SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: September 22, 1998
------------------------
(Date of earliest event reported)
THE MANITOWOC COMPANY, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 1-11978 39-0448110
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
500 So. 16th Street, Manitowoc, WI 54220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (920-684-4410)
(Former name or former address, if changed since last report)
Item 5. Other Events
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On September 22, 1998, The Manitowoc Company, Inc. (the "Company") issued a
press release announcing it had signed an agreement to purchase the assets of
USTC, Inc., a wholly owned subsidiary of UK-based Powerscreen International
PLC.
Located in York, Pennsylvania, USTC builds three proprietary product lines,
including boom trucks, rough terrain forklifts, and other types of material-
handling equipment. USTC was formed in 1996 when Powerscreen purchased the
boom truck product line formerly built by JLG. Presently, the USTC product
line includes nine models of boom trucks offering capacities from 10 to
32 tons and tip heights to 170 feet. USTC has approximately 200 employees and
had consolidated sales exceeding $30 million for its fiscal year ending
March 31, 1998.
The Company plans to finance the purchase with a combination of short- and
long-term debt. The estimated price includes cash in the mid-$40 million
range plus the assumption of trade debt. Closing is contingent upon government
approval and approval by Powerscreen's shareholders. The transaction is
anticipated to close in late October to early November.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
See the Exhibit Index following the Signature page of this
Report, which is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: September 30, 1998
THE MANITOWOC COMPANY, INC.
(Registrant)
By: /s/ Robert R. Friedl
---------------------------
Robert R. Friedl
Senior Vice President and
Chief Financial Officer
THE MANITOWOC COMPANY, INC.
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Dated September 22, 1998
Exhibit Filed
No. Description Herewith
- -------- -------------- ------------
20 Press Release dated X
September 22, 1998, announcing
the agreement to purchase
the assets of USTC, Inc.
2 Purchase and Sales Agreement, X
dated as of September 21, 1998,
for the acquisition of USTC, Inc.
by The Manitowoc Company, Inc.
PURCHASE AND SALE AGREEMENT
BY AND AMONG
THE MANITOWOC COMPANY, INC.
POWERSCREEN USC INC.
(d/b/a USTC)
AND
POWERSCREEN INTERNATIONAL, PLC
DATED AS OF SEPTEMBER 21, 1998
TABLE OF CONTENTS
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Page
ARTICLE 1 DEFINITIONS 1
1.1 Accounts 1
1.2 Agreement 1
1.3 Agreement Sections 1
1.4 Assumed Liabilities 3
1.5 Bill of Sale 3
1.6 Buildings 3
1.7 Business 3
1.8 Buyer 3
1.9 Buyer's Closing Certificate 4
1.10 Buyer's Counsel Opinion 4
1.11 Closing 4
1.12 Closing Date 4
1.13 Code 4
1.14 Confidentiality Agreement 4
1.15 Contracts 4
1.16 Disclosure Schedule 4
1.17 Employee Benefit Plans 4
1.18 Equipment 4
1.19 ERISA 5
1.20 Escrow Agent 5
1.21 Escrow Agreement 5
1.22 Escrow Deposit 5
1.23 Existing Contracts 5
1.24 Existing Indebtedness 5
1.25 Existing Insurance Policies 5
1.26 Existing Investments 5
1.27 Existing Liens 5
1.28 Existing Litigation 6
1.29 Existing Permits 6
1.30 Existing Plans 6
1.31 Financial Information 6
1.32 1997 and 1998 Financial Statements 6
1.33 HSR Act 6
1.34 Indebtedness 6
1.35 Intangible Assets 6
1.36 Inventory 7
1.37 Investment 7
1.38 Knowledge of Seller 7
1.39 Law 7
1.40 Lien 7
1.41 Liquid Assets 7
1.42 Parent 7
1.43 Parent's Counsel Opinion 7
1.44 Parent's Security 7
1.45 Past Due Accounts 8
1.46 Permitted Liens 8
1.47 Person 8
1.48 Purchased Assets 8
1.49 Purchased Contracts 8
1.50 Real Property 8
1.51 Records 8
1.52 Relevant Time of Inquiry 8
1.53 Retained Assets 8
1.54 Retained Liabilities 9
1.55 Seller 9
1.56 Seller's Closing Certificate 9
1.57 Seller's Counsel Opinion 9
ARTICLE 2 PURCHASE AND SALE; PURCHASE PRICE 10
2.1 Purchase and Sale 10
2.2 Determination Purchase Price 10
2.3 Closing Payment 12
2.4 Post-Closing Adjustments; Payment Adjustment 13
ARTICLE 3 OTHER AGREEMENTS 14
3.1 Access and Cooperation 14
3.2 Disclosure Schedule 15
3.3 Duties Concerning Representations 15
3.4 Deliveries of Information; Consultation 15
3.5 Acquisition Proposals 16
3.6 Public Announcements 17
3.7 Retained Liabilities 17
3.8 Access to Records and Employees 17
3.9 Referrals and Deliveries 18
3.10 Risk of Loss 18
3.11 Allocation of Purchase Price 18
3.12 Employee Matters 19
3.13 Effective Time of Closing 20
3.14 Use of Name 20
3.15 Intention 20
3.16 Nonassignable Purchased Contracts
and Existing Permits 20
3.17 Real Property 21
3.18 Noncompetition 22
3.19 HSR Act 23
3.20 Accounts 23
3.21 Existing Litigation 23
3.22 Parent Shareholder Circular 24
3.23 Cash Management of Seller 24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER 25
4.1 Organization; Business 25
4.2 Authorization; Enforceability 25
4.3 No Violation or Conflict 26
4.4 Financial Information; Books and Records 26
4.5 Assets 27
4.6 Contingent and Undisclosed Liabilities 28
4.7 Taxes 28
4.8 Absence of Certain Changes 29
4.9 Existing Plans 29
4.10 Compliance with Law 29
4.11 Litigation 30
4.12 Existing Contracts 30
4.13 Performance of Contracts 32
4.14 Existing Insurance Policies 32
4.15 Environmental Protection 33
4.16 Labor Matters 35
4.17 Brokers 36
4.18 Governmental Approvals 36
4.19 Disclosure 36
4.20 Intangible Assets 37
4.21 Product Matters 37
4.22 Customers 37
4.23 Relationships with Related Parties 37
4.24 Real Property 38
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE BUYER 38
5.1 Organization; Business 38
5.2 Authorization; Enforceability 38
5.3 No Violation or Conflict 39
5.4 Brokers 39
5.5 Governmental Approvals 39
5.6 No Knowledge of Breach 39
ARTICLE 6 CONDUCT OF BUSINESS PENDING THE CLOSING 39
6.1 Carry on in Regular Course 39
6.2 Use of Assets 39
6.3 Sales Practices 39
6.4 Distributions 40
6.5 No Default 40
6.6 Existing Insurance Policies 40
6.7 Employment Matters 40
6.8 Contracts and Commitments 40
6.9 Preservation of Relationships 40
6.10 Compliance with Laws 40
6.11 Taxes 40
6.12 Affiliate Transactions 40
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE BUYER 41
7.1 Compliance with Agreement 41
7.2 Proceedings and Instruments Satisfactory 41
7.3 No Challenges 41
7.4 Representations and Warranties of the
Parent and the Seller 41
7.5 No Adverse Change 41
7.6 Deliveries at Closing 41
7.7 Other Documents 41
7.8 Possession; Instruments of Conveyance 42
7.9 HSR Act 42
7.10 Parent Shareholder Approval 42
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE PARENT AND THE SELLER 42
8.1 Compliance with Agreement 42
8.2 Proceedings and Instruments Satisfactory 42
8.3 No Challenges 42
8.4 Representations and Warranties of the Buyer 43
8.5 Deliveries at Closing 43
8.6 Other Documents 43
8.7 HSR Act 43
8.8 Parent Shareholder Approval 43
ARTICLE 9 INDEMNITIES 43
9.1 Parent's and Seller's Indemnity 43
9.2 Buyer's Indemnity 44
9.3 Other Provisions and Limitations
Regarding Indemnities 44
ARTICLE 10 DISPUTE RESOLUTION MECHANISMS 47
10.1 Dispute 47
10.2 Process 47
10.3 Negotiations 47
10.4 Mediation 47
10.5 Submission to Adjudication 48
10.6 General 48
ARTICLE 11 TERMINATION; MISCELLANEOUS 49
11.1 Termination 49
11.2 Rights on Termination; Waiver 49
11.3 Survival of Representations and Warranties 50
11.4 Entire Agreement; Amendment 50
11.5 Expenses 50
11.6 Governing Law 50
11.7 Assignment 50
11.8 Notices 51
11.9 Counterparts; Headings 51
11.10 Interpretation 51
11.11 Severability 52
11.12 No Reliance 52
11.13 Exhibits and Disclosure Schedule 52
11.14 Taxes and Fees; Prorations 52
11.15 Income Tax Position 52
11.16 Further Assurances 52
11.17 No Strict Construction 53
11.18 JLG Agreement 53
11.19 Consent to Jurisdiction 54
SIGNATURES 55
EXHIBITS
1. Form of Bill of Sale
2. Form of Buyer's Closing Certificate
3. Form of Buyer's Counsel Opinion
4. Form of Escrow Agreement
5. Parent's Counsel Opinion
6. Form of Seller's Closing Certificate
7. Form of Seller's Counsel Opinion
8. Adjusted March 31, 1998 Balance Sheet of Sellers
9. Certain Accounting Practices and Policies
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is made as of this 21st day of
September, 1998 by and among THE MANITOWOC COMPANY, INC. POWERSCREEN USTC INC.
and POWERSCREEN INTERNATIONAL, PLC.
RECITALS
WHEREAS, Seller is and has been engaged in the business of designing,
manufacturing, selling, distributing and servicing: (a) hydraulic boom lift
cranes and other materials handling equipment mounted on commercial truck
chassis or trailers; and (b) self-propelled hydraulic materials handling units
designed to be carried by and used in conjunction with truck trailers (the
"Business"); and
WHEREAS, Parent owns directly all shares of the issued and outstanding
capital stock of Seller; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, substantially all of the assets, rights and properties of Seller,
upon all of the terms and subject to all of the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the mutual
covenants, conditions and agreements set forth in this agreement and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
specified:
1.1 Accounts. "Accounts" shall mean all of the accounts receivable,
notes receivable and similar rights of the Seller, as of the Relevant Time of
Inquiry.
1.2 Agreement. "Agreement" shall mean this Purchase and Sale
Agreement, together with the Exhibits and the Disclosure Schedule attached
hereto, as the same may be amended from time to time in accordance with the
terms hereof.
1.3 Agreement Sections. The following terms shall have the meanings
specified in the Sections of this Agreement listed in the following table:
TERM SECTION
Acquisition Proposal 3.5(a)(i)
Book Value 2.2(b)(i)
Buyer Records 3.8(a)(i)
Calculation 2.4(a)
CERCLA 4.15(f)
Closing Balance Sheet 2.2(b)(ii)
Closing Financial Statements 2.2(b)(ii)
Closing Net Worth 2.2(b)(v)
Closing Payment 2.1(b)
Competing Business 4.23
Competing Transaction 3.5(a)(ii)
CPR 10.4
Disclosure Schedule Change 3.2(b)
Dispute 10.1
Effective Time of Closing 3.13
Environmental Claim 4.15(a)(i)
Environmental Hazardous Materials 4.15(a)(ii)
Environmental Laws 4.15(a)(iii)
Environmental Permits 4.15(a)(iv)
Environmental Release 4.15(a)(v)
Fulton 11.18(a)
Independent Accountants 2.4(e)
Interim Income Statement 2.2(b)(iii)
Interim Period EBITDA 2.2(b)(iv)
JLG 11.18(a)(iii)
JLG Agreement 11.18(a)
Minimum EBITDA 2.2(b)(vi)
Minimum Net Worth 2.2(b)(vi)
Moffett Business 3.18(b)
Net Worth Shortfall 2.2(b)(viii)
Proprietary Rights Agreements 4.16(b)
Purchase Price 2.2(a)
Replacement 10.6(f)
Request 10.4
Seller Dealer 3.18(b)
Seller Employees 3.12(a)
Sellers Records 3.8(a)(ii)
Survey 3.17(a)(i)
Title Commitments 3.17(a)(ii)
Title Company 3.17(a)(iii)
WARN Act 3.12(c)
1.4 Assumed Liabilities. "Assumed Liabilities" shall mean and be
limited to:
(a)Those liabilities and obligations of the Seller for payment
and performance arising after the Effective Time of Closing pursuant to the
Purchased Contracts; and
(b)Accounts payable, accrued expenses, accrued income taxes,
accrued products liability contingencies and capital lease obligations which:
(i) have been incurred in the ordinary course of the Business; and (ii) are
set forth in the Disclosure Schedule or reflected on the Closing Balance
Sheet; and
(c)All of Seller's payment obligations under its note payable,
made as of March 24, 1998, to Marine Equipment Co., Inc. d/b/a Gateway
Equipment Co. reflected on the Closing Balance Sheet; and
(d)Seller's obligations under warranties extended by Seller to
customers on Seller's customary and standard terms in connection with sales of
products made prior to the Effective Time of Closing in the ordinary course of
Seller's conduct of the Business; and
(e)All liabilities of the Seller for claims, demands, expenses
and actions in law or in equity made or brought after the Effective Time of
Closing by any Person seeking recovery for personal injury or property damage
alleged to have been caused by the defective design or workmanship of any
product manufactured or sold by the Business, whether manufactured before or
after Closing (including those manufactured prior to Seller's acquisition of
the business on May 22, 1996, but excluding discontinued products);
(f)All liabilities of the Seller related to Field Service
Bulletins or Field Service Changes issued prior to the Effective Time of
Closing and specified on the Disclosure Schedule; and
(g)Any other liability or obligation of the Seller explicitly
assumed by the Buyer pursuant to any provision of this Agreement.
1.5 Bill of Sale. "Bill of Sale" shall mean the Bill of Sale and
Assumption of Liabilities in substantially the form of Exhibit 1 attached to
this Agreement.
1.6 Buildings. "Buildings" shall mean all buildings, fixtures,
structures and improvements located on the Real Property.
1.7 Business. "Business" shall have the meaning defined in the
Recitals to this Agreement.
1.8 Buyer. "Buyer" shall mean The Manitowoc Company, Inc., a
Wisconsin corporation, and any assignee permitted under Section
11.7 of this Agreement.
1.9 Buyer's Closing Certificate. "Buyer's Closing Certificate" shall
mean the Closing Certificate of the Buyer in substantially the
form of Exhibit 2 attached to this Agreement.
1.10 Buyer's Counsel Opinion. "Buyer's Counsel Opinion" shall mean the
opinion of Quarles & Brady in substantially the form of Exhibit 3 attached to
this Agreement.
1.11 Closing. "Closing" shall mean the conference to be held at 10:00
A.M., Central Time, on the Closing Date at the offices of Quarles & Brady, 411
East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or such other time and
place as the parties may mutually agree to in writing, at which the
transactions contemplated by this Agreement shall be consummated.
1.12 Closing Date. "Closing Date" shall mean: (a) November 3, 1998
or, if later, on the tenth business day following the satisfaction or waiver
of the conditions set forth in Article 7 and Article 8 of this Agreement
(other than conditions which, by their nature, are to be satisfied at the
Closing, but subject to such conditions); or (b) such other date as the
parties may mutually agree to in writing.
1.13 Code. "Code" shall mean the Internal Revenue Code of 1986, as the
same may be in effect from time to time.
1.14 Confidentiality Agreement. "Confidentiality Agreement" shall mean
the letter agreement between the Seller and the Buyer dated May 12, 1998.
1.15 Contracts. "Contracts" shall mean all of the contracts,
agreements, leases, relationships and commitments, written or oral, to which
the Seller is a party or by which it or the Purchased Assets are bound.
1.16 Disclosure Schedule. "Disclosure Schedule" shall mean the
Disclosure Schedule, dated the date of this Agreement, delivered by the Seller
to the Buyer contemporaneously with the execution and delivery of this
Agreement and as the same may be amended or supplemented from time to time
after the date of this Agreement and prior to the Closing Date in accordance
with the terms of this Agreement.
1.17 Employee Benefit Plans. "Employee Benefit Plans" shall mean any
pension plan, profit sharing plan, bonus plan, incentive compensation plan,
stock ownership plan, stock purchase plan, stock option plan, stock
appreciation plan, employee benefit plan, employee benefit policy, retirement
plan, fringe benefit program, insurance plan, severance plan, disability plan,
health care plan, sick leave plan, death benefit plan, or any other plan or
program to provide retirement income, fringe benefits or other benefits to
former or current employees of the Seller.
1.18 Equipment. "Equipment" shall mean all machinery, toolings,
equipment, furniture, fixtures, motor vehicles, furnishings, parts, tools,
dies, jigs, patterns, machine tools, office equipment, computers, leasehold
improvements, construction in progress and other items of tangible personal
property which, as of the Relevant Time of Inquiry, are owned by the Seller
and used by or useful to the Seller in the operation of the Businesses.
1.19 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as the same may be in effect from time to time.
1.20 Escrow Agent. "Escrow Agent" shall mean a financial institution
mutually acceptable to Buyer and Seller.
1.21 Escrow Agreement. "Escrow Agreement" shall mean the Escrow
Agreement among the Buyer, the Seller and the Escrow Agent in substantially
the form of Exhibit 4 attached hereto.
1.22 Escrow Deposit. "Escrow Deposit" shall mean Two Million and
00/100 U.S. Dollars ($2,000,000.00).
1.23 Existing Contracts. "Existing Contracts" shall mean those
Contracts which are listed and briefly described on the Disclosure Schedule,
which listing will change from time to time from and after the date of this
Agreement and to and including the Closing Date as the Seller enters into new
Contracts, completes performance of Existing Contracts, and terminates
Existing Contracts, and as Existing Contracts expire or terminate in
accordance with their terms, all in the ordinary course of Seller's conduct of
the Business and in accordance with the terms of this Agreement.
1.24 Existing Indebtedness. "Existing Indebtedness" shall mean all of
the In debtedness of the Seller, all of which is listed and briefly described
on the Disclosure Schedule, which listing will change from time to time from
and after the date of this Agreement and to and including the Closing Date as
the Seller pays off Existing Indebtedness and contracts for, enters into and
incurs new Indebtedness, all in the ordinary course of its conduct of the
Business and in accordance with the terms of this Agreement.
1.25 Existing Insurance Policies. "Existing Insurance Policies" shall
mean all of the insurance policies currently in effect and owned by the
Seller, all of which are listed and briefly described on the Disclosure
Schedule.
1.26 Existing Investments. "Existing Investments" shall mean all
Investments of the Seller, all of which are listed and briefly described on
the Disclosure Schedule.
1.27 Existing Liens. "Existing Liens" shall mean all Liens affecting
any of the Purchased Assets on the date of this Agreement, all of which are
listed and briefly described on the Disclosure Schedule.
1.28 Existing Litigation. "Existing Litigation" shall mean all pending
or threatened litigation, audit inquiries, charges, workers compensation
claims, claims for bodily injury, product warranty claims, arbitrations,
governmental investigations or proceedings, citations and legal actions of any
kind, all of which are listed and briefly described on the Disclosure
Schedule.
1.29 Existing Permits. "Existing Permits" shall mean all permits,
licenses, approvals, qualifications, permissions and governmental
authorizations (including Environmental Permits) required for the conduct of
the Business, all of which are listed and briefly described on the Disclosure
Schedule.
1.30 Existing Plans. "Existing Plans" shall mean all Employee Benefit
Plans of the Seller, all of which are listed and briefly described on the
Disclosure Schedule.
1.31 Financial Information. "Financial Information" shall mean: (a)
the 1997 Financial Statements and the 1998 Financial Statements; (b) the
unaudited financial statements of the Seller for the interim period ended June
30 1998; (c) the books and records of account of the Seller; and (d) all other
financial information relating to the financial condition of the Seller
delivered or to be delivered by the Seller or the Parent to the Buyer.
1.32 1997 and 1998 Financial Statements. "1997 Financial Statements"
shall mean the audited financial statements of the Seller for the ten-month
period ended March 31, 1997, and the "1998 Financial Statements" shall mean
the audited financial statements of the Seller for the year ended March 31,
1998.
1.33 HSR Act. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
1.34 Indebtedness. "Indebtedness" shall mean all liabilities or
obligations of the relevant Person, whether primary or secondary or absolute
or contingent: (a) for borrowed money; or (b) evidenced by notes, bonds,
debentures or similar instruments; or (c) secured by Liens on any assets of
that Person.
1.35 Intangible Assets. "Intangible Assets" shall mean all of the
intangible assets owned or used by the Seller in the Businesses, including but
not limited to goodwill, trade secrets, know-how, data, plans, drawings, blue
prints, operating methods and procedures, proprietary information, processes,
technical knowledge, formulae, advertising formats, logos, United States and
foreign patents, patent applications, trade names (including the Seller's name
"USTC," and all variations and derivatives thereof, including the names
"United States Truck Crane," and "US Truck Crane," but excluding Seller's
corporate name), trademarks, service marks, trademark registrations, service
mark registrations, copyrights, copyright applications, franchise rights,
customer lists, customer telephone numbers and related rights.
1.36 Inventory. "Inventory" shall mean all inventories of the Seller
as of the Relevant time of Inquiry, including raw materials, parts,
assemblies, vehicle chassis and other store inventories, work in process and
finished goods.
1.37 Investment. "Investment" by any Person shall mean: (a) any
transfer or delivery of cash, stock or other property or value by that Person
in exchange for Indebtedness, stock or any other security of another Person;
(b) any loan, advance or capital contribution to or in any other Person; (c)
any guaranty, creation or assumption of any liability or obligation of any
other Person; and (d) any investments in any fixed property or fixed assets
other than fixed properties and fixed assets acquired in the ordinary course
of business of the relevant Person.
1.38 Knowledge of Seller. "Knowledge of Seller" shall mean the actual
knowledge of any executive officer of the Parent and the actual knowledge of
any of Barry Kavanagh or Don Campbell, after reasonable inquiry made by such
Person.
1.39 Law. "Law" shall mean any applicable foreign, federal, state,
local or other law, rule, regulation or governmental requirement of any kind,
and the rules, regulations and orders promulgated thereunder.
1.40 Lien. "Lien" shall mean, with respect to any asset: (a) any
mortgage, pledge, lien, charge, claim, restriction, condition, easement,
covenant, lease, encroachment, title defect imposition, security interest or
other encumbrance of any kind; and (b) the interest of a vendor or lessor
under any conditional sale agreement, financing lease or other title retention
agreement relating to such asset.
1.41 Liquid Assets. "Liquid Assets" shall mean all down payments,
checks, rights to refunds, security deposits, prepaid expenses and advance
payments of the Seller as of the Relevant Time of Inquiry, but shall exclude
cash, cash equivalents and Seller's bank accounts.
1.42 Parent. "Parent" shall mean Powerscreen International PLC, a
public company incorporated and existing with limited liability under the Laws
of England and Wales, which indirectly through one or more interim holding
companies owns all of the issued and outstanding shares of capital stock of
Seller.
1.43 Parent's Counsel Opinion. "Parent's Counsel Opinion" shall mean
the opinion of Andrew D. Harris, Esq., Secretary and Legal Services Director
of the Parent, in substantially the form of Exhibit 5 attached to this
Agreement
1.44 Parent's Security. "Parent's Security" shall mean all security
documentation entered into by the Seller in connection with obligations to
banks and the other members of the Parent's controlled group of companies
pursuant to a security agreement dated as of July 1, 1998 between: (a) the
Governor and Company of the Bank of Ireland as security trustee; and (b) the
Seller, Benford America, Inc., Finlay Hydrascreen USA Inc., Powerscreen USA
LLC, Powerscreen USB Inc. and Royer Industries Inc.
1.45 Past Due Accounts. "Past Due Accounts" shall mean those Accounts
which, as of the Closing Date, are more than ninety (90) days past due.
1.46 Permitted Liens. "Permitted Liens" shall mean those of the
Existing Liens which are expressly noted as Permitted Liens on the Disclosure
Schedule.
1.47 Person. "Person" shall mean and include a natural person,
corporation, trust, partnership, limited liability company, limited liability
partnership, association, unincorporated organization, governmental entity,
agency or branch or department thereof, or any other legal entity.
1.48 Purchased Assets. "Purchased Assets" shall mean all assets of the
Seller used in the conduct of the Business (except for the Retained Assets)
including, but not limited to the Accounts, the Buildings, the Equipment, the
Existing Insurance Policies, the Existing Investments, the Existing Permits,
the Intangible Assets, the Inventory, the Liquid Assets, the Purchased
Contracts, the Real Property and the Records.
1.49 Purchased Contracts. "Purchased Contracts" shall mean all of the
Contracts, other than those of the Existing Contracts which are identified on
the Disclosure Schedule as Contracts that the Buyer will not assume in
connection with the consummation of the transactions contemplated by this
Agreement.
1.50 Real Property. "Real Property" shall mean the parcels of real
property identified by the street addresses and legal descriptions set forth
in the Disclosure Schedule which are owned or leased by the Seller in
connection with the Business.
1.51 Records. "Records" shall mean all books, documents and records
owned or used by the Seller in the conduct of its Business, including
personnel, medical and accounting records, correspondence, governmentally
required records, engineering data, designs, drawings, blue prints, plans,
specifications, lists, customer lists, computer media, software and software
documentation, sales literature, catalogues, promotional items, advertising
materials and other written materials.
1.52 Relevant Time of Inquiry. "Relevant Time of Inquiry" shall mean
any point in time from and after the date of this Agreement and up to and
including the Closing Date as of which any assessment or inquiry is made with
respect to: (a) any of the disclosures made in the Disclosure Schedule; (b)
any of the terms defined in this Agreement; or (c) any of the representations,
warranties or covenants made in or pursuant to this Agreement.
1.53 Retained Assets. "Retained Assets" shall mean the following
assets of Seller as of the Closing Date which, although they may relate to the
Businesses, are not Purchased Assets and are to be retained by Seller:
(a)Seller's corporate name, Powerscreen USC Inc., Seller's
franchise to be a corporation, articles of incorporation, bylaws, minute
books, stock books, corporate seals and other corporate records having to do
with the corporate organization and capitalization of Seller;
(b)Seller' canceled checks, bank statements and tax returns;
(c)Cash and cash equivalents;
(d)The capital stock of the Seller;
(e)Any refunds or credits with respect to any federal, state or
local income taxes of the Seller or any other rights with respect to such
taxes;
(f)Insurance policies and rights under such policies, except to
the extent any amounts or benefits are received with respect to events
occurring prior to the Closing;
(g)Rights of the Seller under those Contracts which are not
Purchased Contracts; and
(h)Rights of the Seller arising under or pursuant to this
Agreement.
1.54 Retained Liabilities. "Retained Liabilities" shall mean all
obligations and liabilities of Seller as of the Closing Date other than the
Assumed Liabilities, including without limitation (a) all obligations or
liabilities arising out of the operation of the Business or the ownership of
the Purchased Assets prior to the Effective Time of Closing; and (b) all
obligations and liabilities of the Seller under the Contracts which are not
Purchased Contracts, including obligations and liabilities under such
Contracts arising after the Effective Time of Closing and in connection with
the termination of such Contracts in anticipation of, in connection with, or
as a result of the consummation of the transactions contemplated by this
Agreement.
1.55 Seller. "Seller" shall mean Powerscreen USC Inc., a Delaware
corporation doing business under the name "USTC."
1.56 Seller's Closing Certificate. "Seller's Closing Certificate"
shall mean the Closing Certificate of the Seller and the Parent in
substantially the form of Exhibit 6 attached to this Agreement.
1.57 Seller's Counsel Opinion. "Seller's Counsel Opinion" shall mean
the opinion of Brown, Todd & Heyburn PLLC in substantially the form of Exhibit
7 attached to this Agreement.
ARTICLE 2
PURCHASE AND SALE; PURCHASE PRICE
2.1 Purchase and Sale. At the Closing, and upon all of the terms and
subject to all of the conditions of this Agreement:
(a)Purchase of Assets. Seller shall sell, assign, convey and
deliver to Buyer, and Buyer shall purchase and accept from the Seller, the
Purchased Assets.
(b)Closing Payment. Buyer shall make a cash payment in the
amount of Forty-five Million and 00/100 Dollars (U.S. $45,000,000.00)
("Closing Payment") in the manner described in Section 2.3 of this Agreement.
(c)Assumed Liabilities. Buyer shall assume and agree to pay
and perform in accordance with and be bound by all of the covenants, terms and
obligations under the Assumed Liabilities.
2.2 Determination Purchase Price.
(a)Purchase Price. The "Purchase Price" for the Purchased
Assets shall be: (i) the amount of the Closing Payment; plus (ii) the amount
of the Assumed Liabilities; minus (iii) the amount of the Net Worth Shortfall,
if any (provided no such subtraction shall be made to the extent the same
matter results in a subtraction under clause (iv) following); minus (iv) if
the Interim Period EBITDA is less than the Minimum EBITDA, an amount
determined in accordance with the method demonstrated below based upon the
amount of the shortfall of the Interim Period EBITDA as compared to the
Minimum EBITDA and the appropriate multiplier factor(s):
Shortfall of Interim Period EBITDA
As Compared to Minimum EBITDA Multiplier Factor
$0 -$250,000 0
$250,001 - $500,000 2
$500,001 - $750,000 4
$750,001 - $1,000,000 6
$1,000,001 or more 8
Example of Calculation:
Assume Interim Period EBITDA of $5,900,000. Amount of variation is
$530,000. The multiplier factors are: 0 on the first $250,000 of the
shortfall; 2 on the next $250,000; and 4 on the last $30,000. EBITDA Purchase
Price adjustment is calculated as follows:
$250,000 x 0 = $ 0
250,000 x 2 = 500,000
30,000 x 4 = 120,000
---------
Total Adjustment = $620,000
(b) Definitions. As used in this Agreement:
(i)"Book Value" shall mean, for any Purchased Asset, the
amount equal to the book value of such Purchased Asset as of the Relevant Time
of Inquiry, and for any Assumed Liability shall mean the book amount of such
liability as of the Relevant Time of Inquiry.
(ii)"Closing Balance Sheet" shall mean the balance sheet
of the Seller, as of the Closing Date, to be prepared by the Buyer following
the Closing pursuant to Section 2.4(a) of this Agreement and as set forth in
this Agreement. The Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles as consistently applied by the
Seller and reflected in the March 31, 1998 adjusted balance sheet attached as
Exhibit 8 to this Agreement. By way of clarification: (A) the Closing Balance
Sheet shall be prepared using only those accounting practices, policies and
procedures set forth on Exhibit 9 attached to this Agreement; (B) where no
specific practice, policy or procedure described on Exhibit 9 applies to any
particular issue or circumstance arising in connection with the preparation of
the Closing Balance Sheet, then generally accepted accounting principles will
be applied in a manner consistent with the preparation of the March 31, 1998
adjusted balance sheet attached as Exhibit 8 to this Agreement; and (C) no
value will be attributed to any Past Due Account to the extent it has not been
collected in full as of the sixtieth (60th) day following the Closing Date;
and (D) for purposes of determining the amount of the Inventory to be included
on the Closing Balance Sheet, immediately following the Closing Date the
parties will conduct a joint inventory count as of the Closing Date during
which mutually agreed upon representatives of the Buyer and the Seller will be
present. The quantity and dollar value of the Inventory included in the
Purchased Assets will be mutually agreed upon between the parties by means of
this joint inventory count process utilizing the policies set forth in Exhibit
9.
(iii)"Closing Financial Statements" shall mean the
Closing Balance Sheet and the Interim Income Statement.
(iv)"Interim Income Statement" shall mean the income
statement of the Seller for the twelve (12) month period ended July 31, 1998
to be prepared by the Buyer following the Closing pursuant to Section 2.4(a)
of this Agreement and as set forth in this Agreement. The Interim Income
Statement shall be prepared in accordance with generally accepted accounting
principles as consistently applied by the Seller, except that: (A) the Interim
Income Statement shall be prepared using only those accounting practices,
policies and procedures set forth on Exhibit 9 attached to this Agreement; (B)
where no specific practice, policy or procedure described on Exhibit 9 applies
to any particular issue or circumstance arising in connection with the
preparation of the Interim Income Statement, then generally accepted
accounting principles will be applied in a manner consistent with the
preparation of the income statement included in the 1998 Financial Statements;
and (C) the Interim Income Statement need reflect only those items necessary
for a presentation of the amount of Seller's earnings before interest, taxes,
foreign currency transactions, product liability contingencies, depreciation
and amortization for the period covered by the Interim Income Statement (the
"Interim Period EBITDA").
(v)"Closing Net Worth" shall mean the amount by which
the Book Value of the Purchased Assets exceeds the Book Value of the Assumed
Liabilities, as reflected on the Closing Balance Sheet.
(vi)"Minimum EBITDA" shall mean an amount equal to Six
Million Four Hundred Thirty Thousand and 00/100 U.S. Dollars (U.S.
$6,430,000.00)
(vii)"Minimum Net Worth" shall mean $8,948,588, which is
the amount by which the Book Value of the Purchased Assets exceeds the Book
Value of the Assumed Liabilities reflected on Seller's March 31, 1998 adjusted
balance sheet attached as Exhibit 8 to this Agreement.
(viii)"Net Worth Shortfall" shall mean the amount, if
any, by which the Closing Net Worth falls short of the Minimum Net Worth.
2.3 Closing Payment. At the Closing, the Buyer shall make the Closing
Payment as follows:
(a)The Buyer shall deliver the Escrow Deposit to the Escrow
Agent to hold, invest and deliver in accordance with the terms of the Escrow
Agreement; and
(b)The Buyer shall deliver to the Seller, by a single wire
transfer of immediately available funds to an account designated by the Seller
in writing no less than five days prior to the Closing Date, an amount equal
to the Closing Payment less the Escrow Deposit.
2.4 Post-Closing Adjustments; Payment Adjustment.
(a)Closing Financial Statements. As promptly as practicable
following the Closing Date, the Buyer shall prepare or cause its independent
accountants to prepare: (i) the Closing Financial Statements; and (ii) a
calculation of the Closing Net Worth, the Interim Period EBITDA, the Net Worth
Shortfall, if any, and the Purchase Price, based upon the Closing Financial
Statements (the "Calculation"). The Calculation shall be prepared in
accordance with the terms of this Agreement. The Buyer shall deliver to the
Seller, as promptly as practicable after the Closing Date and, in any event,
within sixty (60) calendar days after the Closing Date, the Financial
Statements and the Calculation, together with all work papers and supporting
documentation and explanation of any adjustments made.
(b)Seller's Duties. As soon as is reasonably practicable
following the Seller's receipt of the materials described in Section 2.4(a) of
this Agreement and in any event within thirty (30) calendar days after receipt
of such deliveries, the Seller shall comply with either Section 2.4(c) or
Section 2.4(d) of this Agreement and shall instruct its advisors to review the
Financial Statements and the Calculation. For purposes of this exercise, the
Buyer shall afford to the Seller and its advisors full and unobstructed access
to all relevant books, records, information and personnel as reasonably
necessary to enable the Seller to review the Financial Statements and the
Calculation.
(c)No Objection by Seller. If the Seller notifies the Buyer
within the 30-day period provided in Section 2.4(b) that the Seller has no
objection to the Closing Financial Statements or the Calculation, or if the
Seller fails to provide any objection notice within that period, then the
Seller shall be deemed to have accepted the Closing Financial Statements and
the Calculation as delivered by the Buyer, and the amount paid by the Buyer
pursuant to Section 2.3 of this Agreement shall be adjusted in the manner set
forth in Section 2.4(g) of this Agreement.
(d)Objection by Seller. If the Seller objects to any matter in
the Closing Financial Statements or the Calculation in accordance with this
Agreement, the Seller shall, within thirty (30) calendar days after receipt of
the deliveries described in Section 2.4(a) of this Agreement: (i) notify the
Buyer in writing of such objection; and (ii) deliver to the Buyer the
calculation by the Seller of the amounts of the Closing Net Worth, Net Worth
Shortfall, Interim Period EBITDA and the Purchase Price. If the Buyer agrees
with the Seller's objection and the Seller's calculations, then the amount
paid by the Buyer pursuant to Section 2.3 of this Agreement shall be adjusted
in the manner set forth in Section 2.4(g) of this Agreement, based upon
Seller's calculations. If the Buyer does not agree with the objection of the
Seller or with the Seller's calculations, the Buyer shall, within thirty (30)
calendar days after receipt of Seller's objection, notify the Seller in
writing of such fact.
(e)Independent Accountants. The disagreement between the
Seller and the Buyer may then be submitted by either party for resolution to
Ernst & Young LLP, or to such other firm of independent certified public
accountants of national standing with an office in Baltimore, Maryland and
which is not affiliated with the Buyer, the Seller or the Parent, and which is
agreed to in writing by the Seller and the Buyer (the "Independent
Accountants"). Each of the parties shall furnish, at its own expense, the
Independent Accountants and the other parties with such documents and
information as the Independent Accountants may request. Each party may also
furnish to the Independent Accountants such other information and documents as
it deems relevant with appropriate copies or notification being given to the
other party. The Independent Accountants may, at their discretion, conduct a
conference concerning the disagreement with the Seller and the Buyer, at which
conference each party shall have the right to present additional documents,
materials and other information and to have present its advisors, counsel and
accountants. In connection with such process, there shall be no hearings,
oral examinations, testimony, depositions, discovery or other similar
proceedings conducted by any party or by the Independent Accountants. The
Independent Accountants shall determine the proportion of their fees and
expenses to be paid by each of the Seller and the Buyer, based primarily on
the degree to which the Independent Accountants have accepted the positions of
the respective parties.
(f)Decision. The Independent Accountants shall promptly render
their decision on the question in writing and finalize the Closing Financial
Statements and the Calculation of the Purchase Price. The decision of the
Independent Accountants shall be final and binding on the parties.
(g)Adjustments. In the event the Purchase Price as finally
determined pursuant to this Section 2.4 of this Agreement is less than the
amount of the Closing Payment, the Escrow Agent promptly shall pay to the
Buyer out of the Escrow Deposit an amount equal to the difference between the
Closing Payment and such Purchase Price, plus interest on such amount from the
Closing Date until the date paid in full at an annual rate equal to the
annualized rate of return earned on the Escrow Deposit from the Closing Date
to the date of such distribution from the Escrow Deposit. Concurrent with
such payment, the Escrow Agent shall distribute the balance of the Escrow
Deposit to the Seller, but only to the extent such balance exceeds $1,000,000.
The balance of the Escrow Deposit shall be retained and held by the Escrow
Agent pursuant to this Agreement and the Escrow Agreement.
ARTICLE 3
OTHER AGREEMENTS
3.1 Access and Cooperation.
(a)Access. Upon reasonable notice, the Seller shall afford to
the officers, employees, accountants, legal counsel and other representatives
of the Buyer full access to all of the properties, books, contracts,
commitments and records of the Seller.
(b)Confidentiality Agreement. The Buyer and the Seller agree
that, except as required by Law, the provisions of the Confidentiality
Agreement shall remain in full force and effect; provided that, at the
Effective Time of Closing, the Confidentiality Agreement, together with the
June 9, 1998 indicative offer letter executed by and between Buyer and Seller,
shall be deemed to have terminated without further action by the parties.
3.2 Disclosure Schedule.
(a)Disclosure Schedule. Contemporaneously with the execution
and delivery of this Agreement, the Seller is delivering to the Buyer the
Disclosure Schedule. Subject to Section 11.13 of this Agreement, the
Disclosure Schedule is deemed to constitute an integral part of this Agreement
and to modify the representations, warranties, covenants or agreements of the
Seller contained in this Agreement to the extent that such representations,
warranties, covenants or agreements expressly refer to the Disclosure
Schedule.
(b)Updates. Prior to the Closing Date, the Seller shall update
the Disclosure Schedule as necessary by written notice to the Buyer to reflect
any matters which occur from and after the date of this Agreement which, if
existing on the date of this Agreement, would have been required to be
described in the Disclosure Schedule. If requested by the Buyer, the Seller
shall meet and discuss with the Buyer any change in the Disclosure Schedule
made by the Seller which is, in the reasonable judgment of the Buyer,
materially adverse in any matter to Buyer (a "Disclosure Schedule Change").
If the parties cannot resolve any differences regarding a Disclosure Schedule
Change within a reasonable period of time (not to exceed ten (10) calendar
days), either party may terminate this Agreement.
3.3 Duties Concerning Representations. Each party to this Agreement
shall: (a) to the extent within its control, use reasonable efforts to cause
all of its representations and warranties contained in this Agreement to be
true and correct in all material respects on the Closing Date with the same
force and effect as if such representations and warranties had been made on
and as of the Closing Date; (b) use reasonable efforts to obtain any third
party consents or approvals required by this Agreement; and (c) use reasonable
efforts to cause all of the conditions precedent set forth in Articles 7 and 8
of this Agreement to be satisfied.
3.4 Deliveries of Information; Consultation. From time to time prior
to the Closing Date:
(a)Deliveries by the Seller. The Seller shall furnish promptly
to the Buyer: (i) the monthly financial statements of the Seller (as prepared
by the Seller in accordance with their normal accounting procedures) promptly
after such financial statements are available; (ii) a summary of any action
taken by the Seller's Board of Directors, or any committee thereof or by the
Parent as the sole shareholder of the Seller; and (iii) all other information
concerning the operations, properties and personnel of the Seller as the Buyer
may reasonably request.
(b)Consultation. The Seller shall confer and consult with
representatives of the Buyer on a periodic basis to report on operational
matters of the Seller and the general status of ongoing business operations of
the Seller.
(c)Acquisitions. The Seller shall notify the Buyer
immediately: (i) of any Acquisition Proposal; (ii) of any request from any
Person for confidential information concerning the business of the Seller; and
(iii) if any Person seeks to initiate or continue any discussions or
negotiations with the Seller concerning a Competing Transaction or an
Acquisition Proposal.
3.5 Acquisition Proposals.
(a)Definitions. As used in this Agreement, the following terms
shall have the meanings specified:
(i)"Acquisition Proposal" shall mean any inquiry,
proposal or offer relating to a Competing Transaction; and
(ii)"Competing Transaction" shall mean any or all of the
following, other than the transactions described in this Agreement or any
other transaction between the Buyer and the Seller (except where the
transactions contemplated by this Agreement have not been consummated because
of a failure of the Buyer to meet any or all of the conditions precedent set
forth in Article 8 of this Agreement: (A) a merger, share exchange,
consolidation, reorganization, combination or similar transaction which
involves or affects the Seller; or (B) a sale, transfer or other disposition
of all or substantially all of the assets of the Seller in a single
transaction or a series of related transactions; or (C) a sale, exchange offer
or tender offer for, or acquisition by any Person or group of Persons of,
beneficial ownership of any outstanding shares of stock of the Seller in a
single transaction or series of related transactions; or (D) a public
announcement of a proposal, plan, intention or agreement to do any of the
foregoing.
(b)Acquisition Proposals. Neither the Parent nor the Seller
shall, and shall cause their respective shareholders, officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained or engaged by that party)
not to: (i) initiate, solicit, or encourage any inquiries concerning an
Acquisition Proposal or a Competing Transaction; (ii) engage in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any Person relating to an Acquisition Proposal
or a Competing Transaction; or (iii) facilitate any effort or attempt to make
or implement an Acquisition Proposal; or (iv) consummate, agree or commit to
consummate an Acquisition Proposal or a Competing Transaction. The Parent and
the Seller shall immediately cease or cause to be terminated any existing
activities, discussions or negotiations with any Person with respect to any of
the foregoing activities. The covenants set forth in this Section 3.5(b)
shall lapse, expire and be of no further force or effect upon the termination
of this Agreement prior to the Closing if such termination is caused by the
Buyer's failure to meet any or all of the conditions precedent set forth in
Article 8 of this Agreement.
(c)Fees. In consideration of the substantial expenditures of
time, effort and expense undertaken and to be undertaken by the Buyer in
connection with the consummation of the transactions contemplated by this
Agreement, and notwithstanding any provision to the contrary in this
Agreement, Seller shall pay to Buyer the amount of $1,000,000 upon a
termination of this Agreement without prejudice to the right of Buyer to seek
damages in excess of that amount, if such termination results from the Closing
of any Competing Transaction, or is followed by Seller or Parent or both
entering into, executing, agreeing to or closing any Competing Transaction on
or prior to February 28, 1999.
3.6 Public Announcements. Subject to each party's disclosure
obligations imposed by Law, the Buyer, the Seller and the Parent will
cooperate and consult with each other in the development and distribution of
all news releases and other public information disclosures with respect to
this Agreement or any of the transactions contemplated by this Agreement and
shall not issue any press release or public statement without the approval of
the other parties, which approval shall not be unreasonably withheld. Seller
and Parent acknowledge that Buyer is a public company, and Buyer acknowledges
that Parent is a public company. As public companies, Buyer and Parent are
subject to legally required disclosures, which may require either or both of
them to make one or more public announcements regarding this Agreement on very
short notice. Under such circumstances, the disclosing party will exercise
reasonable efforts to comply with the foregoing provisions of this Section 3.6
of this Agreement, but the disclosing party has the right to proceed with any
public announcement without prior approval if the disclosing party is unable
to obtain such approval at a time when the disclosing party, on the advice of
counsel, has made a good faith determination that it is necessary to issue
such public statement.
3.7 Retained Liabilities. Except as otherwise specifically provided
for in this Agreement, Buyer is not assuming any liabilities or obligations of
Seller, and Seller shall pay, perform in accordance with, be bound by and
satisfy all of the Retained Liabilities in the ordinary course of business.
3.8 Access to Records and Employees.
(a)Definitions. As used in this Agreement, the following terms
shall have the meanings specified:
(i)"Buyer Records" shall mean all books, documents and
records which are part of the Purchased Assets and relate to the period prior
to the Closing Date, including personnel records, accounting records,
correspondence, manuals, engineering data, designs, drawings, blueprints,
plans, specifications, lists, customer lists, computer media, software and
software documentation, sales literature, catalogues, promotional items,
advertising materials and other written materials.
(ii)"Seller Records" shall mean all books, documents and
records owned by the Seller or the Parent, which primarily relate to the
Business but which are not included in the Purchased Assets.
(b)Buyer Records. Until January 1, 2004, the Buyer agrees to
permit the Seller, and their attorneys, accountants, agents and designees,
such access to, and right to copy, such Buyer Records as the Seller may deem
reasonably necessary or reasonably desirable. Any such examination and
copying shall be at the expense of the Seller, shall be performed at the place
where the Buyer Records are regularly maintained by the Buyer and shall not
unreasonably interfere with the normal business activities of the Buyer. The
Buyer shall notify the Seller if at any time prior to January 1, 2004 it
intends to destroy any or all of the Buyer Records and the Seller shall have
the right to review and remove the Buyer Records at the Seller's expense.
(c)Seller Records. Until January 1, 2004, the Seller agrees to
permit the Buyer, and its attorneys, accountants, agents and designees, such
access to, and right to copy, such Seller Records as the Buyer may deem
reasonably necessary or reasonably desirable. Any such examination and
copying shall be at the expense of the Buyer, shall be performed at the place
where the Seller Records are regularly maintained by the Seller and shall not
unreasonably interfere with the normal business activities of the Seller. The
Seller shall notify the Buyer if at any time prior to January 1, 2004 the
Seller intends to destroy any or all of the Seller Records, and the Buyer
shall have the right to review and remove any of the Seller Records at the
Buyer's expense.
(d)Buyer's Employees. Until January 1, 2004, the Buyer shall
afford the Seller and the Parent access to those employees of the Buyer who
were employees of the Seller prior to the Closing Date. Any such access shall
be: (i) at the request of the Seller or Parent, as the case may be; (ii)
scheduled and provided on a reasonable basis taking into account the business
requirements of the Buyer; and (iii) for any proper business purpose of the
Seller or Parent, as the case may be. The Seller or Parent, as the case may
be, shall pay all reasonable out-of-pocket expenses, excluding wages and
salaries, incurred by the Buyer in connection with this Section 3.8(d) of this
Agreement.
3.9 Referrals and Deliveries. After the Closing, the Seller shall
immediately:
(a) deliver to the Buyer, in the form received with the addition
of any required endorsements by the Seller, any cash, checks, or other
payments received by the Seller which belong to the Buyer; (b) refer to the
Buyer any and all inquiries from customers or suppliers of the Seller or other
Persons relating to the business of the Seller; and (c) deliver to the Buyer
all purchase orders received by the Buyer relating to the businesses of the
Seller.
3.10 Risk of Loss. All risk of loss and rights to insurance proceeds
with respect to the Purchased Assets shall remain with the Seller until the
Effective Time of Closing. All risk of loss shall pass to the Buyer effective
as of the Effective Time of Closing.
3.11 Allocation of Purchase Price. The Purchase Price shall be
allocated among the classes of Purchased Assets in accordance with Section
1060 of the Code as mutually agreed between the parties and set forth on a
schedule to be mutually executed at Closing. The Buyer and the Seller shall
cooperate with each other in the preparation and filing of IRS Form 8594 in
connection with such allocation. Neither the Buyer nor the Seller shall take
any position (whether in financial statements, audits, tax returns or
otherwise) which is inconsistent with such allocation of the Purchase Price
unless required to do so by applicable Law.
3.12 Employee Matters.
(a)Employee Information. Within five (5) days after the date
of this Agreement, Seller shall provide to Buyer a full and complete summary
of employment information concerning all employees actually employed in the
Business as of the date of this Agreement (including those on leave of absence
or layoff status (collectively the "Seller Employees"), including, for each
such Seller Employee, name, job title, any job description, rate of pay, hire
date, job classification (i.e., full time or part time), participation in
Employee Benefit Plans, social security number, and additional information
specified under Section 4.16(a) of this Agreement. Such information shall be
updated by the Seller as of the Closing Date.
(b)Seller Employees. Prior to the Closing, the Seller shall
terminate the employment of all of the Seller Employees, effective as of the
Effective Time of Closing. With the exception of the Seller Employees
identified on the Schedule as the persons whom the Seller desires to retain in
its employment, Buyer shall offer employment to each of the Seller Employees
effective as of the Effective Time of Closing in their present or comparable
positions and with base salaries or hourly wages at least equal to the base
salaries or hourly wages, as the case may be, paid by the Seller to such
Seller Employees as of the Closing Date. Any Seller Employee who accepts
Buyer's employment offer will be eligible to participate in employee benefit
plans sponsored and maintained by the Buyer, subject to any applicable waiting
periods. For purposes of vesting requirements provided under the Buyer's
plans, Seller Employees who accept employment with the Buyer will receive
credit for employment service with the Seller. Notwithstanding the foregoing,
Buyer shall not hire, with an effective date of hiring prior to the Closing
Date, any Seller Employee, and Buyer shall have no obligation to hire any
Seller Employee who refuses to take or fails a drug screening test
administered by the Buyer in accordance with its policies and practices.
It is further expressly understood and agreed that, subject to Buyer's
compliance with its obligation to offer employment to each Seller Employee
pursuant to this Section 3.12(b), the Buyer is not assuming any union
contracts, collective bargaining agreements, any liabilities or obligations
under any Employee Benefit Plan, including without limitation any severance
benefits that might arise under an Employee Benefit Plan or COBRA as a result
of Seller's termination of such Seller Employee's employment pursuant to this
Section 3.12(b) of this Agreement or otherwise, or any other obligations of
the Seller to any of the Seller Employees, whether existing prior to or
arising as a result of the consummation of the transactions contemplated by
this Agreement. Any and all such matters shall be "Retained Liabilities" and
shall remain the Seller's sole responsibility and obligation. However, to the
extent any such liability or obligation results from Buyer's failure to offer
employment to one or more Seller Employees as required by this Section
3.12(b), then such liabilities and obligations shall be deemed "Assumed
Liabilities" for all purposes under this Agreement and the Buyer shall be
fully responsible for such liabilities and obligations.
(c)WARN Act Matters. The Buyer covenants and agrees with the
Seller that the Buyer will offer employment to a sufficient number of the
Seller Employees as of the Effective Time of Closing, and will maintain a
sufficient number of such Seller Employees in its employment during the 60
days following the Closing Date, so that the consummation of the transactions
contemplated by this Agreement will not give rise to a "plant closing" or a
"mass layoff" (as those terms are defined in the U.S. Worker Adjustment and
Retaining Notification Act of 1988, as amended (the "WARN Act")), as of or
prior to the Closing Date. For purposes of this Agreement, the Closing Date
is the "Effective Date" as that term is defined and used under the WARN Act.
3.13 Effective Time of Closing. The parties agree that the
transactions described in this Agreement shall be deemed effective as of 11:59
P.M., Central Time, on the Closing Date (the "Effective Time of Closing").
3.14 Use of Name. On the Closing Date, Seller shall take all
appropriate legal and other steps to discontinue use of "USTC Inc.," "United
States Truck Crane," "US Truck Crane" and all other "doing business as"
names, "fictitious names," or trade names used by Seller or its predecessors
in connection with the Business and all confusingly similar names.
3.15 Intention. It is the intention of the parties that the Purchased
Assets shall include all of the tangible and intangible assets owned by the
Seller and used in or necessary for the operation of the Businesses on the
date of this Agreement and as of the Closing Date, excepting therefrom only
the Retained Assets and assets disposed of by the Seller in the ordinary
course of the Business between the date of this Agreement and the Closing
Date, and including any assets acquired by the Seller for use in the Business
after the date of this Agreement and on or prior to the Closing Date.
3.16 Nonassignable Purchased Contracts and Existing Permits. To the
extent that the assignment of any Purchased Contract or Existing Permit to the
Buyer pursuant to this Agreement shall require the consent of any other
Person, this Agreement shall not constitute a contract to assign the same if
an attempted assignment would constitute a breach of such Purchased Contract
or Existing Permit. The parties shall use their mutual reasonable efforts and
cooperation to obtain any consent necessary to any such assignment. If any
such consent is not obtained, the parties will cooperate in any reasonable
arrangement to assure, as nearly as practicable, that they are in the same
position as they would have been had the required consent been obtained.
3.17 Real Property.
(a)Definitions. As used in this Agreement, the following terms
shall have the meanings specified:
(i)"Survey" shall mean a certified survey map prepared by
a registered land surveyor jointly selected by the Seller and the Buyer which
shall be sufficient to enable the Title Company to eliminate all survey
exceptions relating to the surveyed Real Property other than Permitted Liens
and shall include those matters required to be included on a land survey in
accordance with the minimum standards and detail requirements for land title
surveys as jointly established and adopted by the American Land Title
Association and the American Congress of Surveying and Mapping according to
the 1992 Standards for an Urban Survey and showing the following items
(whether covered by the minimum standard and detail requirements specified
above or not): (A) all courses and distances of the boundaries and the legal
description of the surveyed Real Property ; (B) the location and dimensions of
all improvements and their relation to lot lines and set back and building
line requirements (whether such requirements are imposed by Law or Lien); (C)
the location of all rights of way, water courses and easements of record,
whether above or (if possible) under the ground; (D) any encroachments by the
buildings, structures or other improvements located on the surveyed Real
Property over lot lines, building lines, easements, roadways, rights of way or
other real property interests in the adjoining lands; and (E) any
encroachments by buildings, structures or other improvements located on
adjoining properties onto the surveyed Real Property.
(ii)"Title Commitments" shall mean binding commitments
issued by the Title Company for the issuance of 1970 Form B American Land
Title Association owners form of title insurance policies with extended
coverage, insuring the title in each parcel of the Real Property to be in
accordance with the terms of this Agreement, subject only to Permitted Liens.
(iii)"Title Company" shall mean Chicago Title Insurance
Company or such other title insurance company which may be jointly selected by
the Buyer and the Seller.
(b)Deliveries Prior to Closing. At least ten (10) calendar
days prior to the Closing Date, the Seller shall: (i) cause the Title Company
to deliver to the Buyer the Title Commitments, together with copies of all
recorded documents affecting the Real Property; and (ii) deliver to the Buyer
a Survey of each parcel of the Real Property.
(c)Deliveries at Closing. On the Closing Date, the Seller
shall cause the Title Company to issue and deliver to the Buyer executed title
insurance policies, each dated as of the Closing Date, which title insurance
policies shall: (i) be in the amount for each parcel of the Real Property
which is set forth in the Disclosure Schedule; and (ii) insure that title to
the Real Property is in accordance with the provisions set forth in this
Agreement and in the Title Commitments.
(d)Exceptions. If the Title Commitments or the Surveys
disclose the existence of a Lien which is not a Permitted Lien, the Seller
shall be fully liable therefor. In addition to other remedies which the Buyer
may have, the Buyer may require the Seller to: (i) remove or cure such Lien
on or prior to the Closing Date; (ii) pay to the Buyer an amount agreed to by
the Buyer and the Seller as fair compensation for the fact that such Lien
exists; or (iii) cause the Title Company to expressly insure over such Lien by
an endorsement satisfactory in form and substance to the Buyer and its
counsel.
(e)Expenses. The Buyer and the Seller shall share equally the
costs, expenses and premiums for the Surveys, the Title Commitments and the
title insurance policies issued pursuant to the Title Commitments.
3.18 Noncompetition.
(a)Noncompetition. The Parent and the Seller jointly and
severally agree that, if the transactions contemplated by this Agreement are
consummated, they will not, directly or indirectly, for the period of three
(3) years from and after the Closing Date with respect to the Parent and for
the period of five (5) years from and after the Closing Date with respect to
the Seller, in the United States of America and such other countries in which
the Seller has sold products in the one-year period immediately preceding the
Closing Date, own, manage, operate, control, participate in, consult with, or
be connected in any manner with, the operation, ownership, management or
control of any enterprise which offers products or services that are
competitive with any products or services offered by the Business to its
customers.
(b)Exception. Notwithstanding the provisions of Section
3.18(a) of this Agreement, neither the Parent nor the Seller shall be
prohibited from owning or acquiring securities of any corporation or other
business enterprise that may be engaged in activities described in 3.18(a),
provided that: (i) no affiliate of the Parent or the Seller is an officer,
director or employee of, or consultant to, such corporation or business
enterprise; (ii) such securities are held by the Parent or the Seller for
investment purposes only and represent less than five percent (5%) of the
total equity interests of such corporation or business enterprise; and (iii)
such securities are listed on a national or international securities exchange
or are regularly quoted in the over the counter market by one or more members
of the National Association of Securities Dealers. Moreover, the provisions
of Section 3.18(a) of this Agreement shall not be deemed to limit or restrict
in any manner the authority of the Parent, directly or indirectly through one
or more subsidiaries, to carry on the business of designing, manufacturing,
distributing, selling and servicing self-propelled, hydraulic, materials
handling units designed to be carried by and used in conjunction with truck
trailers carried on by the Parent's subsidiary, Moffett Engineering Ltd. (the
"Moffett Business"); provided that, for a period of one year following the
Closing Date, the Parent will not, and will cause its subsidiaries not to,
solicit, encourage or contract with any Seller Dealer (as that term is defined
below) to carry any inventory, advertise, market, distribute, sell or offer
for sale, or otherwise promote for sale any products manufactured by the
Moffett Business. For purposes of this Section 3.18(b), a "Seller Dealer"
shall mean any person who, within the one-year period prior to the Closing
Date, has carried any inventory, advertised, marketed, offered for sale, sold
or otherwise promoted the sale of any product manufactured or offered for sale
by the Seller in the course of its conduct of the Business.
3.19HSR Act. The Buyer and the Seller shall each: (a) within five
(5) business days after the execution of this Agreement, file with the
Antitrust Division of the United States Department of Justice and the Federal
Trade Commission the pre-merger notifications required by the HSR Act from
such party, requesting early termination of the waiting periods thereunder;
(b) promptly respond to inquiries to such party from such Persons in
connection with such filings; and (c) cooperate fully with one another in the
preparation of such filings and responses.
3.20 Accounts. The Buyer covenants and agrees that, following the
Closing Date, it will utilize methods of collection for the Accounts included
in the Purchased Assets which are consistent with the historic methods of
collection utilized by the Seller in the conduct of the Business prior to the
Closing Date. With respect to any of the Past Due Accounts which are
attributed zero value for purposes of the Closing Balance Sheet, and with
respect to any Accounts which are not collected and with respect to which the
Buyer receives an indemnity payment from the Seller pursuant to Article 9 of
this Agreement, the Buyer shall assign such Accounts to the Seller within five
business days of receiving such indemnity payment.
3.21Existing Litigation. The parties agree and acknowledge that the
matters disclosed on the Disclosure Schedule as Existing Litigation are
Retained Liabilities. The Seller agrees to undertake full conduct and control
of all of the proceedings, settlement discussions and litigation with respect
to such matters (which shall include, but not be limited to, the Seller's
choice of counsel and other experts and/or professional advisers), provided
that:
(a)The Seller shall keep the Buyer reasonably informed of
developments and progress in those matters and shall allow the Buyer's
representatives and/or advisers to attend any conferences or meetings relevant
to those matters;
(b)The Buyer shall supply and/or make available, at the
reasonable expense of the Seller (but excluding the Buyer's allocable overhead
costs), all research information and personnel which the Seller may reasonably
request in order to assist in the defense of any of the Existing Litigation
and shall not make any admissions of liability in respect thereof; and
(c)With respect to the case of Diane I. Pasquale v. JLG
Industries, et. al. and the matter involving Alodio Hernandez and Evans
Carpentry, LLC, each of which is described in the Disclosure Schedule as
Existing Litigation, within five business days of the Buyer's receipt of
written notice from the Seller that the matter has been settled or otherwise
determined at first instance, the Buyer shall pay to the Seller in cash an
amount equal to the costs, fees, disbursements, settlement amounts and
judgments (including reasonable attorney's fees) incurred by the Seller in
connection with that matter, up to an aggregate maximum amount for both
matters of One Million and 00/100 U.S. Dollars (U.S. $1,000,000.00).
3.22 Parent Shareholder Circular. If required by applicable Law or
rules and regulations of any stock exchange on which shares of stock of the
Parent are traded, Parent and Seller shall, promptly following the execution
of this Agreement, prepare and distribute a circular to Parent's shareholders
describing the transactions contemplated by this Agreement and seeking
shareholder approval of the same. Buyer shall provide publicly available
information about itself which the Seller is required to include in any such
circular or supplement thereto under applicable laws, rules and regulations,
and otherwise shall cooperate reasonably with the Seller and the Parent in
conjunction with completing the circular and obtaining the shareholder
approval.
3.23 Cash Management of Seller. The Buyer agrees and acknowledges that
the Seller is entitled to distribute to its immediate parent company and
ultimately the Parent all after tax income earned by Seller from and after
March 31, 1998 and up to and including the Closing Date. Buyer further
acknowledges that the Seller will employ practices designed to generate cash
that can be so distributed, which may not be entirely consistent with Seller's
past practices. In this regard, the Seller may accelerate collection efforts
on the Accounts and it may slow payment on trade payables as compared to
Seller's historic practices. However, the Seller will not engage in any
extraordinary or novel practices, including without limitation offering
special discounts for advance or accelerated payment terms or reducing prices
in a manner inconsistent with market developments. Moreover, Seller will not
employ any such special practices to the extent they might have a material
adverse effect on the financial condition or future operations of the
Business. Without limiting the generality of the foregoing, the Seller agrees
that it will not slow payment of trade payables beyond the point where the
average duration is more than 60 days or (calculated in accordance with
Exhibit 10 attached to this Agreement) pay any dividends or make any other
distributions if, after giving effect thereto, stockholders equity would fall
below stockholders equity at March 31, 1998 as reflected in the 1998 Financial
Statements.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Each of the Parent and the Seller hereby jointly and severally
represents and warrants to the Buyer that:
4.1 Organization; Business.
(a) Organization; Qualification.
(i) Seller is a corporation duly and validly organized and
existing and in good standing under the Laws of the State of Delaware. The
Parent indirectly (through one or more subsidiaries) owns all of the issued
and outstanding shares of capital stock of the Seller; and except pursuant to
the Parent's Security (which will be released at Closing), there are no other
Persons who hold any interests in any capital securities of the Seller or
other rights in the Seller which, in either case, would entitle them to any
voting rights with respect to the Seller's sale of the Purchased Assets
pursuant to this Agreement.
(ii) The Seller is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in which
either the ownership or use of the Purchased Assets or the operation of the
Business requires such qualification. The Disclosure Schedule contains a list
of all states and foreign jurisdictions where the Seller is so qualified.
(b) Power. The Seller has the full corporate power and
authority and all franchises, permits, licenses, approvals, authorizations,
registrations, grants and orders necessary to carry on the Business as it is
now conducted, to own, lease and operate the Purchased Assets and to perform
all of its obligations under the Contracts.
(c) Properties. The Seller owns or has the right to use all
property, real or personal, tangible or intangible, which is necessary for the
operation of the Business as presently conducted by the Seller.
4.2 Authorization; Enforceability.
(a) Parent. The execution, delivery and performance of this
Agreement and all of the documents and instruments required by this Agreement
to be executed and delivered by Parent are within the corporate power of
Parent and have been duly authorized by all necessary corporate action by
Parent.
(b) Seller. The execution, delivery and performance of this
Agreement and all of the documents and instruments required by this Agreement
to be executed and delivered by Seller are within the corporate power of
Seller and have been duly authorized by all necessary corporate action by
Seller.
(c) Enforceability. This Agreement is, and the other documents
and instruments required by this Agreement to be executed and delivered by the
Parent or the Seller will be, when so executed and delivered, the legal, valid
and binding obligations of each of them, enforceable against each of them in
accordance with their respective terms, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar Laws generally affecting the rights of creditors and subject to
general equity principles.
4.3 No Violation or Conflict.
(a) No Violation. Subject to compliance with the HSR Act and to
shareholder approval requirements of the Parent imposed by the Laws of England
and Wales or rules and regulations of the London or Irish Stock Exchanges, the
execution, delivery and performance of this Agreement by the Parent and the
Seller do not and will not, directly or indirectly (with or without notice or
lapse of time):
(i) Contravene, conflict with or violate any Law, the
Articles of Incorporation or Bylaws of the Parent or the Seller;
(ii) Contravene, conflict with or violate or give any
governmental body or any other Person the right to challenge the consummation
of the transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under any Law or any judgment, order or decree to which
either of the Parent or the Seller or any of the Purchased Assets may be
subject;
(iii) Contravene, conflict with, violate or breach any
provision, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any Contract;
(iv) Result in the imposition or creation of any Lien upon
or with respect to the Purchased Assets; or
(v) To Seller's Knowledge, disrupt or impair any material
relationship with any supplier, customer, distributor, sales representative or
employee of the Seller.
(b) Consents. Except as set forth in the Disclosure Schedule,
neither the Parent or the Seller is or will be required to give any notice or
obtain any consent or approval from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
the transactions contemplated hereby.
4.4 Financial Information; Books and Records.
(a) Financial Statements. The Seller has delivered to Buyer all
of the Financial Information. The 1998 Financial Statements (and notes)
fairly present the financial condition and the results of operations of the
Seller as at the date to which they were prepared and on the basis on the
accounting practices and policies described in the notes thereto, all in
accordance with generally accepted accounting principals applied in a manner
consistent with the preparation of the 1997 Financial Statements. The interim
financial statements as of and for the period ended July 31, 1998 included in
the Financial Information were prepared using policies, practices and
procedures consistent with those used in the preparation of the monthly
unaudited financial statements of the Seller for the period comprised within
the 1998 Financial Statements, except that there has been no physical
inventory, no year-end tax and deferred tax calculations, no foreign currency
adjustments, no product liability contingencies, no audit adjustments and no
footnotes (the effect of which footnotes would not, individually or in the
aggregate, have a material adverse effect). On such basis and taken as a
whole, such interim financial statements present fairly in all material
respects the financial condition and results of operations of the Business as
of July 31, 1998 and for the period then ended.
(b) Accounting Books. The accounting books and records of the
Seller: (i) are maintained in a manner consistent with past practice; (ii)
have recorded therein all material properties and assets and liabilities of
the Seller; and (iii) reflect all material transactions entered into by the
Seller or to which the Seller is a party.
(c) Bank Accounts. The Disclosure Schedule sets forth the name
of each bank in which the Seller has an account or safe deposit box or with
which the Seller has an arrangement for safekeeping.
4.5 Assets.
(a) Title. The Seller owns good and valid title to all of the
Purchased Assets, free and clear of any and all Liens except: (a) the
Existing Liens as of the Relevant Time of Inquiry; and (b) the Permitted Liens
on the Closing Date. Seller is in sole possession of, and has sole control
of, the Purchased Assets. All of the tangible Purchased Assets are physically
located on the Real Property. Except as set forth on the Disclosure Schedule,
none of the Purchased Assets is leased, rented, licensed or otherwise not
owned by Seller.
(b) All Assets. The Purchased Assets include all assets of the
Seller which are used in the operation of the Business, excepting therefrom
only the Retained Assets.
(c) Buildings and Equipment. The Buildings and Equipment,
taken as a whole, are in such operating condition and repair which is adequate
for the purposes for which they are being used by the Seller in the conduct of
the Business. No asset necessary to the operation of the Business as
presently conducted is in need of maintenance or repair, except for routine
maintenance and repairs that are not material in nature and do not involve
costs in excess of $25,000 in any single instance.
(d) Inventory. The Inventory is at a level consistent with the
normal practices of the Businesses.
(e) Investments. Except for the Existing Investments, Seller
neither owns, nor has any right or obligation to acquire, any Investment.
(f) Accounts. Subject to the Buyer's fulfillment of its
covenants and agreements under Section 3.16 and Section 3.20 of this
Agreement, all of the Accounts have arisen from bonafide transactions by the
Seller in the ordinary course of business and, to the extent not previously
collected, are fully collectible within 120 days of their respective due
dates, except to the extent reserved against in the Financial Information or
on the Closing Balance Sheet and except for the Past Due Accounts.
4.6 Contingent and Undisclosed Liabilities. Except pursuant to the
deposit and collection of checks in the ordinary course of business, Seller
has not guaranteed or become a surety for or is otherwise contingently liable
for the obligations of any other Person. Seller has no liabilities,
obligations or indebtedness of any nature (whether known or unknown and
whether absolute, accrued, contingent or otherwise), other than those: (a) for
which a provision or note has been made in the 1998 Financial Statements; or
(b) which arose in the ordinary course of business since March 31, 1998; or
(c) which are disclosed on the Disclosure Schedules.
4.7 Taxes.
(a) Tax Returns. Except as disclosed on the Disclosure
Schedule, Seller has timely and properly filed all federal, state, local and
foreign tax returns (including but not limited to income, franchise, sales,
payroll, employee withholding and social security and unemployment) which were
required to be filed. Seller has delivered to Buyer copies of all such income
tax and other material tax returns which have been filed since May 22, 1996.
All such tax returns are true, complete and correct.
(b) Payment of Taxes. Seller has paid or made provision for all
federal, state, local, foreign or other governmental charges that may or could
follow the Purchased Assets or otherwise affect Buyer after the consummation
of the transactions contemplated in this Agreement.
(c) Tax Liens. There are no tax Liens upon any of the Purchased
Assets, except for Liens for current taxes not yet due and payable.
(d) Withholding. Seller has properly withheld and timely paid
all withholding and employment taxes which it was required to withhold and pay
relating to salaries, compensation and other amounts heretofore paid to its
employees or other Persons. All Forms W-2 and 1099 required to be filed with
respect thereto have been timely and properly filed.
4.8 Absence of Certain Changes. Except as set forth in the Disclosure
Schedule, since July 31, 1998, there has not been any:
(a) Material adverse change in the financial condition,
properties, liabilities, business or results of operations of the Seller;
(b) Damage, destruction or loss which has materially and
adversely affected the financial condition, properties, business, results of
operation or prospects of the Seller or the Purchased Assets (whether or not
covered by insurance); or
(c) Transactions by of the Seller outside the ordinary course of
business, except for the transactions contemplated by this Agreement.
4.9 Existing Plans.
(a) Existing Plans. The Disclosure Schedule contains a complete
and accurate list of all Existing Plans. Except for the Existing Plans,
Seller neither maintains, nor is it bound by, any Employee Benefit Plan. All
of the Existing Plans which are intended to meet the requirements of Section
401(a) of the Code have been determined by the Internal Revenue Service to be
"qualified" within the meaning of the Code, and there are no facts which would
adversely affect the qualified status of any of the Existing Plans.
(b) ERISA. There is no accumulated funding deficiency, within
the meaning of ERISA or the Code, in connection with the Existing Plans and no
reportable event, as defined in ERISA, has occurred in connection with any
Existing Plan. The Existing Plans have not, nor has any trustee or
administrator of the Existing Plans, engaged in any prohibited transaction as
defined in ERISA or the Code. Seller is not contributing to, nor has Seller
ever contributed to, any multi-employer plan, as defined in ERISA.
(c) Terminated Plans. Seller has never terminated an employee
pension plan as defined in Section 3(2) of ERISA.
4.10 Compliance with Law.
(a) Operations. Seller's present and past operation of the
Business and the Purchased Assets is and has been in compliance with all
Existing Permits and Laws in all material respects. Seller is not currently
the subject of an inspection or inquiry regarding violations or alleged
violations of any Law by any federal, state, local or other governmental
agency.
(b) Events. No event has occurred or circumstance exists that
(with or without notice or lapse of time): (i) may constitute or result in a
violation by the Seller of, or a failure on the part of the Seller to comply
with, any Existing Permit or Law; or (ii) may give rise to any obligation on
the part of the Seller to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
(c) Existing Permits. The Disclosure Schedule contains a
listing of each Existing Permit. Each Existing Permit is valid and in full
force and effect, and such Existing Permits collectively constitute all of the
permits, licenses, approvals, qualifications, permissions or authorizations
necessary to permit the Seller lawfully to conduct and operate the Business in
the manner currently conducted and to permit the Seller to own and use the
Purchased Assets in the manner in which it currently owns and uses such
assets.
4.11 Litigation. Except for the Existing Litigation: (a) there is no
litigation, arbitration, proceeding, governmental investigation, citation or
action of any kind pending or, to the Knowledge of Seller, proposed or
threatened, against or relating to the Seller or the Purchased Assets, nor is
there any basis Known to the Seller for any such action; and (b) there are no
actions, suits or proceedings pending or, to the Knowledge of Seller, proposed
or threatened, against the Seller by any Person which question the legality,
validity or propriety of the transactions contemplated by this Agreement.
Seller has delivered to Buyer copies of all pleadings, correspondence and
other documents relating to the Existing Litigation.
4.12 Existing Contracts. Except for the Existing Contracts listed on
the Disclosure Schedule, there is no Contract to which Seller is a party or by
which Seller is bound which:
(a) Involves the performance of services or delivery of goods or
materials by the Seller of an amount or value in excess of $25,000;
(b) Involves the performance of services or delivery of goods or
materials to the Seller of an amount or value in excess of $25,000;
(c) Was not entered into in the ordinary course of business and
involves expenditures or receipts of the Seller in excess of $25,000;
(d) Is a lease, rental or occupancy agreement, license,
installment and conditional sale agreement, or other Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $25,000 and with terms of less than one year);
(e) Is a licensing agreement or other Contract with respect to
patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the nondisclosure of any of the Intangible
Assets;
(f) Is a joint venture, partnership or other Contract (however
named) involving a sharing of profits, losses, costs, or liabilities by either
Seller with any other Person;
(g) Contains covenants that in any way purport to restrict the
operation of the Business or limit the freedom of the Seller to engage in any
line of business or to compete with any Person or otherwise restricts the
right of the Seller to use or disclose any information in its possession;
(h) Provides for payments to or by any Person based on sales,
purchases, or profits, other than direct payments for goods;
(i) Is a power of attorney that is currently effective and
outstanding;
(j) Was entered into other than in the ordinary course of
business and contains or provides for an express undertaking by the Seller to
be responsible for consequential damages;
(k) Commits capital expenditures in excess of $25,000;
(l) Is a warranty, guaranty or other similar undertaking with
respect to contractual performance extended by the Seller other than in the
ordinary course of business;
(m) Is a labor union contract;
(n) Is a management, consulting, employment, personal service,
agency or other contract providing for employment or rendition of services and
which: (i) is in writing; or (ii) creates other than an at will employment
relationship; or (iii) provides for any commission, bonus, profit sharing,
incentive, retirement, consulting or additional compensation; or (iv) contains
any termination or severance pay obligations or liabilities;
(o) Is an agreement for the storage, transportation, treatment
or disposal of any hazardous waste or hazardous byproduct;
(p) Is an agreement with the Seller or any subsidiary or
affiliate thereof, or with any director, officer, employee or shareholder of
the Parent, the Seller or any subsidiary or affiliate thereof;
(q) Is an agreement with any agent, dealer, distributor, sales
representative or manufacturer's representative for any of the products of the
Seller;
(r) Is an agreement, note or other evidence of any Indebtedness
of the Seller;
(s) Is any other agreement which: (i) involves an amount in
excess of $25,000; or (ii) is not in the ordinary course of business; and
(t) Is any other written or unwritten agreement that is
material, either in amount or significance, to the ongoing operation of the
Business.
4.13 Performance of Contracts. To the Knowledge of Seller, each
Existing Contract is in full force and effect and is valid and enforceable in
accordance with its terms. Except as set forth on the Disclosure Schedule:
(a) The Seller is in material compliance with all applicable
terms and requirements of each Contract under which it has or had any
obligation or liability or by which the Seller or any of the Purchased Assets
is or was bound;
(b) Each other Person that has or had any obligation or
liability under any Contract under which the Seller has or had any rights is
in material compliance with all applicable terms and requirements of such
Contract;
(c) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give the Seller or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract;
(d) To the Knowledge of the Seller, the Seller has neither
given to nor received from any other Person, at any time since June 30, 1998,
any notice or other communication (whether oral or written) regarding any
actual or alleged violation or breach of, or default under, any Contract; and
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Seller under current or completed Contracts with any Person other than in the
ordinary course of business and, to the Knowledge of Seller, no such Person
has made written demand for such renegotiation.
4.14 Existing Insurance Policies.
(a) Deliveries. Seller has delivered to Buyer accurate
summaries of the Existing Insurance Policies, all pending applications for an
insurance policy to cover the Purchased Assets and any statement by the
auditor of Seller's financial statements with regard to the adequacy of the
insurance coverage provided by the Existing Insurance Policies.
(b) Existing Insurance Policies. The Existing Insurance
Policies: (i) are valid, outstanding and enforceable; (ii) taken together,
are considered by Seller to provide adequate insurance coverage for the
Purchased Assets for all risks normally insured against by a Person carrying
on the same business as either Seller; and (iii) taken together, are adequate
for compliance with all Laws, the Existing Permits and the Contracts.
(c) Losses. The Disclosure Schedule sets forth, by year, for
the current policy year and each of the two preceding policy years in respect
of each policy for liability, property or casualty: (i) a summary of loss
experience under each policy; (ii) statement describing each claim under each
policy for an amount in excess of $25,000; and (iii) a statement describing
the loss experience for all claims that were self-insured, including the
number and aggregate cost of such claims.
(d) Cancellation. Seller has not received: (i) any refusal of
coverage or notice that a defense will not be afforded with reservation of
rights; or (ii) any notice of cancellation or any other indication that any
insurance policy is no longer in full force and effect or will not be renewed
or that the issuer of any such policy is not willing or able to perform its
obligations thereunder.
4.15 Environmental Protection.
(a) Definitions. As used in this Agreement:
(i) "Environmental Claim" shall mean any notice of
violation, lien, claim, demand, abatement order or direction (conditional or
otherwise) of any governmental authority or any person for personal injury
(including sickness, disease or death), property damage, damage to the
environment or natural resources, nuisance, pollution, contamination or other
adverse effects on the environment, or for fines, penalties or restrictions,
resulting from or based upon any of the following conditions existing on or
before the Closing Date: (A) the release, or the existence or continued
presence of a release (including, without limitation, sudden or non-sudden,
accidental or non-accidental leaks or spills) of any Environmental Hazardous
Material in, into or onto the environment (including, without limitation, the
air, groundwater, surface water or soil) at, in, under or from the Real
Property in violation of any Environmental Law; (B) the environmental aspects
of the transportation, storage or disposal of Environmental Hazardous
Materials on the Real Property in violation of any Environmental Law; or (C)
any other violation of any Environmental Law.
(ii) "Environmental Hazardous Materials" shall mean those
materials which are regulated by or from the basis of liability under any
Environmental Law including, without limitation, asbestos, petroleum and
petroleum products, polychlorinated biphenyls ("PCBs"), and radioactive
substances.
(iii) "Environmental Laws" shall mean any federal, state or
local statute, law, ordinance, rule, regulation or order (whether voluntary or
not) relating to the environment, natural resources, applicable to the
Business of Seller, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sect. 9601 et
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sect.6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Sect.1251 et seq.), the Clean
Air Act (42 U.S.C. Sect. 7401 et seq.), and the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), as such laws have been amended through the Closing
Date, and any similar state or local laws and ordinances and the regulations
implementing such statutes or ordinances, but excluding any Safety Law.
(iv) "Environmental Permits" shall mean all federal, state
or local environmental, health and safety permits and governmental
authorizations.
(v) "Environmental Release" shall mean any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of Environmental Hazardous Materials
into the environment.
(vi) "Safety Law" shall mean any federal, state, or local
statute, law, ordinance, rule, regulation or order (whether voluntary or not)
relating to health or human safety applicable to the Business as presently
conducted, including without limitation, the Hazardous Material Transportation
Act (42 U.S.C. Sect.9601 et seq.) and the Occupational Safety and Health Act (29
U.S.C. Sect. 651 et seq.), but excluding any Environmental Law.
(b) Compliance. Except as described on the Disclosure Schedule,
Seller: (i) is in material compliance with all applicable Environmental Laws;
and (ii) has not received any written communication or, to its Knowledge, oral
communication that alleges that the Seller is not or, at any time since May
22, 1996, was not in compliance with applicable Environmental and Safety Laws.
(c) Environmental Permits. Except as described on the
Disclosure Schedule, Seller has obtained all Environmental Permits necessary
for its operation of the Business as presently conducted, and all such permits
are in good standing and Seller is in compliance with all terms and conditions
of such Environmental Permits. A true, accurate and complete list of all such
Environmental Permits held by the Seller is set forth on the Disclosure
Schedule.
(d) Environmental Claims. Except as described on the Disclosure
Schedule, there is no Environmental Claim pending or, to the Knowledge of
Seller, threatened, against the Seller or the Purchased Assets or against any
Person whose liability for any Environmental Claim the Seller has or may have
retained or assumed either contractually or by operation of Law, or against
any real or personal property or operation which the Seller owns, leases or
manages.
(e) Environmental Releases. Except as described on the
Disclosure Schedule, there have been no Environmental Releases of any
Environmental Hazardous Material not in compliance with Environmental and
Safety Law by the Seller or any employee or agent of the Seller, or by any
Person on the Real Property.
(f) CERCLA. Except as described on the Disclosure Schedule, the
Real Property is not currently listed on the National Priorities List or the
Comprehensive Environmental Response, Compensation and Liability Information
System, both promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or on any
comparable state list, and Seller has not received any written notice from any
Person under or relating to CERCLA or any comparable state or local Law.
(g) Off Site Locations. Except as described on the Disclosure
Schedule, to the Knowledge of the Seller no off-site location at which the
Seller has disposed or arranged for the disposal of any waste is listed on the
National Priorities List or on any comparable state list. Except as described
on the Disclosure Schedule, Seller has not received any written notice from
any Person with respect to any off-site location, of potential or actual
liability or a written request for information from any Person under or
relating to CERCLA or any comparable state or local Law.
(h) Environmental Hazardous Materials. Except as described on
the Disclosure Schedule, there is not and, since May 22, 1996, there has not
been any Environmental Hazardous Materials used, generated, treated, stored,
transported, disposed of, handled or otherwise existing on, under or about the
Real Property, except for quantities of any such Environmental Hazardous
Materials stored or otherwise held on, under or about the Real Property in
material compliance with all Environmental Laws and intended to be used in the
operation of the Business.
(i) Tanks. Except as described on the Disclosure Schedule,
there is not any underground or above-ground storage tank or pipeline on the
Real Property.
4.16 Labor Matters.
(a) Employees. Pursuant to Section 3.12(a), the Disclosure
Schedule sets forth a complete and accurate list of the following information
for each employee of the Seller, including each employee on leave of absence
or layoff status: name; job title; current compensation paid or payable and
any change in compensation since March 31, 1998; vacation accrued; and service
credited for purposes of vesting and eligibility to participate under the
Existing Plans.
(b) Proprietary Rights. Except as set forth on the Disclosure
Schedule, no employee of the Seller is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, noncompetition,
or proprietary rights agreement, between such employee and the Seller or any
other Person ("Proprietary Rights Agreement") that in any way adversely
affects or will adversely affect: (i) the performance of that Person's duties
as an employee of the Seller; or (ii) the ability of the Buyer to conduct the
Business as presently conducted by Seller. To the Knowledge of Seller, except
for Mr. Donald Campbell no officer or other key employee of the Seller intends
to terminate employment with Seller prior to the Closing or with Buyer
immediately following the Closing.
(c) Strikes; etc. Since May 22, 1996, there has not been, there
is not presently pending or existing, and, to the Knowledge of Seller, there
is not threatened: (i) any strike, slowdown, picketing, work stoppage, or
employee grievance process; (ii) any charge, grievance, proceeding or other
claim against or affecting the Seller relating to the alleged violation of any
Law pertaining to labor relations or employment matters, including any charge
or complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
governmental body, organizational activity, or other labor or employment
dispute against or affecting the Seller; or (iii) any application for
certification of a collective bargaining agent.
(d) Events. To the Knowledge of Seller, no event has occurred
or circumstance exists that could provide the basis for any work stoppage or
other labor dispute. There is no lockout of any employees of the Seller by
the Parent or the Seller, and no such action is contemplated by the Parent or
the Seller.
(e) Compliance. The Seller has complied in all material
respects with all Laws relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health and plant closing.
(f) Claims. To the Knowledge of Seller, no present or former
employee of the Seller has any claim against the Seller (whether under Law,
under any employee agreement or otherwise) on account of or for: (i) overtime
pay, other than overtime pay for the current payroll period; (ii) wages or
salaries, other than wages or salaries for the current payroll period; or
(iii) vacations, sick leave, time off or pay in lieu of vacation, sick leave
or time off, other than vacation, sick leave or time off (or pay in lieu
thereof) earned in the twelve-month period immediately preceding the date of
this Agreement.
(g) Unemployment Compensation. The Seller has made all required
payments to its unemployment compensation reserve accounts with the
appropriate governmental departments and such accounts have positive balances.
4.17 Brokers. Except for fees payable to Cavendish Corporate Finance
Limited, which shall be the sole responsibility of Seller, the Seller has not
incurred any brokers', finders' or any similar fee in connection with the
transactions contemplated by this Agreement.
4.18 Governmental Approvals. Except for the requisite notices and
filings by the Seller under the HSR Act, no permission, approval,
determination, consent or waiver by, or any declaration, filing or
registration with, any governmental or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement by
the Seller.
4.19 Disclosure. No statement of fact by the Seller contained in this
Agreement or the Disclosure Schedule: (a) contains any untrue statement of a
material fact; or (b) omits to state a material fact necessary in order to
make the statements herein or therein contained, in the light of the
circumstances under which they are made, not misleading. No statement of fact
by the Seller contained in any supplement to the Disclosure Schedule made in
accordance with the terms of this Agreement will: (x) contain any untrue
statement of a material fact; or (y) omit to state a material fact necessary
in order to make the statements therein contained, in light of the
circumstances under which they are made, not misleading as of the date to
which it speaks.
4.20 Intangible Assets.
(a) Disclosure Schedule. The Disclosure Schedule contains a
listing of all of the Intangible Assets material to the operation of the
Business as conducted by the Seller. The Intangible Assets set forth on the
Disclosure Schedule constitute all of the patents, patent applications, trade
names, trademarks, trademark registrations, trademark applications, service
marks, service mark registrations, service mark applications, copyrights and
copyright applications used by the Seller in the conduct of the Business.
(b) Ownership. The Seller owns the entire right, title and
interest in and to each of the Intangible Assets set forth on the Disclosure
Schedule. There are no claims, demands or proceedings pending or, to the
Knowledge of Seller, threatened by any Person contesting or challenging the
Seller's right to use any of the Intangible Assets. There are no patents,
trademarks, trade names or copyrights owned by a Person which the Seller is
using without license to do so. The Seller owns or possesses adequate
licenses or other rights to use all patents, trademarks, trade names and
copyrights necessary to conduct the Business as now conducted. All patents,
patent applications, trademarks, trade names, copyrights and rights to
discoveries or inventions (whether or not patentable) owned or held by any
employee of the Seller have been duly and effectively transferred to the
Seller.
(c) Validity; Infringement. The Seller does not infringe on the
intellectual property rights of any other Person. None of the Intangible
Assets set forth of the Disclosure Schedule by the Seller is invalid or
unenforceable.
4.21 Product Matters. The Disclosure Schedule describes: (a) any
currently existing obligation or liability of the Seller in excess of $25,000
which is based upon any express or implied warranty relating to any product
produced, sold or shipped by the Seller or its predecessors; and (b) any
outstanding product recall or any other obligation or liability of the Seller
which is based upon death, disease or injury to Person or property relating to
any product produced, sold or shipped by the Seller or its predecessors.
4.22 Customers. Since March 31, 1998, there has been no termination,
cancellation or material curtailment of the business relationship of the
Seller with any customer or group of affiliated customers whose purchases
individually or in the aggregate constituted more than five percent (5%) of
the consolidated sales of the Seller for the fiscal year ended on March 31,
1998, nor, to the Knowledge of Seller, any notice of intent to so materially
curtail.
4.23 Relationships with Related Parties. Except as set forth on the
Disclosure Schedule, neither the Parent nor any affiliate of the Parent has,
or since March 31, 1997, has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used by the Seller.
Neither the Parent nor any affiliate of the Parent is or since March 31, 1997
has owned (of record or as a beneficial owner) an equity interest or any other
financial or profit interest in, a Person that has (a) had business dealings
or a material financial interest in any transaction with the Seller; or (b)
except for the Parent's interest in the Moffett Business, engaged in
competition with the Seller with respect to any line of the products or
services of the Business (a "Competing Business") in any market presently
served by the Seller through the Business, except for less than five percent
of the outstanding capital stock of any Competing Business that is publicly
traded on any recognized exchange or in the over-the-counter market. Except
as set forth on the Disclosure Schedule, no neither the Parent nor any
affiliate of the Parent is a party to any Contract with, or has any claim or
right against, Seller.
4.24 Real Property.
(a) Real Property. The parcels included in the Real Property:
(i) constitute all real property and improvements owned, leased or used by the
Seller; (ii) to Seller's Knowledge, are not in possession of any adverse
possessors; (iii) are not subject to any leases or tenancies of any kind
(except for any Existing Contract); (iv) have direct access to and from a
public road or street; (v) are used in a manner which is consistent and
permitted by applicable zoning ordinances and other Laws without special use
approvals or permits; (vi) are, and have been since the date of possession
thereof by the Seller, in the peaceful possession of the Seller; (vii) are
served by all water, sewer, electrical, telephone, drainage and other
utilities required for normal operations of the Businesses; (viii) to Seller's
Knowledge are not located in a flood plain, wetland or similar restricted
area; and (ix) require no work or improvements to bring them into compliance
with any applicable Law.
(b) Notices. To the Knowledge of Seller, there are no: (i)
planned or contemplated public improvements which may result in special
assessments against the Real Property or which may adversely affect the
availability of utility service to the Real Property; or (ii) increases or
contemplated increases in the assessed value of the Real Property which would
increase the estimated real estate taxes therefor.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
5.1 Organization; Business. The Buyer is a corporation duly and
validly organized and existing under the Laws of the State of Wisconsin.
5.2 Authorization; Enforceability. The execution, delivery and
performance of this Agreement by the Buyer and all of the documents and
instruments required by this Agreement to be executed and delivered by the
Buyer are within the corporate power of the Buyer and have been duly
authorized by all necessary corporate action by the Buyer. This Agreement is,
and the other documents and instruments required by this Agreement to be
executed and delivered by the Buyer will be, when executed and delivered by
the Buyer, the valid and binding obligations of the Buyer, enforceable against
the Buyer in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws generally affecting the rights of creditors and
subject to general equity principles.
5.3 No Violation or Conflict. The execution, delivery and performance
of this Agreement by the Buyer do not and will not conflict with or violate
any Law, the Articles of Incorporation or Bylaws of the Buyer or any contract
or agreement to which the Buyer is a party or by which Buyer is bound.
5.4 Brokers. The Buyer has not incurred any brokers', finders' or any
similar fee in connection with the transactions contemplated by this
Agreement.
5.5 Governmental Approvals. Except for the requisite notices and
filings by the Buyer under the HSR Act, no permission, approval,
determination, consent or waiver by, or any declaration, filing or
registration with, any governmental or regulatory authority is required in
connection with the execution, delivery and performance of this Agreement by
the Buyer.
5.6 No Knowledge of Breach. Buyer has no knowledge of any breach of
the representations and warranties of the Seller set forth in this Agreement.
ARTICLE 6
CONDUCT OF BUSINESS PENDING THE CLOSING
From and after the date of this Agreement and until the Closing Date,
the Parent and the Seller shall cause the Seller to:
6.1 Carry on in Regular Course. Except as explicitly provided
otherwise under this Agreement (including Section 3.23 hereof), carry on the
Business in the ordinary course and substantially in the same manner as
heretofore and not to make or institute any unusual or novel methods of
purchase, sale, lease, management, accounting or operation.
6.2 Use of Assets. (a) Use, operate, maintain and repair all of the
Purchased Assets in a normal business manner consistent with past practices;
and (b) not sell, lease, encumber, transfer or dispose of any of the Purchased
Assets or rights therein or acquire any assets or rights which would be
included in the Purchased Assets, except in the ordinary course of business;
and (c) not permit any Purchased Asset to suffer any Lien thereon, other than
the Permitted Liens.
6.3 Sales Practices. Not engage in any sales of a product: (a) with
payment terms longer than terms customarily offered by the Seller for such
products; (b) at a greater discount from listed prices than customarily
offered for such products, other than pursuant to a promotion of a nature
previously used in the normal course of the Business for such products; (c) at
a price which does not give effect to any previously announced general
increase in the list price for such product; (d) with shipment terms more
favorable to the customer than shipment terms customarily offered by the
Seller for such products; or (e) in conjunction with other benefits to the
customer not in the ordinary course of business with such customer.
6.4 Distributions. Not pay any dividends or make any other
distributions with respect to the Seller's capital stock, except to the extent
such dividend or other distribution would not cause the excess of the Closing
Net Worth to fall below the Minimum Net Worth.
6.5 No Default. Not do any act or omit to do any act, or permit any
act or omission to act, which will cause a breach of any of the Contracts.
6.6 Existing Insurance Policies. Maintain all of the Existing
Insurance Policies in full force and effect.
6.7 Employment Matters. Not: (a) enter into or adopt any new
Employee Benefit Plan; (b) amend or terminate any Existing Plan or pay any
benefit under any Existing Plan which is not required by the terms of such
Existing Plan, except as required by Law; (c) increase in any manner the
compensation or benefits of any officer or employee of the Business, except
for normal merit and seniority raises and discretionary bonuses which are
consistent with past practices and which do not exceed in the aggregate
$5,000.00 for any individual Seller Employee during the period from July 31,
1998 to and including the Closing Date, and which do not in the aggregate
exceed the amount of $100,000 for all Seller Employees over that period of
time; or (d) enter into or offer to enter into any written employment or
consulting agreement with any Person outside the ordinary course of business,
unless terminable at will by the Seller.
6.8 Contracts and Commitments. Not enter into any contract or
commitment or engage in any transaction not in the ordinary course of business
and consistent with Seller's past practices and not purchase, lease, sell or
dispose of any capital asset.
6.9 Preservation of Relationships. Use its reasonable efforts to
preserve the Business organization intact, to retain the services of its
present officers and key employees and to preserve the goodwill of suppliers,
distributors, sales representatives, contractors, customers, creditors and
others having business relationships with the Seller.
6.10 Compliance with Laws. Comply in all material respects with all
applicable Laws.
6.11 Taxes. Timely and properly file all federal, state, local and
foreign tax returns which are required to be filed, and pay or make provision
for the payment of all taxes owed by the Seller.
6.12 Affiliate Transactions. Not enter into any transaction or any
Contract with any affiliate of the Parent or of the Seller, other than
transactions in the ordinary course of business consistent with past
practices.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER
The obligations of the Buyer to be performed on the Closing Date shall
be subject to the satisfaction prior to or at the Closing of the following
express conditions precedent:
7.1 Compliance with Agreement. The Seller shall have performed and
complied in all material respects with all of its obligations under this
Agreement which are to be performed or complied with by them prior to or on
the Closing Date.
7.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Buyer, and the Seller
shall have made available to the Buyer for examination the originals or true
and correct copies of all documents the Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.
7.3 No Challenges. No suit, action or other proceeding shall be
pending or threatened before any court of competent jurisdiction in which the
consummation of the transactions contemplated by this Agreement is restrained
or enjoined or in which the relief requested is to restrain, enjoin or
prohibit the consummation of the transactions contemplated by this Agreement.
7.4 Representations and Warranties of the Parent and the Seller.
Subject to updates to the Disclosure Schedules made pursuant to Section 3.2(b)
of this Agreement, the representations and warranties made by the Parent and
the Seller in this Agreement shall be true and correct in all material
respects (as determined in the good faith judgment of the Buyer) when made and
as of the Closing Date with the same force and effect as though said
representations and warranties had been made at such times.
7.5 No Adverse Change. During the period from the date of this
Agreement to the Closing Date: (a) there shall not have occurred and continue
to exist on the Closing Date any new condition or fact which is, or reasonably
may be expected to be, materially adverse to the financial condition,
properties, business or results of operation of the Seller; and (b) the
Purchased Assets shall not have been materially and adversely affected by
reason of any loss, taking, condemnation, destruction or physical damage,
whether or not insured against.
7.6 Deliveries at Closing. The Seller shall have delivered to the
Buyer the following documents, each dated the Closing Date and properly
executed by the Seller, or counsel for the Seller, as appropriate: (a) the
Bill of Sale; (b) the Escrow Agreement; (c) the Parent's Counsel Opinion; (d)
the Seller's Closing Certificate; and (e) the Seller's Counsel Opinion.
7.7 Other Documents. The Parent and the Seller shall have delivered
to the Buyer such certificates and documents of officers of the Parent or the
Seller, as the case may be, and public officials as shall be reasonably
requested by the Buyer to establish the existence of the Parent and the Seller
and the due authorization of this Agreement and the transactions contemplated
by this Agreement by the Parent and the Seller.
7.8 Possession; Instruments of Conveyance. The Seller shall have
delivered to the Buyer: (a) legal title to and legal possession of the
Purchased Assets; and (b) such other deeds, bills of sale, endorsements,
assignments and other good and sufficient instruments of conveyance and
transfer as shall be reasonably requested by the Buyer to vest in the Buyer
good and marketable title to the Purchased Assets as contemplated by this
Agreement.
7.9 HSR Act. All necessary requirements of the HSR Act shall have
been complied with and any "waiting periods" applicable to the transactions
described in this Agreement which are imposed by the HSR Act shall have
expired prior to the Closing Date or shall have been terminated by the
appropriate agency.
7.10 Parent Shareholder Approval. To the extent required under the
rules and regulations of the London Stock Exchange, the Irish Stock Exchange
and applicable Law, requisite approval of this Agreement and the transactions
contemplated hereby by the shareholders of the Parent shall have been
obtained.
ARTICLE 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT AND THE SELLER
The obligations of the Parent and the Seller to be performed on the
Closing Date shall be subject to the satisfaction prior to or at the Closing
of the following express conditions precedent:
8.1 Compliance with Agreement. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement which are to be performed or complied with by it prior to or on the
Closing Date.
8.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to the Seller, and the Buyer
shall have made available to the Seller for examination the originals or true
and correct copies of all documents which the Seller may reasonably request in
connection with the transactions contemplated by this Agreement.
8.3 No Challenges. No suit, action or other proceeding (including,
without limitation, any objection by the London or Irish Stock Exchanges)
shall be pending before any court of competent jurisdiction in which the
consummation of the transactions contemplated by this Agreement is restrained
or enjoined.
8.4 Representations and Warranties of the Buyer. The representations
and warranties made by the Buyer in this Agreement shall be true and correct
in all material respects (as determined in the good faith judgment of the
Seller and the Parent) when made and as of the Closing Date with the same
force and effect as though such representations and warranties had been made
at such times.
8.5 Deliveries at Closing. The Buyer shall have delivered to the
Seller the Closing Payment and the following documents, each dated the Closing
Date and properly executed by the Buyer or counsel for the Buyer, as
appropriate: (a) the Bill of Sale; (b) the Buyer's Closing Certificate; (c)
the Buyer's Counsel Opinion; and (d) the Escrow Agreement.
8.6 Other Documents. The Buyer shall have delivered to the Seller
such certificates and documents of officers of the Buyer and of public
officials as shall be reasonably requested by the Seller to establish the
existence and good standing of the Buyer and the Buyer's due authorization of
this Agreement and the transactions contemplated by this Agreement.
8.7 HSR Act. All necessary requirements of the HSR Act shall have
been complied with and any "waiting periods" applicable to the transactions
described in this Agreement which are imposed by the HSR Act shall have
expired prior to the Closing Date or shall have been terminated by the
appropriate agency.
8.8 Parent Shareholder Approval. To the extent required under the
rules and regulations of the London Stock Exchange, the Irish Stock Exchange
and applicable Law, requisite approval of this Agreement and the transactions
contemplated hereby by the shareholders of the Parent shall have been
obtained.
ARTICLE 9
INDEMNITIES
9.1 Parent's and Seller's Indemnity. The Parent and the Seller hereby
jointly and severally indemnify and hold the Buyer harmless from and against,
and agree to promptly defend the Buyer from and reimburse the Buyer for, any
and all losses, damages, costs, expenses, liabilities, obligations and claims
of any kind (including, without limitation, reasonable attorneys' fees and
other reasonable legal costs and expenses, including without limitation, those
incurred in connection with any suit, action or other proceeding) which Buyer
may at any time suffer or incur, or become subject to, as a result of or in
connection with:
(a) Any breach of any of the representations and warranties made
by either or both of the Parent and the Seller in or pursuant to this
Agreement;
(b) Any failure by either or both of the Parent and the Seller
to carry out, perform, satisfy and discharge any of their covenants,
agreements, undertakings, liabilities or obligations under this Agreement or
under any of the documents and materials required to be delivered by either or
both of the Parent and the Seller pursuant to this Agreement;
(c) The Retained Liabilities; and
(d) Any suit, action or other proceeding brought by any Person
arising out of, or in any way related to, any of the matters referred to in
Sections 9.1(a), 9.1(b) or 9.1(c) of this Agreement.
9.2 Buyer's Indemnity. The Buyer hereby indemnifies and holds the
Parent and the Seller harmless from and against, and agrees to promptly defend
the Parent and the Seller from and reimburse the Parent and the Seller for,
any and all losses, damages, costs, expenses, liabilities, obligations and
claims of any kind (including, without limitation, reasonable attorneys' fees
and other reasonable legal costs and expenses, including, without limitation,
those incurred in connection with any suit, action or other proceeding) which
either of them may at any time suffer or incur, or become subject to, as a
result of or in connection with:
(a) Any breach of any of the representations and warranties made
by the Buyer in or pursuant to this Agreement;
(b) Any failure by the Buyer to carry out, perform satisfy and
discharge any of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement (including without limitation Buyer's
covenants under Section 3.12(c) of this Agreement) or under any of the
documents and materials required to be delivered by the Buyer pursuant to this
Agreement;
(c) Buyer's ownership, occupation and operation of the Purchased
Assets after the Effective Time of Closing (excluding, however, any matters
for which Seller are required to indemnify Buyer pursuant to Section 9.1 of
this Agreement);
(d) The Assumed Liabilities; and
(e) Any suit, action or other proceeding brought by any Person
arising out of, or in any way related to, any of the matters referred to in
Sections 9.2(a), 9.2(b), 9.2(c) or 9.2(d) of this Agreement.
9.3 Other Provisions and Limitations Regarding Indemnities.
(a) Insurance Recoveries; Tax Benefits. The amounts for which
an indemnifying party shall be liable under Sections 9.1 and 9.2 of this
Agreement shall be net of any insurance proceeds actually received by the
indemnified party in connection with the facts giving rise to the right of
indemnification. The amount of indemnification payable also shall be adjusted
downward to reflect any reduction in any tax liability, refund of any taxes
already paid or any other tax benefit realized by the indemnified party as a
result of the indemnification.
(b) Notice; Third Party Claims. The indemnified party shall
promptly notify the indemnifying party in reasonable detail of any claim,
demand, action or proceeding for which indemnification will be sought under
Section 9.1 or Section 9.2 of this Agreement, and if such claim, demand,
action or proceeding is a third party claim, demand, action or proceeding, the
indemnifying party will have the right at its expense to assume the defense
thereof using counsel reasonably acceptable to the indemnified party. The
indemnified party shall have the right to participate, at its own expense,
with respect to any such third party claim, demand, action or proceeding. In
connection with any such third party claim, demand, action or proceeding, the
parties shall cooperate with each other and provide each other with access to
relevant books and records in their possession. No such third party claim,
demand, action or proceeding shall be settled without the prior written
consent of the indemnified party. If a firm written offer is made to settle
any such third party claim, demand, action or proceeding and the indemnifying
party proposes to accept such settlement and the indemnified party refuses to
consent to such settlement, then: (i) the indemnifying party shall be excused
from, and the indemnified party shall be solely responsible for, all further
defense of such third party claim, demand, action or proceeding; (ii) the
maximum liability of the indemnifying party relating to such third party
claim, demand, action or proceeding shall be the amount of the proposed
settlement if the amount thereafter recovered from the indemnified party on
such third party claim, demand, action or proceeding is greater than the
amount of the proposed settlement; and (iii) the indemnified party shall pay
all attorneys' fees and legal costs and expenses incurred after rejection of
such settlement by the indemnified party, but if the amount thereafter
recovered by such third party from the indemnified party is less than the
amount of the proposed settlement, the indemnified party shall be reimbursed
by the indemnifying party for such attorneys' fees and legal costs and
expenses up to a maximum amount equal to the difference between the amount
recovered by such third party and the amount of the proposed settlement.
(c) Exclusivity. Following the Closing, the provisions of this
Article 9 shall be the exclusive remedy for the matters covered hereby,
provided that nothing herein shall relieve any party from any liability for
fraud.
(d) Termination of Parent's and Seller's Rights. The right of
the Parent and the Seller to receive indemnity provided by Section 9.2(a) of
this Agreement shall, as to any matter which has not been described in a
notice delivered to the Buyer pursuant to Section 9.3(b) of this Agreement
prior to such time, expire at 11:59 P.M., Central Time, on that date which is
eighteen (18) calendar months after the Closing Date.
(e) Termination of Buyer's Rights. The right of the Buyer to
receive indemnity provided by Section 9.1(a) of this Agreement shall, as to
any matter which has not been described in a notice delivered to the Seller
pursuant to Section 9.3(b) of this Agreement prior to such time, expire at
11:59 P.M. Central Time, on that date which is eighteen (18) calendar months
after the Closing Date.
(f) Rights on Termination. The termination of the rights of an
indemnified party to receive indemnity contained in Sections 9.3(d) and 9.3(e)
of this Agreement shall not affect that Person's right to prosecute to
conclusion any claim made by that Person prior to the time that the relevant
right of indemnity terminates.
(g) Limitations on Parent's and Seller's Liability. The
liability of the Parent and the Seller under Section 9.1 of this Agreement
shall be without deduction or limitation, except that the liability of the
Seller under Section 9.1(a) of this Agreement shall:
(i) Be recoverable only if and to the extent that the
cumulative damages suffered by the Buyer for all breaches exceeds Four Hundred
Fifty Thousand and 00/100 Dollars ($450,000);
(ii) Be limited in the aggregate to the Purchase Price; and
(iii) The Buyer shall not be entitled to more than one
recovery for any single loss, damage, cost, expense, liability, obligation or
claim even though such may have resulted from the breach or inaccuracy of more
than one of the representations and warranties or covenant made by the Seller
or the Parent in or pursuant to this Agreement. Without limiting the
generality of the foregoing, the Buyer shall not be entitled to pursue a
recovery for any breach of a representation or warranty if the Buyer has
received a Purchase Price adjustment payment pursuant to Section 2.4(g) on
account of the same matter or circumstance constituting the breach.
(h) Limitations on Buyer's Liability. The liability of the
Buyer under Section 9.2 of this Agreement shall be without deduction or
limitation, except that the liability of the Buyer under Section 9.2(a) of
this Agreement shall:
(i) Be recoverable only if and to the extent that the
cumulative damages suffered by the Parent and the Seller for all Buyer
breaches exceeds Four Hundred and Fifty Thousand and 00/100 Dollars
($450,000);
(ii) Be limited in the aggregate to the Purchase Price; and
(iii) The Parent and the Seller shall not be entitled to
more than one recovery for any single loss, damage, cost, expense, liability,
obligation or claim even though such may have resulted from the breach or
inaccuracy of more than one of the representations and warranties or covenant
made by the Buyer in or pursuant to this Agreement.
(i) Application. A party to this Agreement may be required to
close the transactions described in this Agreement despite the fact that
certain breaches or inaccuracies of the representations and warranties of the
other parties to this Agreement may exist on the Closing Date or the other
parties may have breached certain of their covenants contained in this
Agreement. If a party has actual knowledge of any breach or inaccuracies of
the representations and warranties made by the other party under the terms of
this Agreement and the terms of this Agreement provide the nonbreaching party
the right to terminate this Agreement on account of such breach or
inaccuracies, and if the nonbreaching party nonetheless elects to proceed with
the Closing as described in this 9.3(i) of this Agreement, then such
nonbreaching party shall not have any right after the Closing to seek
indemnity from the breaching party on account of such breach or inaccuracies
pursuant to the provisions of this Article 9 of this Agreement
ARTICLE 10
DISPUTE RESOLUTION MECHANISMS
10.1 Dispute. As used in this Agreement, "Dispute" shall: (a) mean any
dispute or disagreement between the Buyer and the Seller concerning the
interpretation of this Agreement, the validity of this Agreement, any breach
or alleged breach by any party under this Agreement or any other matter
relating in any way to this Agreement; and (b) exclude any dispute or
disagreement between the Buyer and the Seller concerning the calculation of
the Purchase Price, which shall be resolved pursuant to the provisions of
Section 2.4 of this Agreement.
10.2 Process. If a Dispute arises, the parties shall follow the
procedures specified in Sections 10.3, 10.4 and 10.5 of this Agreement.
10.3 Negotiations. The parties shall promptly attempt to resolve any
Dispute by negotiations between the Buyer and the Seller. Either the Buyer or
the Seller may give the other party written notice of any Dispute not resolved
in the normal course of business. The Buyer and the Seller shall meet at a
mutually acceptable time and place within ten (10) calendar days after
delivery of such notice, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve the
Dispute. If the Dispute has not been resolved by these Persons within thirty
(30) calendar days of the disputing party's notice, or if the parties fail to
meet within such fifteen (15) calendar days, either the Buyer or the Seller
may initiate mediation as provided in Section 10.4 of this Agreement. If a
negotiator intends to be accompanied at a meeting by legal counsel, the other
negotiator shall be given at least three (3) business days' notice of such
intention and may also be accompanied by legal counsel.
10.4 Mediation. If the Dispute is not resolved by negotiations
pursuant to Section 10.3 of this Agreement, the Buyer and the Seller shall
attempt in good faith to resolve any such Dispute by mediation. Either the
Buyer or the Seller may initiate a mediation proceeding by a request in
writing to the other party (the "Request"), and both parties will then be
obligated to engage in a mediation. The proceeding will be conducted in
accordance with the then current Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes, with the following exceptions:
(a) If the parties have not agreed within thirty (30) calendar
days of the Request on the selection of a mediator willing to serve, CPR, upon
the request of either the Buyer or the Seller, shall appoint a member of the
CPR Panel of Neutrals as the mediator; and
(b) Efforts to reach a settlement will continue until the
conclusion of the proceedings, which shall be deemed to occur upon the
earliest of the date that: (i) a written settlement is reached; or (ii) the
mediator concludes and informs the parties in writing that further efforts
would not be useful; or (iii) the Buyer and the Seller agree in writing that
an impasse has been reached; or (iv) is forty-five (45) calendar days after
the Request and none of the events specified in Sections 10.4(b)(i), (ii) or
(iii) have occurred. No party may withdraw before the conclusion of the
proceeding.
10.5 Submission to Adjudication. If a Dispute is not resolved by
negotiation pursuant to Section 10.3 of this Agreement or by mediation
pursuant to Section 10.4 of this Agreement within 90 calendar days after
initiation of the negotiation process pursuant to Section 10.3 of this
Agreement, such Dispute and any other claims arising out of or relating to
this Agreement may be heard, adjudicated and determined in an action or
proceeding filed in any state or federal court sitting in Baltimore, Maryland.
10.6 General.
(a) Provisional Remedies. At any time during the procedures
specified in Sections 10.3 and 10.4 of this Agreement, a party may seek a
preliminary injunction or other provisional judicial relief if in its judgment
such action is necessary to avoid irreparable damage or to preserve the status
quo. Despite such action, the parties will continue to participate in good
faith in the procedures specified in this Article 10 of this Agreement.
(b) Tolling Statutes of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time shall be tolled while
the procedures specified in this Article 10 of this Agreement are pending.
The parties will take such action, if any, as is required to effectuate such
tolling.
(c) Performance to Continue. Each party is required to continue
to perform its obligations under this Agreement pending final resolution of
any Dispute.
(d) Extension of Deadlines. All deadlines specified in this
Article 10 of this Agreement may be extended by mutual agreement between the
Buyer and the Seller.
(e) Costs. The parties shall pay: (i) their own costs, fees,
and expenses incurred in connection with the application of the provisions of
this Article 10 of this Agreement; and (ii) fifty percent (50%) of the fees
and expenses of CPR and the mediator in connection with the application of the
provisions of Section 10.4 of this Agreement.
(f) Replacement. If CPR is no longer in business or is unable
or refuses or declines to act or to continue to act under this Article 10 of
this Agreement for any reason, then the functions specified in this Article 10
of this Agreement to be performed by CPR shall be performed by another Person
engaged in a business equivalent to that conducted by CPR as is agreed to by
the Buyer and the Seller (the "Replacement"). If the Buyer and the Seller
cannot agree on the identity of the Replacement within ten (10) calendar days
after a Request, the Replacement shall be selected by the Chief Judge of the
United States District Court for the State of Delaware upon application. If a
Replacement is selected by either means, this Article 10 shall be deemed
appropriately amended to refer to such Replacement.
ARTICLE 11
TERMINATION; MISCELLANEOUS
11.1 Termination. This Agreement may be terminated and the
transactions contemplated by this Agreement may be abandoned at any time prior
to the Closing, as follows:
(a) By mutual written agreement of the Buyer and the Seller;
(b) By the Buyer if any of the conditions set forth in Article 7
of this Agreement shall not have been fulfilled by the Closing;
(c) By the Seller if any of the conditions set forth in Article
8 of this Agreement shall not have been fulfilled by the Closing;
(d) By either party pursuant to Section 3.2(b) of this
Agreement; or
(e) By the Buyer or the Seller if the Closing has not occurred
on or before December 31, 1998.
11.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 11.1 of this Agreement, all further obligations of the
parties under or pursuant to this Agreement shall terminate without further
liability of any party to the others, provided that the obligations of the
parties contained in Sections 3.1(b), 3.5(c), 3.6, Article 9, Article 10, 11.2
and 11.5 of this Agreement shall survive any such termination. If any of the
conditions set forth in Article 7 of this Agreement have not been satisfied,
the Buyer may nevertheless elect to proceed with the consummation of the
transactions contemplated by this Agreement, and if any of the conditions set
forth in Article 8 of this Agreement have not been satisfied, the Seller may
nevertheless elect to proceed with the consummation of the transactions
contemplated by this Agreement. Any such election to proceed shall be
evidenced by a certificate signed on behalf of the waiving party by an officer
of that party.
11.3 Survival of Representations and Warranties. All representations
and warranties of the parties contained in this Agreement or made pursuant to
this Agreement shall survive the Closing Date and the Effective Time of
Closing and the consummation of the transactions contemplated by this
Agreement and shall terminate and be of no further force and effect at 11:59
P.M. Central Time on that date which is eighteen (18) calendar months after
the Closing Date. The termination of the representations and warranties
contained in the immediately preceding sentence shall not affect a party's
right to prosecute to conclusion any claim made by such party prior to such
time.
11.4 Entire Agreement; Amendment. Subject to Section 3.1(b) of this
Agreement, this Agreement and the documents referred to in this Agreement and
required to be delivered pursuant to this Agreement constitute the entire
agreement among the parties pertaining to the subject matter of this
Agreement, and, as of the Effective Time of Closing, shall subsume and
supersede: (a) the Confidentiality Agreement; (b) the indicative offer letter
dated as of June 9, 1998 by and among the Buyer and the Seller; and (c) all
prior and contemporaneous agreements, understandings, negotiations and
discussions of the parties, whether oral or written. There are no warranties,
representations or other agreements between the parties in connection with the
subject matter of this Agreement, except as specifically set forth in this
Agreement. No amendment, supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the Buyer and
the Seller. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision of this Agreement,
whether or not similar, nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
11.5 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties to this Agreement shall pay the
fees and expenses of its respective counsel, accountants, brokers,
consultants, investment bankers and other experts incident to the negotiation
and preparation of this Agreement and consummation of the transactions
contemplated by this Agreement.
11.6 Governing Law. This Agreement shall be construed and interpreted
according to the internal Laws of the State of Delaware without regard to the
conflicts of Laws principles thereof.
11.7 Assignment. Prior to the Closing, this Agreement shall not be
assigned by either the Buyer or the Parent or the Seller, except: (a) with
the prior written consent of the other party; and (b) by the Buyer, to one or
more direct or indirect wholly owned subsidiaries of the Buyer, provided that
the Buyer remains fully responsible and liable for the payment and performance
by such subsidiary of the obligations of the Buyer under this Agreement.
11.8 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given at
the earlier of the date when actually delivered to an officer of a party by
personal delivery, express commercial courier delivery or telephonic facsimile
transmission or when deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed as
follows, unless and until any of such parties notifies the others in
accordance with this Section of a change of address:
If to the Parent or the Seller: Powerscreen International, PLC
Attention: Andrew D. Harris,
Group Legal Advisor
Lower Cape
Warwick, England CV34 5DZ
Fax No.: 011-44-1-926-496-049
with a copy to: Brown, Todd & Heyburn PLLC
Attention: Jay Middleton Tannon, Esq.
400 West Market Street
32nd Floor
Louisville, KY 40202-3363
Fax No.: 502-581-1087
If to the Buyer: The Manitowoc Company, Inc.
Attention: Philip Keener, Treasurer
500 South 16th Street
P.O. Box 66
Manitowoc, WI 54221-0066
Fax No.: 920-683-8138
with a copy to: Quarles & Brady
Attention: Fredrick G. Lautz
411 East Wisconsin Avenue
Milwaukee, WI 53202
Fax No: 414-271-3552
11.9 Counterparts; Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement. The Table of
Contents and Article and Section headings in this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
11.10 Interpretation. Unless the context requires otherwise: (a) all
words used in this Agreement in the singular number shall extend to and
include the plural, and all words in the plural number shall extend to and
include the singular; (b) all words in any gender shall extend to and include
all genders; (c) "ordinary course of business" (or similar terms) shall be
deemed followed by "consistent with past practice since May 22, 1996"; and (d)
in determining whether a fact, event or other item is "material," "materially
adverse," has a "material adverse effect," or possesses a level of
significance described in a similar phrase or expression, such fact, event or
other item shall be considered individually and in the aggregate with all
similar or related facts, events or other items.
11.11 Severability. If any provision, clause, or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such
provision, clause or part under other circumstances, shall not be affected
thereby unless such invalidity materially impairs the ability of the parties
to consummate the transactions contemplated by this Agreement.
11.12 No Reliance. Except for the parties to this Agreement and any
assignees permitted by Section 11.7 of this Agreement: (a) no Person is
entitled to rely on any of the representations, warranties and agreements of
the parties contained in this Agreement; and (b) the parties assume no
liability to any Person because of any reliance on the representations,
warranties and agreements of the parties contained in this Agreement.
11.13 Exhibits and Disclosure Schedule. If a document or matter is
disclosed in the Disclosure Schedule, it shall be deemed to be disclosed for
all purposes of this Agreement without the necessity of specific repetition or
cross-reference, except that, where a Disclosure Schedule requires more
substantive disclosure than a mere listing, a listing of items shall not be
deemed disclosure of the relevant substance.
11.14 Taxes and Fees; Prorations. The Seller and the Buyer shall share
equally all transfer taxes of any kind and all recording and filing fees which
arise as a result of the conveyance of the Purchased Assets by the Seller to
the Buyer. However, the Seller shall be fully responsible for and shall pay
any and all sales or use taxes applicable to the Seller's transfer of the
Purchased Assets to the Buyer pursuant to this Agreement. Real Property ad
valorem taxes and special assessments applicable to the Real Property shall be
prorated as of the Closing Date. Any and all utility charges associated with
the present operation of the Business shall be prorated as of the Closing
Date.
11.15 Income Tax Position. Neither the Buyer nor the Parent or the
Seller shall take a position for income tax purposes which is inconsistent
with this Agreement.
11.16 Further Assurances. From time to time after the Closing Date,
upon the reasonable request and expense of the Buyer and without any
additional consideration, the Seller shall execute and deliver or cause to be
executed and delivered such further instruments of conveyance, assignment and
transfer and take such further action as the Buyer may reasonably request in
order to more effectively sell, assign, convey, transfer, reduce to possession
and record title to any of the Purchased Assets.
11.17 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent. In the event an ambiguity or question of intent or interpretation
arises, this Agreement will be construed as if drafted jointly by the parties
and no presumption or burden of proof will arise favoring or disfavoring any
Person by virtue of the authorship of any of the provisions of this Agreement.
11.18 JLG Agreement.
(a) If that certain Asset Purchase Agreement (the "JLG
Agreement"), dated as of May 22, 1996, by and among the Seller, JLG
Industries, Inc. ("JLG") and Fulton International Inc. ("Fulton"), cannot
be assigned by Seller to Buyer at the Closing, then, in order to ensure that
Seller is not in breach of its obligations under the JLG Agreement, Buyer
hereby:
(i) Agrees, until May 22, 2003, in accordance with and
subject to the limitations, restrictions and conditions set forth in, Section
6.02 of the JLG Agreement, and in consideration for Seller's agreement to
reimburse Buyer for reasonable costs and expenses incurred by Buyer in doing
so, to: (A) allow JLG and its representatives access to and the right to make
or obtain copies of the Buyer Records; (B) provide Seller with 90 days'
advance written notice prior to destroying any of the Buyer Records and,
during such period, allowing Seller and JLG, at their own expense, to make
copies of any or all of the Buyer Records without further consideration to
Buyer; and (C) make its employees available to assist Seller and/or JLG in
gaining access to the Buyer Records as shall be reasonably necessary to
accomplish the purposes of this 11.18(a)(i).
(ii) Agrees, until May 24, 2001, in accordance with and
subject to the conditions set forth in Section 6.03 of the JLG Agreement, to:
(A) manufacture or supply certain spare parts specified on Schedule 6.03; (B)
notify Seller and JLG of any accidents involving the referenced products; and
(C) subject to reimbursement by Seller for its reasonable costs and expenses
incurred in connection with doing so, cooperate with Seller and/or JLG in
connection with any litigation involving such products.
(iii) Subject to the conditions set forth in Section 6.04 of
the JLG Agreement, acknowledges the nonexclusive, non-assignable, royalty-
free, fully paid, perpetual license granted by the Seller to JLG pursuant to
Section 6.04 of the JLG Agreement to use, for purposes of JLG's business, the
patents identified on Schedule 6.04 attached to the JLG Agreement.
(b) Moreover, Seller agrees that, if the consents of JLG and
Fulton cannot be obtained for the assignment by the Seller of its rights under
the JLG Agreement to the Buyer at the Closing, then the Seller shall, at
Buyer's expense, take all steps reasonably requested by the Buyer to enforce
against JLG and Fulton the noncompete covenant made by them pursuant to
Section 5.03 of the JLG Agreement for so long as such covenant remains in
effect.
(c) In the event Seller is able to assign the JLG Agreement to
Buyer at the Closing, then Buyer agrees that, notwithstanding such assignment,
Seller shall retain any rights it may have against, or for contribution from,
JLG and/or Fulton under the JLG Agreement or otherwise in connection with the
Pasquale litigation matter described in the Existing Litigation Disclosure
Schedule.
11.19 Consent to Jurisdiction. The Buyer, the Seller and the Parent
each agree to the exclusive jurisdiction of any federal court in Baltimore,
Maryland with respect to any claim or cause of action arising under or
relating to this Agreement, waive personal service of any and all process upon
it, consent that all service of process will be made by registered mail
directed to it at its address set forth in Section 11.8 of this Agreement, and
agree that service so made shall be deemed to be completed when received. The
Buyer, the Seller and the Parent each waive any objection based on forum non
conveniens and waive any objection to venue of any action instituted as
described in this Section 11.19 of this Agreement. Nothing in this Section
11.19 of this Agreement shall affect the right of any party to serve legal
process in any other matter permitted by Law.
IN WITNESS WHEREOF, the parties have caused this Purchase and
Sale Agreement to be duly executed as of the day and year first above written.
THE MANITOWOC COMPANY, INC.
By: /s/ Philip Keener
----------------------------
Philip Keener, Treasurer
POWERSCREEN USC INC.
By: /s/ Andrew Harris
----------------------------
Andrew D. Harris, Company Secretary
POWERSCREEN INTERNATIONAL, PLC
By: /s/ Andrew Harris
----------------------------
Andrew D. Harris, Company Secretary
ustc agreement
NEWS For Immediate Release
THE MANITOWOC COMPANY
TO PURCHASE ASSETS OF USTC
TO COMBINE WITH ITS MANITEX UNIT
MANITOWOC, WISCONSIN, September 22, 1998 - The Manitowoc Company, Inc.
(MTW), announced today it had signed an agreement to purchase the assets of
USTC, Inc., a wholly owned subsidiary of UK-based Powerscreen International
PLC.
Located in York, Pennsylvania, USTC builds three proprietary product
lines, including boom trucks, rough terrain forklifts, and other types of
material-handling equipment. USTC was formed in 1996 when Powerscreen
purchased the boom truck product line formerly built by JLG. Presently, the
USTC product line includes nine models of boom trucks offering capacities
from 10 to 32 tons and tip heights to 170 feet. USTC has approximately 200
employees and had consolidated sales exceeding $30 million for its fiscal
year ending March 31, 1998.
In making the announcement, Joe Conway, Manitex executive vice
president and general manager, said: "Our Manitex operation is the number
two factor in North American boom truck sales. This combination will
establish Manitex as an even stronger competitor in this $100+ million
market."
Terry D. Growcock, Manitowoc's president and chief executive officer,
added: "This transaction also is expected to result in operating
efficiencies and synergies that will improve gross margins and trim overhead
costs for the combined operation. We expect the addition of USTC to be
accretive to Manitowoc's earnings per share and EVA(R) (Economic Value-Added)
performance in the first full year."
Manitowoc plans to finance the purchase with a combination of short-
and long-term debt. The estimated price includes cash in the mid-$40
million range plus the assumption of trade debt. Closing is contingent upon
government approval and approval by Powerscreen's shareholders. The
transaction is anticipated to close in mid-November.
"This acquisition is another example of our commitment to grow each
of our core businesses and a definite enhancement to our overall crane
segment," explained Growcock. "Our aggressive product development efforts
have produced a series of innovative crane platforms. These have included
our new "S" Series rear-mounted boom trucks and the industry's highest
capacity boom truck, the Manitex 38100. Enthusiastic acceptance of these
models by our customers have helped swell our backlog of unfilled crane
orders."
The Manitowoc Company, Inc. is a leading manufacturer of ice-cube
machines, ice/beverage dispensers, and commercial refrigeration equipment
for the foodservice industry. It is also a leading producer of lattice-boom
cranes, boom trucks, and related products for the construction industry and
specializes in ship-repair work for vessels operating on the Great Lakes.
A Note on Forward-Looking Statements
This press release includes forward-looking statements based on
management's current expectations, especially those regarding anticipated
operating efficiencies and synergies, improvements in gross margins, and
accretive effect of the transaction. These statements involve a number of
risks and uncertainties, and they must be qualified by factors that could
cause results to be materially different from management's expectations.
Such factors include reception of the transaction in USTC's markets, as well
as factors affecting the truck crane industry generally (which are described
in more detail in Manitowoc's annual report to shareholders).
Company Contact:
Robert R. Friedl
Senior Vice President and
Chief Financial Officer
920-683-8136
