<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1996
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------
KUHLMAN CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 58-2058047
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 Skidaway Village Square
Savannah, Georgia 31411
(912) 598-7809
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
RICHARD A. WALKER, Esq.
Executive Vice President, Chief Administrative Officer, General Counsel and
Secretary
Kuhlman Corporation
3 Skidaway Village Square
Savannah, Georgia 31411
(912) 598-7809
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
--------------------
Copies of Communications to:
DALIUS F. VASYS, Esq.
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle, Suite 2600
Chicago, IL 60601
(312) 609-7500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
--------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
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PROPOSED PROPOSED AMOUNT
AMOUNT TO MAXIMUM MAXIMUM OF
TITLE OF EACH CLASS OF BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) FEE(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share
Preferred Stock Purchase Rights (2) 10,000 $14.44 $144,400.00 $50.00
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</TABLE>
(1) Pursuant to Rule 457(c), the proposed offering price and registration fee
are based upon the average of the high and low prices reported on the New
York Stock Exchange for the Registrant's Common Stock on September 20,
1996.
(2) This Registration Statement also covers the associated preferred stock
purchase rights (the "Rights") owned pursuant to a Rights Agreement dated
as of April 28, 1987, as amended on February 24, 1995, between the
Registrant and Harris Trust and Savings Bank, as successor rights agent.
Until the occurrence of certain proscribed events, the Rights are not
exercisable, are evidenced by the certificates for the Common Stock, and
will be transferred along with and only with such securities. Thereafter,
separate certificates will be issued representing one Right for each share
of Common Stock, subject to adjustment for dilution.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 1996
P R O S P E C T U S
________ SHARES
KUHLMAN CORPORATION
COMMON STOCK
--------------------
This Prospectus relates to the offer and sale of shares (the "Shares") of
common stock, par value $1.00 per share (the "Common Stock"), of Kuhlman
Corporation, a Delaware corporation (the "Company"). The Shares may be offered
and sold from time to time by certain selling shareholders of the Company (the
"Selling Shareholders") in transactions in the open market, in negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). See "Sale of the
Shares."
The Selling Shareholders acquired the Shares on __________, 1996 in
connection with the acquisition by a wholly-owned subsidiary of the Company
of substantially all of the assets of a company owned by the Selling
Shareholders. See "Recent Development." The Selling Shareholders may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). See "Selling Shareholders" and "Sale of
the Shares."
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. A wholly-owned subsidiary of the
Company has agreed to bear all expenses (other than underwriting discounts,
broker or dealer commissions, and fees and expenses of counsel or other advisors
to the Selling Shareholders) in connection with the registration and sale of the
Shares being offered by the Selling Shareholders and to indemnify the Selling
Shareholders against certain liabilities, including certain liabilities under
the Securities Act.
The Common Stock is listed on the New York Stock Exchange. On __________,
1996, the last reported sale price of the Common Stock of the Company on the New
York Stock Exchange was $____ per share.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is ___________, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement"), of which this Prospectus forms a part, covering the Shares to be
sold pursuant to this offering.
As permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings contained in the
Registration Statement. Such additional information, exhibits and undertakings
can be inspected at and obtained from the Commission as set forth below. For
additional information regarding the Company, the Common Stock and related
matters and documents, reference is made to the Registration Statement and
exhibits thereto.
CERTAIN DOCUMENTS PREVIOUSLY FILED BY THE COMPANY WITH THE COMMISSION
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"), ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS. SEE "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE." COPIES OF ANY DOCUMENTS INCORPORATED HEREIN BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS THEY ARE SPECIFICALLY
INCORPORATED BY REFERENCE THEREIN, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON TO
WHOM A PROSPECTUS IS DELIVERED UPON REQUEST TO THE SECRETARY, KUHLMAN
CORPORATION, 3 SKIDAWAY VILLAGE SQUARE, SAVANNAH, GEORGIA 31411, (TELEPHONE:
(912) 598-7809).
The Company is subject to the informational and reporting requirements of
the Exchange Act, and accordingly files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission, as well as the Registration Statement,
are available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at certain regional offices of the Commission
located at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and
Seven World Trade Center, 13th Floor, New York, New York 10007. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
2
<PAGE>
THE COMPANY
The Company is a holding company that owns and manages a group of operating
companies, which are organized into two business segments, Electrical Products
and Industrial Products. In the Electrical Products Segment, the Company
designs, manufactures and markets electrical utility and industrial type
transformers for various markets and industries involved in electrical
distribution systems; and manufactures and markets electronic and electrical
wire and cable products for numerous commercial, industrial and consumer uses.
In the Industrial Products Segment, the Company designs, manufactures and
markets turbochargers, engine cooling fans, fan drives and crankshaft vibration
dampers used in diesel and gasoline engines for truck, agricultural,
construction and other industrial applications; and spring products and metal
stampings used by other manufacturers in their products or production process.
The Company's principal executive offices are located at 3 Skidaway Village
Square, Savannah, Georgia 31411. Its telephone number is (912) 598-7809.
RECENT DEVELOPMENT
On ______________, 1996, the Company's wholly-owned subsidiary, Coleman
Cable Systems, Inc., a Delaware corporation ("Coleman"), acquired substantially
all of the assets of Web Wire Products, Inc., a Florida corporation ("Web
Wire"), and assumed certain liabilities of Web Wire (the "Acquisition") pursuant
to a Reorganization and Asset Acquisition Agreement dated as of September 20,
1996 (the "Asset Acquisition Agreement") among the Company, Coleman, Web Wire
and the Selling Shareholders. Web Wire is a manufacturer of battery cables,
ignition wire sets and related products. Pursuant to the Asset Acquisition
Agreement, the Company issued the Shares to Web Wire, which subsequently
distributed the Shares to the Selling Shareholders. Of the _________ Shares
issued in connection with the Acquisition, _________ Shares are held in escrow
and may be released to the Selling Shareholders periodically from December 31,
1996 through on or about August 31, 1998 or retired by the Company in accordance
with certain provisions of the Asset Acquisition Agreement. Under the terms of
the Asset Acquisition Agreement, the Company agreed to register the Shares for
resale by the Selling Shareholders and Coleman has agreed to indemnify the
Selling Shareholders against certain liabilities, including certain liabilities
under the Securities Act. The Registration Statement of which this Prospectus
is a part was filed with the Commission pursuant to the registration provisions
of the Asset Acquisition Agreement.
SELLING SHAREHOLDERS
The Shares covered by this Prospectus are being offered and sold by the
persons listed below (the "Selling Shareholders"). The Company has issued such
Shares to Web Wire in connection with the consummation of the Acquisition. Web
Wire subsequently distributed the Shares to the Selling Shareholders. In
connection therewith, the Selling Shareholders will be receiving an aggregate of
__________ Shares. The __________ Shares owned by the Selling Shareholders
represent all of the Common Stock presently owned by them.
The following table shows as to each Selling Shareholder the number of
Shares owned by each Selling Shareholder prior to this offering and the number
of Shares being registered hereby:
Number of
Shares owned Number Shares owned
Prior to of Shares After
Name Offering Registered(1) Offering(1)
---- -------- ------------- -----------
Harold Lowenstein . . . . . 0 0
Allan R. Walch . . . . . . 0 0
Total . . . 0 0
(1) Includes _____ Shares subject to escrow as set forth in the Asset
Acquisition Agreement. See "Recent Development."
3
<PAGE>
Under the terms of the Asset Acquisition Agreement, the Company agreed to
file a registration statement with respect to the potential resale of the
__________ Shares and to maintain the effectiveness of such registration
statement for a period of thirty months from the date of this Prospectus. All
of the registration and qualification fees, printing and accounting fees, and
fees and disbursements of the Company's or Coleman's legal counsel incurred in
connection with the registration of the Shares will be paid by Coleman;
provided, however, that any underwriters' discounts, broker or dealer
commissions, and fees and expenses of counsel or other advisors to the Selling
Shareholders will be borne by the Selling Shareholders. Subject to the escrow
provisions of the Asset Acquisition Agreement, the __________ Shares may be
offered and sold from time to time within such thirty month period as determined
by the Selling Shareholders. See "Recent Development."
SALE OF THE SHARES
Sales of the Shares may be made by the Selling Shareholders, or, subject to
applicable law, by pledgees, donees, transferees or other successors in
interest, in the over-the-counter market or otherwise at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Shares may be sold by one or more of the
following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; and (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated immediately prior to sale.
Such brokers or dealers may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales.
The Company has advised the Selling Shareholders of their obligations under
the Exchange Act to avoid market manipulation of the Shares (including, without
limitation, their obligation not to purchase or solicit purchases by others of
any of the Shares during the two business days preceding the commencement of any
offers or sales of the Shares by any of the Selling Shareholders) until the
offering pursuant to this Prospectus by all Selling Shareholders has been
completed.
The Company also has advised the Selling Shareholders of their obligations
under the Securities Act to deliver copies of this Prospectus to any purchaser
of their Shares.
LEGAL MATTERS
A legal opinion to the effect that the Shares are validly issued, fully
paid and nonassessable has been rendered by Vedder, Price, Kaufman & Kammholz,
Chicago, Illinois.
EXPERTS
The financial statements and schedule of the Company for the year ended
December 31, 1995 incorporated by reference in this Prospectus and elsewhere
in the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act (Commission File No. 1-7695) are incorporated
herein by this reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;
4
<PAGE>
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 and June 30, 1996;
(3) The Company's Current Reports on Form 8-K dated September 3, 1996
and September 25, 1996;
(4) The description of the Company's Common Stock and Preferred Stock
Purchase Rights contained in the Company's Registration Statement filed
pursuant to Section 12 of the Exchange Act on Form 8-A, as amended.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the date
upon which this offering is terminated shall be deemed to be incorporated by
reference herein and to be part hereof from the date any such document is filed.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also incorporates by reference) modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed to constitute a part hereof except as so modified or superseded. All
information appearing in this Prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated herein by reference, except to the extent set forth in
this paragraph.
----------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SHARES OF COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
----------------------------------------
5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 4. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration fee to the Securities and Exchange
Commission $ 50.00
New York Stock Exchange Listing Fee . . . . . . . . 1,225.00
Accounting fees and expenses . . . . . . . . . . . 1,000.00
Legal fees and expenses . . . . . . . . . . . . . . 5,000.00
Miscellaneous expenses . . . . . . . . . . . . . . 2,000.00
---------
Total . . . . . . . . . . . . . . . . . . $9,275.00
---------
---------
The foregoing items, except for the SEC registration fee and the New York
Stock Exchange listing fee, are estimated. A wholly-owned subsidiary of the
Registrant has agreed to bear all expenses (other than underwriters' discounts,
broker or dealer commissions, and fees and expenses of counsel and other
advisors to the Selling Shareholders) in connection with the registration and
sale of the Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes
indemnification of directors, officers, employees and agents of the Company;
allows the advancement of costs of defending against litigation; and permits
companies incorporated in Delaware to purchase insurance on behalf of directors,
officers, employees and agents against liabilities whether or not in the
circumstances such companies would have the power to indemnify against such
liabilities under the provisions of the statute. The Company's Certificate of
Incorporation and Bylaws provide for indemnification of its officers and
directors to the extent permitted by Section 145 of the Delaware General
Corporation Law. Pursuant to such provisions, the Company has purchased such
insurance on behalf of its directors and officers.
The Company's Certificate of Incorporation eliminates, to the fullest
extent permitted by Delaware law, liability of a director to the Company or its
stockholders for monetary damages for a breach of such director's fiduciary duty
of care except for liability where a director (a) breaches his or her duty of
loyalty to the Company or its stockholders, (b) fails to act in good faith or
engages in intentional misconduct or knowing violation of law, (c) authorizes
payment of an illegal dividend or stock repurchase or (d) obtains an improper
personal benefit. This provision only pertains to breaches of duty by directors
as directors and not breaches of duty by directors in any other corporate
capacity, such as any capacity as an officer. While liability for monetary
damages has been eliminated, equitable remedies such as injunctive relief or
rescission remain available. In addition, a director is not relieved of his
responsibilities under any other law, including the federal securities laws.
ITEM 16. EXHIBITS
3.1 Certificate of Incorporation of the Registrant (incorporated by reference
to Exhibit 1 to Registrant's Form 10-Q for the quarter ended June 30,
1993).
3.2 Certificate of Amendment of Certificate of Incorporation of the Registrant
dated May 31, 1995 (incorporated by reference to Exhibit 3.1 to
Registration Statement No. 33-58133).
3.3 Certificate of Voting Powers, Designations, Preferences, and Relative,
Participating, Optional, or Other Special Rights, and the Qualifications,
Limitations, or Other Restrictions thereof of the Junior Participating
Preferred Stock, Series A of the Registrant dated May 31, 1995
(incorporated by reference to Exhibit 3.3 to Registrant's Form 10-K for the
year ended December 31, 1995).
II-1
<PAGE>
3.4 Bylaws (incorporated by reference to Exhibit 36 to the Registrant's Form
10-K for the year ended December 31, 1993).
3.5 Rights Agreement dated as of April 28, 1987 between the Registrant and
Manufacturers National Bank of Detroit, as rights agent (incorporated by
reference to Exhibit 1 to the Registrant's Current Report on Form 8-K dated
May 5, 1987).
3.6 Amendment to Rights Agreement dated as of February 24, 1995, between the
Registrant and Harris Trust and Savings Bank, as successor rights agent
(incorporated by reference to Exhibit 3.5 to the Registration Statement
No. 33-58133).
4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1
to Registration Statement No. 33-58133).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz as to the legality of the
securities being registered.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Vedder, Price, Kaufman & Kammholz (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (see signature page to this Registration Statement).
99.1 Reorganization and Asset Acquisition Agreement dated September 20, 1996
among the Registrant, Coleman Cable Systems, Inc., Web Wire Products, Inc.,
Harold Lowenstein and Allan R. Walch.
*To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement.
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
II-2
<PAGE>
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction to the questions whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Savannah, State of Georgia, on September 25, 1996.
KUHLMAN CORPORATION
By: /s/ Robert S. Jepson, Jr.
------------------------------
Robert S. Jepson, Jr.
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Robert S. Jepson, Jr., Curtis G. Anderson, Vernon
J. Nagel and Richard A. Walker, and each of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
S-1
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Robert S. Jepson, Jr. Chairman of the Board and September 25,
- -------------------------------- Chief Executive Officer 1996
Robert S. Jepson, Jr. (Principal Executive Officer)
and Director
/s/ Vernon J. Nagel Executive Vice President of September 25,
- -------------------------------- Finance, Chief Financial 1996
Vernon J. Nagel Officer and Treasurer
(Principal Financial and
Accounting Officer)
/s/ Curtis G. Anderson President, Chief Operating September 25,
- -------------------------------- Officer and Director 1996
Curtis G. Anderson
/s/ William E. Burch Director September 25,
- --------------------------------- 1996
William E. Burch
/s/ Steve Cenko Director September 25,
- --------------------------------- 1996
Steve Cenko
/s/ Gary G. Dillon Director September 25,
- --------------------------------- 1996
Gary G. Dillon
/s/ Alexander W. Dreyfoos, Jr. Director September 25,
- --------------------------------- 1996
Alexander W. Dreyfoos, Jr.
/s/ William M. Kearns, Jr. Director September 25,
- --------------------------------- 1996
William M. Kearns, Jr.
/s/ Robert D. Kilpatrick Director September 25,
- --------------------------------- 1996
Robert D. Kilpatrick
/s/ George J. Michel, Jr. Director September 25,
- --------------------------------- 1996
George J. Michel, Jr.
/s/ General H. Norman Schwarzkopf Director September 25,
- --------------------------------- 1996
General H. Norman Schwarzkopf
S-2
<PAGE>
EXHIBIT INDEX
3.1 Certificate of Incorporation of the Registrant (incorporated by reference
to Exhibit 1 to Registrant's Form 10-Q for the quarter ended June 30,
1993).
3.2 Certificate of Amendment of Certificate of Incorporation of the Registrant
dated May 31, 1995 (incorporated by reference to Exhibit 3.1 to
Registration Statement No. 33-58133).
3.3 Certificate of Voting Powers, Designations, Preferences, and Relative,
Participating, Optional, or Other Special Rights, and the Qualifications,
Limitations, or Other Restrictions thereof of the Junior Participating
Preferred Stock, Series A of the Registrant dated May 31, 1995
(incorporated by reference to Exhibit 3.3 to Registrant's Form 10-K for the
year ended December 31, 1995).
3.4 Bylaws (incorporated by reference to Exhibit 36 to the Registrant's Form
10-K for the year ended December 31, 1993).
3.5 Rights Agreement dated as of April 28, 1987 between the Registrant and
Manufacturers National Bank of Detroit, as rights agent (incorporated by
reference to Exhibit 1 to the Registrant's Current Report on Form 8-K dated
May 5, 1987).
3.6 Amendment to Rights Agreement dated as of February 24, 1995, between the
Registrant and Harris Trust and Savings Bank, as successor rights agent
(incorporated by reference to Exhibit 3.5 to the Registration Statement
No. 33-58133).
4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1
to Registration Statement No. 33-58133).
5.1 Opinion of Vedder, Price, Kaufman & Kammholz as to the legality of the
securities being registered.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Vedder, Price, Kaufman & Kammholz (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (see signature page to this Registration Statement).
99.1 Reorganization and Asset Acquisition Agreement dated September 20, 1996
among the Registrant, Coleman Cable Systems, Inc., Web Wire Products, Inc.,
Harold Lowenstein and Allan R. Walch.
- ------------------------------------
*To be filed by amendment.
<PAGE>
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 6,
1996 incorporated by reference in Kuhlman Corporation's Form 10-K for the year
ended December 31, 1995 and all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
September 25, 1996
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
REORGANIZATION AND
ASSET ACQUISITION AGREEMENT
by and among
KUHLMAN CORPORATION,
COLEMAN CABLE SYSTEMS, INC.,
WEB WIRE PRODUCTS, INC.
and
CERTAIN INDIVIDUALS
September 20, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
PURCHASE AND TRANSFER OF ASSETS
AND PLAN OF REORGANIZATION . . . . . . . . . . 1
1.1 Acquired Assets. . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Acquired Inventory . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . 4
1.5 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 2
CONSIDERATION FOR THE ACQUIRED ASSETS. . . . . . . . 7
2.1 Stock Consideration. . . . . . . . . . . . . . . . . . . . . . 7
2.2 Payment of Stock Consideration . . . . . . . . . . . . . . . . 7
2.3 Adjustments to Stock Consideration . . . . . . . . . . . . . . 10
2.4 Procedures for Final Determination of Net Asset Amount . . . . 11
2.5 Net Asset Amount Definition. . . . . . . . . . . . . . . . . . 11
2.6 Valuation of Inventory . . . . . . . . . . . . . . . . . . . . 12
2.7 [Intentionally Deleted]. . . . . . . . . . . . . . . . . . . . 13
2.8 Registration of Kuhlman Common Stock . . . . . . . . . . . . . 13
(a) REGISTRATION OF KUHLMAN COMMON STOCK . . . . . . . . . . 13
(b) FURNISHING INFORMATION . . . . . . . . . . . . . . . . . 13
(c) PROSPECTUS REQUIREMENTS. . . . . . . . . . . . . . . . . 13
(d) REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . . . 14
(e) INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 15
(f) FEES AND EXPENSES OF REGISTRATION. . . . . . . . . . . . 16
(g) LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDERS. . . . . . . . . . . 17
3.1 Organization and Power . . . . . . . . . . . . . . . . . . . . 17
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Authorization; No Breach . . . . . . . . . . . . . . . . . . . 17
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . 18
3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . 18
3.6 No Material Adverse Changes. . . . . . . . . . . . . . . . . . 18
3.7 Absence of Certain Developments. . . . . . . . . . . . . . . . 19
3.8 Title and Condition of Properties. . . . . . . . . . . . . . . 20
i
<PAGE>
TABLE OF CONTENTS
(CONTINUED) PAGE
3.9 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . 21
3.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.12 Contracts and Commitments. . . . . . . . . . . . . . . . . . . 22
3.13 Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . 24
3.14 Litigation; Proceedings. . . . . . . . . . . . . . . . . . . . 24
3.15 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.16 Governmental Consent, etc. . . . . . . . . . . . . . . . . . . 25
3.17 Employees . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 25
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.20 Affiliated Transactions. . . . . . . . . . . . . . . . . . . . 27
3.21 Compliance with Laws; Permits; Certain Operations. . . . . . . 27
3.22 Environmental Matters. . . . . . . . . . . . . . . . . . . . . 27
3.23 Investment Undertakings of Seller and Shareholders . . . . . . 29
3.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.25 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.26 C Reorganization Treatment . . . . . . . . . . . . . . . . . . 30
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . 31
4.1 Corporate Organization and Power . . . . . . . . . . . . . . . 31
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . 31
4.3 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.4 Governmental Authorities and Consents. . . . . . . . . . . . . 32
4.5 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.7 Notification . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.8 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.9 Due Issuance . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.10 Public Filings . . . . . . . . . . . . . . . . . . . . . . . . 32
4.11 Material Changes . . . . . . . . . . . . . . . . . . . . . . . 33
4.12 Continuation of Seller's Historic Business . . . . . . . . . . 33
ARTICLE 5
COVENANTS OF SELLER AND SHAREHOLDERS. . . . . . . . . 33
5.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . 33
5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . 34
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED) PAGE
5.4 Distribution of Kuhlman Common Stock . . . . . . . . . . . . . 34
ARTICLE 6
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE. . . . . . . . . 35
6.1 Conditions to Purchaser's Obligation . . . . . . . . . . . . . 35
ARTICLE 7
CONDITIONS TO SELLER'S AND
SHAREHOLDERS' OBLIGATION TO CLOSE . . . . . . . . . . 37
ARTICLE 8
CLOSING TRANSACTIONS . . . . . . . . . . . . . 37
8.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2 Action to Be Taken at the Closing. . . . . . . . . . . . . . . 38
8.3 Closing Documents. . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Nonassignable Contracts. . . . . . . . . . . . . . . . . . . . 39
8.5 Possession . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 9
INDEMNIFICATION . . . . . . . . . . . . . . 40
9.1 Indemnification by Seller and Shareholders . . . . . . . . . . 40
9.2 Indemnification by Purchaser . . . . . . . . . . . . . . . . . 41
9.3 Method of Asserting Claims . . . . . . . . . . . . . . . . . . 41
ARTICLE 10
TERMINATION . . . . . . . . . . . . . . . 42
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . 43
10.3 Effect of Closing. . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 11
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . 43
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Mutual Assistance. . . . . . . . . . . . . . . . . . . . . . . 43
11.3 Press Release and Announcements. . . . . . . . . . . . . . . . 44
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED) PAGE
11.4 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.5 Further Transfers. . . . . . . . . . . . . . . . . . . . . . . 44
11.6 Transition Assistance. . . . . . . . . . . . . . . . . . . . . 44
11.7 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . 44
11.8 Non-Compete; Non-Solicitation. . . . . . . . . . . . . . . . . 45
11.9 Specific Performance . . . . . . . . . . . . . . . . . . . . . 46
11.10 Remittances . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.11 Best Efforts to Consummate Closing Transactions. . . . . . . . 46
11.12 Waiver of Compliance with Bulk Sales Laws. . . . . . . . . . . 47
11.13 Change of Seller's Name. . . . . . . . . . . . . . . . . . . . 47
11.14 Collection of Accounts Receivable. . . . . . . . . . . . . . . 47
11.15 Employees of Seller. . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 12
MISCELLANEOUS . . . . . . . . . . . . . . . 48
12.1 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . 48
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.5 No Strict Construction . . . . . . . . . . . . . . . . . . . . 50
12.6 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . 50
12.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.8 Complete Agreement . . . . . . . . . . . . . . . . . . . . . . 50
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 51
iv
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
LIST OF EXHIBITS
Exhibit A - Form of Escrow Agreement . . . . . . . . . . (Section 2.2(a))
Exhibit B - Opinion of Counsel to Seller and
Shareholders . . . . . . . . . . . . . . . . (Section 6.1(g))
Exhibit C - Opinion of Counsel to Purchaser. . . . . . . (Section 7.1(c))
Exhibit D - Closing Certificate of Seller and
Shareholders . . . . . . . . . . . . . . . . (Section 8.3(a)(i))
Exhibit E - Form of Bill of Sale and Assignment. . . . . (Section 8.3(a)(iii))
Exhibit F - Closing Certificate of Purchaser . . . . . . (Section 8.3(b)(iii))
Exhibit G - Form of Employment Agreement . . . . . . . . (Section 8.3(c))
Exhibit H - First Page of each of Product Catalogue
No. 96 and Battery Cable Application
Chart No. BC95 . . . . . . . . . . . . . . . (Section 11.8(a))
LIST OF DISCLOSURE SCHEDULES
Accounts Receivable Schedule . . . . . . . . . . . . . . (Section 1.1(a))
Affiliated Transactions Schedule . . . . . . . . . . . . (Section 3.20)
Closing Date Purchase Orders and Vendor Orders Schedule. (Section 6.1(m))
Compliance Schedule. . . . . . . . . . . . . . . . . . . (Section 3.21)
Condition of Tangible Assets Schedule. . . . . . . . . . (Section 3.8(f)
Consents Schedule. . . . . . . . . . . . . . . . . . . . (Section 3.16)
Contracts Schedule . . . . . . . . . . . . . . . . . . . (Section 3.12)
Developments Schedule. . . . . . . . . . . . . . . . . . (Section 3.7)
Employee Benefits Schedule . . . . . . . . . . . . . . . (Section 3.18)
Environmental Matters Schedule . . . . . . . . . . . . . (Section 3.22)
Insurance Schedule . . . . . . . . . . . . . . . . . . . (Section 3.19)
Leases Schedule. . . . . . . . . . . . . . . . . . . . . (Section 3.8(b))
Liabilities Schedule . . . . . . . . . . . . . . . . . . (Section 3.5)
Litigation Schedule. . . . . . . . . . . . . . . . . . . (Section 3.14)
Proprietary Rights Schedule. . . . . . . . . . . . . . . (Section 3.13)
Purchase Orders Schedule . . . . . . . . . . . . . . . . (Section 1.4(c))
Qualifications Schedule. . . . . . . . . . . . . . . . . (Section 3.1)
Restrictions Schedule. . . . . . . . . . . . . . . . . . (Section 3.3)
Tangible Property Schedule . . . . . . . . . . . . . . . (Section 1.1(e))
Tax Matters Schedule . . . . . . . . . . . . . . . . . . (Section 3.11)
Vendor Orders Schedule . . . . . . . . . . . . . . . . . (Section 1.4(d))
v
<PAGE>
INDEX OF DEFINITIONS
TERM PAGE
1933 Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1995 Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1998 Settlement Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1998 Excess Inventory Value . . . . . . . . . . . . . . . . . . . . . . . 9
1998 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
accredited investor . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Acquired Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
affiliated group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Cash Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Closing Date Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Effective Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Employment Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Escrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Escrowed Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Excess Inventory Value. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excess Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Excluded Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Indemnifying Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
vi
<PAGE>
INDEX OF DEFINITIONS
(CONTINUED)
TERM PAGE
Kuhlman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Kuhlman Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Latest Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Market Value Per Share. . . . . . . . . . . . . . . . . . . . . . . . . . 7
material adverse effect . . . . . . . . . . . . . . . . . . . . . . . . . 18
material adverse change . . . . . . . . . . . . . . . . . . . . . . . . . 18
multiemployer plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Net Asset Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Non-Competition Period. . . . . . . . . . . . . . . . . . . . . . . . . . 45
Nonassignable Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 40
Notifying Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Payment Date Financial Statements . . . . . . . . . . . . . . . . . . . . 34
Payment Date Net Asset Amount . . . . . . . . . . . . . . . . . . . . . . 10
Payment Date Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . 34
Payment Date Inventory Value. . . . . . . . . . . . . . . . . . . . . . . 13
PBGC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Permitted Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Premises Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Purchaser Indemnified Party . . . . . . . . . . . . . . . . . . . . . . . 41
Purchaser Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . 40
Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchaser Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
qualifying event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Related Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Republic. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Restricted Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Seller Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Seller Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . 41
Seller Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . 41
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Settlement Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
single employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
vi
<PAGE>
INDEX OF DEFINITIONS
(CONTINUED)
TERM PAGE
UCC Searches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Unpermitted Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . 36
Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Vendor Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
viii
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REORGANIZATION AND
ASSET ACQUISITION AGREEMENT
REORGANIZATION AND ASSET ACQUISITION AGREEMENT made as of September 20,
1996, (this "AGREEMENT") by and among KUHLMAN CORPORATION, a Delaware
corporation ("KUHLMAN"), COLEMAN CABLE SYSTEMS, INC., a Delaware corporation and
a wholly-owned subsidiary of Kuhlman ("PURCHASER"), WEB WIRE PRODUCTS, INC., a
Florida corporation ("SELLER") and HAROLD LOWENSTEIN and ALLAN R. WALCH, the
sole shareholders of Seller ("SHAREHOLDERS").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of manufacturing and
distributing certain wire products; and
WHEREAS, on the terms and subject to the conditions of this Agreement,
Purchaser desires to acquire from Seller, subject to certain related
liabilities, and Seller desires to transfer and sell to Purchaser, subject to
Purchaser assuming certain related liabilities, substantially all of the assets,
properties and business of Seller as a going concern (the "BUSINESS") in a
transaction intended to qualify as a reorganization described in Section
368(a)(1)(C) of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
PURCHASE AND TRANSFER OF ASSETS
AND PLAN OF REORGANIZATION
1.1 ACQUIRED ASSETS. On the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 8.1), Purchaser shall
acquire and purchase from Seller, and Seller shall sell, convey, assign,
transfer and deliver to Purchaser, all properties, assets, rights and interests
of every kind and nature, whether real or personal, tangible or intangible, and
wherever located and by whomever possessed, owned by Seller as of the Closing
Date related to or used in, or otherwise associated with, the Business,
including, without limitation, all of the following assets (but excluding all
Excluded Assets as defined in Section 1.3 below):
(a) except as provided in Section 1.3(b), all accounts and notes
receivable (whether current or noncurrent); a list, description and aging
of which as of June 30, 1996 is set forth on the "ACCOUNTS RECEIVABLE
SCHEDULE" heretofore delivered to Purchaser;
(b) all prepayments and prepaid expenses (including, without
limitation, prepaid insurance premiums) to the extent Purchaser shall
obtain the benefit thereof;
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(c) all inventories of finished products, work-in-progress and raw
materials to the extent set forth in Section 1.2 (the "INVENTORY") and all
packaging materials, labels and related supplies;
(d) all interests in real estate (including, without limitation,
land, buildings and improvements), whether owned in fee, leased or
otherwise;
(e) all interests in plant, machinery and equipment, fixtures,
fittings, furniture, automobiles, trucks, tractors, trailers and other
vehicles, tools, spare parts and supplies and other tangible personal
property, whether owned, leased or otherwise (including, without
limitation, items which have been fully depreciated or expensed), a
complete list of which as of June 30, 1996 is set forth on the "TANGIBLE
PROPERTY SCHEDULE" heretofore delivered to Purchaser;
(f) all insurance, insurance reserves and deposits (including,
without limitation, reserves, refunds and deposits relating to workmen's
compensation);
(g) all intangible assets and intellectual property (including,
without limitation, registered and unregistered trademarks, service marks
and trade names, trade dress and other names, marks and slogans, including
the names "WEB WIRE PRODUCTS," "WEB WIRE & CABLE MFG., CO." and "WEB WIRE &
CABLE MFG. CO.," and all variations and permutations thereof), all
publishing and distribution rights, and all associated goodwill; all
statutory, common law and registered copyrights; all patents, inventions,
shop rights, know-how, trade secrets and confidential information; and all
registration applications for any of the foregoing; together with all
rights to use all of the foregoing forever and all other rights in, to and
under the foregoing in all countries;
(h) all discoveries, improvements, processes, formulae (secret or
otherwise), data, confidential information, engineering, technical and shop
drawings, specifications and ideas, whether patentable or not, all licenses
and other similar agreements, and all drawings, records, books or other
indicia, however evidenced, of the foregoing;
(i) all rights existing under contracts, leases, licenses, permits,
supply and distribution arrangements, sales and purchase agreements and
orders, consignment arrangements, warranties, consents, orders,
registrations, privileges, franchises, memberships, certificates, approvals
or other similar rights and all other agreements, arrangements and
understandings;
(j) the right to receive mail and other communications addressed to
Seller (including, without limitation, mail and communications from
customers, suppliers, distributors, agents and others and accounts
receivable payments);
(k) all lists and records pertaining to customers, suppliers,
distributors, personnel and agents and all other books, ledgers, files,
documents, correspondence, plats, architectural plans, drawings and
specifications, computer software, computer data and business records of
every kind and nature;
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(l) all creative materials (including, without limitation,
photographs, films, art work, color separations and the like), advertising
and promotional materials and all other printed or written materials;
(m) all claims, refunds, causes of action, choses in action, rights
of recovery and rights of set-off of every kind and nature;
(n) all goodwill as a going concern and all other intangible
property;
(o) all interest in and to telephone numbers and all listings
pertaining to Seller in all telephone books and other directories; and
(p) all other property not referred to above which is either
(i) represented on Seller's Latest Balance Sheet (as defined in Section
3.4) or acquired by Seller thereafter (except for such property which has
been sold or otherwise disposed of in the ordinary course of business or
constitutes Excluded Assets), or (ii) shall be represented on Seller's
Closing Balance Sheet (as defined in Section 2.4).
For purposes of the Agreement, the term "ACQUIRED ASSETS" means all properties,
assets and rights which Seller shall convey to Purchaser or shall be obligated
to convey to Purchaser under this Agreement.
1.2 ACQUIRED INVENTORY.
(a) At Closing, Purchaser shall be deemed to have purchased the first
$700,000 of Inventory that it ships to its customers in the ordinary course
of business after the Closing (the "CLOSING DATE INVENTORY"). The Closing
Date Inventory shall be valued in accordance with Section 2.6 and shall be
included on the Closing Date Balance Sheet at such value.
(b) All Inventory in existence on the Closing Date in excess of the
Closing Date Inventory is referred to as the "EXCESS INVENTORY." The
Excess Inventory also shall be acquired as a part of the Acquired Assets,
shall be valued in accordance with Section 2.6 and shall be included on the
Closing Date Balance Sheet at such value. The value of the Excess
Inventory is referred to herein as the "EXCESS INVENTORY VALUE."
1.3 EXCLUDED ASSETS. Notwithstanding the foregoing, the following assets
(the "EXCLUDED ASSETS") are expressly excluded from the purchase and transfer
contemplated hereby and, as such, are not included in the Acquired Assets:
(a) all cash;
(b) all receivables and other amounts due Seller from any of its
shareholders or employees, all receivables due Seller from Northern
Automotive which as of the Closing have been outstanding for 180 or more
days and all other receivables due Seller
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<PAGE>
from any other account debtor which as of the Closing have been outstanding
for 150 or more days;
(c) income tax credits and refunds and future tax benefits based upon
Seller's activities prior to Closing;
(d) all rights to receive proceeds of insurance policies with respect
to any key man life insurance and any liabilities or obligations that
constitute Excluded Liabilities (as defined in Section 1.5) and arise out
of transactions entered into at or prior to the Closing, any action or
inaction at or prior to the Closing or any state of fact existing at or
prior to the Closing regardless of when asserted;
(e) the right to receive mail and other communications addressed to
Seller relating to any of the Excluded Assets or the Excluded Liabilities;
(f) the minute books, capital stock records, articles of
incorporation, by-laws and corporate seal of Seller, together with annual
and other corporate reports filed with the State of Florida and other
states in which Seller is qualified to do business, other documents and
correspondence that relate to Seller's corporate organization and
maintenance thereof, and tax returns and records relating to state and
federal income and other taxes;
(g) all rights of Seller and its shareholders with respect to the
claims, refunds, causes of action, choses in action, rights of recovery,
rights of set-off and all other rights and assets of every kind and nature
related to the Excluded Liabilities;
(h) all title insurance policies with respect to real estate included
in the Acquired Assets; and
(i) all consideration to be received by Seller from Purchaser and all
other rights of Seller and Shareholders under this Agreement.
1.4 ASSUMPTION OF LIABILITIES. Subject to the conditions specified in
this Agreement, on the Closing Date, Purchaser shall assume and agree to pay,
defend, discharge and perform as and when due only the following liabilities and
obligations of Seller (the "ASSUMED LIABILITIES"):
(a) all trade payables incurred in the ordinary course of business to
the extent reflected on the liability side of Seller's Closing Balance
Sheet;
(b) obligations of continued performance under the agreements,
leases, contracts and commitments listed on the "LEASES SCHEDULE" or the
"CONTRACTS SCHEDULE" (excluding the Excluded Contracts (as defined in
Section 1.5(j)) and any liability or obligation for any breach thereof
occurring prior to the Closing Date), but only to the extent that Seller's
rights and benefits under such agreements, leases, contracts and
4
<PAGE>
commitments have been validly assigned to Purchaser pursuant to this
Agreement (collectively, the "CONTRACTS");
(c) obligations of continued performance under executory purchase
orders with customers relating to the sale of products entered into in the
ordinary course of business (the "PURCHASE ORDERS") and not in violation of
any representations, warranties or covenants contained herein, but only to
the extent that Seller's rights and benefits under such Purchase Orders
have been validly assigned to Purchaser pursuant to this Agreement. A list
and description of all such Purchase Orders as of June 30, 1996 are set
forth on the "PURCHASE ORDERS SCHEDULE" heretofore delivered to Purchaser;
(d) obligations of continued performance under executory vendor
purchase orders for the purchase of supplies and raw materials entered into
the ordinary course of business and under which purchase orders the goods
subject thereto have not been received by Seller prior to the Closing Date
(the "VENDOR ORDERS") and which are not in violation of any
representations, warranties or covenants contained herein, but only to the
extent that Seller's rights and benefits under such Vendor Orders have been
validly assigned to Purchaser pursuant to this Agreement. A list and
description of all such Vendor Orders as of June 30, 1996 are set forth on
"VENDOR ORDERS SCHEDULE" heretofore delivered to Purchaser;
(e) accrued payroll, payroll related taxes and vacation and sick pay
of employees of Seller generated in the ordinary course of business to the
extent reflected on the liability side of Seller's Closing Balance Sheet;
(f) indebtedness for money borrowed from Republic National Bank
("REPUBLIC") in a principal amount not in excess of $900,000 and accrued
interest thereon to the extent reflected on the liability side of Seller's
Closing Balance Sheet, which indebtedness shall be satisfied by Purchaser
concurrently with the Closing; and
(g) liability for warranty claims by purchasers of products from
Seller (but not liability for injury to person, damage to property (other
than the products sold by Seller) or other loss) to the extent reflected on
the liability side of Seller's Closing Balance Sheet.
1.5 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser shall not assume or be liable for any of
the following liabilities or obligations of Seller (the "EXCLUDED LIABILITIES")
and none of the following liabilities or obligations shall be "ASSUMED
LIABILITIES" for purposes of this Agreement:
(a) any of Seller's liabilities or obligations under this Agreement;
(b) any of Seller's liabilities or obligations for expenses, taxes or
fees incident to or arising out of the negotiation, preparation, approval
or authorization of this Agreement or the consummation of the transactions
contemplated hereby, including, without limitation, all attorneys' and
accountants' fees and sales, use and transfer taxes;
5
<PAGE>
(c) any of Seller's liabilities or obligations for indebtedness for
borrowed money, indebtedness secured by liens on its assets or guarantees
of any of the foregoing, (including all such amounts owing to any
shareholder of Seller), except as set forth in Section 1.4(f);
(d) any of Seller's obligations or liabilities which relate to or
arise out of any of the Benefit Plans (as defined in Section 3.18(a)),
including without limitation, liabilities under Section 4980B or Part 6 of
Title I of ERISA (as defined in Section 3.18(a)) in connection with any
"QUALIFYING EVENT" (as defined in Section 4980(f)(3)) of the Code) which
occurs prior to or on the Closing;
(e) any of Seller's liabilities or obligations with respect to any
amount of federal, state, local or foreign taxes, including interest,
penalties and additions to such taxes, which are imposed on or measured by
such Seller's income or gross receipts for any period prior to or after the
Closing Date, including, without limitation, by reason of the transfer and
sale of the Acquired Assets (PROVIDED, HOWEVER, that it is specifically
understood that tax obligations arising after the Closing Date attributable
to Purchaser's operation of the Acquired Assets after the Closing Date
shall be the responsibility of the Purchaser);
(f) any of Seller's liabilities or obligations arising by reason of
any violation or alleged violation of any federal, state, local or foreign
law or any requirement of any governmental authority (including without
limitation applicable environmental protection and occupational health and
safety laws and regulations and the Americans With Disabilities Act) or by
reason of any breach or alleged breach of any agreement, contract, lease,
commitment, instrument, judgment, order or decree, regardless of when any
such violation or breach is asserted;
(g) any of Seller's liabilities or obligations which would not have
existed had each of Seller's representations and warranties been true as of
the Closing Date;
(h) any of Seller's liabilities or obligations to Seller's present or
former employees or anyone employed by Seller prior to the Closing Date, or
any labor organization representing any of them, and which are attributable
either to events on or prior to the Closing Date or to any acts or
omissions of Seller prior to, on or after the Closing Date, except as
specifically set forth in Section 1.4(e);
(i) any of Seller's liabilities or obligations relating to claims for
breach of warranty, personal injury, damage to property or other loss based
upon or arising out of the sale and distribution of products or the
provision of services by Seller, except as set forth in Section 1.4(g);
(j) any of Seller's liabilities or obligations under that certain
letter agreement dated November 27, 1995 from Les Green to Seller, the GMAC
Financial Services Lease Agreement dated June 27, 1994 between Seller and
Daniel E. Burns Oldsmobile Inc. and
6
<PAGE>
the New Vehicle Lease Agreement dated August 27, 1993 between Seller and
Potamkin Chrysler Inc. (collectively, the "EXCLUDED CONTRACTS"); and
(k) any other liability or obligation of Seller not expressly assumed
by Purchaser under Section 1.4, including, without limitation, any
liabilities or obligations that are not reflected on the Closing Balance
Sheet (except as otherwise provided in Sections 1.4(b), (c) and (d)) and
any liabilities or obligations arising out of transactions entered into at
or prior to the Closing, any action or inaction at or prior to the Closing
or any state of fact existing at or prior to the Closing, regardless of
when asserted.
ARTICLE 2
CONSIDERATION FOR THE ACQUIRED ASSETS
2.1 STOCK CONSIDERATION. In addition to the assumption of the Assumed
Liabilities, the aggregate consideration for the Acquired Assets (the "STOCK
CONSIDERATION") shall be a number of shares of common stock, $1.00 par value per
share (together with the associated preferred stock purchase rights), of Kuhlman
(collectively, the "KUHLMAN COMMON STOCK") with an aggregate "MARKET VALUE PER
SHARE" (as defined below) equal to Five Million Dollars ($5,000,000), subject to
adjustment in accordance with this Article 2. For purposes hereof, "MARKET
VALUE PER SHARE" shall be deemed to equal the arithmetic average of the
composite closing prices per share of Kuhlman Common Stock on the New York Stock
Exchange on the fifteen (15) consecutive trading days immediately preceding the
calendar day immediately preceding the Closing Date.
2.2 PAYMENT OF STOCK CONSIDERATION.
(a) On the Closing Date, Purchaser shall pay the Stock Consideration,
as adjusted pursuant to Section 2.3, by:
(i) delivering or causing to be delivered to Seller a
certificate or certificates registered in the name of Seller and
evidencing a number of shares of Kuhlman Common Stock equal to the
greater of:
(A) the difference between (i) the quotient of such Stock
Consideration divided by the Market Value Per Share and (ii) the
quotient of the Excess Inventory Value divided by the Market
Value Per Share; and
(B) fifty percent (50%) times the quotient of such Stock
Consideration divided by the Market Value Per Share; and
(ii) by depositing or causing to be deposited in escrow (the
"ESCROW"), a certificate or certificates registered in the name of
Seller and evidencing the number of shares of Kuhlman Common Stock
equal to the difference between (A) the quotient of such Stock
Consideration divided by the Market Value Per Share,
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and (B) the number of shares of Kuhlman Common Stock to be delivered
pursuant to Section 2.2(a)(i) above (the "ESCROWED SHARES") to be held
subject to the terms of the Escrow Agreement in the form of Exhibit A
hereto (the "ESCROW AGREEMENT") which shall be executed by Purchaser,
Seller and Shareholders and the escrow agent (the "ESCROW AGENT") at
or prior to Closing.
(b) All dividends, liquidating dividends, distributions of property
(other than cash dividends and interest or other earnings derived from any
securities or other property into which the Escrowed Shares may be
converted or exchanged) or return of capital paid with respect to the
Escrowed Shares shall be held in Escrow. All non-liquidating cash
dividends paid with respect to the Escrowed Shares and interest or other
earnings derived from any securities or other property into which the
Escrowed Shares may be converted or exchanged shall be paid to Seller
(collectively, "CASH DISTRIBUTIONS"). All non-cash dividends,
distributions, securities and property which are paid with respect to such
Escrowed Shares or into which such Escrowed Shares are converted or
exchanged and which are required to be held in Escrow by this Section
2.2(b) shall be distributed to the party entitled to such Escrowed Shares
at the time any such Escrowed Shares are distributed from Escrow. Seller
shall be entitled to vote any Escrowed Shares so long as they remain in
Escrow. The Escrowed Shares shall be for the exclusive benefit of the
parties hereto, and no other person or entity shall have any right, title
or interest therein. Any claim of any person to any Escrowed Shares shall
be subject and subordinate to the prior right thereto of the parties
hereto.
(c) Commencing with the calendar quarter ending on December 31, 1996
and on the last day of each of the next succeeding calendar quarters until
March 31, 1998, inclusive, there shall be released from Escrow to Seller a
number of shares of Kuhlman Common Stock equal to:
(i) the original number of Escrowed Shares times 1/8, less
(ii) the quotient of (A) the aggregate amount of Cash
Distributions paid to Seller with respect to 1/4 of the original
number of Escrowed Shares between (I) the Closing Date or the end of
the immediately preceding calendar quarter, as may be appropriate, and
(II) December 31, 1996 or the end of such succeeding calendar quarter,
as may be appropriate, divided by (B) the Market Value Per Share.
(d) (i) As of June 30, 1998 (the "1998 VALUATION DATE"), a physical
inventory of the Excess Inventory that shall not have been sold by
Purchaser prior to such date shall be taken by Purchaser.
Representatives of Seller shall have the right to observe and check
such inventory. Such Excess Inventory shall be valued at its Excess
Inventory Value as of the Closing Date (i.e. the lower of original
cost or fair market value as of the Closing Date).
(ii) Purchaser shall prepare a settlement sheet as of the 1998
Valuation Date, which sheet shall list the number of each item of
Excess Inventory on hand
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as of the 1998 Valuation Date and the value thereof determined as
aforesaid (the "1998 SETTLEMENT SHEET"). The 1998 Settlement Sheet
shall be signed by representatives of Purchaser who shall attest to
the accuracy of the physical count and the valuation of such Excess
Inventory. The 1998 Settlement Sheet shall be subject to a review by
Seller or, at its option and expense, by an independent certified
public accounting firm of its choice.
(iii) Purchaser shall deliver the 1998 Settlement Sheet to
Seller within thirty (30) days after the 1998 Valuation Date. Seller
shall be deemed to have accepted the results of the physical inventory
and the valuation of the Excess Inventory as of the 1998 Valuation
Date unless within fifteen (15) days after the delivery of the
Settlement Sheet to Seller, Seller gives written notice to Purchaser
of Seller's objection to any item thereon. If Seller gives such
notice of objection, Purchaser and Seller shall attempt in good faith
to negotiate a resolution to the dispute as promptly as possible. If
Purchaser and Seller have not been able to agree upon a resolution of
the dispute within fifteen (15) days after the date Seller gave such
written notice of objection to Purchaser, any remaining disputes shall
be resolved by an accounting firm selected and paid for in the same
manner as provided in Section 2.4. The final determination of the
value of the Excess Inventory as of the 1998 Valuation Date is
referred to as the "1998 EXCESS INVENTORY VALUE."
(iv) Purchaser shall not be obligated to sell any Excess
Inventory at less than Purchaser's normal profit level or to take any
other action out of the ordinary course of business to sell any Excess
Inventory.
(e) Within thirty (30) days after the final determination of the 1998
Excess Inventory Value, there shall be released from Escrow to Seller a
number of Escrowed Shares equal to the difference between (i) the remaining
number of Escrowed Shares (exclusive of any Escrowed Shares which are the
subject of any dispute under Section 7(b) or (c) of the Escrow Agreement)
and (ii) the sum of the number of Escrowed Shares in (A) and (B) below:
(A) (I) the quotient of the 1998 Excess Inventory Value divided
by (II) the Market Value Per Share; plus
(B) (I) the quotient of the aggregate amount of Cash
Distributions paid to Seller with respect to the number of Escrowed
Shares determined pursuant to (A) above between the Closing and the
date of the final distribution of the Escrowed Shares from Escrow
pursuant to this Section 2.2(e) or which Cash Distributions have a
record date on or prior to and a payment date subsequent to the date
of said final distribution of the Escrowed Shares from Escrow, divided
by (II) the Market Value Per Share.
All remaining Escrowed Shares (i.e., the sum of the number of Escrowed
Shares in (A) and (B) above) shall be released from Escrow to Purchaser;
provided, however, that in the event that the quotient of such remaining
Escrowed Shares divided by the Market
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Value Per Share is $10,000 or less, Seller shall pay such amount in cash to
Purchaser within thirty (30) days after the final determination of the 1998
Excess Inventory Value and upon receipt of such cash by Purchaser such
remaining Escrowed Shares shall be released to Seller. For a period of
thirty (30) days after the final determination of the 1998 Excess Inventory
Value, Seller shall have the right, at Seller's expense, to pick up from
Purchaser all Excess Inventory which shall not have been sold prior to
June 30, 1998 and to dispose of such Excess Inventory in a manner that does
not violate Section 11.8 of this Agreement. If Seller fails to pick up
such Excess Inventory within such time period, Purchaser shall have the
right to retain or dispose of such Excess Inventory as it deems fit without
liability of any kind to Seller or Shareholders.
(f) In the event Purchaser shall sell all of the Excess Inventory
prior to June 30, 1998, then within thirty (30) days after the occurrence
of such event all of the remaining Escrowed Shares shall be released from
Escrow to Seller.
(g) In the event the number of Escrowed Shares to be released from
Escrow at any time includes a fraction of an Escrowed Share, such fraction
shall be rounded to the nearest whole Escrowed Share.
(h) For purposes of this Section 2.2, all references to Seller shall
mean the Shareholders after Seller distributes the Stock Consideration
(including, without limitation, its interest in the Escrowed Shares) to its
Shareholders as contemplated by this Agreement.
2.3 ADJUSTMENTS TO STOCK CONSIDERATION.
(a) No later than the date hereof, Seller shall notify Purchaser in
writing of its good faith determination of the Net Asset Amount (as defined
in Section 2.5 below) as of August 31, 1996 based upon the Payment Date
Balance Sheet (as defined in Section 5.3) and certain other financial
information, and subject to the provisions of Section 2.5 below (the
"PAYMENT DATE NET ASSET AMOUNT"). At the Closing, the Stock Consideration
shall be adjusted as follows:
(i) if the Payment Date Net Asset Amount is greater than
$2,960,400, the Stock Consideration shall be increased by the amount
of such excess; or
(ii) if the Payment Date Net Asset Amount is less than
$2,960,400, the Stock Consideration shall be decreased by the amount
of such deficiency; and
(iii) if the Payment Date Inventory Value (as defined in
Section 2.6) is less than $3,400,000, the Stock Consideration shall be
decreased by the amount of such deficiency.
(b) Upon the final determination of the Net Asset Amount pursuant to
Section 2.4 below (including without limitation the value of the Inventory
as of the Closing Date), Purchaser and Seller shall recompute the Stock
Consideration based upon the Net Asset Amount and the value of the
Inventory as finally determined, and within three (3)
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business days after such final determination, Purchaser or Seller, as the
case may be, shall pay the other party any amount due such party as
follows: (i) if Seller is due such amount, Purchaser shall deliver or
cause to be delivered to Seller and Escrow (in the same proportion as set
forth in Section 2.2(a)(i)) a number of shares of Kuhlman Common Stock
equal to such amount divided by the Market Value Per Share; and (ii) if
Purchaser is due such amount, Seller shall deliver or cause to be delivered
to Purchaser a number of shares of Kuhlman Common Stock equal to such
amount divided by the Market Value Per Share.
2.4 PROCEDURES FOR FINAL DETERMINATION OF NET ASSET AMOUNT. Within
fifteen (15) days after the Closing Date, Seller shall prepare and deliver to
Purchaser at Seller's expense an unaudited balance sheet for Seller as of the
opening of business on the Closing Date, certified by Seller and Shareholders,
and compiled and reviewed by Seller's independent public accountants, together
with a statement setting forth Seller's determination of the Net Asset Amount.
Such balance sheet and determination of the Net Asset Amount shall be subject to
review by Purchaser or, at its option and expense, by an independent certified
public accounting firm of its choice. Within thirty (30) days after receipt
from Seller of such balance sheet and determination of the Net Asset Amount,
Purchaser shall deliver to Seller a detailed written statement describing its
objections, if any, to such balance sheet and determination of the Net Asset
Amount. If Purchaser does not raise any objections within the 30-day period,
the unaudited balance sheet and Seller's determination of the Net Asset Amount
shall become final and binding upon all parties. Upon request by Purchaser at
any time after receipt of the aforementioned balance sheet and statement, Seller
shall make available to Purchaser and its accountants and other representatives
the work papers used in preparing the balance sheet and in determining Seller's
calculation of the Net Asset Amount and such other documents as Purchaser may
reasonably request in connection with its review of the Net Asset Amount. If
Purchaser does raise any objections, Seller and Purchaser shall use reasonable
efforts to resolve any such disputes. If a final resolution is not obtained
within thirty (30) days after Purchaser shall have submitted its objections to
Seller, any remaining disputes shall be resolved by an accounting firm mutually
agreeable to Purchaser and Seller. If Purchaser and Seller are unable to
mutually agree on such an accounting firm within five (5) days after the
expiration of said 30-day period, a "BIG-SIX" accounting firm shall be selected
by lot after elimination of one firm designated as objectionable by each of
Purchaser and Seller. The determination of the accounting firm so selected
shall be set forth in writing and shall be conclusive and binding upon the
parties, and the fees and expenses of such accounting firm shall be paid
one-half by Purchaser and one-half by Seller. The final balance sheet prepared
in accordance with this Section 2.4 and Section 2.5 below and the related
statement setting forth the final determination of the Net Asset Amount are
referred to as the "CLOSING BALANCE SHEET."
2.5 NET ASSET AMOUNT DEFINITION. "NET ASSET AMOUNT" as of any date shall
be the excess of Seller's assets (other than the Excluded Assets) at such time
over Seller's liabilities (other than the Excluded Liabilities) at such time.
The Closing Balance Sheet shall be prepared, and the Net Asset Amount shall be
determined, in accordance with generally accepted accounting principles applied
in a manner consistent with those used in preparing the Seller's balance sheet
as of December 31, 1995 (the "1995 BALANCE SHEET"); PROVIDED that (a) all proper
accruals and reserves shall be recorded (including, but not limited to, vacation
and sick pay, customer rebate, product return and commission accruals, bad debt
reserves, warranty reserves, taxes and utility
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charges prorated through the Closing Date), (b) no assets shall be included in
excess of the lower of their cost or fair market value, (c) no assets which have
been fully expensed or depreciated on the books and records of Seller in
accordance with past practice shall be included, (d) no prepaid expenses,
intangible assets or other assets shall be included if they shall not benefit
Purchaser, (e) except as otherwise provided in this Section 2.5, to the extent
that the 1995 Balance Sheet was not prepared in accordance with generally
accepted accounting principles (based upon authoritative accounting
pronouncements and literature in effect on the Closing Date) and as a result the
Net Asset Amount would otherwise be overstated or understated as of the Closing
Date, the Closing Balance Sheet shall be prepared and the Net Asset Amount
shall be determined in accordance with generally accepted accounting principles
as in effect on the Closing Date, (f) all accounting entries (including all
liabilities and accruals) shall be taken into account regardless of their amount
and all errors and omissions shall be corrected and all adjustments made, and
(g) all Inventory shall be valued in accordance with Section 2.6, based upon a
physical inventory as of the Closing Date, unless on or prior to the Closing
Date Purchaser and Seller agree upon an alternative methodology to value the
Inventory as of the Closing Date.
2.6 VALUATION OF INVENTORY.
(a) On July 31, 1996, or such other date or dates mutually agreed to
by Seller and Purchaser ("VALUATION DATE"), a physical inventory of the
Inventory described in Section 1.1(c) which satisfies the requirements of
Section 3.10 shall be taken by Seller and observed and checked by
representatives of Purchaser. The Inventory shall be valued at the lower
of original cost or fair market value.
(b) Seller shall prepare a settlement sheet as of the Valuation Date,
which sheet shall list the number of each item of Inventory on hand as of
the Valuation Date and the value thereof determined as aforesaid (the
"SETTLEMENT SHEET"). The Settlement Sheet shall be signed by the
representatives of Seller who shall attest to the accuracy of the physical
count and the valuation of such Inventory. The Settlement Sheet shall be
subject to a review by Purchaser or, at its option and expense, by an
independent certified public accounting firm of its choice.
(c) Seller shall deliver the Settlement Sheet to Purchaser no later
than the date hereof. Purchaser shall be deemed to have accepted the
results of the physical inventory and the valuation of the Inventory as of
the Valuation Date unless within fifteen (15) days after the delivery of
the Settlement Sheet to Purchaser, Purchaser gives written notice to Seller
of Purchaser's objection to any item thereon. If Purchaser gives such
notice of objection, Purchaser and Seller shall attempt in good faith to
negotiate a resolution to the dispute as promptly as possible. If
Purchaser and Seller have not been able to agree upon a resolution of the
dispute within fifteen (15) days after the date Purchaser gave such written
notice of objection to Seller, any remaining disputes shall be resolved by
an accounting firm selected and paid for in the same manner as provided in
Section 2.4. The final determination of the value of the Inventory as of
the Valuation Date is referred to as the "PAYMENT DATE INVENTORY VALUE."
2.7 [INTENTIONALLY DELETED]
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2.8 REGISTRATION OF KUHLMAN COMMON STOCK.
(a) REGISTRATION OF KUHLMAN COMMON STOCK. Kuhlman shall cause to be
prepared and filed with the Securities and Exchange Commission (the
"COMMISSION") a Registration Statement on Form S-3 as soon as reasonably
practicable after the date hereof, pursuant to which Kuhlman shall cause to
be requested that the Kuhlman Common Stock constituting the Stock
Consideration be registered for resale by Shareholders after the required
distribution of the Kuhlman Common Stock by Seller to Shareholders pursuant
to Seller's Plan of Reorganization, and shall use its reasonable best
efforts to cause such registration to become effective as soon as is
reasonably practicable (the "REGISTRATION STATEMENT"). Prior to filing
with the Commission, Shareholders shall receive a copy of the Registration
Statement for review, and Shareholders shall represent and warrant to
Purchaser that the information contained in the Registration Statement
concerning Shareholders and Shareholders's intended method of disposition
of such Kuhlman Common Stock is true, complete and correct.
(b) FURNISHING INFORMATION. Shareholders shall furnish to Purchaser
such information regarding Shareholders and Shareholders' intended method
of disposition of such Kuhlman Common Stock, as shall be reasonably
requested by Purchaser in order to effect the registration of such Kuhlman
Common Stock.
(c) PROSPECTUS REQUIREMENTS. Shareholders hereby covenant with
Purchaser that Shareholders shall promptly advise Purchaser of any changes
in the information concerning Shareholders contained in the Registration
Statement and that Shareholders shall not make any sale of such Kuhlman
Common Stock pursuant to the Registration Statement without complying with
the prospectus delivery requirements of the Securities Act of 1933 (the
"1933 ACT"). Shareholders acknowledge that occasionally there may be times
when the use of the prospectus forming a part of the Registration Statement
shall have to be suspended until such time as an appropriate amendment to
the Registration Statement has been filed and declared effective by the
Commission, the relevant prospectus has been appropriately supplemented or
until such time as an appropriate report has been filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended. Shareholders
covenant that Shareholders shall not sell any such Kuhlman Common Stock
pursuant to any such prospectus during the period commencing at the time at
which Purchaser gives Shareholders notice of the suspension of the use of
said prospectus and ending at the time Purchaser gives notice that
Shareholders may thereafter effect sales pursuant to said prospectus.
Neither Kuhlman nor Purchaser shall have any liability to Seller or
Shareholders for any changes in the value of the Kuhlman Common Stock that
may occur by reason of such suspension. Furthermore, neither Kuhlman nor
Purchaser shall have any liability to Seller or Shareholders by reason of
any changes that may occur in the value of the Kuhlman Common Stock for any
other reason, that Kuhlman or Purchaser would not otherwise have under
applicable Securities Laws in the absence of this Agreement.
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(d) REGISTRATION RIGHTS.
(i) In order to permit the disposition of such Kuhlman Common
Stock, Purchaser agrees (A) to use its best efforts to cause the
Registration Statement to be kept continuously effective (including by
causing to be filed amendments and supplements thereto) for a period
of thirty (30) months after the Closing Date (other than during
reasonable periods of time when the effectiveness of the Registration
Statement is required to be suspended under the 1933 Act or other
applicable securities laws) or the sale by Shareholders of all of such
Kuhlman Common Stock (of which event Shareholders agree promptly to
notify Purchaser), whichever is earlier (collectively, the "EFFECTIVE
PERIOD"), and (B) to cause to be prepared and filed with the
Commission, as soon as reasonably practicable, such amendments and
supplements to the Registration Statement as may be necessary to keep
the Registration Statement effective continuously during the Effective
Period.
(ii) During the Effective Period, Purchaser agrees to cause the
Registration Statement and the related prospectus, and any amendment
or supplement thereto, as of the effective date of such Registration
Statement, amendment or supplement, (A) to comply in all material
respects with the applicable requirements of the 1933 Act and the
rules and regulations promulgated by the Commission thereunder, and
(B) not to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, other than information
confirmed by Shareholders pursuant to Section 2.8(b) or statements or
omissions made in reliance upon and in conformity with information
furnished to Purchaser in writing by or on behalf of Shareholders
expressly for use in the Registration Statement and the related
prospectus, or any amendment or supplement thereto.
(iii) In connection with the Registration Statement,
Purchaser agrees as soon as reasonably practicable:
(A) to furnish to Shareholders such number of copies of the
Registration Statement, each amendment and supplement thereto,
and prospectus included in the Registration Statement and such
other related documents as Shareholders may reasonably request;
(B) to notify Shareholders promptly of any request by the
Commission that the Registration Statement or prospectus forming
a part thereof be amended or supplemented;
(C) to advise Shareholders after Purchaser receives notice
or otherwise obtains knowledge of the issuance of any order by
the Commission suspending the effectiveness of the Registration
Statement or any amendment or supplement thereto or of the
initiation or threatening of any proceeding for that purpose, and
promptly use its reasonable best
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efforts to prevent the issuance of any stop order or to obtain
its withdrawal promptly if such stop order should be issued; and
(D) to notify Shareholders at any time when a prospectus
relating to the Registration Statement is required to be
delivered under the 1933 Act, of the occurrence of any event
known to Purchaser as a result of which the Registration
Statement contains an untrue statement of material fact or omits
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and
cause to be prepared a supplement or amendment to the
Registration Statement so that the Registration Statement shall
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) INDEMNIFICATION.
(i) Purchaser agrees to indemnify, defend and hold harmless
Shareholders from and against all loss, damages, liabilities,
expenses, costs, fees and disbursements of counsel (including the
reasonable fees and expenses of legal counsel to Shareholders), and
actions to which they may become subject, under the 1933 Act or
otherwise, insofar as such loss, damage, liability, expense or claim
(or action in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus contained
therein (or any amendment or supplement thereto) or arises out of or
is based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements in any thereof not misleading, and will reimburse
Shareholders and such other persons for any reasonable legal or any
other expenses incurred in connection with investigating or defending
any such action or claim, except insofar as the same may have been
caused by any untrue statement or omission contained in the
information confirmed by Shareholders pursuant to Section 2.8(b) or
based upon information furnished to Purchaser in writing by or on
behalf of Shareholders expressly for use therein.
(ii) Shareholders, jointly and severally, agree to indemnify,
defend and hold harmless Kuhlman, Purchaser and their respective
officers, directors, affiliates, agents, employees, stockholders and
controlling persons (within the meaning of Section 15 of the 1933 Act)
from and against all loss, damages, liabilities, expenses, costs, fees
and disbursements of counsel (including the reasonable fees and
expenses of legal counsel to Kuhlman, Purchaser and any such other
person), and actions to which they may become subject, under the 1933
Act or otherwise, insofar as such loss, damage, liability, expense or
claim (or action in respect thereof) arises out of or is based upon
(A) any untrue statement of a material fact contained in any final
prospectus contained in the Registration Statement (or any amendment
or supplement thereto) or which arises out of or is based upon any
omission to state therein a material fact required to
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be stated therein or necessary to make the statement in any thereof
not misleading, to the extent that such untrue statement or omission
is contained in the information confirmed by Shareholders pursuant to
Section 2.8(b) or is made in reliance upon or in conformity with
information furnished in writing by or on behalf of Shareholders
expressly for inclusion in the Registration Statement or prospectus
contained therein (or any amendment or supplement thereto); (B) the
failure by Shareholders to comply with the covenants contained in
Section 2.8(c) above; and (C) the sale of any such Kuhlman Common
Stock by Shareholders in violation of the registration or
qualification requirements of any applicable blue sky or securities
laws of any jurisdiction within the United States of America or Puerto
Rico (other than as a result of the failure of Kuhlman to maintain the
listing of Kuhlman Common Stock on the New York Stock Exchange); and
shall reimburse Kuhlman and Purchaser and such other persons for any
reasonable legal or any other expenses incurred in connection with
investigating or defending any such action or claim.
(f) FEES AND EXPENSES OF REGISTRATION. Purchaser shall pay all
expenses and fees incident to the performance of its obligations in
Sections 2.8(a), (c) and (d) other than underwriting discounts and broker
or dealer commissions and fees and expenses of counsel or other advisors to
Shareholders.
(g) LEGEND. Until the Registration Statement shall have become
effective, the certificates or other documents evidencing such Kuhlman
Common Stock (including those issued at any time in exchange or
substitution thereof) shall be subject to stop transfer instructions and
shall bear a legend substantially in the following form:
"The securities represented hereby have not been registered
under the Securities Act of 1933 or under the securities
laws of any state or other jurisdiction (together, the
"SECURITIES LAWS") and may not be offered for sale, sold or
otherwise transferred or encumbered in the absence of
compliance with such Securities Laws and until the issuer
thereof shall have received from counsel acceptable to it a
written opinion reasonably satisfactory to it that the
proposed disposition will not violate any applicable
Securities Laws."
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF SELLER AND SHAREHOLDERS
As an inducement to Kuhlman and Purchaser to enter into this Agreement,
Seller and Shareholders hereby, jointly and severally, represent and warrant to
Purchaser (and, with respect to Section 3.23 below, to Kuhlman) as of the date
hereof and as of the Closing Date that:
3.1 ORGANIZATION AND POWER. Seller is a corporation duly organized,
validly existing and in good standing under the laws of Florida, and Seller is
qualified to do business as a foreign corporation and is in good standing in the
jurisdictions specified on the "QUALIFICATIONS
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SCHEDULE" heretofore delivered to Purchaser, which are all jurisdictions in
which the ownership of properties or the conduct of business requires it to be
so qualified. Seller has all requisite power and authority and all material
licenses, permits and other authorizations necessary to own and operate its
properties and to carry on its businesses as now conducted. The copies of the
articles of incorporation and by-laws of Seller which have been previously
furnished to Purchaser reflect all amendments made thereto at any time prior to
the date of this Agreement are correct and complete in all material respects and
shall not be amended prior to the Closing Date. On the date hereof,
Shareholders own, and on the Closing Date shall own, beneficially and of record
in the aggregate all of the issued and outstanding shares of capital stock of
Seller.
3.2 SUBSIDIARIES. Seller owns no stock, partnership interest, joint
venture interest or other security or interest in any other corporation,
organization or entity.
3.3 AUTHORIZATION; NO BREACH. Each Shareholder has the legal capacity,
power and right to enter into and perform this Agreement and the other
agreements contemplated hereby. The execution, delivery and performance of this
Agreement and the other agreements contemplated hereby and the transactions
contemplated hereby and thereby have been duly and validly authorized by Seller.
No other corporate act or proceeding on the part of Seller, its Board of
Directors or its shareholders is necessary to authorize the execution, delivery
or performance of this Agreement, any other agreement contemplated hereby or the
consummation of the transactions contemplated hereby or thereby. This Agreement
has been duly executed and delivered by Seller and each Shareholder, and this
Agreement constitutes and the other agreements contemplated hereby upon
execution and delivery by Seller and/or each Shareholder shall each constitute,
a valid and binding obligation of Seller and/or each Shareholder who is a party
thereto, enforceable in accordance with its terms. Except as set forth on the
"RESTRICTIONS SCHEDULE" heretofore delivered to Purchaser, the execution,
delivery and performance of this Agreement by Seller and each Shareholder and
the consummation of the transactions contemplated hereby and thereby do not and
shall not (a) conflict with or result in any breach of any of the provisions of,
(b) constitute a default under, result in a violation of, or cause the
acceleration of any obligation under, (c) result in the creation of any lien,
security interest, charge or encumbrance upon any of the Acquired Assets under,
or (d) require any authorization, consent, approval, exemption or other action
by or notice to any court or other governmental body under, the provisions of
Seller's articles of incorporation or by-laws or any indenture, mortgage, lease,
loan agreement or other agreement (other than the loan agreement with Republic)
or instrument to which Seller or either Shareholder is bound or affected, or
any law, statute, rule, regulation, judgement, order or decree to which Seller
or either Shareholder is subject or by which any of the Acquired Assets is
bound.
3.4 FINANCIAL STATEMENTS. Seller has furnished Purchaser with copies of
(a) its unaudited balance sheet as of June 30, 1996 ("LATEST BALANCE SHEET") and
the related unaudited financial statements for the six-month period then ended
and (b) its reviewed balance sheets as of December 31, 1995 and December 31,
1994 and the related reviewed financial statements for the fiscal years then
ended. Each of the foregoing financial statements has been and the Payment Date
Financial Statements shall be based upon the information contained in Seller's
books and records (which are and shall be accurate and complete in all material
respects) and fairly presents and shall fairly present the financial condition
and results of operations of Seller as of the times and for the periods referred
to therein, and such financial statements contain and
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shall contain proper accruals and adequate reserves and have been and shall be
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods indicated, except as otherwise noted
therein.
3.5 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing, Seller shall
have no material liabilities or obligations whether accrued, absolute,
contingent, unliquidated or otherwise, whether or not known to Seller or either
Shareholder, whether due or to become due, arising out of transactions entered
into at or prior to the Closing, or any action or inaction at or prior to the
Closing, or any state of facts existing at or prior to the Closing, regardless
of when any such liability or obligation is asserted, including, without
limitation, taxes with respect to or based upon transactions or events occurring
on or before the Closing, except (a) liabilities and obligations under
agreements, contracts, leases or commitments described on the "LEASES SCHEDULE"
and the "CONTRACTS SCHEDULE" (but not liabilities for breaches thereof), (b)
liabilities and obligations reflected on Seller's Latest Balance Sheet, (c)
liabilities and obligations which have arisen after the date of Seller's Latest
Balance Sheet in the ordinary course of business (none of which is a liability
for breach of contract, breach of warranty, tort, infringement, claim or lawsuit
or will have a material adverse effect upon the business, operations, financial
condition, properties or prospects of Seller), (d) liabilities and obligations
to the extent properly reflected on the liability side of the Closing Balance
Sheet in accordance with Section 2.4 and (e) liabilities and obligations
otherwise expressly disclosed in this Agreement or the "LIABILITIES SCHEDULE"
heretofore delivered to Purchaser. For purposes of this Agreement (other than
Section 4.11 hereof), "MATERIAL ADVERSE EFFECT" and "MATERIAL ADVERSE CHANGE"
shall mean a single event, occurrence or fact or related or unrelated series of
events, occurrences or facts (i) which, in relation to any quantifiable matter
or matters, singularly or in the aggregate, has or have an impact in an amount
greater than $50,000, and (ii) which, in relation to any nonquantifiable matter
or matters, singularly or in the aggregate, or when combined with any
quantifiable matter or matters, is or are materially adverse to the assets,
financial condition, operating results, employee relations, customer relations
or prospects of the Business.
3.6 NO MATERIAL ADVERSE CHANGES. Since the date of the Latest Balance
Sheet, there has been no material adverse change in the financial condition,
operating results, assets, operations, employee relations, customer relations or
business prospects of Seller.
3.7 ABSENCE OF CERTAIN DEVELOPMENTS. Except as set forth in the
"DEVELOPMENTS SCHEDULE" heretofore delivered to Purchaser, since the date of the
Latest Balance Sheet, Seller has not:
(a) borrowed any amount or incurred or become subject to any material
liabilities, except current liabilities incurred in the ordinary course of
business and liabilities under contracts entered into in the ordinary
course of business;
(b) discharged or satisfied any material lien or encumbrance or paid
any material liability, other than current liabilities paid in the ordinary
course of business;
(c) mortgaged, pledged or subjected to any lien, charge or any other
encumbrance, any portion of the Acquired Assets, except liens for current
property taxes not yet due and payable;
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(d) sold, assigned or transferred any of the Acquired Assets, except
in the ordinary course of business or cancelled without fair consideration
any material debts or claims owing to or held by it;
(e) sold, assigned, transferred, abandoned or permitted to lapse any
patents, trademarks, trade names, copyrights, trade secrets or other
intangible assets, or disclosed any material proprietary confidential
information to any person;
(f) made or granted any bonus or any wage or salary increase to any
employee or group of employees or made or granted any increase in any
employee benefit plan or arrangement (except for any increase in bonus,
wage, salary and benefit plan and arrangement in accordance with past
custom and practice and, on an aggregate basis with respect to any employee
or group of employees, not in excess of five percent (5%) of any such
employee's annual salary or $5,000, whichever is less), or amended or
terminated any existing employee benefit plan or arrangement or adopted any
new employee benefit plan or arrangement;
(g) made any capital expenditures or commitments therefore that
aggregate in excess of $25,000;
(h) made any loans or advances to, or guarantees for the benefit of,
any persons;
(i) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or
consistent with past practice;
(j) entered into any other material transaction other than in the
ordinary course of business;
(k) made any charitable contributions or pledges;
(l) suffered any material damage, destruction or casualty loss to the
Acquired Assets, whether or not covered by insurance; or
(m) redeemed any stock, bonds or other securities or declared or paid
any dividend or other distribution to its shareholders.
3.8 TITLE AND CONDITION OF PROPERTIES.
(a) Seller owns no real estate.
(b) The lease on the property where Seller presently conducts its
business (the "PREMISES LEASE") expired on March 28, 1996. Seller has
continued to lease the property on a month-to-month basis and is presently
negotiating a new lease with the landlord. Seller has delivered a copy of
the Premises Lease to Purchaser.
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(c) Except as provided in 3.8(b) above, the leases described on the
"LEASES SCHEDULE" heretofore delivered to Purchaser are in full force and
effect, and Seller (as indicated on such schedule) holds a valid and
existing leasehold interest under each of the leases for the term set forth
on the "LEASES SCHEDULE." The leases described on the "LEASES SCHEDULE"
constitute all of the leases under which Seller holds a leasehold interest
in real estate or personal property. Seller has delivered to Purchaser
complete and accurate copies of each of the leases described on the "LEASES
SCHEDULE," and none of the leases have been modified in any respect, except
to the extent that such modifications are disclosed by the copies delivered
to Purchaser. Seller is not in default under any of such leases, and no
other party to such leases has the right to terminate, accelerate
performance under or otherwise modify any of such leases including upon the
giving of notice or the passage of time. To the best of Seller's and each
Shareholder's knowledge, no third party to any such lease is in default
under such lease.
(d) The real estate demised by the leases described on the "LEASES
SCHEDULE" constitute all of the real estate used or occupied by Seller and
no other real estate is necessary for the conduct of the Business.
(e) Seller owns good and marketable title, free and clear of all
liens, charges, security interests, encumbrances and claims of others, to
all of the personal property and assets shown on the Latest Balance Sheet
or acquired thereafter or located on any of its premises, except for liens
of current taxes not yet due and payable and liens disclosed on the Latest
Balance Sheet. At the Closing, Seller shall convey good and marketable
title to all of the personal property included within the Acquired Assets,
free and clear of all liens, security interests, charges, encumbrances and
claims of others, other than liens for current taxes not yet due and
payable (the "PERMITTED ENCUMBRANCES").
(f) Except as set forth in the "CONDITION OF TANGIBLE ASSETS
SCHEDULE" heretofore delivered to Purchaser, Seller's buildings, machinery,
equipment, tools, dies and other tangible assets are in good condition and
repair in all material respects and are usable in the ordinary course of
business. Seller owns or leases under valid leases all buildings,
machinery, equipment and other tangible assets necessary for the conduct of
the Business.
(g) Seller is not in material violation of any applicable zoning,
building, fire or other ordinance or other law, regulation or requirement
relating to the operation of owned or leased properties, including, without
limitation, applicable environmental protection and occupational health and
safety laws and regulations and the Americans With Disabilities Act.
Within the five (5) years prior to the date of this Agreement, neither
Seller nor either Shareholder has received any notice of any such violation
or any condemnation proceeding with respect to any properties owned, used
or leased by Seller, except as has been previously disclosed to Purchaser
in writing.
3.9 ACCOUNTS RECEIVABLE. All notes and accounts receivable of Seller on
the Latest Balance Sheet and to be reflected on the Payment Date Balance Sheet
and the Closing Balance Sheet are and shall be valid receivables and are
collectible and shall be collected within one hundred fifty (150) days after the
date such note or account receivable arose (or with respect to
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notes or receivables due from Northern Automotive, within one hundred eighty
(180) days after the date such note or receivable arose), subject to no valid
counterclaims, setoffs or bankruptcy preference or similar actions at the
aggregate amount thereof shown on the applicable Balance Sheet, net of any bad
debt reserve properly recorded on the applicable Balance Sheet or shall be
repurchased by Seller pursuant to Section 11.14 hereof.
3.10 INVENTORIES. Seller's inventories reflected on the Latest Balance
Sheet and to be reflected on the Payment Date Balance Sheet and the Closing
Balance Sheet are and shall consist of a quality and quantity usable and
saleable in the ordinary course of business and at Seller's normal profit
levels, are not and shall not be slow-moving, obsolete or damaged and are and
shall be merchantable and fit for their particular use. The warranty reserve
reflected on the Latest Balance Sheet and to be reflected on the Payment Date
Balance Sheet and the Closing Balance Sheet is and shall be adequate to cover
all liability arising from warranty claims relating to any product sold or
service provided by Seller prior to the Closing Date.
3.11 TAX MATTERS.
(a) Seller has duly filed all federal, state, local and foreign tax
information and tax returns (the "RETURNS") required to be filed by it (all
such returns being accurate and complete in all material respects) and has
duly paid or made provision for the payment of all taxes and other
governmental charges (including, without limitation, interest, additions to
tax and penalties) which have been incurred or are shown to be due on said
Returns or are claimed in writing to be due from Seller or imposed on
Seller or its properties, assets, income, payroll, franchises, licenses,
sales or use, by any federal, state, local or foreign taxing authorities
(collectively, the "TAXES") on or prior to the date hereof other than Taxes
which are being contested in good faith and by appropriate proceedings and
as to which Seller has set aside on its books adequate reserves, or which
may be attributable to the transactions contemplated hereby. The amounts
recorded as reserves for Taxes on a gross or net basis, on the Latest
Balance Sheet, are sufficient in the aggregate for payment by Seller of all
unpaid Taxes (including, without limitation, any interest, additions to tax
or penalties thereon) for the period ended as of the date of the Latest
Balance Sheet or for any year or period prior thereto. The "TAX MATTERS
SCHEDULE" heretofore delivered to Purchaser sets forth the date or dates
since December 31, 1991 through which the Internal Revenue Service ("IRS")
has examined the federal income tax returns of Seller, whether singly or as
a member of an affiliated group, and the date or dates through which any
state, local, foreign or other taxing authority has examined any state,
local, foreign or other returns of Seller. Except as set forth on the "TAX
MATTERS SCHEDULE," neither the IRS nor any state, local, foreign or other
taxing authority is in the process of examining any federal, state, local,
foreign or other tax return of Seller. Except as disclosed on the "TAX
MATTERS SCHEDULE," (i) there are no material disputes pending, or material
claims asserted, for Taxes upon Seller, (ii) Seller has not been required
to give any currently effective waivers extending the statutory period of
limitation applicable to any federal, state, local, foreign return or for
any period, and (iii) Seller has in effect no power of attorney or
authorization to anyone to represent it with respect to any Taxes. Seller
has not filed any consolidated federal income tax return with an
"AFFILIATED GROUP" (within the meaning of Section 1504 of the Code, where
Seller was not the common parent of the group. Seller is not and has not
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been, a party to any tax allocation agreement or arrangement pursuant to
which it has any contingent or outstanding liability to anyone. Seller has
no liability for the Taxes of any person or entity by contract, as
transferee or successor, or by operations of law. Seller has not filed a
consent under Section 341(f) of the Code. Seller has not been a United
States real property holding corporation within the meaning of Section 897
of the code for any period. Seller has provided to Purchaser or its
representatives complete and correct copies of its federal, state, local
and foreign income tax returns filed on or prior to April 15, 1996 and all
examination reports, if any, relating to the audit of such returns by the
IRS or other tax authority for each taxable year beginning on or after
January 1, 1989. To the knowledge of Seller and each Shareholder, there
exists no proposed assessment against Seller or notice, whether formal or
informal, of any deficiency or claim for additional Tax (including, without
limitation, interest, additions to tax or penalties) except as disclosed on
the "TAX MATTERS SCHEDULE."
(b) Except as disclosed on the "TAX MATTERS SCHEDULE," all monies
required to be withheld from employees of Seller for income taxes, social
security and unemployment insurance taxes or collected from customers or
others as sales, use or other taxes have been withheld or collected and
paid, when due, to the appropriate governmental authority, or if such
payment is not yet due, an adequate reserve has been established.
3.12 CONTRACTS AND COMMITMENTS.
(a) Except as set forth in Section 3.18 or in the "CONTRACTS
SCHEDULE" heretofore delivered to Purchaser, Seller is not a party to any:
(i) bonus, pension, profit sharing, retirement or deferred
compensation plan or stock purchase, stock option, hospitalization
insurance or similar plan or practice, whether formal or informal, or
severance agreements or arrangements;
(ii) contract with any labor union or contract for the employment
of any officer, individual employee or other person on a full-time,
part-time or consulting basis;
(iii) agreement or indenture relating to the borrowing of
money or to mortgaging, pledging or otherwise placing a lien on any of
the Acquired Assets;
(iv) guarantee of any obligation for borrowed money or otherwise,
other than endorsements made for collection in the ordinary course of
business;
(v) agreement or commitment with respect to the lending or
investing of funds to or in other persons or entities;
(vi) license or royalty agreement;
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(vii) lease or agreement under which it is lessee of or holds
or operates any personal property owned by any other party for which
the aggregate annual rental payments to any one person and its
affiliates exceeds $5,000;
(viii) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by it for which the aggregate annual
rental exceeds $5,000;
(ix) contract or group of related contracts with the same party
for the purchase or sale of products or services under which the
undelivered balance of such products and services has a selling price
in excess of $5,000;
(x) other contract or group of related contracts with the same
party continuing over a period of more than six months from the date
or dates thereof, not terminable by it on thirty (30) days' or less
notice without penalties or involving more than $5,000;
(xi) contract which prohibits it from freely engaging in business
anywhere in the world;
(xii) contract relating to the distribution of its products;
(xiii) contract with any officer, director, partner,
shareholder or other insider; or
(xiv) other agreement material to it whether or not entered
into in the ordinary course of business.
(b) Except as specifically disclosed in the "CONTRACTS SCHEDULE," (i)
to the best of Seller's and each Shareholder's knowledge, no contract or
commitment material to Seller has been breached in any material respect or
cancelled by the other party since December 31, 1993, (ii) since December
31, 1993, no material customer or supplier has notified Seller that it
shall stop or decrease in any material respect the rate of business done
with Seller, (iii) Seller has in all material respects performed all the
obligations required to be performed by it to the date of this Agreement
and is not in receipt of any claim of default under any material lease,
contract, commitment or other agreement to which it is a party; (iv) no
event has occurred which with the passage of time or the giving of notice
or both would result in a breach or default under any material lease,
contract, instrument or other agreement to which Seller is a party; and (v)
Seller is a party to no contract which is materially adverse to its
operations, financial condition, operating results or business prospects.
(c) Purchaser has been supplied with a true and correct copy of all
written contracts which are referred to on the "CONTRACT SCHEDULE,"
together with all amendments, waivers or other changes thereto.
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3.13 PROPRIETARY RIGHTS. Set forth on the "PROPRIETARY RIGHTS SCHEDULE"
heretofore delivered to Purchaser is a list and summary description of all
patents, patent applications, trademarks, service marks, trade names, corporate
names and copyrights, and computer software owned by Seller or used by Seller in
the conduct of the Business. Seller owns and possesses all right, title and
interest in and to the proprietary rights necessary to conduct the Business.
Seller has taken all necessary or desirable action to protect the proprietary
rights necessary or desirable to conduct the Business. Seller has not received
any notices of infringement, misappropriation, invalidity or conflict from any
third party with respect to such proprietary rights, Seller has not infringed,
misappropriated or otherwise conflicted with any proprietary rights of any third
parties and, to the best of Seller's knowledge and each Shareholder, Seller's
proprietary rights have not been infringed by any third parties.
3.14 LITIGATION; PROCEEDINGS. Except as set forth in the "LITIGATION
SCHEDULE" heretofore delivered to Purchaser, there are no actions, suits,
proceedings, orders or investigations pending or, to the best of Seller's and
each Shareholder's knowledge, threatened against or affecting Seller at law or
in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign (including, without limitation, any worker's compensation claims), and
there is no set of facts or circumstances known on the date hereof or on the
Closing Date to Seller or either Shareholder that could reasonably be expected
to form a basis for any of the foregoing. No officer, director, employee or
agent of Seller has been or is authorized to make or receive, and neither Seller
nor either Shareholder knows of no such person making or receiving, any bribe,
kickback or other illegal payment at any time. Within the three (3) years
preceding the date hereof, neither Seller nor either Shareholder has received
any opinion or legal advice in writing to the effect that Seller is materially
exposed from a legal standpoint to any liability or disadvantage which may be
material to the Business as previously or presently conducted.
3.15 BROKERAGE. There are no claims for brokerage commissions, finders
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Seller or either Shareholder.
3.16 GOVERNMENTAL CONSENT, ETC. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental or
regulatory authority is required in connection with the execution, delivery or
performance of this Agreement by Seller or either Shareholder, or the
consummation by Seller or either Shareholder of any of the transactions
contemplated hereby and thereby, except as disclosed on the "CONSENTS SCHEDULE."
3.17 EMPLOYEES. To the best of Seller's and each Shareholder's knowledge,
no key employee nor group of Seller's employees has any plans to terminate
employment with Seller. Seller has complied in all material respects with all
applicable laws relating to the employment of labor, including provisions
thereof relating to wages (including, without limitation, overtime pay), hours,
equal opportunity, immigration, collective bargaining and the payment of social
security and other taxes. Seller has no material labor relations problems, and
there has been no union organization efforts by the employees of Seller.
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3.18 EMPLOYEE BENEFIT PLANS.
(a) The "EMPLOYEE BENEFITS SCHEDULE" heretofore delivered to
Purchaser, contains a list and a true and correct copy, including all
amendments thereto, of any employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), which Seller and/or any ERISA Affiliate (as defined
below) maintains or has ever maintained, to which Seller contributes or has
ever contributed, or under which any employee or former employee, officer
or former officer, director or former director of Seller is covered or has
benefit rights, and each other arrangement, program or plan pursuant to
which any benefit is or shall be provided to an employee, former employee
or retired employee whether formal or informal, including, without
limitation, those providing any form of medical, health and dental
insurance, severance pay and benefits continuation, relocation assistance,
vacation pay, tuition aid and matching gifts for charitable contributions
to educational or cultural institutions (collectively, the "BENEFIT
PLANS"). Except as set forth on the "EMPLOYEE BENEFITS SCHEDULE," Seller
neither maintains nor has entered into any Benefit Plan or other document,
plan or agreement which contains any change in control provisions which
would cause an increase or acceleration of benefits or benefit entitlements
to employees or former employees of Seller or their respective
beneficiaries, or other provisions, which would cause an increase in
liability of Seller or to Purchaser as a result of the transactions
contemplated by this Agreement or any related action thereafter. Each of
such plans that is an employee pension benefit plan within the meaning of
Section 3(2) of ERISA that is intended to be a qualified plan under Section
401(a) of the Code has been amended to comply in all material respects with
current law as required and each such plan either has obtained a favorable
determination letter with respect to such amendment or the remedial
amendment period for such amendment under Section 401(b) of the Code has
not expired. For purposes hereof, an "ERISA AFFILIATE" is any trade or
business, whether or not incorporated, that together with Seller would be
deemed a "SINGLE EMPLOYER" within the meaning of ERISA Section 4001 or
affiliated with Seller within the meaning of Section 414(b), (c) or (m) of
the Code.
(b) Except as set forth in the "EMPLOYEE BENEFITS SCHEDULE," all
accrued contributions and other payments to be made by Seller or any ERISA
Affiliate to any Benefit Plan through the date of the Latest Balance Sheet
have been made or reserves adequate for such purposes as of the date of the
Latest Balance Sheet have been set aside therefor and reflected on the
Latest Balance Sheet. Neither Seller nor any ERISA Affiliate is in
material default in performing any of its contractual obligations under any
of the Benefit Plans or any related trust agreement or insurance contract,
and there are no material outstanding liabilities of any Benefit Plan other
than liabilities for benefits to be paid to participants in such Benefit
Plan.
(c) There is no pending litigation or, to the best knowledge of
Seller and each Shareholder, threatened litigation or pending claim (other
than benefit claims made in the ordinary course) by or on behalf of or
against any of the Benefit Plans (or with respect to the administration of
any of the Benefit Plans) now or heretofore maintained by Seller which
allege violations of applicable state or federal law.
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(d) Each Benefit Plan is and has been in compliance in all material
respects with, and each such Plan is and has been operated in accordance
with, the applicable laws, rules and regulations governing such Plan,
including, without limitation, the rules and regulations promulgated by the
Department of Labor, the Pension Benefit Guaranty Corporation ("PBGC") and
the IRS under ERISA, the Code or any other applicable law.
(e) Neither Seller nor any ERISA Affiliate maintains or has ever
maintained, contributes or has ever contributed to, or is or has ever been
obligated to contribute to, any Benefit Plan subject to Title IV of ERISA.
No condition exists that presents a material risk to Seller or any ERISA
Affiliate of incurring a liability under Title IV of ERISA with respect to
Benefit Plans, other than liability for premiums due to the PBGC. The PBGC
has not instituted proceedings to terminate any of the Benefit Plans and no
condition known to Seller or either Shareholder exists that presents a
material risk that such proceedings shall be instituted. All reporting and
disclosure requirements of ERISA and the Code have been satisfied in all
material respects with respect to each of the Benefit Plans. Neither
Seller nor any ERISA Affiliate is required to contribute to an employee
benefit plan that is a "MULTIEMPLOYER PLAN" within the meaning of Section
3(37) of ERISA nor has been so required during the five-year period ending
on the Closing Date.
(f) Neither Seller nor any ERISA Affiliate maintains or has ever
maintained, contributes to or has ever contributed to or is or has ever
been obligated to contribute to any Benefit Plan subject to the
requirements of Section 412 of the Code. No prohibited transaction has
occurred with respect to any Benefit Plan that would result, directly or
indirectly, in the imposition of any excise tax under Section 4975 of the
Code; nor has any reportable event under Section 4043 of ERISA occurred
with respect to any Benefit Plan.
3.19 INSURANCE. The "INSURANCE SCHEDULE" heretofore delivered to Purchaser
lists and briefly describes each insurance policy maintained by Seller with
respect to the Acquired Assets or the Business. All of such insurance policies
are in full force and effect, and Seller is not and has never been in material
default with respect to its obligations under any of such insurance policies.
Such insurance coverage is customary for well insured entities engaged in
similar lines of business.
3.20 AFFILIATED TRANSACTIONS. Except as set forth on the "AFFILIATED
TRANSACTIONS SCHEDULE" heretofore delivered to Purchaser, no officer, director,
shareholder or affiliate of Seller or any person related by blood or marriage to
any such person or any entity in which any such person owns any beneficial
interest, is a party to any agreement, contract, commitment or transaction with
Seller or has any interest in any property used by Seller.
3.21 COMPLIANCE WITH LAWS; PERMITS; CERTAIN OPERATIONS. Seller and its
officers, directors, agents and employees have complied in all material respects
with all applicable laws and regulations of foreign, federal, state and local
governments and all agencies thereof which affect the Business or the Acquired
Assets or to which Seller may otherwise be subject, and no claims have been
filed against Seller alleging a violation of any such law or regulation, except
as set forth on the "COMPLIANCE SCHEDULE" heretofore delivered to Purchaser.
Seller holds all
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of the permits, licenses, certificates and other authorizations of foreign,
federal, state and local governmental agencies required for the conduct of the
Business, all of which are listed on the "COMPLIANCE SCHEDULE." In particular,
but without limiting the generality of the foregoing, Seller has not violated,
or received a notice or charge asserting any violation of, the Immigration
Reform and Control Act of 1986, the Occupational Safety and Health Act of 1970,
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, the Resource Conservation and Recovery Act of 1976, the Toxic Substances
Control Act of 1976 or any other state or federal acts (including rules and
regulations thereunder) regulating or otherwise affecting the employment of
aliens, employee health and safety or the environment.
3.22 ENVIRONMENTAL MATTERS.
(a) As used in this Section 3.22, the following terms shall have the
following meanings:
(i) "HAZARDOUS MATERIALS" means any dangerous, toxic or
hazardous pollutant, contaminant, chemical, waste, material or
substance as defined in or governed by any federal, state or local
law, statute, code, ordinance, regulation, rule or other requirement
relating to such substance or otherwise relating to the environment or
human health or safety, including without limitation any waste,
material, substance, pollutant or contaminant that might cause any
injury to human health or safety or to the environment or might
subject Seller to any imposition of costs or liability under any
Environmental Law.
(ii) "ENVIRONMENTAL LAWS" means all applicable federal, state,
local and foreign laws, rules, regulations, codes, ordinances, orders,
decrees, directives, permits, licenses and judgments relating to
pollution, contamination or protection of the environment (including,
without limitation, all applicable federal, state, local and foreign
laws, rules, regulations, codes, ordinances, orders, decrees,
directives, permits, licenses and judgments relating to Hazardous
Materials in effect as of the date of this Agreement).
(iii) "RELEASE" shall mean the spilling, leaking, disposing,
discharging, emitting, depositing, ejecting, leaching, escaping or any
other release or threatened release, however defined, whether
intentional or unintentional, of any Hazardous Material.
(b) Seller and each Shareholder has and, to the best knowledge of
Seller and each Shareholder, all third parties have, complied in all
material respects with all applicable Environmental Laws with respect to
all real estate owned, leased or operated by Seller, Seller's operation of
the Business at or from such real estate and Seller's operation of the
Acquired Assets.
(c) Seller has obtained, and maintained in full force and effect, all
environmental permits, licenses, certificates of compliance, approvals and
other authorizations necessary to own or operate the Acquired Assets
(collectively, the "ENVIRONMENTAL PERMITS"). Seller has conducted its
Business and operated the Acquired
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Assets in compliance with all terms and conditions of the Environmental
Permits. Seller has filed all reports and notifications required to be
filed under and pursuant to all applicable Environmental Laws with respect
to the operation of the Business and the operation of the Acquired Assets.
(d) Except as set forth in the "ENVIRONMENTAL MATTERS SCHEDULE"
heretofore delivered to Purchaser: (i) no Hazardous Materials have been
generated, treated, contained, handled, located, used, manufactured,
processed, buried, incinerated, deposited, stored, or released by Seller or
either Shareholder or, to the best knowledge of Seller and each
Shareholder, by any third party, on, under or about any part of any real
property owned, leased or operated by Seller in violation of any
Environmental Law, and (ii) no real property owned, leased or operated by
Seller or any of the other Acquired Assets contain any asbestos, urea,
formaldehyde, radon, polychlorinated biphenyls (PCBs) or pesticides at
levels or amounts that violate any Environmental Law as a result of any act
or omission of Seller or either Shareholder or, to the best knowledge of
Seller and each Shareholder, of any third party.
(e) Except as set forth in the "ENVIRONMENTAL MATTERS SCHEDULE,"
neither Seller nor either Shareholder has received notice alleging in any
manner that Seller is, or might be potentially, responsible for any Release
of Hazardous Materials, or any costs arising under or in violation of
Environmental Laws with respect to the Acquired Assets or the operation of
the Business.
(f) None of the real estate owned, leased or operated by Seller is or
has been listed on the United States Environmental Protection Agency
National Priorities List of Hazardous Waste Sites, or any other list,
schedule, law, inventory or record of hazardous or solid waste sites
maintained by any federal, state or local agency.
(g) Seller has disclosed and delivered to Purchaser all environmental
reports and investigations which Seller or either Shareholder has obtained
or ordered with respect to the Acquired Assets or the Business.
(h) No lien has been attached or filed against Seller with respect to
the Acquired Assets in favor of any governmental or private entity for
(i) any liability or imposition of costs under or in violation of any
applicable Environmental Law; or (ii) any Release of Hazardous Materials.
3.23 INVESTMENT UNDERTAKINGS OF SELLER AND SHAREHOLDERS.
(a) Pursuant to Seller's Plan of Reorganization and this Agreement,
Seller is required to distribute the Stock Consideration to Shareholders.
Seller and each Shareholder has been informed that the shares of Kuhlman
Common Stock to be issued to Seller under this Agreement have not been
registered under the 1933 Act, or under the securities laws of the State of
Florida or of any other jurisdiction (collectively with the 1933 Act, the
"SECURITIES LAWS"); and that such shares of Kuhlman Common Stock must be
held by Seller or Shareholders indefinitely unless they are subsequently
registered under the Securities Laws or unless an exemption from such
registration is available.
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(b) Except for the distribution of such shares of Kuhlman Common
Stock to the Shareholders upon registration thereof under the 1933 Act as
contemplated by Section 2.8, Seller and each Shareholder is acquiring the
shares of Kuhlman Common Stock not with a view to, or for sale in
connection with, any public distribution thereof; neither Seller nor either
Shareholder has any current intention of selling or otherwise distributing
such shares of Kuhlman Common Stock to any person or persons; and such
shares of Kuhlman Common Stock shall be acquired for Seller's and/or
Shareholders' own account for investment and not on behalf of any other
person or persons and not with a view to, or for sale in connection with,
any further distribution thereof. Further, Seller and each Shareholder
agree not to offer for sale, sell or otherwise transfer such shares of
Kuhlman Common Stock in the absence of compliance with the Securities Laws
and until Kuhlman has received from counsel acceptable to Kuhlman an
opinion of such counsel that the proposed disposition shall not violate any
Securities Laws.
(c) Seller and each Shareholder is knowledgeable and experienced in
financial and business matters, and capable of evaluating the merits and
risks of an investment in such shares of Kuhlman Common Stock; Seller and
each Shareholder has had access to or received as much information with
respect to Kuhlman and such shares of Kuhlman Common Stock, as Seller and
each Shareholder deem advisable in making a decision to invest in such
shares of Kuhlman Common Stock; and Seller and each Shareholder has had the
opportunity to ask questions and receive answers from representatives of
Kuhlman with respect to investing in such shares of Kuhlman Common Stock
and to obtain additional information to verify the accuracy of the
information to which it or he has had access or which has been furnished to
it or him.
(d) On the date hereof and on the Closing Date, Seller and each
Shareholder shall be an "ACCREDITED INVESTOR" as defined in paragraph (a)
of Rule 501 of the general rules and regulations under the 1933 Act.
3.24 DISCLOSURE. Neither this Agreement nor any of the schedules,
attachments or exhibits hereto contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading.
There is no material fact which has not been disclosed in writing to Purchaser
of which any officer, director or key employee of Seller is aware and which
materially adversely affects or could reasonably be anticipated to affect
materially adversely the Business or the Acquired Assets.
3.25 CLOSING DATE. All of the representations and warranties of Seller in
this Article 3 and elsewhere in this Agreement and all information delivered in
any schedule, attachment or exhibit hereto or in any certificate delivered to
Purchaser are true and correct in all respects on the date of this Agreement and
shall be true and correct in all respects on the Closing Date.
3.26 C REORGANIZATION TREATMENT.
(a) The acquisition of the Acquired Assets and the assumption of the
Assumed Liabilities shall be consummated in accordance with the terms of
this Agreement;
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(b) All of the Assumed Liabilities were incurred by the Seller in the
ordinary course of Seller's business;
(c) No consideration other than the Stock Consideration and
Purchaser's assumption of the Assumed Liabilities shall be issued or
transferred, directly or indirectly, to Seller or Shareholders in exchange
for the Acquired Assets;
(d) Under no circumstances shall the assumption of the Assumed
Liabilities involve the payment of any money or other property to Seller,
nor shall Purchaser assume liability for any expenses of Shareholders;
(e) The fair market value of the Acquired Assets shall equal or
exceed the total amount of the Assumed Liabilities;
(f) There is no plan or intention by Shareholders to sell, exchange,
or otherwise dispose of a number of shares of Kuhlman Common Stock
distributed to them by Seller after the transactions contemplated by this
Agreement have been consummated that would reduce the ownership by
Shareholders of such shares of Kuhlman Common Stock to a number of such
shares having a fair market value, as of the Closing Date, of less than
fifty percent (50%) of the fair market value of all the formerly
outstanding shares of Seller as of the same date;
(g) Purchaser is acquiring at least ninety percent (90%) of the fair
market value of the net assets and at least seventy percent (70%) of the
fair market value of the gross assets held by Seller immediately prior to
the consummation of the transactions contemplated by this Agreement. For
purposes of this representation and warranty, amounts used by Seller to pay
its reorganization expenses, if any, and all redemptions and distributions
(except for regular, normal dividends) made by Seller immediately preceding
the transactions contemplated by this Agreement shall be included as assets
of Seller held immediately prior to the consummation of the transactions
contemplated by this Agreement;
(h) There shall be and shall have been no intercorporate indebtedness
existing between Purchaser and Seller that was issued, acquired or shall be
settled at a discount;
(i) Except for the Assumed Liabilities assumed by Purchaser pursuant
to Section 1.4 hereof, Seller and Shareholders shall pay their respective
expenses, if any, incurred in connection with the transactions contemplated
by this Agreement; and
(j) None of the Kuhlman Common Stock to be received by either
Shareholder upon distribution thereof by Seller shall be separate
consideration for, or allocable to, any employment, consulting or other
agreement with Seller or Purchaser, and any compensation paid to either
Shareholder following the consummation of the transactions contemplated by
this Agreement under any employment, consulting or other agreement entered
into with Purchaser shall be for services actually rendered or to be
rendered by such Shareholder under such employment, consulting or other
agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and Shareholders as of
the date hereof and as of the Closing Date that:
4.1 CORPORATE ORGANIZATION AND POWER. Purchaser is a corporation duly
organized and validly existing under the laws of the State of Delaware with full
corporate power and authority to enter into this Agreement and the other
agreements contemplated hereby and perform its obligations hereunder and
thereunder.
4.2 AUTHORIZATION. The execution, delivery and performance by Purchaser
of this Agreement and the other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all requisite corporate action, and no other corporate
proceedings on the part of Purchaser is necessary to authorize the execution,
delivery or performance of this Agreement or the other agreements contemplated
hereby. This Agreement and the other agreements contemplated hereby each
constitute a valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with their respective terms.
4.3 NO VIOLATION. Purchaser is not subject to or obligated under its
certificate of incorporation or by-laws, any applicable law, rule or regulation
of any governmental authority, or any agreement or instrument, or any license,
franchise or permit, or subject to any order, writ, injunction or decree which
would be breached or violated by its execution, delivery or performance of this
Agreement or the other agreements contemplated hereby. Purchaser shall comply
with all applicable laws, and with all applicable rules and regulations of all
governmental authorities in connection with its execution, delivery and
performance of this Agreement and the other agreements contemplated hereby and
the transactions contemplated hereby and thereby.
4.4 GOVERNMENTAL AUTHORITIES AND CONSENTS. Purchaser is not required to
submit any notice, report or other filing with any governmental authority in
connection with the execution or delivery by it of this Agreement or the
consummation of the transactions contemplated hereby. No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by Purchaser in connection with its execution,
delivery and performance of this Agreement or the transactions contemplated
hereby.
4.5 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Purchaser.
4.6 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or, to the best of Purchaser's knowledge, threatened
against or affecting Purchaser, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, which would
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adversely affect Purchaser's performance under this Agreement or the
consummation of the transactions contemplated hereby.
4.7 NOTIFICATION. From the date hereof to the Closing, Purchaser shall
promptly inform Seller in writing of any material variances from the
representations and warranties contained in this Article 4.
4.8 CLOSING DATE. All of the representations and warranties contained in
this Article 4 and elsewhere in this Agreement and all information delivered in
any schedule, attachment or exhibit hereto or in any certificate delivered to
Seller are true and correct in all material respects on the date of this
Agreement and shall be true and correct in all material respects on the Closing
Date.
4.9 DUE ISSUANCE. Upon issuance to Seller, the Stock Consideration shall
be duly issued, validly authorized and non-assessable.
4.10 PUBLIC FILINGS. Kuhlman's Form 10-K for the year ended December 31,
1995, Forms 10-Q for the quarters ended March 31 and June 30, 1996, Form 8-K
dated March 1, 1996 and Form 8-K/A dated April 26, 1996, amending Form 8-K dated
March 1, 1996 and Form 8-K dated September 3, 1996, did not as of the respective
dates they were filed with the Commission contain an untrue statement of a
material fact or omit a material fact necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
4.11 MATERIAL CHANGES. Since June 30, 1996, there has been no change in
the financial condition, operating results, assets, employee relationships or
customer relationships known and relating to Kuhlman that would be materially
adverse to Kuhlman and its subsidiaries, taken as a whole, except any such
changes heretofore disclosed to Seller and Shareholders.
4.12 CONTINUATION OF SELLER'S HISTORIC BUSINESS. As of the Closing,
Purchaser has no plan or intention to sell or otherwise dispose of the historic
business assets of Seller, except for dispositions made in the ordinary course
of business, or to cease using a significant portion of Seller's historic
business assets in a business so as to fail to continue Seller's historic
business or use a significant portion of Seller's historic business assets in a
business within the meaning of Treasury Regulation (Section 1.368-1(d).
ARTICLE 5
COVENANTS OF SELLER AND SHAREHOLDERS
5.1 AFFIRMATIVE COVENANTS. Prior to the Closing, Seller shall and
Shareholders shall cause Seller to:
(a) conduct the Business only in the usual and ordinary course of
business in accordance with past custom and practice (including placing
purchase orders only for
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reasonable quantities and at reasonable prices and accepting customer
orders only for reasonable quantities on reasonable terms);
(b) keep in full force and effect its corporate existence and all
material rights, franchises and intellectual property relating to or
pertaining to the Business;
(c) use best efforts to retain its employees and preserve its present
business relationships, and continue to compensate its employees in
accordance with past custom and practice;
(d) maintain the Acquired Assets in customary repair, order and
condition and maintain insurance reasonably comparable to that in effect on
the date of this Agreement; replace in accordance with past practice its
inoperable, worn out and obsolete assets with assets of comparable quality;
and in the event of any casualty, loss or damage to any of the Acquired
Assets prior to Closing, either repair or replace such assets with assets
of comparable quality or, if Purchaser agrees, transfer to Purchaser at
Closing the proceeds of any insurance recovery with respect thereto;
(e) maintain its books, accounts and records in accordance with past
custom and practice as used in the preparation of the financial statements
described in Section 3.4;
(f) permit Purchaser and its employees, agents, accounting and legal
representatives and potential lenders and their representatives to have
access to its books, records, invoices, contracts, leases, key personnel,
independent accountants, property, facilities, equipment and other things
reasonably related to the Business or the Acquired Assets;
(g) use best efforts to obtain all consents and approvals necessary
or desirable to consummate the transactions contemplated hereby and to
cause the other conditions to Purchaser's obligation to close to be
satisfied; and
(h) promptly inform Purchaser in writing of any variances from the
representations and warranties contained in Article 3 hereof.
5.2 NEGATIVE COVENANTS. Prior to the Closing, without the prior written
consent of Purchaser, Seller shall not and Shareholders shall not permit Seller
to:
(a) directly or indirectly (including through any agent, broker,
finder or other third party), offer to sell, merge, consolidate or
otherwise dispose of, negotiate for the sale, merger, consolidation or
other disposition of, initiate or continue discussions concerning the sale,
merger, consolidation or other disposition of, Seller as a whole, or the
sale or other disposition of any of its shares of capital stock or any of
the Acquired Assets (other than inventory in the ordinary course of
business);
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(b) take or omit to take any action, or permit its subsidiaries or
affiliates to take or omit to take any action, which would reasonably be
anticipated to have a material and adverse effect upon the Business or the
Acquired Assets; and
(c) redeem any stock, bonds or other securities or equity interests,
or declare or pay any dividend or other distribution to its shareholders.
5.3 FINANCIAL STATEMENTS. No later than the date hereof, Seller agrees to
provide Purchaser with copies of the unaudited balance sheet (the "PAYMENT DATE
BALANCE SHEET"), statement of income and related financial statements of Seller
relating to the Business as of and for the seven-month period ending July 31,
1996 (the "PAYMENT DATE FINANCIAL STATEMENTS").
5.4 DISTRIBUTION OF KUHLMAN COMMON STOCK. As soon as practicable after
the Closing, but in no event later than twelve (12) months after the Closing
Date, and as part of the transactions contemplated by this Agreement, Seller
shall liquidate itself and distribute to Shareholders the Kuhlman Common Stock
it shall have received under this Agreement (including, without limitation, its
interest in the Escrowed Shares) and any of its other properties in accordance
with Section 368(a)(2)(G) of the Code.
ARTICLE 6
CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE
6.1 CONDITIONS TO PURCHASER'S OBLIGATION. The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 3 hereof
shall be true and correct at and as of the Closing as though then made and
as though the Closing Date was substituted for the date of this Agreement,
without taking into account any disclosures made by Seller to Purchaser
pursuant to Section 5.1(h) hereof;
(b) Seller and each Shareholder shall have performed all of the
covenants and agreements required to be performed by it or him under this
Agreement prior to the Closing;
(c) there shall have been no material adverse change in the
operations, financial condition, operating results, assets or business
prospects of the Business, and there shall have been no material casualty
loss or damage to the Acquired Assets, taken as a whole, whether or not
covered by insurance which would result in a material adverse change;
(d) all governmental filings, authorizations and approvals that are
required for the consummation of the transactions contemplated hereby shall
have been duly made and obtained on terms and conditions satisfactory to
Purchaser;
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(e) all consents by third parties that are required for the transfer
of the Acquired Assets and the Business to Purchaser as contemplated
hereby, that are required for the consummation of the transactions
contemplated hereby or that are required to prevent a breach of, or a
default under or a termination or modification, of any instrument,
contract, license, lease or other agreement to which Seller is a party or
to which any of the Acquired Assets is subject, and releases of all liens,
charges, security interests, encumbrances and claims of others on the
Acquired Assets, other than Permitted Encumbrances, shall have been
obtained on terms and conditions satisfactory to Purchaser;
(f) no action or proceeding before any court or government body shall
be pending or threatened which, in the judgment of Purchaser, made in good
faith and upon the advice of counsel, makes it inadvisable or undesirable
to consummate the transactions contemplated hereby by reason of the
probability that the action or proceeding shall result in a judgment,
decree or order which would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful the
transactions contemplated by this Agreement or cause such transactions to
be rescinded;
(g) Purchaser shall have received from counsel to Seller and
Shareholders, Adorno & Zeder, an opinion with respect to the matters set
forth in Exhibit B attached hereto, addressed to Purchaser and dated the
Closing Date, in form and substance reasonably satisfactory to Purchaser;
(h) not less than ten (10) days prior to the Closing Date, Seller
shall have provided Purchaser, at Seller's own expense, with UCC search
reports ("UCC SEARCHES") of Seller and each Shareholder disclosing no liens
or encumbrances (i) against the Acquired Assets, other than the Permitted
Encumbrances or (ii) that would attach to the Escrowed Shares. If the UCC
Searches disclose any liens, encumbrances or other claims (the "UNPERMITTED
ENCUMBRANCES"), Seller shall have caused the same to be released at
Seller's expense at or prior to the Closing or, with respect only to
Unpermitted Encumbrances of a definite or ascertainable amount, Seller
shall grant Purchaser a credit against the number of shares of Kuhlman
Common Stock constituting the Stock Consideration payable at the Closing
equal to the aggregate amount of such Unpermitted Encumbrances divided by
the Market Value Per Share.
(i) all proceedings to be taken by Seller in connection with the
consummation of the Closing and the other transactions contemplated hereby
and all certificates, opinions, instruments and other documents required
to effect the transactions contemplated hereby reasonably requested by
Purchaser shall be reasonably satisfactory in form and substance to
Purchaser and its counsel;
(j) Purchaser shall be satisfied that the results of its due
diligence investigation of Seller, including, without limitation, review
of the items disclosed on the "DISCLOSURE SCHEDULES" hereto, do not reveal
any matter that is unsatisfactory to Purchaser;
(k) [INTENTIONALLY DELETED];
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(l) [INTENTIONALLY DELETED];
(m) Seller shall have delivered to Purchaser a true and correct
SCHEDULE 6.1(M) setting forth a list and description of all Purchase Orders
and Vendor Orders outstanding as of the Closing Date; and
(n) Seller shall have entered into a lease for the premises that it
currently occupies in Miami, Florida, on terms and conditions satisfactory
to Purchaser and the lessor thereunder shall have consented in writing to
the assignment of such lease to Purchaser.
Any conditions specified in this Section 6.1 may be waived by Purchaser;
PROVIDED that no such waiver shall be effective unless it is set forth in a
writing executed by Purchaser, except as otherwise provided in Section 10.3.
ARTICLE 7
CONDITIONS TO SELLER'S AND
SHAREHOLDERS' OBLIGATION TO CLOSE
7.1 The obligation of Seller and Shareholders to consummate the
transactions contemplated by this Agreement are subject to the satisfaction of
the following conditions on or before the Closing Date:
(a) the representations and warranties set forth in Article 4 hereof
shall be true and correct at and as of the Closing as though then made and
as though the Closing Date was substituted for the date of this Agreement
throughout such representations and warranties;
(b) Purchaser shall have performed all of the covenants and
agreements required to be performed by it under this Agreement prior to the
Closing;
(c) Seller and Shareholders shall have received from Purchaser's
counsel, Vedder, Price, Kaufman & Kammholz, an opinion with respect to the
matters set forth in Exhibit C attached hereto, addressed to Seller and
Shareholders and dated the Closing Date, in form and substance reasonably
satisfactory to Seller and Shareholders;
(d) all proceedings to be taken by Purchaser in connection with the
consummation of the Closing and the other transactions contemplated hereby
and all certificates, opinions, instruments and other documents required to
effect the transactions contemplated hereby reasonably requested by Seller
shall be reasonably satisfactory in form and substance to Seller and its
counsel;
(e) the Registration Statement shall have become effective; and
(f) Purchaser shall have entered into an Employment Agreement (as
defined below) with each Shareholder.
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Any condition specified in this Section 7.1 may be waived by Seller and
Shareholders; PROVIDED, that no such waiver shall be effective against Seller
and Shareholders unless it is set forth in a writing executed by Seller and
Shareholders, except as otherwise provided in Section 10.3.
ARTICLE 8
CLOSING TRANSACTIONS
8.1 THE CLOSING. Subject to the conditions contained in this Agreement,
the closing of the transactions contemplated by this Agreement (the "CLOSING")
shall take place at the offices of Vedder, Price, Kaufman & Kammholz in Chicago,
Illinois, at 10:00 a..m. local time on the later of (a) two (2) business days
after the Registration Statement shall have become effective or (b) two (2)
business days after the final determination of the Payment Date Inventory Value
(or at such other place or on such other date as may be mutually agreeable to
the parties), but in no event later than September 30, 1996. The date and time
of the Closing are referred to herein as the "CLOSING DATE."
8.2 ACTION TO BE TAKEN AT THE CLOSING. The sale, conveyance, assignment
and delivery of the Acquired Assets and the payment of the Stock Consideration
pursuant to the terms of this Agreement shall take place at the Closing, and,
simultaneously, the other transactions contemplated by this Agreement shall take
place by the delivery of all of the closing documents set forth in Section 8.3.
8.3 CLOSING DOCUMENTS.
(a) Seller shall deliver to Purchaser at the Closing the following
documents, duly executed by Seller where necessary to make them effective:
(i) an officer's certificate in the form set forth in Exhibit D
attached hereto, stating that the preconditions specified in Section
6.1(a) through (h), inclusive, and Section 6.1(m) and (n) have been
satisfied;
(ii) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order to effect
the transactions contemplated by this Agreement;
(iii) such recordable warranty deeds, bills and other
instruments of sale, transfer, assignment, conveyance and delivery
(including all vehicle titles), as are required in order to transfer
to Purchaser good and marketable title to the Acquired Assets, free
and clear of all liens, charges, security interests and other
encumbrances (which bill of sale and assignment shall be in the form
of Exhibit E hereto);
(iv) such estoppel certificates from mortgagees and lessors as
Purchaser may reasonably request;
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(v) certified copies of the resolutions duly adopted by the
Board of Directors and shareholders of Seller authorizing the
execution, delivery and performance of this Agreement and each of the
other agreements contemplated hereby, and the consummation of all
other transactions contemplated by this Agreement;
(vi) stock powers, duly endorsed in blank and other customary
instruments of transfer that may be required by Seller to effect the
transfer of the Escrowed Shares; and
(vii) such other documents or instruments as Purchaser may
reasonably request to effect the transactions contemplated hereby.
All of the foregoing documents in this Section 8.3(a) shall be
satisfactory in form and substance to Purchaser and shall be dated the
Closing Date.
(b) Purchaser shall deliver to Seller at the Closing the following
items, duly executed by Purchaser where necessary to make them effective:
(i) certificates representing the number of shares of Kuhlman
Common Stock to be delivered at Closing under Section 2.2;
(ii) an Assumption Agreement, providing for the assumption by
Purchaser of the Assumed Liabilities, except for the Purchase Orders,
Vendor Orders and Contracts;
(iii) an officer's certificate in the form set forth as
Exhibit F attached hereto, stating that the preconditions specified in
Section 7.1 (a), (b), (c), (e) and (f) hereof have been satisfied;
(iv) certified copies of the resolutions duly adopted by
Purchaser's board of directors authorizing the execution, delivery and
performance of this Agreement and each of the other agreements
contemplated hereby, and the consummation of all other transactions
contemplated by this Agreement;
(v) copies of all necessary third party and governmental
consents, approvals, releases and filings required in order for
Purchaser to effect the transactions contemplated by this Agreement;
and
(vi) such instruments of assumption and other documents or
instruments as Seller reasonably may request to effect the
transactions contemplated hereby.
All of the foregoing documents in this Section 8.3(b) shall be
reasonably satisfactory in form and substance to Seller and shall be dated
as of the Closing Date.
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(c) Each Shareholder and Purchaser shall execute and deliver to one
another at Closing an Employment Agreement in the form of Exhibits G-1 and
G-2 hereto (the "EMPLOYMENT AGREEMENT").
(d) Seller and Purchaser shall execute and deliver to one another an
Assignment and Assumption of the Purchase Orders, Vendor Orders and
Contracts, selling and assigning from Seller to Purchaser, its successors
and assigns, all of Seller's right, title and interest in and to such
Purchase Orders, Vendor Orders and Contracts (other than the Excluded
Contracts), consented to in writing by each of the other parties to said
Purchase Orders, Vendor Order and Contracts if the consent of such parties
is required.
8.4 NONASSIGNABLE CONTRACTS. To the extent that the assignment hereunder
by Seller to Purchaser of any contract, commitment, license, lease or other
agreement of Seller (the "NONASSIGNABLE CONTRACTS") is not permitted or is not
permitted without the consent of any other party to the Nonassignable Contract,
this Agreement shall not be deemed to constitute an assignment of any such
Nonassignable Contract if such consent is not given or if such assignment
otherwise would constitute a breach of, or cause a loss of contractual benefits
under, any such Nonassignable Contract, and Purchaser shall assume no
obligations or liabilities thereunder, except to pay the Republic loan
concurrently with the Closing to the extent set forth in Section 1.4(f) and at
or prior to the Closing Seller shall pay the balance, if any, of the Republic
loan. Seller shall use its best efforts to advise Purchaser promptly in writing
with respect to any Nonassignable Contract which it knows or has reason to
believe shall not receive any required consent. Without in any way limiting
Seller's obligation to obtain all consents and waivers necessary for the sale,
transfer, assignment and delivery of the Nonassignable Contracts and the
Acquired Assets to Purchaser hereunder, if any such consent is not obtained or
if such assignment is not permitted irrespective of consent and the Closing
hereunder is consummated, Seller shall cooperate with Purchaser in any
reasonable arrangement designed to provide Purchaser with the rights and
benefits, subject to the obligations, under the Nonassignable Contract,
including enforcement for the benefit of Purchaser of any and all rights of
Seller against any other person arising out of breach or cancellation by such
other person and if requested by Purchaser, acting as an agent on behalf of
Purchaser or as Purchaser shall otherwise reasonably require, in each case at
Purchaser's cost.
POSSESSION. Simultaneously with the Closing, Seller and each
Shareholder shall take such steps as are necessary or desirable to put Purchaser
in actual possession and operating control of the Acquired Assets and the
Business.
ARTICLE 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER AND SHAREHOLDERS. Seller and Shareholders,
jointly and severally, agree to indemnify in full Purchaser, Kuhlman and their
respective officers, directors, affiliates, employees, agents and stockholders
(collectively, the "PURCHASER INDEMNIFIED PARTIES") and hold them harmless
against any loss, liability, deficiency, damage, expense or cost (including
reasonable legal fees and expenses) (collectively, "LOSSES"), which Purchaser
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Indemnified Parties may suffer, sustain or become subject to, as a result of
(a) any misrepresentation in any of the representations or breach of any of the
warranties of Seller or either Shareholder contained in this Agreement or in any
exhibits, schedules, certificates or other documents delivered or to be
delivered pursuant to the terms of this Agreement or otherwise incorporated in
this Agreement (collectively, the "RELATED DOCUMENTS"), (b) any breach of, or
failure to perform, any agreement of Seller or either Shareholder contained in
this Agreement or any of the Related Documents, (c) any of the Excluded
Liabilities, including, without limitation, any matters described on the
"LIABILITIES SCHEDULE," "TAX MATTERS SCHEDULE," "LITIGATION SCHEDULE," "EMPLOYEE
BENEFITS SCHEDULE," "COMPLIANCE SCHEDULE" or "ENVIRONMENTAL MATTERS SCHEDULE,"
(d) any violation or alleged violation of any Environmental Law or any Release
of Hazardous Materials on, upon, in, under or from any real estate owned, leased
or operated by Seller or in connection with the Business on or prior to Closing
Date, (e) the ultimate division between Shareholders of the Stock Consideration
and other consideration received in connection with the transactions
contemplated hereby, or (f) any "CLAIMS" (as defined in Section 9.3(a) hereof)
or threatened Claims against Purchaser arising out of the actions or inactions
of Seller prior to the Closing with respect to the Acquired Assets or the
operation of the Business or any other business prior to or after the Closing or
(g) the transactions contemplated by this Agreement failing to qualify as a
reorganization under Section 368(a)(i)(C) of the Code for any reason other than
Purchaser's breach of its representation and warranty in Section 4.12 of this
Agreement (collectively, "PURCHASER LOSSES"). Notwithstanding the foregoing,
(x) Seller and Shareholders shall be liable to the Purchaser Indemnified Parties
for Purchaser Losses pursuant to Section 9.1(a) only to the extent the aggregate
amount of Purchaser Losses pursuant to Section 9.1(a) exceeds $25,000, and (y)
each Shareholder's liability for breach of his Employment Agreement or Section
11.8 of this Agreement shall be several rather than joint and several with the
other Shareholder.
9.2 INDEMNIFICATION BY PURCHASER. Purchaser agrees to indemnify in full
the Seller, and its officers, directors, employees, agents and stockholders
(collectively, the "SELLER INDEMNIFIED PARTIES") and hold them harmless against
any Losses which any of the Seller Indemnified Parties may suffer, sustain or
become subject to as a result of (a) any misrepresentation in any of the
representations or breaches of any of the warranties of Purchaser contained in
this Agreement or in any of the Related Documents, (b) the Assumed Liabilities,
(c) any action or inaction by Purchaser or Kuhlman after Closing with respect to
the operation of the Acquired Assets that give rise to any claims or threatened
claims against Seller or either Shareholder or (d) any breach of, or failure to
perform, any agreement of Purchaser contained in this Agreement or any of the
Related Documents (collectively, "SELLER LOSSES").
9.3 METHOD OF ASSERTING CLAIMS. As used herein, an "INDEMNIFIED PARTY"
shall refer to a "PURCHASER INDEMNIFIED PARTY" or "SELLER INDEMNIFIED PARTY," as
applicable, the "NOTIFYING PARTY" shall refer to the party hereto whose
Indemnified Parties are entitled to indemnification hereunder, and the
"INDEMNIFYING PARTY" shall refer to the party hereto obligated to indemnify such
Notifying Party's Indemnified Parties.
(a) In the event that any of the Indemnified Parties is made a
defendant in or party to any action or proceeding, judicial or
administrative, instituted by any third party for the liability or the
costs or expenses of which are Seller Losses or Purchaser Losses, as the
case may be, (any such third party action or proceeding being referred to
as a
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"CLAIM"), the Notifying Party shall give the Indemnifying Party prompt
notice thereof and in any event within thirty (30) days of Notifying
Party's receipt of such action or proceeding. The failure to give such
notice shall not affect any Indemnified Party's ability to seek
reimbursement unless such failure has materially and adversely affected the
Indemnifying Party's ability to defend successfully a Claim. The
Indemnifying Party shall be entitled to contest and defend such Claim;
PROVIDED, that the Indemnifying Party (i) has a reasonable basis for
concluding that such defense may be successful and (ii) diligently contests
and defends such Claim. Notice of the intention so to contest and defend
shall be given by the Indemnifying Party to the Notifying Party within
twenty (20) business days after the Notifying Party's notice of such Claim
(but, in all events, at least five (5) business days prior to the date that
an answer to such Claim is due to be filed). Such contest and defense
shall be conducted by reputable attorneys employed by the Indemnifying
Party. The Notifying Party shall be entitled at any time, at its own cost
and expense (which expense shall not constitute a Loss unless the Notifying
Party reasonably determines that the Indemnifying Party is not adequately
representing or, because of a conflict of interest, may not adequately
represent, any interests of the Indemnified Parties), to participate in
such contest and defense and to be represented by attorneys of its or their
own choosing. If the Notifying Party elects to participate in such
defense, the Notifying Party shall cooperate with the Indemnifying Party in
the conduct of such defense. Neither the Notifying Party nor the
Indemnifying Party may concede, settle or compromise any Claim without the
consent of the other party, which consent shall not be unreasonably
withheld; PROVIDED, HOWEVER, that in the event such Indemnifying Party
shall desire to settle such Claim for a specified amount and the Notifying
Party shall be unwilling to consent to such settlement, such Indemnifying
Party's obligation of indemnity hereunder with respect to such Claim shall
not exceed the amount of such settlement offer. Notwithstanding the
foregoing, in the event the Indemnifying Party fails or is not entitled to
contest and defend a claim, the Notifying Party shall be entitled to
contest, defend and settle such Claim.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party that does not involve a Claim, the Notifying Party
shall deliver a notice of such claim with reasonable promptness to the
Indemnifying Party. If the Indemnifying Party notifies the Notifying Party
that it does not dispute the claim described in such notice or fails to
notify the Notifying Party within thirty (30) days after delivery of such
notice by the Notifying Party whether the Indemnifying Party disputes the
claim described in such notice, the Loss in the amount specified in the
Notifying Party's notice shall be conclusively deemed a liability of the
Indemnifying Party and the Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the Indemnifying Party has
timely disputed its Liability with respect to such claim, the Chief
Executive Officers of each of the Indemnifying Party and the Notifying
Party (or their respective designees) shall proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through the
negotiations of such Chief Executive Officers (or their respective
designees) within sixty (60) days after the delivery of the Notifying
Party's notice of such claim, such dispute (except for any such dispute
which gives rise or could give rise to equitable relief under this
Agreement) shall be resolved fully and finally in Miami, Florida by an
arbitrator selected pursuant to, and an arbitration governed by, the
Commercial Arbitration Rules of the American Arbitration
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Association. The arbitrator shall resolve the dispute within thirty (30)
days after selection and judgment upon the award rendered by such
arbitrator may be entered in any court of competent jurisdiction.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Subject to Section 10.2, this Agreement may be
terminated at any time prior to the Closing:
(a) by mutual consent of Purchaser, Seller and Shareholders;
(b) by either Purchaser or Seller if there has been a material
misrepresentation or breach of warranty or breach of covenant on the part
of the other party(ies) in the representations and warranties or covenants
set forth in this Agreement and any such misrepresentation or breach, if
capable of cure, is not cured within fifteen (15) days after written notice
thereof to such other party(ies), or if events have occurred which have
made it impossible to satisfy a condition precedent to the terminating
party's(ies') obligations to consummate the transactions contemplated
hereby (other than as a result of any willful act or omission by the
terminating party(ies)); or
(c) by either Purchaser or Seller if the transactions contemplated
hereby have not been consummated by September 30, 1996; PROVIDED, that
neither Purchaser nor Seller shall be entitled to terminate this Agreement
pursuant to this subsection (c) if Purchaser's, or Seller's and/or either
Shareholder's willful breach of this Agreement, respectively, has prevented
the consummation of the transactions contemplated hereby.
10.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided above, this Agreement shall forthwith become void, and there shall
be no liability on the part of Shareholders, Seller or Purchaser, except for
willful breaches of this Agreement prior to the time of such termination and
except for the provisions of Section 11.7.
10.3 EFFECT OF CLOSING. Shareholders, Seller and Purchaser shall be deemed
to have waived their respective rights to terminate this Agreement upon the
completion of the Closing. No such waiver shall constitute a waiver of any
other rights arising from the non-fulfillment of any condition precedent set
forth in Article 6 or 7 unless such waiver is made in writing.
ARTICLE 11
ADDITIONAL AGREEMENTS
11.1 SURVIVAL. The representations, warranties, covenants and agreements
set forth in this Agreement or in any writing delivered to Purchaser, Seller or
Shareholders in connection with this Agreement shall survive the Closing Date
and the consummation of the transactions contemplated hereby and shall not be
affected by any examination made for or on behalf of Purchaser, Seller or
Shareholders, the knowledge of any of Purchaser's or Seller's officers,
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directors, stockholders, employees or agents, or the acceptance by Purchaser,
Seller or Shareholders of any certificate or opinion.
11.2 MUTUAL ASSISTANCE. Subsequent to the Closing, Seller and each
Shareholder on the one hand and Purchaser on the other, at their own cost, (a)
shall assist each other (including making records available) in the preparation
of their respective tax returns and the filing and execution of tax elections,
if required, as well as any audits or litigation that may ensue as a result of
the filing thereof or any other matter relating to the Business, to the extent
that such assistance is reasonably requested and (b) shall maintain for a period
of five (5) years after the Closing all records of Seller in existence as of the
Closing Date relating to the Business in their respective possession; PROVIDED,
HOWEVER, that in the event any party shall desire to dispose of any such records
prior to the expiration of said five (5) year period, it shall give the other
party(ies) an opportunity, for a period of thirty (30) days after written notice
thereof to such party(ies), to take possession of such records.
11.3 PRESS RELEASE AND ANNOUNCEMENTS. No press release related to this
Agreement or the transactions contemplated hereby, or other announcements to the
employees, customers or suppliers of Seller shall be issued without the joint
approval of Purchaser and Seller. Purchaser and Seller shall cooperate to
prepare a joint press release to be issued on the Closing Date or, upon the
request of Seller or Purchaser, at the time of the signing of this Agreement.
No other public announcement related to this Agreement or the transactions
contemplated hereby shall be made by either party, except as required by law, in
which event the parties shall consult as to the form and substance of any such
announcement required by law.
11.4 EXPENSES. Each party shall pay all of its expenses in connection with
the negotiation of this Agreement, the performance of its obligations hereunder
and the consummation of the transactions contemplated by this Agreement. Seller
shall pay (a) the cost of recording all documents necessary to place record
title in the condition warranted by or required of Seller by this Agreement and
(b) all sales, use, transfer or excise Taxes (as defined in Section 3.11 hereof)
that shall become due and payable as a result of the sale of the Acquired
Assets, including any sales Tax assessed by governmental authorities after
filing of sales Tax returns. Seller shall file all Tax returns and pay to the
appropriate taxing authority all such Tax as is required by law to be paid in
connection herewith.
11.5 FURTHER TRANSFERS. Seller shall, and shall cause its subsidiaries and
affiliates to, execute and deliver such further instruments of conveyance and
transfer and take such additional action as Purchaser may reasonably request to
effect, consummate, confirm or evidence the transfer to Purchaser of the
Acquired Assets. Seller shall execute such documents as may be necessary to
assist Purchaser (or its designees) in preserving or perfecting its rights in
the Acquired Assets.
11.6 TRANSITION ASSISTANCE. From the date hereof and until three (3) years
after the Closing, neither Seller nor either Shareholder shall in any manner
take any action which is designed, intended or might be reasonably anticipated
to have the effect of discouraging customers, suppliers, lessors and other
business associates of Seller from maintaining the same business relationships
with Purchaser after the date of this Agreement as were maintained with Seller
during the twelve-month period immediately prior to the date of this Agreement.
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11.7 CONFIDENTIALITY. If the transactions contemplated by this Agreement
are not consummated, Purchaser shall maintain the confidentiality of all, and
not use any, information and materials received by it reasonably designated by
Seller as confidential, and Purchaser shall return to Seller or destroy any
materials (and copies thereof) obtained from Seller in connection with the
transactions contemplated hereby. Whether or not the transactions contemplated
hereby are consummated, Seller and each Shareholder shall maintain the
confidentiality of all, and not use any, information and materials regarding
Purchaser and its affiliates, reasonably designated as confidential by
Purchaser. If the transactions contemplated by this Agreement are consummated,
Seller and each Shareholder shall maintain the confidentiality of all, and not
use any, proprietary and other non-public information regarding the Business and
the Acquired Assets and shall turn over to Purchaser all such materials in their
possession.
11.8 NON-COMPETE; NON-SOLICITATION.
(a) As a significant inducement to Purchaser to enter into and to
perform its obligations under this Agreement, Seller and each Shareholder
agree that, for a period of five (5) years after the Closing Date (the
"NON-COMPETITION PERIOD"), neither Seller nor either Shareholder shall
anywhere in the United States of America, Canada or Mexico, directly or
indirectly, either for itself or himself or any other person, own, manage,
control, participate in, permit its or his name to be used by, consult
with, render services for or otherwise assist in any manner any entity that
owns, invests in, manages, controls or engages in the business of
manufacturing or distributing battery cables, starter cables, battery
terminals, battery accessories, booster cables, ignition wire sets, spark
plug wires, primary wire, distributor caps and rotors, or any other
products referred to in Seller's "Web Wire & Cable Manufacturing Co.
Product Catalogue No. 96" or in Seller's catalogue entitled "Web Wire &
Cable Manufacturing Company Battery Cable Application Chart No. BC95", the
first page of each of which is attached hereto for identification purposes
as Exhibits H-1 and H-2, respectively (the "RESTRICTED BUSINESS"). Nothing
herein shall prohibit Seller or either Shareholder from being a passive
owner of not more than two percent (2%) of the outstanding stock of any
class of a corporation which is publicly traded, so long as it or he has no
active participation in the business of such corporation.
(b) Seller and each Shareholder agree that for a period of five (5)
years after the Closing, neither it nor he shall directly or indirectly
offer employment to or hire any current or future employee of the Purchaser
without the prior written consent of Purchaser.
(c) Seller and each Shareholder agree that for a period of five (5)
years after the Closing, neither it nor he shall directly or indirectly
solicit any Restricted Business within the United States of America, Canada
or Mexico from any person or entity that was a customer of Seller within
the two (2) year period prior to the Closing.
(d) If, at the time of enforcement of this Section 11.8, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area
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reasonable under such circumstances shall be substituted for the stated
duration, scope or area.
(e) Seller and each Shareholder recognize and affirm that in the
event of breach by it or him of any of the provisions of this Section 11.8
money damages would be inadequate and Purchaser would have no adequate
remedy at law. Accordingly, Seller and each Shareholder agree that
Purchaser shall have the right, in addition to any other rights and
remedies existing in its favor, to enforce its rights and the obligations
of Seller and Shareholders under this Section 11.8 not only by an action or
actions for damages, but also by an action or actions for specific
performance, injunction and/or other equitable relief without posting any
bond or security to enforce or prevent any violations, whether
anticipatory, continuing or future, of the provisions of this Section 11.8,
including, without limitation, the extension of the Non-Competition Period
by a period equal to (i) the length of the violation of this Section 11.8
plus (ii) the length of any court proceedings necessary to stop such
violation. In the event of a breach or violation, whether alleged or
actual, by Seller or either Shareholder of any of the provisions of this
Section 11.8, the running of the Non-Competition Period, but not of the
obligations of Seller or such Shareholder under this Section 11.8, shall be
tolled during the period during which such occurrence of any alleged breach
or violation is investigated and during the continuance of any actual
breach or violation.
(f) In the event Purchaser shall fail to pay when due any installment
of a Shareholder's Signing Bonus Payments (as defined in the Employment
Agreement) and fails to cure such breach within fifteen (15) days after
written notice thereof, such Shareholder (but not Seller or the other
Shareholder) shall be released from his obligations under this Section
11.8.
11.9 SPECIFIC PERFORMANCE. Seller and each Shareholder acknowledge that
the Business and the Acquired Assets are unique and recognizes and affirms that
in the event of a breach of this Agreement by Seller or either Shareholder,
other than a breach which is remedied pursuant to the provisions of Section 9.1
or 12.6, money damages would be inadequate and Purchaser would have no adequate
remedy at law. Accordingly, Seller and Shareholders agree that Purchaser shall
have the right, in addition to any other rights and remedies existing in its
favor, to enforce its rights and the obligations of Seller and Shareholders
hereunder not only by an action or actions for damages but also by an action or
actions for specific performance, injunction and/or other equitable relief,
without posting any bond or security.
11.10 REMITTANCES. All remittances, mail and other communications
relating to the Acquired Assets, Assumed Liabilities or the Business received by
Seller or either Shareholder at any time after the Closing Date shall be
immediately turned over to Purchaser by Seller or such Shareholder, and all
remittances, mail and other communications relating to the Excluded Assets or
the Excluded Liabilities received by Purchaser at any time after the Closing
Date shall be immediately turned over to Seller or to Shareholders by Purchaser.
Seller and each Shareholder shall cooperate with Purchaser, and take such
actions as Purchaser reasonably requests, to assure that customers of the
Business send their remittances directly to Purchaser, and to assure that
remittances from customers of the Business which are improperly sent to
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Seller or either Shareholder are not commingled with the assets of Seller or
either Shareholder and are turned over to Purchaser.
11.11 BEST EFFORTS TO CONSUMMATE CLOSING TRANSACTIONS. On the terms
and subject to the conditions contained in this Agreement, Seller, each
Shareholder and Purchaser agree to use their best efforts to take, or to cause
to be taken, all reasonable actions, and to do, or to cause to be done, all
reasonable things, necessary, proper or advisable under applicable laws and
regulations to consummate, as soon as reasonably practicable, the Closing,
including the satisfaction of all conditions thereto set forth herein.
11.12 WAIVER OF COMPLIANCE WITH BULK SALES LAWS. Purchaser hereby
waives compliance by Seller with the requirements of any so called bulk sales or
transfers laws of any jurisdiction in connection with the sale of the Acquired
Assets to Purchaser; but such waiver shall not affect the obligation of Seller
and Shareholders under Section 9 to indemnify Purchaser and hold Purchaser
harmless from and against any loss, liability, damage or expense which Purchaser
may suffer or sustain or to which Purchaser may become subject as a result of or
in connection with the failure by Seller to so comply.
11.13 CHANGE OF SELLER'S NAME. As of the Closing, Seller shall change
its corporate name to a name which in the reasonable opinion of Purchaser is
substantially dissimilar to Web Wire Products and thereafter shall not use any
name or title similar to its former corporate name.
11.14 COLLECTION OF ACCOUNTS RECEIVABLE.
(a) Purchaser shall use reasonable efforts to collect all of the
accounts receivables from customers reflected on the Closing Balance Sheet
(the "ACCOUNTS RECEIVABLE"). Purchaser shall furnish Seller with all such
records and other information as Seller may require to verify the amounts
collected by Purchaser with respect to the Accounts Receivable. For the
purpose of determining amounts collected by Purchaser with respect to the
Accounts Receivable, (i) if a payment is specified by an account debtor as
being in payment of a specific invoice of Purchaser or Seller, as the case
may be, the payment shall be applied to that invoice and (ii) in the
absence of a bona fide dispute between an account debtor and Seller, all
payments by an account debtor that are not specified as being in payment of
a specific invoice shall first be applied to the oldest outstanding invoice
due from that account debtor. Purchaser shall not be required to retain a
collection agency, bring any suit or take any other action out of the
ordinary course of business to collect any of the Accounts Receivable.
Purchaser shall not compromise, settle or adjust the amount of any of the
Accounts Receivable without the prior written consent of Seller which shall
not be unreasonably withheld.
(b) To the extent that Purchaser has not collected the full amount of
the Accounts Receivable reflected on the Closing Balance Sheet (less the
allowance for uncollectible accounts set forth thereon) within one hundred
fifty (150) days after the Closing Date (or, with respect to Accounts
Receivable due from Northern Automotive, within one hundred eighty (180)
days after the Closing Date), or any such collected amounts are subject to
return due to any bankruptcy preference or similar action,
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Purchaser shall have the right to require Seller to repurchase for cash all
Accounts Receivable remaining outstanding at their face amount less said
allowance (and any such collected amounts that are subject to return), and
concurrently with the payment by Seller of such amount, Purchaser shall
quit claim and reassign to Seller all Accounts Receivable remaining
outstanding and all such collected amounts that are subject to return.
(c) In the event that after the Closing Date Seller shall receive any
remittance from or on behalf of any account debtor with respect to the
Accounts Receivable (excluding any Accounts Receivable reassigned to
Seller), Seller shall endorse without recourse (and without affecting
Seller's obligations under Section 11.14(b)) such remittance to the order
of Purchaser and forward same to Purchaser promptly upon receipt thereof.
(d) In the event that Purchaser shall receive any remittance from or
on behalf of any account debtor with respect to any Account Receivable
after such Account Receivable has been reassigned to Seller, Purchaser
shall endorse without recourse such remittance to the order of Seller and
forward same to Seller promptly upon receipt thereof.
11.15 EMPLOYEES OF SELLER. Purchaser is under no legal obligation to
employ any personnel presently employed by Seller. Prior to the Closing Date,
Purchaser may offer employment to such persons currently employed by Seller as
Purchaser in its sole discretion shall determine. Purchaser shall have the
absolute right to establish all terms and conditions of employment, including
wages, benefits and benefit plans, for any employees of Seller to whom it
chooses to make an offer of employment to be employed by Purchaser. Further, it
is expressly agreed that Purchaser is not bound by any previous or existing
collective bargaining agreement which may be in existence between Seller and any
representatives of Seller's employees, nor is Purchaser bound to assume,
implement or continue any wages, terms and conditions of employment, benefits or
benefit plans which may currently exist for Seller's employees. All such offers
of employment shall be on the terms and conditions established by Purchaser and
shall be contingent upon employment commencing with Purchaser only following the
Closing Date. Seller and Shareholders agree not to discourage any individuals
who are offered employment by Purchaser from accepting employment with
Purchaser.
ARTICLE 12
MISCELLANEOUS
12.1 AMENDMENT AND WAIVER. This Agreement may be amended, and any
provision of this Agreement may be waived; PROVIDED, that any such amendment or
waiver shall be binding on Seller or a Shareholder only if such amendment or
waiver is set forth in a writing executed by Seller or such Shareholder and that
any such amendment or waiver shall be binding upon Purchaser only if such
amendment or waiver is set forth in a writing executed by Purchaser. No course
of dealing between or among any persons having any interest in this Agreement
shall be deemed effective to modify, amend or discharge any part of this
Agreement or any rights or obligations of any person under or by reason of this
Agreement.
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12.2 NOTICES. All notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested. Notices, demands and
communications to Seller, Shareholders or Purchaser shall, unless another
address is specified in writing in accordance herewith, be sent to the address
indicated below:
NOTICES TO SELLER(1) NOTICES TO SHAREHOLDERS
Web Wire Products, Inc. Mr. Harold Lowenstein
5602 NW 161st Street 5602 NW 161st Street
Miami, Florida 33014 Miami, Florida 33014
Attention: President
Mr. Allan R. Walch
5602 NW 161st Street
Miami, Florida 33014
WITH A COPY TO: WITH A COPY TO:
Adorno & Zeder Adorno & Zeder
2601 South Bayshore Drive 2601 South Bayshore Drive
Suite 1600 Suite 1600
Miami, Florida 33133 Miami, Florida 33133
Attention: Martin J. Nash, Esq. Attention: Martin J. Nash, Esq.
NOTICES TO PURCHASER
Coleman Cable Systems, Inc.
2500 Commonwealth Avenue
North Chicago, Illinois 60064
Attention: Joel V. Marshall, President, Coleman Cord Products
- --------------------
(1) Seller's name shall change following the Closing to "WWP Liquidating Corp."
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WITH COPIES TO:
Kuhlman Corporation
Three Skidaway Village Square
Savannah, Georgia 31411
Attention: Richard A. Walker, Esq., Executive Vice President,
Chief Administrative Officer, General Counsel and Secretary
Vedder, Price, Kaufman & Kammholz
222 N. LaSalle Street, Suite 2600
Chicago, Illinois 60601-1003
Attention: Dalius F. Vasys, Esq.
12.3 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns (including all successors and assignees in the
event of Seller's liquidation), but neither this Agreement nor any of the
rights, interests or obligations hereunder of Seller or either Shareholder shall
be assignable by Seller or either Shareholder without the prior written consent
of Purchaser. Subsequent to the Closing, Purchaser shall have the right to
assign this Agreement without the consent of any other party.
12.4 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provisions or the remaining provisions of this Agreement.
12.5 NO STRICT CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any person.
12.6 REMEDIES CUMULATIVE. Except as set forth in Section 9.3(b), all
remedies of the parties provided herein shall, to the extent permitted by law,
be deemed cumulative and not exclusive of any thereof or of any other remedies
available to the parties, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained herein, and
every remedy given herein or by law to any party hereto may be exercised from
time to time, and as often as shall be deemed expedient, by such party. In the
event Purchaser suffers any Purchaser Losses, Purchaser shall have the right, in
addition to all other rights provided hereunder or at law, to set off such
Purchaser Losses against the Escrowed Shares by withdrawing from Escrow and
retaining a number of Escrowed Shares equal to the quotient of the Purchaser
Losses divided by the Market Value Per Share (determined as set forth in the
last sentence of Section 2.1, except that the date of such set off shall be
substituted for the Closing Date). Any Escrowed Shares which are set off shall
be deducted from the installment or installments of Escrowed Shares which are
first thereafter distributable to Seller from Escrow under Section 2.2(c).
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12.7 CAPTIONS. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
12.8 COMPLETE AGREEMENT. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
12.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one and the same
instrument.
12.10 GOVERNING LAW. The internal law, not the law of conflicts, of
the State of Illinois shall govern all questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SELLER:
WEB WIRE PRODUCTS, INC.
By:/s/ Allan R. Walch
----------------------------------------------
Name: Allan R. Walch
-----------------------------------------
Title: President
---------------------------------------
SHAREHOLDERS:
/s/ Harold Lowenstein
-------------------------------------------------
Harold Lowenstein
/s/ Allan R. Walch
-------------------------------------------------
Allan R. Walch
PURCHASER:
COLEMAN CABLE SYSTEMS, INC.
By:/s/ Joel V. Marshall
-------------------------------------------
Name: Joel V. Marshall
---------------------------------------
Title: Vice President
--------------------------------------
The undersigned hereby agrees to be a party to the foregoing Agreement solely
for purposes of being bound by Section 2.8 thereof.
KUHLMAN CORPORATION
By:/s/ Curtis G. Anderson
----------------------------------------------
Name: Curtis G. Anderson
-----------------------------------------
Title: President and Chief Operating Officer
----------------------------------------
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