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): September 1, 1995
Joslyn Corporation
(Exact name of registrant as specified in charter)
Illinois 0-1252 36-3560095
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) No.)
30 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 454-2900
Not applicable
(Former name or former address, if changed since last report)
EXHIBIT INDEX ON PAGE 4
Page 1 of 63
<PAGE>
Joslyn Corporation
Amended 8K-Cyberex
Item 1. Not Applicable
Item 2. On July 5, 1995 Joslyn Corporation filed a form 8-K reporting the
acquisition of Cyberex, Inc., a closely held corporation, and
requested the automatic 60 day extension. This filing amends the
July 5th filing which is hereby incorporated by reference.
Item 3-6. Not Applicable
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Cyberex.
(1) Cyberex's 1994 audited financial statements which are the
Balance Sheets, Statements of Net Earnings, Statements of
Shareholders' Equity, Statements of Cash Flows, Notes to
Financial Statements and Independant Auditors' Report.
See pages 5-12
(2) Cyberex's 1995 unaudited financial statements as of and for
the six months to date of acquisition which are the Balance
Sheet, Statement of Net Earnings, Statement of Share-
holders' Equity, Statement of Cash Flow and Notes to
Financial Statements. See pages 13-17
(b) Pro Forma Financial Information.
(1) Joslyn and Cyberex's Pro Forma Condensed Balance Sheet
(unaudited) as of December 31, 1994. See page 19
(2) Joslyn and Cyberex's Pro Forma Condensed Income Statement
(unaudited) as of December 31, 1994. See page 20
(3) Joslyn and Cyberex's Pro Forma Condensed Income Statement
(unaudited) as of June 30, 1995. See page 21
(c) Exhibits
(1) The purchase agreement between Joslyn and Cyberex
See pages 22 - 62
(2) The consent to use the Deloitte and Touche LLP audit
opinion. See page 63
Item 8. Not Applicable
Page 2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOSLYN CORPORATION
___________________________
Lawrence G. Wolski
Chief Executive Officer
Dated: September 1, 1995
Page 3
<PAGE>
JOSLYN CORPORATION
EXHIBIT INDEX
PAGE # DESCRIPTION
5 - 12 Audited 1994 Financial Statements of Cyberex, Inc.
13 - 17 Unaudited 1995 Financial Statements of Cyberex to date of acquisition
Pro Forma Financial Information.
19 Joslyn and Cyberex's Pro Forma Condensed Balance Sheet
(unaudited) as of December 31, 1994.
20 Joslyn and Cyberex's Pro Forma Condensed Income Statement
(unaudited) as of December 31, 1994.
21 Joslyn and Cyberex's Pro Forma Condensed Income Statement
(unaudited) as of June 30, 1995.
22 - 62 Purchase Agreement
63 Deloitte & Touche LLP consent
Page 4
<PAGE>
CYBEREX, INC.
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS 1994 1993
CURRENT ASSETS:
Cash and cash equivalents $ 4,170,975 $3,092,943
Accounts receivable, less allowance for doubtful
accounts of $20,000 for 1994 and 1993 4,055,944 2,925,637
Inventories (Note 2) 2,847,261 2,341,910
Prepaid expenses 68,634 79,269
Deferred income taxes (Note 4) 422,722 396,150
----------------------
Total current assets 11,565,536 8,835,909
PROPERTY, PLANT AND EQUIPMENT (Note 5):
Land 96,000 96,000
Building and improvements 1,344,773 1,340,551
Machinery and equipment 1,113,117 1,071,379
Office furniture and equipment 361,766 325,551
----------------------
Total 2,915,656 2,833,481
Less accumulated depreciation (2,295,993)(2,156,151)
----------------------
Net property, plant and equipment 619,663 677,330
----------------------
TOTAL ASSETS $12,185,199 $9,513,239
======================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $1,066,036 $ 802,631
Accrued salaries and payroll taxes 512,661 360,775
Dividend payable 531,768 348,812
Commissions payable 141,243 119,188
Customers' advance deposits 930,493 476,051
Product warranty reserve 322,000 321,272
Income taxes payable (Note 4) 491,576 223,710
Current portion of obligation under
capital lease (Note 5) 7,800 7,800
----------------------
Total current liabilities 4,003,577 2,660,239
OBLIGATION UNDER CAPITAL LEASE (Note 5) 3,250 11,050
DEFERRED INCOME TAXES (Note 4) 58,145 98,638
SHAREHOLDERS' EQUITY (Note 6):
Common stock, stated value $.20 per share;
authorized 1,000,000 shares; issued, 177,256
in 1994 and 174,406 shares in 1993 35,451 34,881
Additional paid-in capital 338,986 250,656
Retained earnings 7,828,931 6,555,501
Notes receivable arising from incentive
stock option plan (83,141) (97,726)
----------------------
Total shareholders' equity 8,120,227 6,743,312
----------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $12,185,199 $9,513,239
======================
See notes to financial statements.
Page 5
<PAGE>
CYBEREX, INC.
STATEMENTS OF NET EARNINGS
YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993
REVENUES - Net sales and services $15,945,902 $14,289,411
COSTS AND EXPENSES:
Cost of sales and services 8,880,627 8,530,007
Selling 1,854,316 1,650,693
Administrative and general 1,780,121 1,537,661
Research and development 513,163 375,179
-----------------------
Total costs and expenses 13,028,227 12,093,540
-----------------------
INCOME FROM OPERATIONS 2,917,675 2,195,871
OTHER INCOME (EXPENSE):
Interest income 146,543 108,080
Interest expense (2,140) (14,383)
-----------------------
Total other income 144,403 93,697
-----------------------
INCOME BEFORE PROVISION FOR INCOME TAXES 3,062,078 2,289,568
PROVISION FOR INCOME TAXES (Note 4) 1,225,000 918,000
----------------------
NET EARNINGS $ 1,837,078 $ 1,371,568
=======================
EARNINGS PER SHARE $10.53 $8.11
=======================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 174,479 169,136
=======================
See notes to financial statements.
Page 6
<PAGE>
CYBEREX, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994 AND 1993
Common Stock
---------------- Additional Total
Number Stated Paid-in Retained Notes Shareholders'
of Shares Value Capital Earnings Receivable Equity
<TABLE>
<CAPTION>
BALANCE, JANUARY 1, 1993 (Note 6) 167,442 $33,488 $144,255 $5,534,973 $ 5,712,716
<C> <S> <S> <S> <S> <S> <S>
Sale of common shares under
Incentive Stock Option Plan 7,050 1,410 107,090 $(97,726) 10,774
Purchase and retirement of
common shares (86) (17) (689) (2,228) (2,934)
$2.00 per share dividend declared (348,812) (348,812)
Net earnings 1,371,568 1,371,568
-------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 174,406 $34,881 $250,656 $6,555,501 $(97,726) $6,743,312
Sale of common shares under
Incentive Stock Option Plan 4,000 800 100,680 101,480
Receipts on notes arising from
Incentive Stock Option Plan 14,585 14,585
Purchase and retirement of
common shares (1,150) (230) (12,350) (31,880) (44,460)
$3.00 per share dividend declared (531,768) (531,768)
Net earnings 1,837,078 1,837,078
-------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 177,256 $35,451 $338,986 $7,828,931 $(83,141) $8,120,227
===================================================================
</TABLE>
See notes to financial statements.
Page 7
<PAGE>
CYBEREX, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993
OPERATING ACTIVITIES:
Net earnings $1,837,078 $1,371,568
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation 139,842 126,760
Inventory reserves 45,774 (16,185)
Product warranty reserve 728 (7,642)
Deferred income taxes (67,065) 18,556
Write-off of investment -- 96,026
(Increase) decrease in operating assets:
Accounts receivable (1,130,307) (774,670)
Inventories (551,125) (40,257)
Prepaid expenses 10,635 (27,835)
Increase (decrease) in operating liabilities:
Trade accounts payable 263,405 (137,183)
Accrued salaries and payroll taxes 151,886 12,826
Commissions payable 22,055 (38,325)
Customers' advance deposits 454,442 (159,712)
Income taxes payable 267,866 30,672
-----------------------
Net cash provided by operating activities 1,445,214 454,599
INVESTING ACTIVITIES - Purchase of equipment (82,175) (85,331)
FINANCING ACTIVITIES:
Principal payments on long-term debt -- (282,987)
Principal payments on obligation under
capital lease (7,800) (7,800)
Payment of dividends (348,812) --
Purchase of stock (44,460) (2,934)
Proceeds from sale of stock-net of notes
receivable 101,480 10,774
Receipts on notes arising from incentive
stock option plan 14,585 --
-----------------------
Net cash used in financing activities (285,007) (282,947)
-----------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,078,032 86,321
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,092,943 3,006,622
-----------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $4,170,975 $3,092,943
=======================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 2,140 $ 14,383
=======================
Cash paid during the year for income taxes $ 987,212 $ 863,798
=======================
See notes to financial statements.
Page 8
<PAGE>
CYBEREX, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
1. INTRODUCTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk and Company Information - The Company operates
in the electronic components industry. Operations involve the production
and sale of uninterruptible power supply systems for commercial and
industrial use. The Company maintains ongoing credit evaluation of its
customers and generally does not require collateral. The Company provides
reserves for potential credit losses and such losses have not exceeded
management's expectations.
Cash and Cash Equivalents - Cash and cash equivalents, including cash in
excess of daily requirements, is invested in highly liquid short-term
investments having maturities of three months or less.
Inventories - Inventories are stated at the lower of cost (first-in, first-
out method) or market.
Property, Plant and Equipment - Property, plant and equipment are stated at
cost. Depreciation is provided over the estimated useful lives of the assets
using the straight-line method for the building. Building improvements and
equipment are depreciated using accelerated methods.
Taxes on Income - The provision for income taxes is accounted for under an
asset and liability approach to accounting for income taxes, which can
result in recording tax provisions or benefits in periods different than the
periods in which such taxes are paid or benefits realized. Deferred income
taxes are provided at statutory rates, primarily for differences in reporting
state income taxes, warranty costs, depreciation, customers' advance deposits
and inventory costs.
Customers' Advance Deposits - Customers' advance deposits arise from the sale
of preventive maintenance contracts and advance billings on customer purchase
orders. Income is recognized as services are provided or goods shipped.
Earnings per Share - Earnings per share for the periods presented have been
calculated on the basis of the weighted average shares outstanding. Shares
issuable upon the exercise of stock options have been excluded from the
average number of shares in the computation of earnings per share since the
effect is not significant.
2. INVENTORIES
Inventories consist of the following:
1994 1993
Raw materials $1,012,746 $ 659,558
Work-in process 1,822,845 1,653,239
Finished goods 11,670 29,113
-----------------------
Total $2,847,261 $2,341,910
=======================
Page 9
<PAGE>
3. LINE OF CREDIT
The Company has an unsecured line of credit available, with a maximum
borrowing limit of $4,500,000 at December 31, 1994. Borrowings under this
arrangement are at the bank's prime rate. There were no outstanding
borrowings at December 31, 1994 and 1993. No compensating balances are
required under the agreement. As of December 31, 1994, this credit line
supports the issuance of letters of credit in the amounts of $196,568.
4. PROVISION FOR INCOME TAXES
The provision for income taxes consists of the following:
1994 1993
Federal income tax expense (benefit):
Current $1,071,000 $ 790,000
Deferred (58,000) 57,000
Foreign income taxes 1,000 3,000
State and local income tax expense (benefit):
Current 220,000 106,000
Deferred (9,000) (38,000)
-----------------------
Total $1,225,000 $ 918,000
=======================
5. LEASE COMMITMENTS
The Company leases equipment under a capital lease agreement. The equipment
has been capitalized at the present value of the future minimum lease payments
which substantially covers the estimated useful life of the asset. The
Company also leases computer equipment under a noncancelable operating lease.
The lease contains an option renewal provision at the end of the lease. Total
rent expense for the operating lease was $42,550 for the years ended December
31, 1994 and 1993.
The following is a schedule by year of minimum lease payments due under leases
as of December 31, 1994:
Capital Operating
1995 $ 9,941 $42,550
1996 4,142 21,275
--------------------
Total minimum lease payments $14,083 $63,825
Less amount representing interest (3,033) ========
----------
Present value of net minimum lease payments 11,050
Less current maturities of obligation under
capital lease (7,800)
----------
Obligation under capital lease $ 3,250
==========
Page 10
<PAGE>
6. COMMON STOCK
Stock Purchase Agreement - Under a stock purchase agreement, the Company has
the right and option to purchase shares of stock from a selling shareholder,
at the offer price agreed to by the shareholder, within thirty days of the
offer date. During 1994 and 1993, no shares were purchased under the
agreement.
Stock Purchase Plan - The Company had a stock purchase plan which authorized
the granting of options for 100,000 shares of common stock to key employees.
The purchase price was based on the fair market value of the shares as of
the effective date of the grant of the option, but in no event could the
purchase price be less than book value as of December 31, preceding the
effective date of the grant. Options granted under the plan were
exercisable for a period of six months from the date of the grant, and while
the grantee was employed by the Company. The term of this plan expired
November 29, 1994. During 1994 and 1993, there were no options offered or
shares purchased under the plan. In the event of either the termination or
death of an employee, the Company is obligated to repurchase all stock
purchased by the employee under the plan for an amount determined under a
specified formula. During 1994, the Company repurchased 1,150 shares at a
total cost of $44,460. During 1993, the Company repurchased 86 shares at
a total cost of $2,934.
Incentive Stock Option Plan - The Company has an incentive stock option plan
which authorizes the granting of options for 80,000 shares of common stock to
key executives. The purchase price per share shall be 100% (110% for an
optionee who is a greater than 10% shareholder) of the fair market value of
the stock on the day the option is granted. Options granted under this plan
are exercisable for a period of up to ten years from the date such option
is granted (five years for an option granted to a greater than 10%
shareholder) and only while an optionee is an employee of the Company. No
options shall be granted under this plan subsequent to April 27, 1994.
During 1994 and 1993, 4,000 and 7,050 shares were purchased under the plan
at a price of $25.37 and $15.39 per share, respectively. Of the 7,050 shares
purchased during 1993, 6,350 were purchased with notes due November 1, 1998,
bearing interest at 6%. There were no options offered under the plan during
1994 and 1993. There were options for 24,000 shares outstanding at December
31, 1994 of which 9,000 are exercisable at $19.97 per share and 15,000 shares
are exercisable at $25.37 per share. There were options for 28,000 shares
outstanding at December 31, 1993 of which 9,000 shares are exercisable at
$19.97 per share and 19,000 shares are exercisable at $25.37 per share.
In the event of either the termination or death of an employee, the Company
is obligated to repurchase all stock purchased by the employee under the plan
for the fair market value of the stock as determined by the Board of Directors.
During 1994 and 1993, there were no shares repurchased under the plan.
7. EMPLOYEE BENEFIT PLANS
Discretionary Profit-Sharing Plan - Employees of the Company participate in a
profit-sharing retirement plan covering substantially all employees.
Contributions are made to the plan at the discretion of the Company's Board of
Directors. There were no contributions made to the plan during 1994. Company
contributions charged to expense during the year ended December 31, 1993 were
$50,000.
Savings Plan - The Company also sponsors an employee savings plan covering
substantially all employees. Under the plan, the Company matches contributions
of participating employees up to a designated level. The cost recognized for
matching contributions under the plan was $45,910 and $45,809 in 1994 and
1993, respectively.
* * * * * *
Page 11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Cyberex, Inc.
Mentor, Ohio
We have audited the balance sheets of Cyberex, Inc. as of December 31, 1994
and 1993 and the related statements of net earnings, shareholders' equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Cyberex, Inc. as of
December 31, 1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
/s/Deloitte & Touche LLP
Cleveland, Ohio
March 24, 1995
Page 12
<PAGE>
CYBEREX, INC.
BALANCE SHEET
JUNE 28,1995
(Dollars in thousands)
(Unaudited)
ASSETS JUNE 28, 1995
CURRENT ASSETS:
Cash and cash equivalents $ 3,640
Accounts receivable, less allowance for doubtful
accounts of $100 2,599
Inventories (Lower of FIFO cost or market) 3,575
Prepaid income taxes and other current assets 812
Deferred Income Taxes 607
---------
Total current assets $ 11,233
PROPERTY, PLANT AND EQUIPMENT
Land $ 96
Building and improvements 1,353
Machinery and equipment 1,127
Office furniture and equipment 384
---------
Total $ 2,960
Less accumulated depreciation (2,365)
---------
Net property, plant and equipment $ 595
---------
TOTAL ASSETS $ 11,828
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank $ 7
Trade accounts payable 861
Accrued salaries and payroll taxes 376
Commissions payable 177
Customers' advance deposits 604
Product warranty reserve 517
Miscellaneous accrued liabilities 210
Reserve for stock options (Note 2) 2,113
---------
Total current liabilities $ 4,865
SHAREHOLDERS' EQUITY
Common stock, stated value $.20 per share;
authorized 1,000,000 shares; issued 177,256 $ 35
Additional paid-in capital 339
Retained earnings 6,589
---------
Total Shareholders' Equity $ 6,963
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 11,828
=========
See notes to unaudited historic financial statements.
Page 13
<PAGE>
CYBEREX, INC.
STATEMENT OF NET EARNINGS
FOR THE SIX MONTHS ENDED JUNE 28,1995
(Dollars in thousands except earnings per share)
(Unaudited)
SIX MONTHS ENDED
JUNE 28, 1995
REVENUES- Net sales and services $ 7,052
---------
COSTS AND EXPENSES
Cost of sales and services $ 4,581
Selling 682
Administrative and general 844
Research and development 263
Other expense (Note 2) 2,746
Interest income (123)
Interest expense 1
---------
TOTAL COST AND EXPENSES $ 8,994
_________
LOSS BEFORE PROVISION FOR INCOME TAXES $( 1,942)
PROVISION FOR INCOME TAXES (702)
---------
NET LOSS $ (1,240)
=========
NET LOSS PER SHARE $ (7.11)
=========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 174,479
=========
See notes to unaudited historic financial statements.
Page 14
<PAGE>
CYBEREX, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 28, 1995
(Dollars in thousands)
(Unaudited)
Common Stock
--------------- Additional Total
Number Stated Paid-in Retained Notes Shareholders'
of Shares Value Capital Earnings Receivable Equity
----------------------------------------------------------
<TABLE>
<CAPTION>
BALANCE, JANUARY 1, 1995 177 $35 $339 $7,829 ($83) $8,120
<C> <S> <S> <S> <S> <S> <S>
Receipts on notes arising
from Incentive Stock
Option Plan 83 83
Net Loss (1,240) (1,240)
----------------------------------------------------------
BALANCE, JUNE 28, 1995 177 $35 $339 $6,589 $0 $6,963
==========================================================
</TABLE>
See notes to unaudited historic financial statements.
Page 15
<PAGE>
CYBEREX, INC
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 28, 1995
(Dollars in thousands)
(Unaudited)
SIX MONTHS ENDED
JUNE 28, 1995
OPERATING ACTIVITIES:
Net Loss $(1,240)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 69
Deferred income taxes (184)
(Increase) decrease in operating assets:
Accounts receivable 1,457
Inventories (728)
Prepaid expenses (29)
(Increase) decrease in operating liabilities:
Trade accounts payable (205)
Salaries and payroll taxes (137)
Commisions payable 36
Customers' advance deposits (326)
Product warranty reserve contingencies 195
Miscellaneous accrued liabilities 210
Stock Option liability 2,113
Income taxes (1,265)
--------
NET CASH PROVIDED BY OPERATIONS $ (34)
--------
INVESTING ACTIVITIES-Purchase of equipment $ (44)
________
FINANCING ACTIVITIES
Proceeds from notes receivable arising
from stock option plan $ 83
Payment of note payable to bank
(capital lease obligation) (4)
Payment of dividend (532)
________
NET CASH USED IN FINANCING ACTIVITIES $ (453)
--------
(DECREASE) IN CASH AND CASH EQUIVALENTS $ (531)
CASH AND CASH EQUIVALENTS AT JANUARY 1, 1995 4,171
--------
CASH AND CASH EQUIVALENTS AT JUNE 28, 1995 $ 3,640
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 1
========
Cash paid for income taxes $ 816
========
See notes to unaudited historic financial statements.
Page 16
<PAGE>
CYBEREX, INC
NOTES TO UNAUDITED HISTORIC FINANCIAL STATEMENTS
AS OF AND FOR THE SIX MONTHS ENDED JUNE 28, 1995
Note 1:
The condensed financial statements for Cyberex, Inc. included herein
have been prepared by the Corporation, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission.
Although certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, the Corporation believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the latest
Annual Report for Cyberex,Inc. which is also included in this 8-K filing.
Note 2:
On June 28, 1995 Joslyn Corporation acquired all of the issued and
outstanding stock of Cyberex, Inc. The total purchase price of $22
million included $19,887,000 for all the common stock and $2,113,000
for the termination of the outstanding stock options.
Other expense includes a charge for $2,113,000 related to recognizing
the stock options liability and also includes other non-recurring
charges related to the acquisition and charges to conform Cyberex's procedures
to Joslyn's procedures. Excluding these expenses, net earnings and
earnings per share would have been $480,000 and $2.75, respectively.
Page 17
<PAGE>
JOSLYN CORPORATION
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
On June 28, 1995 Joslyn Corporation acquired all of the issued and
outstanding stock of Cyberex, Inc., a closely held corporation. The
total purchase price of $22 million was paid from Joslyn's available
cash on hand. Cyberex is a recognized leading manufacturer of
uninterruptable power systems and static transfer switches.
Following are the unaudited condensed consolidated pro forma financial
statements reflecting, on a preliminary estimated basis, Joslyn's
acquisition of Cyberex using the purchase method of accounting. The
financial information is presented as if the acquisition occurred on
December 31, 1994 for the Condensed Consolidated Balance sheet and the
first day of each period for the Condensed Consolidated Statements of
Income. The final allocation of the purchase price will be completed
within twelve months.
The data presented is based on the respective historical statements of
Joslyn Corporation and Cyberex, Inc. The condensed consolidated pro
forma income statement for the six months ended June 30, 1995 excludes
Cyberex's charges for non-recurring expenses recorded due to the
acquisition. These charges are for the termination of Cyberex stock
options and certain expenses to conform Cyberex's accounting policies
to Joslyn's policies. The pro forma adjustments are based on available
information and the actual adjustments could differ from the pro forma
adjustments. Permitted pro forma adjustments include only the effects
of events directly attributable to a transaction expected to have a
continuing impact. The pro forma results do not purport to be
indicative of what would have occurred had the acquisition actually
been consumated on the assumed dates or of results that may occur for
any subsequent period.
Page 18
<PAGE>
JOSLYN CORPORATION
CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
Year Ended December 31, 1994
(Dollars in thousands)
Pro Forma
Joslyn Cyberex Adjustments Total
=======================================================================
Assets
- -----------------------------------------------------------------------
Current Assets:
Cash and Cash Equivalents 39,775 4,171 (22,000) 21,946
Receivables, Less Allowance
($2,099 for Joslyn & $20 for
Cyberex) for doubtful accounts 28,482 4,056 32,538
Inventories 35,564 2,847 38,411
Deferred Tax and Other
Current Assets 15,804 492 16,296
- -----------------------------------------------------------------------
Total Current Assets 119,625 11,566 (22,000) 109,191
Goodwill 14,280 14,280
Net Deferred Tax and Other Assets 19,924 (58) 19,866
Net Property, Plant and Equipment 37,955 620 38,575
- -----------------------------------------------------------------------
Total Assets 177,504 12,128 (7,720) 181,912
=======================================================================
Liabilities and Shareholders' Equity
- -----------------------------------------------------------------------
Current Liabilities:
Accounts Payable 10,674 1,066 11,740
Accrued Liabilities 30,548 2,450 400 33,398
Income Taxes 2,444 492 2,936
- -----------------------------------------------------------------------
Total Current Liabilities 43,666 4,008 400 48,074
- -----------------------------------------------------------------------
Postretirement Medical Liability 14,712 14,712
- -----------------------------------------------------------------------
Environmental Accrual 38,500 38,500
- -----------------------------------------------------------------------
Shareholders' Equity:
Common Stock, $1.25 Par Value;
Authorized 20,000 Shares, Issued
7,154 Shares in 1994 8,943 35 (35) 8,943
Additional Paid-in capital 339 (339)
Retained Earnings 72,321 7,829 (7,829) 72,321
Equity Adjustments (638) (83) 83 (638)
- -----------------------------------------------------------------------
Total Shareholders' Equity 80,626 8,120 (8,120) 80,626
- -----------------------------------------------------------------------
Total Liabilities and
Shareholders' Equity 177,504 12,128 (7,720) 181,912
=======================================================================
Note: The pro forma balance sheet adjustments reflect the $22.0
million cash payment by Joslyn for the acquisition of Cyberex, Inc.,
the recognition of goodwill for the excess of cost over the value of
the purchased net assets and the elimination of Cyberex's equity had
the purchase been made on December 31, 1994.
Page 19
<PAGE>
JOSLYN CORPORATION
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
Year Ended December 31, 1994
(Dollars in thousands except per share)
Adjustments
--------------------
Investment Pro Forma
Joslyn Cyberex Goodwill Income Income
--------------------------------------------------
<TABLE>
<CAPTION>
Net Sales $ 216,177 $ 15,946 $ $ $ 232,123
<C> <S> <S> <S> <S> <S>
Cost of Goods Sold 159,924 8,881 168,805
Selling and General Expenses 36,321 4,147 333 40,801
Other Expense, Net 7,030 2 7,032
Investment Income (1,668) (146) 573 (1,241)
Environmental Charge 35,000 35,000
--------------------------------------------------
Income (Loss) before Income Taxes $ (20,430)$ 3,062 $ (333)$ (573)$ (18,274)
Income Taxes (9,250) 1,225 (229) (8,254)
--------------------------------------------------
Net (Loss) Income $ (11,180)$ 1,837 $ (333)$ (344)$ (10,020)
==================================================
Net (Loss) Income Per Share of Common Stock ($1.41)
==========
Average Number of Shares Outstanding 7,124,000
==========
</TABLE>
Note: The pro forma income statement adjustments reflect the amortization of
the goodwill and the loss of investment income had the purchase been made at
the beginning of the period.
Page 20
<PAGE>
JOSLYN CORPORATION
CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
Six Months Ended June 30, 1995
(Dollars in thousands except per share)
Adjustments
-------------------
Investment Pro Forma
Joslyn Cyberex Goodwill Income Income
--------------------------------------------------
<TABLE>
<CAPTION>
Net Sales $ 114,069 $ 7,052 $ $ $ 121,121
<C> <S> <S> <S> <S>
Cost of Goods Sold 84,751 4,581 89,332
Selling and General Expenses 18,319 1,653 167 20,139
Other Expense, Net 191 136 327
Investment Income (1,106) (122) 287 (941)
--------------------------------------------------
Income before Income Taxes $ 11,914 $ 804 $ (167)$ (287)$ 12,264
Income Taxes 4,200 324 (115) 4,409
--------------------------------------------------
Net Income $ 7,714 $ 480 $ (167)$ (172)$ 7,855
==================================================
Net Income Per Share of Common Stock $1.10
==========
Average Number of Shares Outstanding 7,162,000
==========
</TABLE>
Note: The pro forma income statement adjustments reflect the amortization of
the goodwill and the loss of investment income had the purchase been made at
the beginning of the period.
Page 21
<PAGE>
__________________________________________________________________________
SHARE PURCHASE AGREEMENT
Dated as of June 14, 1995
Among
JOSLYN CORPORATION,
CYBEREX, INC.
and
CERTAIN NAMED SHAREHOLDERS OF CYBEREX, INC.
__________________________________________________________________________
Page 22
<PAGE>
TABLE OF CONTENTS Page
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES . . . . . . . 1
1.1. Purchase and Sale of Common Shares. . . . . . . . . . . . . . . . . 1
1.2. Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Payment on the Closing Date . . . . . . . . . . . . . . . . . . . . 2
1.5. Buyer's Additional Deliveries . . . . . . . . . . . . . . . . . . . 2
1.6. The Companys and Seller's Deliveries. . . . . . . . . . . . . . . . 2
1.7. Indemnity Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
SELLERS AND THE NAMED SELLERS . . . . . . . . . . . . . . 3
2.1. Organization of the Company . . . . . . . . . . . . . . . . . . . . 3
2.2. Subsidiaries and Investments. . . . . . . . . . . . . . . . . . . . 4
2.3. Capital Shares of the Company . . . . . . . . . . . . . . . . . . . 4
2.4. Title to Common Share . . . . . . . . . . . . . . . . . . . . . . . 4
2.5. Authority of Sellers. . . . . . . . . . . . . . . . . . . . . . . . 4
2.6. Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 5
2.7. Operations Since Balance Sheet Date . . . . . . . . . . . . . . . . 5
2.8. No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . 6
2.9. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.10. Availability of Assets and Legality of Use. . . . . . . . . . . . . 7
2.11. Governmental Permits. . . . . . . . . . . . . . . . . . . . . . . . 7
2.12. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.13. Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . 8
2.14. Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.15. Personal Property Leases . . . . . . . . . . . . . . . . . . . . . 8
2.16. Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . 8
2.17. Accounts Receivable; Inventories . . . . . . . . . . . . . . . . . 9
2.18. Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . .10
2.19. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
2.20. Employee Relations . . . . . . . . . . . . . . . . . . . . . . . .10
2.21. Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . .10
2.22. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
2.23. Status of Contracts. . . . . . . . . . . . . . . . . . . . . . . .13
2.24. No Violation, Litigation or Regulatory Action. . . . . . . . . . .13
2.25. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.26. Environmental Protection . . . . . . . . . . . . . . . . . . . . .14
2.27. Sellers'Assets . . . . . . . . . . . . . . . . . . . . . . . . . .15
2.28. Depositories; Powers of Attorney. . . . . . . . . . . . . . . . . .15
2.29. Transactions with Affiliates . . . . . . . . . . . . . . . . . . .15
2.30. No Finder. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
-i-
Page 23
<PAGE>
Page
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . .15
3.1. Organization of Buyer. . . . . . . . . . . . . . . . . . . . . . .15
3.2. Authority of Buyer. . . . . . . . . . . . . . . . . . . . . . . . .16
3.3. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE . . . . . . . .16
4.1. Due Diligence Investigation of the
Company by Buyer . . . . . . . . . . . . . . . . . . . . . . . . .16
4.2. Preserve Accuracy of Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
4.3. Operations Prior to the Closing Date. . . . . . . . . . . . . . . .17
ARTICLE V
ADDITIONAL AGREEMENTS. . . . . . . . . . . .19
5.1. Covenant Not to Compete or Solicit Business. . . . . . . . . . . .19
5.2. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.3. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . .22
5.4. Improvements Act Filings. . . . . . . . . . . . . . . . . . . . . .22
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER . . . . .23
6.1. No Misrepresentation or Breach of Covenants and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
6.2. No Changes or Destruction of Assets . . . . . . . . . . . . . . . .23
6.3. Opinion of Counsel for the Company and Sellers. . . . . . . . . . .23
6.4. Resignations of Officers and Directors; Release . . . . . . . . . .23
6.5. No Restraint. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.6. Necessary Approvals and Consents. . . . . . . . . . . . . . . . . .24
6.7. Improvements Act Waiting Period . . . . . . . . . . . . . . . . . .24
6.8. Escrow Agreements . . . . . . . . . . . . . . . . . . . . . . . . .24
6.9. Execution of Agreement and Delivery of Purchased
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
6.1O. Cash Balance . . . . . . . . . . . . . . . . . . . . . . . . . . .24
-ii-
Page 24
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS . . . . . .24
7.1. No Misrepresentation or Breach of Covenants and
Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
7.2. Corporate Action. . . . . . . . . . . . . . . . . . . . . . . . .25
7.3. No Restraint. . . . . . . . . . . . . . . . . . . . . . . . . . .25
7.4. Necessary Approvals and Consents. . . . . . . . . . . . . . . . .25
7.5. Improvements Act Waiting Period . . . . . . . . . . . . . . . . .25
7.6. Escrow Agreements . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . .25
8.1. Indemnification by Sellers. . . . . . . . . . . . . . . . . . . .25
8.2. Indemnification by Buyer. . . . . . . . . . . . . . . . . . . . .27
8.3. Notice of Claims. . . . . . . . . . . . . . . . . . . . . . . . .27
8.4. Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . .28
8.5. Subsequent Dispositions . . . . . . . . . . . . . . . . . . . . .28
8.6. Certain Conflicts . . . . . . . . . . . . . . . . . . . . . . . .28
8.7. Limitation of Liability . . . . . . . . . . . . . . . . . . . . .28
ARTICLE IX
TERMINATION . . . . . . . . . . . . .28
9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE X
GENERAL PROVISIONS. . . . . . . . . . . .29
10.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
10.2. Confidential Nature of Information . . . . . . . . . . . . . . .28
10.3. Governing Law; Venue . . . . . . . . . . . . . . . . . . . . .30
10.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
10.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . .31
10.6. Access to Records after Closing . . . . . . . . . . . . . . . .31
10.7. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . .32
10.8. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . .32
10.9. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
10.1O. Expenses; Attorneys' Fees . . . . . . . . . . . . . . . . . . . .32
10.11. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . .32
10.12. Execution in Counterparts. . . . . . . . . . . . . . . . . . . .32
10.13. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . .33
10.14. No Public Announcement . . . . . . . . . . . . . . . . . . . . .34
10.15. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . .35
-iii-
Page 25
<PAGE>
EXHIBIT DESCRIPTION
A List of Sellers
B Opinion of Counsel to Sellers and the Company
C Letter of Transmittal
D Indemnity Escrow Agreement
SCHEDULE DESCRIPTION
1.4 - Seller Representative Account Number
2.1 - Organization of the Company
2.2 - Subsidiaries of the Company
2.3 - Capital Shares of the Company
2.5 - Authority of Seller
2.6 - Financial Statements
2.7(a) - Changes in Operations
2.7(b) - Conduct of Business
2.8 - Undisclosed Liabilities
2.9 - Taxes
2.10 - Availability of Assets and Legality of Use
2.11 - Governmental Permits
2.12 - Real Property
2.15 - Personal Property Leases
2.16 - Intellectual Property
2.17(b) - Inventory
2.18 - Title to Assets
2.20 - Employee Relations
2.21(a) - Non-Pension Benefit Plans and Compensation Commitments
2.21(b) - Pension Benefit Plans
2.22 - Contracts
2.24 - Violations, Litigation or Regulatory Actions
2.25(a) - Insurance
2.25(b) - Worker's Compensation Claims
2.26(a) - Environmental Matters
2.26(b) - Environmental Claims
2.26(c) - Release
2.26(j) - Previous Facilities
2.27 - Seller's Assets
2.28 - Depositaries
2.29 - Transactions with Affiliates
6.4 - Outside Directors
-iv-
Page 26
<PAGE>
SHARE PURCHASE AGREEMENT
SHARE PURCHASE AGREEMENT, dated as of June 14, 1995, among Joslyn
Corporation, an Illinois corporation ("Buyer"), Cyberex, Inc., an Ohio
corporation (the "Company"), and the individuals and other entities set
forth on Exhibit A hereto ("Sellers").
WITNESSETH:
WHEREAS, Sellers own, beneficially and of record, all of the issued and
outstanding Common Shares, no par value (the "Common Shares"), and all options
covering any Common Shares of the Company, which is engaged in the business of
manufacturing and distributing power supply systems worldwide (the
"Business"); and
WHEREAS, Sellers desire to cancel any outstanding options covering Common
Shares and to sell to Buyer, and Buyer desires to have such options cancelled
and to purchase from Sellers, all of such issued and outstanding Common
Shares, all on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter set forth, it is hereby agreed among the
Company, each of the Sellers and Buyer as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES
1.1. PURCHASE AND SALE OF COMMON SHARES. Upon the terms and subject
to the conditions of this Agreement, on the Closing Date, Sellers shall cancel
all then outstanding options to purchase Common Shares (the "Options") and
Sellers shall sell, transfer, assign, convey and deliver to Buyer, and Buyer
shall purchase from Sellers, free and clear of all Encumbrances (as defined in
Section 10. 13), an aggregate of 177,256 Common Shares owned beneficially and
of record by Sellers, which shares constitute, and will constitute as of the
Closing Date, all of the issued and outstanding Common Shares (the "Purchased
Shares"). Although this Agreement contemplates the execution, delivery and
performance by holders of all of the outstanding Common Shares and that such
execution, delivery and performance is a condition to Closing, each Seller
understands and acknowledges that in the event that this Agreement is not so
executed, delivered and performed by all such holders, Buyer may waive any
such conditions to Closing and those holders of Common Shares who have
executed this Agreement will be bound by the terms hereof.
1.2. CLOSING DATE. The purchase and sale of the Purchased Shares
and the cancellation of the Options provided for in Section 1.1 (the "
Closing") shall be consummated on June -,1995, or such other date as may be
agreed upon by Buyer and Sellers at the offices of Hahn Loeser & Parks or at
such other place or at such other time as shall be agreed upon by Buyer and
the Seller Representative (as defined in Section 10.13) (such date and time
being hereinafter called the "Closing Date").
Page 27
<PAGE>
1.3. PURCHASE PRICE. The purchase price for the Purchased Shares and
the cancellation of the Options (the "Purchase Price") shall be equal to
$22,000,000 which shall be allocated among the Sellers as set forth on
Exhibit A.
1.4. PAYMENT ON THE CLOSING DATE. At Closing, Buyer shall (a) pay
the Seller Representative an amount equal to the Purchase Price, less the
Escrow Amount, by wire transfer of immediately available funds to the account
specified in Schedule 1.4, and (b) deposit in the Escrow Account the amount
of the Escrow Amount, as set forth in Section 1.7.
1.5. Buyer's Additional Deliveries. At Closing Buyer shall deliver
to the Seller Representative all the following:
(a) The resolutions of the Board of Directors of Buyer authorizing
the execution and performance of this Agreement and the contemplated
transactions.
(b) The certificate contemplated by Section 7.1, duly executed by
the President or any Vice President of Buyer.
1.6 THE COMPANY'S AND SELLERS' DELIVERIES. At Closing the Company,
the Named Sellers ( as defined in Section 10.13) and Sellers, as applicable,
shall deliver to Buyer all the following:
(a) Copies of the Articles of Incorporation as amended of the
Company certified as of a recent date by the Secretary of State of the
State of Ohio;
(b) Certificate of good standing of the Company issued as of a
recent date by the Secretary of State of the State of Ohio;
(c) Certificate of the secretary or an assistant secretary of the
Company dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Articles of
Incorporation of the Company since a specified date; (ii) the Code of
Regulations of the Company; (iii) the resolutions of the Board of
Directors of the Company authorizing the execution and performance of
this Agreement and the contemplated transactions;
(d) Opinion of counsel to Sellers and the Company substantially
in the form contained in Exhibit B;
(e) All consents, waivers or approvals obtained by the Company
with respect to the consummation of the transactions contemplated by this
Agreement;
(f) The certificates contemplated by Sections 6.1 and 6.2, duly
executed by the President of the Company and the Named Sellers; and
(g) Each of the Sellers shall deliver to the Seller Representative
who shall deliver to Buyer (i) a certificate or certificates for the
Purchased Shares held by such Seller, duly endorsed by such Seller in
blank or accompanied by stock powers duly executed by such Seller in
-2-
Page 28
<PAGE>
blank, in each case, in form satisfactory to Buyer, and (ii) a letter
of transmittal in the form contained in Exhibit C.
1.7. INDEMNITY ESCROW. On or prior to the Closing Date, the Seller
Representative, Sellers, Buyer and National City Bank, as escrow agent (the
"Escrow Agent"), shall enter into an Indemnity Escrow Agreement, substantially
in the form of Exhibit D (the "Indemnity Escrow Agreement"), providing for
the establishment of an escrow account (the "Escrow Account") with the Escrow
Agent to secure the obligations of Sellers to Buyer pursuant to Article VIII
and Section 5.2. At the Closing, Buyer shall deposit in the Escrow Account so
established the sum of $1,100,000 (the "Escrow Amount") to be held, invested
and subsequently disbursed in accordance with the terms, conditions and
provisions of the Indemnity Escrow Agreement. The right of the Seller
Representative to receive any funds held in such Escrow Account shall be
conditioned upon such funds not being otherwise distributed in accordance
with the Indemnity Escrow Agreement to indemnify or reimburse Buyer for Losses
or Expenses (each as defined in Section 10.13) in accordance with Article VIII
(it being understood that the fees and expenses of the Escrow Agent are to be
borne by Buyer). Upon termination of the Indemnity Escrow Agreement, any
funds remaining in such Escrow Account (after making adequate provision for
any distributions to Buyer as contemplated by the immediately preceding
sentence) shall be distributed to the Seller Representative in such manner
as provided in the Indemnity Escrow Agreement.
1.8. Further Assurances. (a) The Company, the Seller Representative, the
Named Sellers or Sellers shall, after the Closing Date, upon request by Buyer
and without further consideration, execute and deliver such transfers,
conveyances and assurances as may be required or desirable for conveying,
transferring, assigning and delivering to Buyer the Purchased Shares to be
sold and transferred to Buyer hereunder. (b) Buyer, the Company and Sellers
shall execute such documents and other papers and use its, her or his
reasonable best efforts to take or cause to be taken all actions and to do or
cause to be done all things necessary, proper or advisable to carry out the
provisions hereof and to consummate and make effective as promptly as
practicable the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY,
SELLERS AND THE NAMED SELLERS
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, the Company and the Named Sellers,
jointly represent and warrant to Buyer as follows (provided, however, that the
representations and warranties in Section 2.4 and Section 2.5 are made only by
the Company and each Seller individually, and not by the Company or any Seller
as to any entity other than himself or itself):
2.1. ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Ohio. Except as set forth in Schedule 2.1, the Company is duly qualified
to transact business as a foreign corporation and is in good standing in each
of the jurisdictions where the conduct of its business requires such
Page 29
<PAGE>
qualification, and no other jurisdiction has demanded, requested or otherwise
indicated that the Company is required so to qualify. The Company has full
corporate power and authority to own or lease and to operate and use its
properties and assets and to carry on its business as now conducted. The
Company has delivered to Buyer true and complete copies of the Companys
Articles of Incorporation, as in effect on the date hereof and the Code of
Regulations, as in effect on the date hereof. The original minute books and
share transfer records will be delivered at Closing.
2.2. SUBSIDIARIES AND INVESTMENTS. Except as set forth in Schedule
2.2, the Company does not, directly or indirectly, (a) own, of record or
beneficially, any outstanding voting securities or other equity interests in
any corporation, partnership, joint venture or other entity or (b) otherwise
control any such corporation, partnership, joint venture or other entity.
2.3. CAPITAL SHARES OF THE COMPANY. The authorized capital shares
of the Company consists of 1,000,000 Common Shares without par value of which
177,256 shares are duly and validly issued and outstanding, fully paid and
nonassessable and are owned, beneficially and of record, by Sellers as set
forth in Schedule 2.3. None of such issued and outstanding shares has been
issued in violation of, or is subject to, any preemptive or subscription
rights. Except for this Agreement, and except as set forth in Schedule 2.3,
to the best of the knowledge of the Company there are no agreements,
arrangements, warrants, options, puts, calls, or rights of any character
relating to the issuance, sale, purchase, redemption, conversion, exchange,
voting or transfer of any Common Shares or other securities of the Company.
All voting rights in the Company are vested exclusively in the Common Shares.
2.4. TITLE TO COMMON SHARES. Each of the Sellers is the sole lawful
and beneficial owner of the Options to be cancelled and the Common Shares to
be sold and delivered by such Seller to Buyer pursuant to this Agreement, free
and clear of all Encumbrances, and no other person has any rights to or
interest in such Options or Common Shares, including any rights that may vest
under the community property laws of any state and the delivery of such shares
to Buyer pursuant to this Agreement will transfer and convey good and
marketable title thereto to Buyer, free and clear of all Encumbrances.
2.5. AUTHORITY OF SELLLERS. The Company and each of the Sellers has
full legal right, power, capacity and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by the Company or such Seller to Buyer pursuant hereto ("Ancillary
Agreements") to consummate the transactions contemplated hereby and to comply
with the terms, conditions and provisions hereof and thereof.
The execution, delivery and performance of this Agreement and the Ancillary
Agreements by the Company and Sellers have been duly authorized and approved by
all necessary corporate action on the part of the Company and by Sellers and do
not require any further authorization or consent of the Company or Sellers or
any other person. This Agreement constitutes , when duly executed and
delivered by the Company or Sellers and the other parties thereto, will
constitute the legal, valid and binding agreement of the Company and Sellers.
Except as set forth in Schedule 2.5, neither the execution and delivery of
this Agreement or of any of the Ancillary Agreements, nor the consummation by
the Company or Sellers of any of the transactions contemplated hereby, nor
Page 30
<PAGE>
compliance by the Company and Sellers with the terms, conditions and
provisions hereof will:
(a) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, or an event creating rights of
acceleration, termination or cancellation or a loss of rights under, or result
in the creation or imposition of any Encumbrance upon any of the assets or
properties of Sellers or of the Company under the Articles of Incorporation
or Code of Regulation, any note, agreement, mortgage, license, order, award,
or decree to which any of the Sellers or the Company is a party.
(b) require the approval, consent, authorization or act of, or the
making by any of the Sellers or the Company of any declaration, filing or
registration with, any third party or any Governmental Body (as defined in
Section 10.13), except for such filings and approvals as may be required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Improvements
Act).
2.6. FINANCIAL STATEMENTS. Schedule 2.6 contains (a) the unaudited
balance sheet of the Company as of March 31, 1995 (the "Interim Balance Sheet
Date") and the related statements of income and retained earnings and cash
flows for the three-month period then ended and (b) the audited balance sheet
of the Company as of December 31 for the year 1994 (the "Balance Sheet Date")
and the related statements of income and retained earnings and cash flows for
the year ended December 1994. The financial statements referred to in clauses
(a) and (b) of the preceding sentence are herein referred to collectively as
the "Financial Statements." Except as set forth therein or in the notes
thereto or in Schedule 2.6, to the best knowledge of the Named Sellers, the
Financial Statements have been prepared in conformity with the generally
accepted accounting principles ("GAAP") consistently applied and in
accordance with the books and records of the Company and are true and correct
and present fairly the financial position, results of operations and other
information included therein of the Company subject, in the case of unaudited
interim financial statements, to normal year-end adjustments, in each case in
accordance with GAAP consistently applied during the periods involved.
2.7. OPERATIONS SINCE BALANCE SHEET DATE (a) Except as set forth in
Schedule 2.7(a), during the period from the Balance Sheet Date to the date
hereof, inclusive, there has been:
(i) no material adverse change in the assets, properties,
business, results of operations, liabilities or condition (financial or
otherwise) of the Company and to the best of the knowledge of Named
Sellers no fact or condition exists or is contemplated or threatened
which might reasonably be expected to cause such a change in the future;
or
(ii) no damage, destruction, loss or claim made or filed against
the Company (whether or not covered by insurance) or condemnation or other
taking winch materially and adversely affects the results of operations,
assets, properties, condition (financial or otherwise) or business of the
Company.
(b) Except as set forth in Schedule 2.7(b), since the Balance Sheet
Date, the Company has conducted the Business only in the ordinary course and
in conformity with past practice. Since the Balance Sheet Date, except as set
forth in Schedule 2.7(b), the Company has not:
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(i) sold, leased, transferred or otherwise disposed of (including
any transfers from the Company to any of its Affiliates (as defined in
Section 10. 13.)), or mortgaged or pledged on, any of the assets reflected
on the balance sheet as of the Balance Sheet Date or ary assets acquired
after the Balance Sheet Date except for sales of inventory in the ordinary
course of business consistent with past practice;
(ii) cancelled without fair consideration any debts owed to or
claims held by the Company or waived any rights of material value;
(iii) created, incurred, guaranteed or assumed any indebtedness for
borrowed money;
(iv) granted any bonus or other special compensation or increased
the compensation or benefits payable or to become payable to any
directors, officers or employees except, in the case of employees, for
increases in the normal course of operations consistent with past
compensation practice or instituted any increase in or otherwise amended
any profit sharing, bonus, incentive, deferred compensation, insurance,
retirement, medical, hospital, disability, welfare or other employee
benefit plan;
(v) sold, assigned or transferred any patents, trademarks,
tradenames, copyrights, Software (as defined in Section 2.16) (except in
the ordinary course of business consistent with past practice), trade
secrets or other similar intangible assets;
(vi) declared, set aside or paid any dividend or made any other
distribution (whether in cash, shares or other property) to any Seller;
(vii) purchased, redeemed, called for purchase or redemption or
otherwise acquired any of the Common Shares or any other securities of the
Company;
(viii) except as otherwise contemplated herein, entered into any
transaction other than in the ordinary course of business or any
transaction;
(ix) made any changes in the accounting methods or practices
followed by the Company; or
(x) agreed or committed to do or authorized any of the
foregoing.
2.8. NO UNDISCLOSED LIABILITIES. Except as set forth in Schedule 2.8,
to the best of the knowledge of the Named Sellers, the Company is not subject
to any material obligation or liability (including, without limitation,
unasserted claims), whether absolute, contingent or accrued which is not shown
or which is materially in excess of amounts shown or reserved for on the
Company's balance sheet as of the Balance Sheet Date and none of which is a
liability for Environmental Law matters, breach of contract, breach of
warranty, tort, infringement or other lawsuit.
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2.9. TAXES. (a) Except as set forth in Schedule 2.9, (i) the Company
has filed on or before the date hereof all Tax Returns (as defined in
Section 10. 13) required to be filed; (ii) all such Tax Returns are complete
and accurate and disclose all Taxes (as defined in Section 10. 13) owed and
required to be paid by the Company for the periods covered thereby and all
Taxes shown to be due on such Tax Returns have been timely paid by the Company;
(iii) all Taxes owed by the Company and required to be paid for all taxable
years or periods ending on or before December 31, 1994, have been (or will be)
timely paid; (iv) there is no action, suit, investigation, audit, claim,
deficiencies or assessment pending or to the best of the knowledge of Named
Sellers proposed or threatened with respect to Taxes of the Company and, to
the best of the Companys and Named Sellers' knowledge, no basis exists
therefor; (v) there are no liens for Taxes upon the assets of the Company
except liens relating to current Taxes not yet due; and (vi) all Taxes which
the Company is required by law to withhold or to collect for payment have
been duly withheld and collected, and have been paid or accrued and reserved
against.
(b) As a result of the transactions contemplated by this Agreement,
there will be no "parachute payment" as that term is defined in Section 28OG
of the Internal Revenue Code ("Code").
2.10. AVAILABILITY OF ASSETS AND LEGALITY OF USE. Except as set forth in
Schedule 2. 10, the assets owned or leased by the Company constitute all the
assets used by the Company in the conduct of the Business (including, but not
limited to, all computers and computer programs and data processing systems)
and are in serviceable condition (subject to normal wear and tear) and are
suitable for the uses for which they are intended. Except as set forth in
Schedule 2.10, to the best of knowledge of the Named Sellers, (a) all such
assets and their uses materially conform to all applicable laws, regulations,
rules, ordinances, codes, licenses and permits (zoning, environmental and
occupational safety and health requirements of law ), and (b) no notice of any
existing violation of any of such matters relating to such assets or their
use has been received by the Company.
2.11. GOVERNMENTAL PERMITS. To the best of knowledge of the Named
Sellers, the Company owns, holds or possesses all governmental licenses,
permits, approvals and other authorizations ("Governmental Permits) to own,
lease, operate and use its assets and properties which are necessary to conduct
the Business. Schedule 2.11 sets forth a list and brief description of each
such Governmental Permit.
Complete and correct copies of all of the Governmental Permits have
previously been disclosed to Buyer by the Company. The Company has materially
fulfilled and performed its respective obligations under each of such
Governmental Permits. No notice of cancellation, of default or of any dispute
concerning any Governmental Permits, or of any event, condition or state of
facts has been received or is known by the Company or any of the Named Sellers.
Except as set forth in Schedule 2.1 1, each of the Governmental Permits is
valid, subsisting and in full force and effect and will be in full force and
effect on the Closing.
2.12. REAL PROPERTY. Schedule 2.12 contains a brief list of each parcel
of real property owned by the Company (the "Real Property") (showing the record
title holder and location) and each option held by the Company to acquire any
real property. The Company has good and marketable title to all such Real
Property, subject to no material Encumbrance of any kind except liens for taxes
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not yet due and payable. Complete and correct copies of any title opinions,
surveys and appraisals in the Companys possession or any policies of title
insurance currently in force and in the possession of the Company with respect
to each such parcel have previously been disclosed by the Company to Buyer.
2.13. REAL PROPERTY LEASES. There are no real property leases.
2.14. CONDEMNATION. Neither the whole nor any part of the Real Property
listed in Schedule 2.12 is subject to any pending suit for condemnation or
other taking by any public authority and, to the best of knowledge of the
Company or the Named Sellers, no such condemnation or other taking is
threatened.
2.15. PERSONAL PROPERTY LEASES. Schedule 2.15 contains a brief
description of each lease or other agreement involving rental payment
in excess of $3,000 per year, under which the Company is lessee of, or holds
or operates, any machinery, equipment, computer hardware and related equipment,
vehicle or other tangible personal property owned by a third party.
2.16. INTELLECTUAL PROPERTY. (a) Schedule 2.16 contains a list of:
(i) all patents and patent applications, (whether or not
patentable or reduced to practice) owned or controlled by the Company;
(ii) all registered copyrights, and copyright applications owned
or controlled by the Company;
(iii) all computer software programs and software systems
(including, without limitation, all data, databases, compilations, tool
sets, related documentation and materials, whether in source code, object
code or human readable form and regardless of media), developed by or for
the Company ("Software") material to the conduct of the Business including
without limitation design and procurement Software but excluding
accounting Software;
(iv) all trademarks, service marks and trade names for which
registrations have been issued or applied for by the Company and all other
trademarks, service marks and trade names owned or used by the Company or
in which the Company holds any right, license, sublicense or interest; and
(v) all licenses, sublicenses, assignments or agreements which
are material to the Company and which relate or pertain to intellectual
property, mailing lists, know-how, trade secrets, disclosures or uses of
ideas to which the Company is a party.
(b) Except as set forth in Schedule 2.16, to the best of the knowledge
of the Named Sellers, all patents listed in Schedule 2.16 are valid and in
force and all patent applications of the Company listed therein are in good
standing and, except as otherwise set forth in Schedule 2.16, the Company owns
the entire right, title and interest in and to such patents and patent
applications, free and clear of all Encumbrances. All of the registrations
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for trademarks, service, marks, trade names and copyrights listed in Schedule
2.16 as being owned, controlled or used by the Company are valid and in force
and, except as otherwise set forth on Schedule 2.16, the Company owns the
entire right, title and interest in and to all such trademarks, service marks,
trade names and copyrights so listed as well as the registrations and
applications for registration therefor, free and clear of all Encumbrances.
Correct and complete copies of all the patents and patent applications and of
all of the trademarks, service marks, trade names and copyrights and
registrations, applications or deposits therefor and all the agreements,
commitments, contracts, understandings, licenses, sublicenses and assignments
listed in Schedule 2.16 have been delivered by the Company to Buyer.
(c) Except as disclosed on Schedule 2.16, to the best of the knowledge
of the Named Sellers, the Company owns the entire right, title and interest
in and to, free and clear of all Encumbrances, or has the perpetual royalty-
free right to use, all inventions, improvements, processes, formulae, trade
secrets, Software, mailing lists, know-how, and proprietary or confidential
information material to the conduct of the Business. To the best of the
knowledge of the Named Sellers, no infringement of any patent, patent right,
trademark, service mark, trade name, copyright, proprietary or other property
right has occurred. No claim of invalidity of any patent described in
Schedule 2.16 has been made, and no proceedings are pending or, to the best
of knowledge of the Company or the Named Sellers, threatened against the
Company, which challenge the validity, ownership or use of any patent,
trademark, service mark, trade name or copyright or the ownership or use of
any other right or property described in Schedule 2.16, and, except as
specifically disclosed in Schedule 2.16, none of the Company or any of the
Named Sellers knows of any infringing use of any of the same by others.
Except as specifically disclosed in Schedule 2.16, none of the Company or any
of the Named Sellers has had any notice of, and, to the best knowledge of the
Company or the Named Sellers, there is no reasonable basis for a claim against
the Company that the operations, activities, products, equipment, machinery or
processes of the Company infringe the patents, or proprietary rights of others.
(d) Except as set forth in Schedule 2.16, all Software (i) has been
developed and used, and is owned exclusively, by the Company; (ii) to the best
of the knowledge of the Named Sellers and the Company, has never been
improperly copied or used in violation of any intellectual property right,
agreement, license or sublicense; (iii) has been maintained and protected with
confidentiality and non-disclosure agreements and such other measures as the
Company believes are necessary to protect the proprietary, trade secret or
confidential information contained therein; (iv) includes the source code,
system documentation, as well as any pertinent commentary, explanation,
program (including compilers), used for the development, maintenance and
implementation of the Software; and (v) is not subject to any site, equipment
or other operational limitations.
(e) Except as set forth in Schedule 2.16, all personnel, including
employees, agents, consultants and contractors, who have contributed to or
participated in the conception and development of the Software on behalf of
the Company have been party to a confidentiality and non-disclosure agreement
with the Company.
2.17. Accounts Receivable; Inventories. (a) All accounts receivable of
the Company have arisen from bona fide transactions by the Company in the
ordinary course of business. All accounts receivable reflected on the Interim
Balance Sheet Date are good and collectible in the ordinary course of business
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consistent with the Company's past collection practices at the aggregate
amounts recorded in respect thereof, net of an allowance for doubtful
accounts reflected on the Interim Balance Sheet Date and any adjustments or
allowances made in the ordinary course of business consistent with the
Companys past practices.
(b) Except as set forth in Schedule 2.17(b), the inventories of the
Company reflected on the Balance Sheet Date are in good, merchantable and
useable condition and are reflected on the Balance Sheet Date in accordance
with generally accepted accounting principles and are reflected on the books
and records of the Company at the lower of average cost or market value.
Except as set forth in Schedule 2.17(b), all inventories of the Company are
held at the facility listed in Schedule 2.12 and no inventory is held on
consignment by or for the Company.
2.18. TITLE TO ASSETS. Except as set forth in Schedule 2.18, the
Company has good title to all of its tangible assets reflected on the Balance
Sheet Date or thereafter acquired, free and clear of all material
Encumbrances.
2.19. EMPLOYEES. Correct and complete copies of each of the following
have been delivered by the Company to Buyer: (a) a list of all employees of
the Company (including those on disability) as of May 31, 1995 and (b) the
annual compensation of such employees.
2.20. EMPLOYEE RELATIONS. (a) Except as set forth in Schedule 2.20,
to the best of the knowledge of the Named Sellers, the Company has complied
with all applicable laws, rules and regulations which relate to wages,
hours, discrimination in employment and to the operation of the Business and
is not liable for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing.
(b) The Company is not a party to, and to the best of the knowledge of
the Named Sellers is not affected by or threatened with, any dispute or
controversy with a union or with respect to unionization or collective
bargaining involving its employees.
2.21. EMPLOYEE BENEFIT PLANS. (a) Set forth in Schedule 2.21 (a), is a
true and complete list of each of the following to which the Company or any
ERISA Affiliate (as defined in Section 10.13) of the Company is a party or
by which it is bound or otherwise required to make payment at any time:
(i) any performance, bonus, incentive, savings, stock option,
severance, vacation pay, holiday pay, paid-time off, hospitalization or
other medical, dental, disability, life or other insurance, excess
benefit or other employee benefit plan, program, policy, payroll practice,
trust or arrangement of any kind, whether written or oral, binding or non-
binding, other than those described on Schedule 2.21(b) hereof,
(collectively, the "Non-Pension Benefit Plans");
(ii) any other plan, agreement, arrangement, policy or
understanding, whether written or oral, relating to any other compensation
or benefits, in which any current or former officer, director or employee
of the Company participates ("Compensation Commitments").
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True and complete copies of all written Non-Pension Benefit Plans
and Compensation Commitments and of all related insurance and annuity
policies and contracts and other documents with respect to each Non-Pension
Benefit Plan and Compensation Commitments have been disclosed or delivered
to Buyer.
(b) Set forth in Schedule 2.21(b) is a true and complete list of
each "employee pension benefit plan" (as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by the Company or an ERISA Affiliate of the Company, or with
respect to which the Company or an ERISA Affiliate of the Company is or will
be required to make any payment, or which provides or will provide benefits
to present or prior employees of the Company or an ERISA Affiliate of the
Company due to such employment (the "Pension Benefit Plans". Neither the
Company nor any ERISA Affiliate of the Company has maintained or contributed
to or is required to contribute or otherwise has any liability or could be
expected to have liability of any kind whatsoever, whether contingent or
otherwise, with respect to Pension Benefit Plans that is a "multiemployer
plan" (as such term is defined in Section 3(37) of ERISA).
(c) The Company has delivered to Buyer, with respect to each of the
Pension Benefit Plans true and complete copies, as applicable, of (i) all plan
documents, including investment agreements or arrangement, and amendments,
trust agreements and insurance and annuity contracts and policies, (ii) the
most recent determination letter issued by the Internal Revenue Service ("IRS")
in response to an application filed on Form 5300, 5301, 5303 or 53 10, (iii)
the Annual Reports (Form 5500 Series) and accompanying schedules, as filed,
for the most recently completed three plan years, (iv) the current and prior
summary plan description, (v) the financial statements for the most recently
completed three plan years, and (vi) all material correspondence with the IRS,
Department of Labor and Pension Benefit Guaranty Corporation (the "PBGC"). In
addition, the Company has provided to Buyer a complete list of all individuals
not actively employed by the Company who, as of the date hereof, are receiving
benefits or who are entitled to future benefits under any Pension Benefit Plan,
Compensation Commitment or Non-Pension Benefit Plan (collectively the "Benefit
Plans"), including all individuals receiving benefits pursuant to Part 6 of
Title I of ERISA.
(d) Neither the Company nor any ERISA Affiliate has maintained or
been required to make any payment to a Pension Benefit Plan subject to Title
IV of ERISA at any time since January 2, 1974.
(e) Each of the Benefit Plans which is intended to qualify under
Section 401 (a) of the Code has received a favorable determination letter
from the IRS that such plan is so qualified under the Code as amended to the
date hereof, and no circumstances exist which would cause any such plan to
cease being so qualified. Except as disclosed in Schedule 2.2 1 (b), each of
the Benefit Plans (i) has been administered in accordance with its terms and
(ii) complies in form, and has been administered in accordance, with the
requirements of ERISA and, where applicable, the Code. Except as disclosed
in Schedule 2.21 (b), neither the Company nor any ERISA Affiliate of the
Company has any obligations under any of the Benefit Plans or otherwise to
provide health benefits to its former employees, except as specifically
required by law. The Company and all ERISA Affiliates of the Company have at
all times complied with the health care continuation requirements of Part 6
of Title I of ERISA.
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(f) Neither the Company nor any other "disqualified person" (within
the meaning of Section 4975 of the Code) or "party in interest" (within the
meaning of Section 3(14) of ERISA) has engaged in any non-exempt "prohibited
transaction" (within the meaning of Section 4975 of the Code or Section 406
of ERISA) with respect to any of the Benefit Plans which could subject any
such plan (or its related trust), the Company or any officer, director or
employee of any of the foregoing to the penalty or tax under Section 502(i)
of ERISA or Section 4975 of the Code.
(g) There is no pending or threatened claim in respect of any of
the Benefit Plans other than usual claims for benefit payments according to
Benefit Plan provisions.
(h) There are no Non-Pension, Compensation Commitments, nor Pension
Benefit Plans other than those listed in Schedules 2.21 (a) and 2.21 (b)
and there are no prior Pension Benefit Plans which were terminated since
September 2, 1974.
2.22. CONTRACTS. Except as set forth on Schedule 2.22 or any other
Schedule hereto, the Company is not a party to or bound by:
(a) any contract for the purchase, sale or lease of real property
or any option to purchase or sell real property;
(b) any contract which relates to the purchase, licensing or
development of any computer software, hardware or data bases used or to be
used by the Company;
(c) any purchase order, agreement or commitment obligating the
Company to purchase any products and which (i) is not terminable by the Company
without payment or penalty upon 60 days' (or less) notice, or (ii) relates to
purchases or sales in an aggregate amount exceeding $100,000; or any agreement
or commitment to sell any products which is presently expected to result in a
loss upon completion or performance thereof in an amount in excess of $100,000;
(d) any indebtedness, obligation or liability for borrowed money,
or liability for the deferred purchase price of property in excess of $100,000
(excluding normal trade payables), or any instrument guaranteeing any
indebtedness, obligation or liability, or any obligation to incur any
indebtedness, obligation or liability;
(e) any joint venture, partnership or other arrangement involving
a sharing of profits involving the Company;
(f) any agreement which includes provisions regarding minimum or
volume discounts, rebates, discounts, bonuses, commission or other payment
with respect to the sale of any product of the Company;
(g) any consignment, distributor, dealer, manufacturer's
representative, sales agency contract;
(h) any agreement limiting the Company's ability to engage in any
business anywhere in the world;
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(i) any material contract not made in the ordinary course of
business;
(j) any other contract, agreement, commitment, understanding or
instrument which is material to the Company other than this Agreement.
2.23. STATUS OF CONTRACTS. Each of the leases, contracts and other
agreements listed on Schedules in this Agreement (collectively, the "Material
Contracts"), constitutes a valid and binding obligation of the Company and,
to the knowledge of the Company or any of the Named Sellers, is in full force
and effect and each of the Material Contracts will continue in full force and
effect on the Closing Date if not sooner terminated pursuant to its terms. The
Company has fulfilled and performed its obligations under each of the Material
Contracts and the Company is not in, or to the best of knowledge of the Named
Sellers alleged to be in, breach or default under any of the Material
Contracts. To the knowledge of the Company or any of the Named Sellers, no
other party to any of the Material Contracts has breached or defaulted
thereunder. The Company is not currently renegotiating any of the Material
Contracts or paying liquidated damages thereunder.
2.24. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as set
forth on Schedule 2.24: to the best of the knowledge of the Company and the
Named Sellers.
(a) The Company has materially complied with all laws,
regulations, rules, injunctions, ordinances, decrees or orders of any
Governmental Body which are applicable to the Company;
(b) No notice has been served upon the Company by any Governmental
Body or other person of any currently existing violation of any law;
(c) There are no lawsuits, claims, suits, proceedings or
investigations pending or, threatened against the Company nor is there any
basis for any material lawsuit, claim, suit or proceeding;
(d) There is no action, suit or proceeding pending or, threatened
which questions the legality or propriety of the transactions contemplated by
this Agreement.
2.25. INSURANCE. (a) Schedule 2.25(a) sets forth a list and brief
description (including nature of coverage, limits, deductibles and premiums
with respect to each type of coverage) of all policies or binders of
insurance (including directors and officers insurance) maintained, owned or
held by the Company which are in effect on the date hereof. To the best of
the knowledge of the Company and the Named Sellers, such policies and binders
are in full force and effect. The Company has complied with each of such
insurance policies and binders and has not failed to give any material notice
or present any claim thereunder in a due and timely manner. There are no
outstanding unpaid claims under any of such insurance policies or binders and
except as set forth in Schedule 2.25 (a), the Company has not received any
notice of cancellation or nonrenewal of any such policy or binder. Since
January 1, 1992, the Company has not been denied any insurance or indemnity
bond coverage which it has requested, or received written notice from any of
its insurance carriers that any insurance premiums will be materially
increased, or that any insurance coverage so listed in such Schedule will not
be available in the future on substantially the same terms as now in effect.
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Since January 1, 1992, no insurance carrier has cancelled or reduced any
insurance coverage for the Company or has given any notice or other indication
of its intention to cancel or reduce any such coverage. All current premiums
due and payable under any such insurance policies or binders have been duly
paid. The Company has not received any inspection reports since January 1,
1992 from insurance underwriters as to the condition of any of the assets or
properties of the Company.
(b) Schedule 2.25(b) sets forth (i) the nature of any worker's
compensation claims experienced by the Company in the fiscal year ended
December 31, 1994 and all worker's compensation claims that are open on the
date hereof; (ii) the amounts paid thereon to the date hereof; (iii) the
current status of each; and (iv) for each such claim that is open, the
amounts reserved therefor.
2.26. ENVIRONMENTAL PROTECTION. (a) Except as set forth in Schedule
2.26 (a) and to the best of the knowledge of the Company and the Named Sellers,
all facilities (including building and equipment) and real property (including
underlying groundwater and whether currently or previously owned or operated by
the Company), were, during any period of ownership or operation by the Company
and continue to be, in material compliance with all applicable federal, state
or local statutes, laws, ordinances, codes, rules, regulations, guidelines or
any binding determinations, decrees or orders of any Governmental Body relating
to protection of the environment or public or worker health and safety
(collectively, "Environmental Laws").
(b) Except as specifically set forth on Schedule 2.26(b), there has
been no past, and there are no pending or, to the knowledge of the Company or
any of the Named Sellers, threatened claims, lawsuits, complaints, notices or
requests for information received by the Company with respect to any potential
liability or any alleged violation of any Environmental Law including the
Release or threatened Release of any Contaminant (each as defined in Section
10.13); or
(c) Except as set forth on Schedule 2.26(c), during any period of
ownership or operation by the Company, there has been no Release of any
Contaminant by the Company on, in, under or from any facility now or
previously owned, operated or leased by the Company.
(d) No property now or previously owned, operated or leased by the
Company is listed or, to the knowledge of the Company or any of the Named
Sellers, proposed for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response Compensation and Liability Act, as
amended ("CERCLA"), on the Comprehensive Environmental Response Compensation
Liability Infomiation System List ("CERCLIS") or on any similar state list
of sites requiring investigation or clean-up.
(e) There are no underground storage tanks, active or abandoned,
including petroleum storage tanks, or surface impoundments on or under any
property now or previously owned, operated or leased by the Company.
(f) The Company has not directly transported or directly arranged
for the transportation of any hazardous substances or hazardous wastes to any
location which is listed or proposed for listing on the National Priorities
List pursuant to CERCLA, on CERCLIS or on any similar state list or which is
the subject of federal, state or local enforcement actions or other
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investigations which may lead to material claims against the Company,
including but not limited to, claims under CERCLA.
(g) During any period of ownership or operation by the Company,
there were and are no polychlorinated biphenyls (PCB) or asbestos in a
condition which requires abatement under current laws and regulations present
at any facility now or previously owned, operated or leased by the Company.
(h) The Company is not subject to the environmental liabilities of
any third party, including any former subsidiary.
(i) Schedule 2.26(j) sets forth a true and complete list of each
facility previously owned, operated or leased by the Company or any of its
current or former subsidiaries.
2.27. SELLERS' ASSETS. Except as set forth in Schedule 2.27, none
of the Sellers owns any assets or properties relating to or used by the Company
in the Business.
2.28. DEPOSITARIES. Schedule 2.28 sets forth (a) the name and a brief
description of all bank accounts, lock-boxes, safe deposit boxes, money market
funds, certificates of deposit, shares, bonds, notes and other securities in
the name of or owned or controlled by the Company and the names of all persons
authorized to draw thereon or to have access thereto.
2.29. TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
2.29, since January 1, 1992, there have been no material transactions other
than compensation in the ordinary course of business in respect of the Company
between the Company and any officer, director or other Affiliate of the
Company (including spouses, children and other relatives of any of the
foregoing).
2.30. NO FINDER. Except for Raffensperger, Hughes & Co., the fees
and expenses of which will be paid by the Sellers, neither Sellers nor the
Company or any party acting on any of their behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement.
The Company has previously delivered to Buyer a true, correct and complete
copy of any engagement or fee agreement between the Company and Raffensperger,
Hughes & Co.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to the Company and Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to the Company and Sellers and agrees as follows:
3.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois
and has full corporate power and authority to own or lease and to operate and
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use its properties and assets and to carry on its business as now conducted.
3.2. AUTHORITY OF BUYER. Buyer has the corporate power and authority
to execute and deliver this Agreement and all of the other agreements and
instruments to be executed and delivered by Buyer pursuant hereto (the "Buyer
Ancillary Agreements"), to consummate the transactions contemplated hereby
and thereby and to comply with the terms, conditions and provisions hereof
and thereof.
The execution, delivery and performance of this Agreement and the Buyer
Ancillary Agreements by Buyer have been duly authorized and approved by all
necessary corporate action on behalf of Buyer's Board of Directors and do not
require any further authorization or consent of Buyer. This Agreement
constitutes and each Buyer Ancillary Agreement, when executed and delivered
by Buyer and the other parties thereto, will constitute the legal, valid and
binding agreement of Buyer enforceable in accordance with its respective
terms.
Neither the execution and delivery of this Agreement or any Buyer
Ancillary Agreement by Buyer or the consummation by Buyer of any of the
transactions contemplated hereby or thereby nor compliance by Buyer with or
fulfillment by Buyer of the terms, conditions and provisions hereof or thereof
will:
(a) conflict with, result in a breach of the terms, conditions or
provisions of, or constitute a default, an event of default or an event
creating rights of acceleration, termination or cancellation or a loss of
rights under, the Articles of Incorporation or By-Laws of Buyer or any material
agreement or any judgment, order, award or decree to which Buyer is a party
or any of its properties is subject or by which Buyer is bound; or
(b) require the approval, consent, authorization or act of, or the
making by Buyer of any declaration, filing or registration with, any third
party or any foreign, federal, state or local court, governmental or regulatory
body, except for such filings or approvals as may be required under the
Improvements Act.
3.3. NO FINDER. Neither Buyer nor any party acting on its behalf has
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for or on account of the transactions contemplated by this
Agreement.
ARTICLE IV
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
4.1. DUE DILIGENCE INVESTIGATION OF THE COMPANY BY BUYER. The
Company shall afford to the officers, employees and authorized representatives
of Buyer (including, without Stations independent public accountants,
attorneys, environmental consultants and engineers) complete access during
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normal business hours to the offices, properties, employees and other
representatives of the Company and business and financial records (including
computer files) of the Company to the extent Buyer shall reasonably deem
necessary or desirable and shall furnish to Buyer or its authorized
representatives such additional information concerning the Company and its
properties, assets, business and operations as shall be reasonably requested,
including all such information as shall be necessary to enable Buyer or its
representatives to verify the accuracy of the representations and warranties
contained in Article 11, to verify that the covenants of the Company and the
Named Sellers in Section 4.3 have been complied with and to determine whether
the conditions set forth in Article VI have been satisfied. Buyer agrees that
such due diligence investigation shall be conducted in such a manner as not
to interfere unreasonably with the operations of the Company. No due
diligence investigation by Buyer or its representatives hereunder shall
affect the representations and warranties of the Company and Sellers
hereunder or the obligations of Sellers pursuant to Article VIII hereof.
4.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each party
shall promptly notify the other of any action, suit or proceeding that shall
be instituted or threatened against such party to restrain, prohibit or
otherwise challenge the legality of any transaction contemplated by this
Agreement. The Company and the Named Sellers upon obtaining actual knowledge
thereof shall promptly notify Buyer of any lawsuit, claim, proceeding or
investigation that may be threatened, brought, asserted or commenced after
the date hereof against the Company or any Seller, and of any facts or
circumstances as to which the Company or any Seller obtains knowledge that
cause any of the Compaity's and Sellers' representations and warranties
contained herein or relating to any matters required to be set forth in the
Schedules hereto to be untrue. The Company and the Named Sellers promptly
shall notify Buyer of any change or event prior to the Closing which would
reasonably be expected to materially and adversely affect the Business or
the results of operations, properties or condition (financial or otherwise)
of the Company.
4.3. OPERATIONS PRIOR TO THE CLOSING DATE. (a) Except as expressly
specified in this Agreement, the Named Sellers shall cause the Company to, and
the Company shall, operate and carry on its business only in the ordinary
course and substantially as presently operated. In furtherance, the Company
shall (i) keep and maintain its assets and properties in good operating
condition and repair (normal wear and tear and damage by unavoidable casualty
excepted), (ii) use its best efforts consistent with good business practice
to maintain the business organization of the Company intact and to preserve
the goodwill of the suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the Company, and
(iii) use its best efforts to continue all existing policies of insurance in
full force and effect and at least at such levels as are in effect on the date
hereof, and in any event to continue to carry such insurance as is consistent
with the Company's past practices.
(b) Notwithstanding Section 4.3(a), except as expressly contemplated
by this Agreement or except with the express prior written approval of Buyer,
the Named Sellers shall not permit or cause the Company to, and the Company
shall not:
(i) amend its Articles of Incorporation as amended or Code of
Regulations;
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(ii) issue or agree to issue (by the issuance or granting of
options, warrants or rights to purchase Common Shares or otherwise) any Common
Shares or securities exchangeable for or convertible into Common Shares or
other securities, except that the Company may grant stock options covering
no more than one thousand (1,000) Common Shares and may permit the exercise
of such options and of its existing options covering 24,000 Common Shares;
(iii) split, combine or reclassify any Common Shares or declare,
set aside or pay any dividends or make any other distributions (whether in
cash, shares or other property) in respect of the Common Shares;
(iv) make any material change in the Company's business or the
operations of the Company or make any expenditure in respect thereof or in
respect of the purchase of assets (other than the purchase of inventories in
the normal course of the Company's business) which shall exceed $100,000 in
the aggregate;
(v) enter into any contract, agreement, undertaking or commitment
(or any extension or renewal thereof which would have been required to be set
forth in Schedule 2.22;
(vi) amend or consent to the amendment of any contract, agreement,
undertaking or commitment listed in Schedule 2.22, the aggregate effect of
which is to cause the terms of such contract, agreement, undertaking or
commitment to be less favorable to the Company or Buyer than prior to such
amendment or consent to amendment;
(vii) sell, lease, transfer or otherwise dispose of, or mortgage or
pledge, or impose any Encumbrance on, any of the properties or assets of the
Company other than inventory sold in the ordinary course of the Company's
business consistent with past practice;
(viii) create, incur, guarantee or assume, or agree to create, incur,
guarantee or assume, any indebtedness for borrowed money or enter into any
capitalized lease obligations;
(ix) cancel or agree to cancel without fair consideration therefor
any debts owed to or claims held by the Company (including the settlement of
any claims or litigation);
(x) cancel any existing policies or binders of insurance or take
or fail to take any action as a result of which insurers under such policies
or binders could avoid liability for claims arising thereunder;
(xi) enter into any contract for the purchase of real estate or
exercise any option to purchase real estate or enter into any lease of real
estate;
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(xii) enter into any negotiation or transaction relating to the
merger or consolidation of, or the sale of any Common Shares of the Company,
or the sale, lease or other disposition of any substantial portion of its
properties or business;
(xiii) initiate or acquiesce in any zoning variation or
reclassification of the real estate listed in Schedule 2.12;
(xiv) accelerate or delay collection of any notes or accounts
receivable generated by the Company in advance of or beyond their regular due
dates or the dates when the same would have been collected in the ordinary
course of the Business consistent with past practice;
(xv) delay or accelerate payment of any account payable or other
liability of the Company beyond or in advance of its due date or the date
when such liability would have been paid in the ordinary course of the Business
consistent with past practice;
(xvi) allow the levels of raw materials, supplies, work-in-process
or other materials included in the inventory of the Company to vary in any
material respect from the levels customarily maintained by the Company
except to the extent necessary to carry on the Business.
(xvii) amend or modify in any respect any Benefit Plan or Compensation
Commitment or any of the Companys Benefit Plans (except, in the case of
Compensation Commitments and Benefit Plans subject to the requirements of
the Tax Reform Act of 1986, or such changes as are required by law);
(xviii) make any change in the accounting policies applied in the
preparation of the financial statements included in Schedule 2.6; or
(xix) agree or commit to do or authorize any of the foregoing.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. COVENANT NOT TO COMPETE OR SOLICIT BUSINESS. In furtherance of
the sale of the Purchased Shares and the Company to Buyer hereunder by virtue
of the transactions contemplated hereby and more effectively to protect the
value and goodwill of the Company and the Business, each of the Named Sellers,
individually covenants and agrees that, for a period ending on the third
anniversary of the Closing Date, neither such Named Seller nor any of its
Affiliates will:
(i) directly or indirectly (whether as principal, agent,
independent contractor, partner or otherwise) own, manage, operate,
control, participate in, perform services for, or otherwise carry on,
a business similar to or competitive with the Business anywhere in the
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United States (it being understood by the parties hereto that the
Business is not limited to any particular region of the United States
and that such business may be engaged in effectively from any location
in the United States); or
(ii) induce or attempt to persuade any employee, agent or customer
of the Company to terminate such employment, agency or business
relationship in order to enter into any such relationship on behalf of
any other business organization in competition with the Business;
provided, however, that nothing set forth in this Section 5.1 shall prohibit
the Named Sellers or their Affiliates from owning not in excess of 5% in the
aggregate of any class of capital Shares of any corporation if such shares are
publicly traded and listed on any national or regional Shares exchange or
reported on the National Association of Securities Dealers Automated Quotations
(NASDAQ) System. In addition, each of the Named Sellers covenants and agrees
that neither it nor any of its Affiliates will divulge or make use of any trade
secrets or other confidential information of the Business other than to
disclose such secrets and information to Buyer or it's Affiliates.
In the event any of the Named Sellers or any Affiliate of the Named
Sellers violates any of its obligations under this Section 5.1, Buyer may
proceed against it in law or in equity for such damages or other relief as a
court may deem appropriate. The Named Sellers acknowledge that a violation
of this Section 5.1 may cause Buyer irreparable harm which may not be
adequately compensated for by money damages. The Named Sellers therefore
agree that in the event of any actual or threatened violation of this Section
5. 1, Buyer shall be entitled, in addition to other remedies that it may have,
to a temporary restraining order and to preliminary and final injunctive
relief against the Named Sellers or such Affiliate of the Named Sellers
to prevent any violations of this Section 5.1, without the necessity of posting
a bond. The prevailing party in any action commenced under the Section 5.1
shall also be entitled to receive reasonable attorneys' fees and court costs.
It is the intent and understanding of each party hereto that if, in any action
before any court or agency legally empowered to enforce this Section 5. 1,
any term, restriction, covenant or promise in this Section 5.1 is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make
it enforceable by such court or agency.
The covenants contained in this Section 5.1 are personal to each Named
Sellers and no breach of such covenants by a Named Seller shall give rise to
any claims by Buyer against, or liability to the Buyer on the part of, the
Company or any other Seller or Named Seller.
5.2. TAX MATTERS. (a) Liability for Taxes. (i) To the extent not
paid by the Company, or any Subsidiary, the Sellers shall be liable for, and
indemnify Buyer against, all Taxes owed by the Company and required to be paid
for all taxable years or periods ending on or before December 31, 1994 which
have not been so paid. Notwithstanding the eighteen (18) month indemnification
period set forth in Section 8. 1, liability for taxes hereunder shall terminate
on the third anniversary of the Closing Date. Furthermore, the indemnification
for tax liability pursuant to this Section 5.2 shall not be subject to the
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$100,000 or $300,000 limitation set forth in Section 8.1 but shall be subject
to the Limitation of Liability set forth in Section 8.7.
(ii) Buyer shall be liable for, and indemnify the Sellers against
Taxes owed by the Company, or any Subsidiary, and required to be paid for any
taxable year or period that begins after December 31, 1994.
(iii) The Company has previously delivered to Buyer true and complete
copies of: (A) such income Tax Returns of the Company and each Subsidiary as
have been requested by Buyer; (B) any other Tax Returns requested by Buyer; and
(C) any workpapers or other supporting data requested by Buyer.
(b) Tax Returns. (i) The Company shall timely file or cause to be
timely filed when due (taking into account all lawful extensions timely
obtained) all Tax Returns that are required to be filed by or with respect to
the Company and each Subsidiary on or prior to the Closing Date and the Company
shall remit (or cause to be remitted) any taxes due in respect of such Tax
Returns. All Tax Returns which the Company is required to file or cause to be
filed in accordance with this paragraph (b) shall be prepared and filed in a
manner consistent with past practice.
(ii) With respect to Tax Returns not required to be filed until after
the Closing Date, Buyer shall cause the Company to prepare and file when due
(taking into account all lawful extensions timely obtained) all such Tax
Returns that are required to be filed with respect to the Company and each
Subsidiary. Such Tax Returns shall be prepared by the Company in a manner
consistent with this Section 5.2 and, to the extent such Tax Returns involve
interest and penalties for which Sellers may have an indemnity obligation
under the Section 5.2, shall be made available to the Seller Representative
for review and comment a reasonable time prior to filing, and in no event
less than thirty (30) days, before they are due to be filed.
(c) Contest Provisions. (i) Buyer shall notify the Seller
Representative in writing upon receipt by Buyer, any of its Affiliates, or the
Company or any Subsidiary of notice of any pending or threatened federal,
state, local or foreign Tax audits or assessments which may materially affect
the Tax liabilities of the Company or any Subsidiary for which the Named
Sellers would be required to indemnify Buyer pursuant to paragraph (a) of this
Section 5.2, provided that failure to comply with this provision shall not
affect Buyer's right to indemnification hereunder except to the extent that
Sellers shall have been prejudiced by such failure.
(ii) The Seller Representative shall have the sole right to represent
the Companys and each Subsidiary's interests in any Tax audit or administrative
or court proceeding relating to Taxable periods ending on or before December
31, 1994, and to employ counsel or other professionals of its choice at its
expense for such purpose, provided, however, that Buyer and its representatives
shall be permitted, at Buyer's expense, to be present at, and participate in,
any such audit or proceeding. Notwithstanding the foregoing, the Seller
Representative shall not be entitled to settle, either administratively or
after the commencement of litigation, any claim for Taxes which would adversely
affect the liability for Taxes of the Buyer, the Company, any Subsidiary or
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any Affiliate thereof for any period after the Closing Date to any extent
without the prior written consent of Buyer; provided, however, that if Buyer
determines for any reason not to consent to such settlement, Seller's liability
under Section 5.2(a) of this Agreement to indemnify Buyer against such Taxes
shall be limited to the amount Sellers would have paid in such settlement and
Buyer shall bear the costs of continuing such proceeding.
(d) Assistance and Cooperation. After the Closing Date, each of the
Named Sellers and Buyer shall (and cause their respective Affiliates to) at
their own expense:
(i) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with
paragraph (b) of this Section 5.2;
(ii) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns of the Company and each
Subsidiary;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating to Taxes
of the Company and each Subsidiary;
(e) Expense. Expenses incurred me connection with any Tax audit or
administrative or court proceedings relating to Taxable periods ending on or
before the Closing Date shall not be deemed to be "Expenses" for purposes of
Section 8 of this Agreement.
5.3. ACQUISITION PROPOSALS. Neither the Named Sellers nor the
Company's officers, directors, agents or Affiliates, or any custodian,
receiver, liquidator, assignee, trustee, or other similar official of the
Named Sellers, the Company or of all or any portion of their respective
property, shall directly or indirectly, solicit, initiate or encourage any
inquiries or the making of any proposals from, engage or participate in any
negotiations or discussions with, provide any confidential information or data
to, or enter into (or authorize) any agreement or agreement in principle with
any person (other than Buyer and its Affiliates), or announce any intention
to do any of the foregoing, with respect to any offer or proposal to acquire
all or any substantial part of the assets, properties, or business of the
Company or any of the Common Shares of the Company, whether by merger,
purchase of Common Shares or assets or otherwise.
5.4. IMPROVEMENTS ACT FILINGS. Buyer and the Company shall
promptly make their respective filings, and shall thereafter promptly make any
required submissions, under the Improvements Act with respect to the Purchased
Shares. Each of Buyer and the Company will use its best efforts to cause the
satisfaction of the waiting period under the Improvements Act. Buyer and the
Company will furnish to each other such necessary information and reasonable
assistance as may be requested in connection with their respective preparation
of necessary filings or submissions to any governmental agency, including,
without limitation, any filings necessary under the provisions of the
Improvements Act. Buyer and the Company will supply each other with copies
of all correspondence, filing or communications (or memoranda setting forth the
substance thereof) between either of them or their respective representatives
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and the Federal Trade Commission, the Antitrust Division of the United States
Department of Justice or any other governmental agency or authority or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the option of
Buyer, be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions.
6.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. There
shall have been no material breach by the Company, the Named Sellers or Sellers
in the performance of any of their respective covenants, agreements and
obligations herein; each of the representations and warranties of the Company,
the Named Sellers and Sellers contained or referred to herein shall be true and
correct in all material respects on the Closing Date as though made on the
Closing Date (unless they expressly speak as of a specific date other than the
Closing Date, in which case they need only have been true and correct in all
material respects as of such specified date); and there shall have been
delivered to Buyer a certificate to such effect, dated the Closing Date and
signed by the President of the Company and by each of the Named Sellers.
6.2. NO CHANGES OR DESTRUCTION OF ASSETS. Between the date hereof and
the Closing Date, there shall have been (a) no material adverse change
(regardless of insurance coverage therefor) in the assets, properties,
business, results of operations, liabilities, prospects or condition
(financial or otherwise) of the Company and (b) no material adverse federal or
state legislative or regulatory change affecting the Company or its products
and services; and there shall have been delivered to Buyer a certificate to
such effect based on the best of the knowledge of the President, dated the
Closing Date and signed by the President of the Company.
6.3. OPINION OF COUNSEL FOR THE COMPANY AND SELLERS. (a). Buyer shall
have received from counsel for the Company and Sellers, an opinion, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer and its
counsel, to the effect set forth in Exhibit B. (b) Buyer shall have received
from patent counsel for the Company, an opinion dated the Closing Date in form
and in substance reasonably satisfactory to Buyer and its counsel.
6.4. RESIGNATIONS OF OFFICERS AND DIRECTORS; RELEASE. The Company and
the Named Sellers shall have furnished Buyer with signed resignations,
effective as of the Closing, of the outside directors of the Company listed in
Schedule 6.4.
6.5. NO RESTRAINT. (a) There shall not be in effect or, to the best
knowledge of Buyer, the Named Sellers or the Company, threatened any
preliminary or permanent injunction or other order, decree or ruling by a
Governmental Body, no requirements of law shall have been promulgated or
enacted by a Governmental Body, and there shall not be in effect or, to the
best knowledge of Buyer, the Named Sellers or the Company, threatened any order
of a Governmental Body, which, in any case, restrains or prohibits the
transactions contemplated hereby.
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(b) Except as set forth in or contemplated by Schedule 2.24, there shall
be no lawsuits, claims, suits, proceedings or investigations which would
involve an expense in excess of $50,000 pending or, to the best knowledge of
Buyer, the Named Sellers or the Company, threatened (i) against Buyer or the
Company in respect of the Company or its assets, properties or business. or
(ii) which assets illegality or asserts a breach of the duty of the Board of
Directors of the Company regarding the transactions contemplated hereby.
6.6. NECESSARY APPROVALS AND CONSENTS. The Company and the Named Sellers
shall have delivered to Buyer such evidence as Buyer may reasonably request of
the receipt of all approvals and actions of any third party or Governmental
Body specified in Schedule 2.5, and Buyer shall have received all approvals
and actions of any third party or Governmental Body specified in Schedule 2.5.
6.7. IMPROVEMENTS ACT WAITING PERIOD. The applicable waiting period
under the Improvements Act shall have been expired or terminated.
6.8. ESCROW AGREEMENTS. Buyer, the Seller Representative and the Escrow
Agent shall have entered into the Indemnity Escrow Agreement.
6.9. EXECUTION OF AGREEMENT AND DELIVERY OF PURCHASED SHARES. Each and
every Seller shall have executed this Agreement and delivered to Buyer an
agreement cancelling any Options held by such Seller and/or a certificate or
certificates for the Purchased Shares held by such Seller, duly endorsed by
such Seller in blank or accompanied by stock powers duly executed by such
Seller in blank, in each case, in form satisfactory to Buyer.
6.10 CASH BALANCE. The average book cash balance for the thirty (30)
days immediately preceding the Closing Date shall be $3 million.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
The obligations of Sellers under this Agreement shall, at the option of
Sellers, be subject to the satisfaction on or prior to the Closing Date, of
the following conditions:
7.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES. There
shall have been no material breach by Buyer in the performance of any of its
covenants and agreements herein; each of the representations and warranties
of Buyer contained or referred to in this Agreement shall be true and correct
on the Closing Date as though made on the Closing Date, except for changes
therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Seller Representative or any
transaction contemplated by this Agreement; and there shall have been
delivered to the Seller Representative a certificate to such effect, dated
the Closing Date and signed on behalf of Buyer by its President or any Vice
President.
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7.2. CORPORATE ACTION. Buyer shall have taken all corporate action
necessary to approve the transactions contemplated by this Agreement, and Buyer
shall have furnished Sellers with certified copies of resolutions adopted by
the Board of Directors of Buyer, in form and substance reasonably satisfactory
to counsel for Sellers, in connection with such transactions.
7.3. NO RESTRAINT. (a) There shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a Governmental Body,
no requirements of law shall have been promulgated or enacted by a Government
Body and there shall not be in effect any order of a Governmental Body, which,
in any case, restrains or prohibits the transactions contemplated hereby.
(b) Except as set forth in or contemplated by Schedule 2.24, there shall
be no action, suit or proceeding pending or, to the best knowledge of Buyer,
the Named Sellers or the Company, threatened which questions the legality or
propriety of the transactions contemplated hereby.
7.4. NECESSARY APPROVALS AND CONSENTS. The Company and Sellers shall
have received all approvals and actions of any third party or Governmental Body
specified in Schedule 2.5, which in each case has been denoted therein as being
a condition to the Sellers' obligation to consummate the Closing.
7.5. IMPROVEMENTS ACT WAITING PERIOD. The applicable waiting period
under the Improvements Act shall have been expired or terminated.
7.6. ESCROW AGREEMENTS. Buyer, the Seller Representative and the Escrow
Agent shall have entered into the Indemnity Escrow Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1. INDEMNIFICATION BY SELLERS. Each Seller jointly agrees (except
that each Seller individually agrees with respect to its representations and
warranties in Section 2.4 and 2.5) to indemnify and hold harmless Buyer from
and against any and all Losses and Expenses incurred by Buyer in connection
with or arising from:
(a) any material breach, by the Company or Sellers of, or any other
material failure of the Company or Sellers to perform, any of its or their
respective covenants, agreements or obligations in this Agreement or in any
other agreement executed and delivered by or on behalf of the Company or any
Seller pursuant to this Agreement or in any certificate or other document
delivered by the Company or any Seller pursuant to this Agreement;
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(b) any material breach, of any warranty or the material inaccuracy, of
any representation of the Company or Sellers contained or referred to in this
Agreement or any certificate or other document delivered by or on behalf of the
Company or any Seller pursuant hereto;
(c) (i) the occupancy, operation, use or control by the Company of any
of the Real Property listed on Schedule 2.12 prior to the Closing Date or (ii)
the operation of the Companys business at the Real Property by the Company
listed on Schedule 2.12 prior to the Closing Date, or (iii) the ownership,
occupancy, operation, use, or control of any real property, owned or occupied
by the Company prior to the date of this Agreement or (iv) the operation of the
Company's business at any owned real property described in clause (iii) above,
such Losses and Expenses in each case incurred or imposed as a requirement of
or in connection with the compliance by the Company with any Environmental Laws
as a result of any action by the Company which caused a violation of such
Environmental Laws or in connection with or arising from any Release by the
Company or presence of any Contaminant Released by the Company on, at or from
(A) any such real property (including, without limitation, all facilities,
improvements, structures and equipment thereon, surface water thereon and
soil or groundwater thereunder) or any conditions whatsoever arising from
actions of the Company on or under such real property or (B) any real property
or facility owned by a third party at which Contaminants whenever generated
by the Company were sent prior to the Closing Date; provided, however, that
Sellers' indemnity in this Section 8.1 (c) shall apply to actions or omissions
by the Company taken prior to the Closing Date which caused a violation of any
Environmental Laws, but shall not apply to actions or omissions of third
parties in consequence of which the Company may nevertheless have liability
for Remedial Action or have other liability under any Environmental Laws;
The indemnification provided for in this Section 8.1 shall terminate eighteen
(18) months after the Closing Date (and no claims shall be made by Buyer
under this Section 8.1 thereafter), except that the indemnification by Sellers
shall continue in any event as to:
(i) any breach, of any warranty or the inaccuracy, of any
representation of Seller contained or referred to in Section 2.1, 2.3,
2.4, or 2.5 as to all of which no time limitation shall apply;
(ii) the covenants of Sellers set forth in Section 1.8, 5.1 or 10.10
as to which no time limitation shall apply;
(iii) any Loss or Expense as to which Buyer has notified Sellers in
accordance with the provisions of Section 8.3 on or prior to the date
such indemnification obligation would otherwise terminate in accordance
with this Section 8.1, as to which the indemnification obligations of
Sellers shall continue until the liability of Sellers shall have been
determined pursuant to the Article VIII,and Sellers shall have
indemnified and reimbursed Buyer for the full amount of such Loss and
Expense in accordance with this Article VIII.
(d) any claim, action or suit by Raffensperger, Hughes & Co. resulting
from or arising out of their representation of the Company or its Sellers;
(e) any claim, action or suit by Shareholders of the Company;
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provided, however, that Sellers shall be not be required to indemnify and hold
Buyer harmless with respect to any Losses or Expenses incurred by Buyer unless
the amount of each Loss and Expense is equal to $100,000 or more, or the
aggregate amount of such Losses and Expenses exceeds $300,000, and in such
event Sellers shall be responsible for all such Losses or Expenses including
amounts included with in such $100,000 or $300,000 amount. For purposes of
this Article VIll, any Loss and Expense exceeding the amounts set forth herein
shall be deemed "material."
8.2. INDEMNIFICATION BY BUYER. Buyer agrees to indemnify and hold
harmless each Seller from and against any and all Loss and Expense incurred by
such Seller in connection with or arising from:
(a) any breach, by Buyer of, or other failure of Buyer to perform, any
of its covenants, agreements or obligations in this Agreement or any agreement
or instrument contemplated hereby or certificate or other document delivered by
Buyer pursuant to this Agreement; or
(b) any breach, of any warranty or the inaccuracy, of any representation
of Buyer contained or referred to in this Agreement or in any certificate or
other document delivered by or on behalf of Buyer pursuant hereto.
The indemnification provided for in this Section 8.2 shall terminate as of the
the Closing Date (and no claims shall be made by Seller under this Section 8.2
thereafter), except that the indemnification by Buyer shall continue in any
event as to:
(i) the representations and warranties of Buyer set forth
infections 3.1, 3.2, 3.3 and 10.10; and
(ii) any Loss or Expense of which Seller Representative have
notified Buyer in accordance with the requirements of Section 8.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this Section 8.2, as to which the obligation of Buyer
shall continue until the liability of Buyer shall have been determined
pursuant to this Article VIII, and Buyer shall have reimbursed Sellers
for the full amount of such Loss and Expense in accordance with this
Article VIII.
provided, however, that Buyers shall be not be required to indemnify and hold
Sellers harmless with respect to any Losses or Expenses incurred by Sellers
unless the amount of each Loss and Expense is equal to $100,000, or more, or
the aggregate amount of such Losses and Expenses exceeds $300,000, and in
such event Buyer shall be responsible for all such Losses or Expenses
including amounts included within such $100,000 or $300,000 amount.
8.3. NOTICE OF CLAIMS. (a) Buyer or Sellers seeking indemnification
shall give to the Escrow Agent and the party obligated to provide
indemnification a notice (a "Claim Notice") describing in reasonable detail
the facts giving rise to any claim for indemnification hereunder and shall
include in such Claim Notice the amount or the method of computation of the
amount of such claim, and a reference to the provision of this Agreement
or any other agreement, document or instrument upon which such claim is based;
provided, that a Claim Notice by or against a third person shall be given
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promptly after the action or suit is commenced; provided further that failure
to give such notice shall not relieve the Indemnifying Party of its obligations
hereunder except to the extent it shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice, the amount of
indemnification to which an indemnificd person shall be entitled under this
Article VIII shall be determined: (i) by the written agreement between the
indemnified person and the indemnifying party; (ii) by a final judgment or
decree of any court of competent jurisdiction; or (iii) by any other means to
which the indemnified person and the indemnifying party shall agree. The
judgment or decree of a court shall be deemed final when the time for appeal,
if any, shall have expired and no appeal shall have been taken or when all
appeals taken shall have been finally determined. The indemnified person
shall have the burden of proof in establishing the amount of Loss and Expense
suffered by it.
8.4. THIRD PARTY CLAIMS. The indemnifying person shall have the right
to conduct and control, any third party claim, action or suit, and the
indemnifying person may compromise or settle the same, provided that the
indemnifying person shall give the indemnified party advance notice of any
proposed compromise or settlement. The indemnifying person shall permit the
indemnified party to participate in the defense of any such action or suit,
provided that the fees and expenses of its counsel shall be borne by the
indemnified party.
8.5. SUBSEQUENT DISPOSITIONS. Buyer's right to indemnification
hereunder shall not be affected by any subsequent disposition of any of the
assets of the Company or any of the Common Shares.
8.6. CERTAIN CONFLICTS. If there shall be any conflicts between the
provisions of this Article VIII and Section 5.2, the provisions of Section 5.2
shall control.
8.7 LIMITATION OF LIABILITY. The maximum aggregate amount recoverable
by Buyer under the tax indemnification provisions of Section 5.2 and for Losses
and Expenses incurred by Buyer in connection with or arising from this
Agreement shall be equal to the Escrow Amount ($1.1 Million).
ARTICLE IX
TERMINATION
9.1. TERMINATION. (a) Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated at any time prior
to the Closing: (i) by the mutual consent of Buyer and the Sellers
Representative; (ii) by Buyer in the event of a material breach by the Company,
Sellers or the Named Sellers of any of their respective representations,
warranties, covenants, agreements or obligations contained in this Agreement
or if any of the Company, Sellers' or the Named Sellers' representations or
warranties contained in this Agreement shall have been inaccurate in any
material respect when made; (iii) by the Seller Representative in the event of
a material breach by Buyer of any of its representations, warranties,
covenants, agreements or obligations contained in this Agreement or if any of
Buyers representations or warranties contained in this Agreement shall have
been inaccurate in any material respect when made; (iv) by Buyer or the Seller
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Representative if the Closing shall not have occurred on or before July 15,
1995 (or such later date as may be mutually agreed to by Buyer and the Seller
Representative); or (v) by Buyer if, since the date of this Agreement there
shall have occurred any material adverse change (whether or not covered by
insurance) in the assets, properties, business, results of operations,
liabilities, prospects or condition (financial or otherwise) of the Company.
(b) In the event that this Agreement shall be terminated pursuant to
this Article IX, all further obligations of the parties under this Agreement
(other than Section 10.2 or 1O.10) shall be terminated without further
liability of any party to the other, provided that nothing herein shall
relieve any party from liability for its breach of this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL. All representations, warranties, covenants, agreements
and obligations contained in this Agreement shall survive the consummation of
the transactions contemplated by this Agreement; provided, however, that,
except for the representations and warranties contained in Section 2.1, 2.3,
2.4, 2.5, 3.1, 3.2 or 3.3, and the covenants set forth in Section 1O.1O, as to
all of which no time limitation shall apply, and except as otherwise provided
in Article VIII, Sections 5.1 or 5.2, the representations and warranties
contained in Article II and III shall terminate eighteen (18) months after the
Closing Date. Except as otherwise provided herein, no claim shall be made for
the breach of any representation or warranty contained in Article II or III or
under any certificate delivered with respect thereto under this Agreement after
the date on which such representations and warranties terminate as set forth
in this Section.
10.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees that it
will treat in confidence all documents, materials and other information which
it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and
other related documents, and, in the event the transactions contemplated
hereby shall not be consummated, each party will return to the other party
all copies of nonpublic documents and materials which have been furnished in
connection therewith. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any
information which (a) such party can demonstrate was already lawfully in its
possession prior to the disclosure thereof by the other party, (b) is known
to the public and did not become so known through any violation of a legal
obligation, (c) became known to the public through no fault of such party,
(d) is later lawfully acquired by such party from other sources or (e) such
party is required to disclose pursuant to judicial order or, in the opinion
of counsel, pursuant to applicable law or the rules of any national securities
association. Without limiting the right of either party to pursue all other
legal and equitable rights available to it for violation of this Section 10.2
by the other party, it is agreed that other remedies cannot fully compensate
the aggrieved party for such a violation of this Section 10.2 and that the
aggrieved party shall be entitled to injunctive relief to prevent a violation
or continuing violation hereof.
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10.3. GOVERNING LAW; VENUE. THIS AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAW PROVISIONS) OF THE STATE OF
ILLINOIS.
10.4. NOTICES. All notices or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally or by messenger or 72 hours after having been sent by
registered or certified mail or by private courier or by facsimile transmission
addressed as follows:
If to Buyer (or the Company, after the Closing), to:
Joslyn Corporation
30 South Wacker Drive
Chicago, Illinois 60606
Attention: Vice President and General Counsel
Facsimile: (312) 454-2930
with copies to:
Thomas A. Cole
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile: (312) 853-7036
If to Sellers, the Named Sellers or the Seller Representative, to:
[Seller Representative]
7171 Industrial Park Blvd.
Mentor, Ohio 44060
Facsimile: (216) 946-3662
with a copy to:
Hahn Loeser & Parks
3300 BP America Bldg.
200 Public Square
Cleveland, OH 44114
Attention: Harry Mercer
Facsimile: 216-241-2824
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if to the Company prior to the Closing, to:
Cyberex, Inc.
7171 Industrial Park Blvd.
Mentor, Ohio 44060
Attention: Edward J. Yohman, Chairman
Facsimile: (216) 946-3662
or to such other address as such party may indicate by a notice delivered to
the other parties hereto.
10.5. SUCCESSORS AND ASSIGNS. (a) The rights of each of the parties under
this Agreement shall not be assignable by such party prior to the Closing
without the written consent of the other, except that the rights of Buyer
hereunder may be assigned prior to the Closing, without the consent of any
other party hereto, to an Affiliate of Buyer, provided that the assignee shall
assume in writing all of Buyer's obligations to Sellers hereunder and Buyer
shall not be relieved from its obligations hereunder. Following the Closing,
any party may assign any of such party's rights hereunder, but no such
assignment shall relieve such party of such party's obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their legal heirs, legal representatives, successors
and permitted assigns. The successors and permitted assigns hereunder of Buyer
shall include, without limitation, any permitted assignee as well as the
successors in interest to such permitted assignee (whether by merger,
liquidation (including successive mergers or liquidations) or otherwise.
10.6. Access to Records after Closing. (a) For a period of seven years
after the Closing Date, Sellers and their representatives shall have reasonable
access to all of the books and records of the Company relating to periods prior
to the Closing Date to the extent that such access may reasonably be required
by Sellers in connection with their obligations hereunder or the preparation
of their federal or state income tax returns, amended returns, any claim for
refund or any audit or contest of such returns or claims. Such access shall
be afforded by Buyer upon receipt of reasonable advance notice and dining
normal business hours. Sellers shall be solely responsible for any costs or
expenses incurred by them pursuant to this Section 10.6(a). If Buyer shall
desire to dispose of any of such books and records prior to the expiration
of such seven-year period, Buyer shall, prior to such disposition, give
Sellers thirty days, at their expense, to segregate and remove such books and
records as Sellers may select.
(b) For a period of seven years after the Closing Date, Buyer and its
representatives shall have reasonable access to all of the books and records
of Named Sellers relating in any respect to the Company to the extent such
access may reasonably be required by Buyer in connection with its ownership
or operation of the Company, including any tax matters relating thereto.
Such access shall be afforded by Named Sellers upon receipt of reasonable
advance notice and during normal business hours. Buyer shall be solely
responsible for any costs and expenses incurred by it pursuant to this Section
10.6(b). If Sellers shall desire to dispose of any of such books and records
prior to the expiration of such seven-year period, Sellers shall, prior to such
disposition, give Buyer thirty days, at Buyer's expense, to segregate and
remove such books and records as Buyer may select.
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10.7. ENTIRE AGREEMENT; Amendments. This Agreement and the Exhibits and
Schedules referred to herein and the documents delivered pursuant hereto
contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or intents between or among any of the parties hereto. The
parties hereto, by mutual agreement in writing, may amend, modify and
supplement this Agreement.
10.8. INTERPRETATION. Article titles and headings to sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules
and Exhibits referred to herein shall be construed with and as an integral
part of this Agreement to the same extent as if they were set forth verbatim
herein.
10.9. WAIVERS. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce
at any time any provision of this Agreement shall not be construed to be a
waiver of such provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement
shall be held to constitute a waiver of any other or subsequent breach.
10.10. EXPENSES; ATTORNEYS' FEES. Subject to the provisions of Section
8.1, each party hereto will pay all of his or its own costs and expenses
incident to his or its negotiation and preparation of this Agreement and to
his or its performance and compliance with all agreements and conditions
contained herein on his or its part to be performed or complied with, including
the fees, expenses and disbursements of his or its counsel and accountants.
Without limitation of any partys rights and obligations under Article VIII,
in the event of any dispute, claim, arbitration or litigation with regard to
this Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall promptly pay, all
reasonable fees and expenses, including the fees and expenses of counsel
incurred by the prevailing party incurred in connection with such dispute,
claim, arbitration or litigation.
1O.11. PARTIAL INVALIDITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provisions of this Agreement, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision or provisions
had never been contained herein unless the deletion of such provision or
provisions would result in such a material change as to cause completion of
the transactions contemplated hereby to be unreasonable.
10.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by each of the
parties and delivered to each of the Company, Sellers and Buyer.
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10.13. DEFINITIONS. As used in this Agreement, the following terms
have the meanings specified or referred to in this Section 10.13:
"AFFILIATE" means, with respect to any person, any other person which
directly or indirectly controls, is controlled by or is under common control
with such person.
"BUSINESS" means, the manufacture and distribution of power supply
systems worldwide.
"CONTAMINANT" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, asbestos, petroleum or petroleum-
derived substance, radioactive material or waste, or any constituent of any
such substance or waste and including, any substance which any Governmental
Body requires to be controlled, removed, monitored, remediated or otherwise
addressed.
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect
in title, community property right, covenant or other restriction of any kind.
"ERISA AFFILIATE" means (a) any corporation which at, or at any time
before, the Closing Date is or was a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as the Company;
(b) any partnership, trade or business (whether or not incorporated) which at,
or at any time before, the Closing Date is or was under common control (within
meaning of Section 414(c) of the Code) with the Company; (c) any entity, which
at, or at any time before, the Closing Date is or was a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code)
as either the Company, any corporation described in clause (a) or any
partnership, trade or business described in clause (b); and (d) any other
entity required to be aggregated with the Company, within the meaning of
Section 414(o) of the Code.
"EXPENSE" means any and all expenses (a) reasonably incurred in connection
with investigating, preparing, defending, bringing or prosecuting any claim,
action, suit or proceeding (including, without limitation, court filing fees,
court costs, arbitration fees or costs, witness fees, and reasonable fees and
disbursements of legal counsel, investigators, expert witnesses, accountants
and other professionals), (b) reasonably incurred in undertaking any Remedial
Action (as defined in Section 10.13) or (c) incurred by a Government Body to
investigate, study or remediate any environmental damage.
"GOVERNMENTAL BODY" means any court, government (federal, state, local or
foreign), department, commission, board, bureau, agency, official or other
regulatory, administrative or governmental authority.
"LOSSES" means any and all losses, costs, obligations, liabilities,
settlement payments, awards, judgments, fines, penalties, damages, expenses,
deficiencies or other charges, but shall not include Expenses.
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"NAMED SELLERS" means Messrs. Edward J. Yohman, Edward W. Tornberg, Gus
Stevens, Robert J. Resch and James E. Murray.
"PERMITTED ENCUMBRANCE" means liens for taxes, assessments or other
governmental charges which are not yet due and payable.
"PERSON" means and includes an individual, a partnership, a corporation,
a trust, a joint venture, an unincorporated organization and any governmental
or regulatory body or other agency or authority.
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any facility of any Contaminant,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater or Facility.
"REMEDIAL ACTION" means any and all actions required to (a) clean up,
remove, treat, monitor or in any other way address Contaminants in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not migrate or endanger
or threaten to endanger public health or welfare or the indoor or outdoor
environment or (c) perform pre-remedial studies and investigations and post-
remedial monitoring and care.
"SELLER REPRESENTATIVE" is a committee consisting of Messrs. Edward J.
Yohman, Edward W. Tomberg, Gus Stevens and Robert J. Resch, all appointed
pursuant to the Representative and Reserve Fund Agreement by and among the
Sellers.
"TAX" (and, with correlative meaning, "Taxes" and "Taxable") shall mean:
(i) any federal, state, local or foreign net income, gross income, gross
receipts, sales, use, employment, franchise, payroll, withholding, alternative
or add-on minimum, ad valorem, or any other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any governmental
authority; and
(ii) any liability of the Company for the payment of amounts with
respect to payments of a type described in clause (i) as a result of being a
member of an affiliated, consolidated group.
"TAX RETURN" shall mean any return, report or similar statement required
to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund,
amended return or declaration of estimated Tax.
10.14. NO PUBLIC ANNOUNCEMENT. No party hereto shall, without the
approval of the other parties hereto, make any press release or other public
announcement concerning the transactions contemplated by the Agreement, except
as and to the extent that any such party shall be so obligated by law or the
rules of any Share exchange, in which case the other party shall be advised
and the parties shall use their best efforts to cause a mutually agreeable
release or announcement to be issued; provided that the foregoing shall not
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preclude communications or disclosures necessary to implement the provisions
of this Agreement or to comply with the accounting and Securities and Exchange
Commission disclosure obligations.
10.15. ARBITRATION. If the parties involved in any such controversey,
claim or dispute mutually agree to submit the same to arbitration, any
controversy, claim or dispute arising under, out of, in connection with, or
relating to this Agreement and any amendment hereof, or the breach hereof,
which cannot be resolved by the parties within 45 days after receipt of a
Claim Notice contemplated by Section 8.3, shall then be determined and settled
by arbitration in Cleveland, Ohio by a person mutually agreed upon, or in the
event of a disagreement as to the selection of the arbitrator, in accordance
with the rules of the American Arbitration Association. The arbitrator shall
conduct the arbitration in accordance with the rules of the American
Arbitration Association. Any award rendered shall specify the findings of
fact of the arbitrator and the reasons for such award with reference to and
reliance on relevant law. Any such award shall be final and binding on all
the parties and their successors and assigns, and judgment may be entered
thereon by any court having jurisdiction. Each party shall bear its own
expenses in connection with the preparation and presentation of its case.
The fees and expenses of the arbitrator shall be borne equally by the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
JOSLYN CORPORATION
By: /s/Lawrence G. Wolski
Name: Lawrence G.Wolski
Title: Acting Chief Executive Officer
CYBEREX, INC.
By: /s/Edward J. Yohman
Name: Edward J. Yohman
Title: Chief Executive Officer/Chairman
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NAMED SELLERS
/s/ Edward J. Yohman
______________________
Edward J. Yohman
/s/ Edward W.Tornberg /s/ Gus Stevens
______________________ __________________________
Edward W. Tornberg (as to Gus Stevens
19,740 Common Shares
/s/ Robert J. Resch /s/ James E. Murray
______________________ __________________________
Robert J. Resch James E. Murray
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 33-32571 of Joslyn Corporation on Form S-8 of our report dated March
24, 1995 on the financial statements of Cyberex, Inc. for the year ended
December 31, 1994 appearing in this Report on Form 8-K of Joslyn
Corporation.
/s/ Deloitte & Touche LLP
Cleveland, Ohio
August 29, 1995
