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): August 28, 1997
Hein-Werner Corporation
(Exact name of registrant as specified in its charter)
Wisconsin 1-2725 39-0340430
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
2120 Pewaukee Road
Waukesha, WI 53188
(Address of principal executive office, including zip code)
(414) 542-6611
(Registrant's telephone number)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On August 28, 1997, Hein-Werner Corporation (the "Company") sold
substantially all of the business, including certain assets and
liabilities, of its Winona Van Norman Division (the "Division") to Van
Norman Equipment Co., Inc., a Minnesota corporation ("Buyer"), pursuant to
an Asset Purchase Agreement, dated as of August 18, 1997, by and among the
Company, Buyer and Cornelius E. Mieras ("Mieras")(the "Asset Agreement" ).
The Company's sale of the business, including certain assets and
liabilities of the Division, as well as the consummation of the
transactions related thereto, is referred to as the "Disposition." Prior
to the Disposition, Mieras was employed by the Company as President of the
Division.
Pursuant to the Asset Agreement: (i) the Company sold the Division to
Buyer for $1,277,652 in cash at the closing of the Disposition subject to
the assumption by Buyer of certain contractual and other liabilities of
the Division; (ii) the Company agreed to a five-year convenant not to
compete in the manufacture or sale of (a) machines used in gas or diesel
engine rebuilding or reconditioning and (b) truck and automotive brake
lathes, (subject to certain exceptions) and (iii) the Company agreed to
indemnify Buyer (a) against any inaccuracy in or breach by the Company of
the Company's representations and warranties contained therein, (b)
against the breach of any covenant of the Company contained therein, and
(c) for liabilities not specifically assumed by Buyer under the Asset
Agreement. The purchase price paid by Buyer for the business, certain
assets and liabilities of the Division was determined on the basis of
arm's length negotiations between the parties. The Company has paid or
accrued approximately $1.8 million of direct Disposition costs.
The Division designs, manufactures and supplies advanced engineered
machinery for the automotive aftermarket, primarily for automotive, truck,
diesel and high-performance engine rebuilding. The Division also
manufactures brake lathes and related equipment as well as providing
contract machining services. Located in Winona, Minnesota, the Division
employs 59 people and recorded net sales of approximately $7 million in
1996.
The Asset Agreement is filed as an exhibit to this Current Report on
Form 8-K and is incorporated herein by reference. The brief summaries of
certain of the material provisions of the Asset Agreement set forth above
are each qualified in their entirety by reference to the agreement filed
as an exhibit hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statement of Business Acquired - Not applicable
(b) Pro Forma Financial Information
HEIN-WERNER CORPORATION
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to
the disposition (such disposition as well as the consummation of certain
related transactions is referred to herein as the "Disposition") by Hein-
Werner Corporation (the "Company") of substantially all of the business,
certain assets and liabilities of its Winona Van Norma Division (the
"Division") pursuant to an Asset Purchase Agreement, dated August 18,
1997, by and among the Company, Winona Van Norman Equipment Co, Inc., a
Minnesota corporation, and Cornelius E. Mieras. The Disposition was
deemed to be effective as of the close of business on August 28, 1997.
The pro forma amounts have been prepared based upon certain accounting and
other pro forma adjustments as described in the accompanying notes to the
unaudited pro forma condensed consolidated financial statements of the
Company.
The unaudited pro forma condensed consolidated statements of
operations reflect the historical results of operations of the Company
including the Division for the year ended December 31, 1996, with pro
forma adjustments as if the Disposition had occurred as of the beginning
of fiscal 1996. The historical financial statements for the six months
ended June 28, 1997 reflect the Division as a discontinued operation. The
pro forma condensed consolidated statement of operations for the year
ended December 31, 1996 includes a column titled "H-W pro forma without
GBI." This information is taken from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission relating to the May
29, 1997 sale of the Company's Great Bend Industries ("GBI) division. The
final pro forma numbers, therefore, reflect the sale of both GBI and the
Division. The pro forma adjustments are described in the accompanying
notes and give effect to events that are (a) directly attributable to the
Disposition, (b) factually supportable and (c) in the case of certain
income adjustments, expected to have a continuing impact.
The unaudited pro forma condensed consolidated financial statements
should be read in connection with the Company's Annual Report on Form 10-K
for the year ended December 31, 1996, the Company's Quarterly Report on
Form 10-Q for the quarter ended June 28, 1997 and the Company's Current
Report on Form 8-K relating to the sale of GBI.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what the
Company's financial position or results of operations as of the dates
presented would have been had the Disposition in fact occurred on such
date or at the beginning of the periods indicated, or to project the
Company's financial position or results of operations for any future date
or period.
<PAGE>
Pro Forma Condensed Consolidated Balance Sheet
June 28, 1997
(unaudited)
Pro Forma
(in thousands) Adjust-
Hein-Werner ments(1) Pro Forma
ASSETS
Current assets:
Cash $ 8,861 $ 1,489 $10,350
Accounts receivable, net 12,928 12,928
Inventories 9,727 9,727
Assets of discontinued
business awaiting
disposition 5,052 (5,052) 0
Prepaid expenses and other 2,361 2,361
-------- --------- ---------
Total current assets 38,929 (3,563) 35,366
Property, plant and equipment 2,777 2,777
Other assets 1,599 1,599
-------- --------- ---------
Total assets $43,305 $(3,563) $39,742
======== ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Notes payable $ 2,404 $2,404
Current installments of
long-term debt 170 170
Accounts payable 3,619 3,619
Income taxes payable 3,172 3,172
Other current liabilities 8,788 (3,563) 5,225
-------- -------- --------
Total current
liabilities 18,153 (3,563) 14,590
Long-term debt, excluding
current installments 328 328
Other long-term liabilities 1,573 1,573
--------- --------- ---------
Total Liabilities 20,054 (3,563) 16,491
Stockholder's Equity 23,251 -- 23,251
--------- --------- ---------
Total liabilities and
stockholders' equity $43,305 $(3,563) $39,742
========= ========= =========
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
<PAGE>
<TABLE>
Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 1996
(unaudited)
<CAPTION>
H-W Pro Forma
(in thousands, except per Pro Forma Disposed Adjust-
share data) Hein-Werner w/o GBI Division ments(2) Pro Forma
<S> <C> <C> <C> <C> <C>
Net sales $68,492 $48,443 $ 6,747 $41,696
Cost of sales 42,672 27,015 5,154 21,861
------- ------- -------- -------- ---------
Gross profit 25,820 21,428 1,593 19,835
Selling, engineering, and
administrative expenses 21,471 19,566 2,738 585 17,413
Bad debt expenses 420 406 15 391
------- -------- -------- -------- ---------
Operating profit (loss) 3,929 1,456 (1,160) (585) 2,031
Interest (income) expense-net 1,465 47 199 (146) (298)
Other expense-net 164 164 164
------- -------- -------- -------- ---------
Income before income taxes 2,300 1,245 (1,359) (439) 2,165
Income tax expense 124 420 41 461
-------- ------- --------- --------- ---------
Net income (loss) $ 2,176 $ 825 $(1,359) $ (480) $ 1,704
======== ======= ========= ========= =========
Earnings per common share-
primary $ 0.78 $ 0.29 $ 0.59
======== ======= ========= ========= =========
Earnings per common share-
fully diluted $ 0.64 $ 0.29 $ 0.59
======== ======= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding-primary 2,804 2,874 2,874
======== ======= ========= ========= =========
Weighted average common and
common equivalent shares
outstanding-fully diluted 3,383 2,874 2,874
======== ======= ========= ========= =========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
<PAGE>
Pro Forma Condensed Consolidated Statement of Operations
Six Months Ended June 28, 1997
(unaudited)
Pro
Forma
(in thousands, except per Hein- Adjust-
share data) Werner ments(2) Pro Forma
Net sales $ 19,639 $ -- $ 19,639
Cost of sales 10,570 10,570
------- -------- --------
Gross profit 9,069 -- 9,069
Selling, engineering, and
administrative expenses 8,044 309 8,353
------- ------- -------
Operating profit (loss) 1,025 (309) 716
Interest (income) expense-net 114 (152) (38)
Other expense-net 88 -- 88
------- ------- -------
Income before income taxes 823 (157) 666
Income tax expense 133 215 348
Income from continuing
operations $ 690 $ (372) $ 318
======= ======= =======
Earnings for continuing
operations per common share-
primary $ 0.24 $ 0.11
======= =======
Earnings from continuing
operations per common share-
fully diluted $ 0.24 $ 0.11
======= =======
Weighted average common and
common equivalent shares
outstanding-primary 2,838 2,838
======= =======
Weighted average common and
common equivalent shares
outstanding-fully diluted 2,881 2,881
======= =======
See accompanying notes to unaudited pro forma condensed consolidated
financial statements.
<PAGE>
HEIN-WERNER CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The pro forma condensed consolidated balance sheet has been prepared to
reflect the sale by the Company of substantially all of the business,
certain assets and liabilities of the Division. The pro forma adjustments
as of June 28, 1997 reflect the application of proceeds from the sale of
the Division to investments in cash equivalents and to establish remaining
accrued liabilities.
NOTE 2
The pro forma condensed consolidated statement of operations for the year
ended December 31, 1996 includes a column titled "H-W pro forma without
GBI." This information is taken from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission relating to the May
29, 1997 sale of the Great Bend Industries ("GBI") division. The final
pro forma numbers, therefore, reflect the sale of both GBI and the
Division. The pro forma condensed consolidated statements of operations
for the year ended December 31, 1996 and the six months ended June 28,
1997 are based upon the financial statements of the Company for the year
ended December 31, 1996 and the six months ended June 28, 1997,
respectively, after giving effect to the following pro forma adjustments:
a) Increase in interest earned from the investment of the proceeds
obtained from the sale of the Division and collection of the
receivables retained in the transaction, computed at rates in effect
during the respective periods.
b) Retention of certain central office selling, engineering, and
administrative expenses and other expenses previously allocated to
the Division, offset by a reduction of certain central office
expenses as a result of the sale of the Division. The historical
financial statements for the six months ended June 28, 1997, reflect
the Division as a discontinued operation. As a result, the only
adjustments to the statement of operations are those which reflect
pro forma interest earned on cash proceeds received and for certain
central office costs previously allocated to the Division but which
will continue after the disposition.
c) Provision for income taxes is needed so that income taxes on the U.S.
portion of consolidated pro forma income before taxes reflects U.S.
statutory rates. For the six months ended June 28, 1997, losses in
certain countries for which no tax benefit could be recorded due to
an inability to carry those losses back resulted in tax expense of
$133 on foreign losses before income taxes of $99. This results in
consolidated pro forma income tax expense of 52.3% of consolidated
income before income taxes, even though income taxes have been
provided at 38% on the U.S. portion thereof.
d) For the year ended December 31, 1996, pro forma weighted average
common and common equivalent shares reflect the issuance of 564,381
additional options in connection with the repayment of certain
convertible subordinated notes. For the six months ended June 28,
1997, the issuance of these additional options had already occurred
and is reflected in both this historical and pro forma amounts.
(c.) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed
as part of this Current Report on Form 8-K.
<PAGE>
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.
HEIN-WERNER CORPORATION
September 12, 1997 By: /s/ Mary L. Kielich
Mary L. Kielich
Corporate Controller, Assistant
Secretary and Assistant
Treasurer
<PAGE>
HEIN-WERNER CORPORATION
EXHIBIT INDEX TO FORM 8-K
Report Dated August 28, 1997
Exhibit
(2.1) Asset Purchase Agreement, dated as of August 18, 1997, by and
among Hein-Werner Corporation, a Wisconsin corporation, Van
Norman Equipment Co., Inc., a Minnesota corporation, and
Cornelius E. Mieras
ASSET PURCHASE AGREEMENT
WINONA VAN NORMAN DIVISION
OF
HEIN-WERNER CORPORATION
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . 1
1.1. Definition of "Business". . . . . . . . . . . . . . . . . 1
1.2. Assets to be Transferred . . . . . . . . . . . . . . . . 1
1.3. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . 4
2.1. Liabilities to be Assumed . . . . . . . . . . . . . . . . 4
2.2. Liabilities Not to be Assumed . . . . . . . . . . . . . . 6
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . 7
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . 7
3.2. Payment of Purchase Price . . . . . . . . . . . . . . . . 7
3.3. Inventory . . . . . . . . . . . . . . . . . . . . . . . . 8
4. REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . 8
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3. Sufficiency of Vacation Accruals . . . . . . . . . . . . 9
4.4. No Violation . . . . . . . . . . . . . . . . . . . . . . 9
4.5. No Brokers or Finders . . . . . . . . . . . . . . . . . . 9
4.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . 9
4.7. Title . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8. No Restrictive Agreements . . . . . . . . . . . . . . . . 9
4.9. Additional Contracts, Licenses and Personal Property
Leases . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. SEPARATE REPRESENTATIONS AND WARRANTIES OF BUYER AND OF
MIERAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.1. Representations and Warranties of Buyer . . . . . . . . . 10
5.2. Representations and Warranties of Mieras . . . . . . . . 11
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION . . . . . . . . . . 11
6.1. Business Employees . . . . . . . . . . . . . . . . . . . 11
6.2. Hein-Werner Retirement and Savings Plan and Trust . . . . 12
6.3. Data Processing . . . . . . . . . . . . . . . . . . . . . 12
6.4. Payroll Tax . . . . . . . . . . . . . . . . . . . . . . . 12
6.5. Employee Benefit Plans . . . . . . . . . . . . . . . . . 12
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 13
7.1. Environmental Assessment . . . . . . . . . . . . . . . . 13
7.2. Sublease . . . . . . . . . . . . . . . . . . . . . . . . 13
7.3. Customer Credits . . . . . . . . . . . . . . . . . . . . 13
7.4. Refitting and Remarketing . . . . . . . . . . . . . . . . 13
7.5. Removal of Waste . . . . . . . . . . . . . . . . . . . . 13
7.6. Access to Information and Records . . . . . . . . . . . . 13
7.7. Sales Representatives . . . . . . . . . . . . . . . . . . 13
7.8. Treatment of Receivables; Maintenance of Lockbox . . . . 14
7.9. Litigation Cooperation . . . . . . . . . . . . . . . . . 14
7.10. Product Marking . . . . . . . . . . . . . . . . . . 14
7.11. Product Installation . . . . . . . . . . . . . . . 14
7.12. Customer Credits . . . . . . . . . . . . . . . . . 15
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . 15
8.1. Representations and Warranties True on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2. Compliance With Agreement . . . . . . . . . . . . . . . . 15
8.3. Financing . . . . . . . . . . . . . . . . . . . . . 15
9. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . . 15
9.1. Representations and Warranties True on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.2. Compliance With Agreement . . . . . . . . . . . . . 15
10. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 16
10.1. By Company . . . . . . . . . . . . . . . . . . . . 16
10.2. By Buyer . . . . . . . . . . . . . . . . . . . . . 16
11. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11.1. Documents Delivered by Company . . . . . . . . . . 16
11.2. Documents Delivered by Buyer . . . . . . . . . . . 17
12. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 18
12.1. Right of Termination Without Breach . . . . . . . . 18
12.2. Other Terminations . . . . . . . . . . . . . . . . 18
13. COVENANT NOT TO COMPETE . . . . . . . . . . . . . . . . . . . 19
13.1. Non-Competition . . . . . . . . . . . . . . . . . . 19
13.2. Enforcement . . . . . . . . . . . . . . . . . . . . 19
13.3. Injunctive Relief . . . . . . . . . . . . . . . . . 19
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 19
14.1. Further Assurance . . . . . . . . . . . . . . . . . 19
14.2. Disclosures and Announcements . . . . . . . . . . . 20
14.3. Assignment; Parties in Interest . . . . . . . . . . 20
14.4. Law Governing Agreement . . . . . . . . . . . . . . 20
14.5. Amendment and Modification . . . . . . . . . . . . 20
14.6. Notice . . . . . . . . . . . . . . . . . . . . . . 20
14.7. Expenses . . . . . . . . . . . . . . . . . . . . . 22
14.8. Entire Agreement . . . . . . . . . . . . . . . . . 22
14.9. Counterparts . . . . . . . . . . . . . . . . . . . 22
14.10. Headings . . . . . . . . . . . . . . . . . . . . . 22
14.11. Survival . . . . . . . . . . . . . . . . . . . . . 22
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated August __,
1997, by and among VAN NORMAN EQUIPMENT CO., INC., a Minnesota corporation
("Buyer"), CORNELIUS E. MIERAS, an individual ("Mieras") and HEIN-WERNER
CORPORATION, a Wisconsin corporation ("Company").
R E C I T A L S
A. Company is engaged, through its Winona Van Norman
Division, in the manufacture and sale of (i) machinery used in gas and
diesel engine rebuilding and reconditioning and (ii) truck and automotive
brake lathes.
B. The Winona Van Norman Division business is carried on at
a leased facility located at 4730 West Hwy. 61, Winona, Minnesota 55987
(the "Facility").
C. Mieras is a principal shareholder of Buyer and has served
as President of the Winona Van Norman Division since 1986.
D. Buyer desires to purchase from Company, and Company
desires to sell to Buyer, the business and substantially all of the
property and assets of Company's Winona Van Norman Division, as set forth
herein.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business". As used herein, the term "Business"
shall mean the business of the Winona Van Norman Division of Company at
the Facility.
1.2. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, on the Closing Date (as hereinafter defined) Company
shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer
shall purchase and accept (except as provided in Section 1.3 hereof) the
following assets of the Business owned by Company (the "Purchased
Assets"):
1.2.(a) Personal Property. All machinery, equipment
(including, without limitation, items listed on Schedule
1.3(h)(ii)), vehicles, tools, supplies, spare parts, furniture and
all other personal property owned by the Company, located at the
Facility and not included in inventory (other than personal
property leased pursuant to Personal Property Leases as hereinafter
defined) and including tooling and equipment owned by the Business
and located at various vendors' premises.
1.2.(b) Inventory. All inventories of raw materials,
work-in-process, goods in transit and finished goods of the
Business owned by the Company on the Closing Date, together with
related packaging materials (collectively the "Inventory").
1.2.(c) Personal Property Leases. All leases of
machinery, equipment, vehicles, furniture and other personal
property utilized by the Business at the Facility (the "Personal
Property Leases").
1.2.(d) Trade Rights. Any Trade Rights of the Business
owned by the Company, including, but not limited to, those listed
on Schedule 1.2(d). As used herein, the term "Trade Rights" shall
mean and include: (i) all trademark rights, business identifiers,
trade dress, service marks, trade names, and brand names, all
registrations thereof and applications therefor and all goodwill
associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of
authorship; (iii) all patents and patent applications and all
intellectual property rights associated therewith; (iv) all
contracts or agreements granting any right, title, license or
privilege under the intellectual property rights of any third
party; (v) all inventions, mask works and mask work registrations,
know-how, discoveries, improvements, designs, trade secrets, shop
and royalty rights, employee covenants and agreements respecting
intellectual property and non-competition and all other types of
intellectual property; and (vi) all claims for infringement or
breach of any of the foregoing.
1.2.(e) Contracts. All the Company's rights in, to and
under all contracts, purchase orders and sales orders (hereinafter
"Contracts") of the Business. To the extent that any Contract for
which assignment to Buyer is provided herein is not assignable
without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if such
assignment or attempted assignment would constitute a breach
thereof. Company and Buyer agree to use their reasonable best
efforts (without any requirement on the part of Company to pay any
money or agree to any change in the terms of any such Contract) to
obtain the consent of such other party to the assignment of any
such Contract to Buyer in all cases in which such consent is or may
be required for such assignment. If any such consent shall not be
obtained, Company agrees to cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the benefits intended to
be assigned to Buyer under the relevant Contract.
1.2.(f) Computer Software and Hardware. Except as
described in Section 1.3.(e), all computer hardware of the Business
owned by the Company at the Facility and all of Company's right,
title and interest, if any, in and to computer software utilized in
conjunction with such computer hardware.
1.2.(g) Literature. All sales literature, promotional
literature, catalogs and similar materials of the Business owned by
the Company.
1.2.(h) Records and Files. All records, files, invoices,
customer lists, blueprints, specifications, designs, drawings,
accounting records, business records, operating data and other data
of the Business owned by Company.
1.2.(i) Licenses; Permits. All licenses, permits and
approvals of the Business.
1.2.(j) John Bean Agreement. Company is assigning to
Buyer at Closing (as that term is defined herein) the rights and
obligations of Company under Company's agreement with The John Bean
Company.
1.2.(k) Prepaid Expenses. Prepaid expenses shown on
Schedule 3.1(A).
1.3. Excluded Assets. Company shall retain all of its rights,
claims and assets not described in Section 1.2. Without limiting the
generality of the foregoing, and any contrary provisions of Section 1.2
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer shall not purchase or accept, the following
assets of Company:
1.3.(a) Cash and Cash Equivalents. All cash and cash
equivalents.
1.3.(b) Consideration. The consideration delivered by
Buyer to Company pursuant to this Agreement.
1.3.(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and
associated returns and records.
1.3.(d) Insurance. All policies of insurance, including
all prepaid insurance.
1.3.(e) Computer Software and Hardware. The "Symix/Data
General" software and all computer hardware and other equipment
utilized in connection with the "Symix/Data General" software as
listed on Schedule 1.3.(e). All such equipment and software shall
be returned to Company upon completion of the services provided by
Company pursuant to Section 6.2 hereof.
1.3.(f) Intercompany Receivables and Payables.
Intercompany accounts receivable and accounts payable of the
Business from the Company or any subsidiary or affiliate of the
Company.
1.3.(g) Notes and Accounts Receivable. All notes, drafts
and accounts receivable of the Business.
1.3.(h) Leasehold Improvements and Fixtures. Any and all
leasehold improvements made or fixtures attached to the Facility,
including, without limitation, the leasehold improvements listed on
Schedule 1.3(h)(i); provided, however, that those items listed on
Schedule 1.3(h)(ii) shall not be considered leasehold improvements
under this Section and shall constitute part of the Purchased
Assets pursuant to Section 1.2(a).
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer shall not assume or be liable for any Liability of the
Company except that Buyer agrees to assume and agrees to perform and
discharge the following Liabilities of Company (collectively the "Assumed
Liabilities"):
2.1.(a) Vacation Accruals Listed on Schedule 3.1(C). All
obligations to satisfy accrued liabilities to employees of the
Business for vacation accrued prior to the Closing Date as listed
on Schedule 3.1(C).
2.1.(b) Prorated Expenses. All obligations to satisfy the
obligations associated with the prorated expenses listed on
Schedule 3.1(D).
2.1.(c) Contractual Liabilities. Company's Liabilities
arising from and after the Closing Date under and pursuant to (i)
all purchase orders and sales orders of the Business, (ii) all
contracts described in any of Sections 1.2.(c), 1.2.(e), 1.2.(i)
and 1.2.(j), (iii) the Collective Bargaining Agreement (as such
term is defined in Section 6.1 hereof); and (iv) all other
contracts entered into in the ordinary course of business of the
Business.
The Contracts described in this subsection 2.1(c) above are
hereinafter collectively described as the "Assumed Contracts."
2.1.(d) Liabilities Under Permits and Licenses. Company's
Liabilities arising from and after the Closing Date under all
permits or licenses of the Business and assigned to Buyer on the
date hereof.
2.1.(e) Product Liability. Any Liability of Company
(including any Liability of Company for claims made for injury to
person, damage to property or other damage, whether made in product
liability, tort, breach of warranty or otherwise), for occurrences
after the Closing Date in any way relating to or resulting from any
products manufactured, assembled or sold (i) by the Business
(including its predecessors) after October 2, 1979; (ii) by Winona
Tool Co. and its successors and assigns (which successors and
assigns include the Business); and (iii) by Van Norman Machine Co.
and its successors and assigns (which successors and assigns
include the Business) after October 2, 1979, excluding Liabilities,
if any, for occurrences after the Closing Date in any way relating
to or resulting from products manufactured, assembled or sold for
industrial uses.
2.1.(f) Product Warranty. Company's liabilities and
obligations with respect to products of the Business under and
pursuant to the Business' product warranties; provided, however,
that Company shall reimburse Buyer for all out-of-pocket expenses
incurred by Buyer in satisfying warranty obligations on CG240 and
CG250 products imported from Italy and shipped by the Business
prior to Closing, but only to the extent that such expenses are
pre-approved by Company.
2.1.(g) Employee Liabilities. All liabilities of the
Company relating to Affected Employees as described in Section 6.1.
2.1.(h) Other Liabilities of Which Mieras Has Knowledge.
Except as provided in Section 2.2, all other Liabilities of the
Business of which Mieras has Knowledge (as hereinafter defined) as
of the Closing Date and not listed on Schedule 2.1(h) and 2.2(g).
For purposes of this Agreement, "Knowledge" shall mean that Mieras
possesses (i) an awareness of one or more events, conditions or
occurrences relating to any Liability or Liabilities of the Company
and (ii) knows, knew or reasonably should have known, at any time
up to and including the Closing Date, that such events, conditions
or occurrences could reasonably result in a Liability or
Liabilities of the Company.
2.1.(i) Other Liabilities of Which Mieras Has No
Knowledge. Except as provided in Section 2.2, all other
Liabilities of the Business of which Mieras has no Knowledge on the
Closing Date; provided, however, that Buyer is only assuming the
Liabilities described in this subsection to the extent of the first
$10,000 of payments or out-of-pocket expenses per Claim (as such
term is defined in Section 10.1 hereof), up to a maximum aggregate
amount of $100,000.
Buyer shall give prompt written notice to Company of any
pending or threatened Claim which constitutes or could constitute a
Liability of the Company of the kind described in this Section
2.1(i). Within ten business days of receipt of such notice by
Company, Company shall send written notice to Buyer that Company
intends to either (i) undertake the defense of such Claim or (ii)
assist Buyer in the defense of such Claim. If Company chooses to
undertake defense of such Claim, then Buyer shall (a) provide
Company or its representatives with all records and other materials
required by them and in the possession or under the control of
Buyer, for the use of Company and its representatives in defending
any such Claim; (b) in other respects give reasonable cooperation
in such defense; and (c) reimburse Company for the first $10,000 of
payments or expenses per Claim up to an aggregate amount of
$100,000 in accordance with this Section 2.1(i). If Company
chooses to assist Buyer in the defense of such Claim, then Buyer
shall (x) provide Company with such information and documentation
concerning the Claim as Company shall reasonably request; (y)
consult with Company on all matters pertaining to the disposition
of such Claim; and (z) in no event settle or otherwise dispose of
such Claim without the consent of Company. If Company shall not so
consent, Company shall undertake the defense of such Claim and
Buyer shall remit to Company an amount equal to the difference
between $10,000 and the total sums expended by Buyer in defense of
such Claim prior to Company undertaking such defense. Company
agrees that, with respect to Claims under this Section 2.1(i) which
Buyer proposes to settle or dispose of finally and in all respects
for an aggregate amount (including fees and expenses) which is less
than $10,000, such consent shall not be withheld provided Company
receives a full release from all liabilities related to such Claim.
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1, Buyer is not assuming any
Liabilities of Company and all such Liabilities shall be and remain the
responsibility of Company. Notwithstanding the provisions of Section 2.1,
Buyer is not assuming and Company shall not be deemed to have transferred
to Buyer the following Liabilities of Company:
2.2.(a) Income and Franchise Taxes. Any Liability of
Company for Federal income taxes and any state or local income,
profit or franchise taxes (and any penalties or interest due on
account thereof) or any liability for sales, unemployment, bulk
sales use, transfer, stamp or document taxes except those listed on
Schedule 3.1(D).
2.2.(b) Accounts Payable. Accounts payable of the
Business. For purposes of determining accounts payable of the
Business, Company will cut-off receipt of non-inventory supplies
and other non-inventory items as of the close of business on a date
not more than four business days prior to Closing (for example, on
August 24, 1997 if the Closing Date is August 28, 1997), and any
non-inventory supplies or other non-inventory items received after
such date will be deemed received by Buyer after the Closing Date.
2.2.(c) Indebtedness. Any indebtedness for borrowed money
for the Business and the capitalized leases listed on Schedule
2.2.(c).
2.2.(d) Intercompany Payables. Intercompany payables of
the Business to the Company or any subsidiary or affiliate of the
Company.
2.2.(e) Recourse Obligations. Company shall retain all
recourse liabilities associated with any products sold by the
Business prior to Closing and financed by Triad Systems Financial
Corporation or Textron Financial Corporation or any other entity or
person.
2.2.(f) Environmental Liabilities. All liability
(including but not limited to the obligation to clean up the
Facility and the obligations arising from those matters listed on
Schedule 5.2) from and relating to the generation, management,
handling, transportation, treatment, storage, disposal, delivery,
discharge, release or emission of any hazardous substances, or any
action, omission or condition affecting the environment with
respect to the Facility, prior to the Closing Date.
2.2.(g) Litigation and Claims. All litigation and claims
listed on Schedule 2.2(g).
2.2.(h) Liabilities to Employees. Liabilities of Company
to employees of the Business except as assumed by Buyer pursuant to
Sections 2.1(a), 2.1(c), 2.1(g), 2.1(h), 2.1(i) and 6.1 hereof.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price") for
the Purchased Assets shall be:
(i) $250,000 for the assets described in Sections 1.2(a)
through 1.2(j) hereof (but excluding Section 1.2(b)); plus
(ii) prepaid expenses at book value (for those items set
forth on Schedule 3.1(A)); plus
(iii) Inventory Value as calculated in accordance with
Section 3.3 hereof (as set forth on Schedule 3.1(B)); minus
(iv) $23,000 for employee expenses; minus
(v) vacation accruals at book value (as set forth on Schedule
3.1(C)); minus
(vi) prorated expenses (as set forth on Schedule 3.1(D)).
As of the date of this Agreement, Schedules 3.1(A), 3.1(B) and
3.1(C) reflect the book values of the respective items to which they
pertain as of August 1, 1997. All such Schedules shall be updated on the
Closing Date to reflect the book values of the respective items to which
they pertain as of the Closing Date (together with Schedule 3.1(D), the
"Updated Schedules"). The book values appearing on the Updated Schedules
shall be the values used in calculating the Purchase Price.
3.2. Payment of Purchase Price. The Purchase Price shall be paid
by Buyer as follows:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities in the form attached as Exhibit B hereto.
3.2.(b) Cash to Company. At the Closing, Buyer shall
deliver to Company the Purchase Price as calculated pursuant to
Section 3.1 hereof.
3.2.(c) Method of Payment. All payments under this
Section 3.2 shall be made in the form of certified or bank
cashier's check payable to the order of Company or, at Company's
option, by wire transfer of immediately available funds to an
account designated by the recipient, which designation shall be
made by Company to Buyer not less than forty-eight (48) hours prior
to the time for payment specified herein.
3.3. Inventory.
3.3.(a) Definition of "Inventory Value". "Inventory
Value" shall be the sum of (i) a fraction, the numerator of which
shall be the total book value of Inventory valued at standard cost
as reflected in the books and records of the Company as of the
Closing Date (excluding Italian machines included in the inventory
of the Business which were received by Company after March 31,
1997) minus $1,000,000, and the denominator of which shall be two;
and (ii) an amount equal to 100% of the actual cost (including
transportation costs and duties) to Company for all Italian
machines included in the inventory of the Business as of the
Closing Date which were received by Company after March 31, 1997.
The calculation of Inventory Value shall be set forth in detail by
Company on Schedule 3.1(B). For purposes of determining Inventory
Value, Company will cease outgoing shipments of products and
incoming receipt of inventory as of the close of business on a date
which is not more than two business days prior to Closing (for
example, on August 26, 1997 if the Closing Date is August 28, 1997)
and any outgoing shipments of products and incoming inventory
received after such date will be deemed shipped and/or received by
Buyer after the Closing Date.
3.3.(b) No Post-Closing Adjustment of Inventory Value.
The parties hereto specifically acknowledge that the Inventory
Value shall be calculated based on the value of Inventory at
standard cost as reflected on the books and records of the Company
as of the Closing Date (i) without conducting a physical inventory
and (ii) without establishing a reserve, and without any obligation
of either party to provide compensation following the Closing Date,
for obsolete, damaged, or unusable inventory. The parties further
acknowledge and agree that the Inventory Value set forth on
Schedule 3.1(B) shall not be subject to adjustment following the
Closing Date and is sufficient in all respects for the
determination of the Purchase Price hereunder.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to
Buyer.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
4.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease its
properties, to carry on its business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) No Subsidiaries. No portion of the Business is
conducted by the Company by means of any subsidiary or any other
interest in any corporation, partnership or other entity.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors of Company. No other or further corporate act or proceeding on
the part of Company or its shareholders is necessary to authorize this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid
binding agreements of Company, enforceable in accordance with their
respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by
general equitable principles.
4.3. Sufficiency of Vacation Accruals. All vacation accruals set
forth on Schedule 3.1(C) are sufficient for the payment in full of the
liabilities to which they relate.
4.4. No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto, nor the consummation by Company of
the transactions contemplated hereby and thereby will require any
authorization, consent, approval, exemption or other action by or notice
to any government entity, or subject to obtaining the necessary consents
or giving of notices, will violate or conflict with, or constitute a
default under any term or provision of the Articles of Incorporation or
By-laws of Company or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which
Company is a party or by which Company or any of its assets or properties
may be bound or affected.
4.5. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, shareholders or agents have retained,
employed or used any broker or finder in connection with the transaction
provided for herein or in connection with the negotiation thereof.
4.6. Litigation. The Company is not a party to any litigation with
respect to the Business and, except for matters of which Mieras has
knowledge, has no notice or knowledge of any written claims with respect
to the Business except as disclosed herein on schedule 2.2(g).
4.7. Title. Company has good and marketable title to the Purchased
Assets being sold hereunder (except that Company makes no representation
or warranty with respect to Trade Rights or computer software) free and
clear of all liens and encumbrances except (i) minor imperfections of
title and liens and encumbrances not otherwise identified in this Section
4.7 which, individually or in the aggregate, do not materially detract
from the value of or materially impair the use of the affected assets as
such assets are currently utilized, and (ii) liens and encumbrances
securing obligations to be assumed by Buyer pursuant to this Agreement.
4.8. No Restrictive Agreements. The Company has not entered into
any non-compete agreement or other restrictive agreement with respect to
the Purchased Assets which would prevent Buyer from continuing the
operation of the Business.
4.9. Additional Contracts, Licenses and Personal Property Leases.
No officer or employee of Company whose principal place of employment is
located in Company's facility in Waukesha, Wisconsin has executed any
agreements, contracts or Personal Property Leases of the Business, or
sought or obtained any permits or licenses of or for the Business, which
(i) have not been made known and available to Buyer prior to the Closing
Date or (ii) Buyer, Mieras, or any employee or agent of the Business whose
principal place of employment is not located in Company's facility in
Waukesha, Wisconsin was not previously aware of prior to the Closing Date.
5. SEPARATE REPRESENTATIONS AND WARRANTIES OF BUYER AND OF MIERAS
5.1. Representations and Warranties of Buyer. Buyer makes the
following representation and warranties to Company:
5.1.(a) Corporate.
5.1.(a)(i) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Minnesota.
5.1.(a)(ii) Corporate Power. Buyer has all requisite
corporate power to enter into this Agreement and the other
documents and instruments to be executed and delivered by
Buyer and to carry out the transactions contemplated hereby
and thereby.
5.1.(b) Authority. The execution and delivery of this
Agreement and the other documents and instruments to be executed
and delivered by Buyer pursuant hereto and the consummation of the
transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Buyer. No other corporate
act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by Buyer pursuant hereto
or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and
delivered, the other documents and instruments to be executed and
delivered by Buyer pursuant hereto will constitute, valid and
binding agreements of Buyer enforceable in accordance with their
respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors'
rights generally, and by general equitable principles.
5.1.(c) No Violation. Neither the execution and delivery
of this Agreement or the other documents and instruments to be
executed and delivered by Buyer pursuant hereto, nor the
consummation by Buyer of the transactions contemplated hereby and
thereby will require any authorization, consent, approval,
exemption or other action by or notice to any Government Entity, or
subject to obtaining the necessary consents or giving of Notices,
will violate or conflict with, or constitute a default under any
term or provision of the Articles of Incorporation or By-laws of
Buyer or of any contract, commitment, understanding, arrangement,
agreement or restriction of any kind or character to which Buyer is
a party or by which Buyer or any of its assets or properties may be
bound or affected.
5.1.(d) No Brokers or Finders. Neither Buyer nor any of
its directors, officers, employees or agents have retained,
employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the
negotiation thereof.
5.1.(e) Buyer Financing. Buyer will use its best efforts
to have adequate financing commitments executed in order to
consummate the transactions contemplated hereby in the time frame
set forth herein.
5.2. Representations and Warranties of Mieras. Mieras makes the
following representations and warranties to Company:
5.2.(a) Environmental Matters. To the best of Mieras's
Knowledge, except as shown on Schedule 5.2, the Business is in full
compliance with all federal and state laws, rules and regulations
relating to pollution or protection of the environment
("Environmental Laws"), and, to the best of Mieras's Knowledge and
except as shown on Schedule 5.2, the Company, with respect to the
Business, is not subject to any Liability under or pursuant to any
Environmental Laws.
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION
6.1. Business Employees. Certain of the Company's employees are
represented by the Winona Van Norman Company Employees Union (the
"Union"). The Union and the Company are parties to a collective
bargaining agreement effective April 3, 1995 through April 5, 1998 (the
"Collective Bargaining Agreement"). Buyer agrees at the Closing to assume
the Collective Bargaining Agreement.
All employees of the Business at the Closing Date shall become
employees of Buyer ("Affected Employees"). At the Closing Date, Buyer
shall be solely responsible for all pay and benefits with respect to such
employees for services rendered after the Closing Date. With respect to
all employees of the Business at the Closing Date, Buyer shall also pay or
otherwise satisfy all properly accrued and disclosed vacation, holiday and
sick time due to employees of the Business at the Closing Date. After the
Closing Date, Buyer shall also be responsible for any "COBRA" obligations
for Affected Employees of the Business and their dependents.
Buyer agrees to assume full responsibility for compliance with
any plant closing or similar laws, including WARN Act notices, if any,
which may be required as a result of employment losses caused by the
transactions provided for herein or by reason of any events occurring at
or after the Closing Date.
If the sale to Buyer of the Business and the Purchased Assets
pursuant to this Agreement or the transactions contemplated hereby, or if
the failure by Buyer to hire as a permanent employee of Buyer any employee
of Company, shall directly or indirectly result in any Liability (i) for
severance payments or termination benefits or (ii) by virtue of any state,
federal or local "plant-closing" or similar law, such Liability shall be
the sole responsibility of Buyer.
6.2. Hein-Werner Retirement and Savings Plan and Trust. The
Company will fulfill all of its obligations to Affected Employees of the
Business pursuant to the Hein-Werner Retirement and Savings Plan and
Trust.
6.3. Data Processing. After Closing and for a period of five
months thereafter, or such earlier date as Buyer shall notify Company of
its election to terminate such assistance and services, Company agrees to
provide data processing assistance and services to the Business as
conducted by Buyer after the Closing Date. Such data processing
assistance and services shall be of substantially the same kind and amount
as Company is at the Closing Date providing to the Business from its
Waukesha Headquarters facility. Such assistance and services shall be
provided without charge to Buyer, except that Buyer shall pay all costs
associated with line charges, paper, printing cartridges and other
consumables.
6.4. Payroll Tax. Company agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected Employees
paying over to the federal, state and city governments those amounts
respectively withheld or required to be withheld for employment through
the Closing Date. Company also agrees to issue, by the date prescribed by
IRS Regulations, Forms W-2 for wages paid through the Closing Date. Buyer
shall be responsible for all payroll and payroll tax obligations after the
Closing Date for Affected Employees.
6.5. Employee Benefit Plans.
6.5.(a) Defined Contribution Plans. Company shall cause
the interest of each of the Business' Employees as of the Closing
Date in the Hein-Werner Retirement and Savings Plan and Trust to be
fully vested and nonforfeitable as of the Closing Date. In all
other respects, each such person shall be treated as any other
terminated participant in accordance with the provisions of said
plan.
6.5.(b) No Third-Party Rights. Nothing in this Agreement,
express or implied, is intended to confer upon any of Company's
employees, former employees, collective bargaining representatives,
job applicants, any association or group of such persons or any
affected employees any rights or remedies of any nature or kind
whatsoever under or by reason of this Agreement, including, without
limitation, any rights of employment.
7. OTHER MATTERS
7.1. Environmental Assessment. Company shall, prior to the
Closing, cause to be conducted and pay all costs associated with a Phase I
and a Phase II environmental assessment of the Facility and associated
property, which shall be made available to Buyer.
7.2. Sublease. At the Closing, Company shall sublease the Facility
to Buyer pursuant to the Sublease Agreement attached as Exhibit A hereto.
7.3. Customer Credits. All Liabilities in connection with customer
returns for credit which relate to products sold by the Business prior to
Closing shall remain the responsibility of Company; provided, however,
that (i) no customer returns for credit shall be accepted by Buyer without
the prior consent of Company and (ii) Buyer shall purchase from Company
any such products returned by customers for fifty percent of the present
standard cost of such products. If Company and Buyer determine in good
faith that any such returned products are not reusable, Buyer shall have
no obligation hereunder to repurchase such returned products from Company.
7.4. Refitting and Remarketing. Buyer shall refurbish, refit, and
remarket, at the direction and to the satisfaction of Company, any
products repurchased or repossessed by Company pursuant to Section 2.2(e)
hereof. Company shall pay Buyer for refurbishing at a labor rate of
$30.00 per hour, plus cost of parts. Remarketing shall be performed by
Buyer in cooperation with Company. Company will be responsible for
selling expenses approved by Company in advance.
7.5. Removal of Waste. Company shall be responsible for the
removal of barrels of hazardous materials created in the ordinary course
of business prior to the Closing Date which have not been removed from the
Facility prior to the date hereof.
7.6. Access to Information and Records. After the Closing, each
party will afford the other party, its counsel, accountants and other
representatives, during normal business hours, reasonable access to the
books, records and other data in such party's possession relating directly
or indirectly to the properties, liabilities or operations of the
Business, with respect to periods prior to the Closing, and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party for any proper business
purpose. Each party agrees for a period extending eight (8) years after
the Closing not to destroy or otherwise dispose of any such records
without first offering in writing to surrender such records to the other
party, which party shall have ten (10) days after such offer to agree in
writing to take possession thereof.
7.7. Sales Representatives. Following the Closing, Buyer shall use
best efforts to collect and to assist Company in the collection of all
accounts receivable outstanding as of the Closing Date from those
customers, distributors and sales representatives with accounts receivable
balances with Company as of the Closing Date. Buyer's assistance shall
not include collection agency action or litigation.
7.8. Treatment of Receivables; Maintenance of Lockbox. Buyer
agrees that, for 60 days following the Closing Date, Buyer will not notify
or instruct customers, distributors or sales representatives of the Van
Norman product line of the Business with accounts receivable balances with
Company as of the Closing Date to remit any payments due Buyer or Company
on accounts receivable to any address or location other than the lockbox
facility maintained by Company prior to the Closing Date for such purpose.
With respect to all payments due Buyer from (i) The John Bean Company,
(ii) any customers, distributors or sales representatives of the Winona
Van Norman product line of the Business or (iii) any customers,
distributors or sales representatives of the Van Norman product line of
the Business which do not have accounts receivable balances with Company
as of the Closing Date, Buyer may instruct any such customers,
distributors or sales representatives as of the Closing Date to remit
payments to any new lockbox facilities established by Buyer for such
purpose.
For 60 days following the Closing Date, each party agrees, with
respect to any lockbox facility of the Business maintained by either
party, to provide the other party (or to cause its bank or financial
institution to provide the other party) with copies of all documentation
received from such party's bank or financial institution which accounts
for, lists, itemizes or otherwise describes any payments remitted to such
lockbox facilities by customers, distributors or sales representatives on
any open accounts. Company agrees to remit to Buyer any payments received
by Company which correlate with specific invoices dated after the Closing
Date or which are received from customers, distributors or sales
representatives for which no accounts receivable balances exist with
Company as of the Closing Date. Buyer agrees to remit to Company any
payments received by Buyer which (i)(a) correlate with specific invoices
dated prior to the Closing Date or (b) cannot reasonably be correlated
with any specific invoices of Buyer or Company and (ii) are received from
customers, distributors or sales representatives for which accounts
receivable balances exist with Company as of the Closing Date.
7.9. Litigation Cooperation. The parties agree after the Closing
to cooperate with one another in connection with any litigation, claim,
action or proceeding involving the Business including without cost (except
reimbursement of out-of-pocket expenses), providing copies of drawings and
other documents and providing employees as witnesses or otherwise to
assist in such litigation, all as reasonably requested from time to time
by the parties. Buyer shall assist Company in resolving the shipping
container damage claim with the Italian manufacturer presently valued at
not less than $85,000, and Buyer shall have no right to any proceeds from
any such resolution.
7.10. Product Marking. Buyer agrees that with respect to all
products of the Business manufactured or sold after the Closing Date that
it will mark such products so that such can be clearly and permanently
identified as having been manufactured or sold after the Closing Date.
7.11. Product Installation. Buyer agrees that, with respect
to any products which were (i) shipped by the Business prior to the
Closing Date; (ii) sold by or through any distributor or sales
representative subsequently terminated by Buyer following the Closing
Date; and (iii) not fully installed with the customer as of the Closing
Date, Buyer shall be responsible for installation of such product with the
customer. Should Buyer pay for or perform such installation, Buyer will
be reimbursed by Company at the standard hourly labor cost associated with
such installation to the extent of necessary work paid for or performed by
Buyer.
7.12. Customer Credits. Company will remit to Buyer up to
the amount of any customer credit listed on Schedule 7.12 which is
credited by Buyer to such customer following the Closing Date in
connection with such customer's purchase of additional products or
inventory from Buyer. Buyer shall provide Company with evidence that such
amount has been so credited by Buyer.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
8.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company in this Agreement
shall be true and correct in all material respects when made and shall be
true and correct in all material respects at and as of the Closing Date as
though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms of this
Agreement or consented to in writing by Buyer.
8.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by Company
prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 12.1.
8.3. Financing. Buyer shall have obtained the financing necessary
to consummate the sale and purchase of the Purchased Assets and the other
transactions to occur at Closing.
9. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Buyer and Mieras in this
Agreement shall be true and correct in all material respects when made and
shall be true and correct in all material respects at and as of the
Closing Date as through such representations and warranties were made or
given on and as of the Closing Date.
9.2. Compliance With Agreement. Buyer and Mieras shall have in all
material respects performed and complied with all of Buyer's and Mieras'
agreements and obligations under this Agreement which are to be performed
or complied with by Buyer and Mieras prior to or on the Closing Date,
including the delivery of the closing documents specified in Section 12.2.
10. INDEMNIFICATION
10.1. By Company. Subject to the terms and conditions of
this Section 8, Company hereby agrees to indemnify, defend and hold
harmless Buyer and its directors, officers, employees and controlled and
controlling persons (hereinafter "Buyer's affiliates"), from and against
all Claims asserted against, resulting to, imposed upon, or incurred by
Buyer, Buyer's affiliates, the Business or the Purchased Assets, directly
or indirectly, by reason of, arising out of or resulting from (a) the
inaccuracy or breach of any representation or warranty of Company
contained in or made pursuant to this Agreement; (b) the breach of any
covenant of Company contained in this Agreement; or (c) Liabilities of
Company not assumed by Buyer pursuant to this Agreement. As used in this
Agreement, the term "Claim" shall include (i) all Liabilities; (ii) all
losses, damages (including, without limitation, consequential damages),
judgments, awards, settlements, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated
matter), penalties, court costs and attorneys fees and expenses); and
(iii) all demands, claims, actions, costs of investigation, causes of
action, proceedings and assessments, whether or not ultimately determined
to be valid.
10.2. By Buyer. Subject to the terms and conditions of this
Section 8, Buyer hereby agrees to indemnify, defend and hold harmless
Company, its directors, officers, employees and controlling persons, from
and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or
resulting from (a) the inaccuracy or breach of any representation or
warranty of Buyer or Mieras contained in or made pursuant to this
Agreement; (b) the breach of any covenant of Buyer contained in this
Agreement; and (c) Liabilities specifically assumed by Buyer pursuant to
this Agreement.
11. CLOSING
The closing of this transaction ("the Closing") shall take place at
the offices of Foley & Lardner, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin, at 10:00 A.M. on August 28, 1997, or at such other time and
place as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "Closing Date".
11.1. Documents Delivered by Company. On the Closing Date,
Company shall deliver to Buyer the following documents, in each case duly
executed or otherwise in proper form:
11.1.(a) Bills of Sale. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as
will be sufficient in the opinion of Buyer and its counsel to
transfer, assign, convey and deliver to Buyer the Purchased Assets
as contemplated hereby.
11.1.(b) Compliance Certificate. A certificate signed by
the chief executive officer of Company that each of the
representations and warranties made by Company in this Agreement is
true and correct in all material respects on and as of the Closing
Date with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date
(except for any changes permitted by the terms of this Agreement or
consented to in writing by Buyer), and that Company has performed
and complied with all of Company's obligations under this Agreement
which are to be performed or complied with on or prior to the
Closing Date.
11.1.(c) Opinion of Counsel. A written opinion of Foley &
Lardner, counsel to Company, dated as of the Closing Date,
addressed to Buyer, substantially in the form of Exhibit C hereto.
11.1.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Company authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
11.1.(e) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at, prior to or
subsequent to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Buyer may reasonably
request.
11.1.(f) Sublease. The Sublease attached as Exhibit A
hereto.
11.2. Documents Delivered by Buyer. On the Closing Date,
Buyer shall deliver to Company the following documents, duly executed or
otherwise in proper form:
11.2.(a) Cash Purchase Price. To Company a certified or
bank cashier's check (or wire transfer) as required by Section
3.2.(b) hereof.
11.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company debts, liabilities and obligations as provided for in
Article 2 in the form attached hereto as Exhibit B.
11.2.(c) Compliance Certificate. A certificate signed by
the chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on
and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of
the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Company), and that
Buyer has performed and complied with all of Buyer's obligations
under this Agreement which are to be performed or complied with on
or prior to the Closing Date.
11.2.(d) Opinion of Counsel. A written opinion of Frank E.
Wohletz, counsel to Buyer, dated as of the Closing Date, addressed
to Company, in substantially the form of Exhibit D hereto.
11.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
11.2.(f) Other Documents. All other documents, instruments
or writings required to be delivered to Company at, prior to, or
subsequent to the Closing pursuant to this Agreement and such other
certificates of authority and documents as Company may reasonably
request.
12. TERMINATION
12.1. Right of Termination Without Breach. This Agreement
may be terminated without further liability of any party at any time prior
to the Closing:
12.1.(a) by written agreement of Buyer and Company, or
12.1.(b) by either Buyer or Company if the Closing shall
not have occurred on or before August 31, 1997, provided the
terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring on or
before such date.
12.2. Other Terminations.
12.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Buyer, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer
which has not been so waived (including but not limited to the
condition contained in Section 8.3 hereof), or (iii) Company shall
have attempted to terminate this Agreement under this Article 12 or
otherwise without grounds to do so, then Buyer may, by written
notice to Company at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 12.2.(c) hereof.
12.2.(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer of any of the agreements,
representations or warranties contained in this Agreement which has
not been waived in writing by Company, or (ii) there has been a
failure of satisfaction of a condition to the obligations of
Company which has not been so waived, or (iii) Buyer shall have
attempted to terminate this Agreement under this Article 12 or
otherwise without grounds to do so, then Company may, by written
notice to Buyer at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 12.2.(c) hereof.
12.2.(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 12.2 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or
failed to satisfy any of the representations, warranties,
covenants, agreements, conditions or other provisions of this
Agreement prior to termination hereof. In addition to the right of
any party under common law to redress for any such breach or
violation, each party whose breach or violation has occurred prior
to termination shall jointly and severally indemnify each other
party for whose benefit such representation, warranty, covenant,
agreement or other provision was made ("indemnified party") from
and against all losses, damages (including, without limitation,
consequential damages), costs and expenses (including, without
limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs, and attorneys fees and
expenses) asserted against, resulting to, imposed upon, or incurred
by the indemnified party, directly or indirectly, by reason of,
arising out of or resulting from such breach or violation.
13. COVENANT NOT TO COMPETE
13.1. Non-Competition. Following the Closing, and for a
period of five (5) years following the Closing, Company agrees not to
directly or indirectly engage or participate in the manufacture or sale of
(i) machines used in gas or diesel engine rebuilding or reconditioning and
(ii) truck and automotive brake lathes, in competition with the business
conducted by Buyer utilizing the purchased assets and business in North,
Central and South America (other than in accordance with Section 7.4
hereof). Nothing herein shall prohibit any person or entity from owning
five percent (5%) or less of a publicly traded company which conducts a
business which is competitive with Buyer's business. Nothing herein shall
prohibit Company from manufacturing or selling truck and automotive repair
equipment other than brake, engine or transmission rebuilding and
refurbishing equipment.
13.2. Enforcement. The provisions of the covenant contained
in this Section 13 are severable and independent and shall be interpreted
and applied consistently with requirements of reasonableness and equity.
If any provision of the covenant contained in this Section 13 shall be
held to be invalid or otherwise unenforceable, in whole or in part, the
remainder of the provisions, or the enforceable parts thereof, shall not
be affected thereby.
13.3. Injunctive Relief. Buyer and Company acknowledge that
compliance by Company with the covenant contained in this Section 13 is
necessary to protect the interests of Buyer and that a breach of the
covenant contained in this Section 13 will result in irreparable and
continuing damage to Buyer for which there will be no adequate remedy at
law. Company hereby agrees, without intending to limit the remedies
available to Buyer, that Buyer and its successors and assigns shall be
entitled to injunctive relief with respect to the covenant contained in
this Section 13 in addition to such other and further relief as may be
appropriate.
14. MISCELLANEOUS
14.1. Further Assurance. From time to time, at Buyer's
request and without further consideration, Company will execute and
deliver to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the
transactions contemplated hereby and to vest in Buyer good, valid and
marketable title to the business and assets being transferred hereunder.
14.2. Disclosures and Announcements. Both the timing and the
content of all disclosure to third parties and public announcements
concerning the transactions provided for in this Agreement by either
Company or Buyer shall be subject to the approval of the other party in
all essential respects, except that no approval shall be required but
prior written notice shall be given as to any statements and other
information which a party may submit to the Securities and Exchange
Commission, any stock exchange or such party's stockholders or be required
to make pursuant to any rule or regulation of the Securities and Exchange
Commission or otherwise required by law.
14.3. Assignment; Parties in Interest.
14.3.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be
assigned, transferred or encumbered without the prior written
consent of the other party.
14.3.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person
any right or remedy under or by reason of this Agreement.
14.4. Law Governing Agreement. This Agreement may not be
modified or terminated orally, and shall be construed and interpreted
according to the internal laws of the State of Minnesota, excluding any
choice of law rules that may direct the application of the laws of another
jurisdiction.
14.5. Amendment and Modification. Buyer and Company may
amend, modify and supplement this Agreement in such manner as may be
agreed upon by them in writing.
14.6. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
(a) If to Buyer or to Mieras, to:
Cornelius E. Mieras
4730 West Highway 61
Winona, Minnesota 55987
(with a copy to)
Wohletz Law Office
Home Federal Building
Fourth and Center Streets
P. O. Box 1305
Winona, Minnesota 55987-7305
Attention: Frank E. Wohletz
Facsimile: (507) 452-5494
or to such other person or address as Buyer shall furnish to Company in
writing.
(b) If to Company, to:
Hein-Werner Corporation
2120 Pewaukee Road
Waukesha, WI 53187-1606
Attention: Joseph L. Dindorf, President and Chief Executive
Officer
Facsimile: 414/542-7890
(with a copy to)
Maurice J. McSweeney
Foley & Lardner
777 East Wisconsin Avenue
Suite 3700
Milwaukee, Wisconsin 53202
Facsimile: (414) 297-4900
or to such other person or address as Company shall furnish to Buyer and
Parent in writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to
this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof
of delivery); if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by
U.S. mail pursuant to this paragraph, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by
the relevant postal service, or, if the addressee fails or refuses to
accept delivery, as of the date of such failure or refusal. Any party to
this Agreement may change its address for the purposes of this Agreement
by giving notice thereof in accordance with this Section.
14.7. Expenses. Regardless of whether or not the
transactions contemplated hereby are consummated:
14.7.(a) Brokerage. Company represents and warrants to
Buyer, and Buyer represents and warrants to Company, that there is
no broker involved or in any way connected with the transfer
provided for herein. Buyer agrees to hold Company harmless from
and against all claims for brokerage commissions or finder's fees
incurred through any act of Buyer in connection with the execution
of this Agreement or the transactions provided for herein. Company
agrees to hold Buyer harmless from and against all claims for
brokerage commissions or finder's fees incurred through any act of
Company in connection with the execution of this Agreement or the
transactions provided for herein.
14.7.(b) Expenses to be Paid by Buyer. Buyer shall pay,
and Buyer shall indemnify, defend and hold Company harmless from
and against, any sales, use, excise, transfer or other similar tax
imposed with respect to the transactions provided for in this
Agreement, and any interest or penalties related thereto.
14.7.(c) Other. Except as otherwise provided herein, each
of the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
14.7.(d) Costs of Litigation. The parties agree that the
prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled
to recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party
in connection with such action, including without limitation
attorneys' fees and prejudgment interest.
14.8. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
14.9. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
14.10. Headings. The headings in this Agreement are inserted
for convenience only and shall not constitute a part hereof. Where any
group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred
to using such defined term in the singular number.
14.11. Survival. All terms and conditions of this Agreement
shall survive the Closing. All statements contained in any documents,
certificates or other instruments delivered by or on behalf of Company or
Buyer pursuant to this Agreement shall be deemed representations and
warranties by Company or Buyer hereunder. All representations and
warranties and agreements made by Company or Buyer in this Agreement or in
any documents, certificates, or other instruments delivered pursuant
hereto shall survive the Closing hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
HEIN-WERNER CORPORATION
By: /s/ Joseph L. Dindorf
Joseph L. Dindorf, President and Chief
Executive Officer
VAN NORMAN EQUIPMENT CO., INC.
By: /s/ Cornelius E. Mieras
Cornelius E. Mieras, President
CORNELIUS E. MIERAS
/s/ Cornelius E. Mieras
