as compensation for the sale of Lifts twenty (20%)
percent of the sums derived from such sales by the Purchaser.
(d) The assets purchased pursuant to this Agreement do not include
B Inventory, which shall be consigned to the Purchaser to be sold
subject to the prior approval of the Seller except when sold in the
ordinary course of business at a sales price at or above the Seller's
carrying value for such B Inventory. The Purchaser shall make a good
faith effort to sell the B Inventory at the best price possible. The
Seller shall pay the Purchaser as compensation for the sale of B
Inventory twenty (20%) percent of the sums derived from such sales by
the Purchaser.
3. PURCHASE PRICE. In consideration of the sale, transfer, conveyance,
assignment and delivery of the Purchased Assets by Seller to Purchaser, and in
reliance upon the representations and
11
<PAGE> 4
warranties made herein by Seller, Purchaser will pay to Seller a total purchase
price for the Purchased Assets as follows:
(a) At the Closing, Purchaser shall pay to Seller the sum of
$500,000.00 for the Equipment by wire transfer or immediately available
funds.
(b) Purchaser shall pay the Seller the sum of $4,400,000.00,
subject to an audit prior to Closing based on book value of the
Inventory, for the Inventory as follows:
(i) Purchaser shall pay to Seller the sum of $1,000,000.00 by
wire transfer or immediately available funds at the Closing. In
the event the net sales of Cal Van Tools during the twelve month
period following the closing exceed $9,000,000.00, then the
Purchaser shall pay to the Seller as principal on the Promissory
Note the sum of $1,000,000.00 on the first day of the fifteenth
month following the date of Closing and the principal balance due
on the Promissory Note shall thereby be reduced by $1,000,000.00.
The Purchaser shall make a good faith effort to sell such products
and shall furnish the Seller a monthly report on such sales for
the twenty-four (24) months following the Closing.
(ii) Purchaser shall execute and deliver to Seller the
Promissory Note in the principal amount of $3,400,000.00 subject
to any adjustments as provided in Sections 3(b)(ii)(5) and
3(b)(ii)(6) containing the following terms and conditions:
12
<PAGE> 5
(1) The interest rate shall be the rate of seven and
five-eights (7.625%) per cent per annum. In the event the net
sales of Cal Van Tools during the twelve month period
following the closing exceed $9,000,000.00, then the interest
rate shall be increased to eight and one half (8.5%) percent
per annum effective the first day of the fifteenth month
following the date of Closing.
(2) Interest payments only shall be payable for the first
twelve (12) payments on the Promissory Note with the first
payment commencing on the first day of the first month
following the Closing and continuing on the first day of each
month for a total of twelve (12) such payments.
(3) Principal and interest payments shall commence on the
first day of the thirteenth (13th) month following the Closing
Date. The amount of the monthly principal and interest payment
shall be determined by amortizing the balance of the
Promissory Note over a four (4) year period at the interest
rate of seven and five-eights (7.625%) percent per annum. In
the event the interest rate is increased to eight and one half
(8.5%) percent per annum under paragraph 3(b)(ii)(3), the
principal and interest payments shall be adjusted
13
<PAGE> 6
accordingly effective the first day of the fifteenth month
following the closing.
(4) The balance of the principal and interest due on the
Promissory Note shall be payable in a balloon payment due and
payable on the first (1st) day of the forty-ninth (49th)
month following the Closing.
(5) On the second anniversary date of the Closing, the
principal balance due under the Promissory Note shall be
reduced by the book value of the Inventory sold by Seller at
closing but not sold by the Purchaser. Purchaser will make its
best efforts to sell the Inventory and will provide the Seller
with a monthly report on the status of the Inventory. The
Purchaser shall give the Seller and the Seller's attorney,
accountants, and representatives access to all books and
records pertaining to sale of the Inventory, Lifts, and B
Inventory through December 31, 2000. Such unsold Inventory,
Lifts, and B Inventory shall be reconveyed by the Purchaser to
the Seller. The amount of the monthly principal and interest
payments shall remain the same.
(6) On the first anniversary of the Closing, an interim
review of the Inventory shall be made by
14
<PAGE> 7
the parties for the purpose of determining if an agreement as
to the Inventory can be reached.
4. ADJUSTMENTS TO PURCHASE PRICE. The purchase price shall be adjusted
based on an inventory conducted by the parties on or immediately prior to the
closing date. Any adjustment in the purchase price shall be reflected in the
amount of the promissory note.
5. CLOSING. The Closing shall take place at 10:00 A.M., on the 18th day
of November, 1997 at the offices of the Seller at 1500 Walter Avenue, Fremont,
Ohio or at such other time and place as the parties may agree (the "Closing
Date").
6. SELLER'S OBLIGATIONS AT CLOSING.
(a) At the Closing, the Seller will deliver to Purchaser:
(i) the Bill of Sale duly executed by Seller;
(ii) such other good and sufficient instruments of
conveyance, assignment and transfer, in form and substance
reasonably satisfactory to Purchaser, as shall be effective
to vest in Purchaser good and marketable title to the
Purchased Assets;
(iii) all Contracts, files and other data and documents
pertaining to the Purchased Assets; and
(iv) a copy of the resolutions duly adopted by the Board of
Directors of Seller, certified by the Secretary of Seller,
authorizing the sale of the Purchased Assets, and the other
transactions contemplated by this Agreement.
(b) At any time and from time to time after the Closing, at
Purchaser's request and without further consideration, Seller
will execute and deliver such other instruments of
15
<PAGE> 8
sale, transfer, conveyance, assignment and confirmation and take such other
action as Purchaser may reasonably deem necessary or desirable in order to more
effectively transfer, convey and assign to Purchaser, and to confirm Purchaser's
title to, all of the Purchased Assets, to put Purchaser in actual possession and
operating control thereof and to assist Purchaser in exercising all rights with
respect thereto.
7. PURCHASER'S OBLIGATIONS AT CLOSING.
(a) At the Closing, Purchaser shall:
(i) Pay to Seller the sum of $500,000.00 as provided by Section
2(a);
(ii) Pay to Seller the sum of $1,000,000.00 as provided by Section
2(b)(i);
(iii) Deliver to Seller the Promissory Note, duly executed by
Purchaser, as provided by Section 2(b)(ii), and the guaranty of
said Promissory Note executed by Horizon Tool, Inc. as provided by
Section 17;
(iv) Deliver to Seller a copy of Resolutions, duly adopted by the
Board of Directors of Purchaser, certified by the Secretary of
Purchaser, authorizing the purchase of the Purchased Assets,
pursuant to this Agreement, the Purchaser's Promissory Note, and
the other transactions contemplated by this Agreement.
8. LEASE TERMS: Purchaser and Seller shall enter into a Lease Agreement
providing for the Purchaser to lease the premises located at 1500 Walter Avenue,
Fremont, Ohio for a period of one year with an option to renew the lease for one
additional year. The Lease shall provide for monthly lease payments during the
first six months of the Lease of $12,000.00 and monthly lease payments
16
<PAGE> 9
for the second six months of the Lease of $13,250.00. Monthly lease payments for
the option year of the Lease shall be $13,500.00 per month. The Lease shall
further provide for the Purchaser to pay all ordinary maintenance expenses,
utilities, taxes, and insurance allocable to the term of the Lease and further
that the Purchaser may terminate the Lease after the first six months upon sixty
days written notice to the Seller.
9. PURCHASE ORDER. Upon the execution of this Agreement the Seller
shall give to the Purchaser a purchase order for $300,000.00 from the Seller for
metal stamping. The Purchaser shall not increase prices on such metal stamping
from the date of the Closing through December 31, 1998.
10. REPRESENTATIONS AND WARRANTIES BY SELLER. The Seller represents and
warrants to Purchaser as follows:
(a) ORGANIZATION, STANDING AND QUALIFICATION. Seller is a
corporation duly organized, validly existing and in good standing under
the laws of Ohio; it has all requisite corporate power and authority
and is entitled to carry on the business as now being conducted and to
own, lease or operate its properties as and in the places where its
business are now conducted and its properties are now owned, leased or
operated.
(b) EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. Neither the
execution, delivery nor performance of this Agreement by Seller will,
with or without the giving of notice or the passage of time, or both,
conflict with, result in a
17
<PAGE> 10
default, right to accelerate or loss of rights under, or result in,
cause or create any liability or encumbrance pursuant to, any provision
of Seller's Articles of Incorporation or regulations or any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule, regulation, order, judgment, decree or other legal or
contractual requirement to which Seller is a party or the Purchased
Assets may be bound or affected. Seller has the full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby. All proceedings required to be taken
by it to authorize the execution, delivery and performance of this
Agreement, the Bill of Sale and the Lease Agreement have been properly
taken and this Agreement constitutes a valid and binding obligation of
Seller, enforceable against it in accordance with its terms.
(c) LITIGATION. There is no claim, legal action, suit, arbitration,
governmental investigation (to Seller's knowledge), or other legal or
administrative proceeding, nor any order, decree or judgment in
progress, pending or in effect, or to the knowledge of Seller, against
or relating to Seller, its officers, directors or employees, its
properties, assets or the Business or the transactions contemplated by
this Agreement.
18
<PAGE> 11
(d) TITLE TO PROPERTIES. Seller has good, marketable title to all
the Purchased Assets. None of the Purchased Assets are subject to any
Encumbrance.
(e) DISCLOSURE. No representation or warranty by Seller contained
in this Agreement contains any untrue statement of a material fact, or
omits to state any material fact required to make such representations
and warranties not misleading.
11. REPRESENTATIONS AND WARRANTIES BY PURCHASER. Purchaser represents
and warrants to Seller as follows:
(a) ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of Ohio and has
full corporate power and authority to enter into this Agreement and the
related agreements referred to herein and to carry out the transactions
contemplated by this Agreement and to carry on its business as now
being conducted and to own, lease or operate its properties.
(b) EXECUTION, DELIVERY AND PERFORMANCE OF AGREEMENT. Neither the
execution, delivery nor performance of this Agreement by Purchaser
will, with or without the giving of notice or the passage of time, or
both, conflict with, result in a default, right to accelerate or loss
of rights under, or result in the creation of any Encumbrance pursuant
to, any provision of Purchaser's Articles of Incorporation or
regulations or any franchise, deed of trust, lease, license, agreement,
understanding, law, ordinance, rule or regulation
19
<PAGE> 12
or any order, judgment or decree to which Purchaser is a party or by
which it may be bound or affected. Purchaser has full power and
authority to enter into this Agreement and to carry out the
transactions contemplated hereby. All proceedings required to be taken
by Purchaser to authorize the execution, delivery and performance of
this Agreement, the Promissory Note and the Lease Agreement have been
properly taken and this Agreement constitutes, and when executed and
delivered such other agreements and instruments will constitute, the
valid and binding obligations of Purchaser, enforceable against
Purchaser in accordance with their respective terms.
(c) Litigation. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding,
nor any order, decree, or judgment in progress either pending or in
effect, or to the knowledge of Purchaser threatened, against or
relating to Purchaser in connection with or relating to the
transactions contemplated by this Agreement, and the Purchaser does not
know or have any reason to be aware of any basis for the same.
12. CONDUCT OF BUSINESS PRIOR TO CLOSING.
(a) Prior to the Closing, Seller shall conduct the Business only in the
ordinary course and consistent with its prior practice and shall maintain, keep
and preserve the Purchased Assets in good condition and repair and maintain
insurance thereon in accordance with present practices.
20
<PAGE> 13
Seller will use its reasonable efforts to preserve for the benefit of Purchaser
the goodwill of Seller's suppliers, customers, others having business relations
with it.
(b) The Seller shall give Purchaser prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Section 10 or elsewhere in this Agreement.
13. ACCESS TO INFORMATION AND DOCUMENTS. Upon reasonable notice and
during regular business hours, Seller will give Purchaser full access to all
documents, contracts, books and records of Seller pertaining to the Purchased
Assets and will furnish Purchaser with copies of such documents and with such
information with respect to the Purchased Assets as Purchaser may from time to
time reasonably request, and Purchaser will not improperly disclose the same
prior to the Closing.
After Closing through December 31, 2000, at reasonable times and on
reasonable notice, Purchaser shall give Seller and Seller's attorneys,
accountants, and other representatives full access to all books and records
pertaining to the purchased assets and the business to the extent such books and
records are necessary for the Seller to prepare its financial reports and tax
returns or to recover assets or pay liabilities.
14. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS. All obligations of
Purchaser hereunder are subject, at the option of Purchaser, to the fulfillment
of each of the following conditions
21
<PAGE> 14
at or prior to the Closing, and Seller shall exert its best efforts to cause
each such condition to be so fulfilled:
(a) All representations and warranties of Seller contained herein
or in any document delivered pursuant hereto shall be true and correct
in all material respects when made and shall be deemed to have been
made again at and as of the Closing Date.
(b) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Seller at or before the Closing
shall have been duly and properly performed in all material respects.
(c) There shall be delivered to Purchaser a certificate executed by
President and Secretary of Seller dated the Closing Date, certifying
that the conditions set forth in paragraphs (a) and (b) of this Section
14 have been fulfilled.
(d) All documents required to be delivered to Purchaser at or prior
to the Closing shall have been so delivered.
15. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. All obligations of
Seller at the Closing are subject, at the option of Seller, to the fulfillment
of each of the following conditions at or prior to the Closing, and Purchaser
shall exert its best efforts to cause each such condition to be so fulfilled:
(a) All representations and warranties of Purchaser contained
herein or in any document delivered pursuant hereto shall be true and
correct in all material respects when made
22
<PAGE> 15
and shall be deemed to have been made again at or as of the Closing Date.
(b) All covenants, agreements and obligations required by the terms
of this Agreement to be performed by Purchaser at or before the Closing
shall have been duly and properly performed in all material respects.
(c) There shall be delivered to Seller a certificate executed by
the President and Secretary of Purchaser, dated the date of the Closing
Date, certifying that the conditions set forth in paragraphs (a) and
(b) of this Section 15 have been fulfilled.
(d) The Lease Agreement and the guaranty agreements referred to in
Section 17.
16. NOTICES. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or
mailed by certified mail, return receipt requested, addressed to the parties at
the addresses set forth below:
Seller Robert W. Woolf
Chemi-Trol Chemical Co.
2776 C.R. 69
Gibsonburg, Ohio 43431
Purchaser: Michael D. Brock
Horizon Tool, Inc.
4300 Waterleaf Court
Greensboro, NC 27410
23
<PAGE> 16
17. CORPORATE AND PERSONAL GUARANTIES. The President and Vice-President
of Horizon Tool, Inc. Michael D. Brock and Jerry M. Kenny, will execute at
Closing a guaranty of the Promissory Note. In the event the Purchaser is not
Horizon Tool, Inc., then Horizon Tool, Inc. will execute at Closing a guaranty
of the Promissory Note, the Lease and post closing covenants contained in this
agreement.
18. INDEMNIFICATION.
The Seller hereby agrees that it will indemnify and hold the Purchaser
and Horizon Tool, Inc. (the "Indemnitees") harmless from and against any and all
Loss incurred by the Indemnitees arising out of any claims, demands, or actions
by any party against the Indemnitees based upon or arising from the Worker
Adjustment And Retraining Notification Act, 29 U.S.C. Section 2101, et seq. or
any state plant closing law.
As used in this Agreement, the term "Loss" means the amount of any
loss, liability, damage, cost or expense (including reasonable attorneys' fees)
incurred by the Indemnitees arising out of the matters or circumstances referred
to in Section 18(a).
If any matter shall arise which, in the opinion of the Indemnitees,
constitutes a claim subject to indemnification by Seller as provided herein (an
"Indemnity Claim"), the Indemnitees shall give prompt written notice of such
indemnity claim to Seller, setting forth the relevant facts and circumstances of
such indemnity claim in reasonable detail and the amount of indemnity
24
<PAGE> 17
sought from Seller with respect thereto, and shall give continuing notice
promptly thereafter as to developments coming to the Indemnitees' attention
materially affecting any matter relating to any such indemnity claim.
If any indemnity claim is based upon any claim, demand, suit or action
of any party against the Indemnitees, then Seller shall at its own expense
assume the defense of such claim, shall upon final determination thereof fully
discharge at its own expense all liability of the Indemnitees with respect to
such claim, and shall be entitled, in its sole discretion and at its sole
expense but without any liability of the Indemnitees therefor, to compromise the
settlement of such claim upon terms acceptable to Seller.
If for any reason, the Seller fails to undertake the defense of the
Indemnitees to an indemnity claim, the Purchaser may, at its option withhold any
payment due to the Seller for the Purchased Assets an amount which is sufficient
to fully reimburse the Indemnitees for their Loss on account of the indemnity
claim.
The Seller warrants that this indemnity is enforceable under state and
federal law and agrees not to assert any such defense in response to any
indemnity claim made by the Indemnitees.
The Purchaser will hire a minimum of twenty-five employees of the
Seller immediately after the Closing at wages and benefits comparable to those
paid said employees by the Seller.
25
<PAGE> 18
19. RETURNED MERCHANDISE. For a period of nine (9) months following the
date of Closing, all merchandise presently sold by Cal-Van Tools and in their
current line, returned as defective will be the responsibility of Seller.
Thereafter, all returned merchandise shall be the responsibility of the
Purchaser.
During the nine (9) month period following the Closing, Purchaser shall
allow returns only for defective merchandise. Merchandise returned as defective
shall be returned promptly by the Purchaser to the vendor that sold such
merchandise to Cal Van for credit, i.e. the amount paid by Cal Van for such
merchandise. If and when credit is received from the vendor, the amount of
credit shall be remitted promptly to the Seller. Merchandise that is returned as
defective shall be credited by Seller against such customers outstanding
accounts receivable with Seller, if any, at the original invoiced price to the
customer, less any normal allowance. If such customer has no outstanding
accounts receivable with Seller or the outstanding accounts receivable are
inadequate to cover the full amount of the credit to such customer, Purchaser
may, in its discretion, grant such credit in the amount claimed less normal
allowance. In such event, Seller shall promptly reimburse Purchaser for the
amount so credited. Any returned defective merchandise is the property of
Seller.
If Purchaser chooses to accept merchandise returned as stock
adjustments in accordance with sales policy, i.e. 2 for 1, during the nine month
period subsequent to Closing, the customer credits and the returned merchandise
will be the responsibility of Purchaser. Customer credits will be charged
against Purchaser's
26
<PAGE> 19
accounts receivable and returned merchandise will be added to Purchaser's
inventory. It is agreed that all repackaging costs necessary to return
merchandise to inventory will be charged to Seller. Such costs shall be the
lesser of eighty (80.0%) of the current packaging standard cost used by the
Purchaser on that item or the current item packaging standard cost used by the
Seller.
In the event any non-defective merchandise sold by Seller prior to
Closing is returned for credit by Advance Auto Stores, or any other customer,
without the prior written approval of the Seller or the Purchaser such returned
merchandise shall be credited by the Seller against the customers outstanding
accounts receivable with Seller at the historical cost of such merchandise. The
merchandise returned shall be returned to inventory either as Inventory or B
Inventory in accordance with the classification of such inventory at the
Closing. If classified as Inventory then an amount equal to the cost of such
inventory as of Closing, less any repackaging costs necessary to return such
merchandise to inventory as good and saleable product, shall be added to the
principal amount of the Promissory Note. If the customer has no outstanding
accounts receivable balance with Seller, the Purchaser shall handle the return
at its discretion.
20. VACATION PAY AND OTHER EMPLOYEE BENEFITS. The Seller shall pay all
accrued vacation pay and other employee benefits to all employees of the Seller
upon their termination and shall provide all required COBRA notices.
27
<PAGE> 20
21. ACCOUNTS RECEIVABLE. The Purchaser will use its best efforts to
conduct its business in a manner that facilitates the collection of currently
outstanding accounts receivables of the Seller and minimizes returned
merchandise. Purchaser will use its best efforts to allow an orderly transition
to new suppliers for existing customers of the Seller which customers have
elected to discontinue buying from the Purchaser.
During the four (4) months following the Closing, all collections from
accounts receivable of the Seller shall be deposited in a bank account of the
Seller and disbursed daily to either the Seller or the Purchaser based on the
remittance information. Thereafter, such collections shall be deposited in a
bank account of the Purchaser and those collections belonging to the Seller
shall be remitted daily to the Seller.
The Seller will reimburse the Purchaser twenty five per cent (25%) of
the Credit Manager's salary and related benefits and payroll taxes for six (6)
months following the Closing.
22. MISCELLANEOUS.
(a) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified,
amended or terminated except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto.
28
<PAGE> 21
(b) This Agreement shall be binding upon and inure to the benefit
of each corporate party hereto, its successors and assigns.
(c) This Agreement and all amendments thereof shall be governed by
and construed in accordance with the law of the State of Ohio
applicable to contracts made, and to be performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER
Chemi-Trol Chemical Co.
By: /s/ Robert W. Woolf
----------------------------------------
President
ATTEST:
/s/ Ken D. Lauck
- ------------------------------
Secretary
PURCHASER:
Eagle Tools, Inc.
By: /s/ Michael D. Brock
----------------------------------------
President
ATTEST:
/s/ Jimy M. Kinny
- ------------------------------
Secretary
29
<PAGE> 22
BILL OF SALE
------------
Pursuant to the terms and conditions of an Agreement of Purchase and
Sale of Assets (the "Agreement") dated November 18, 1997, by and between
Chemi-Trol Chemical Co., an Ohio corporation having its principal office in
Fremont, Ohio ("Seller"), and Eagle Tools, Inc., an Ohio corporation having its
principal office in Guilford County, North Carolina ("Purchaser"), for $1.00 and
other valuable consideration to it in hand paid, the receipt of which is hereby
acknowledged, Seller by these presents does hereby sell, assign, transfer and
convey unto Purchaser subject to the terms and conditions of the Agreement, its
successors and assigns, all of the Purchased Assets, as described in Section 2
of the Agreement.
TO HAVE AND TO HOLD said Purchased Assets unto Purchaser, its
successors and assigns, to and for its use forever.
AND, Seller does hereby confirm all of its representations and
warranties with respect to the Purchased Assets as set forth in the Agreement.
IN WITNESS WHEREOF, Seller has caused this instrument to be executed
this 18th day of November, 1997.
Seller:
Chemi-Trol Chemical Co.
By: /s/ Robert W. Woolf
---------------------------------------------
President
ATTEST:
/s/ Ken D. Lauck
- ---------------------------
Secretary
30
<PAGE> 1
Exhibit 99.1
NEWS RE: CHEMI-TROL CHEMICAL CO.
BULLETIN 2776 C.R. 69
GIBSONBURG, OHIO 43431
FROM:
[FRB LOGO]
FOR FURTHER INFORMATION:
AT THE COMPANY: AT THE FINANCIAL RELATIONS BOARD:
ROBERT W. WOOLF DENNIS WAITE
(419) 665-2367 (312) 640-6674
FOR IMMEDIATE RELEASE
CHEMI-TROL COMPLETES SALE OF CAL-VAN TOOLS
GIBSONBURG, OHIO, NOVEMBER 18, 1997-CHEMI-TROL CHEMICAL CO. (NASDAQ: CTRL) today
announced that it has successfully completed the sale of certain assets of its
Cal-Van Tools Division to Horizon Tool, Inc., a privately owned company located
in Greensboro, N.C.
Consideration received includes $1.5 million in cash, a promissory note to be
valued based on final inventory valuations and a related lease agreement for the
Cal-Van property not sold as part of this transaction.
As a result of this transaction the company anticipates that it will record an
after-tax charge of approximately $910,000, or $0.45 per share.
The divesture of Cal-Van Tools completes a plan announced by the company in
December 1996 to sell two of its under-performing non-core businesses. The
company's Cory Orchard and Turf Division was sold in March 1997. "The sale of
Cal-Van will allow us to focus our total efforts on our core businesses, the
Tank Division and Chemical Group," said Chemi-Trol President and Chief Operating
Officer Robert W. Woolf.
Chemi-Trol is a leading manufacturer and distributor of steel pressure tanks for
the storage of liquefied petroleum gas (LPG) and anhydrous ammonia used in
fertilizer; and is one of the largest applicators of pavement marking and
vegetation control materials in the United States. Chemi-Trol is also a
distributor of vegetation control materials to commercial and industrial users.
The company has been in business since 1952.
This press release contains forward-looking statements within the meaning of the
federal securities laws. As a general matter, forward-looking statements are
those focused upon future plans, objectives or performance as opposed to
historical items and include statements of anticipated events or trends and
expectations and beliefs relating to matters not historical in nature. Such
forward-looking statements are subject to uncertainties and factors relating to
the company's operations and business environment, all of which are difficult to
predict and many of which are beyond the control of the company, that could
cause actual results of the company to differ materially from those matters
expressed or implied by such forward-looking statements.
FOR FURTHER INFORMATION REGARDING CHEMI-TROL FREE OF CHARGE, VIA FAX,
DIAL 1-800-PRO-INFO. USE THE COMPANY STOCK SYMBOL, "CTRL."
31
