<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): JUNE 4, 1997
CENTRUM INDUSTRIES, INC.
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(Exact Name of Registrant as specified in its Charter)
Delaware 0-9607 34-1654011
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(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) Identification No.)
6135 Trust Drive, Suite 104A, Holland, Ohio 43528
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(Address of principal executive offices)
Registrant's telephone number, including area code:
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(419) 868-3441
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 4, 1997, Centrum Industries, Inc. (Centrum) acquired substantially all
of the assets of Taylor Forge International, Inc. (TFI), a Tennessee
corporation, through a subsidiary which will do business as Taylor Forge
Company (Taylor). Taylor produces steel seamless rolled rings for the oil,
bearing and miscellaneous commercial industries. Centrum is a holding company
for three manufacturing segments: Metal Forming Operations, Material Handling
systems, and Motor Production systems. The largest segment, the Metal Forming
Operations which includes McInnes Steel Company and its subsidiaries, produces
large specialty steel forgings, seamless rolled rings, and nonferrous castings.
This acquisition will provide Centrum with greater penetration into the rolled
ring market as the operations of Taylor will complement the metal forming
operations at McInnes Rolled Rings, an existing division of McInnes Steel
Company. The two subsidiaries will jointly have the capability to produce
rolled rings ranging in size from 4 to 160 inches and 2 to 10,000 pounds,
thereby expanding the depth of products offered by the metal forming
operations.
The assets acquired consisted of substantially all assets of TFI. The total
purchase price of approximately $6.8 million was financed by bank debt, a
$250,000 seller note, and the issuance of 94,000 shares of Centrum's common
stock. The purchase price is subject to adjustment post closing through the
issuance of up to 30,000 additional shares of Centrum's common stock, based
upon the audited financial statements for TFI as of the acquisition date.
Pursuant to an amendment to the original loan agreement with The Huntington
National Bank (see Exhibit 10.9 to Centrum's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996), the line of credit was expanded on
substantially the same terms and conditions as the original loan, and an
additional term note in the amount of $4 million was raised. In addition,
employment contracts were entered into with two former shareholders of the
parent corporation of TFI. The purchase price was determined by negotiations
between Centrum management and the management of TFI based upon a valuation of
Taylor's assets, customer base and revenues.
Centrum's management will continue its focus on acquiring companies with
quality products in industries such as metal forming, which have capital and
technology barriers to entry.
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ITEM 7. - FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
As of the date of filing of this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements required
by this Item 7(a). In accordance with Item 7(a) (4) of Form 8-K, such
financial statements shall be filed by amendment to this Form 8-K no later than
60 days after the date of filing this report.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, it is impractible
for the Registrant to provide the pro forma financial information as required
by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such pro forma
financial information shall be filed by amendment to this Form 8-K no later
than 60 days after the date of filing this report.
(c) Exhibits
Exhibit 10.1 Asset Purchase Agreement dated April 29, 1997, as amended
May 14, 1997
Exhibit 10.2 Registration Rights Agreement dated June 4, 1997
Exhibit 10.3 Employment contract with Robert Leonetti dated June 4, 1997
Exhibit 10.4 Employment contract with Harry Centella dated June 4, 1997
Exhibit 10.5 Amendment No. 2 Loan Agreement with The Huntington National
Bank dated June 4, 1997
Exhibit 10.6 Amended and Restated Continuing Guaranty Unlimited of Centrum
dated June 4, 1997
<PAGE> 4
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.
CENTRUM INDUSTRIES, INC.
(Registrant)
June 17, 1997 By: /s/ Timothy M. Hunter
--------------------------------
Timothy M. Hunter
Chief Financial Officer and
Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit Page
<S> <C>
Exhibit 10.1 Asset Purchase Agreement dated April 29, 1997 as
amended May 14, 1997
Exhibit 10.2 Registration Rights Agreement dated June 4, 1997
Exhibit 10.3 Employment Contract with Robert Leonetti dated
June 4, 1997
Exhibit 10.4 Employment Contract with Harry Centella dated
June 4, 1997
Exhibit 10.5 Amendment No. 2 to Loan Agreement with The
Huntington National Bank dated June 4, 1997
Exhibit 10.6 Amended and Restated Continuing Guaranty
Unlimited of Centrum dated June 4, 1997
</TABLE>
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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
CENTRUM INDUSTRIES, INC.,
CENTRUM ACQUISITION CORPORATION,
AND
TAYLOR FORGE INTERNATIONAL
DATED: APRIL 29, 1997
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 DELIVERIES AT THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.5 PURCHASE PRICE ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.6 AFFIDAVIT IN LIEU OF ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 ASSUMED OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.8 RETAINED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . 10
(a) REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . 10
(b) REPRESENTATIONS AND WARRANTIES OF CENTRUM . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) ORGANIZATION, QUALIFICATION, CORPORATE POWER AND AUTHORIZATION . . . . . . . . . . . . . . . . 15
(b) CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) NONCONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(d) SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) EVENTS SUBSEQUENT TO THE MOST RECENT FISCAL YEAR END . . . . . . . . . . . . . . . . . . . . . 17
(g) ABSENCE OF UNDISCLOSED LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(i) ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(j) OWNED REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(k) INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(l) INVENTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(m) REAL PROPERTY LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(n) CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(o) NOTES AND ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(p) POWERS OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(q) INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(r) LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(s) PRODUCT WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(t) PRODUCT LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(u) EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(v) EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(w) GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(x) ENVIRONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<TABLE>
<S> <C> <C>
(y) LEGAL COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(z) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . 35
(aa) INTENTIONALLY DELETED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ab) BROKERS' FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ac) EXON-FLORIO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ad) HEALTH AND SAFETY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(ae) COMPUTER SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(af) INTERNATIONAL TRADE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(ag) DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5. PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(a) GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) NOTICES AND CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) OPERATION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) PRESERVATION OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(e) FULL ACCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(f) NOTICE OF DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(g) EXCLUSIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(h) LIEN SEARCHES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(i) ADDITIONAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(j) BULK SALES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(k) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(l) ENVIRONMENTAL REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(m) TITLE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(n) SURVEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(o) CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(p) INTENTIONALLY DELETED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(q) PRINCIPAL SHAREHOLDERS' COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(a) GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(b) CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(c) LITIGATION SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(d) TRANSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(e) RETENTION OF BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(f) CENTRUM COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(g) EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(h) COMPANY PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(i) CLOSING, TAXES AND PRORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(j) USE OF NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(k) PAYMENTS RECEIVED BY COMPANY AFTER CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(l) ACCOUNTS RECEIVABLE COLLECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(m) NONASSIGNABLE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(n) AUDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(o) COMMISSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
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<TABLE>
<S> <C> <C>
(p) PRODUCT LIABILITY INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(q) UNEMPLOYMENT/WORKERS COMPENSATION RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(r) OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7. CONDITIONS TO OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) CONDITIONS TO OBLIGATION OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(a) SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER . . . . . . . . . . . . . . . . . . . . . 53
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . 53
(d) PROCEDURE FOR INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
(e) RIGHTS OF SETOFF AGAINST THE ESCROW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(f) OTHER INDEMNIFICATION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(c) OTHER TERMINATION RIGHTS BY THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(d) OTHER TERMINATION RIGHTS BY THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) PRESS RELEASES AND ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) NO THIRD-PARTY BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(c) ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(d) SUCCESSION AND ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(e) COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(f) HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(g) NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(h) GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(i) AMENDMENTS AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(j) SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(k) FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(l) CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(m) INCORPORATION OF EXHIBITS AND SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(n) SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(o) SUBMISSION TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(p) CURRENCY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SCHEDULES
2.7...................... Assumed Liabilities
4(a) .................... Directors and Officers
4(b) .................... Common Stock
4(e)..................... Financial Statements
</TABLE>
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4(f) .................... Subsequent Events
4(g) .................... Indebtedness
4(h) .................... Tax Returns
4(i) .................... Defects in Assets
4(j)..................... Real Property
4(k)(iii) ............... Patent or Registration
4(k)(iv) ................ Intellectual Property
4(l)..................... Inventory
4(n) .................... Contracts
4(o)..................... Notes and Accounts Receivable
4(q) .................... Insurance
4(r) .................... Litigation
4(s) .................... Product Warranty
4(u) .................... Employees
4(v) .................... Employee Benefit Plans
4(x) .................... Environmental
4(ae) ................... Computer System
EXHIBITS
Exhibit A................ Itemization of Personal Property
Exhibit B................ Retained Assets
Exhibit C................ Description of Real Property
Exhibit C-1.............. Plat of Real Property
Exhibit D................ Purchase Price Allocations
Exhibit E................ Affidavit in Lieu of Taxes
Exhibit F................ Bulk Sale Affidavit and
Indemnification Agreement
Exhibit G................ Alpine-South Battery Co. Parcel
Exhibit 3(a)............. Shareholder Representation Letter
Exhibit 7(a)(v)(D)....... Pledge and Escrow Agreement
Exhibit 7(a)(v)(E)....... Employment Agreement with Leonetti
and Centella
Exhibit 7(a)(v)(F)....... Noncompetition Agreement with the
Company and Principal Shareholders
Exhibit 7(a)(vii)........ Opinion of Black Bobango & Morgan
Exhibit 7(b)(vi)......... Opinion of Fuller & Henry P.L.L.
Exhibit 7(b)(vii)........ Registration Rights Agreement
<PAGE> 6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into this 29th day of April
1997, by and among CENTRUM INDUSTRIES, INC., a Delaware corporation
("Centrum"), CENTRUM ACQUISITION CORPORATION, a Tennessee corporation ("Centrum
Subsidiary") and TAYLOR FORGE INTERNATIONAL, INC., a Tennessee corporation (the
"Company"). Centrum and Centrum Subsidiary shall together be referred to as
Buyer, and the Buyer and the Company are referred to collectively herein as the
"Parties".
RECITALS
This Agreement contemplates a transaction in which the Company will
sell and transfer to Centrum Subsidiary substantially all of its assets in
exchange for cash, stock in Centrum and an assumption by Centrum Subsidiary of
certain liabilities of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ACCREDITED INVESTOR" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"ADJOINING PROPERTY" has the meaning set forth in Section 6(r) below.
"ADJUSTED PURCHASE PRICE" has the meaning set forth in Section 2.5
below.
"ADMINISTRATOR" has the meaning set forth in ERISA Sec. 3(16)(A).
"ADVERSE CONSEQUENCES" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including reasonable attorneys' fees and court costs.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" has the meaning set forth in Code Sec. 1504(a) (or
any analogous combined or consolidated unitary group defined under state, local
or foreign income tax law) of which the Company is or has been a member.
<PAGE> 7
"ASSETS" means the assets of the Company purchased pursuant to Section
2.1 below.
"ASSUMED OBLIGATIONS" has the meaning set forth in Section 2.7 below.
"AUDITORS" means Uiberall, Leib, Blockman, Perry, P.C.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"BREAKUP FEE" has the meaning set forth in Section 10(k)(ii) below.
"BUYER" has the meaning set forth in the preface above.
"BUYER CLAIM" has the meaning set forth in Section 2.6(c) below.
"CENTELLA" means Harry M. Centella.
"CENTRUM COMMON STOCK" has the meaning set forth in Section 2(b)
below.
"CENTRUM FINANCIAL STATEMENTS" has the meaning set forth in Section
3(c)(i) below.
"CLOSING" has the meaning set forth in Section 2.2 below.
"CLOSING DATE" has the meaning set forth in Section 2.2 below.
"CODE" means the Internal Revenue Code of 1986 (or any successor
legislation thereto), as amended.
"COMPANY" has the meaning set forth in the preface above.
"COMPANY PLAN" means any Employee Benefit Plan of which the Company
(which for purposes of this paragraph includes every member of any "controlled
group", as defined in ERISA Sec. 302(f)(6)(B), that includes the Company) is or
within the last seven (7) years was the Plan Sponsor; any Employee Benefit Plan
as to which the Company is or within the last seven (7) years was
an Employer; any Multiemployer Plan or other Employee Benefit Plan as to which
the Company contributes (or has an obligation to contribute) or has within the
last seven (7) years contributed (or had an obligation to contribute) for the
benefit of any one or more current or former employees of the Company; and any
other bonus, deferred compensation, incentive compensation, fringe benefit,
severance or termination pay, change in control compensation, and/or death
benefit plan, program, agreement, or arrangement which is or has been
maintained or contributed to by the Company for the benefit of any one or more
of its current or former employees.
<PAGE> 8
"COMPUTER SYSTEM" has the meaning set forth in Section 4(e) below.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 6(b).
"CONFIDENTIALITY AGREEMENT" means the agreement dated November 8,
1996.
"DEFERRED INTERCOMPANY TRANSACTION" has the meaning set forth in
Treas. Reg. Sec. 1.1502-13.
"DEFINED BENEFIT PLAN" means a Pension Plan which is (i) a "defined
benefit plan" within the meaning of ERISA Sec. 3(35) and (ii) subject to the
plan termination insurance provisions of ERISA Title IV.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4 below.
"DISPUTES AUDITOR" means the Memphis, Tennessee office of Ernst &
Young LLP.
"DISSENTING SHARES" has the meaning set forth in Section 5(p) below.
"EMPLOYEE BENEFIT PLAN" has the meaning set forth in ERISA Sec. 3(3).
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(2)(A).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Sec. 3(1).
"EMPLOYER" has the meaning set forth in ERISA Sec. 3(5).
"EXCESS LOSS ACCOUNT" has the meaning set forth in Treas. Reg. Sec.
1.1502-19.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXEMPT PLAN" means an Employee Benefit Plan which is an unfunded
"excess benefits plan" within the meaning of ERISA Sec. 3(36) or an unfunded
plan described in ERISA Sec. 201(a)(2) providing deferred compensation for a
select group of management or highly-compensated employees.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in Sec. 302
of the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(e)
below.
<PAGE> 9
"GAAP" means United States generally accepted accounting principles
set forth in the rules, regulations, statements, opinions and pronouncements of
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), which are applicable
to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means the government of the United States or
any foreign country, any state or political subdivision thereof, or any entity,
body or authority exercising executive, legislative, judicial, regulatory,
administrative or other governmental functions, or any court, department,
commission, board, agency, instrumentality or administrative body of any of the
foregoing.
"HIRSCHBERG" means Edward B. Hirschberg.
"INTELLECTUAL PROPERTY" means all (a) patents, patent applications,
patent disclosures, and improvements thereto, (b) trademarks, services marks,
trade dress, logos, trade names, and corporate names and registrations and
applications for registration thereof, (c) copyrights and registrations and
applications for registration thereof, (d) mask works and registrations and
applications for registration thereof, (e) computer software, data and
documentation, (f) trade secrets and confidential business information
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (g) other proprietary rights, and (h) copies and tangible
embodiments hereof (in whatever form or medium).
"KNOWLEDGE" means actual knowledge of the Company's officers after
reasonable inquiry, and to the extent appropriate, further investigation.
"LAW" means any law, statute, regulation, ordinance, rule, order,
decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated, or entered into, agreed or imposed by any
Governmental Authority.
"LEONETTI" means Robert L. Leonetti.
"LETTER OF INTENT" means the letter dated January 31, 1997.
"LIABILITY" means any obligation or liability (whether known or
unknown, whether absolute or contingent, whether liquidated or unliquidated,
and whether due or to become due and regardless of when or by whom asserted),
including any liability for Taxes.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Most Recent Financial Statements.
<PAGE> 10
"MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in
Section 4(e) below.
"MOST RECENT FISCAL MONTH END" has the meaning set forth in Section
4(e) below.
"MOST RECENT FISCAL YEAR END" has the meaning set forth in Section
4(e) below.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 4001(a)
(3).
"NATIONSBANK TERM DEBT" means the term loan indebtedness with
NationsBank of Tennessee, N.A. in the original principal amount of $4,500,000
incurred by the Company pursuant to loan agreements dated February 4, 1994 and
December 13, 1995.
"NET WORKING CAPITAL" means the Company's current assets minus current
liabilities as determined in accordance with GAAP, less deferred tax balances,
receivables from any Affiliate, any inventory not in compliance with the
provisions of Section 4(l) below, any receivables not in compliance with the
provisions of Section 4(o) below and the fair market value of Retained Assets.
For purposes of this Agreement, current assets shall not include the Rings
Inventory and the accounts receivable shall not include an allowance for
doubtful accounts and current liabilities shall include the Shareholder Loans
but not the current portion of the NationsBank Term Debt.
"NONASSIGNABLE CONTRACT" has the meaning set forth in Section 6(m)
below.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"PARTY" has the meaning set forth in the preface above.
"PAYMENT" has the meaning set forth in Section 6(k).
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to ERISA Title IV.
"PENSION PLAN" means an Employee Pension Benefit Plan which is (i) a
"defined benefit plan" within the meaning of ERISA Sec. 3(35) and/or (ii)
subject to the minimum funding standards of ERISA Title I, Part 3, or Code Sec.
412.
"PERSON" means any individual, partnership, limited partnership,
limited liability company, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital, unincorporated
association, trust, trustee, executor, administrator or other legal personal
representative, regulatory body or agency, government or governmental agency,
authority or entity however designated or constituted.
"PERSONAL PROPERTY" has the meaning set forth in Section 2.1(a) below
"PHASE I ASSESSMENT" has the meaning set forth in Section 5(l) below.
<PAGE> 11
"PHASE II ASSESSMENT" has the meaning set forth in Section 5(l) below.
"PLAN SPONSOR" has the meaning set forth in ERISA Sec. 3(16)(B).
"PRINCIPAL SHAREHOLDERS" means Centella, Hirschberg, Leonetti and TFI.
"PROHIBITED TRANSACTION" means a transaction prohibited by ERISA Sec.
406 as to which a civil penalty is or could be assessable against the Company
under ERISA Sec. 501(i) or on which an excise tax is or could be assessable
against the Company under Code Sec. 4975 (after giving effect to all statutory,
regulatory, and administrative exceptions and exemptions).
"QUALIFIED PLAN" means an Employee Pension Benefit Plan that meets the
qualification requirements set forth in Code Sec. 401(a).
"REAL PROPERTY" has the meaning set forth in Section 2.1(b) below.
"RETAINED ASSETS" has the meaning set forth in Section 2.1(a) below.
"RETAINED LIABILITIES" has the meaning set forth in Section 2.8 below.
"RINGS INVENTORY" means the stock rings held in the finished goods
inventory set forth in SCHEDULE 4(L).
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), security interest or preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease obligation, any financing lease having substantially the
same economic effect as any of the foregoing and any filing, under the Uniform
Commercial Code or comparable Law of any jurisdiction, of any financing
statement (other than a financing statement filed by a "true" Lessor pursuant
to a Section 9-408 of the Uniform Commercial Code or other comparable Law of
any jurisdiction) naming the owner of the asset to which such lien relates as
debtor.
"SHAREHOLDER LOANS" means the loans to the Company from the Principal
Shareholders or their spouses as set forth on SCHEDULE 2.7.
"SUBSIDIARY" means any corporation with respect to which another
specified corporation has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits,
<PAGE> 12
environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax or any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not. Taxes shall also
include any transferee or secondary liability for a Tax and any liability
assumed by agreement or arising as a result of being (or ceasing to be) a
member of an Affiliated Group (or being included in any Tax Return relating
thereto).
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TENNESSEE ACT" means the Tennessee Business Corporation Laws.
"TFI" means TFI, Inc., a Tennessee corporation.
"TRADENAME" has the meaning set forth in Section 2.1(c) below.
2. THE TRANSACTION
2.1 PURCHASE AND SALE.
Centrum Subsidiary agrees to purchase and the Company agrees to sell
the following:
(a) Assets, properties, goodwill and rights owned or used
in connection with the business of the Company, of every nature, kind and
description, tangible and intangible, wheresoever located and whether or not
reflected or carried on the books of the Company, including but not limited to:
cash and cash equivalents in excess of Ten Thousand Dollars ($10,000.00), all
operating equipment, office setups and furniture (whether owned or leased),
fixed assets, deposits, permits, licenses, prepaid items, motor or titled
vehicles, accounts receivable , inventory (to include raw materials, work in
process, supplies and finished goods), customer orders and contracts,
commitments, agreements, offers and proposals, and customer lists, of the
Company, including without limitation those items set forth in EXHIBIT A
attached hereto and incorporated by reference (collectively the "Personal
Property") owned by or used in connection with the business of the Company, or
reflected in the balance sheets dated as of March 31, 1997, and all assets and
properties acquired since the date hereof, except such assets disposed of in
the Ordinary Course of Business with the approval (other than for sales of
inventory) of Centrum Subsidiary and those assets, including cash and cash
equivalents up to Ten Thousand Dollars ($10,000.00) identified as "Retained
Assets" in EXHIBIT B;
(b) All interest of the Company in the real estate,
fixtures and improvements for the properties located at 5577 Tayfor Drive,
Millington, Tennessee 38053 used in connection with the business of the
Company, as more particularly described on EXHIBIT C attached and incorporated
herein by reference and as outlined in red on EXHIBIT C-1 attached and
incorporated herein by reference (hereinafter the
<PAGE> 13
"Real Property"). The Real Property (subject to the provisions of Section
6(r)) does not include the four (4) acre tract owned or to be owned by Alpine
Power Systems, Inc.
(c) All interests in all Intellectual Property of the
Company, including without limitation the tradename "Taylor Forge
International" (the "Tradename").
The Personal Property, Real Property and Intellectual Property are sometimes
hereinafter collectively referred to as the "Assets").
2.2 THE CLOSING. The transaction contemplated herein
shall be consummated (the "Closing"), subject to the terms and conditions of
this Agreement at the offices of Fuller & Henry, 2210 Huntington Center, 41
South High Street, Columbus, Ohio 43215 commencing at 10:00 a.m. local time on
May 30, 1997, or the second business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby or such other date as the Buyer and the
Company may mutually determine (the "Closing Date"); provided, however, that
the Closing Date shall be no later than June 30, 1997.
2.3 DELIVERIES AT THE CLOSING. At the Closing, (i) the
Company will deliver to the Buyer the various certificates, instruments, and
documents referred to in Section 7(a) below, and (ii) the Buyer will deliver to
the Company the various certificates, instruments, and documents referred to in
Section 7(b) below.
2.4 PURCHASE PRICE.
(a) Centrum Subsidiary agrees to pay the Company for the
Assets the sum of Two Million Dollars ($2,000,000.00), in same day funds,
together with an amount of Centrum Common Stock (valued at Two and 25/100
Dollars ($2.25) per share for calculation purposes) equal to the Net Working
Capital of the Company as of the Closing Date (the "Purchase Price"). The
Purchase Price, subject only to the Adjustments to the Purchase Price, as
defined in Section 2.5 below, shall be payable as follows:
(i) Two Million Dollars ($2,000,000.00) delivered by
Centrum Subsidiary to the Company, by wire transfer, certified
check or cashier's check at Closing;
(ii) by delivery of fully paid and nonassessable
Centrum Common Stock equal to seventy-five percent (75%) of
the estimated Net Working Capital of the Company as of the
Closing Date; and
(iii) The balance of the Purchase Price after
adjustments as set forth in Section 2.5 of this Agreement, by
Centrum Subsidiary to the Company by the delivery into escrow
pursuant to the Stock Pledge and Escrow Agreement of fully
paid and nonassessable Centrum Stock, or by the Company to
Centrum Subsidiary, as the case may be, by redelivery of fully
paid and nonassessable Centrum stock within one hundred twenty
(120) days after Closing, it being the intent that following
the adjustments, Centrum Common Stock equal to twenty-five
percent (25%) of the final Net Working Capital of the Company
as of the Closing will be held in
<PAGE> 14
escrow and the balance of the Centrum Common Stock will be issued to the
Company.
For purposes of determining the estimated Net Working Capital of the Company as
of the Closing Date, the Company's unaudited balance sheet for the month
immediately preceding the Closing Date shall be used with such adjustments
going forward for accounts receivable, accounts payable and inventory as is
mutually agreed to by Company and Buyer.
(b) The Purchase Price for all of the Assets shall be
allocated at Closing, exclusive of Centrum Subsidiary's acquisition costs, to
the Assets in accordance with Section 1060 of the Internal Revenue Code, as
amended, and as set forth in EXHIBIT D attached hereto and incorporated herein.
The parties agree that the Purchase Price allocations shall be based upon and
reflect the net fair market values of the Assets being purchased hereunder as
determined by the parties exclusive of Centrum Subsidiary's acquisition costs.
Neither Centrum Subsidiary nor the Company will do anything, or fail to take
any action, which by reason of such doing or such failure, would be considered
as inconsistent with any of the allocations set forth on EXHIBIT D for federal
or state income tax purposes or any other purpose.
2.5 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall
be subject to adjustment based upon the updated financial statements to be
prepared as of Closing Date. The term "Adjusted Purchase Price" shall
hereinafter mean the Purchase Price adjusted in accordance with this Section
2.5. The Net Working Capital of the Company as of the Closing Date, shall be
calculated by Centrum Subsidiary's auditors, Price Waterhouse LLP, in
accordance with GAAP applied on a basis consistent with those followed by the
Company, reflecting changes from operations from March 31, 1997 to the Closing
Date and reflecting any adjustments in accrual and reserve amounts so that the
Company and Centrum Subsidiary receive the benefit of such accrual and reserve
accounts which correspond to their respective retention or assumption of
liabilities for which such accrual or reserve accounts were established, if
any. The Company shall cooperate with Price Waterhouse LLP to determine the
Company's Net Working Capital at the Closing Date and provide to Price
Waterhouse LLP full access to any and all records and documentation necessary
to perform an audit, including any and all records and documentation in the
possession of the Auditors. In the event of a dispute involving less than
Fifty Thousand Dollars ($50,000.00) in the aggregate, the determination of
Price Waterhouse LLP shall prevail. In the event that the Company disputes
the Net Working Capital at the Closing Date as determined by Price Waterhouse
LLP, and such dispute involves an aggregate of Fifty Thousand Dollars
($50,000.00) or more and is not resolved by the Company and Centrum Subsidiary
within ten (10) days, then such dispute shall be submitted to the Disputes
Auditor and the decision of such accounting firm shall be final. The fees and
expenses of the Disputes Auditor shall be borne by the Company and Centrum
Subsidiary Equally.
2.6 AFFIDAVIT IN LIEU OF ESCROW. To insure payment of
accrued sales, withholding, unemployment, Liabilities, income and other Tax
Liabilities which if not paid may be asserted as obligations of Centrum
Subsidiary, the Company shall provide an
<PAGE> 15
affidavit in the form of EXHIBIT E and shall indemnify and hold Buyer harmless
from all owed Taxes and Liabilities.
2.7 ASSUMED OBLIGATIONS. Effective as of the Closing
Date, Centrum Subsidiary will assume and become liable: for the Company's
current leases set forth on SCHEDULE 2.7 hereof, current contracts, current
commitments and unfilled purchase and customer orders, to which the Company is
a party and entered into in the Ordinary Course of Business; the Shareholder
Loans set forth on SCHEDULE 2.7 hereof (to be paid at Closing); trade accounts
payable incurred in the Ordinary Course of Business; steel consignment with
Elwood Steel Belgium; the revolving credit loan from NationsBank net of any
intercompany advances; and in exchange for a release as to the Assets up to
Four Million Dollars ($4,000,000.00) toward the NationsBank's Term Debt (the
"Assumed Obligations").
2.8 RETAINED LIABILITIES. Except as set forth in this
Section 2.8, it is expressly recognized that Centrum Subsidiary will assume no
liability or responsibility for any other liabilities or obligations of the
Company, including without limitation, Taxes of any kind and nature, product
warranty or product liability claims (including without limitation claims based
upon or in connection with any products sold, shipped, manufactured or services
rendered at any time prior to Closing), obligations of the Company to Centrum
Subsidiary, workers' compensation claims by any employees of the Company, audit
fees, pension, or employee welfare benefit plan claims, employee severance,
fringe benefit and other claims (other than those expressly assumed by Centrum
Subsidiary), attorney fees incurred in connection with the transaction
contemplated herein or otherwise, or other charges or expenses incurred in
connection with the consummation of the transaction contemplated herein. Other
than the Assumed Obligations, the Company agrees to discharge all of the
foregoing obligations (hereinafter known as the "Retained Liabilities") that it
may have in the Ordinary Course of Business, but in no event later than sixty
(60) days after the Closing Date or after the Liability is determined,
whichever is later.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
SHAREHOLDERS. Each of the Principal Shareholders jointly and severally
represent and warrant to the Buyer that the statements contained in this
Section 3(a) are correct and complete as of the date of this Agreement and,
subject to such changes as are disclosed in writing to Buyer on or prior to the
Closing Date, will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(a)) with respect to himself, except as
otherwise specifically set forth herein or in any Schedule attached to this
Agreement.
(i) If the Principal Shareholder is a
corporation, limited partnership, trust or other form other than an individual
Person, the Principal Shareholder is duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its formation.
(ii) Each Principal Shareholder receiving either
initially (or upon dissolution of the Company) Centrum Common Stock in the
transaction contemplated
<PAGE> 16
herein (A) understands that the Centrum Common Stock has not been, and
will not be, registered under the Securities Act, or under any state securities
Laws, and is being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (B) is acquiring
the Centrum Common Stock solely for his, her or its own account for investment
purposes, and not with a view to the distribution thereof, (C) is a
sophisticated investor with knowledge and experience in business and financial
matters, (D) has received certain information concerning Centrum and has had the
opportunity to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Centrum Common Stock, (E) is able
to bear the economic risk of lack of liquidity inherent in holding the Centrum
Common Stock, and (F) is an Accredited Investor for the reason set forth on such
Principal Shareholder's EXHIBIT 3(A).
(iii) AUTHORIZATION OF TRANSACTION. The Company
and each of the Principal Shareholders has full power and authority to execute
and deliver this Agreement and the other agreements contemplated hereby, to
perform his or its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby to be delivered at Closing and thereby. This
Agreement has been duly executed and delivered by the Company and each of the
Principal Shareholders and this Agreement constitutes, and each of the other
agreements contemplated hereby, upon execution and delivery, will constitute,
the valid and legally binding obligation of the Company and each of the
Principal Shareholders, enforceable in accordance with its terms and
conditions, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other Laws affecting creditors' rights generally
from time to time in effect and to general equitable principles. Except as
otherwise specifically provided herein, neither the Company nor any Principal
Shareholder need give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement. The
shareholders and directors of both TFI and the Company have duly met in a
properly called meeting and the shareholders and directors of TFI and the
Company have unanimously approved this Agreement and the transaction
contemplated herein. No shareholder of TFI or of the Company has or will have
any dissenter's or appraisal rights under the Tennessee Act as a result of the
transaction contemplated in this Agreement.
(iv) COMPANY SHARES. Each of the Principal
Shareholders is not a party to any option, warrant, right, contract, call, put
or other agreement or commitment providing for the disposition or acquisition
of any capital stock of the Company. Each of the Principal Shareholders is not
a party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of the Company. Centella,
Hirschberg and Leonetti own collectively of record and beneficially all of
TFI's common stock, which constitutes all of the issued and outstanding capital
stock of TFI.
(v) BROKER FEES. The Company has no Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Centrum
Subsidiary could become liable or obligated.
<PAGE> 17
(vi) NO CONTRACT. The Company is not a party to
any option, warrant, right, contract, call, put or other agreement or
commitment providing for the disposition or acquisition of any of the Assets of
the Company (other than this Agreement or the acquisition of inventory in the
Ordinary Course of Business).
(b) REPRESENTATIONS AND WARRANTIES OF CENTRUM. Centrum
represents and warrants to the Company that the statements contained in this
Section 3(b) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(b)) with respect to itself, except as otherwise
specifically set forth herein (the word "material" meaning to Centrum and its
Subsidiaries taken as a whole):
(i) CORPORATE STANDING OF CENTRUM AND
AUTHORIZATION OF TRANSACTION. Centrum is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, is duly
authorized to conduct business under the Laws of the State of Delaware, and
has the corporate power to carry on its business as and where conducted.
Centrum has full corporate power and authority to execute and deliver this
Agreement and the other documents to be delivered at Closing, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. This Agreement has been duly executed and
delivered by Centrum and this Agreement constitutes, and each of the other
agreements to be delivered at Closing, upon execution and delivery, will
constitute, the valid and legally binding obligation of Centrum, enforceable
in accordance with its terms and conditions, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other Laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles. Except as otherwise specifically provided herein, Centrum need
not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in to consummate
the transactions contemplated by this Agreement.
(ii) CORPORATE STANDING OF CENTRUM SUBSIDIARY AND
AUTHORIZATION OF TRANSACTION. Centrum Subsidiary is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Tennessee, duly authorized to transact business in the State of Tennessee.
Centrum Subsidiary has full corporate power and authority to execute and
deliver this Agreement and the other documents to be delivered at Closing, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by Centrum Subsidiary and this Agreement constitutes,
and each of the other agreements to be delivered at Closing, upon execution and
delivery, will constitute, the valid and legally binding obligation of Centrum
Subsidiary, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other Laws
affecting creditors' rights generally from time to time in effect and to
general equitable principles. Except as otherwise specifically provided
herein, Centrum Subsidiary need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
<PAGE> 18
(iii) NONCONTRAVENTION. Neither the execution and
the delivery of this Agreement by Centrum and Centrum Subsidiary, nor the
consummation of the transactions contemplated hereby and thereby, will (A)
violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental
agency, or court to which Centrum and its Subsidiaries is subject or any
provision of its charter or bylaws or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which Centrum or any
of its Subsidiaries is a party or by which they are bound or to which any of
assets are subject.
(iv) GOVERNMENTAL APPROVALS. Other than in
connection or in compliance with the provisions of the Tennessee Act, and
federal and state securities Laws, there are no governmental approvals required
in connection with the Agreement or the consummation of the transactions
contemplated thereby.
(v) CAPITAL STOCK. The total number of all
classes of authorized capital stock of Centrum consists of 16,000,000 shares,
of which 15,000,000 shares, of a par value of $.05 per share, are Common Stock,
and 1,000,000 shares, of a par value of $.05 per share, are Preferred Stock.
As of December 31, 1996, there were 8,298,215 shares of Common Stock issued and
outstanding, and 70,000 shares of Preferred Stock issued and outstanding.
Centrum owns indirectly all of the issued and outstanding common stock of
Centrum Subsidiary.
(vi) FINANCIAL STATEMENTS. Centrum has delivered
to the Company copies of the following financial statements: Consolidated
financial statements for the fiscal years ended March 31, 1996, 1995 and 1994,
as certified by Price Waterhouse LLP, independent certified public accountants;
and the unaudited consolidated balance sheet of Centrum and its Subsidiaries as
at December 31, 1996 as filed with the SEC on Form 10-Q, together with an
attachment disclosing certain adjustments (the "Financial Statements"). The
Financial Statements are true and correct in all material respects and have
either been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, or disclosure of adjustments has been
made. The Financial Statements are correct and complete, contain adequate
accruals for current expenses and liabilities, present accurately and
completely in all material respects the financial condition and results of
operation of Centrum and its Subsidiaries as of the times and for the periods
referred to therein, and are consistent with the books and records of Centrum
(which books and records are correct and complete); provided, however, that the
interim Centrum Financial Statements are subject to normal year-end adjustments
(which will not be material) and lack footnotes and other presentation items.
(vii) ABSENCE OF MATERIAL ADVERSE CHANGE. Since
December 31, 1996, there has been no material adverse change in the financial
position or business of Centrum and its Subsidiaries taken as a whole.
<PAGE> 19
(viii) ABSENCE OF LITIGATION. There is no action,
suit, proceeding, claim or investigation by any governmental agency pending or,
to the knowledge of Centrum, threatened against Centrum or its Subsidiaries or
the assets or business of Centrum or its Subsidiaries which has or may have a
material adverse effect on Centrum's consolidated business or condition or
challenging or affecting the transactions contemplated by this Agreement.
(ix) CONDUCT OF BUSINESS. Centrum and its
Subsidiaries have conducted business and used their property substantially in
compliance with all federal, state, and local Laws, ordinances and regulations,
violation of which would have a material adverse effect on Centrum's
consolidated business or condition.
(x) CENTRUM'S COMMON STOCK. The shares of the
Centrum Common Stock to be issued in accordance with this Agreement have been
duly authorized and, when issued as contemplated hereby, will be duly and
validly issued and outstanding, fully paid and non-assessable shares of Centrum
free and clear of all claims, liens, encumbrances and security interests and of
any preemptive or other similar rights; except that the Centrum Common Stock
will be issued pursuant to an exemption from registration under the Securities
Act and the Tennessee Blue Sky Law and will therefore be "restricted" common
stock.
(xi) ABSENCE OF UNDISCLOSED LIABILITIES. Except
as and to the extent reflected or reserved against in the consolidated balance
sheet of Centrum as of December 31, 1996, Centrum had, as of such date, no
material liabilities or obligations, secured or unsecured (whether accrued,
absolute, contingent or otherwise), of a nature required to be reflected in its
balance sheet, or the notes thereto, prepared in accordance with GAAP
applicable to Centrum and its Subsidiaries and consistent with the past
practice and custom of Centrum.
(xii) SEC FILINGS. Centrum filed with the SEC its
Annual Report on Form 10-K for the fiscal year ended March 31, 1996 (the "1996
10-K"), its Annual Report on Form 10-K for the fiscal year ended March 31, 1995
(the "1995 10-K"), and its Annual Report on Form 10-K for the fiscal year ended
March 31, 1994 (the "1994 10-K"). Centrum filed its Quarterly Report on Form
10-Q for the period ending December 31, 1996.
(xiii) LICENSES, PERMITS, ETC. Centrum and its
Subsidiaries hold all licenses, certificates, permits, franchises and rights
from all appropriate federal, state and other public authorities necessary for
the conduct of their businesses the lack of which would have a material adverse
effect on Centrum's consolidated business or condition; neither Centrum nor its
Subsidiaries have been charged with, or to its knowledge is under governmental
investigation with respect to, any actual or alleged violation of any statute,
ordinance, rule or regulation which, if determined adversely to Centrum or its
Subsidiaries, would have a material adverse effect on Centrum's consolidated
business or condition; and neither Centrum nor its Subsidiaries are the
subject of any pending or, to Centrum's knowledge, threatened proceeding by
any regulatory authority having jurisdiction over its business, properties or
operations.
<PAGE> 20
(xiv) BROKER'S FEES. Centrum has no Liability or
obligation to pay any fees, commissions, or similar compensation to any broker,
finder, or agent, or other Person with respect to the transactions contemplated
by this Agreement for which the Company could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Company and the Principal Shareholders represent and warrant to the Buyer that
the statements contained in this Section 4 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 4), except as set forth in the
disclosure schedule attached hereto (the "Disclosure Schedule"). Nothing in
the Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) ORGANIZATION, QUALIFICATION, CORPORATE POWER AND
AUTHORIZATION. The Company is a corporation duly organized, validly existing,
and in good standing under the Laws of the jurisdiction of its incorporation.
The Company is duly authorized to conduct business and is in good standing
under the Laws of each jurisdiction in which the nature of its businesses or
the ownership or leasing of its properties requires such qualification. The
Company has full corporate power and authority to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
SCHEDULE 4(A) of the Disclosure Schedule lists the directors and officers of
the Company and of TFI. The Company has delivered to the Buyer correct and
complete copies of its Charter and Bylaws (as amended to date). The minute
books containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors, the stock certificate
books, and the stock record books of the Company have been made available to
the Buyer and are correct and complete. The Company is not in default under or
in violation of any provision of its Charter or Bylaws.
The Company has full corporate power and authority to execute and
deliver this Agreement and the other documents to be delivered at Closing, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Company and this Agreement constitutes, and each
of the other agreements to be delivered at Closing, upon execution and
delivery, will constitute, the valid and legally binding obligation of the
Company, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and other Laws
affecting creditors' rights generally from time to time in effect and to
general equitable principles. Except as otherwise specifically provided
herein, the Company need not give any notice to, make any filing with, or
obtain any
<PAGE> 21
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
(b) CAPITALIZATION. The entire authorized capital stock
of the Company consists of two thousand (2,000) shares of common stock, of
which one thousand (1,000) shares are issued and outstanding. All of the
issued and outstanding shares of the Company's common stock have been duly
authorized, are validly issued, fully paid, and nonassessable. All of the
Company's common stock is held of record by TFI. TFI holds of record and owns
beneficially all of the Company's common stock, which constitutes all of the
issued and outstanding shares of the capital stock of the Company, in each case
free and clear of any Security Interest, option, agreement, voting trust,
proxy, right of first refusal or other encumbrance, arrangement or restriction
whatsoever. Except as set forth in SCHEDULE 4(B) of the Disclosure Schedule,
there are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments providing for the issuance, disposition, or acquisition of any
shares of capital stock of the Company. There are no outstanding or authorized
stock appreciation, phantom stock, or similar rights with respect to the
Company. There are no agreements or other obligations (contingent or
otherwise) which may require the Company to repurchase or otherwise acquire any
shares of capital stock. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any capital stock of
the Company.
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, or the other agreements contemplated hereby or
thereby, nor the consummation of the transactions contemplated hereby or
thereby, will (i) violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject; (ii)
violate any provision of the Charter or Bylaws of the Company; or (iii)
conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument and indebtedness, Security
Interest, or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), except for the consent of
NationsBank pursuant to the NationsBank Term Debt, which consent has been
obtained. The Company does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) SUBSIDIARIES. The Company has no Subsidiaries and
the Company does not control directly or indirectly or have a direct or
indirect equity participation in any corporation, partnership, trust, limited
liability company or other business association.
(e) FINANCIAL STATEMENTS. The Company has furnished the
Buyer with the following financial statements (collectively the "Financial
Statements"): (i) audited consolidated and consolidating balance sheets and
statements of income,
<PAGE> 22
changes, in shareholders' equity, and cash flow of TFI as of and for the
fiscal years ended March 31, 1992, March 31, 1993, March 31, 1994, March 31,
1995 and March 31, 1996 (the "Most Recent Fiscal Year End") prepared by the
Auditors, independent certified public accountants for the Company, together
with the details of consolidation that tie to the audited balance sheet and
statement of income for the fiscal year ending March 31, 1996; (ii) unaudited
balance sheets and statement of income, changes in shareholders equity and cash
flows of the Company as of and for the fiscal years ended March 31, 1992, March
31, 1993, March 31, 1994, March 31, 1995 and March 31, 1996 prepared by the
Auditors; and (iii) unaudited balance sheet and statements of income of the
Company (the "Most Recent Financial Statements") as of and for the eleven (11)
months ended February 28, 1997 (the "Most Recent Fiscal Month End") for the
Company. Except as set forth on SCHEDULE 4(E) of the Disclosure Schedule, the
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, are correct and
complete, contain adequate accruals for current expenses and liabilities,
present accurately and completely in all material respects the financial
condition and results of operation of the Company as of the times and for the
periods referred to therein, and are consistent with the books and records of
the Company (which books and records are correct and complete in all material
respects).
(f) EVENTS SUBSEQUENT TO THE MOST RECENT FISCAL YEAR END.
Except as otherwise disclosed in SCHEDULE 4(F) of the Disclosure Schedule,
since the date of the Most Recent Fiscal Year End, there has not been any
adverse change in the assets, Liabilities, business, financial condition,
operations, results of operations, or future prospects of the Company.
Without limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any contract,
lease, sublease, license or sublicense (or series of related contracts, leases,
subleases, licenses and sublicenses) outside the Ordinary Course of Business,
nor has the Company submitted or received any business proposals or given
quotations with respect to any prospective contract, lease, sublease, license,
or sublicense (or series of related contracts, leases, subleases, licenses,
sublicenses) which are outside the Ordinary Course of Business;
(iii) except in the Ordinary Course of Business and
as set forth on SCHEDULE 4(F) of the Disclosure Schedule, no party has
accelerated, terminated, amended, modified, or canceled or waived any rights or
obligations under any contract, lease, sublease, license or sublicense (or
series of related contracts, leases, subleases, licenses and sublicenses) to
which the Company is a party or by which it is bound;
(iv) except in the Ordinary Course of Business and
as set forth on SCHEDULE 4(F) of the Disclosure Schedule, the Company has not
imposed any Security Interest upon any of its assets, tangible or intangible;
<PAGE> 23
(v) the Company has not made any capital expenditure
(or series of related capital expenditures) outside the Ordinary Course of
Business;
(vi) the Company has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and acquisitions)
outside the Ordinary Course of Business;
(vii) the Company has not created, incurred, assumed,
or guaranteed any indebtedness (including capitalized lease obligations)
outside the Ordinary Course of Business;
(viii) the Company has not delayed or postponed
(beyond its normal practice) the payment of accounts payable and other
Liabilities;
(ix) the Company has not accelerated the payments
of accounts receivable beyond its normal practice;
(x) the Company has not canceled, compromised,
waived, or released any right or claim (or series of related rights and claims)
outside the Ordinary Course of Business;
(xi) the Company has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
(xii) there has been no change made or authorized in
the articles of incorporation or bylaws of the Company;
(xiii) the Company has not issued, sold, or
otherwise disposed of any of its capital stock, granted any options, warrants,
or other rights to purchase or obtain (including upon conversion or exercise)
any of its capital stock or redeemed, repurchased or otherwise acquired or
transferred any of its capital stock;
(xiv) the Company has not declared, set aside, or
paid any dividend or distribution with respect to its capital stock or
redeemed, purchased, or otherwise acquired any of its capital stock;
(xv) the Company has not experienced damage,
destruction, or loss (whether or not covered by insurance) to its property in
excess of $10,000 singly, or in the aggregate;
(xvi) except for loans from the shareholders of TFI
as set forth on SCHEDULE 4(F) of the Disclosure Schedule, the Company has not
made any loan to, or entered into any other transaction with, any of its
directors, officers, and employees outside the Ordinary Course of Business
giving rise to any claim or right on its part against the person or on the part
of the person against it;
(xvii) the Company has not entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
<PAGE> 24
(xviii) the Company has not granted any increase
outside the Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees;
(xix) the Company has not adopted any Employee
Benefit Plan or any (A) bonus, (B) profit-sharing, (C) severance, (D) pension,
(E) retirement, (F) medical, hospitalization, life or other insurance, or (G)
other plan, contract, or commitment for any of its directors, officers, and
employees, or modified or terminated any existing such Employee Benefit Plan or
other such plan, contract, or commitment;
(xx) the Company has not made any other change in
employment terms for any of its directors, officers, and, except in the
Ordinary Course of Business, employees;
(xxi) the Company has not made or pledged to make
any charitable or other capital contribution outside the Ordinary Course of
Business;
(xxii) the Company has not failed to maintain levels
of inventory in the Ordinary Course of Business;
(xxiii) the Company has not failed to maintain its
assets in repair, order and condition in accordance with the Ordinary Course of
Business;
(xxiv) to the Knowledge of the Company, there has
not been any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the Company; and
(xxv) the Company has not committed to any of the
foregoing.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to
the extent reflected or reserved against in the Most Recent Financial
Statements, the Company had, to the Knowledge of the Company and the Principal
Shareholders, as of such date, no material Liabilities (including any breach of
contract, breach of warranty, tort, infringement, or violation of Law or any
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand) or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise), of a nature required to be reflected in its balance
sheet, or the notes thereto, prepared in accordance with GAAP applicable to
Company and consistent with the past practice and custom of the Company.
SCHEDULE 4(G) of the Disclosure Schedule contains a list of all indebtedness of
the Company.
(h) TAX MATTERS.
(i) The Company has timely filed all Tax Returns
that it was required to file. All such Tax Returns were correct and complete
in all material respects and set forth with reasonable accuracy all material
items required to be set forth therein. The Company has paid, accrued or
otherwise adequately reserved Liabilities for the payment of all Taxes, whether
or not yet due and payable and whether or not disputed, in respect of the
periods covered by Tax Returns which are due on or before
<PAGE> 25
the Closing Date. Except as set forth on SCHEDULE 4(H), the Company is
not currently the beneficiary of any extension of time within which to file any
Tax Return. Except as set forth on SCHEDULE 4(H), no claim has ever been made by
an authority in a jurisdiction where the Company does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax. Upon consummation of the
transaction contemplated herein, no taxing authority will have any Basis to
pursue any claims against the Buyer as a transferee or otherwise for any Tax
Liabilities of the Company.
(ii) Except as set forth on SCHEDULE 4(H), the
Company has paid all Taxes required to have been paid. The Company has
withheld and paid over all Taxes required to have been withheld and paid over,
including, without limitation, those required to be withheld or paid over in
connection with amounts paid or owing to any employee, creditor, independent
contractor, or other Person. The Company has collected and paid over all Taxes
required to have been collected and paid over, including, without limitation,
any and all sales tax or use tax required to be collected and paid over.
(iii) Except as set forth on SCHEDULE 4(H), the
Company does not expect any authority to assess any additional Taxes for any
period for which (A) a Tax Return as to such type of Tax has been filed; (B)
any Tax for which no return was required, for any period for which a payment as
to such type of Tax has been made; or (C) any Tax for any period for which a
Tax Return is due but has not been filed. There is no dispute or claim
concerning any Tax Liability of the Company either (Y) claimed or raised by any
authority in writing or (Z) for which the Company has Knowledge based upon
personal contact with any agent of such authority. SCHEDULE 4(H) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to the Company for taxable periods ended on or after
March 31, 1991, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit. The
Company has delivered to the Buyer correct and complete copies of all Tax
Returns, audit reports, tax work papers, examinations, reports, and statements
of deficiencies assessed against or agreed to by the Company since March 31,
1991.
(iv) Except as set forth on SCHEDULE 4(H), the
Company has not waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency.
(v) The Company has not filed a consent under Code
Sec. 341(f) (or any corresponding provision of state, local or foreign income
tax Law) concerning collapsible corporations. The Company disclosed on its
federal income Tax Returns all positions taken therein that could give rise to
a substantial understatement of federal income Tax within the meaning of Code
Sec. 6661 or Code Sec. 6662 or any penalty under the Code (or any corresponding
provisions of state, local or foreign income tax Law). The Company has at all
times prior to and including the date hereof with respect to all of its income
and other Tax Returns acted in good faith and due diligence in stating its Tax
Liability and components thereof and has timely filed all of such income and
other Tax Returns. The Company is not a party to any Tax allocation or sharing
<PAGE> 26
agreement with any Person outside the existing affiliated group. The
Company has never been (or has no Liability for unpaid Taxes because it once
was) a member of an affiliated group during any part of any consolidated return
year within any part of which consolidated return year any corporation other
than the Company also was a member of the affiliated group.
(vi) SCHEDULE 4(H) of the Disclosure Schedule sets
forth the basis of the Company in its Assets.
(vii) The unpaid Taxes of the Company do not
materially exceed the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) set forth on the face of the Most Recent Balance Sheet, as adjusted for
the transactions occurring in the Company's Ordinary Course of Business during
the period from the date of the Most Recent Balance Sheet to the Closing Date.
(i) ASSETS. The Assets constitute all tangible and
intangible assets, properties, rights, know-how, processes and ability
necessary for the conduct of the Company businesses as presently conducted and
as presently proposed to be conducted. Each item of Personal Property, to the
Knowledge of the Company and the Principal Shareholders, except as otherwise
set forth in SCHEDULE 4(I) of the Disclosure Schedule: (i) is, free from
material defects (patent and latent); (ii) has been maintained in accordance
with the preventive maintenance recommendations of the manufacturer; (iii) in
good operating condition and repair (subject to normal wear and tear); and (iv)
is suitable for the purposes for which it presently is used.
(j) OWNED REAL PROPERTY. The Real Property is all of the
real estate owned by the Company. With respect to the Real Property:
(i) the entity identified as the owner has good and
marketable title to the parcel of real property, free and clear of any Security
Interest, easement, covenant, assessment, or other restriction, except for (A)
real estate taxes, installments of special assessments or governmental charges
or similar liens, in each case that are not yet delinquent, or which are set
forth on SCHEDULE 4(J)(I) and are being contested in good faith, (B) recorded
easements, covenants, and other restrictions which do not impair the current
use, occupancy, or value, or the marketability of title, of the property
subject thereto, (C) Security Interests listed in SCHEDULE 4(J)(I) of the
Disclosure Schedule, and (D) zoning and other restrictions imposed by Law;
(ii) there are no (A) pending or threatened
condemnation proceedings, (B) pending or threatened litigation or
administrative actions, or (C) other matters affecting adversely the current
use, operation, occupancy or value thereof;
(iii) the legal description for the parcel contained
in the deed or deeds conveying title thereof to the entity describes such
parcel fully and adequately. Except as listed in SCHEDULE 4(J)(III), the
buildings and improvements on the parcel listed in SCHEDULE 4(J)(I) are located
within the boundary lines of the described parcels of land, are not in
violation of applicable setback requirements, zoning Laws, and ordinances (and
none of the properties or buildings or improvements thereon are
<PAGE> 27
subject to "permitted non-conforming use" or "permitted non-conforming
structure" classifications), and do not encroach on any easement which may
burden the land. The land does not serve any adjoining property for any purpose
inconsistent with the use of the land, the property is not located within any
flood plain or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained, and access to the
property is provided by paved public right-of-way with adequate curb cuts
available;
(iv) all facilities have received all approvals of
governmental authorities (including licenses and permits) required in
connection with the ownership or operation thereof, the lack of which would not
have a material effect on operations of the Company and, to the Knowledge of
the Company and the Principal Shareholders, such facilities have been operated
and maintained substantially in accordance with applicable Laws, rules and
regulations;
(v) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the parcel of real
property or any improvements thereon, except for (A) such items as are
recorded, and (B) such items that are listed in SCHEDULE 4(J)(V) of the
Disclosure Schedule;
(vi) there are no outstanding options or rights of
first refusal to purchase any parcel of real property, or any portion thereof
or interest therein;
(vii) there are no parties (other than the Company)
in possession of the parcel of real property;
(viii) none of the real estate is the subject of a
currently pending condemnation or eminent domain proceeding and the Company has
not received any notice of the existence of any future condemnation or eminent
domain proceeding with respect to any of the real property within two (2) years
prior to the date hereof;
(ix) all facilities located on the parcel of real
property are supplied with utilities and other services which the Company
believes are necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm sewer, all of which
services are adequate in accordance with all applicable Laws, ordinances,
rules, and regulations and are provided via public roads or via permanent,
irrevocable, appurtenant easements benefitting the parcel of real property;
(x) each parcel of real property abuts on and has
direct vehicular access to a public road or access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of real
property;
(xi) no materials have been delivered to the parcel
of real property, nor has any work or labor been performed on said real
property during the last 90 days which has not been fully paid for, and no
Person or corporation presently has any lien, or right of lien, against said
real property for labor or materials; and
<PAGE> 28
(xii) the Company has not received notice, either
orally or in writing of the existence of or the intention to create assessments
(that are not currently in effect) on the real property from any public
authority.
(k) INTELLECTUAL PROPERTY.
(i) The Company owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing hereunder. The
Company has taken all necessary or desirable action to protect each item of
Intellectual Property that it owns or uses. The Company has never conducted
business under any other name than the Tradename.
(ii) The Company has never received any charge,
complaint, claim, or notice alleging any interference, infringement,
misappropriation, or violation with any Intellectual Property rights of third
parties. To the Knowledge of the Company or the Principal Shareholders, the
Company has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third parties, nor
has any third party interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of the
Company.
(iii) SCHEDULE 4(K)(III) of the Disclosure Schedule
identifies each patent or registration which has been issued or assigned to the
Company with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration or invention
disclosure made with respect to any of its Intellectual Property, and
identifies each license, agreement, or other permission which the Company has
granted to any third party with respect to any of its Intellectual Property
(together with any exceptions), including but not limited to, any rights to
manufacture, have manufactured, assemble or sell any products or processes
utilizing the Company's Intellectual Property. The Company has delivered or
made available to the Buyer correct and complete copies of all such patents,
registrations, applications, assignments, licenses, agreements, and permissions
(as amended to date) and have made available to the Buyer correct and complete
copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. With respect to each item of Intellectual
Property that the Company owns:
(A) the identified owner possesses all
right, title and interest in and to the item;
(B) the item is not subject to any
outstanding judgment, order, decree, stipulation, injunction, or charge;
(C) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand is pending or is threatened
which challenges the legality, validity, enforceability, use or ownership of
the item; and
<PAGE> 29
(D) the Company has never agreed to
indemnify any person or entity for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) SCHEDULE 4(K)(IV) of the Disclosure Schedule
identifies each item of Intellectual Property material to the operation of the
business of the Company that any third party owns and that the Company uses
pursuant to license, sublicense, agreement, or permission. The Company has
supplied the Buyer with correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each such item of used Intellectual Property:
(A) the license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable and in full
force and effect;
(B) the license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the Closing and will be available
for use by the Buyer on identical terms and conditions immediately subsequent
to the Closing hereunder;
(C) no party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) no party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) the underlying item of Intellectual
Property is not subject to any outstanding judgment, order, decree,
stipulation, injunction, or charge;
(G) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand is pending or is
threatened which challenges the legality, validity, or enforceability of the
underlying item of Intellectual Property; and
(H) the Company has not granted any
sublicense or similar right with respect to the license, sublicense, agreement,
or permission.
(v) The Company has no Knowledge of any new products,
inventions, procedures, or methods of manufacturing or processing that any
competitors or other third parties have developed which reasonably could be
expected to supersede or make obsolete any product or process of the Company.
(vi) The Company has taken reasonable security
measures to protect the secrecy, confidentiality, and value of the Company's
Intellectual Property. Any of the Company's employees or other persons who,
either alone or in concert with others, developed, invented, discovered,
derived, programmed or designed the Intellectual
<PAGE> 30
Property, or who has knowledge of or access to the Intellectual
Property, have been put on notice of the Company's interest in the Intellectual
Property and have entered into nondisclosure agreements with the Company, copies
of which have been furnished to Buyer.
(vii) No third party has claimed or to the Knowledge
of the Company or the Principal Shareholders has reason to claim that any
person employed by or affiliated with the Company has (A) violated or may be
violating any of the terms or conditions of his employment, noncompetition or
nondisclosure agreement with such third party, (B) disclosed or may be
disclosing or utilized or may be utilizing any trade secret or proprietary
information or documentation of such third party, or (C) interfered or may be
interfering in the employment relationship between such third party and any of
its present or former employees. No third party has requested information from
the Company which suggests that such a claim might be contemplated. No person
employed by or affiliated with the Company has employed or proposed to employ
any trade secret or any information or documentation proprietary to any former
employer, and no person employed by or affiliated with the Company has employed
or proposes to employ any trade secret or any information or documentation
proprietary to any former employer, and no person employed by or affiliated
with the Company has violated any confidential relationship which such person
may have had with any third party, in connection with the development,
manufacture or sale of any product or proposed product or the development or
sale of any service or proposed service of the Company, and the Company has no
reason to believe there will be any such employment or violation. None of the
execution or delivery of this Agreement, or the carrying on of the business of
the Company as officers, employees or agents by any officer, director or key
employee of the Company, or the conduct or proposed conduct of the business of
the Company, will conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under any contract, covenant or
instrument under which any such person is obligated.
(l) INVENTORY. Except for the Rings Inventory or as set
forth in SCHEDULE 4(L) of the Disclosure Schedule, the inventory of the Company
consists of raw materials and supplies, manufactured and purchased parts, goods
in process, and finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of which is
slow-moving under normal industry practices, obsolete, damaged, or defective.
(m) REAL PROPERTY LEASES. The Company does not lease or
sublease any real property.
(n) CONTRACTS. SCHEDULE 4(N) of the Disclosure Schedule
lists all the following contracts, agreements, and other written arrangements
to which the Company is a party:
(i) any written arrangement (or group of related
written arrangements) for the lease of personal property from or to third
parties;
(ii) any written arrangements (or group of related
written arrangements) for the purchase or sale of raw materials, commodities,
supplies,
<PAGE> 31
utilities, products, equipment (including equipment being manufactured
pursuant to customer specifications) or other personal property or for the
furnishing or receipt of services which calls for performance over a period of
more than six months and/or which involves an expenditure in the aggregate of
more than Twenty-Five Thousand Dollars ($25,000.00);
(iii) any written arrangement concerning a partnership
or joint venture;
(iv) any written arrangement (or group of related
written arrangements) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness (including
capitalized lease obligations) under which it has imposed (or may impose) a
Security Interest on any of its assets, tangible or intangible;
(v) any written arrangement concerning confidentiality
or non-competition;
(vi) any written arrangement involving the Company and
its Affiliates;
(vii) any written arrangement with any of its directors,
officers, and employees in the nature of a collective bargaining agreement,
employment agreement, bonus agreement, profit sharing agreement, option
agreement, deferred compensation agreement, or severance agreement;
(viii) any written arrangement under which the
consequences of default or termination could have an adverse effect on the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of the Company taken as a whole; or
(ix) any other written arrangement (or group of related
written arrangements) not entered into the Ordinary Course of Business.
The Company has delivered to the Buyer a correct and complete copy of each
written arrangement listed in SCHEDULE 4(N) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed: (A) the
written arrangement is legal, valid, binding, enforceable, and in full force
and effect; (B) the written arrangement will continue to be legal, valid,
binding, and enforceable and in full force and effect on identical terms
following the Closing; (C) no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default or permit termination, modification, or acceleration, under the written
arrangement; (D) no party has repudiated any provision of the written
arrangement; (E) products and equipment currently being manufactured are in
compliance with the customer's specifications; (F) the Company's current
backlog of filling customer orders is approximately One Million Seven Hundred
Fourteen Thousand Dollars ($1,714,000.00); and (G) except as shown on SCHEDULE
4(N) or reflected in the Most Recent Fiscal Month End financial statements, no
advance payment has been received on such arrangement. Except as set forth on
SCHEDULE 4(N), the Company is not a party to any verbal contract, agreement,
or other arrangement which, if reduced to written form, would be required to
be listed in SCHEDULE 4(N) of the Disclosure
<PAGE> 32
Schedule under the terms of this Section 4(n). Except as set forth on
SCHEDULE 4(N) of the Disclosure Schedule, no unfilled customer order or
commitment obligating the Company to process, manufacture, or deliver products
or perform services will result in a loss to the Company upon completion of
performance. Except as set forth on SCHEDULE 4(N) of the Disclosure Schedule,
no purchase order or commitment of the Company is in excess of normal
requirements, nor the prices provided therein in excess of current market prices
for the products or services to be provided thereunder. With the exception of
First Mississippi Corporation, no supplier of the Company has indicated within
the past year that it will stop, or decrease the rate of, supplying materials,
products, or services to the Company and no customer of the Company has
indicated within the past year that it will stop, or decrease the rate of,
buying materials, products, or services from the Company.
(o) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth
on SCHEDULE 4(O), all notes and accounts receivable of the Company (including
accounts receivables, loan receivables and advances) are reflected properly on
their books and records, are valid receivables which have arisen only from bona
fide transactions in the Ordinary Course of Business.
(p) POWERS OF ATTORNEY. There are no outstanding powers
of attorney executed on behalf of the Company.
(q) INSURANCE. SCHEDULE 4(Q) of the Disclosure Schedule
sets forth the following information with respect to each insurance policy
(including policies providing general liability, products liability,
automobile, and workers' compensation coverage, group health or life, but
excluding property, casualty, bond and surety, key man and other insurance
policies and arrangements to which the Company is a party, a named insured, or
otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number, the period of coverage and
the estimated annual premiums, costs and any related administrative charges;
(iv) the scope (including an indication of whether
the coverage was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are calculated and
operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss-sharing arrangements.
With respect to each such insurance policy, (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; (B) the policy will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing Date; (C) neither the Company
nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and
<PAGE> 33
no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination, modification, or
acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. The Company has been covered during the past two (2)
years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. The
Company had been covered during the eight (8) years immediately preceding such
two year period by insurance in scope and amount customary and reasonable for
the businesses in which it has engaged during the aforementioned period.
SCHEDULE 4(Q) of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company.
(r) LITIGATION. SCHEDULE 4(R) of the Disclosure Schedule
sets forth each instance in which the Company (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge or (ii) is a party
or is threatened to be made a party to any charge, complaint, action, suit,
proceeding, hearing, or investigation of or in any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator. None of the charges, complaints, actions, suits,
proceedings, hearings, and investigations set forth in SCHEDULE 4(R) of the
Disclosure Schedule could result in any adverse change in the assets,
liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company taken as a whole. None of the Company and
the directors and officers (and employees with responsibility for litigation
matters) of the Company has any reason to believe that any such charge,
complaint, action, suit, proceeding, hearing, or investigation may be brought
or threatened against the Company.
(s) PRODUCT WARRANTY. To the Knowledge of the Company
and the Principal Shareholders, each product or piece of equipment
manufactured, sold, leased, or delivered or service rendered or performed by
the Company has been in conformity with all applicable contractual commitments
and all express and implied warranties, and the Company has no Liability (and
there is no Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any
of them giving rise to any Liability) for replacement or repair thereof or
other damages in connection therewith. To the Knowledge of the Company and the
Principal Shareholders, no product manufactured, sold, leased, or delivered or
service rendered or performed by the Company is subject to any guaranty,
warranty, or other indemnity beyond applicable standard terms and conditions of
sale or lease, those implied by Law or required by contracts with particular
customers. SCHEDULE 4(S) of the Disclosure Schedule includes copies of the
standard terms and conditions of sale or lease for the Company (containing
applicable guaranty, warranty, and indemnity provisions) for each of the
Company's five (5) largest customers in each of the three (3) most recent
fiscal years, and a copy of any unexpired express warranty, indemnity or
guaranty given to any customer with respect to any product manufactured, sold,
leased or delivered, or service rendered or performed by the Company since
January 1, 1992 which is not consistent with the Company's standard terms and
conditions.
(t) PRODUCT LIABILITY. To the Knowledge of the Company
and the Principal Shareholders, the Company has no liability (and there is no
Basis for any present or future charges, complaint, action, suit, legal
proceeding, hearing, investigation, claim, demand against it giving rise to any
Liability arising out of any injury
<PAGE> 34
to persons or property or the property of the Company as a result of the
ownership, possession, or use of any product manufactured and sold, leased, or
delivered by the Company prior to the Closing Date. The Company has not been a
party to any product liability litigation which alleged any injury to persons or
property or the property of the Company as a result of the ownership, possession
or use of any product manufactured and sold, leased and delivered or service
rendered or performed by the Company at any time since January 1, 1990. To the
Knowledge of the Company and the Principal Shareholders, all products designed
and/or manufactured and shipped by the Company prior to the Closing Date were,
when shipped, in substantial compliance with all applicable rules and
regulations of the Occupational Health and Safety Administration and with all
applicable federal and state workplace health and safety Laws and regulations.
(u) EMPLOYEES. Except as set forth in SCHEDULE 4(U) of
the Disclosure Schedule, to the Knowledge of the Company and the directors and
officers (and employees with responsibility for employment matters) of the
Company, no key employee or group of employees has any plans to terminate or
modify his or her employment with the Company. Except as set forth in SCHEDULE
4(U) of the Disclosure Schedule, to the Knowledge of the Company and the
Principal Shareholders (and the personnel responsible for labor relations of
the Company), the Company has complied with all legal requirements relating to
the employment of labor, including, without limitation, provisions relating to
wages, hours, equal opportunity, collective bargaining and the payment of
social security and other Taxes. All employees of the Company are eligible to
work under the Immigration Reform Control Act of 1986, as amended, and the
Company maintains the records required thereunder. The Company is not a party
to or bound by any collective bargaining agreement, nor has it experienced any
strikes, grievances, claims of unfair labor practice or other collective
bargaining disputes. The Company has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of the Company. SCHEDULE 4(U) in the Disclosure Schedule
contains (i) a list of all grievances, if any, presently pending and which
involves any employee at any facility of the Company, as well as a description
and the status of each, (ii) a list of all unfair labor practice charges, if
any, as well as a description and the status of each, filed prior to the date
hereof with any governmental agency by or on behalf of any employee at any
facility of the Company, and (iii) a list of all employee-related litigation,
if any, including administrative proceedings, as well as a description and the
status of each case, filed by or on behalf of any employee at any facility of
the Company.
(v) EMPLOYEE BENEFITS. SCHEDULE 4(V) of the Disclosure
Schedule lists all of the Company Plans. For purposes of this Section 4(v) and
of Section 5(k) hereof, the "Company" includes all members of any "controlled
group", as defined in ERISA Sec. 302(f)(6)(B), of which the Company is a
member. The representations and warranties set forth in this Section 4(v) are
made with respect to all or certain, as indicated, of the Company Plans listed
on SCHEDULE 4(V). Except as otherwise disclosed on SCHEDULE 4(V):
(i) None of the Company Plans is a Pension Plan, a Defined
Benefit Plan, or a Multiemployer Plan.
<PAGE> 35
(ii) Each Employee Benefit Plan substantially complies,
in form and operation, with all applicable provisions of ERISA, the Code, and
other applicable Law; and all required documents and reports, including plan
documents, trust agreements, insurance contracts, annual reports (Form 5500 or
other prescribed form), summary annual reports, and summary plan descriptions,
are in existence and, to the extent required, have been adopted, executed,
delivered, filed and/or distributed appropriately with respect to each such
Plan in accordance with ERISA Title I; and the group health plan continuation
coverage requirements of ERISA Title I, Part 6, and Code Sec. 4980B have been
met with respect to each Employee Welfare Benefit Plan to which they apply.
(iii) The Company, in its capacity as the Plan Sponsor
and/or Administrator of each Employee Benefit Plan and as a Fiduciary with
respect to each such Plan, has substantially complied with all applicable
provisions of ERISA, the Code, and other applicable Law.
(iv) All employer and employee contributions, including
employee salary reduction contributions, premiums, and other payments which are
due to, under, or with respect to any Company Plan have been paid, and all such
contributions, premiums, and other payments for any period ending on or before
the Closing Date which are not yet due have been paid or accrued in accordance
with applicable Law and the past custom and practice of the Company.
(v) Neither the Company nor any Employee Benefit Plan
has engaged in any Prohibited Transaction; no investigation or other
proceedings have been commenced to remove or otherwise sanction any Fiduciary
of any such Plan; and there has been no settlement agreement or court order
with respect to which a civil penalty could be assessed against the Company
under ERISA Sec. 502(l). No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Employee Benefit Plan. No
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand with respect to the administration or the investment of the assets of
any Employee Benefit Plan (other than routine claims for benefits) is pending
or threatened. The Company has no Knowledge of any Basis for any such charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand.
(vi) Subject only to any limitations or restrictions
expressly imposed by ERISA, the Code, or other applicable Law, the Company has
full and unlimited authority, which it may exercise or delegate, to administer
and interpret each Company Plan in its discretion and to amend, suspend, and/or
terminate each such Plan at any time, and the Company has not made any
enforceable, oral or written representations to any Person that modify the
scope of such authority as set forth in the governing documents of the Company
Plans.
(vii) Each Employee Pension Benefit Plan is either a
Qualified Plan or an Exempt Plan, and each such Qualified Plan, as most
recently amended and currently in effect, is the subject of a favorable
determination letter from the Internal Revenue Service with respect to its
qualified status.
<PAGE> 36
(viii) The Company has delivered to the Buyer correct and
complete copies of (A) all documents, in whatever form, setting forth the
provisions of each Company Plan, including (but not limited to) the plan
documents and summary plan descriptions for each Employee Benefit Plan; (B) the
most recent determination letter received from the Internal Revenue Service
with respect to each Qualified Plan; (C) the most recent Form 5500 (or other
prescribed form) Annual Report (including all schedules and attachments) of
each Employee Benefit Plan; (D) all related trust agreements, insurance
contracts, and other funding arrangements which implement each Employee Benefit
Plan; and (E) all correspondence, in whatever form, with any Governmental
Authority regarding any Company Plan.
(ix) The Company does not maintain and has never
maintained, does not contribute to, and never has contributed or been required
to contribute to, any Company Plan or other Employee Welfare Benefit Plan
providing health, accident, disability, or death (including life insurance)
benefits to retirees or other former employees, their spouses, or their
dependents (other than group health plan continuation coverage in accordance
with ERISA Title I, Part 6 and Code Sec. 4980B).
(w) GUARANTIES. Except in connection with the
NationsBank Term Debt, the Assets are not bound by any guaranty or not
otherwise liable for any Liability or obligation (including indebtedness) of
any other person.
(x) ENVIRONMENT. Except as set forth in SCHEDULE 4(X) of
the Disclosure Schedule:
(i) To the Knowledge of the Company and the
Principal Shareholders, the Company and its Affiliates, and the predecessors of
the Company, have complied with all Laws (including rules and regulations
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof) concerning the environment. No charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has been filed or
commenced against any of them alleging any failure to comply with any such Law
or regulation.
(ii) To the Knowledge of the Company and the
Principal Shareholders, the Company has no Liability (and there is no Basis
related to the past or present operations, properties, or facilities of the
Company and its predecessors and Affiliates for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
against the Company giving rise to any Liability) under the Emergency Planning
and Community Right-to-Know Act of 1986 (as amended), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Federal Water Pollution Control Act
of 1972, the Clean Air Act of 1970, the Safe Drinking Water Act of 1974, the
Toxic Substances Control Act of 1976, the Refuse Act of 1989 (each as amended),
or any other Law (or rule or regulation thereunder) of any federal, state,
local, or foreign government (or agency thereof), concerning release or
threatened release of hazardous substances, public health and safety, or
pollution or protection of the environment.
(iii) To the Knowledge of the Company and the
Principal Shareholders, the Company has no Liability (and neither the Company
nor its predecessors and Affiliates has handled or disposed of any substance,
arranged for the
<PAGE> 37
disposal of any substance, or owned or operated any property or
facility in any manner that could form the Basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common Law or pursuant to any statute) against the Company
giving rise to any Liability) for damage to any site, location, or body of water
(surface or subsurface) or for illness or personal injury to any employee.
(iv) To the Knowledge of the Company and the
Principal Shareholders, the Company has obtained and been in compliance with
all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, local, and foreign Laws (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including Laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(v) To the Knowledge of the Company and the
Principal Shareholders, all properties and equipment used in the business of
the Company are and have been free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2 trans-dichloroethylene, dioxins, dibenzofurans, and
Extremely Hazardous Substances.
(vi) To the Knowledge of the Company and the
Principal Shareholders, no pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste ever has been buried, stored, spilled,
leaked, discharged, emitted, or released on the Real Property, or if buried,
stored, spilled, leaked, discharged, emitted or released on the Property, has
been cleaned up and remediated in accordance with Laws and disclosed to all
public agencies having jurisdiction thereof.
(y) LEGAL COMPLIANCE.
(i) To the Knowledge of the Company and the
Principal Shareholders, the Company has complied with all Laws (including rules
and regulations thereunder) of federal, state, local, and foreign governments
(and all agencies thereof). No charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against the Company alleging any failure to comply with any such Law or
regulation.
(ii) To the Knowledge of the Company and the
Principal Shareholders, the Company has complied with all applicable Laws
(including rules and regulations thereunder) relating to the employment of
labor, employee civil rights, and equal employment opportunities.
<PAGE> 38
(iii) The Company has not violated in any respect or
received a notice or charge asserting any violation of the Sherman Act, the
Clayton Act, the Robinson-Patman Act, or the Federal Trade Commission Act, each
as amended.
(iv) The Company has not:
(A) made or agreed to make any contribution,
payment, or gift of funds or property to any governmental official, employee,
or agent where either the contribution, payment, or gift or the purpose thereof
was illegal under the Laws of any federal, state, local, or foreign
jurisdiction;
(B) established or maintained any unrecorded
fund or asset for any purpose, or made any false entries on any books or
records for any reason; or
(C) made or agreed to make any contribution,
or reimbursed any political gift or contribution made by any other person, to
any candidate for federal, state, local, or foreign public office.
(v) To the Knowledge of the Company and the
Principal Shareholders, the Company has filed in a timely manner all reports,
documents, and other materials it was required to file (and the information
contained therein was correct and complete in all respects) under all
applicable Laws (including rules and regulations thereunder).
(vi) To the Knowledge of the Company and the
Principal Shareholders, the Company has possession of all records and documents
it was required to retain under all applicable Laws (including rules and
regulations thereunder).
(z) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY.
Except in their roles as lenders, shareholders, directors, officers or
employees of, or consultants to, the Company, none of the Principal
Shareholders and their Affiliates has been involved in any business arrangement
or relationship with the Company within the past thirty-six (36) months, and
none of the Principal Shareholders and their Affiliates owns any property or
right, tangible or intangible, which is used in the business of the Company.
(aa) INTENTIONALLY DELETED.
(ab) BROKERS' FEES. The Company has no Liability or
obligation to pay any fees, commissions or similar compensation to any broker,
finder, or agent, or other Person with respect to the transactions contemplated
by this Agreement.
(ac) EXON-FLORIO. The Company has not entered into any
contracts to supply goods or services to the United States Government or any
agency thereof in which such goods or services are subject to export
restrictions for national security reasons, nor has it supplied goods or
services to a contractor supplying goods or services to the United States
Government or any agency thereof in which such goods or services are subject to
export restrictions for national security reasons. Products
<PAGE> 39
manufactured by the Company are subject to no export restrictions
imposed by the United States Government.
(ad) HEALTH AND SAFETY.
(i) To the Knowledge of the Company and the
Principal Shareholders, the Company and its predecessors and Affiliates have
complied with all Laws (including rules and regulations thereunder) of federal,
state, local, and foreign governments (and all agencies thereof) concerning the
public health and safety, and employee health and safety. No charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against any of them alleging any failure to
comply with any such Law or regulation.
(ii) To the Knowledge of the Company and the
Principal Shareholders, the Company has no Liability (and there is no Basis for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Company giving rise to any
Liability) under the Occupational Safety and Health Act, as amended, or any
other Law (or rule or regulation thereunder) of any federal, state, local, or
foreign government (or agency thereof) concerning employee health and safety.
(iii) To the Knowledge of the Company and the
Principal Shareholders, the Company has no Liability (and the Company has not
exposed any employee to any substance or condition that could form the Basis
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand (under the common Law or pursuant to any
statute) against the Company giving rise to any Liability) for any illness of
or personal injury to any employee.
(iv) To the Knowledge of the Company and the
Principal Shareholders, the Company has obtained and been in compliance with
all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, local, and foreign Laws (including rules, regulations, codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety.
(v) All product labeling of the Company has been in
conformity with applicable Laws (including rules and regulations thereunder).
(ae) COMPUTER SYSTEM. Except as disclosed in SCHEDULE
4(AE), to the Knowledge of the Company and the Principal Shareholders, all
computer hardware and software and related materials used by the Company and
the Company internet access and internet home page (herein collectively
referred to as the "Computer System") is in good working order and condition,
and the Company has not experienced any significant defects in design,
workmanship or materials, and the Computer System has the performance
capabilities, characteristics and functions necessary to the conduct of its
business and operations as presently conducted and as presently proposed to be
conducted. The use of the Computer System (including any software
modifications) (i)
<PAGE> 40
has not violated or infringed upon and will not violate or
infringe upon the rights of any third parties, and (ii) has not resulted and
will not result in the termination of any maintenance, service or support
agreement relating to any part of the Computer System or any reduction in the
services provided to the Company, warranties available to the Company or rights
of the Company thereunder.
(af) INTERNATIONAL TRADE. The Company has maintained
adequate records with respect to any preferential tariff claimed for any of its
exported products. The Company has received no notice of a customs audit by
the United States or any other foreign government, and the Company has not
received any notice of a violation, assessment, or penalty with respect to
preferential tariffs. The Company is not in violation of the Foreign Corrupt
Practices Act.
(ag) DISCLOSURE. This Agreement, including the Disclosure
Schedule and any other exhibits, does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained herein, in light of the circumstances in
which they are made, not misleading. To the Knowledge of the Company and the
Principal Shareholders, there is no material fact which has not been disclosed
to the Buyer in writing of which the officers or directors of the Company are
aware and which is or could reasonably be anticipated to be material to the
Buyer's decision to consummate the transactions contemplated by this Agreement
on the terms and conditions set forth herein.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the parties will use his or its
best efforts to take all action and to do all things necessary, proper, or
advisable to consummate and make effective the transactions contemplated by
this Agreement (including satisfying the closing conditions set forth in
Section 7 below).
(b) NOTICES AND CONSENTS. The Company will give any
notices to third parties, and will use best efforts to obtain any third-party
consents, that the Buyer may request in connection with the matters pertaining
to the Company disclosed or required to be disclosed in the Disclosure
Schedule. Each of the Parties will take any additional action that may be
necessary, proper, or advisable in connection with any notices to, filings
with, and authorizations, consents, and approvals of governments, governmental
agencies, and third parties that he or it may require to give, make or obtain.
The Company will weekly provide notice to the Buyer of any increase in the line
of credit with NationsBank over the sum of Four Hundred Thousand Dollars
($400,000.00).
(c) OPERATION OF BUSINESS. The Company will not engage
in any practice, take any action, embark on any course of inaction, or enter
into any transaction outside the Ordinary Course of Business or incur any
indebtedness for borrowed money without Buyer's consent (other than accounts
payable at levels consistent with past practices). Without limiting the
generality of the foregoing, the Company will not engage in any practice, take
any action, embark on any course of inaction, or enter into any transaction of
the sort described in Section 4(f) above, or
<PAGE> 41
increase the Shareholder Loans so that the aggregate amount exceeds the
sum of Three Hundred Twenty-Five Thousand Dollars ($325,000.00).
(d) PRESERVATION OF BUSINESS. The Company will:
(i) conduct its operations only in the usual
and Ordinary Course of Business in accordance with past practices;
(ii) keep in full force and effect its corporate
existence;
(iii) use best efforts, consistent with sound
business judgment, to retain employees and preserve its present business
relationships;
(iv) maintain its assets in customary repair, order
and condition and maintain insurance comparable to that in effect on the date
hereof;
(v) maintain books, accounts and records in
accordance with past custom and practice as used in the preparation of the
financial statements described in Section 4(e) hereof;
(vi) permit the Buyer and the Buyer's employees,
agents and accounting and legal representatives to have access at reasonable
times to books, records, invoices, contracts, leases, key personnel,
independent accountants, facilities, equipment and other things reasonably
related to its businesses and assets; and
(vii) promptly inform the Buyer in writing of any
material variances from the representations and warranties contained in Article
4 hereof which become known to the Company.
(e) FULL ACCESS. The Company will permit representatives
of the Buyer to have full access at all times, and in a manner so as not to
interfere with the normal business operations of the Company, to all premises,
properties, books, records, contracts, Tax records, and documents of or
pertaining to the Company.
(f) NOTICE OF DEVELOPMENTS. The Company will give prompt
written notice to the Buyer of any material development affecting the Assets,
Liabilities, business, financial condition, operations, results of operations,
or future prospects of the Company, or any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement would have been
required to be disclosed to Buyer or which would render inaccurate any of the
representations, warranties or statements set forth in Section 4 hereof. Each
party will give prompt written notice to the other of any material development
affecting the ability of the Parties to consummate the transactions
contemplated by this Agreement. No disclosure by any Party pursuant to this
Section 5(f), however, shall be deemed to amend or supplement the Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
(g) EXCLUSIVITY. Neither the Principal Shareholders, the
Company, nor any of the Company's directors, officers, managerial employees,
nor any of their respective representatives, agents or Affiliates shall
directly or indirectly take any action
<PAGE> 42
which would have the effect of preventing or disabling the performance
by the Principal Shareholders and the Company of their obligations under this
Agreement or solicit, initiate, encourage, respond favorably to or condone
inquiries or proposals from, or provide any Confidential Information to, or
participate in any discussions or negotiations with, any Person (other than
Buyer, potential lenders to Buyer and their representatives) concerning (i) any
merger, sale of assets not in the Ordinary Course of Business, acquisition,
business combination, change of control or other similar transaction involving
the Company, (ii) any purchase or other acquisition by any Person of any shares
of capital stock of the Company, (iii) any debt financing not in the Ordinary
Course of Business involving the Company or any of its assets, (iv) liquidation,
dissolution, or recapitalization, or (v) similar transaction or business
combination involving the Company until June 30, 1997, unless the Closing
shall be extended by the mutual agreement of the parties. The Principal
Shareholders and the Company will promptly advise Buyer of, and communicate to
Buyer in writing the terms and conditions of (and the identify of the Person
making) any such inquiry, proposal or offer received.
(h) LIEN SEARCHES. The Company, at its expense, will
obtain an asset/lien report in all jurisdictions in which any Personal Property
is located or in which the Company is incorporated, owns any assets or
properties, or does business which report shall not contain any material
information not disclosed on the Disclosure Schedule.
(i) ADDITIONAL FINANCIAL STATEMENTS. The Company shall
furnish the Buyer with any interim unaudited balance sheets and statements of
income which are prepared for periods ending after the Most Recent Fiscal Month
End as soon as the same shall become available.
(j) BULK SALES ACT. Buyer and the Company hereby
mutually waive compliance with the bulk sales laws of the State of Tennessee,
including, but not limited to, Article 6 of the Uniform Commercial Code as in
effect in such state (all of the foregoing being collectively referred to
herein as the "Bulk Sales Laws") with respect to the sale of the Assets under
this Agreement. In consideration for such waiver, however, and the purchase
herein, the Company hereby agrees (i) to hold harmless, indemnify and defend
Buyer from and against any and all losses, claims, suits, demands, damages,
costs or expenses of any nature (including reasonable attorneys' fees and any
reasonable expense incurred in the investigation of any such matter) arising
from or relating to the noncompliance by either the Company and/or Buyer with
the Bulk Sales Laws with respect to the sale of the Assets under this
Agreement, and (ii) to promptly pay when due all debts and obligations of the
Company which were incurred or created prior to the Closing. The Company shall
execute and deliver to Buyer at Closing the Affidavit in the form of EXHIBIT F
attached hereto and incorporated herein by reference.
(k) ERISA. The Company will comply in all material
respects with all applicable provisions of ERISA, the Code, and other
applicable Law with respect to each Company Plan and will preserve unimpaired
the Company's authority to administer, interpret, amend, suspend, and/or
terminate each such Plan. Immediately upon becoming aware of any of the
following events or conditions with respect to any Company Plan, the Company
will give Buyer written notice specifying the nature of the
<PAGE> 43
matter of which the Company has become aware, what action the Company is
taking or proposes to take with respect thereto, and, as soon as known by the
Company, what action is being taken or proposed to be taken with respect thereto
by the applicable Plan, by any Person acting on behalf of such Plan, by the
Internal Revenue Service, by the United States Department of Labor, and/or by
any other Governmental Authority:
(i) Any proposed or final determination by the
Internal Revenue Service, by the PBGC, by the United States Department of
Labor, or by any other Governmental Authority that any Company Plan is not in
compliance with any applicable provisions of ERISA, the Code, or other
applicable Law or, with respect to any Employee Pension Benefit Plan (other
than an Exempt Plan), that such Plan is not a Qualified Plan;
(ii) The occurrence of a Prohibited Transaction
involving any Employee Benefit Plan; the commencement of any investigation or
other proceedings to remove or otherwise sanction any Fiduciary with respect to
any such Plan; or the effectuation of a settlement agreement or issuance of a
court order with respect to which a civil penalty could be assessed against the
Company under ERISA Sec. 502(l); and
(iii) Any impairment, however occasioned, of the
Company's authority to administer, interpret, amend, suspend, and/or terminate
any Company Plan.
Without the advance written consent of Buyer, the Company shall not:
(a) amend or modify any Company Plan listed on SCHEDULE
4(V) in any respect which is materially adverse to
Buyer's interests; nor
(b) adopt or become obligated to contribute to any
Employee Benefit Plan not listed on SCHEDULE 4(V).
For purposes hereof, any increase in the cost of or rate of contributions to
any Company Plan or any impairment of the Company's authority to administer,
interpret, amend, suspend, and/or terminate any Company Plan, however
occasioned, shall be treated as a modification of such Plan and as subject to
this paragraph, whether or not it results from an amendment to the governing
documents of such Plan.
(l) ENVIRONMENTAL REPORTS. The Company and Buyer jointly
and severally agree that:
(i) Buyer shall obtain, at its expense, within
thirty (30) days after the acceptance of this Agreement, a report of a Phase I
environmental assessment ("Phase I Assessment") of the Real Property prepared
by a registered engineer of Buyer's choice experienced in preparing such
assessments. The Phase I Assessment, if any, shall be certified to Buyer. At
Buyer's option, it may obtain at its expense a Phase II environmental
assessment ("Phase II Assessment").
The Phase I Assessment shall, at a minimum, comply with the American
Society for Testing & Materials ("ASTM")-Standard Practices for Environmental
Site Assessments, Standard Practice E1527 (the "ASTM Standard") and shall
specifically
<PAGE> 44
include a review of a disclosure questionnaire fully and
accurately completed by the Company and interviews of any employees of the
Company and owners of land adjacent to the Real Property. The engineer shall
recommend whether a Phase II Assessment should be undertaken as a result of the
information obtained.
If a Phase II Assessment is recommended and if Buyer so directs, the
engineer shall, within thirty (30) days of the date of the Phase I Assessment,
take appropriate samples and make appropriate tests of the soil, air, surface
water and ground water of the Real Property, all in accordance with the ASTM
Standard. Buyer shall pay the costs of the Phase II Assessment. Company shall
cooperate with any engineers or other parties which Buyer utilizes to effect
such assessments.
(ii) If the Phase I Assessment or a Phase II
Assessment identifies any environmental condition or any other circumstances
which requires remediation or removal to achieve applicable or relevant and
appropriate requirements, Buyer shall have the option to complete such
remediation or removal itself, or to terminate this Agreement; provided,
further, in the event of such termination, the Company shall reimburse Buyer
for all of its expenses (not to exceed Ten Thousand Dollars ($10,000.00))
incurred in connection with the Phase I and Phase II Assessment, including
without limitation, professional fees and expenses. Buyer shall in turn assign
and deliver to Company the results of the Phase I and Phase II Assessment. The
Company shall have no right to terminate this Agreement due to the results of
Buyer's environmental assessment.
(m) TITLE INSURANCE. The Company shall obtain and
deliver to the Buyer with respect to the Real Property, an ALTA Owners' Policy
of Title Insurance Form B-1987 (or equivalent policy acceptable to the Buyer if
the Real Property is located in a state in which an ALTA Owner's Policy of
Title Insurance Form B-1987 is not available) issued by a title insurer
satisfactory to the Buyer (and, if requested by the Buyer, reinsured in whole
or in part by one or more insurance companies and pursuant to a direct access
agreement reasonably acceptable to the Buyer), in an amount equal to the fair
market value of the Real Property (including all improvements located thereon),
insuring title to such Real Property to be in Centrum Subsidiary as of the
Closing (subject only to the title exceptions described above in Schedule 4(j)
and in Schedule 4(j) of the Disclosure Schedule). At Closing, Centrum
Subsidiary shall be responsible for the title insurance portion of the title
expense.
Such title insurance policy delivered to Buyer shall, unless
waived by Buyer, (A) insure title to the real property and all recorded
easements benefitting such real property, (B) contain an "extended coverage
endorsement" insuring over the general exceptions contained customarily in such
policies, (C) contain an ALTA Zoning Endorsement 3.1 (or equivalent), (D)
contain an endorsement insuring that the real property described in the title
insurance policy is the same real estate as shown on the Survey delivered with
respect to such property, (E) contain an endorsement insuring that each street
adjacent to the real property is a public street and that there is direct and
unencumbered pedestrian and vehicular access to such street from the real
property, (F) if the real property consists of more than one record parcel,
contain a "contiguity" endorsement insuring that all of the record parcels are
contiguous to one another, and (G) contain a "non-imputation" endorsement to
the effect that title defects known to the officers,
<PAGE> 45
directors, and stockholders of the owner prior to the Closing shall not
be deemed "facts known to the insured" for purposes of the policy.
(n) SURVEY. With respect to the Real Property, the
Company shall procure and deliver to Buyer in preparation for the Closing a
current survey of the real property certified to the Buyer and the title
company providing the title insurance policies pursuant to Section 5(m) above,
prepared by a licensed surveyor and conforming to current ALTA/ACSM "Class A"
Standards for Land Title Surveys, disclosing the location of all improvements,
easements, party walls, sidewalks, roadways, utility lines, and other matters
shown customarily on such surveys, and showing access affirmatively to public
streets and roads (the "Survey"). No Survey shall disclose any survey defect
or encroachment from or onto the real property which has not been cured or
insured over prior to the Closing. Buyer shall be responsible for the cost of
such survey.
(o) CONFIDENTIALITY. In the event the transaction
contemplated herein is not consummated, the Buyer will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Company or destroy, at the request and option of the Company, all tangible
embodiments (and all copies) of the Confidential Information which are in
Buyer's possession. In the event that the Buyer is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, the Buyer will notify the Company,
promptly of the request or requirement so that the Company may seek an
appropriate protective order or the receipt of a waiver compliance with the
provisions of this Section 6(b). If, in the absence of a protective order or
the receipt of a waiver hereunder, the Buyer is, on the advice of counsel,
compelled to disclose the Confidential Information to the tribunal or else
stand liable for contempt, the Buyer may disclose the Confidential
Information to the tribunal; provided, however, that the Buyer shall use all
its best efforts to obtain, at the request of the Company, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Company shall
designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure. As used in this Agreement, the term "Confidential
Information" means all trade secrets, proprietary information, confidential
business information, and/or confidential or proprietary Know-How of the
Company disclosed to the Buyer (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), but does not include information which: (i) is at the time of
disclosure a part of the public domain or thereafter becomes part of the public
domain through no violation of this Agreement; (ii) becomes available to the
Buyer on a nonconfidential basis from a source other than the Buyer, provided
that such source is not bound by a confidentiality agreement with Company or
Buyer; (iii) or is independently developed by or for the Buyer by persons who
have not had direct or indirect access to such Confidential Information.
<PAGE> 46
(p) INTENTIONALLY DELETED.
(q) PRINCIPAL SHAREHOLDERS' COVENANTS.
(i) The Principal Shareholders, in their capacity as
officers of the Company, shall do or refrain from doing all acts and things in
order to ensure that the representations and warranties of the Company in
Sections 3 and 4 hereof remain true and correct at the Closing as if such
representations and warranties were made at and as of such date and to satisfy
or cause or to be satisfied the conditions in Section 7 which are within the
control of the Principal Shareholders and shall use best efforts to ensure that
the Company complies with its covenants in this Agreement.
(ii) Each such Principal Shareholder further agrees
that he or it will (a) vote all shares owned by him or it or which he or it has
the right to vote in favor of the transaction contemplated herein and the
adoption of this Agreement, and against any other proposal which would be
inconsistent with the completion of the transaction contemplated herein, (b)
not discourage other shareholders of the Company or TFI from voting in favor of
the transaction contemplated herein and the adoption of this Agreement, and (c)
not sell, transfer, pledge, hypothecate or otherwise dispose of any shares of
the Company or TFI owned by him or it.
6. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section 8 below). The Company acknowledges and agree that from
and after the Closing the Buyer will be entitled to possession of all
documents, books, records, agreements, and financial data of any sort relating
to the Company or the Assets.
(b) CONFIDENTIALITY. The Company will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in his or its possession. In the event that the Company is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that the Company will notify
the Buyer, promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or the receipt of a waiver compliance with the
provisions of this Section 6(b). If, in the absence of a protective order or
the receipt of a waiver hereunder, the Company is, on the advice of counsel,
compelled to disclose the Confidential Information to the tribunal or else
stand liable for contempt, the Company may disclose the Confidential
Information to the tribunal; provided, however, that the Company shall use all
its best efforts to obtain, at the request of the Buyer, an order or
<PAGE> 47
other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure. The confidentiality obligations of this Section 6(b) will
continue after the Closing Date without any limitation on the length of time
such obligations survive. As used in this Agreement, the term "Confidential
Information" means all trade secrets, proprietary information, confidential
business information, and/or confidential or proprietary Know-How of the Company
(including ideas, formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), drawings, specifications,
designs, plans, proposals, technical data, copyrightable works, financial,
marketing, and business data, pricing and cost information, business and
marketing plans, and customer and supplier lists and information), but does
not include information which: (i) is at the time of disclosure a part of the
public domain or thereafter becomes part of the public domain through no
violation of this Agreement; (ii) becomes available to the Company on a
nonconfidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with Buyer or Company;
(iii) is independently developed by or for the Company by persons who have not
had direct or indirect access to such Confidential Information; (iv) was
disclosed by the Company to actual or potential customers or suppliers in the
Ordinary Course of Business prior to the Closing Date without assurance of
confidential treatment; or (v) is described by the Company on SCHEDULE 6(B).
(c) LITIGATION SUPPORT. In the event and for so long as
any Party actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company each of the other Parties will
cooperate with it and its counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(d) TRANSITION. The Company will not take any action
that primarily is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of the
Company from maintaining the same business relationships with the Buyer after
the Closing as it maintained with the Company prior to the Closing. The
Company will refer all customer inquiries relating to the business of the
Company to the Buyer from and after the Closing.
(e) RETENTION OF BOOKS AND RECORDS. Buyer will retain
for three (3) years after the Closing Date all books, records and other
documents pertaining to the Assets in existence on the Closing Date and to make
the same available after the Closing Date for inspection.
<PAGE> 48
(f) CENTRUM COMMON STOCK. Each share certificate
representing Centrum Common Stock will be imprinted with a legend substantially
in the following form:
The common stock represented by this certificate has not been
registered under the Securities Act of 1933, as amended, or
under the securities Laws of any state of the United
States. Each holder desiring to transfer the common stock must
furnish Centrum with a written opinion reasonably
satisfactory to Centrum in the form and substance from
counsel reasonably satisfactory to Centrum by reason of
experience to the effect that the holder may transfer the
common stock as desired without registration under the
Securities Act or the securities Laws of any state.
(g) EMPLOYMENT. Centrum Subsidiary intends to make
offers of employment at Closing to substantially all of the employees of the
Company at substantially the same wages and benefits as presently paid and
provided by the Company; however, this shall in no event be considered to be an
implied contract of employment for such employees. The making and content of
any communication to this effect by the Company to any of its employees will be
preapproved by Buyer. Centrum Subsidiary reserves the right to make offers of
employment under terms and conditions satisfactory to Centrum Subsidiary. The
Company will assist Buyer in hiring any of such employees and for a period of
three (3) years will not directly or indirectly employ any of such employees in
the employ of Buyer without first having obtained Buyer's consent. It is
understood, however, that Buyer neither has nor assumes any obligation to hire
or engage all or substantially all of the employees of the Company and in the
event Buyer fails to give the Company sufficient time prior to Closing so that
a notice required under the Worker Assistance and Retraining Notification Act
can be delivered, Buyer shall indemnify and hold the Company harmless from any
liability to employees of the Company not hired by Centrum Subsidiary. The
Company will pay all severance pay or benefits, vacation pay, sick pay, accrued
pension benefits, wages, commissions, and other compensation due to Company's
employees up to and including the Closing Date. In view of the foregoing, the
Company and Buyer do not anticipate the need for the issuance by either party
of any notices under the federal Worker Assistance and Retraining Notification
Act.
(h) COMPANY PLANS. The Company will be responsible for
all Company Plan contributions and payments, and notifications of termination,
if applicable, to the Internal Revenue Service, Department of Labor or any
other Governmental Authority, if any.
(i) CLOSING, TAXES AND PRORATIONS. The Buyer shall pay
any transfer tax or tax stamps in connection with the sale of the Real Property
and all real estate taxes and assessments shall be paid by the Company in
accordance with local custom. Prorations and adjustments for utilities and
other charges and/or credits incident to the operation of the Company shall be
made on the Closing Date, or as soon thereafter as the correct amounts can be
determined and included in the determination of the Adjusted Purchase Price.
The Company shall either pay directly or deliver payment to
<PAGE> 49
Buyer for the Company's Liabilities incurred to the Closing Date as
soon thereafter as is practicable, but in no event later than thirty (30) days
after Closing.
(j) USE OF NAME. At Closing, the Company shall assign to
Buyer all of the Company's right, title and interest in and to the Tradename
and immediately change its name to a corporate name not using the words Taylor
Forge; shall agree on behalf of the Company and Company's successors and
assigns not to use the Tradename or any combination or variation thereof in any
manner or way whatsoever from and after the Closing Date; and shall consent to
Buyer using any or all of the Tradename and cooperate with Buyer in filing all
necessary consents required under applicable Tennessee and federal Law for the
use of the Tradename.
(k) PAYMENTS RECEIVED BY COMPANY AFTER CLOSING. The
Company hereby agrees that if the Company receives any payment or credit or an
account receivable ("Payment") on or after the Closing Date, such Payment shall
be the property of and belong to Buyer and promptly shall be delivered to Buyer
by the Company. The Company agrees to cooperate fully in making any necessary
endorsements to any instruments received as Payment, and further agrees that
Buyer is hereby authorized to endorse any such instrument in the name of the
Company and deposit such instrument into any account of Buyer, or negotiate or
otherwise dispose of such instrument as Buyer sees fit.
(l) ACCOUNTS RECEIVABLE COLLECTION. The Assets which are
being sold hereunder shall include all accounts receivable of the Company as
reflected on the Company's books as of the Closing Date. In connection with
the sale of the accounts receivable, the Company agrees to execute such
instruments of transfer, conveyance and assignment as may be reasonably
requested by Buyer to give effect to such sale.
(i) Buyer agrees to use its best efforts to collect
such accounts receivable as are sold hereunder by the Company.
This shall include, but not be limited to, at least one (1)
written contact by mail or wire during each thirty (30) day
period for each account debtor who is in default of its agreed
terms of payment. With respect to those accounts which are
over thirty (30) days in default, Buyer shall contact each
such account debtor at least once by mail or wire and once by
phone during each thirty (30) day period. With respect to
each account receivable which is sold to Buyer by the Company
hereunder, Buyer agrees to apply all payments received by it
from the account debtor following the Closing Date to the
account receivable which is being sold herein unless the
account debtor is disputing the account or the product or
service sold to the account debtor which gave rise to the
account.
(ii) With respect to those accounts receivable, if
any, which are secured as of the Closing Date, Buyer shall
take such steps as are necessary to maintain the security. In
addition, with respect to those accounts receivable which are
<PAGE> 50
not secured on the date of Closing, Buyer may use reasonable
efforts to obtain security.
(iii) Buyer shall not release any account debtor or
compromise any account receivable for less than the amount
shown on the Company's books as of the Closing Date unless
Buyer receives the written consent of the Company to release
and\or compromise the account, which consent shall not be
unreasonably withheld.
(iv) If, after a period of ninety (90) days from the
date of the Closing, Buyer has been unable to collect the
accounts receivable, then in that event the Company agrees to
repurchase the accounts receivable for one hundred percent
(100%) of the amount which has been uncollected, such payment
to be made by way of a redelivery of Centrum Common Stock from
those shares held by the Escrow Agent pursuant to the Stock
Pledge and Escrow Agreement. In connection with such a
repurchase by the Company, Buyer agrees to execute such
documents as are necessary to properly transfer and assign the
accounts receivable to the Company so that the Company may
pursue collection efforts.
(v) With respect to each account receivable which is
being sold by the Company hereunder, Buyer shall provide the
Company with a written status report at the end of each month.
In addition, Buyer agrees to cooperate with the Company and
orally respond to reasonable requests from the Company as to
the status of any account.
(m) NONASSIGNABLE CONTRACTS. Company agrees that if any
contract exists which would be assigned to Buyer but for a nonassignment
provision in such contract or a federal, state, local Law which makes such
assignment by Company legally invalid ("Nonassignable Contract"), Company will
remain primarily liable on that contract, but will transfer to Buyer all
benefits under the Nonassignable Contract in exchange for Buyer undertaking
all of Company's obligations under the Nonassignable Contract.
(n) AUDIT. The Company shall provide full access to the
Buyer and Price Waterhouse LLP to all of its books, records and documentation,
including without limitation, such materials, workpapers and related documents
in the possession or control of the Auditors and fully cooperate with Buyer and
Price Waterhouse LLP so that Price Waterhouse LLP can prepare audited financial
statements meeting the requirements of the SEC for the Company for the fiscal
year ending March 31, 1997.
(o) COMMISSIONS. Within thirty (30) days after receipt
by the Buyer of the proceeds arising out of the sale of any of the Rings
Inventory, Buyer shall pay the
<PAGE> 51
Company a commission equal to forty cents ($.40) per pound of Rings
Inventory shipped.
(p) PRODUCT LIABILITY INSURANCE. For a period of four
(4) years after the date of Closing, the Company will maintain products
liability insurance to protect the Company and the Buyer from any claims for
products liability. The Buyer shall reimburse the Company for up to Two
Thousand Five Hundred Dollars ($2,500.00) of the cost per year incurred by the
Company to maintain such insurance. The Buyer shall be a named insured on such
policy and shall be entitled to thirty (30) days prior notice of any
cancellation of such policy.
(q) UNEMPLOYMENT/WORKERS COMPENSATION RATINGS. The
Company and Centrum Subsidiary shall cooperate to transfer to Centrum
Subsidiary the Company's unemployment compensation experience rating and
worker's compensation experience rating. This shall include timely execution
and delivery by the Company of an: (i) Application of Transfer of Experience
Rating to be filed with the Tennessee Department of Employment Security within
one hundred eighty (180) days after Closing, and (ii) form ERM 14 with the
NCCI.
(r) OPTION. At Closing, Centrum Subsidiary shall be
deemed to have exercised its option to purchase approximately three (3) acres
of the adjoining property owned by Alpine Power Systems, Inc. as outlined in
blue on EXHIBIT C-1 (the "Adjoining Property") for the sum of One Dollar
($1.00) so that after purchase of the Adjoining Property, Alpine Power Systems,
Inc.'s remaining property shall be as set forth on EXHIBIT G. The Company
shall be responsible for all costs and expenses, including subdivision
approvals, filing fees, engineering and survey fees in connection with the
transfer of the Adjoining Property. The Company shall promptly undertake all
necessary steps to obtain within one hundred twenty (120) days after Closing
all required governmental approvals. The Adjoining Property shall be
transferred to Centrum Subsidiary by general warranty deed and free of all
liens and encumbrances.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The
obligation of the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions as of the Closing Date:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date as though then made such as though the
Closing was substituted for the date of this Agreement throughout such
representations and warranties (without taking into account any disclosures
made by the Company to the Buyer pursuant to Section 5(d)(vii) hereof);
(ii) the Company shall have performed and complied
with all of the covenants and agreements required to be performed or complied
with by it under this Agreement at or prior to the Closing Date;
<PAGE> 52
(iii) the Company shall have procured all of the
third party consents specified in Section 5(b) above and the lien searches
obtained by the Company shall comply with the provisions of Section 5(h) above;
(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
judgment, order, decree, stipulation, injunction, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, or (C) affect adversely the right of the Buyer to own,
operate, or control the Assets (and no such judgment, order, decree,
stipulation, injunction, or charge shall be in effect);
(v) at Closing, the Company and the Principal
Shareholders shall have delivered to the Buyer all of the following documents:
(A) a certificate (without qualification as
to knowledge or materiality or otherwise) to the effect that each of the
conditions specified above in Section 7(a)(i)-(iv) is satisfied in all
respects;
(B) General Warranty Deed to the Real
Property; General Warranty Bill of Sale and Assignment with full warranties
conveying the Personal Property free and clear of all claims, liens and
encumbrances; General Assignment of all other of the Assets being purchased by
Buyer; Assignment of the Internet Home Page; Assignment of the Tradename; an
assignment of any rights under the purchase agreement with Gulf & Western;
Certificates of Title endorsed to Buyer for all titled assets where such
endorsement is necessary to transfer the interest of the Company, including
without limitation, automobiles, trucks and watercraft; Assignments, to the
extent permitted by Law, of all leases, permits, contracts, licenses and
similar necessary for the operation of the Assets; and assignments of the
unemployment rating and the workers compensation rating;
(C) the Company's Charter, as amended,
certified by the Secretary of State of the State of Tennessee, a Certificate of
Good Standing from the Secretary of the State of Tennessee and each other state
wherein the Company is qualified to do business evidencing the Company's good
standing in such jurisdiction and if not included in the Certificate of Good
Standing from the Tennessee Secretary of State a good standing (or comparable)
certificate from the Tennessee Department of Taxation as to the Company,
including all applicable periods for calendar year 1997;
(D) the Affidavit in Lieu of Escrow in the
form of EXHIBIT E and the Stock Pledge and Escrow Agreement in the form
attached hereto as EXHIBIT 7(A)(V)(D);
(E) satisfactory employment agreements with
Messrs. Centella and Leonetti in the forms attached hereto as EXHIBIT
7(A)(V)(E);
(F) the Noncompetition Agreement with the
Company and the Principal Shareholders in the forms attached hereto as EXHIBIT
7(A)(V)(F);
<PAGE> 53
(G) certified copies of resolutions by the
Board of Directors and shareholders of the Company evidencing the Company's
power and authority to enter into this Agreement and the transaction
contemplated hereby;
(H) Bulk Sale Affidavit and Indemnification
Agreement in the form of EXHIBIT F attached hereto and incorporated herein by
reference; and
(I) such other documents or instruments as
Buyer reasonably requests to effect the transactions contemplated hereby.
(vi) the Parties shall have received all other
authorizations, consents, and approvals or governments and governmental
agencies that are required for the consummation of the transactions
contemplated hereby;
(vii) the Buyer shall have received from counsel to
the Company an opinion with respect to the matters set forth in EXHIBIT 7(A)
(VII) attached hereto, addressed to the Buyer and dated as of the Closing Date;
(viii) approval of this Agreement by the requisite
vote of the shareholders of the Company at the Special Shareholders meeting;
(ix) delivery to the Buyer of an EXHIBIT 3(A)
executed by the Company and each of the Principal Shareholders receiving
Centrum Common Stock in this transaction or upon the subsequent dissolution of
the Company or TFI;
(x) since the date of the Financial Statements,
there shall have been no material adverse change in the business, financial
condition, operating results, assets, operations or business prospects of the
Company;
(xi) the Buyer shall have completed and the results
of its legal, accounting and business due diligence investigation and review of
the Company shall be consistent with those representations and warranties set
forth in Sections 3 and 4 hereof and the Disclosure Schedules, or to the extent
not consistent, Buyer's due diligence shall be satisfactory to Buyer;
(xii) intentionally deleted;
(xiii) all actions to be taken by the Company in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Buyer;
(xiv) Buyer shall have obtained and closed upon a
satisfactory commitment for its acquisition and working capital debt and the
proceeds received by Buyer reasonably consistent with or more favorable than
the financing proposals or financing commitments received by Buyer; and
(xv) the Company shall have obtained written
consents to the transfer or assignment to Buyer of all material agreements,
licenses, leases and other
<PAGE> 54
material contracts of the Company (other than immaterial agreements
incurred in the Ordinary Course of Business) where the consent of any other
party to any such contract may, in the opinion of Buyer's counsel, be required
for such assignment or transfer and such assignment is permissible under the
agreement, license, lease or material agreement;
(xvi) intentionally deleted;
(xvii) Centrum shall be reasonably satisfied that the
transaction will be exempt from the substantive and procedural requirements of
the SEC relating to proxy solicitations, tender offers and other similar state
or federal regulatory requirements;
(xviii) Buyer shall have completed and be satisfied
with the results of the environmental studies contemplated in Section 5(1)
hereof and such studies shall not have revealed any significant environmental
exposure or Liability;
(xix) Buyer shall be satisfied that the transaction
contemplated herein is permissible pursuant to all applicable antitrust and
competition Laws, regulations and policies without obtaining any consents of
any Governmental Authority in connection therewith and that the transaction
contemplated herein will not result in Buyer or its Subsidiaries being
restricted to any significant extent pursuant to any Laws or policies, from
pursuing future activities, including, without limitation, expansion or
acquisitions;
(xx) the Company will assign and transfer all
rights the Company has in the telephone numbers of the Company (including but
not limited to the telephone numbers (901) 358-6710) and (901) 358-0744 and any
post office boxes maintained by the Company; and
(xxi) the Buyer and the Company shall have received
all authorizations, consents, and approvals of governments and governmental
agencies that are required for the consummation of the transactions
contemplated hereby.
(b) CONDITIONS TO OBLIGATIONS OF THE COMPANY. The
obligation of the Company to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions as of the Closing Date:
(i) the representations and warranties set forth
in Section 3(b) above shall be true and correct in all material respects at and
as of the Closing Date as though made as and though the Closing Date was
substituted for the date of this Agreement throughout such representations and
warranties;
(ii) the Buyer shall have performed and complied
with all of the covenants and agreements required to be performed or complied
with by it under this Agreement at or prior to the Closing Date;
(iii) no action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction wherein an
unfavorable judgment, order, decree, stipulation,
<PAGE> 55
injunction, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect);
(iv) the Buyer shall have delivered to the Company
a certificate (without qualification as to knowledge or materiality or
otherwise) to the effect that each of the conditions specified above in Section
7(b)(i)-(iii) is satisfied in all respects;
(v) the Buyer and the Company shall have received
all authorizations, consents, and approvals of governments and governmental
agencies that are required for the consummation of the transactions
contemplated hereby;
(vi) the Company shall have received from counsel
to the Buyer opinions with respect to the matters set forth in EXHIBIT 7(B)(VI)
attached hereto, addressed to the Company and dated as of the Closing Date;
(vii) the Company shall have received from Centrum
the executed Registration Rights Agreement in the form set forth as EXHIBIT
7(B)(VII) attached hereto;
(viii) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Company.
8. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) SURVIVAL. All of the representations and warranties
of the Company and the Principal Shareholders contained in Section 3 and
Section 4 above (other than the representations and warranties contained in
Section 3(a), Section 4(h), 4(v) and 4(x) above) shall survive the Closing
hereunder (even if the Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period of four (4) years thereafter. All of the
other representations, warranties, and covenants of the Parties contained in
this Agreement (including the representations and warranties of the Company and
Principal Shareholders contained in Section 3(a) and Sections 4(b), 4(v) and
4(x) above) shall survive the Closing (even if the Buyer knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect forever thereafter. All of the
representations and warranties of the Buyer shall survive the Closing hereunder
and continue to be in full force and effect for a period of two (2) years
thereafter.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
In the event the Company or any of the Principal Shareholder breach any of
their respective representations, warranties, and covenants contained herein,
and provided that the Buyer or any of its Affiliates makes a written claim for
indemnification against the Company or Principal Shareholders pursuant to
Section 8(d) below within the applicable survival period, then the Company and
Principal Shareholders agree to
<PAGE> 56
indemnify the Buyer and its Affiliates and hold them harmless from and
against the entirety of any Adverse Consequences the Buyer may suffer, sustain
or become subject to through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end of the
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
COMPANY. In the event the Buyer breaches any of its representations,
warranties, and covenants contained herein, and provided that the particular
representation, warranty, or covenant survives the Closing and that the Company
makes a written claim for indemnification against the Buyer pursuant to Section
8(d) below within the applicable survival period, then the Buyer agrees to
indemnify the Company and hold it harmless from and against the entirety of any
Adverse Consequences that the Company may suffer through and after the date of
the claim for indemnification resulting from, arising out of, relating to, in
the nature of, or caused by the breach.
(d) PROCEDURE FOR INDEMNIFICATION.
(i) The Party seeking indemnification (the
"Indemnified Party") agrees to give the party from whom indemnification is
sought (the "Indemnifying Party") prompt written notice of any claims with
respect to which the Indemnifying Party has agreed to indemnify the Indemnified
Party under Section 8(b) and Section 8(c). Upon request, the Indemnified Party
shall give the Indemnifying Party access to such information possessed by the
Indemnified Party as the Indemnifying Party reasonably requests relating to
such claim.
(ii) The Indemnified Party shall initially
undertake the defense of any third party claim (at the expense of the
Indemnifying Party) until the Indemnifying Party has acknowledged in writing
that the Indemnifying Party is indemnifying the Indemnified Party with respect
to such claim, whether or not involving litigation, at which point the
Indemnifying Party will be entitled to assume the defense of such claim;
provided that the Indemnified Party may at any time, at its election,
participate (including through representation by attorneys of its own) in such
defense; provided that such participation shall be at the Indemnified Party's
own expense unless the named parties to such claim (including any impleaded
parties) include both the Indemnified Party and the Indemnifying Party and the
Indemnified Party shall have been advised by counsel that there are one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, it being understood, however, that in such
case the Indemnifying Party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys. At the Indemnifying Party's reasonable request, the Indemnified
Party will cooperate with the Indemnifying Party in the preparation of such
defense if the Indemnifying Party reimburses the Indemnified Party for the
reasonable expenses incurred in connection with such request. The Indemnifying
Party shall not settle any such claim for consideration other than money
without the prior written consent of the Indemnified Party and the Indemnifying
Party shall not, without the prior written consent of the
<PAGE> 57
Indemnified Party, settle or compromise any claim or consent to the
entry of any judgment that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect of such claim (or, if the claims by the claimant or
plaintiff are broader than the Indemnifying Party's indemnification obligation,
in respect of such portion of such claim to which the Indemnifying Party has an
indemnification obligations under this Section 8.) The Indemnifying Party
contesting or defending a third party claim shall afford to the Indemnified
Party and its counsel an opportunity to be present (as long as no participant to
such conferences objects) in conferences with all persons, including
governmental authorities, asserting such claims and conferences with
representatives or counsel for such persons at such other party's sole cost and
expense.
(iii) If the Indemnifying Party does not assume the
defense of a third party claim in a timely manner, then the Indemnified Party
may do so upon reasonable notice to the Indemnifying Party. Reasonable
attorneys' fees and court costs incurred by the Indemnified Party for such
defense shall, without duplication be included as Adverse Consequences for
which the Indemnifying Party is responsible to the extent otherwise provided in
this Agreement.
(iv) Notwithstanding anything contained herein, if
the subject matter of the third party claim relates materially to the ongoing
business of the Buyer (as opposed to the mere payment of money damages) and if,
were such claim to the adversely decided against the Buyer its ongoing business
would be adversely affected (whether or not the amount of such claim was fully
satisfied), then the Buyer alone shall be entitled, at the Company's sole cost
and expense, to assume the defense of such claim. The Company and the
Principal Shareholders may participate in the defense of any such claim at
their sole cost and expense but the Buyer shall have full authority to
determine all actions to be taken with respect thereto.
(e) RIGHTS OF SETOFF AGAINST THE ESCROW. The Buyer shall
have the option to recover all or any part of its losses (in lieu of seeking
any cash indemnification therefor to which it is entitled under this Section 8)
by notifying the Company that the Buyer is making a claim under the terms and
conditions of the Stock Pledge and Escrow Agreement.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory or common Law remedy any Party may have for breach of representation,
warranty or covenant. The Company and Buyer shall also be entitled to such
equitable remedies for any breach of the Buyer or the Company's and the
Principal Shareholders' representations, warranties or covenants as are
permitted by applicable statutory or common Law.
9. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may
terminate this Agreement as provided below.
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
<PAGE> 58
(ii) the Buyer may terminate this Agreement by giving
written notice to the Company at any time prior to the Closing in the event the
Company is in breach, and the Company may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing in the event the
Buyer is in breach, of any representation, warranty, or covenant contained in
this Agreement in any material respect, with each being given three (3) days
written notice and the opportunity to cure within ten (10) days thereof;
(iii) the Buyer may terminate this Agreement by giving
written notice to the Company if the results of Buyer's continuing business,
legal, and accounting due diligence regarding the Company are inconsistent with
the representations and warranties set forth in Sections 3 and 4 hereof, or
with the contents of the Disclosure Schedule;
(iv) the Buyer may terminate this Agreement by giving
written notice to the Company any time prior to the Closing if the Closing
shall not have occurred on or before June 15, 1997 by reason of the failure of
any condition precedent under Section 7(a) hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); or
(v) the Company may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing if the
Closing shall not have occurred on or before June 15, 1997 by reason of the
failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from the Company itself breaching any representation,
warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section 9(a) above, all obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
(c) OTHER TERMINATION RIGHTS BY THE COMPANY. The Company
shall have the right to terminate this Agreement by written notice to Buyer in
each of the following circumstances.
(i) the vote of the shareholders of the Company in
respect of the transaction contemplated herein and the requisite approval is
not obtained;
(ii) the Closing has not occurred by the date which
is forty-five (45) days following the approval by the shareholders of the
Company of the transaction contemplated herein and the failure of such Closing
to occur is not due to the breach by the Company or any of the Principal
Shareholders of any covenant contained in this Agreement, and provided that
such forty-five (45) day period shall be extended to the end of the applicable
period contemplated in (iii) and (iv) below where the failure to close has been
caused by the circumstances contemplated in such paragraphs;
(iii) an injunction has been issued by any court of
competent jurisdiction enjoining the transaction contemplated herein or the
holding of a meeting of
<PAGE> 59
shareholders of the Company to consider the transaction contemplated
herein or the taking of any other steps necessary to complete the transaction
contemplated herein and such injunction has not been revoked or otherwise
resolved to the satisfaction of the Company within sixty (60) days of its issue;
or
(iv) the Federal Trade Commission or the Antitrust
Division of the Department of Justice (or any other similar Governmental
Authority having jurisdiction over the transaction contemplated herein or any
of the parties hereto) gives notice to the Company or any other party to this
Agreement that it requests a delay in the consummation of the transaction
contemplated herein or intends to object to the transaction contemplated herein
or intends to investigate the transaction contemplated herein and such matters
are not satisfactorily resolved within ninety (90) days of such notice.
(d) OTHER TERMINATION RIGHTS BY THE BUYER. Buyer shall
have the right to terminate this Agreement by written notice to the Company in
each of the following circumstances:
(i) the due diligence review conducted by Buyer
shall reveal any matter which, in the opinion of Buyer, is materially adverse
or any supplemental disclosures to the Disclosure Schedules shall contain
disclosure of any matter which, in the opinion of Buyer, is materially adverse
and of which Buyer has not had full and accurate disclosure in the
representations and warranties set forth in Section 4 hereof or in the
Disclosure Schedule, provided that Buyer shall deliver such notice within ten
(10) days of the completion of its due diligence review or receipt by it of the
complete and final schedules, as the case may be;
(ii) if the requisite shareholder approval for the
transaction contemplated herein has not been obtained by May 15, 1997; provided
that Buyer exercises such right to terminate within ten (10) business days
thereafter;
(iii) the Closing has not occurred by the date which
is forty-five (45) days following the approval by the shareholders of the
Company of the transaction contemplated herein and the failure of such Closing
to occur is not due to the breach by Buyer of any covenant contained in this
Agreement and provided that such forty-five (45) day period shall be extended
to the end of the applicable period contemplated in (iv) and (v) below where
the failure to close has been caused by the circumstances contemplated in such
paragraphs;
(iv) an injunction has been issued by any court of
competent jurisdiction enjoining the transaction contemplated herein or the
holding of a meeting of shareholders of the Company to consider the transaction
contemplated herein or the taking of any other steps necessary to complete the
transaction contemplated herein and such injunction has not been revoked or
otherwise resolved to the satisfaction of the Buyer within sixty (60) days of
its issue; or
(v) the Federal Trade Commission or the Antitrust
Division of the Department of Justice (or any other similar Governmental
Authority having jurisdiction over the transaction contemplated herein or any
of the parties hereto) gives notice to
<PAGE> 60
the Company or any other party to this Agreement that it requests a
delay in the consummation of the transaction contemplated herein or intends to
object to the transaction contemplated herein or intends to investigate the
transaction contemplated herein and such matters are not satisfactorily resolved
within ninety (90) days of such notice.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND ANNOUNCEMENTS. No Party shall
issue any press release or announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of the Buyer
and the Company; provided, however, that Buyer may make any public disclosure
it believes in good faith is required by Law or regulation (in which case the
disclosing Party will advise the other Parties prior to making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. Except as provided for
in (d) below as to permitted assignees, this Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors.
(c) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the
Parties and supersedes any prior understandings, agreements, or representations
by or among the Parties, written or oral, that may have related in any way to
the subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Company; provided, however, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates, (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain liable and responsible for the performance of all of is obligations
hereunder), and (iii) assign or otherwise grant security interests in its
rights hereunder to its lender as security for the financing which is enabling
the Buyer to purchase the Assets.
(e) COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(f) HEADINGS. The sections headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) NOTICES. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered if delivered personally or by
recognized overnight courier service or by facsimile to the parties at the
following addresses (or at such other
<PAGE> 61
address for a party as shall be specified by like notice, except that
notices of changes of address shall be effective upon receipt):
<TABLE>
<S> <C>
If to the COMPANY: COPY to:
Taylor Forge International, Inc. Michael P. Morgan, Esq.
5577 Tayfor Drive Black, Bobango & Morgan
Millington, Tennessee 38053 530 Oak Court Drive, Suite 345
Attention: Robert L. Leonetti, President Memphis, Tennessee 38117
Fax No.: (901) 358-0744 Fax No.: (901) 683-2553
If to the BUYER: COPY to:
Centrum Industries, Inc. John W. Hilbert II, Esq.
6135 Trust Drive, Suite 104A Fuller & Henry P.L.L.
Holland, Ohio 43528 One SeaGate, 17th Floor
Attention: George Wells, President P. O. Box 2088
Fax No.: (419) 868-3490 Toledo, Ohio 43603
Fax No.: (419) 247-2665
</TABLE>
Any Party may change the address to which notices, requests, demands, claims
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Tennessee; provided,
however, that if any provision of this Agreement shall be deemed invalid or
unenforceable under the laws of the State of Tennessee, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of Ohio.
(i) AMENDMENTS AND WAIVERS. No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Buyer and the Company. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior to
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending term or
provision in any other situation or in any other jurisdiction. If the final
judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the Parties agree that the court
making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be
<PAGE> 62
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
(k) FEES AND EXPENSES.
(i) Except as set forth below in this Section 10(k),
each of the Company and Buyer shall be responsible for the expenses (including
fees and expenses of legal advisers, accountants and other professional
advisers) incurred by them, respectively, in connection with the negotiation,
execution and settlement of this Agreement, and the other agreements, and the
completion of the transaction contemplated hereby;
(ii) If this Agreement or the transactions
contemplated hereby are terminated or abandoned because of one of the Breakup
Fee Events below, then the Company and the Principal Shareholders shall
reimburse Buyer for all reasonable expenses and fees (including, without
limitation, fees payable to all banks, and all fees of counsel, accountants,
experts and consultants to Buyer and an appropriate allocation of costs for
employees whose time was significantly devoted to the negotiation of this
transaction and the due diligence review and other internal costs) incurred by
them or on their behalf in connection with this Agreement, and the transactions
contemplated hereby, including (without limitation) the preparation,
evaluations, investigation, negotiation and documentation thereof and any
financing therefor (all of the foregoing being referred to collectively as the
"Expenses").
Nothing contained in this Section 10(k)(ii) shall be deemed to
limit any obligation of the Company or the Principal Shareholders under this
Agreement, including (without limitation) Section 5(g) {Exclusivity} hereof, or
to limit any remedy available to Buyer at law or under this Agreement for the
breach thereof.
The following shall be deemed not to be Breakup Fee Events:
(a) any termination or abandonment of this
Agreement due to a material breach by Buyer of any of its material obligations
under this Agreement; and
(b) the Company terminates this Agreement pursuant to Section 9(c) hereof.
The following shall solely be deemed to be Breakup Fee Events:
(a) failure of the Board of Directors to
recommend the transaction contemplated herein to the shareholders of the
Company;
(b) failure of the Board of Directors of the
Company to take all necessary steps to request approval of the transaction
contemplated herein from the shareholders of the Company, either at a Special
Meeting of the Shareholders or by written resolution by May 15, 1997;
<PAGE> 63
(c) any termination or abandonment of this
Agreement due to a breach by the Company of any of its obligations in Section
5(c), (e), (f), (g) and (j) hereof; or
(d) any termination or abandonment of this
Agreement due to a breach by the Principal Shareholders of any of their
obligations in Article 5 of this Agreement.
(iii) The Buyer shall be responsible for all costs of
preparing and filing any premerger notification documents with the United
States government, including legal fees, consultants and the like.
(iv) The Company shall be responsible for any
conveyance fees, tax stamps, transfer taxes or other governmental charges with
respect to the sale of the Real Property.
(l) 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 shall be applied against any Party.
Any reference to any federal, state, local, or foreign statute or Law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise. The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS AND SCHEDULES. The
Exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties
acknowledges and agrees that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each of the Parties agrees that the other Parties shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States
or any state thereof having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Section 10(o) below), in addition to
any other remedy to which they may be entitled, at Law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties
submits to the jurisdiction of any state or federal court sitting in Toledo,
Ohio, in any action or proceeding arising out of or relating to this Agreement,
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court, and agrees not to bring any action or proceeding
arising out of or relating to this Agreement
<PAGE> 64
in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceedings so brought
and waives any bond, surety, or other security that might be required of any
other Party with respect thereto. Any Party may make service on any other Party
by sending or delivering a copy of the process to the Party to be served at the
address and in the manner providing for the giving of notices in Section 10(g)
above. Nothing in this Section 10(o), however, shall affect the right of any
Party to serve legal process in any other manner permitted by Law. Each of the
Parties agrees that a final judgment in any action of proceeding so brought
shall be conclusive and may be enforced by suit on the judgment or in any other
manner provided by Law.
(p) CURRENCY. Except where otherwise expressly provided,
all amounts in this Agreement are stated and shall be paid in United States
currency.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
CENTRUM INDUSTRIES, INC. CENTRUM ACQUISITION CORPORATION
By /s/ George H. Wells
By /s/ George H. Wells
GEORGE H. WELLS, President and GEORGE H. WELLS, President
Chief Executive Officer
TAYLOR FORGE INTERNATIONAL, INC.
By /s/ Robert L. Leonetti
ROBERT L. LEONETTI, President
The undersigned Principal Shareholders join in this Agreement for
purposes of making the representations and warranties set forth in Articles 3
and 4 hereof, agreeing to and confirming the covenants set forth in Article 5,
and agrees to execute as applicable to them at Closing the documents attached
hereto as EXHIBITS 7(A)(V)(E) and 7(A)(V)(F).
/s/ Robert L. Leonetti
ROBERT L. LEONETTI
<PAGE> 65
/s/ Harry M. Centella
HARRY M. CENTELLA
/s/ Edward B. Hirschberg
EDWARD B. HIRSCHBERG
TFI, INC.
By /s/ Robert L. Leonetti
ROBERT L. LEONETTI, President
The undersigned Alpine Power Systems, Inc. joins in this Agreement for
purposes of agreeing to and confirming the covenant set forth in Article 6(r)
with respect to the Adjoining Property.
ALPINE POWER SYSTEMS, INC.
By /s/ Robert L. Leonetti
ROBERT L. LEONETTI
By /s/ Harry M. Centella
HARRY M. CENTELLA
<PAGE> 66
EXHIBIT D
This schedule represents an estimated preliminary purchase price
allocation for tax purposes based upon the forecast provided by Taylor Forge
for May 31, 1997. The Residual Allocation Method as defined in Internal
Revenue Code Section 1060 will beutilized to determine purchase price
allocation for tax purposes as of the acquisition date.
(in 000's)
ASSETS TAX PURCHASE PRICE ALLOCATION
Accounts Receivable $ 1,474
Inventory 1,693
Prepaid Expenses 144
Real Estate 1,134
Equipment 4,833
-------
Total Assets $ 9,278
<PAGE> 1
EXHIBIT 10.2
4/14/97
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made this 4
day of June 1997, by and among TAYLOR FORGE INTERNATIONAL, INC. ("Taylor")
and CENTRUM INDUSTRIES, INC. ("Company").
In consideration of the mutual covenants hereinafter set forth the
Company and Taylor agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms have the following meanings:
"Asset Purchase Agreement" shall mean the Asset Purchase
Agreement dated April 29, 1997, as amended May 14, 1997.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Common Stock" shall have the meaning ascribed to it in the
Asset Purchase Agreement.
"Holder" shall mean a holder of Registrable Securities.
The terms "register", "registered" and "registration" shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
"Registrable Securities" shall mean (i) shares of Common Stock
issued under the Asset Purchase Agreement, and (ii) any Common Stock issued in
respect of such securities upon any stock split, stock dividend,
recapitalization or similar event.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Section 2 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursement of
counsel for the Company, blue sky fees and expenses, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company and expenses of regular
annual and
<PAGE> 2
periodic audits, which shall be paid in any event by the Company) and the
expenses associated with the Company's obligations under Section 4 hereof.
"Restricted Securities" shall refer collectively to the
securities of the Company required to bear a legend under applicable securities
laws.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities and all
fees and disbursements of one counsel for the holders.
2. Piggyback Registration Rights
(a) If the Company shall determine to register any of its
securities either for its own account or the account of any security
holder or holders (other than a Holder), other than a registration
relating solely to employee benefit plans or pursuant to a
registration statement on Form S-4 or the then equivalent of such
form, the Company will:
(i) Promptly give to all Holders written notice thereof;
and
(ii) Except as set forth in Section 2(b), include in such
registration (and any related qualification under state blue sky laws
and other compliance filings, and in any underwriting involved
therein), all the Registrable Securities specified in a written
request or requests, given by each Holder within fifteen (15) days
after the written notice from the Company is given.
(b) If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the
Company shall so advise each Holder as part of the written notice
given pursuant to Section 2(a)(i). In such event the right of each
Holder to registration pursuant to this Section 2 shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting
to the extent provided herein. Each such Holder, together with the
Company and the other persons distributing their securities through
such underwriting, shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected or
approved for underwriting by the Company. Notwithstanding any other
provision of this Section 2, if the underwriter determines that
marketing factors require a limitation on the number of shares to be
underwritten, the underwriter may (subject to the allocation priority
set forth below) exclude from such registration and underwriting some
or all of each Holder's Registrable Securities which would otherwise
be
-2-
<PAGE> 3
underwritten pursuant hereto: The Company shall so advise all
persons requesting registration, and the number of shares of
securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: before any
Holder shall be entitled to include Registrable Securities in the
registration, there shall first be included in such registration (i)
the number of securities which the Company proposed to offer and sell
for its own account, and (ii) securities with respect to which the
holders have requested inclusion pursuant to any and all registration
rights which have been granted by the Company prior to the date
hereof, and then, to the extent permitted by the underwriter, there
shall be included in such registration that number of securities which
persons having registration rights on parity with the Holders shall
have requested to be included in such registration, with any
limitation on the number of securities so included to be imposed pro
rata on all Holders and all other persons to the extent they request
inclusion therein. If any Holder or any officer, director or other
security holder requesting registration disapproves of the term of any
such underwriting, such person may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
3. Expenses of Registration. All Registration Expenses
incurred on behalf of each Holder in connection with any registration,
qualification or compliance pursuant to this Agreement shall be borne by the
Company, and all Selling Expenses shall be borne by each Holder and all other
holders of the securities so registered and sold pro rata on the basis of the
number of their shares so registered and sold.
4. Registration Procedures. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will advise
each Holder in writing as to the initiation of each registration and as to the
completion thereof. The Company will:
(a) Keep such registration effective for a period of
ninety (90) days or until each Holder has completed the distribution
described in the registration statement relating thereto, whichever
first occurs.
-3-
<PAGE> 4
(b) Furnish such number of prospectuses and other
documents incident thereto as each Holder from time to time may
reasonably request.
(c) Register or qualify the Registrable Securities
covered by such registration under such other securities or blue sky
laws of such jurisdiction (subject to the approval of any managing
underwriter involved) as each Holder shall reasonably request, and do
any and all other acts and things which may be reasonably necessary or
advisable to enable each Holder to consummate the disposition in such
jurisdictions of the Registrable Securities; provided, however, that
the Company shall not be obligated, by reason thereof, to qualify as a
foreign corporation in any jurisdiction where it would not otherwise
be required to qualify or consent to general service of process in any
such jurisdiction or subject itself to taxation as doing business in
any such jurisdiction.
(d) Notify each Holder promptly after the Company shall
receive notice or have knowledge that any registration statement,
supplement or amendment has become effective, any registration
statement is required to be amended or supplemented, any stop order
has been issued, of the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation
of a proceeding for that purpose, or of the happening of any event as
a result of which, the prospectus included in such registration
statement as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made.
(e) Make every reasonable effort to obtain at the
earliest possible moment the withdrawal of any order suspending the
effectiveness of a registration statement or suspending the
qualification of any of the Registrable Securities for sale in any
jurisdiction.
(f) Promptly prepare and furnish to each Holder a
reasonable number of copies of a supplement to or an amendment of a
prospectus as may be necessary so that such prospectus shall not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not
-4-
<PAGE> 5
misleading in light of the circumstances under which they were made.
(g) Include the Registrable Securities for listing on any
national securities exchange on which the Company's Common Stock is
listed.
(h) Make available for inspection by a representative of
each Holder, any underwriters participating in any disposition
pursuant hereto, and any attorney or accountant retained by such
Holders or such underwriters, upon reasonable notice during normal
business hours all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or
accountant in connection with such registration; provided that any
such records, information or documents that are designated by the
Company in writing as confidential shall be kept confidential by such
persons unless disclosure of such records, information or documents is
required by court or administrative order.
(i) Make generally available to its securities holders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
5. Indemnification
(a) In the event of the registration of any Holder's
Registrable Securities under the Securities Act pursuant to this
Agreement, the Company will indemnify and hold harmless each such
Holder, each underwriter, if any, of such shares, and each other
person, if any, who controls each such Holder or any such underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which each such Holder,
the underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are
based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which such Registrable Securities were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein (as such may be amended or
supplemented), or arise out of or are based upon the omission or
alleged omission to
-5-
<PAGE> 6
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse each such Holder, each such underwriter, and each such
controlling person for any legal or any other expenses reasonably
incurred by such Holder, such underwriter or controlling person, in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in such registration statement, such preliminary prospectus, or
such final prospectus (as such may be amended or supplemented) in
reliance upon and in conformity with, written information furnished to
the Company by the Holder, the underwriter or controlling person
specifically for use in preparation thereof.
(b) In the event of the registration by the Company of
any Holder's Registrable Securities, such Holder will indemnify and
hold harmless the Company, each underwriter and each person who
controls the Company or any such underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which the Company, such underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in any registration statement under which such Registrable Securities
were registered under the Securities Act, any prospectus or
preliminary prospectus contained therein, or amendment or supplement
thereto, or arises out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
which untrue statement or alleged untrue statement or omission or
alleged omission was made therein in reliance upon and in conformity
with, written information furnished to the Company by such Holder
specifically for use in connection with the preparation thereof; and
will reimburse the Company, each such controlling person and each such
underwriter for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, damage, liability or action.
-6-
<PAGE> 7
(c) Each party entitled to indemnification under this
Section 5 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any indemnified
Party to give notice as provided herein shall no relieve the
Indemnifying Party of its obligations under this Section 5. No
indemnifying Party, in the defense of any such claim of litigation,
shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified Party of a release from all liability in
respect to such claim or litigation.
6. Information by Holder. Each Holder shall furnish in writing
to the Company such information regarding such Holder as the Company may
reasonably request and as shall be reasonably required in connection with
any registration, qualification or compliance referred to in this Agreement.
7. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit
the sale of the Restricted Securities to the public without registration, the
Company agrees to:
(a) Use its best efforts to make and keep public
information available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times from and after ninety
(90) days following the effective date of the registration under the
Securities Act filed by the Company for an offering of its securities
to the general public;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company
under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act") at any time during which it is subject to
such reporting requirements; and
-7-
<PAGE> 8
(c) So long as any Holders own any Restricted Securities,
furnish to each requesting Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time from and after ninety (90) days
following the effective date of the registration statement filed by
the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time during
which it is subject to such reporting requirements), a copy of the
most recent annual or quarterly report of the Company, and such other
reports and documents so filed as such Holder may reasonably request
in availing itself of an) rule or regulation of the Commission
allowing such Holder to sell any such securities without registration.
8. Transfer of Registration Rights. The right to cause the
Company to register Registrable Securities pursuant to this Agreement may not
be assigned without the consent of the Company.
9. "Market Stand-Off" Agreement. Each Holder agrees, if
requested by the Company and the underwriter of Common Stock (or other
securities) of the Company, not to sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by him during such
period of time as may be required by the underwriter (but no more than one
hundred eighty (180) days) following the effective date of any registration
statement of the Company filed under the Securities Act with respect to any
underwritten public offering of securities by the Company, provided that the
Company's officers and directors and a majority of other holders of securities
of the Company shall also enter into similar agreements. Such agreement shall
be in writing in a form satisfactory to the Company and such underwriter. The
Company may impose stop-transfer instructions with respect to the securities
subject to the foregoing restrictions until the end of said one hundred eighty
(180) day period.
10. Termination of Registration Rights. The right to cause the
Company to register securities granted by the Company under this Agreement
shall terminate with respect to any Holder at such time as all of the
Registrable Securities of such Holder can be sold (in a single transaction) in
accordance with Rule 144.
-8-
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
CENTRUM INDUSTRIES, INC.
By /s/ George H. Wells
----------------------------------
GEORGE H. WELLS, Chief Executive
Officer and President
The foregoing Agreement is hereby agreed to as of the date thereof.
TAYLOR FORGE INTERNATIONAL,
INC.
By /s/ Robert L. Leonetti
---------------------------------
ROBERT L. LEONETTI, President
-9-
<PAGE> 1
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 4th day of June, 1997, by and between
CENTRUM ACQUISITION CORPORATION, a Tennessee corporation (hereinafter called
"Corporation") whose principal place of business is located at 5577 Tayfor
Drive, Millington, Tennessee 38053, and ROBERT L. LEONETTI (hereinafter called
"Employee") an individual residing at 8666 Lakespur Cove, Germantown, Tennessee
38138.
WITNESSETH:
WHEREAS, CORPORATION, CENTRUM INDUSTRIES, INC., a Delaware corporation
("Centrum"), Employee, TAYLOR FORGE INTERNATIONAL, INC., a Tennessee
corporation ("Taylor") and other stockholders of Taylor are parties to an Asset
Purchase Agreement (hereafter referred to as the "Acquisition Agreement"),
dated April 29, 1997, as amended May 14, 1997, pursuant to which the
Corporation acquired substantially all of the assets of Taylor; and
WHEREAS, Employee indirectly owns a portion of the outstanding capital
stock of Taylor and will receive direct financial benefits from the
consummation of the transactions set forth in the Acquisition Agreement; and
WHEREAS, as a material and significant inducement to the Corporation
and Centrum to enter into and consummate the transactions set forth in the
Acquisition Agreement, Employee has agreed to be employed by the Corporation
and assist Centrum in matters relating to the change of ownership contemplated
by the Acquisition Agreement; and
WHEREAS, Employee has extensive experience and abilities which are
valuable to Centrum in assisting in the operation of the Corporation; and
WHEREAS, Centrum is desirous of having Employee employed with the
Corporation upon the terms and conditions of this Agreement, which terms and
conditions are agreeable to Employee.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound thereby, the parties agree as
follows:
1. EMPLOYMENT. For a term of one (1) year commencing June 4,
1997 and ending on June 4, 1998, the Corporation agrees to employ Employee, and
Employee agrees to serve the Corporation. During the term of his employment,
Employee shall, on a fulltime basis, devote all of his time, attention and
energies to the business of the Corporation; shall render efficient,
industrious and loyal services; and shall assume and perform such
responsibilities and duties in connection therewith as may be assigned to him
from time to time by the President of the Corporation, as more particularly
described in Paragraph 2 hereof. Termination of Employee's employment for
cause, as provided in Paragraph 7 of this Agreement, or an involuntary
termination by Employee, shall constitute a failure of Employee to comply with
the terms of this paragraph.
<PAGE> 2
2. DUTIES. Employee shall initially serve as Vice
President-Operations of the Corporation and shall render such services as are
necessary to carry out the duties of said position and such additional duties
as may be assigned to him from time to time by the President.
3. COMPENSATION. During Employee's employment under this
Agreement, the Corporation agrees to pay Employee compensation of an annual
salary equal to the sum of One Hundred Thousand Dollars ($100,000.00).
4. EXPENSES.
(a) During the term of this Agreement, Employee shall be
entitled to continue to use at no additional expense the company car currently
driven by Employee or a similar replacement vehicle at the expiration of the
current car lease, consistent with the Corporation's practices in effect from
time to time. Employee shall be reimbursed for all reasonable expenses
incurred in the operation and maintenance of such car consistent with the
Corporation reimbursement procedures and practices in effect from time to time.
(b) The Corporation will reimburse Employee for all
reasonable and necessary expenses, including without limiting the foregoing,
travel, entertainment, and promotional expenses, incurred by Employee in
carrying out his duties under this Agreement upon the presentation to the
Corporation by Employee from time to time of an itemized account of such
expenses in such form as may be required by the Corporation.
5. FRINGE BENEFITS. During the period of his employment,
Employee shall be afforded the right to participate in any and all group
insurance, medical and health care plans and other employee benefit plans as
are generally made available to other employees of the Corporation and the
right to participate in the profitsharing plans and stock option plans of
Centrum consistent with executives of other Centrum companies; provided,
however, in no event shall Employee's group life insurance benefits and long
term disability income benefit be less than that previously provided to
Employee by Taylor. Employee shall be entitled to three (3) weeks of paid
vacation leave during the term of this Agreement, the scheduling of which shall
be subject to the approval of the President of the Corporation.
6. ILLNESS, OTHER MEDICAL DISABILITY OR DEATH. If Employee
should be prevented from performing his duties by reason of illness, incapacity
or other medical disability for a period of six (6) months or more, service and
compensation (other than that which shall have accrued and remains unpaid)
under this Agreement will cease. When such illness, incapacity or other medical
disability has ended, Employee shall resume his duties under this Agreement and
again become entitled to receive compensation hereunder. Such illness or other
medical disability shall not extend the terms of this Agreement. If Employee
should be prevented from performing his duties by reason of death, the
Corporation shall pay any salary or disability payment due for the month of
Employee's death to Employee's designated beneficiary or surviving spouse, in
the order named, or
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<PAGE> 3
if none to the personal representative of Employee's estate, as the case may
be, and this Agreement shall be terminated and of no further force and effect
upon such payment.
7. TERMINATION FOR CAUSE. Corporation may discharge Employee at
any time for:
(a) an act of theft; embezzlement or felony related to
his employment duties with the Corporation;
(b) criminal conduct (whether or not related to
Employee's employment) or any other act or omission resulting or intended to
result directly or indirectly in gain to, or personal enrichment of, Employee
at the Corporation's expense;
(c) conviction of a crime of moral turpitude or
dishonesty;
(d) habitual intoxication or drug addiction;
(e) any violation of any express direction or any
reasonable rule or regulation established by the Corporation from time to time
regarding the conduct of its business or any act or omission constituting gross
misconduct which is or is intended to be injurious to the Corporation;
(f) the willful failure of Employee to perform his duties
hereunder; or
(g) any violation by Employee of the terms and conditions
of this Agreement or any other agreement between the Corporation and Employee,
in which event the Corporation shall have no further obligations or liabilities
hereunder after the date of such discharge.
8. SEVERANCE PAYMENTS. Upon the concurrence of a "Severance
Event" as hereafter defined, the Corporation shall continue to pay to Employee
for the Severance Period the monthly base salary Employee was receiving from
the Corporation immediately prior to the occurrence of such Severance Event;
provided, however, such severance payments to Employee shall be reduced by any
salary or consulting income received by Employee from any source during the
Severance Period. In the event Employee breaches any provision of this
Agreement, all obligations of the Corporation to make severance payments to
Employee pursuant to this Agreement shall cease. For purposes of this
Agreement, a "Severance Event" shall mean: (i) the termination of Employee's
employment with the Corporation by the Corporation other than a termination for
cause as provided for in paragraph 7 hereof. The "Severance Period" shall mean
a period of time equal to the remaining term of this Agreement following a
Severance Event.
9. NONCOMPETITION, TRADE SECRETS, ETC. As an inducement to the
Corporation to execute this Agreement,
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(a) Employee covenants and agrees with the Corporation
that at all times during the term of his employment hereunder, including
extensions thereof, and for a term equal to one (1) year following his
termination of employment with the Corporation or any of its subsidiaries (the
"Restrictive Period"), within the area where the Corporation, Centrum's wholly
owned subsidiary McInnes Steel Company, a Pennsylvania corporation ("McInnes")
or any of its subsidiaries presently do business (including, without
limitation, the United States, the Canadian provinces of Ontario and Quebec,
Mexico and Southeast Asia [including but not limited to China, Japan, South
Korea and North Korea]), and where the Corporation does business at the time of
termination of Employee (the "Restrictive Area"), he shall not directly or
indirectly:
(i) solicit, induce or encourage any employee of the
Corporation, McInnes or any of its subsidiaries to terminate his or her
relationship with the Corporation, McInnes or any of its subsidiaries; or
(ii) employ or establish a business relationship
which is competitive with the Corporation, McInnes or any of its subsidiaries
with any individual who was employed by Taylor, the Corporation, McInnes or any
of its subsidiaries during the preceding twelve (12) month period; or
(iii) encourage or assist any individual or entity
in a business which is competitive with the Corporation, McInnes or any of its
subsidiaries to employ or establish a business relationship with any individual
who was employed by Taylor, the Corporation, McInnes, or any of its
subsidiaries during the preceding twelve (12) month period; or
(iv) solicit, induce or encourage any suppliers,
customers or prospective customers to terminate or reduce in scope their
relationship with the Corporation, McInnes or any of its subsidiaries; or
(v) solicit or assist any individual or entity in the
solicitation of business from, or performance of work for, any customers or
prospective customers of the Corporation, McInnes or any of its subsidiaries;
or
(vi) engage in (as a principal, agent, consultant,
partner, director, officer, employee, stockholder, investor or otherwise),
alone or in association with any person or entity, or be financially interested
in, any business which is competitive with the Corporation, McInnes or any of
its subsidiaries. Notwithstanding the foregoing, Employee shall be entitled to
hold shares of a publiclytraded company so long as such shares do not represent
more than one percent (1%) of the outstanding capital of such company.
(b) For purposes of paragraph 9, "customers" shall mean
those customers for whom Taylor, the Corporation, McInnes or any of its
subsidiaries supplied products to or performed services during the twelve (12)
months preceding the date in question, and "prospective customers" shall mean
persons or entities whose business was solicited by Taylor, the Corporation,
McInnes or any of its subsidiaries during the twelve (12) months preceding the
date in question.
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(c) Employee shall not use for his personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company,
(i) any information regarding the business methods,
business policies, business strategies, marketing plans, survey procedures,
statistical techniques, research or development projects or results, trade
secrets or other confidential knowledge or processes of, or developed by,
Taylor, the Corporation, McInnes or any of its subsidiaries, or
(ii) any confidential data on or relating to past,
present or prospective customers of Taylor, the Corporation, McInnes or any of
its subsidiaries, or
(iii) budgets, forecasts, pricing information or
unpublished financial information or any other confidential information
relating to or dealing with the business operations or activities of Taylor,
the Corporation, McInnes or any of its subsidiaries.
(d) Employee acknowledges and agrees that:
(i) the covenants set forth herein are essential
elements of the transactions contemplated by the Acquisition Agreement, that
Employee is receiving adequate consideration hereunder, that Employee possesses
special facts above and beyond ordinary competition that would give him an
unfair advantage should he desire to compete with the Corporation and that such
covenants are reasonable and necessary in order to protect the legitimate
interests of the Corporation;
(ii) the Corporation will not have any adequate
remedy at law if Employee violates the terms hereof or fails to perform any of
his obligations hereunder; and
(iii) the Corporation shall have the right, in
addition to any other rights either may have under applicable law, to obtain
from any court of competent jurisdiction preliminary and permanent injunctive
relief to restrain any breach or threatened breach of, or otherwise to
specifically enforce any such covenant or any other obligations of Employee
under this Agreement, as well as to obtain damages and an equitable accounting
of all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Corporation may be entitled.
(e) If the Restrictive Period or the Restrictive Area set
forth in paragraph 9(a) should be adjudged unreasonable in any proceeding, then
the Restrictive Period shall be reduced by such number of months or the
Restrictive Area shall be reduced by the elimination of such unreasonable
portion thereof, or both, so that such restrictions may be enforceable for such
time and in the manner adjudged to be reasonable. If Employee violates any of
the restrictions contained in paragraph 9(a), then the Restrictive Period shall
not run in favor of Employee from the time of the commencement of any such
violation until such time as such violation shall be cured by Employee.
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<PAGE> 6
10. INFORMATION REGARDING AGREEMENT. During the term of this
Agreement and during the Restrictive Period, Employee shall not make the terms
and conditions of this Agreement known to any business, entity, or persons
engaged in activities competitive with the Corporation's business with which he
becomes associated subsequent to the termination of his employment with the
Corporation prior to his association with any such business, entity or persons.
The Corporation shall have the right to make the terms of this Agreement known
to third persons.
11. RETURN OF COMPANY PROPERTY. At the time of Employee's
termination of employment with the Corporation or upon demand by the
Corporation, whichever is sooner, Employee shall promptly turn over to the
Corporation all files, documents, business records and any other records,
documents, writings of any kind whatsoever, and all assets of any kind
whatsoever, that belong to the Corporation. Employee shall not copy or record
in any manner whatsoever the information contained in the foregoing materials
and shall turn over any copies or recordings of any kind whatsoever containing
information derived directly or indirectly from the aforestated materials.
12. SURVIVAL OF COVENANTS. The covenants in Sections 9, 10 and 11
and acknowledgments of the Employee set forth in this Agreement shall survive
the termination of this Agreement, regardless of the cause therefor.
13. REMEDIES. In the event of any violation of any of the
covenants contained in Sections 9, 10 or 11, the Corporation shall be
authorized to obtain preliminary and permanent injunctive relief as well as an
equitable accounting of any profits or benefits arising out of such violation,
which rights and remedies shall be cumulative and in addition to any other
rights or remedies to which the Corporation may be entitled. In the event of
the violation of any of the restrictions contained in Sections 9, 10 or 11, the
period, if any, therein specified shall abate during the time of violation
thereof and that portion remaining at the time of commencement of any violation
shall not begin to run until such violation has been fully and finally cured.
14. WAIVER. The waiver by the Corporation of the breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by it. No waiver by the Corporation shall be
legally operative unless reduced to writing and executed by the Corporation.
15. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally or by recognized
overnight courier service or by facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(i) If to EMPLOYEE:
Robert L. Leonetti
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8666 Lakespur Cove
Germantown, Tennessee 38138
Fax No.: (901) 358-3838
with a COPY, given in the manner prescribed above, to:
Michael P. Morgan, Esq.
Black, Bobango & Morgan
530 Oak Court Drive, Suite 345
Memphis, Tennessee 38117
Fax No.: (901) 683-2553
(ii) If to CORPORATION:
Centrum Acquisition Corporation
5577 Tayfor Drive
Millington, Tennessee 38053
Attn: President
Fax No.: (901) 3580744
and
Centrum Industries, Inc.
c/o McInnes Steel Company
441 E. Main Street
Corry, Pennsylvania 16407
Attention: Timothy M. Hunter, Chief
Financial Officer
Fax No.: (814) 664-2372
with a COPY, given in the manner prescribed above, to:
John W. Hilbert II, Esq.
Fuller & Henry P.L.L.
One SeaGate, Suite 1700
P.O. Box 2088
Toledo, Ohio 436032088
Fax No.: (419) 2472665
16. ENTIRE AGREEMENT; AMENDMENT OR TERMINATION; WAIVER. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof. This Agreement may not be amended or
terminated except by a written instrument, signed by each of the parties
hereto, expressing such amendment or termination. No failure on the part of any
party to exercise and no delay in exercising any right, power or remedy
hereunder shall operate as a
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waiver thereof; nor shall any single or partial exercise of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.
17. GENERAL TERMS. This Agreement is personal in nature and
(a) neither of the parties hereto shall assign or
transfer this Agreement without the written consent of the other, except that
the Corporation may assign or transfer this Agreement,
(i) to any successor corporation in the event of
merger, consolidation or transfer or sale of the business of the Corporation in
which Employee is engaged; or
(ii) to a parent or subsidiary corporation which may
be organized to conduct the business of the Corporation, in which Employee is
engaged.
(b) In any of the aforesaid events, Employee shall remain
liable to the Corporation, or its successor and assignees.
18. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee; provided,
however, that if any provision of this Agreement shall be deemed invalid or
unenforceable under the laws of the State of Tennessee, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of Ohio.
20. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Corporation has caused its appropriate officer
to sign this Agreement, and Employee has signed this Agreement.
CENTRUM ACQUISITION CORPORATION
TO BE KNOWN AS TAYLOR FORGE
COMPANY
By /s/ Timothy M. Hunter
---------------------------------
EMPLOYEE
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Witness:
/s/ Robert L. Leonetti
-----------------------------------
ROBERT L. LEONETTI
/s/ Micheal P. Morgan
- ------------------------
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<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 4th day of June, 1997, by and between
CENTRUM ACQUISITION CORPORATION, a Tennessee corporation (hereinafter called
"Corporation") whose principal place of business is located at 5577 Tayfor
Drive, Millington, Tennessee 38053, and HARRY M. CENTELLA (hereinafter called
"Employee") an individual residing at 8256 Mossy Creek Drive, Germantown,
Tennessee 38138.
WITNESSETH:
WHEREAS, CORPORATION, CENTRUM INDUSTRIES, INC., a Delaware corporation
("Centrum"), Employee, TAYLOR FORGE INTERNATIONAL, INC., a Tennessee
corporation ("Taylor") and other stockholders of Taylor are parties to an Asset
Purchase Agreement (hereafter referred to as the "Acquisition Agreement"),
dated April 29, 1997, as amended May 14, 1997, pursuant to which the
Corporation acquired substantially all of the assets of Taylor; and
WHEREAS, Employee indirectly owns a portion of the outstanding capital
stock of Taylor and will receive direct financial benefits from the
consummation of the transactions set forth in the Acquisition Agreement; and
WHEREAS, as a material and significant inducement to the Corporation
and Centrum to enter into and consummate the transactions set forth in the
Acquisition Agreement, Employee has agreed to be employed by the Corporation
and assist Centrum in matters relating to the change of ownership contemplated
by the Acquisition Agreement; and
WHEREAS, Employee has extensive experience and abilities which are
valuable to Centrum in assisting in the operation of the Corporation; and
WHEREAS, Centrum is desirous of having Employee employed with the
Corporation upon the terms and conditions of this Agreement, which terms and
conditions are agreeable to Employee.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and intending to be legally bound thereby, the parties agree as
follows:
1. EMPLOYMENT. For a term of two (2) years commencing June 4,
1997 and ending on June 4, 1999, the Corporation agrees to employ Employee, and
Employee agrees to serve the Corporation. During the term of his employment,
Employee shall, on a fulltime basis, devote all of his time, attention and
energies to the business of the Corporation; shall render efficient,
industrious and loyal services; and shall assume and perform such
responsibilities and duties in connection therewith as may be assigned to him
from time to time by the President of the Corporation as more particularly
described in Paragraph 2 hereof. Termination of Employee's employment for
cause, as provided in Paragraph 7 of this Agreement, or an involuntary
termination by Employee, shall constitute a failure of Employee to comply with
the terms of this paragraph. Subject to termination as hereinafter provided,
this Agreement shall be automatically renewed from year to year on the
anniversary day of each year ensuing thereafter commencing upon the expiration
of the two (2) year
<PAGE> 2
term of this Agreement, unless within thirty (30) days prior to any such
renewal date, either party to this Agreement shall notify the other in writing
that this Agreement shall terminate and end at the close of the then current
employment term.
2. DUTIES. Employee shall initially serve as Vice
President-Administration of the Corporation and shall render such services as
are necessary to carry out the duties of said position and such additional
duties as may be assigned to him from time to time by the President of the
Corporation.
3. COMPENSATION. During Employee's employment under this
Agreement, the Corporation agrees to pay Employee compensation of an annual
salary equal to the sum of One Hundred Thousand Dollars ($100,000.00), such
salary to be adjusted annually as determined by the Board of Directors of the
Corporation.
4. EXPENSES.
(a) During the term of this Agreement, Employee shall be
entitled to continue to use at no additional expense the company car currently
driven by Employee or a similar replacement vehicle at the expiration of the
current car lease, consistent with the Corporation's practices currently in
effect. Employee shall be reimbursed for all reasonable expenses incurred in
the operation and maintenance of such car consistent with the Corporation
reimbursement procedures and practices in effect from time to time.
(b) The Corporation will reimburse Employee for all
reasonable and necessary expenses, including without limiting the foregoing,
travel, entertainment, and promotional expenses, incurred by Employee in
carrying out his duties under this Agreement upon the presentation to the
Corporation by Employee from time to time of an itemized account of such
expenses in such form as may be required by the Corporation.
5. FRINGE BENEFITS. During the period of his employment,
Employee shall be afforded the right to participate in any and all group
insurance, medical and health care plans and other employee benefit plans as
are generally made available to other employees of the Corporation and the
right to participate in the profitsharing plans and stock option plans of
Centrum consistent with executives of other Centrum companies; provided,
however, in no event shall Employee's group life insurance benefits and long
term disability income benefits be less than that previously provided to
Employee by Taylor. Employee shall be entitled to three (3) weeks of paid
vacation leave during each one (1) year period of the term of this Agreement,
the scheduling of which shall be subject to the approval of the President of
the Corporation.
6. ILLNESS, OTHER MEDICAL DISABILITY OR DEATH. If Employee
should be prevented from performing his duties by reason of illness, incapacity
or other medical disability for a period of six (6) months or more, service and
compensation (other than that which shall have accrued and remains unpaid)
under this Agreement will cease. When such illness, incapacity or other medical
disability has ended, Employee shall resume his duties under this Agreement and
again become entitled to receive compensation hereunder. Such illness or other
medical disability shall not extend the terms of this Agreement. If Employee
should be prevented from performing his duties by reason of death, the
Corporation shall pay any salary or disability payment due for the month of
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<PAGE> 3
Employee's death to Employee's designated beneficiary or surviving spouse, in
the order named, or if none to the personal representative of Employee's
estate, as the case may be, and this Agreement shall be terminated and of no
further force and effect upon such payment.
7. TERMINATION FOR CAUSE. Corporation may discharge Employee at
any time for:
(a) an act of theft; embezzlement or felony related to
his employment duties with the Corporation;
(b) criminal conduct (whether or not related to
Employee's employment) or any other act or omission resulting or intended to
result directly or indirectly in gain to, or personal enrichment of, Employee
at the Corporation's expense;
(c) conviction of a crime of moral turpitude or
dishonesty;
(d) habitual intoxication or drug addiction;
(e) any violation of any express direction or any
reasonable rule or regulation established by the Corporation from time to time
regarding the conduct of its business or any act or omission constituting gross
misconduct which is or is intended to be injurious to the Corporation;
(f) the willful failure of Employee to perform his duties
hereunder; or
(g) any violation by Employee of the terms and conditions
of this Agreement or any other agreement between the Corporation and Employee,
in which event the Corporation shall have no further obligations or liabilities
hereunder after the date of such discharge.
8. SEVERANCE PAYMENTS. Upon the concurrence of a "Severance
Event" as hereafter defined, the Corporation shall continue to pay to Employee
for the Severance Period the monthly base salary Employee was receiving from
the Corporation immediately prior to the occurrence of such Severance Event;
provided, however, such severance payments to Employee shall be reduced by any
salary or consulting income received by Employee from any source during the
Severance Period. In the event Employee breaches any provision of this
Agreement, all obligations of the Corporation to make severance payments to
Employee pursuant to this Agreement shall cease. For purposes of this
Agreement, a "Severance Event" shall mean: (i) the termination of Employee's
employment with the Corporation by the Corporation other than a termination for
cause as provided for in paragraph 7 hereof; or (ii) the failure of the parties
to renew this Agreement at the expiration of the term specified herein or at
the expiration of any subsequent term agreed to by the parties. The "Severance
Period" shall mean a period of time equal to the remaining term of this
Agreement following a Severance Event; provided, however, in no event shall the
Severance Period be less than three (3) months nor more than six (6) months.
9. NONCOMPETITION, TRADE SECRETS, ETC. As an inducement to the
Corporation to execute this Agreement,
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<PAGE> 4
(a) Employee covenants and agrees with the Corporation
that at all times during the term of his employment hereunder, including
extensions thereof, and for a term equal to one (1) year following his
termination of employment with the Corporation or any of its subsidiaries (the
"Restrictive Period"), within the area where the Corporation, Centrum's wholly
owned subsidiary McInnes Steel Company, a Pennsylvania corporation ("McInnes")
or any of its subsidiaries presently do business (including, without
limitation, the United States, the Canadian provinces of Ontario and Quebec,
Mexico, Southeast Asia [including but not limited to China, Japan, South Korea
and North Korea]), and where the Corporation does business at the time of
termination of Employee (the "Restrictive Area"), he shall not directly or
indirectly:
(i) solicit, induce or encourage any employee of the
Corporation, McInnes or any of its subsidiaries to terminate his or her
relationship with the Corporation, McInnes or any of its subsidiaries; or
(ii) employ or establish a business relationship
which is competitive with the Corporation, McInnes or any of its subsidiaries
with any individual who was employed by Taylor, the Corporation, McInnes or any
of its subsidiaries during the preceding twelve (12) month period; or
(iii) encourage or assist any individual or entity
in a business which is competitive with the Corporation, McInnes or any of its
subsidiaries to employ or establish a business relationship with any individual
who was employed by Taylor, the Corporation, Centrum or any of its subsidiaries
during the preceding twelve (12) month period; or
(iv) solicit, induce or encourage any suppliers,
customers or prospective customers to terminate or reduce in scope their
relationship with the Corporation, McInnes or any of its subsidiaries; or
(v) solicit or assist any individual or entity in the
solicitation of business from, or performance of work for, any customers or
prospective customers of the Corporation, McInnes or any of its subsidiaries;
or
(vi) engage in (as a principal, agent, consultant,
partner, director, officer, employee, stockholder, investor or otherwise),
alone or in association with any person or entity, or be financially interested
in, any business which is competitive with the Corporation, McInnes or any of
its subsidiaries. Notwithstanding the foregoing, Employee shall be entitled to
hold shares of a publiclytraded company so long as such shares do not represent
more than one percent (1%) of the outstanding capital of such company.
(b) For purposes of paragraph 9, "customers" shall mean
those customers for whom Taylor, the Corporation, McInnes or any of its
subsidiaries supplied products to or performed services during the twelve (12)
months preceding the date in question, and "prospective customers" shall mean
persons or entities whose business was solicited by Taylor, the Corporation,
McInnes or any of its subsidiaries during the twelve (12) months preceding the
date in question.
(c) Employee shall not use for his personal benefit, or
disclose, communicate or divulge to, or use for the direct or indirect benefit
of any person, firm, association or company,
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<PAGE> 5
(i) any information regarding the business methods,
business policies, business strategies, marketing plans, survey procedures,
statistical techniques, research or development projects or results, trade
secrets or other confidential knowledge or processes of, or developed by,
Taylor, the Corporation, McInnes or any of its subsidiaries, or
(ii) any confidential data on or relating to past,
present or prospective customers of Taylor, the Corporation, McInnes or any of
its subsidiaries, or
(iii) budgets, forecasts, pricing information or
unpublished financial information or any other confidential information
relating to or dealing with the business operations or activities of the
Corporation, McInnes or any of its subsidiaries.
(d) Employee acknowledges and agrees that:
(i) the covenants set forth herein are essential
elements of the transactions contemplated by the Acquisition Agreement, that
Employee is receiving adequate consideration hereunder, that Employee possesses
special facts above and beyond ordinary competition that would give him an
unfair advantage should he desire to compete with the Corporation and that such
covenants are reasonable and necessary in order to protect the legitimate
interests of the Corporation;
(ii) the Corporation will not have any adequate
remedy at law if Employee violates the terms hereof or fails to perform any of
his obligations hereunder; and
(iii) the Corporation shall have the right, in
addition to any other rights either may have under applicable law, to obtain
from any court of competent jurisdiction preliminary and permanent injunctive
relief to restrain any breach or threatened breach of, or otherwise to
specifically enforce any such covenant or any other obligations of Employee
under this Agreement, as well as to obtain damages and an equitable accounting
of all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which the Corporation may be entitled.
(e) If the Restrictive Period or the Restrictive Area set
forth in paragraph 9(a) should be adjudged unreasonable in any proceeding, then
the Restrictive Period shall be reduced by such number of months or the
Restrictive Area shall be reduced by the elimination of such unreasonable
portion thereof, or both, so that such restrictions may be enforceable for such
time and in the manner adjudged to be reasonable. If Employee violates any of
the restrictions contained in paragraph 9(a), then the Restrictive Period shall
not run in favor of Employee from the time of the commencement of any such
violation until such time as such violation shall be cured by Employee.
10. INFORMATION REGARDING AGREEMENT. During the term of this
Agreement and during the Restrictive Period, Employee shall not make the terms
and conditions of this Agreement known to any business, entity, or persons
engaged in activities competitive with the Corporation's business with which he
becomes associated subsequent to the termination of his employment with the
Corporation prior to his association with any such business, entity or persons.
The Corporation shall have the right to make the terms of this Agreement known
to third persons.
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<PAGE> 6
11. RETURN OF COMPANY PROPERTY. At the time of Employee's
termination of employment with the Corporation or upon demand by the
Corporation, whichever is sooner, Employee shall promptly turn over to the
Corporation all files, documents, business records and any other records,
documents, writings of any kind whatsoever, and all assets of any kind
whatsoever, that belong to the Corporation. Employee shall not copy or record
in any manner whatsoever the information contained in the foregoing materials
and shall turn over any copies or recordings of any kind whatsoever containing
information derived directly or indirectly from the aforestated materials.
12. SURVIVAL OF COVENANTS. The covenants in Sections 9, 10 and 11
and acknowledgments of the Employee set forth in this Agreement shall survive
the termination of this Agreement, regardless of the cause therefor.
13. REMEDIES. In the event of any violation of any of the
covenants contained in Sections 9, 10 or 11, the Corporation shall be
authorized to obtain preliminary and permanent injunctive relief as well as an
equitable accounting of any profits or benefits arising out of such violation,
which rights and remedies shall be cumulative and in addition to any other
rights or remedies to which the Corporation may be entitled. In the event of
the violation of any of the restrictions contained in Sections 9, 10 or 11, the
period, if any, therein specified shall abate during the time of violation
thereof and that portion remaining at the time of commencement of any violation
shall not begin to run until such violation has been fully and finally cured.
14. WAIVER. The waiver by the Corporation of the breach of any
provision of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by it. No waiver by the Corporation shall be
legally operative unless reduced to writing and executed by the President of
the Corporation.
15. NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if delivered personally or by recognized
overnight courier service or by facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):
(i) If to EMPLOYEE:
Harry M. Centella
8256 Mossy Creek Drive
Germantown, Tennessee 38138
Fax No.: (901) 358-3838
with a COPY, given in the manner prescribed above, to:
Michael P. Morgan, Esq.
Black, Bobango & Morgan
530 Oak Court Drive, Suite 345
Memphis, Tennessee 38117
6
<PAGE> 7
Fax No.: (901) 6832553
(ii) If to CORPORATION:
Centrum Acquisition Corporation
5577 Tayfor Drive
Millington, Tennessee 38053
Attn: President
Fax No.: (901) 3580744
and
Centrum Industries, Inc.
c/o McInnes Steel Company
441 E. Main Street
Corry, Pennsylvania 16407
Attention: Timothy M. Hunter, Chief
Financial Officer
Fax No.: (814) 664-2372
with a COPY, given in the manner prescribed above, to:
John W. Hilbert II, Esq.
Fuller & Henry P.L.L.
One SeaGate, Suite 1700
P.O. Box 2088
Toledo, Ohio 436032088
Fax No.: (419) 2472665
16. ENTIRE AGREEMENT; AMENDMENT OR TERMINATION; WAIVER. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof. This Agreement may not be amended or
terminated except by a written instrument, signed by each of the parties
hereto, expressing such amendment or termination. No failure on the part of any
party to exercise and no delay in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
17. GENERAL TERMS. This Agreement is personal in nature and
(a) neither of the parties hereto shall assign or
transfer this Agreement without the written consent of the other, except that
the Corporation may assign or transfer this Agreement,
(i) to any successor corporation in the event of
merger, consolidation or transfer or sale of the business of the Corporation in
which Employee is engaged; or
7
<PAGE> 8
(ii) to a parent or subsidiary corporation which may
be organized to conduct the business of the Corporation, in which Employee is
engaged.
(b) In any of the aforesaid events, Employee shall remain
liable to the Corporation, or its successor and assignees.
18. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee; provided,
however, that if any provision of this Agreement shall be deemed invalid or
unenforceable under the laws of the State of Tennessee, this Agreement shall be
governed by, and construed in accordance with, the laws of the State of Ohio.
20. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Corporation has caused its appropriate officer
to sign this Agreement, and Employee has signed this Agreement.
CENTRUM ACQUISITION CORPORATION
By /s/ Timothy M. Hunter
------------------------------------
EMPLOYEE
Witness: /s/ Harry M. Centella
-------------------------------------
HARRY M. CENTELLA
/s/ Michael P. Morgan
- ----------------------------
8
<PAGE> 1
EXHIBIT 10.5
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT (this "Amendment") to the Loan and Security
Agreement is entered into as of the 3rd day of June, 1997, by and between
McInnes Steel Company, Eballoy Glass Products Company, Erie Bronze & Aluminum
Company, McInnes International, Inc. and Centrum Acquisition Corporation, to be
known as Taylor Forge Company ("Taylor Forge"), as borrowers (the foregoing
shall be referred to herein collectively as "Borrowers" and separately as a
"Borrower"), Centrum Industries, Inc. and McInnes Services, Inc., as guarantors
(collectively the "Guarantors" and separately a "Guarantor"), and The
Huntington National Bank (the "Bank").
RECITALS:
A. As of February 29, 1996, the Borrowers (with the exception
of Taylor Forge), the Guarantors and the Bank executed a certain Loan and
Security Agreement, which was amended by a certain First Amendment to Loan and
Security Agreement dated as of January 1, 1997 (collectively the "Loan
Agreement"), setting forth the terms of certain extensions of credit to the
Borrowers (with the exception of Taylor Forge); and
B. As of February 29, 1996, the Borrowers (with the exception
of Taylor Forge) executed and delivered to the Bank, inter alia, a revolving
note in the original principal sum of Fifteen Million Five Hundred Thousand
Dollars ($15,500,000.00) (hereinafter the "Revolving Note"); and
C. As of February 29, 1996, the Borrowers (with the exception
of Taylor Forge) executed and delivered to the Bank, inter alia, a commercial
loan note in the original principal sum of Two Million Eight Hundred Fifty
Thousand Dollars ($2,850,000.00) (hereinafter the "Term Note") (the Revolving
Note and the Term Note are hereinafter referred to as the "Notes"); and
D. In connection with the Loan Agreement and the Notes, the
Borrowers (with the exception of Taylor Forge) executed and delivered to the
Bank certain other loan documents, a reimbursement agreement, openend
mortgages, assignment of rents and security agreements, a second mortgage,
assignment of rents and security agreement, lockbox agreements, consents,
assignments, security agreements, agreements, instruments and financing
statements in connection with the indebtedness referred to in the Loan
Agreement (all of the foregoing, together with the Notes and the Loan
Agreement, are hereinafter collectively referred to as the "Loan Documents");
and
E. The Borrowers have requested that the Bank amend and
modify certain terms and covenants in the Loan Agreement, add Taylor Forge as a
party thereto, and extend additional credit to the Borrowers, and the Bank is
willing to do so upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants,
agreements and promises contained herein, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
for themselves and their successors and assigns do hereby agree, represent and
warrant as follows:
1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan Agreement.
2. As of the date this Amendment becomes effective, Taylor
Forge shall be deemed to be a "Borrower," one of the "Borrowers," a "Company,"
and one of the "Companies," as those terms are defined in the Loan Agreement.
Taylor Forge hereby agrees to be bound by each and every representation,
warranty, term and covenant of the Loan Agreement, hereby grants to the Bank a
security interest in the Collateral, and agrees to execute contemporaneously
herewith all such documents and agreements as the
<PAGE> 2
Bank shall require to become obligated under all of the obligations
evidenced by the Loan Documents, and to grant and perfect to the Bank a first
and exclusive security interest in all the business assets of Taylor Forge.
3. The Preamble of the Loan Agreement is hereby amended to
recite in its entirety as follows:
This agreement (this "Agreement") is entered into
at Columbus, Ohio, between and among The Huntington
National Bank (the "Bank") as lender, McInnes Steel
Company ("MSC"), Eballoy Glass Products Company
("Eballoy"), Erie Bronze & Aluminum Company ("EBA"),
McInnes International, Inc. and Centrum Acquisition
Corporation, to be known as Taylor Forge Company ("Taylor
Forge"), as borrowers (the foregoing shall be referred to
herein collectively as "Borrowers" and separately as a
"Borrower"), and Centrum Industries, Inc. ("Centrum") and
McInnes Services, Inc. ("MSI"), as guarantors
(collectively the "Guarantors" and separately a
"Guarantor") as of the 29th day of February, 1996. The
Borrowers and the Guarantors shall also be referred to
herein collectively as the "Companies" and separately as a
"Company."
4. Section 1.1, "The Loans," of the Loan Agreement is hereby
amended to recite in its entirety as follows:
1.1 The Loans. The Bank, subject to the terms and
conditions hereof, will make loans and advances and extend
credit to the Borrowers up to the aggregate sum of the
principal sum of loans plus the stated value of letters of
credit of $25,350,000.00 (collectively the "Loans").
Subject to the terms and conditions hereof, the Loans
shall be comprised of (a) revolving loans and advances to
the Borrowers, which shall not exceed the aggregate
principal sum of $18,500,000.00 (collectively the
"Revolving Loans" and individually a "Revolving Loan"),
(b) a direct pay letter of credit up to the maximum stated
value of $4,500,000.00 plus accrued interest of
$110,959.00 for the account of MSC (the "Letter of
Credit"), (c) a term loan facility to the Borrowers (with
the exception of Taylor Forge) up to the principal sum of
$2,850,000.00 (the "Term Loan"), and (d) a term loan
facility to the Borrowers up to the principal sum of
$4,000,000.00 (the "Additional Term Loan"); provided,
however, that notwithstanding the individual limitations
set forth above with respect to the Revolving Loans and
the Letter of Credit, the aggregate principal balance of
the Revolving Loans, lus the stated value outstanding of
the Letter of Credit shall not exceed the sum of
$18,500,000.00.
5. Section 1.2, "Borrowing Base," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
1.2 Borrowing Base. The principal balance of the
Revolving Loans made to any Borrower, plus the aggregate
stated value outstanding at any time of Letter of Credit
issued for such Borrower, shall not exceed such Borrower's
Borrowing Base. "Borrowing Base" shall mean, with respect
to any Borrower, the sum of the following with respect to
such Borrower (a) 70% of Eligible Raw
<PAGE> 3
Materials Inventory not to exceed the Consolidated
Eligible Raw Materials Inventory Cap; plus (b) 60%
of Eligible Material Content of WIP Inventory not to
exceed the Consolidated Eligible Material Content
WIP Inventory Cap, plus (c) the Eligible Equipment
Availability, plus (d) 85% of Eligible Accounts
(collectively the "Borrowing Base"). "Consolidated
Eligible Raw Materials Inventory Cap" means an amount not
to exceed $4,500,000.00 with respect to the Eligible Raw
Materials Inventory of all of the Borrowers in the
aggregate. "Consolidated Eligible Material Content of WIP
Inventory Cap" means an amount not to exceed $2,250,000.00
with respect to the Eligible Material Content of WIP
Inventory of all of the Borrowers in the aggregate. The
Bank, in its sole good faith discretion, reserves the
right upon notice to the Borrowers to increase or decrease
the foregoing percentages or the maximum dollar amount
attributable to the Consolidated Raw Materials Inventory
Cap or the Consolidated Eligible Material Content of WIP
Inventory Cap. "Eligible Equipment Availability" shall
mean with respect to Eligible Equipment the following
amounts with respect to the following periods:
(i) from the date of this Agreement through
and including December 30, 1996, with respect to
MSC, the sum of $3,700,000, with respect to EBA,
the sum of $767,000, and with respect to Eballoy,
the sum of $283,000,
(ii) beginning December 31, 1996, and continuing
through and including December 30, 1997, with
respect to MSC, the sum of $3,083,333,
with respect to EBA, the sum of $639,167, with
respect to Eballoy, the sum of $235,833,
(iii) beginning December 31, 1997, and continuing
through and including December 30,
1998, and with respect to MSC, the sum of
$2,466,667, with respect to EBA, the sum of
$406,000, with respect to Eballoy, the sum of
$188,667, and
(iv) beginning December 31, 1998, and continuing at
all times thereafter, with respect to MSC,
the sum of $1,849,791, with respect to EBA,
the sum of $383,500 with respect to Eballoy,
the sum of $141,500,
minus with respect to each applicable period, the
appraised value of any Equipment (other than equipment of
Taylor Forge) that is sold, transferred or disposed of
pursuant to the terms of this Agreement or becomes
obsolete after December 27, 1995.
6. Section 2.3, "Eligible Material Content of WIP Inventory,"
of the Loan Agreement is hereby amended to recite in its entirety as follows:
2.3 Eligible Material Content of WIP Inventory. The
term "Eligible Material Content of WIP Inventory," with
respect to any Borrower, means that portion of such
Borrower's Eligible Inventory consisting of
<PAGE> 4
Work-In-Process -- Materials, as set forth in such
Borrower's general ledger account, which shall be
determined in the same manner as on the date of this
Agreement, and shall be valued at the lesser of cost (on a
FIFO basis) or market; provided, however, that no such
Work-in-Process--Materials of Taylor Forge shall be
Eligible Inventory or Eligible Material Content of WIP
Inventory until such time as the Bank, in its sole and
absolute discretion, has determined that the books and
records of Taylor Forge are fully integrated with those of
MSC and that an accurate perpetual inventory system has
been demonstrated to provide timely reporting of
Work-in-Process--Materials for both Taylor Forge and MSC.
The terms Eligible Raw Materials Inventory and Eligible
Material Content of WIP Inventory shall be mutually
exclusive.
7. Section 3.1, "Interest Rates and Fees," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
3.1 Interest Rates and Fees. The Borrowers jointly
and severally agree to pay the Bank (a) each month
interest on the unpaid balance of the Loans at the rates
of interest set forth in the note or notes evidencing the
Loans; (b) beginning on June 1, 1997, and continuing on
the first of each month thereafter a collateral
administration fee in respect of the Revolving Loans equal
to $4,000.00; (c) on or before the execution of a certain
Second Amendment to Loan and Security Agreement dated as
of June 3, 1997 (the "Second Amendment"), an arrangement
fee of $25,000.00; (d) on February 28, 1998, the sum of
$76,666.67 as an annual facility fee; (e) beginning on
February 28, 1999, and continuing on each anniversary date
of this Agreement thereafter, an annual facility fee equal
to $85,000.00; and (f) beginning on the date of this
Agreement and continuing on each July 1, October 1, and
January 1 and April 1 thereafter the fees set in the
Reimbursement Agreement a equal to 3% per annum of the
stated amount of the Letter of Credit.
8. Section 3.2, "Terms and Advances," of the Loan Agreement
is hereby amended to recite in its entirety as follows:
3.2 Terms and Advances. The Loans shall be evidenced by
a note or by one or more notes or reimbursement
agreements subsequently executed in substitution
therefor, each in substantially the form set
forth in Exhibit A-1, A-2 and A-3 attached hereto and
Exhibits A-4 and A-5 attached to the Second Amendment.
Repayment of the Loans shall be made in accordance with
the terms of the promissory notes or reimbursement
agreement then outstanding pursuant to this Agreement.
9. Section 3.4, "Use of Proceeds," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
3.4 Use of Proceeds. The net proceeds of the Loans
will be used to provide for working capital requirements
of the Borrowers, to finance the acquisition by Centrum
Acquisition Corporation of certain assets of Taylor Forge
International, Inc., and for any other business purpose in
the Borrowers' businesses.
<PAGE> 5
10. Section 3.5, "Early Termination Fee," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
3.5 Early Termination Fee. The Borrowers jointly and
severally agree to pay to the Bank an early termination
fee of $255,500.00 if the Borrowers terminate or prepay in
full the Loans prior to the Maturity Date; provided,
however, that if the Borrowers notify the Bank at least 90
days prior to the Maturity Date of their intention to pay
the Loans in full, and such payment in full is made on the
Maturity Date, there shall be no early termination fee.
"Maturity Date" shall mean February 28, 1999, or any
extended maturity date of the Revolving Loans, as the same
may be extended from time to time by the Bank, in its sole
and absolute discretion. The Borrowers further agree that
any early termination fee set forth in this Section 3.5
shall be due and payable to the Bank regardless of whether
such prepayment results from the Borrowers' voluntary
prepayment or from the Bank's exercise of any of its
rights after an Event of Default hereunder; provided,
however, that if the Loans are paid in full solely as a
result of insurance proceeds resulting from the damage,
destruction, or condemnation of the Collateral, the Real
Estate Collateral, the Guarantor Collateral, the
Non-Recourse Guarantor Collateral, or the Other
Collateral, then the Bank agrees that the above early
termination fee shall be zero.
11. Section 3.6, "The Guarantors and Guarantor Collateral," of
the Loan Agreement is hereby amended to recite in its entirety as follows:
3.6 The Guarantors and Guarantor Collateral. Each of
the Guarantors shall unconditionally guarantee the full
and prompt payment of the Loans, shall evidence its
obligation by executing and delivering to the Bank a
Continuing Guaranty Unlimited (the "Guaranties") (the
guaranty agreement of Centrum shall include, inter alia, a
requirement that such Guarantor will maintain Tangible Net
Worth in accordance with the provisions of Section 6.14
below), and shall secure its obligations under each of the
Guaranties with a first and exclusive security interest,
assignment, pledge, and mortgage on all of its stock or
securities (except for the stock of Micafil, Inc.),
business assets, motor vehicles, and real estate, whether
now owned or hereafter acquired pursuant to security
agreements, assignments, pledges, and mortgages in form
satisfactory to the Bank (the "Guarantor Collateral"). In
addition, Taylor Forge shall unconditionally guarantee the
full and prompt payment of the Term Loan and shall
evidence its obligation by executing and delivering to the
Bank a Continuing Guaranty Unlimited. In addition,
Micafil, Inc., and American Handling, Inc. shall each, on
a non-recourse basis, guaranty the Loans, shall evidence
its obligations by executing and delivering to the Bank a
Non-Recourse Guaranty (the "Non-Recourse Guaranties"), and
shall secure the obligations under the Non-Recourse
Guaranties, with a first and exclusive security interest,
assignment, pledge, and mortgage on all of their
respective business assets, motor vehicles and real
estate, whether now owned or hereafter acquired pursuant
to security agreements, pledges, and mortgages in form
satisfactory to the Bank
<PAGE> 6
subject to any liens or encumbrances permitted by the terms
of such documents (the "Non-Recourse Guarantor
Collateral"), provided, however, that if the Bank, in its
sole discretion, does not provide a credit facility in the
amount of $250,000.00 to Micafil, Inc., then the Bank
agrees to subordinate its security interests with respect
to the business assets of Micafil, Inc. to the extent of
$250,000.00 in favor of another senior lender.
12. Section 3.7, "Other Collateral Securing the Loans," of the
Loan Agreement is hereby amended to recite in its entirety as follows:
3.7 Other Collateral Securing the Loans. In addition
to the Collateral (as defined below), the Loans shall be
secured by (a) first and exclusive open-end mortgages,
assignments of rents and security agreements in all of the
real property interests whether now owned or hereafter
acquired, whether owned or leased of the Borrowers (the
"Real Estate Collateral"); provided, however, that the
Bank's mortgage interests in the Borrowers' real estate
interests shall be subject to the liens and encumbrances
set forth in Exhibit B attached hereto; and, provided
further, that Taylor Forge shall not grant a negative
pledge with respect to its real property located in Shelby
County, Tennessee to any person or entity other than the
Bank; (b) a first and exclusive security interest in all
of the Borrowers' motor vehicles and interests in capital
stock; and (c) the life insurance referred to in Section
6.2 below (collectively the "Other Collateral").
13. Section 4.4, "Cash Collection Account," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
4.4 Cash Collection Account. The collections through
the lockbox arrangement shall be deposited into cash
collection accounts maintained with the Bank (the "Cash
Collection Account"), over which the Bank alone shall have
the power of withdrawal. If any of the Borrowers makes
collections on any of the Collateral, it shall hold in
trust for the Bank the proceeds received from collections,
and turn over all checks, drafts, cash and other
remittances and proceeds to the Bank each business day in
the exact form in which they are received, together with a
collection report in form acceptable to the Bank. Said
proceeds shall be deposited in the Cash Collection
Accounts. Prior to the occurrence of an Event of
Default, the Bank shall apply the whole or any part of the
collected funds on deposit in the Cash Collection Accounts
against the principal and/or interest of the Revolving
Loans, and after the occurrence of an Event of Default,
the Bank may apply such funds to the Term Loan, the
Additional Term Loan or any other indebtedness or
Obligations, and any portion of said funds on deposit in
the Cash Collection Accounts which the Bank elects not to
apply to the Obligations may be paid over and deposited by
Bank to the Borrowers' commercial accounts. The Bank, at
the Bank's sole discretion, may credit amounts deposited
in the Cash Collection Accounts to the Loans on the day of
deposit. To compensate the Bank for this arrangement, the
Bank charges, and each of the Borrowers agrees to pay a
fee which is calculated in accordance with
<PAGE> 7
the Bank's standard practices and procedures as if the
deposits in the Cash Collection Accounts were not applied
to the Revolving Loan until one business day after deposit
in the Cash Collection Accounts, with interest charged on
the daily deposits in the Cash Collection Account at the
interest rates applicable to the Revolving Loan. Such
amount is charged to the Borrowers monthly.
14. Section 5.4, "Capital Structure," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
5.4 Capital Structure. Centrum owns 100% of the
capital stock of MSC. MSC owns 100% of the capital stock
of McInnes Services, Inc. McInnes Services, Inc. owns
100% of the stock of Eballoy, EBA, McInnes International,
Inc. and Taylor Forge. The corporate structure of each of
the Borrowers and MSI is set forth in Schedule 5.4
attached to the Second Amendment and accurately represents
to the Bank the following: (a) the classes of capital
stock of each of the Borrowers and MSI and par value of
each such class, all as authorized by the Articles of
Incorporation or Charter of each and the number of shares
of each such class of stock issued and outstanding, the
registered owner or holder (legally or beneficially)
thereof, and the certificate numbers evidencing the
foregoing. All shares of all classes of capital stock
issued are fully paid and nonassessable. The Borrowers
and MSI do not have outstanding any other stock or other
equity security, or any other instrument convertible to an
equity security of any of them, or any commitment,
understanding, agreement or arrangement to issue, sell or
have outstanding any of the foregoing.
15. Section 6.3, "Sale of Assets, Merger, Subsidiaries,
Tradenames and Conduct of Business," of the Loan Agreement is hereby amended to
recite in its entirety as follows:
6.3 Sale of Assets, Merger, Subsidiaries, Tradenames
and Conduct of Business. Such Company shall not (a)
except in the ordinary course of business, sell, lease,
transfer or otherwise dispose of, any of its assets,
provided, however, such Company shall be permitted to
dispose of equipment that is obsolete or no longer useful
in the ordinary course of such Company's business,
provided that such disposition is not in excess of the
aggregate sum of $100,000.00 in any fiscal year; provided,
further, that such Company provides notice to the Bank of
the sale of such equipment; and provided, further, if such
equipment is Eligible Equipment or is the Rolled Ring
Division Equipment or equipment of Taylor Forge, such
Company obtains the prior written consent of the Bank, and
the proceeds of such disposition are applied first to the
Additional Term Loan, in inverse order of maturity of
installments, and then to the Term Loan, in inverse order
of maturity of installments, (b) except for the initial
capitalization of Centrum Acquisition Corporation by MSI,
consolidate with, merge into, enter into partnerships or
joint ventures with or make investments in any other
entity, or permit any other entity to consolidate with or
merge into it, provided, however, that Centrum shall be
permitted to
<PAGE> 8
make investments in MSC, (c) acquire all or substantially
all of the assets or business of any other person or
entity, provided, however, that Centrum Acquisition
Corporation, a Tennessee corporation and a wholly-owned
subsidiary of MSI, shall be permitted to acquire certain
of the assets of Taylor Forge International, Inc.
pursuant to the terms of a certain Asset Purchase
Agreement by and among Centrum, Centrum Acquisition
Corporation and Taylor Forge International, Inc. dated
as of April 29, 1997 (the "Asset Purchase Agreement") or
(d) create or acquire any subsidiaries or conduct
business under any other tradenames without the
prior written consent of the Bank, provided, however,
that MSI, shall be permitted to create Taylor Forge
for the purpose of acquiring certain of the assets
of Taylor Forge International, Inc. pursuant to the
terms of the Asset Purchase Agreement. Such Company has
no subsidiaries except as disclosed in Schedule 5.4
attached to the Second Amendment and conducts business
only in the name(s) of such Company and the tradenames set
forth in Schedule 6.3 attached to the Second Amendment.
None of the Borrowers or MSI shall engage in any business
other than the businesses engaged in by such Company on
the date hereof and any business or activities which are
substantially similar or related thereto.
16. Section 6.5, "Other Borrowings and Contingent
Liabilities," of the Loan Agreement is hereby amended to recite in its entirety
as follows:
6.5 Other Borrowings and Contingent Liabilities.
Except for the credit extensions set forth on Schedule 6.5
attached to the Second Amendment, intercompany loans and
advances obtained by Centrum from American Handling, Inc.,
which in the aggregate, shall not exceed the Maximum
Upstream Limit (as defined in Section 6.13 below), the
Loans, the IRB, and capitalized lease agreements and/or
purchase money financing transactions secured by the item
or items being purchased in an amount not to exceed the
purchase price of such item or items that, in the
aggregate, do not exceed the sum of $200,000.00 in any one
fiscal year; the Companies, in the aggregate, will not (a)
create or incur extensions of credit or indebtedness for
borrowed money, including without limitation, letters of
credit, or capitalized lease agreements or (b) guarantee,
indorse or otherwise become surety for or upon the
obligations of others, except by indorsement of negotiable
instruments for deposit or collection in the ordinary
course of business. For the purposes of this Agreement,
capitalized lease agreements shall be valued at the
purchase price of the item or items being purchased in
such fiscal year.
17. Section 6.9, "Acquisition of Capital Stock," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.9 Acquisition of Capital Stock. Without the prior
written consent of the Bank, such Company shall not redeem
or acquire any of its own capital stock or any warrants or
any securities relating to such capital stock or any debt
or debt securities of such Company except through (a) the
use of the net proceeds from the simultaneous sale
<PAGE> 9
of an equivalent amount of its capital stock for the same
purchase or redemption price, and (b) with respect to
George H. Wells' stock in Centrum, through the use of any
life insurance proceeds on the life of Mr. Wells which are
not collaterally assigned to secure the Loans; provided,
however, notwithstanding the foregoing, Centrum may pay
"Permitted Payments," as such term is defined in a certain
Subordination Agreement - Investors, dated of even date
herewith, entered into by, between and among, the Bank,
the Borrowers (with the exception of Taylor Forge), the
Guarantors, Micafil, Inc., American Handling, Inc., First
New England Capital Limited Partnership, MorAmerica
Capital Corporation, and North Dakota Small Business
Investment Company.
18. Section 6.14, "Tangible Net Worth," of the Loan Agreement
is hereby amended to recite in its entirety as follows:
6.14 Tangible Net Worth. The Borrowers and MSI, on a
consolidated basis, shall maintain at all times a
consolidated Tangible Net Worth of not less than the
following amounts for the periods specified below:
(a) from the date of this Agreement
through and including May 30, 1996, not
less than $2,300,000.00,
(b) beginning May 31, 1996, and
continuing through and including the day
immediately preceding the date the Second
Amendment becomes effective, not less
than $2,500,000.00,
(c) beginning on the date the
Second Amendment becomes effective, and
continuing through and including December
30, 1997, not less than the sum of
$4,000,000.00,
(d) beginning December 31, 1997 and
continuing through and including June 29,
1998, not less than the sum of
$5,500,000.00, and
(e) beginning June 30, 1998 and
continuing at all times thereafter, not
less than the sum of $6,500,000.00.
"Tangible Net Worth" shall mean shareholders' equity,
minus the sum of all of the following: (i) the excess of
cost over the value of net assets of purchased businesses,
rights, and other similar intangibles, (ii) organizational
expenses, (iii) intangible assets (to the extent not
reflected in the foregoing), (iv) goodwill, (v) deferred
charges or deferred
<PAGE> 10
financing costs, (vi) loans or advances to and/or
accounts or notes receivable from Affiliates, (vii)
leasehold improvements, (viii) noncompete agreements,
and (ix) any other asset not directly related to the
operation of the business of the Borrowers.
19. Section 6.15, "Ratio of Total Liabilities to Tangible Net
Worth," of the Loan Agreement is hereby amended to recite in its entirety as
follows:
6.15 Ratio of Total Liabilities to Tangible Net Worth.
The Borrowers and MSI, on a consolidated basis, shall
maintain at all times a ratio of consolidated Total
Liabilities to consolidated Tangible Net Worth of not
greater than the following amounts for the periods
specified below:
(a) Not greater than 9.00 to 1.00
from the date of this Agreement through
and including May 30, 1996; and
(b) not greater than 8.50 to 1.00
beginning May 31, 1996, and continuing
through and including the day immediately
preceding the date the Second Amendment
becomes effective;
(c) not greater than 7.50 to 1.00,
beginning on the date the Second
Amendment becomes effective, and
continuing through and including December
30, 1997;
(d) Not greater than 6.00 to 1.00
beginning December 31, 1997 and
continuing through and including June 29,
1997; and
(e) Not greater than 5.00 to 1.00
beginning June 30, 1998 and continuing at
all times thereafter.
"Total Liabilities" shall mean with respect to the
Borrowers and MSI (a) all indebtedness for borrowed money
or for the deferred purchase price of property or
services, (b) any other indebtedness which is evidenced by
a note, bond, debenture or similar instrument, (c) all
obligations with respect to any letter of credit issued
for the account of the Borrowers or MSI, (d) all
obligations in respect of acceptances issued or created
for the account of the Borrowers or MSI, (e) lease
obligations which, in accordance with GAAP, should be
capitalized, (f) all liabilities (including lease
obligations) secured by any lien or encumbrance on any
property owned by any of the Borrowers or MSI even
though such Company has not assumed or otherwise become
liable for the payment thereof, (g) all obligations of
the Borrowers or MSI with
<PAGE> 11
respect to interest rate protection agreements (valued
at the termination value thereof computed in accordance
with a method approved by the International Swap Dealers
Association), and (i) all other obligations of the
Borrower or MSI which, in accordance with GAAP, would be
classified upon a balance sheet as liabilities (except
capital stock and surplus earned).
20. Section 6.17, "Capital Expenditures," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.17 Capital Expenditures. The Borrowers and MSI, on
a consolidated basis, will not make any expenditure for
fixed or capital assets, including by way of the
incurrence of capitalized lease obligations, expenditures
for maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles
or otherwise in excess of $1,600,000.00 in any fiscal
year. Centrum will not make any expenditure for fixed or
capital assets, including by way of the incurrence of
capitalized lease obligations, expenditures for
maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles
or otherwise in excess of $100,000.00 in any fiscal year.
21. Section 6.19, "Operating Lease Rentals," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.19 Operating Lease Rentals. The Borrowers and MSI
have entered into the operating leases as set forth in
Schedule 6.19 attached to the Second Amendment. The
Borrowers and MSI, on a consolidated basis, will not
without the prior written approval of the Bank enter into
operating leases providing in the aggregate for annual
rentals which exceed $350,000.00.
22. Section 6.21, "Maintenance of Accounts," of the Loan
Agreement is hereby amended to recite in its entirety as follows:
6.21 Maintenance of Accounts. Each of the Borrowers
and the Guarantors shall provide the Bank with prior
written notice of the opening of any operating or deposit
accounts other than those maintained with the Bank.
Except for the operating and deposit accounts maintained
at the Bank, the payroll accounts set forth on Schedule
6.21 attached to the Second Amendment, and an operating
account at PNC Bank (Delaware) which, in the aggregate
shall not exceed $10,000.00 at any time, an operating
account of Centrum at Capital Bank, N.A., which account
shall not exceed $10,000.00 at any time, and an operating
account of Taylor Forge at NationsBank of Tennessee, N.A.,
which account shall not exceed $10,000.00 at any time, the
Borrowers and the Guarantors do not maintain any
operating and deposit accounts.
23. A new subsection (s) is hereby added to Section 7,
"Financial Information and Reporting," of the Loan Agreement and shall recite
in its entirety as follows:
(s) within 90 days after the date
of the Second Amendment, an audited opening
balance
<PAGE> 12
sheet of Taylor Forge, prepared in accordance
with GAAP and certified by independent
accountants satisfactory to the Bank.
24. Exhibit B, "Schedule of Permitted Encumbrances," of the
Loan Agreement is hereby amended to recite in its entirety as set forth in
Exhibit B attached to this Amendment.
25. Exhibit C, "Schedule of Business Locations," of the Loan
Agreement is hereby amended to recite in its entirety as set forth in Exhibit C
attached to this Amendment.
26. Schedules 5.13, 5.14, 5.15 and 6.11 to the Loan Agreement
are hereby amended to recite in their entirety as set forth in Schedules 5.13,
5.14, 5.15 and 6.11 to this Amendment.
27. Conditions of Effectiveness. This Amendment shall become
effective as of June 3, 1997, upon satisfaction of all of the following
conditions:
(a) The Bank shall have received two duly executed copies of
the Second Amendment to Loan and Security Agreement, the certificates,
instrument, documents, agreements and opinions of counsel set forth on Exhibit
D attached to this Amendment, and such other certificates, instruments,
documents, agreements, and opinions of counsel as may be required by the Bank,
each of which shall be in form and substance satisfactory to the Bank and its
counsel; and
(b) The representations contained in paragraph 28 below shall
be true and accurate.
27. Representations. Each of the Borrowers represents and
warrants that after giving effect to this Amendment (a) each and every one of
the representations and warranties made by or on behalf of such Borrower in the
Loan Agreement or the Loan Documents is true and correct in all respects on and
as of the date hereof, except to the extent that any of such representations
and warranties related, by the expressed terms thereof, solely to a date prior
hereto; (b) such Borrower has duly and properly performed, complied with and
observed each of its covenants, agreements and obligations contained in the
Loan Agreement and Loan Documents; and (c) no event has occurred or is
continuing, and no condition exists which would constitute an Event of Default
or Pending Default.
28. Amendment to Loan Agreement. (a) Upon the effectiveness of
Section 2 through Section 26 hereof, each reference in the Loan Agreement to
"Loan and Security Agreement," "Loan Agreement," "Agreement," the prefix
"herein," "hereof," or words of similar import, and each reference in the Loan
Documents to the Loan Agreement, shall mean and be a reference to the Loan
Agreement as amended hereby. (b) Except as modified herein, all of the
representations, warranties, terms, covenants and conditions of the Loan
Agreement, the Loan Documents and all other agreements executed in connection
therewith shall remain as written originally and in full force and effect in
accordance with their respective terms, and nothing herein shall affect,
modify, limit or impair any of the rights and powers which the Bank may have
thereunder. The amendment set forth herein shall be limited precisely as
provided for herein, and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any of the Bank's rights under or of any other
term or provisions of the Loan Agreement, any Loan Document, or other agreement
executed in connection therewith, or of any term or provision of any other
instrument referred to therein or herein or of any transaction or future action
on the part of the Borrowers which would require the consent of the Bank,
including, without limitation, waivers of Events of Default which may exist
after giving effect hereto. Each of the Borrowers ratifies and confirms each
term, provision, condition and covenant set forth in the Loan Agreement and the
Loan Documents and
<PAGE> 13
acknowledges that the agreement set forth therein continue to be legal, valid
and binding agreements, and enforceable in accordance with their respective
terms.
29. Authority. Each of the Borrowers hereby represents and
warrants to the Bank that (a) such Borrower has legal power and authority to
execute and deliver the within Amendment; (b) the officer executing the within
Amendment on behalf of such Borrower has been duly authorized to execute and
deliver the same and bind such Borrower with respect to the provisions provided
for herein; (c) the execution and delivery hereof by such Borrower and the
performance and observance by such Borrower of the provisions hereof do not
violate or conflict with the articles of incorporation or charter, regulations
or bylaws of such Borrower or any law applicable to such Borrower or result in
the breach of any provision of or constitute a default under any agreement,
instrument or document binding upon or enforceable against such Borrower; and
(d) this Amendment constitutes a valid and legally binding obligation upon such
Borrower in every respect.
30. Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties
had executed the same counterparts.
31 Governing Law. This Amendment shall be governed by and
construed in accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, the Borrowers, the Guarantors and the Bank
have hereunto set their hands as of the date first set forth above.
THE BORROWERS:
MCINNES STEEL COMPANY
By /s/ Timothy M. Hunter
Its Treasurer
EBALLOY GLASS PRODUCTS COMPANY
By /s/ Timothy M. Hunter
Its Treasurer
<PAGE> 14
ERIE BRONZE & ALUMINUM COMPANY
By /s/ Timothy M. Hunter
Its Treasurer
MCINNES INTERNATIONAL, INC.
By /s/ Timothy M. Hunter
Its Treasurer
CENTRUM ACQUISITION CORPORATION
TO BE KNOWN AS
TAYLOR FORGE COMPANY
By /s/ Timothy M. Hunter
Its Treasurer
THE GUARANTORS:
CENTRUM INDUSTRIES, INC.
By /s/ Timothy M. Hunter
Its Treasurer
MCINNES SERVICES, INC.
By /s/ Timothy M. Hunter
Its Treasurer
<PAGE> 15
THE BANK:
THE HUNTINGTON NATIONAL BANK
By /s/ Mark R. Matheson
Its Assistant Vice President
CONSENT OF NON-RECOURSE GUARANTORS
The undersigned, being non-recourse guarantors of the Borrowers'
indebtedness to the Bank pursuant to certain guaranty agreements with the Bank,
hereby consent and agree to be bound by the terms, conditions and execution of
the above Amendment and hereby further agree that their obligations shall be
continuing as provided in said guaranty agreements and said guaranty agreements
shall remain as written originally and continue in full force and effect in all
respects.
MICAFIL, INC.
By /s/ Timothy M. Hunter
Its Treasurer
AMERICAN HANDLING, INC.
By /s/ Timothy M. Hunter
Its Treasurer
<PAGE> 1
EXHIBIT 10.6
GUARANTOR: Centrum Industries, Inc. BORROWER: McInnes Steel Company
ADDRESS: 6135 Trust Drive ADDRESS: 441 East Main Street
Suite 104A Corry, PA 16407
Holland, OH 43528
ADDRESS: 2103 East 33rd Street
Erie, Pennsylvania 16510
BORROWER: Erie Bronze & Aluminum
Company
ADDRESS: 6300 West Ridge Road
Erie, Pennsylvania 16505
BORROWER: McInnes International,
Inc.
ADDRESS: Guardian Building
Havensight, 2nd Floor
P.O. Box 12150
St. Thomas, V. I. 00801
BORROWER: Centrum Acquisition
Corporation,
to be known as Taylor
Forge Company
ADDRESS: 5577 Tay-For Drive
Millington, TN 38053
AMENDED AND RESTATED
CONTINUING GUARANTY
UNLIMITED
This Amended and Restated Continuing Guaranty Unlimited (this "Guaranty") is
made as of the 3rd day of June, 1997, and is an amendment and restatement of a
certain Continuing Guaranty Unlimited executed by the undersigned and dated
February 29, 1996 (the "Original Guaranty Document").
For the purpose of inducing The Huntington National Bank (hereinafter referred
to as "Bank") to lend money or extend credit to McInnes Steel Company, Eballoy
Glass Products Company, Erie Bronze & Aluminum Company, McInnes International,
Inc. and Centrum Acquisition Corporation, to be known as Taylor Forge Company
(hereinafter collectively referred to as "Borrower"), the undersigned
(hereinafter referred to as "Guarantor") hereby unconditionally guarantees the
prompt and full payment to Bank when due, whether by acceleration or otherwise,
of all Obligations of any kind for which Borrower is now or may hereafter
become liable to Bank in any manner.
The word "Obligations" is used in its most comprehensive sense and includes,
without limitation, all indebtedness, debts and liabilities (including
principal, interest, late charges, collection costs, attorneys' fees and the
like) of Borrower to Bank, either created by Borrower alone or together with
another or others, primary or secondary, secured or unsecured, absolute or
contingent, liquidated or unliquidated, direct or indirect, whether evidenced
by note, draft, application for letter of credit, agreements of guaranty or
otherwise, and any and all renewals of, extensions of or substitutes therefor.
The word "Obligations" shall include, BUT NOT BE LIMITED TO, all indebtedness
owed by Borrower to Bank by reason of credit extended or to be extended to
Borrower in the aggregate principal amount of $25,350,000.00, pursuant to a
certain Loan and Security Agreement dated as of February 29, 1996, by and
between Borrower (with the exception of Centrum Acquisition Corporation, to be
known as Taylor Forge Company), McInnes Services, Inc., Debtor and the Bank,
together with all amendments or modifications thereto
<PAGE> 2
or restatements thereof from time to time, including without limitation,
a certain First Amendment to Loan and Security Agreement dated as of
January 1, 1997, and a certain Second Amendment to Loan and Security
Agreement dated as of even date herewith (collectively the "Loan Agreement")
and one or more instruments of indebtedness and related documents.
Guarantor hereby promises that if one or more of the Obligations are not paid
promptly when due, Guarantor will, upon request of Bank, pay the Obligations to
Bank, irrespective of any action or lack of action on Bank's part in connection
with the acquisition, perfection, possession, enforcement or disposition of any
or all Obligations or any or all security therefor or otherwise, and further
irrespective of any invalidity in any or all Obligations, the unenforceability
thereof or the insufficiency, invalidity or unenforceability of any security
therefor.
Guarantor waives notice of any and all acceptances of this Continuing Guaranty
Unlimited ("Guaranty"). This Guaranty is a continuing guaranty, and, in
addition to covering all present Obligations of Borrower to Bank, will extend
to all future Obligations of Borrower to Bank, whether such Obligations are
reduced, amended, or entirely extinguished and thereafter increased or
reincurred. This Guaranty is made and will remain in effect until the
Obligations are paid in full and until the Borrower has no right to request
further advances under the documents or instruments evidencing the Obligations.
Bank's rights hereunder shall be reinstated and revived, and this Guaranty
shall be fully enforceable, with respect to any amount at any time paid on
account of the Obligations which thereafter shall be required to be restored or
returned by Bank upon the bankruptcy, insolvency or reorganization of Borrower,
Guarantor, or any other person, or as a result of any other fact or
circumstance, all as though such amount had not been paid.
In the event Guarantor at any time shall pay any sums on account of any
Obligations or take any other action in performance of any Obligations,
Guarantor shall be subrogated to the rights, powers, privileges and remedies of
the Borrower in respect of such Obligations; provided that all such rights of
subrogation and all claims and indebtedness arising therefrom shall be, and
Guarantor hereby agrees that the same are, and shall be at all times, in all
respects subordinate and junior to all Obligations, and provided, further, that
Guarantor hereby agrees that Guarantor shall not seek to exercise any such
rights of subrogation, reimbursement, exoneration, or indemnity whatsoever or
any rights of recourse to any security for any of the Obligations unless or
until all Obligations shall have been indefeasibly paid in full in cash and
duly and fully performed.
Guarantor waives presentment, demand, protest, notice of protest and notice of
dishonor or other nonpayment of any and all Obligations and further waives
notice of sale or other disposition of any collateral or security now held or
hereafter acquired by Bank. Guarantor agrees that no extension of time,
whether one or more, nor any other indulgence granted by Bank to Borrower, or
to Guarantor, and no omission or delay on Bank's part in exercising any right
against, or in taking any action to collect from or pursue Bank's remedies
against Borrower or Guarantor, or any of them, will release, discharge or
modify the duties of Guarantor. Guarantor agrees that Bank may, without notice
to or further consent from Guarantor, release or modify any collateral,
security or other guaranties now held or hereafter acquired, or substitute
other collateral, security or other guaranties, and no such action will
release, discharge or modify the duties of Guarantor hereunder. Guarantor
further agrees that Bank will not be required to pursue or exhaust any of its
rights or remedies against Borrower or Guarantor, or any of them, with respect
to payment of any of the Obligations, or to pursue, exhaust or preserve any of
its rights or remedies with respect to any collateral, security or other
guaranties given to secure the Obligations, or to take any action of any sort,
prior to demanding payment from or pursuing its remedies against Guarantor.
In addition to its other obligations set forth in this Guaranty, Guarantor
shall cause Borrower and McInnes Services, Inc., on a consolidated basis, to
maintain at all times a "Tangible Net Worth" (as defined in the Loan
Agreement) of, at minimum, the amounts as of the dates specified in Section
6.14 of the Loan Agreement. If at any time during the term
<PAGE> 3
of this Guaranty, the Tangible Net Worth of Borrower and McInnes Services,
Inc., on a consolidated basis, shall be below the minimum amounts during
the applicable time periods set forth in Section 6.14 of the Loan
Agreement, Guarantor agrees, in each such instance, without notice or
demand of any kind, within thirty (30) days of the last day of the month in
which the Tangible Net Worth does not meet such minimum amounts, to
contribute to McInnes Steel Company's shareholders' equity in the form of
common stock or preferred stock, in form and substance satisfactory to the
Bank, the amount necessary to bring the Tangible Net Worth in compliance with
Section 6.14 of the Loan Agreement.
Guarantor agrees that any legal suit, action or proceeding arising out of or
relating to this Guaranty may be instituted in a state or federal court of
appropriate subject matter jurisdiction in the State of Ohio; waives any
objection which Guarantor may have now or acquire hereafter to the venue of any
such suit, action or proceeding; and irrevocably submits to the jurisdiction of
any such court in any such suit, action or proceeding.
WAIVER OF RIGHT TO TRIAL BY JURY
GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS GUARANTY OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF
GUARANTOR OR BANK WITH RESPECT TO THIS GUARANTY OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
GUARANTOR OR BANK MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR TO THE WAIVER OF
THE RIGHT OF GUARANTOR TO TRIAL BY JURY.
Guarantor hereby authorizes any attorney at law to appear for Guarantor in any
action on any or all Obligations guaranteed hereby at any time after such
Obligations become due, whether by acceleration or otherwise, in any court of
record in or of the State of Ohio or elsewhere, to waive the issuing and
service of process against, and confess judgment against Guarantor in favor of
Bank for the amount that may be due, including interest, late charges,
collection costs, attorneys' fees and the like as provided for in said
Obligations, and costs of suit, and to waive and release all errors in said
proceedings and judgments, and all petitions in error and rights of appeal from
the judgments rendered.
If any Obligation of Borrower is assigned by Bank, this Guaranty will inure to
the benefit of Bank's assignee, and to the benefit of any subsequent assignee,
to the extent of the assignment or assignments, provided that no assignment
will operate to relieve Guarantor from any duty to Bank hereunder with respect
to any unassigned Obligation. In the event that any one or more of the
provisions contained in this Guaranty or any application thereof shall be
determined to be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and any other applications thereof shall not in any way be affected or
impaired thereby. This Guaranty shall be construed in accordance with the law
of the State of Ohio.
All Uniform Commercial Code financing statements, fixtures filings, and all
security agreements, mortgages and/or collateral assignments executed and
delivered to the Bank in connection with the Original Guaranty Document shall
remain in full force and effect in all respects as if the indebtedness,
liabilities and obligations secured and perfected with respect to such
Uniform Commercial Code financing statements, security agreements, mortgages
and collateral assignments had been payable originally as provided by
this Guaranty and by the instruments, agreements and documents executed in
connection herewith. If any
<PAGE> 4
inconsistency exists between this Guaranty and the Original Guaranty Document,
the terms of this Guaranty shall prevail. Nothing contained in this Guaranty
or in any security agreement, assignment, collateral assignment, mortgage or
other document or instrument executed contemporaneously herewith shall be
deemed to satisfy or discharge the indebtedness, liabilities or obligations
evidenced by the Original Guaranty Document (this being an amendment and
restatement only) or to terminate the security interests, assignments,
mortgages, financing statements, fixture filings, or other documents or
instruments previously executed and delivered granted to the Bank prior to
the date hereof.
The liabilities evidenced hereby may from time to time be evidenced by another
guaranty or guaranties given in substitution or reaffirmation hereof. Any
security interest or mortgage which secures the liabilities evidenced hereby
shall remain in full force and effect notwithstanding any such substitution or
reaffirmation.
If at the time of payment of the Obligations and any discharge hereof,
Guarantor shall be then directly or contingently liable to Bank as maker,
indorser, surety or guarantor of any other loan or obligation whether the same
shall be evidenced by a note, bill of exchange, agreement of guaranty or other
instrument, then Bank may continue to hold any collateral of Guarantor as
security therefor, even though this Guaranty shall have been surrendered to
Guarantor. Bank shall not be bound to take any steps necessary to preserve any
rights in the collateral against prior parties. If any Obligations hereunder
are not paid when due, Bank may, at its option, demand, sue for, collect or
make any compromise or settlement it deems desirable with reference to any
collateral, and shall have the rights of a secured party under the law of the
State of Ohio. Guarantor shall be liable for any deficiency.
Executed and delivered at Columbus, Ohio, as of the date set forth above.
GUARANTOR:
CENTRUM INDUSTRIES, INC.
By: /s/ Timothy M. Hunter
------------------------
Its: Principal Financial Officer
and Treasurer
WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
