<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 31, 1999
MORTON INDUSTRIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 0-13198 38-0811650
(State of other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1021 WEST BIRCHWOOD, MORTON, ILLINOIS 61550
(Address of principal executive offices) (Zip Code)
(309-266-7176)
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report.)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 31, 1999, Morton Industrial Group, Inc. sold the assets of
Carroll George Inc.(a wholly-owned subsidiary), a composite structures and
plastics business unit based in Northwood, Iowa.
The assets were sold to Advanced Component Technologies, Inc; the net sales
price was approximately $7,200,000 in cash, subject to working capital
adjustments. Proceeds from the sale, net of expenses, were used to reduce
bank debt. The final allocation of proceeds between long-term debt and
line-of-credit debt is not yet finalized.
Item 7. Financial Statements and Exhibits
(b) The accompanying unaudited pro forma condensed consolidated statements
of operations for the nine month period ended October 2, 1999 and the year
ended December 31, 1998 give effect to (i) the sale of the assets of Carroll
George Inc. and (ii) the acquisition in 1998 of Carroll George Inc., B&W
Metal Fabricators, Inc., Mid-Central Plastics, Inc., and SMP Steel
Corporation, and in 1999 of the Non-Automotive Plastics Group of Worthington
Custom Plastics, Inc. as though each such transaction was effective at the
beginning of the respective period. The unaudited pro forma condensed
consolidated statements of operations do not reflect any results of
operations beyond October 2, 1999.
The unaudited pro forma condensed consolidated balance sheet gives effect to
the transaction as though such transaction was completed on October 2, 1999.
These unaudited pro forma condensed consolidated financial statements are not
necessarily indicative of the results that actually would have occurred if
the transactions reflected therein had actually occurred at the dates
indicated, or what results may be achieved in the future.
(c) Exhibits:
99.1 Unaudited pro forma condensed consolidated financial statements
99.2 Agreement dated December 31, 1999 by and among Carroll George
Inc., Morton Industrial Group, Inc. and Advanced Component
Technologies, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MORTON INDUSTRIAL GROUP, INC.
Date: January 18, 2000 By: /s/ Thomas D. Lauerman
-------------------------------
Thomas D. Lauerman
Vice-President and
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
99.1 Unaudited pro forma condensed consolidated
financial statements
99.2 Agreement dated December 31, 1999 by and among
Carroll George Inc., Morton Industrial Group, Inc.
and Advanced Component Technologies, Inc.
</TABLE>
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
1998 and Less Carroll
Morton, 1999 George Inc Pro Forma
as reported Acquisitions(1) Results(2) Consolidated
----------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 151,196 $ 129,645 $ 26,151 $ 254,690
----------- --------- --------- ------------
Gross Profit 21,456 16,985 2,941 35,500
Selling and administrative expenses 14,499 10,956 2,814 22,641
----------- --------- --------- ------------
Operating income 6,957 6,029 127 12,859
Interest and other expense 4,459 4,040 600 7,899
----------- --------- --------- ------------
Earnings (loss) before income taxes and
extraordinary charge 2,498 1,989 (473) 4,960
(Provision) benefit for income taxes (415) 101 33 (347)
----------- --------- --------- ------------
Earnings before extraordinary charge $ 2,083 $ 2,090 $ (440) $ 4,613
=========== ========= ========= ============
Earnings before extraordinary charge per common share:
Basic $ 0.52 $ 0.75 (3)
=========== ============
Diluted $ 0.45 $ 0.66 (3)
=========== ============
Number of shares used to compute per share data:
Basic 4,023,373 4,023,373
=========== ============
Diluted 4,582,614 4,582,614
=========== ============
</TABLE>
(1) Reflects the pro forma results of operations of the companies acquired
in 1998 and 1999, prior to the date of their acquisition by Morton, as
previously presented in Form 8-K/A filed on June 28, 1999. The companies
were acquired on the following dates:
<TABLE>
<CAPTION>
Date Acquired
-------------
<S> <C>
Carroll George Inc. March 30, 1998
B&W Metal Fabricators, Inc. April 8, 1998
Mid-Central Plastics, Inc. May 29, 1998
SMP Steel Corporation June 1, 1998
Worthington April 15, 1999
</TABLE>
(2) Reflects the pro forma results of Carroll George Inc. for the year ended
December 31, 1998.
(3) Pro forma per share amounts give effect to preferred stock dividends
requirements and related discount accretion.
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended October 2, 1999
<TABLE>
<CAPTION>
Less Carroll
Morton, George Inc Pro Forma
as reported Worthington(1) Results(2) Consolidated
----------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 159,553 $ 26,864 $ 13,905 $ 172,512
----------- -------- -------- -----------
Gross Profit 19,293 2,875 1,065 21,103
Selling and administrative expenses 17,486 2,238 1,757 17,967
----------- -------- -------- -----------
Operating income 1,807 637 (692) 3,136
Interest and other expense 5,840 724 450 6,114
----------- -------- -------- -----------
Earnings (loss) before income taxes and cumulative effect
of accounting change (4,033) (87) (1,142) (2,978)
(Provision) benefit for income taxes 46 7 80 (27)
----------- -------- -------- -----------
Earnings (loss) before cumulative effect of accounting change (3,987) (80) (1,062) (3,005)
=========== ======== ======== ===========
Earnings before cumulative effect of accounting change per
common share:
Basic $ (1.08) $ (0.96)(3)
=========== ===========
Diluted $ (1.08) (0.96)(3)
=========== ===========
Number of shares used to compute per share data:
Basic 4,374,714 4,374,714
=========== ===========
Diluted 4,374,714 4,374,714
=========== ===========
</TABLE>
(1) Reflects the 1999 pro forma results of operations of Worthington prior to
the acquisition by Morton on April 15, 1999, as previously presented in
Form 8-K/A filed on June 28, 1999.
(2) Reflects the results of Carroll George Inc. for the nine months ended
October 2, 1999.
(3) Pro forma per share amounts give effect to preferred stock dividends
requirements and related discount accretion.
<PAGE>
MORTON INDUSTRIAL GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of October 2, 1999
<TABLE>
<CAPTION>
Less Carroll
Morton, George Inc Pro Forma Pro Forma
as reported Assets Sold(1) Adjustments Consolidated
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash $ 677 $ 7,200 $(7,200)(2) $ 677
Accounts, notes and other receivables, net 34,425 (1,946) - 32,479
Inventories 23,819 (2,058) - 21,761
Prepaid expenses 2,050 (200) - 1,850
Other 2,354 (294) - 2,060
--------- --------- ------- ---------
Total current assets 63,325 2,702 (7,200) 58,827
--------- --------- ------- ---------
Deferred income taxes 4,646 (317) - 4,329
Property, plant and equipment, net 61,223 (6,218) - 55,005
Intangible assets, net 12,438 (355) - 12,083
Other 1,639 - 1,639
--------- --------- ------- ---------
$ 143,271 $ (4,188) $(7,200) $ 131,883
========= ========== ======= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Note payable to bank $ 23,342 - $ - (2) $ 23,342
Current installment of long-term debt 9,913 - - 9,913
Accounts payable 23,768 (1,222) - 22,546
Other accrued expenses 11,034 (41) - 10,993
--------- --------- ------- ---------
Total current liabilities 68,057 (1,263) - 66,794
Long term debt, net of current portion 66,244 (200) (7,200)(2) 58,844
Other 2,868 2,868
--------- --------- ------- ---------
Total liabilities 137,169 (1,463) (7,200) 128,506
--------- --------- ------- ---------
Redeemable preferred stock 4,980 4,980
--------- --------- ------- ---------
Stockholders' Equity
Class A common stock 43 - - 43
Class B common stock 2 - - 2
Additional paid-in capital 19,978 - - 19,978
Retained earnings(deficit) (18,901) (2,725) - (21,626)
--------- --------- ------- ---------
Total stockholders' equity 1,122 (2,725) - (1,603)
--------- --------- ------- ---------
$ 143,271 $ (4,188) $(7,200) $ 131,883
========= ========= ======= =========
</TABLE>
(1) Reflects cash received, net of approximate expenses, sale of assets and
assumption of liabilities by buyer.
(2) Reflects use of cash to retire debt; at the date of filing this Form 8-K,
the final allocation of debt retirement between term debt and
line-of-credit debt is not yet finalized.
<PAGE>
Exhibit 99.2
ASSET PURCHASE AGREEMENT
This Agreement is executed this 31st day of December, 1999, by and among
CARROLL GEORGE, INC., an Iowa corporation ("Seller"); MORTON INDUSTRIAL
GROUP, INC. ("Shareholder"), a Georgia corporation; and ADVANCED COMPONENT
TECHNOLOGIES, INC., a Minnesota corporation ("Buyer").
RECITALS
WHEREAS, the Seller is engaged in the business of manufacturing and
selling thermoformed plastic components and products (the "Business") from
its plant in Northwood, Iowa; and
WHEREAS, the Seller desires to sell, and the Buyer desires to acquire
from the Seller, substantially all of the operating assets of the Seller used
in or relating to the Business; and
WHEREAS, the parties desire to enter into this Agreement to document the
terms and conditions of the transaction; and
WHEREAS, the capitalized terms used in this Agreement are defined in
Section 8.16 hereof or elsewhere herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 ASSET PURCHASE.
(a) PURCHASED ASSETS. Subject to and upon the terms and
conditions of this Agreement, and in reliance upon the representations,
warranties, covenants and agreements made in this Agreement by the Seller and
Shareholder at the Closing on the Closing Date; the Buyer shall purchase and
accept from the Seller, and the Seller shall sell, transfer, convey, assign
and deliver to the Buyer, any and all of the Seller's right, title and
interest in and to all of the assets, properties, rights, interests and
business of the Seller used in or which relate to the Business, of every
nature, kind and description, tangible and intangible, vested or unvested,
contingent or otherwise, wheresoever located and whether or not carried or
reflected on the books, records and the Balance Sheet or Interim Balance
Sheet, of the Seller, including without limitation the following assets (if
any) which are used in or relate to the Business, however, excluding the
Retained Assets and the Unassumed Liabilities:
<PAGE>
(i) account, trade, note and other receivables other than
receivables from employees (the "Accounts Receivable");
(ii) prepaid expenses;
(iii) inventories of purchased parts and supplies, including
all packaging materials and supplies, raw materials, work-in-process and
finished goods (such inventories are collectively referred to as the
"Inventories"), together with the warranties, if any, received from
manufacturers and sellers of the raw materials, purchased parts and
supplies, and any related claims, credits, rights of recovery and
set-off with respect thereto;
(iv) tangible assets, machinery, equipment, fixtures,
transportation equipment, construction-in-process, tools, dies and
molds, inventories of supplies and spare parts, vehicles, furniture,
office equipment, computer hardware and computer software together with
the warranties, if any, received from the manufacturers and sellers of
these tangible assets, including without limitation those items listed
in SCHEDULE 1.01(a)(iv) attached hereto;
(v) the manufacturing plant consisting of buildings and
land of approximately 10.476 acres in Northwood, Iowa (referred to
herein as the "Real Estate");
(vi) trade secrets and confidential information related to
the Business;
(vii) inventions, discoveries, improvements, processes,
formulae (secret or otherwise), data, engineering, technical and shop
drawings, specifications, trade secrets, know-how and ideas (including
such as may be in the possession of third parties, but which are the
property of the Seller), whether patentable or not, shoprights, licenses
and other similar agreements, and all drawings, records, books or other
indicia, however evidenced, of the foregoing;
(viii) rights existing under leases, contracts, distribution
arrangements, sales and purchase agreements, letters of intent, other
agreements and business arrangements listed on the SCHEDULE 4.18 or
under contracts or commitments which are not required by Section 4.18 to
be listed on the SCHEDULE 4.18;
(ix) claims, causes of action, choses in action, rights of
recovery and rights of set-off of any kind, except for rights of set-off
against liabilities not assumed by Seller;
(x) the right to receive Accounts Receivable payments and
any other communications;
(xi) records pertaining to customers and accounts,
personnel records, all lists and records pertaining to suppliers, and
all books, ledgers, files and business records of every kind;
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(xii) advertising materials and all other printed or written
materials;
(xiii) all goodwill as a going concern, if any, and all other
intangible properties;
(xiv) all right, title and interest in the name "Carroll
George, Inc." and any derivatives thereof; and
(xv) all other property owned by the Seller, or in which it
has an interest on the Closing Date.
For purposes of this Agreement, the term "Purchased Assets" means
all property which the Seller will convey to Buyer or will be obligated
to convey to Buyer under this Agreement.
(b) RETAINED ASSETS. Anything in this Agreement to the contrary
notwithstanding, the Seller is retaining title to, and possession of, and the
Seller is not selling, assigning, conveying, transferring or delivering to
Buyer any and all of the Seller's right, title or interest in or to any of
the following (the "Retained Assets"):
(i) cash, cash investments and marketable securities;
(ii) accounts receivable from related entities;
(iii) income tax returns and other income tax records,
reports, data, files and documents;
(iv) rights under this Agreement;
(v) the Seller's corporate charter, minute books,
corporate records and related corporate documents;
(vi) any benefit, right, or claim relating to any
liabilities or contract not assumed by the Buyer.
(c) ASSUMPTION OF LIABILITIES. Subject to the conditions
specified in this Agreement, Buyer hereby agrees to assume, discharge and,
subject to the provisions of Section 7.02, shall indemnify and hold Seller
and Shareholder harmless from, the following liabilities and obligations of
Seller (hereinafter referred to as the "Assumed Liabilities"):
(i) Seller's liabilities for accounts payable and Accrued
Current Liabilities related to the Business as set forth on SCHEDULE
1.01(c)(i) (this Schedule to be provided within 10 days after Closing by
Seller for Buyer's review and approval);
(ii) Seller's liabilities and obligations under the
contracts, leases, operating leases, or commitments referred to in
Section 1.01(a)(viii) above except: (A)
3
<PAGE>
liabilities or obligations arising out of any breach caused by the
Seller, at any time before, on or after the date of this Agreement; and
(B) liabilities or obligations resulting from claims based on defective
products, violations resulting from claims based on defective products,
violation of product warranties and other product claims with respect to
products manufactured or sold by the Seller, on or prior to the Closing
Date, provided, however, that Buyer will honor warranty claims (limited
to product replacement or purchase price refund) for products sold by
the Seller on or before the Closing Date up to a total cumulative amount
paid by Buyer of $10,000; and
(iii) All liabilities or obligations resulting from claims
based on defective products, violations resulting from claims based on
defective products, violation of product warranties or other product
claims, solely with respect to products manufactured by Buyer after the
Closing Date.
(d) LIABILITIES NOT ASSUMED. Buyer will not assume or be liable
for, and subject to the provisions of Section 7.02, Seller and Shareholder
shall indemnify and hold Buyer harmless from, any of the following
liabilities or obligations consisting of and, notwithstanding any implication
to the contrary contained in (c) above, the following liabilities or
obligations are "Unassumed Liabilities" for purposes of this Agreement:
(i) Any of the Seller's liabilities or obligations under
this Agreement;
(ii) Any of the Seller's liabilities or obligations against
which the Seller is insured or otherwise indemnified by someone other
than Buyer;
(iii) Any of the Seller's liabilities or obligations
(including penalties) arising under common or statutory law whether by
reason of any violation of federal, state, local or foreign law or any
requirement of any governmental authority, including, but not limited
to, violations of all environmental, or occupational health and safety
laws of the United States or any sovereign entity, foreign or otherwise;
(iv) Except for amounts included in the Accrued Current
Liabilities under Subsection (c)(i) above, any liability or obligation
of the Seller in respect of any amount of Tax, and specifically (but
without limitation) Buyer will not assume or be liable for any liability
for Tax imposed by reason of the sale or conveyance of the Purchased
Assets to Buyer; it being understood and agreed that Buyer shall not be
deemed to be Seller's transferee or successor with respect to any such
Tax and that Seller shall pay all transfer taxes with respect to the
transfer of the Real Estate;
(v) Any liability or obligation of the Seller to any
shareholder of Seller whatsoever, including, but not limited to the
payment of dividends or the repurchase or other acquisition of any
shares of its capital stock, and, except for amounts included in the
Accrued Current Liabilities under Subsection (c)(i) above, any liability
or obligation of Seller to any affiliate or any shareholder or entity or
affiliate owned or controlled by any shareholder of Seller;
4
<PAGE>
(vi) Except for amounts included in the Accrued Current
Liabilities under Subsection (c)(i) above, any liability or obligation
for any compensation or other amounts payable to any of the employees of
the Seller, including, but not limited to, salary, bonus, accrued
vacation, fringe, pension or profit sharing benefits, or severance
payments applicable to officers, directors or employees of the Seller or
policies of Seller for any period prior to the Closing Date;
(vii) Any liability or obligation resulting from claims
based on defective products, violations resulting from claims based on
defective products, and, except to the extent set forth in Section
1.01(c)(ii)(B) above, violation of product warranties and other product
claims with respect to products manufactured or sold by the Seller on or
prior to the Closing Date; and
(viii) Any other liability or obligation of the Seller of
every kind and nature, whether actual, contingent or accrued, known or
unknown, not expressly assumed by Buyer under Subsection (c) above.
1.02 PURCHASE PRICE; PRORATIONS.
(a) In consideration of and in exchange for the Purchased
Assets, the Buyer shall pay a total purchase price in the amount of
$7,500,000.00 (the "Purchase Price") at Closing. The Purchase Price shall be
paid by certified check, bank cashier's check or wire transfer at Closing.
(b) Rents, premiums under assignable insurance policies, water
and other utility charges, fuels, prepaid service contracts, general taxes,
if any, and other similar items except for those amounts included in the
Accrued Current Liabilities under Section 1.01(c)(i) above shall be adjusted
ratably as of the time of Closing and added to the Assumed Liabilities where
appropriate.
1.03 CLOSING TRANSACTIONS.
(a) CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Husch &
Eppenberger, LLC, 401 Main Street, Suite 1400, Peoria, Illinois, at 10:00
a.m. on or before December 31, 1999, with such date to be mutually agreeable
to the Buyer and the Seller. Buyer shall have the option of closing earlier
than December 31, 1999. If Buyer elects to close prior to December 31, 1999,
Seller and Buyer shall exercise all reasonable efforts to close on the date
selected by Buyer. The date and time of the Closing shall be 11:59 p.m., CST,
on December 31, 1999 and are herein referred to as the "Closing Date."
(b) TRANSFERS. Subject to the conditions set forth in this
Agreement, the parties agree to consummate the following on the Closing Date:
(i) Seller will convey to Buyer good title to all of the
Purchased Assets, free and clear of all Encumbrances (except those which
are associated with the Assumed
5
<PAGE>
Liabilities) and will deliver to Buyer recordable warranty deeds, bills
of sale, assignments of leases and contracts and all other instruments
of conveyance which are necessary or desirable to effect transfer of the
Purchased Assets, all in form and content reasonably satisfactory to
Buyer.
(ii) Seller and Shareholder will deliver to Buyer a
certificate signed by the Seller and Shareholder in the form set forth
in SCHEDULE 1.03(b)(ii) attached hereto, dated the Closing Date,
certifying (A) the accuracy of the representations and warranties of the
Seller and Shareholder, (B) the performance by the Seller and the
Shareholder of, or the compliance by the Seller and the Shareholder
with, all of the covenants or agreements required to be performed or
complied with by the Seller and the Shareholder, and (C) the
satisfaction of any condition referred to in Section 2.01 that is not a
responsibility of Buyer.
(iii) Seller will deliver to Buyer certified copies of the
resolutions of the Seller's board of directors and stockholders
approving the transactions contemplated by this Agreement.
(iv) Seller will deliver to Buyer certified articles of
incorporation and bylaws of Seller.
(v) Seller will deliver to Buyer a good standing
certificate for the Seller issued by the Secretary of State of Iowa not
more than thirty (30) days prior to Closing.
(vi) Seller will deliver to Buyer an opinion of Seller's
counsel as to matters set forth in SCHEDULE 1.03(b)(vi).
(vii) Seller will deliver to Buyer an executed
noncompetition agreement (the "Noncompetition Agreement") in the form
set forth in SCHEDULE 1.03(b)(vii).
(viii) Seller will deliver to Buyer and Buyer will deliver to
Seller an assignment and assumption agreement (the "Assignment") in the
form set forth in SCHEDULE 1.03(b)(viii).
(ix) Shareholder will deliver to Buyer and Buyer will
deliver to Shareholder a transition services agreement (the "Transition
Agreement") in the form set forth in SCHEDULE 1.03(b)(ix).
(x) Seller will deliver a pay off letter from Harris Trust
& Savings Bank, individually and as Agent for the lenders (collectively,
the "Lenders") under that certain Credit Agreement by and among the
Shareholder and its Subsidiaries and the Lenders dated as of January 20,
1998, as amended, indicating to Buyer's satisfaction that Lenders' liens
on the Seller's assets shall be released upon payment of the Purchase
Price.
(xi) Seller will deliver to Buyer such other documents or
instruments as Buyer reasonably requests to effect the transactions
contemplated hereby. Buyer will
6
<PAGE>
deliver to Seller such other documents or instruments as Seller
reasonably requests to effect the transactions contemplated hereby.
(xii) Buyer will deliver to Seller a certificate signed by
Buyer and in the form set forth in SCHEDULE 1.03(b)(xii) attached
hereto, dated the Closing Date, certifying (A) the accuracy of the
representations and warranties of the Buyer, (B) the performance by the
Buyer of, or the compliance by the Buyer with, all of the covenants or
agreements required to be performed or complied with by the Buyer, and
(C) the satisfaction of any condition referred to in Section 2.02 that
is not a responsibility of the Seller or the Shareholder.
(xiii) Buyer will deliver to Seller certified copies of the
resolutions approving the transactions contemplated by this Agreement.
(xiv) Buyer will deliver to Seller a certified copy of its
articles of incorporation.
(xv) Buyer will deliver to Seller a good standing
certificate for the Buyer issued by the Secretary of State of Minnesota
not more than thirty (30) days prior to Closing.
(xvi) Buyer will deliver to Seller an opinion of Buyer's
counsel as to matters set forth in SCHEDULE 1.03(b)(xvi).
(xvii) Buyer will deliver to Seller the Purchase Price.
(xviii) All actions to be taken and all deliveries to be made
at the Closing shall be considered to be taken or made simultaneously,
and no action taken or delivery made shall be considered to have been
taken or made unless and until all actions and deliveries incidental to
the Closing have been completed.
1.04 WAIVER OF COMPLIANCE WITH BULK TRANSFER REQUIREMENTS. The Buyer
waives compliance by the Seller with the provisions of the Bulk Transfer
Article of the Uniform Commercial Code as enacted in any applicable
jurisdiction. Seller hereby agrees to indemnify and hold Buyer harmless from
any and all liabilities and obligations of Seller which are not assumed by
Buyer under this agreement, and from any and all liabilities resulting from
noncompliance with the Bulk Transfer Article of the Uniform Commercial Code,
including but not limited to all costs, expenses, and reasonable attorneys'
fees incurred in connection with the defense or settlement of any such
liability or obligation.
1.05 PURCHASE PRICE ALLOCATION. The Purchase Price will be allocated in
accordance with the Tax Reform Act of 1986, as amended (the "Allocation") and
as set forth on SCHEDULE 1.05. Seller shall not, without written approval of
Buyer, file any tax returns on which Seller takes any position inconsistent
with the Allocation. Buyer shall not without the written approval of Seller,
file, or permit the filing of any tax returns on which Buyer takes any
position inconsistent with the Allocation. Buyer and Seller, respectively,
will notify each other as soon as
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<PAGE>
reasonably practicable of any audit adjustment or proposed audit adjustment
by any taxing authority which affects the Allocation.
1.06 PURCHASE PRICE ADJUSTMENT. Within thirty days after the Closing
Date, Shareholder shall deliver to Buyer the Closing Date Working Capital
Balance Sheet together with the Working Capital Asset Value Statement. Buyer
shall have thirty days after Buyer's receipt of those documents to notify
Seller of any objections (i.e., Disputed Items) to the Closing Date Working
Capital Balance Sheet or to the Working Capital Asset Value Statement. Any
such notice shall specify the Disputed Item or Disputed Items. If Buyer does
not deliver to Shareholder its objections in writing within the said
thirty-day period after Buyer's receipt of the documents specified in the
first sentence, or Buyer acknowledges in writing that said documents are
accurate, Shareholder's calculation of the Working Capital as of the Closing
Date shall be final, binding, and conclusive on the parties for purposes of
this section, the parties hereto shall cooperate to provide the other parties
and their representatives with information with respect to the Disputed Items.
If the Closing Date Working Capital Balance Sheet reflects that the
Working Capital was two million dollars or more on the Closing Date, no
adjustment to the Purchase Price shall be made. If, however, the Working
Capital as of the Closing Date is determined to be less than two million
dollars, the Purchase Price shall be decreased by the difference and remitted
by Seller and Shareholder to Buyer within ten days after the final
determination thereof.
1.07 DISPUTE RESOLUTION. If Shareholder and Buyer shall be unable to
resolve any Disputed Item or Disputed Items within thirty days after notice
from Buyer to Shareholder that a dispute exists, then Shareholder and Buyer
shall each appoint a representative within ten days who shall together
endeavor in good faith to resolve any such Disputed Item or Disputed Items.
If either party fails to appoint a representative within such time period,
the other party's representative shall resolve such Disputed Item(s). In the
event that such representatives are unable to resolve the Disputed Item(s)
within thirty days, Shareholder and Buyer shall together, within ten business
days, appoint an Arbitrator who is a certified public accountant from the
Chicago office of a nationally recognized "Big Five" accounting firm to
arbitrate the dispute. Shareholder and Buyer shall, within the next twenty
days thereafter, present their positions with respect to the Disputed Item(s)
to the Arbitrator together with such other materials as the Arbitrator deems
appropriate. The Arbitrator shall, within twenty days after the submission of
the evidentiary materials, submit its written decision on each Disputed Item
to the Shareholder and Buyer. Any determination by the Arbitrator with
respect to any Disputed Item shall be final and binding on each party to this
Agreement. Except as specifically set forth to the contrary in this SECTION
1.07, the arbitration shall be conducted in Chicago, Illinois and the
Arbitrator shall comply with the commercial arbitration rules of the American
Arbitration Association, as then in effect, and judgment on any award
rendered by the Arbitrator may be entered in any court having jurisdiction
thereof. Shareholder and Buyer agree that the cost of the Arbitrator shall be
borne 50% by Shareholder and 50% by Buyer.
1.08 NON-ASSIGNABLE CONTRACTS AND PERMITS. To the extent that any
Contract or permit for which assignment to the Buyer is provided for in this
Agreement is not assignable without the consent of another party or the
appropriate Governmental Body, this Agreement shall not
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constitute an assignment or an attempted assignment thereof if such
assignment or attempted assignment would constitute a breach thereof. The
Seller and the Shareholder shall continue to use their respective best
efforts to obtain the consent of such other party or Governmental Body to the
assignment of any such Contract or permit to the Buyer in all cases in which
such consent is or may be required for such assignment. If such consent shall
not be obtained, the Seller and the Shareholder shall cooperate with the
Buyer in any reasonable arrangement designed to provide for the Buyer the
benefits under any such Contract or permit, the Buyer shall not have any
obligation with respect thereto, any other provision of this Agreement to the
contrary notwithstanding.
ARTICLE II
CONDITIONS TO CLOSING
2.01 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article IV
hereof (as qualified by all information delivered in any schedule hereto)
will be true and correct at and as of the Closing Date as though then made
and as though the Closing Date was substituted for the date of this Agreement
throughout such representations and warranties, without giving effect to any
supplement to the Schedules hereto;
(b) The Seller and the Shareholder will have performed all of
the covenants and agreements required to be performed by them under this
Agreement prior to the Closing;
(c) There will have been no material adverse change in the
businesses, financial condition, operating results, assets, employee
relations, customer, supplier relations, or business prospects of the Seller
(taken as a whole) and there will have been no material casualty loss or
damage to the assets of the Seller (taken as a whole) whether or not covered
by insurance;
(d) All consents by third parties that are required for the
transfer of the Purchased Assets to Buyer as contemplated hereby, or that are
required in order to prevent a breach of or a default under or a termination
or modification of any agreement material to the Seller to which it is a
party or to which any material portion of property is subject, will have been
obtained, and releases of any and all security interests, mortgages, and
other liens (except those which are associated with the Assumed Liabilities)
held by third parties on the Purchased Assets will have been obtained;
(e) No action or proceeding before any court or government body
will be pending or threatened wherein an unfavorable judgment, decree or
order could prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement, cause such transactions to be rescinded or
which might materially affect the right of Buyer to own, operate or control
the Purchased Assets or materially diminish the value of the Purchased Assets;
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(f) All proceedings to be taken by the Seller and the
Shareholder in connection with the consummation of the Closing on the Closing
Date and the other transactions contemplated hereby and all certificates,
instruments and other documents required to be delivered to effect the
transactions contemplated hereby reasonably requested by Buyer will be
satisfactory in form and substance to Buyer;
(g) Buyer will be satisfied, in its sole and absolute
discretion, with the results of its legal and business due diligence review
of the Seller and of environmental testing of the Real Estate;
(h) Buyer shall have obtained financing for the Purchase Price
in form and substance satisfactory to Buyer, in its sole and absolute
discretion;
(i) Buyer shall have obtained final approval of the transactions
contemplated by this Agreement from its Board of Directors;
(j) Buyer shall have obtained title insurance in form and amount
satisfactory to Buyer, insuring Buyer's title in fee simple to the Real
Estate, free and clear of all Encumbrances other than such minor defects,
irregularities and encumbrances as normally exist with respect to similar
properties and as in the opinion of Buyer do not materially affect title to,
or impair the use of, the Real Estate for the purposes intended; and
(k) Buyer will be reasonably satisfied that the Seller's
machinery, equipment and other tangible assets are in good condition and
repair and usable in the ordinary course of business as currently conducted.
Any condition specified in this Section 2.01 may be waived by Buyer, PROVIDED
that no such waiver will be effective unless it is set forth in a writing
executed by Buyer. The due diligence review referred to in Section 2.01(g)
shall be completed by December 31, 1999 (provided the Seller promptly
cooperates and furnishes Buyer all information reasonably requested by Buyer
during such period), and if the Buyer notifies Seller by such date that the
Buyer is not reasonably satisfied with its due diligence review, the Buyer
may declare this Agreement null and void. In the absence of notice within
that time period, the due diligence review requirement shall be deemed to be
waived by Buyer, solely for purposes of this Section 2.01.
2.02 CONDITIONS TO THE SELLER'S OBLIGATIONS. The obligations of the
Seller to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following conditions on or before the
Closing Date:
(a) The representations and warranties set forth in Article V
hereof will be true and correct at and as of the Closing as though then made
and as though the Closing Date was substituted for the date of this Agreement
throughout such representations and warranties;
(b) Buyer will have performed all the covenants and agreements
required to be performed by it under this Agreement prior to the Closing;
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(c) No action or proceeding before any court or government body
will be pending or threatened wherein an unfavorable judgment, decree or
order would prevent the carrying out of this Agreement or any of the
transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement, cause such transactions to be rescinded or
which might materially affect the right of the Seller to sell, convey,
assign, transfer and deliver the Purchased Assets or otherwise to fulfill its
obligations pursuant to this Agreement;
(d) All proceedings to be taken by Buyer in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to be delivered by Buyer to effect the transactions
contemplated hereby reasonably requested by the Seller will be satisfactory
in form and substance to the Seller.
(e) Seller has obtained approval from Shareholder's Board of
Directors and its Lenders.
(f) Buyer or an affiliate of Buyer has acquired ownership of
substantially all of the operating assets of Morton Metalcraft Co. of South
Carolina.
Any condition specified in this Section 2.02 may be waived by the Seller
PROVIDED that no such waiver will be effective unless it is set forth in a
writing executed by the Seller.
ARTICLE III
COVENANTS PRIOR TO CLOSING
3.01 AFFIRMATIVE COVENANTS. Prior to the Closing the Seller will, and
the Shareholder shall cause the Seller to:
(a) Continue to conduct its operations only in the ordinary and
usual course of business in accordance with past policy and practices;
(b) Conduct its cash management customs and practices (including
the collection of receivables, inventory control and payment of payables)
only in the Ordinary Course of Business in accordance with past customs and
practices;
(c) Keep in full force and effect its corporate existence and
all material rights relating or pertaining to its business;
(d) Use its Best Efforts to retain its employees and preserve
its present business relationships;
(e) Maintain its assets in customary repair, order and
condition, maintain insurance reasonably comparable to that in effect on the
date of this Agreement, replace in
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accordance with past practice its inoperable, worn out or obsolete assets
with modern assets of comparable quality, and, in the event of a casualty,
loss or damage to any of such assets or properties prior to the Closing Date
for which the Seller is insured, either repair or replace such damaged
property, or, if Buyer agrees, transfer the proceeds of such insurance to
Buyer;
(f) Maintain its books, accounts and records in the manner used
in the preparation of the financial statements referred to in Section 4.05
hereof in accordance with past custom and practice;
(g) Maintain in full force and effect the existence of all
Intellectual Property Assets, which are used or owned in connection with its
Business;
(h) Materially comply with all Legal Requirements and
contractual obligations applicable to its operations and Business;
(i) Make available to the Buyer and its Representatives for
inspection and review, all properties, books, records, accounts and documents
of or relating to the assets, liabilities or operations of the Seller as may
be reasonably requested from time to time; make available applicable
employees for consultation with the Buyer; and permit access to other third
parties reasonably required for verification of any information so obtained.
All information shall be accessed by Buyer through Shareholder's corporate
office in Morton, Illinois. Without prior written approval of Shareholder,
Buyer shall not (a) conduct site visits at the Seller's plant; (b) contact
any employees of the Seller; or (c) contact any customers of the Seller;
(j) Use its best efforts to obtain all third party consents
necessary or desirable to consummate the Contemplated Transactions hereby and
to cause the other conditions to Buyer's closing to be satisfied;
(k) Maintain its accounts payable and other current liabilities
at levels consistent with its operating practices in effect as of October 28,
1999; and
(l) Promptly notify Buyer in writing if Shareholder or the
Seller becomes aware of any fact or condition that causes or constitutes a
Breach of any of Shareholder's and Seller's representations and warranties as
of the date of this Agreement, or if Shareholder or the Seller becomes aware
of the occurrence after the date of this Agreement of any fact or condition
that would (except as expressly contemplated by this Agreement) cause or
constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition
require any change in the underlying schedules if the schedules were dated
the date of the occurrence or discovery of any such fact or condition,
Shareholder and Seller will promptly deliver to Buyer a supplement to the
underlying schedules specifying such change. During the same period,
Shareholder and Seller will promptly notify Buyer of the occurrence of any
Breach of any covenant of Shareholder or Seller in this Article III or of the
occurrence of any event that may make the satisfaction of the conditions in
Article II impossible or unlikely.
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3.02 NEGATIVE COVENANTS. Prior to the Closing, without the prior
written consent of Buyer, which will not be unreasonably withheld, the Seller
and the Shareholder will not:
(a) Take any action that would require disclosure under Section
4.17 of this Agreement; or
(b) Other than in the Ordinary Course of Business, make or grant
any bonus or any wage or salary increase to any employee or group of
employees of the Seller, or make or grant any increase in any employee
benefit plan covering any of the Seller's employees; or
(c) Establish any pension, retirement, profit sharing or stock
bonus plan or multiemployer plan covering the employees of the Seller; or
(d) Transfer any assets other than Retained Assets to the
Shareholder or take or omit to take any action, or permit any Related Person
to take or omit to take any action, which could be reasonably anticipated to
have a material and adverse effect upon the Seller's businesses, operations,
financial conditions, operating results, assets, employee relations, customer
relations or business prospects (taken as a whole).
3.03 AFFIRMATIVE COVENANTS OF BUYER. Prior to the Closing the Buyer
will:
(a) Establish a stock appreciation rights plan or other similar
program satisfactory in form and substance to the Buyer and the Shareholder
relating to the equivalent of 10 percent of the common stock of the Buyer.
Such rights shall be allocated among existing management employees of the
Seller (who become employees of Buyer at Closing) on a basis mutually
satisfactory to the Parties;
(b) Make all filings required by Legal Requirements to be made
by them to consummate the Contemplated Transactions;
(c) Cooperate with Shareholder (i) with respect to all filings
that Shareholder is required by Legal Requirements to make in connection with
the Contemplated Transactions, and (ii) in obtaining all consents identified
in SCHEDULE 4.04; provided that this Agreement will not require Buyer to
dispose of or make any change in any portion of its business or to incur any
other burden to obtain a Governmental Authorization;
(d) Except as set forth in the proviso to Section 3.03(c), use
its Best Efforts to cause the conditions in Article II to be satisfied;
(e) Establish a health benefit plan to provide hospital and
medical benefits for employees of the Seller; and
(f) Promptly inform the Seller and Shareholder in writing of any
variances from the representations and warranties contained in Article V of
this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE SHAREHOLDER
As an inducement to Buyer to enter into this Agreement, the Seller and
Shareholder jointly and severally, hereby represent and warrant to Buyer that:
4.01 ORGANIZATION AND CORPORATE POWER.
(a) Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Iowa, with full corporate power
and authority to conduct its business as it is now being conducted, to own or
use the properties and assets that it purports to own or use, and to perform
all its obligations under Applicable Contracts. Seller is duly qualified to
do business as a foreign corporation and is in good standing under the laws
of each state or other jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities conducted
by it, requires such qualification and where failure to be so qualified would
have a material adverse effect on Seller.
(b) Shareholder has delivered to Buyer copies of the Organizational
Documents of the Seller, as currently in effect, or allowed Buyer's
Representatives to examine the same.
4.02 CAPITAL STOCK. The authorized equity securities of the Seller
consist of 25,000 shares of common stock, no par value. Except as disclosed
on SCHEDULE 4.02, Shareholder is and will be on the Closing Date the record
and beneficial owner and holder of all of the outstanding shares of Seller,
free and clear of all Encumbrances. No legend or other reference to any
purported Encumbrance appears upon any certificate representing equity
securities of the Seller. All of the outstanding equity securities of the
Seller have been duly authorized and validly issued and are fully paid and
nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of any equity securities or other securities of the Seller. None of
the outstanding equity securities or other securities of the Seller was
issued in violation of the Securities Act or any other Legal Requirement. The
Seller does not own or have any Contract to acquire, any equity securities or
other securities of any Person or any direct or indirect equity or ownership
interest in any other business.
4.03 SUBSIDIARIES. Except as set forth in SCHEDULE 4.03, the Seller
does not own any stock, partnership interest, joint venture interest or other
security or interest in any other corporation, organization or entity.
4.04 AUTHORIZATION; NO BREACH.
(a) This Agreement constitutes the legal, valid, and binding
obligation of each of the Seller and Shareholder, enforceable against each of
them in accordance with its terms. Upon the execution and delivery by
Shareholder and the Seller of the Noncompetition Agreement and the Assignment
(collectively, the "Shareholder's Closing Documents"), the Shareholder's
Closing Documents will constitute the legal, valid, and binding obligations
of Shareholder and Seller,
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enforceable against each of them in accordance with their respective terms.
Each of Shareholder and Seller has the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Shareholder's Closing Documents and to perform its obligations under this
Agreement and the Shareholder's Closing Documents.
(b) Except as set forth in SCHEDULE 4.04, neither the execution and
delivery of this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time):
(i) Contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Seller or Shareholder,
or (B) any resolution adopted by the board of directors, any committee of the
board of directors, or the stockholders of the Seller or Shareholder;
(ii) Contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which the Seller or Shareholder,
or any of the assets owned or used by the Seller or Shareholder, may be
subject;
(iii) Contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by the Seller or that otherwise relates to the
business of, or any of the assets owned or used by, the Seller;
(iv) Cause Buyer or the Seller to become subject to, or to become
liable for the payment of, any Tax;
(v) Cause any of the assets owned by the Seller to be reassessed
or revalued by any taxing authority or other Governmental Body;
(vi) Contravene, conflict with, or result in a violation or
breach of any provision of, 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 Applicable Contract; or
(vii) Result in the imposition or creation of any Encumbrance upon
or with respect to any of the assets owned or used by the Seller.
Except as set forth in SCHEDULE 4.04, neither Shareholder nor the Seller is
or will be required to give any notice to or obtain any Consent from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
4.05 FINANCIAL STATEMENTS. Shareholder has delivered to Buyer: (a) an
audited consolidated balance sheet of the Shareholder and consolidating
balance sheet of the Seller as at
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December 31, 1998 (including the notes thereto, the "Balance Sheet"), and the
related audited consolidated and consolidating statements of income and
retained earnings, and cash flows for the fiscal year then ended, together
with the report thereon of KPMG LLC, independent certified public
accountants, and (b) an unaudited consolidated balance sheet of the
Shareholder and consolidating balance sheet of the Seller as at October 28,
1999 (the "Interim Balance Sheet") and the related unaudited consolidated and
consolidating statements of income and retained earnings, and cash flows for
the period then ended. Such financial statements and notes fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Shareholder and the Seller as at the respective
dates of and for the periods referred to in such financial statements, all in
accordance with GAAP, subject, in the case of interim financial statements,
to normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and the absence of
notes (that if presented would not differ materially from those included in
the Balance Sheet); the financial statements referred to in this Section 4.05
reflect the consistent application of such accounting principles throughout
the periods involved.
4.06 NO MATERIAL ADVERSE CHANGES. Except as set forth in the attached
SCHEDULE 4.06, since the date of the Balance Sheet, and to the Seller's and
Shareholder's Knowledge, there has been no material adverse change in the
business, financial condition, operating results, assets or business
prospects of the Seller as previously conducted by it, and no event has
occurred or circumstance exists that can reasonably be expected to result in
such a material adverse change.
4.07 BOOKS AND RECORDS. Since March 30, 1998:
(a) The books of account, minute books, stock record books, and other
records of the Seller, all of which have been made available to Buyer, are
complete and correct and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Securities
Exchange Act of 1934, as amended (regardless of whether or not the Seller is
subject to that Section), including the maintenance of an adequate system of
internal controls; and
(b) The minute books of the Seller contain accurate and complete
records of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Boards of
Directors of the Seller, and no meeting of any such stockholders, Board of
Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Seller.
4.08 TITLE TO PROPERTIES; ENCUMBRANCES. SCHEDULE 4.08 contains a
complete and accurate list of all real property, leaseholds, or other
interests therein owned by the Seller. Shareholder has delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which the Seller acquired such real property and interests, and copies of all
title insurance policies, opinions, abstracts, and surveys in the possession
of Shareholder or the Seller and relating to such property or interests. The
Seller owns (with good and marketable title, subject only to the matters
permitted by the following sentence) all the properties and assets (whether
real, personal, or mixed and whether tangible or intangible) that it purports
to own
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located in the facilities owned or operated by the Seller or reflected as
owned in the books and records of the Seller, including all of the properties
and assets reflected in the Balance Sheet and the Interim Balance Sheet
(except for any personal property sold since the date of the Balance Sheet
and the Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise
acquired by the Seller since the date of the Balance Sheet (except for
personal property acquired and sold since the date of the Balance Sheet in
the Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than
inventory and short-term investments) are listed in SCHEDULE 4.08. Except as
otherwise set forth in SCHEDULE 4.08, all properties and assets reflected in
the Balance Sheet and the Interim Balance Sheet are free and clear of all
Encumbrances and are not, in the case of real property, subject to any rights
of way, building use restrictions, exceptions, variances, reservations, or
limitations of any nature except, with respect to all such properties and
assets, for Permitted Encumbrances. The term "Permitted Encumbrances" means
(a) liens for current taxes not yet due, and (b) with respect to real
property, (i) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use
of the property subject thereto, or impairs the operations of the Seller, and
(ii) easements, rights of way, zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject
thereto. All buildings, plants, and structures owned by the Seller lie wholly
within the boundaries of the real property owned by the Seller and do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person.
4.09 CONDITION AND SUFFICIENCY OF ASSETS. The buildings, plants,
structures, and equipment of the Seller are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they
are being put, and none of such buildings, plants, structures, or equipment
is in need of maintenance or repairs except for ordinary, routine maintenance
and repairs that are not material in nature or cost. With the support to be
provided by Shareholder pursuant to the Transition Agreement, the building,
plants, structures, and equipment of the Seller are sufficient for the
continued conduct of the Seller businesses after the Closing in substantially
the same manner as conducted prior to the Closing. There are no buildings,
plants, structures, equipment, or other assets used in the Business of the
Seller that are owned, used leased or licensed by any Related Person of
Seller, except for such items supplied under the Transition Agreement.
4.10 ACCOUNTS RECEIVABLE. All accounts receivable of the Seller that
are reflected on the Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Seller as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the Ordinary
Course of Business. Unless paid prior to the Closing Date, the Accounts
Receivable are or will be as of the Closing Date current and collectible net
of the respective reserves shown on the Balance Sheet or the Interim Balance
Sheet or on the accounting records of the Seller as of the Closing Date
(which reserves are adequate and calculated consistent with past practice
and, in the case of the reserve as of the Closing Date, will not represent a
greater percentage of the Accounts Receivable as of the Closing Date than the
reserve reflected in the Interim Balance Sheet represented of the Account
Receivable reflected therein and will not represent a material adverse change
in the composition of such Accounts Receivable in terms of aging). Subject to
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such reserves, each of the Accounts Receivable either has been or will be
collected in full, without any set-off, within ninety (90) days after the day
on which it first becomes due and payable. There is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business,
under any Contract with any debtor of an Accounts Receivable relating to the
amount or validity of such Accounts Receivable. SCHEDULE 4.10 contains a
complete and accurate list of all Accounts Receivable as of the date of the
Interim Balance Sheet, which list sets forth the aging of such Accounts
Receivable.
4.11 INVENTORIES. Inventories of the Seller, whether or not reflected
in the Balance Sheet or the Interim Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business, except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Balance Sheet or
the Interim Balance Sheet or on the accounting records of the Seller as of
the Closing Date, as the case may be (which write offs or write downs are
calculated consistent with past practice and, in the case of the write offs
or write downs as of the Closing Date, will not represent a material adverse
change in the composition of such inventories). All Inventories not written
off have been priced at the lower of cost or market on a first in, first out
basis. The quantities of each item of Inventory (whether raw materials,
work-in-process, or finished goods) are not excessive, but are reasonable in
the present circumstances of the Seller.
4.12 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 4.12,
to the Shareholder's Knowledge, the Seller has no liabilities or obligations
of any nature (whether known or unknown and whether absolute, accrued,
contingent, or otherwise) except for liabilities or obligations reflected or
reserved against in the Balance Sheet or the Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
4.13 TAXES. Except as otherwise set forth in SCHEDULE 4.13:
(a) FILING OF TAX RETURNS. There have been properly completed and
filed on a timely basis and in correct form all Tax Returns required to be
filed on or after March 30, 1998 to the date hereof, by Seller, whether
individually or as a member of a group of corporations. The foregoing Tax
Returns are true, correct and complete and correctly reflect the facts
relating to the income, business, assets, operations, activities, status, or
other matters of the Seller or any other information required to be shown
thereon. In particular, the foregoing Tax Returns are not subject to
penalties under Section 6662 of the Code, relating to accuracy-related
penalties (or any corresponding provision of the State or local Tax laws);
(b) PAYMENT OF AND PROVISION FOR TAXES. With respect to all amounts in
respect of Taxes imposed on the Seller or for which the Seller is or could be
liable, whether to taxing authorities (as, for example, under law) or to
other Persons (as, for example, under tax allocation agreements), with
respect to all taxable periods or portions of periods ending on or before
Closing Date, all applicable Tax Laws and agreements have been and will be
fully complied with, and the Seller has paid, or made provision for the
payment of, all Taxes that have or may become due. The charges, accruals, and
reserves with respect to Taxes on the books of the Seller are at least equal
to the Seller's liability for Taxes for all periods, or portions thereof,
ending on
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or prior to the Closing Date. All Taxes that the Seller is or was required to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid:
(c) AUDIT HISTORY. No issues have been raised (and are currently
pending) by any taxing authority in connection with any of the Tax Returns.
All deficiencies proposed as a result of any such issues have been paid or
reserved against. No open waivers of statutes of limitation with respect to
the Tax Returns have been given by or requested from the Seller;
(d) ENCUMBRANCES. There are no Encumbrances for Taxes (other than for
current taxes not yet due and payable) on the assets of the Seller;
(e) TAX-SHARING OR ALLOCATION AGREEMENTS. The Seller is not a party to
or bound by (nor will the Seller become a party to or bound by) any
tax-indemnity, tax-sharing, or tax-allocation agreement;
(f) PRIOR AFFILIATED GROUPS. Except for the group of which Shareholder
is presently a member, the Seller, to Shareholder's and Seller's Knowledge,
has never been a member of an affiliated group of corporations, within the
meaning of Section 1504 of the Code;
(g) SECTION 341(f) CONSENT. No consent to the application of Section
341(f)(2) of the Code has been filed with respect to any property or assets
held, acquired, or to be acquired by the Seller;
(h) WITHHOLDING. All Taxes that the Seller is or was required by Legal
Requirements to withhold or collect have been fully withheld or collected
and, to the extent required, have been paid to the proper Governmental Body
or other Persons.
4.14 EMPLOYEE BENEFITS.
(a) SCHEDULE 4.14 lists all employee benefit plans and labor and
employment agreements or other similar arrangements to which the Seller is a
party or by which it is bound, including, without limitation (i) any
profit-sharing, deferred compensation, bonus, stock option, stock purchase,
pension, consulting, retirement, severance, welfare or incentive plan,
agreement, or arrangement; (ii) any plan, agreement or arrangement providing
for "fringe benefits" or perquisites to employees, officers, directors or
agents, including but not limited to benefits relating to Seller automobiles,
clubs, vacation, child care, parenting, sabbatical, sick leave, medical,
dental, hospitalization, life insurance and other types of insurance; (iii)
any employment agreement not terminable on 30 days' (or less) written notice
without payment of compensation or other amount or the additional vesting or
acceleration of any benefits; or (iv) any other "employee benefit plan"
(within the meaning of Section 3(3) of ERISA).
(b) Shareholder has delivered, or otherwise made available, to Buyer,
true and complete copies of all documents and summary plan descriptions with
respect to such plans, agreement and arrangements, or summary descriptions of
any such plans, agreements or arrangements not otherwise in writing.
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(c) There are no negotiations, demands or proposals that are pending
or have been made which concern matters now covered, or that would be
covered, by plans, agreements or arrangements of the type described in this
section.
(d) To the Shareholder's and Seller's Knowledge, the Seller is in
material compliance with the applicable provisions of ERISA, the regulations
and published authorities thereunder, with respect to all such employee
benefit plans, agreements and arrangements. To Shareholder's and Seller's
Knowledge, there are no actions, suits or claims (other than routine claims
for benefits) pending or threatened against such plans or their assets, or
arising out of such plans, agreements or arrangements, and, to Shareholder's
and Seller's Knowledge, no facts exist which could give rise to any such
actions, suits or claims that might have a material adverse effect on such
plans, agreements or arrangements.
(e) Except as specified in SCHEDULE 4.14, each of the plans,
agreements or arrangements can be terminated by the Seller within a period of
30 days, without payment of any additional compensation or amount or the
additional vesting or acceleration of any such benefits.
(f) With respect to each such plan which is an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) or a "Plan" (within the meaning
of Section 4975(e)(1) of the Code), there has occurred no transaction
prohibited by Section 406 of ERISA and no "prohibited transaction" (within
the meaning of Section 4975(c) of the Code.
(g) The Seller's profit-sharing plan within the meaning of Section
401(a) of the Code is noted on SCHEDULE 4.14 hereto. Such plan has been
authorized by the board of directors of the Seller, is qualified in form and
operation under Section 401(a) of the Code, and the trust under such plan is
exempt from tax under Section 501(a) of the Code. To Shareholder's and
Seller's Knowledge, no event has occurred that will or could give rise to
disqualification or loss of tax-exempt status of such plan. No determination
letter from the IRS has been received with regard to such plan.
(h) The Seller does not maintain any stock bonus or pension plan
within the meaning of Section 401(a) of the Code nor any plan subject to
Title IV of ERISA.
(i) Since March 30, 1998, all group health plans of the Seller have
been operated in substantial compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code to the extent
such requirements are applicable. Except to the extent required under Section
4980B of the Code, the Seller does not provide health or welfare benefits
(through the purchase of insurance or otherwise) for any retired or former
employees unless otherwise reflected on SCHEDULE 4.14.
(j) To Shareholder's and Seller's Knowledge, there has been no act or
omission by the Seller or any ERISA Affiliate that has given rise to or may
give rise to fines, penalties, taxes, or related charges under Section
502(c), (i) or (l), Section 4071 of ERISA or Chapter 43 of the Code.
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4.15 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS.
(a) Except as set forth in SCHEDULE 4.15 since March 30, 1998:
(i) To the Shareholder's and Seller's Knowledge, the
Seller is, and has been, in full compliance with each Legal Requirement that
is or was applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;
(ii) To Shareholder's and Seller's Knowledge, no event has
occurred or circumstance exists that (with or without notice or lapse of
time) (A) may constitute or result in a violation by the Seller of, or a
failure on the part of the Seller to comply with, any Legal Requirement, or
(B) 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; and
(iii) The Seller has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Legal Requirement, or (B) any
actual, alleged, possible, or potential 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.
(b) SCHEDULE 4.15 contains a complete and accurate list of each
Governmental Authorization that is held by the Seller or that otherwise
relates to the business of, or to any of the assets owned or used by, the
Seller. Each Governmental Authorization listed or required to be listed in
SCHEDULE 4.15 is valid and in full force and effect. Except as set forth in
SCHEDULE 4.15 since March 30, 1998:
(i) To Shareholder's and Seller's Knowledge, the Seller
is, and has been, in full compliance with all of the terms and requirements
of each Governmental Authorization identified or required to be identified in
SCHEDULE 4.15;
(ii) To Shareholder's and Seller's Knowledge, no event has
occurred or circumstance exists that may (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any Governmental
Authorization listed or required to be listed in SCHEDULE 4.15, or (B) result
directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in SCHEDULE 4.15;
(iii) The Seller has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding (A) any actual, alleged, possible, or potential
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (B) any actual, proposed, possible, or
potential revocation, withdrawal, suspension, cancellation, termination of,
or modification to any Governmental Authorization; and
(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
SCHEDULE 4.15 have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to
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have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
To the Shareholder's and Seller's Knowledge, the Governmental Authorizations
listed in SCHEDULE 4.15 collectively constitute all of the Governmental
Authorizations necessary to permit the Seller to lawfully conduct and operate
its businesses in the manner they currently conduct and operate such
businesses and to permit the Seller to own and use their assets in the manner
in which they currently own and use such assets.
4.16 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in SCHEDULE 4.16, there is no pending
Proceeding:
(i) That has been commenced by or against the Seller or
that otherwise relates to or may affect the business of, or any of the assets
owned or used by, the Seller; or
(ii) That challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of
the Contemplated Transactions.
To the Knowledge of Shareholder and the Seller, (1) no such Proceeding has
been threatened, and (2) no event has occurred or circumstance exists that
may give rise to or serve as a basis for the commencement of any such
Proceeding. Shareholder has delivered to Buyer copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in
SCHEDULE 4.16.
The Proceedings listed in SCHEDULE 4.16 will not have a material adverse
effect on the business, operations, assets, condition, or prospects of the
Seller.
(b) Except as set forth in SCHEDULE 4.16:
(i) There is no Order to which the Seller, or any of the
assets owned or used by the Seller, is subject;
(ii) Shareholder is not subject to any Order that relates
to the business of, or any of the assets owned or used by, the Seller; and
(iii) To the Knowledge of Shareholder and the Seller, no
officer, director, agent, or employee of the Seller is subject to any Order
that prohibits such officer, director, agent, or employee from engaging in or
continuing any conduct, activity, or practice relating to the business of the
Seller.
(c) Except as set forth in SCHEDULE 4.16 since March 30, 1998:
(i) The Seller is, and has been, in full compliance with
all of the terms and requirements of each Order to which it, or any of the
assets owned or used by it, is or has been subject;
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(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation
of or failure to comply with any term or requirement of any Order to which
the Seller, or any of the assets owned or used by the Seller, is subject; and
(iii) The Seller has not received any notice or other
communication (whether oral or written) from any Governmental Body or any
other Person regarding any actual, alleged, possible, or potential violation
of, or failure to comply with, any term or requirement of any Order to which
the Seller, or any of the assets owned or used by the Seller, is or has been
subject.
4.17 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
SCHEDULE 4.17, since the date of the Balance Sheet, the Seller has conducted
its businesses only in the Ordinary Course of Business and there has not been
any:
(a) Change in the Seller's authorized or issued capital stock;
grant of any stock option or right to purchase shares of capital stock of the
Seller; issuance of any security convertible into such capital stock; grant
of any registration rights; purchase, redemption, retirement, or other
acquisition by the Seller of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) Amendment to the Organizational Documents of the Seller;
(c) Payment or increase by the Seller of any bonuses, salaries,
or other compensation to any stockholder, director, officer, or (except in
the Ordinary Course of Business) employee or entry into any employment,
severance, or similar Contract with any director, officer, or employee;
(d) Adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees
of the Seller;
(e) Damage to or destruction or loss of any asset or property of
the Seller, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects
of the Seller, taken as a whole;
(f) Entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit, or similar agreement, or (ii) any
Contract or transaction involving a total remaining commitment by the Seller
of at least $50,000;
(g) Sale (other than sales of inventory in the Ordinary Course
of Business), lease, or other disposition of any asset or property of the
Seller or mortgage, pledge, or imposition of any lien or other encumbrance on
any material asset or property of the Seller, including the sale, lease, or
other disposition of any of the Intellectual Property Assets;
(h) Cancellation or waiver of any claims or rights with a value
to the Seller in excess of $50,000;
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(i) Material change in the accounting methods used by the
Seller; or
(j) Agreement, whether oral or written, by the Seller to
do any of the foregoing.
4.18 CONTRACTS; NO DEFAULTS.
(a) SCHEDULE 4.18(a) contains a complete and accurate list, and
Shareholder has delivered to Buyer true and complete copies, of:
(i) Each Applicable Contract that involves performance of
services or delivery of goods or materials by the Seller of an amount or
value in excess of $50,000;
(ii) Each Applicable Contract that involves performance of
services or delivery of goods or materials to the Seller of an amount or
value in excess of $50,000;
(iii) Each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
the Seller in excess of $50,000;
(iv) Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable 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 $10,000 and with terms of less than
one (1) year);
(v) Each licensing agreement and other Applicable 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 non-disclosure of any of
the Intellectual Property Assets;
(vi) Each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees relating to wages, hours, and other
conditions of employment;
(vii) Each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Seller with any other Person;
(viii) Each Applicable Contract containing covenants that in
any way purport to restrict the Seller's business activity or limit the
freedom of the Seller to engage in any line of business or to compete with
any Person;
(ix) Each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods;
(x) Each power of attorney that is currently effective and
outstanding;
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(xi) Each Applicable Contract entered into other than in
the Ordinary Course of Business that contains or provides for an express
undertaking by the Seller to be responsible for consequential damages;
(xii) Each Applicable Contract for capital expenditures in
excess of $10,000;
(xiii) Each written warranty, guaranty, and/or other similar
undertaking with respect to contractual performance extended by the Seller
other than in the Ordinary Course of Business; and
(xiv) Each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Except as set forth in SCHEDULE 4.18(b):
(i) Shareholder has not and may not acquire any rights
under, and Shareholder has not and may not become subject to any obligation
or liability under, any Contract that relates to the business of, or any of
the assets owned or used by, the Seller; and
(ii) To the Knowledge of Shareholder and the Seller, no
officer, director, agent, employee, consultant, or contractor of the Seller
is bound by any Contract that purports to limit the ability of such officer,
director, agent, employee, consultant, or contractor to (A) engage in or
continue any conduct, activity, or practice relating to the business of the
Seller, or (B) assign to the Seller or to any other Person any rights to any
invention, improvement, or discovery.
(c) Except as set forth in SCHEDULE 4.18(c) to Shareholder's and
Seller's Knowledge:
(i) Each Contract identified or required to be identified
in SCHEDULE 4.18(a) is in full force and effect and is valid and enforceable
in accordance with its terms; and
(ii) No Contract identified or required to be identified in
SCHEDULE 4.18(a) contains any term or requirement that is unreasonable,
extraordinary, or not customary in the industries in which the Seller
operates.
(d) Except as set forth in SCHEDULE 4.18(d) since March 30, 1998:
(i) To Shareholder's and Seller's Knowledge, the Seller
is, and has been, in material compliance with all applicable terms and
requirements of each Contract under which the Seller has or had any
obligation or liability or by which the Seller or any of the assets owned or
used by the Seller is or was bound;
(ii) To Shareholder's and Seller's Knowledge, each other
Person that has or had any obligation or liability under any Contract under
which the Seller has or had any rights is, and has been, in material
compliance with all applicable terms and requirements of such Contract;
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(iii) To Shareholder's and Seller's Knowledge, 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 Applicable Contract; and
(iv) The Seller has not given to nor received from any
other Person, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible, or potential violation or breach of,
or default under, any Contract.
(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 having the
contractual or statutory right to demand or require such renegotiation and no
such Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Seller have been entered into in the
Ordinary Course of Business and have been entered into without the commission
of any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any Legal
Requirement.
4.19 INSURANCE.
(a) Shareholder has delivered to Buyer:
(i) True and complete copies of all policies of insurance
to which the Seller is a party or under which the Seller, or any director of
the Seller is covered; and
(ii) True and complete copies of all pending applications
for policies of insurance; and
(iii) Any statement by the auditor of the Seller's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) SCHEDULE 4.19(b) describes:
(i) Any self-insurance arrangement by or affecting the
Seller, including any reserves established thereunder;
(ii) Any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Seller; and
(iii) All obligations of the Seller to provide coverage to
third parties (for example, under leases or service agreements) and
identifies the policy under which such coverage is provided.
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(c) SCHEDULE 4.19(c) sets forth, by year, for the current policy
year;
(i) A summary of the loss experience under each policy;
(ii) A statement describing each claim under an insurance
policy for an amount in excess of $10,000, which sets forth:
(A) The name of the claimant;
(B) A description of the policy by insurer, type of
insurance, and period of coverage; and
(C) The amount and a brief description of the claim;
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) Except as set forth on SCHEDULE 4.19(d):
(i) All policies to which the Seller is a party or that
provide coverage to the Seller or any director or officer thereof:
(A) Are valid, outstanding, and enforceable;
(B) Are issued by an insurer that is financially
sound and reputable;
(C) Taken together, provide adequate insurance
coverage for the assets and the operations of the Seller for all risks to
which the Seller is normally exposed;
(D) Are sufficient for compliance with all Legal
Requirements and Contracts to which the Seller is a party or by which any of
them is bound; and
(E) Will, with the exception of insurance maintained
as part of the Seller's Health Plan, continue in full force and effect
following the consummation of the Contemplated Transactions.
(ii) Neither Shareholder nor the Seller has received (A)
any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or effect or
that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Seller has paid all premiums due, and has
otherwise performed all of its respective obligations, under each policy to
which the Seller is a party or that provides coverage to the Seller or
director thereof.
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(iv) The Seller has given notice to the insurer of all
claims that may be insured thereby.
4.20 ENVIRONMENTAL MATTERS. Except as set forth in SCHEDULE 4.20 since
March 30, 1998:
(a) To Shareholder's and Seller's Knowledge, the Seller is, and
has been, in material compliance with, and has not been and is not in
violation of or liable under, any Environmental Law. Neither Shareholder nor
the Seller has any basis to expect, nor has any of them or any other Person
for whose conduct they are or may be held to be responsible received, any
actual or threatened order, notice, or other communication from (i) any
Governmental Body or private citizen acting in the public interest, or (ii)
the current or prior owner or operator of any Facilities, of any actual or
potential violation or failure to comply with any Environmental Law, or of
any actual or threatened obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which Shareholder or the Seller has had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used, or processed
by Shareholder, the Seller, or any other Person for whose conduct they are or
may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(b) There are no pending or, to the Knowledge of Shareholder and the
Seller, threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any
of the Facilities or any other properties and assets (whether real, personal,
or mixed) in which Shareholder or the Seller has or had an interest.
(c) Neither Shareholder nor the Seller has any basis to expect, nor
has any of them or any other Person for whose conduct they are or may be held
responsible, received, any Order, notice, communications, inquiry, warning,
citation, summons, directive, or any other indication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or
mixed) in which Shareholder or the Seller had an interest, or with respect to
any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used, or processed by
Shareholder, the Seller, or any other Person for whose conduct they are or
may be held responsible, have been transported, treated, stored, handled,
transferred, disposed, recycled, or received.
(d) To Shareholder's and Seller's Knowledge, neither Shareholder nor
the Seller, or any other Person for whose conduct they are or may be held
responsible, has any Environmental, Health, and Safety Liabilities with
respect to the Facilities or, to the Knowledge of Shareholder and the Seller,
with respect to any other properties and assets (whether real, personal, or
mixed) in which Shareholder or the Seller (or any predecessor), has or had an
interest, or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
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(e) To Shareholder's and Seller's Knowledge, except for
Hazardous Materials used in, or generated in, the Seller's Ordinary Course of
Business, there are no Hazardous Materials present on or in the Environment
at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps, or any other part
of the Facilities or such adjoining property, or incorporated into any
structure therein or thereon. To Shareholder's and Seller's Knowledge,
neither Shareholder, nor the Seller, nor any other Person for whose conduct
they are or may be held responsible, has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to the Facilities or any
other properties or assets (whether real, personal, or mixed) in which
Shareholder or the Seller has or had an interest except in material
compliance with all applicable Environmental Laws.
(f) To Shareholder's and Seller's Knowledge, there has been no
Release or, threat of Release, of any Hazardous Materials at or from the
Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which Shareholder or the Seller
has or had an interest, or any geologically or hydrologically adjoining
property, whether by Shareholder, the Seller, or any other Person.
(g) Shareholder has delivered to Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by Shareholder or the Seller pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Shareholder, the Seller, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
4.21 EMPLOYEES.
(a) SCHEDULE 4.21 contains a complete and accurate list of the
following information for each employee or director of the Seller, including
each employee on leave of absence or layoff status: name; employee number;
beginning date; department; and current compensation paid or payable.
(b) To Shareholder's and Seller's Knowledge no former or current
employee or current or former director 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 or director and any other entity or person ("Proprietary Rights
Agreement") that in any way adversely affected, affects, or will affect (i)
the performance of his duties as an employee or director of the Seller, or
(ii) the ability of the Seller to conduct its business, including any
Proprietary Rights Agreement with Shareholder or the Seller by any such
employee or director. To Shareholder's and Seller's Knowledge, no director,
officer, or other key employee of the Seller intends to terminate his
employment with such the Seller.
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4.22 LABOR DISPUTES; COMPLIANCE. Except as otherwise set forth in
SCHEDULE 4.22, since March 30, 1998:
(a) The Seller has not been nor is now a party to any collective
bargaining or other labor Contract;
(b) There has not been, there is not presently pending or
existing, and there is not threatened any strike, slowdown, picketing, work
stoppage, labor arbitration or proceeding in respect of the grievance of any
employee, application or complaint filed by an employee or union with the
National Labor Relations Board or any comparable Governmental Body,
organizational activity, or other labor dispute against or affecting the
Seller or its premises, and no application for certification of a collective
bargaining agent is pending or is threatened;
(c) No event has occurred or circumstance exists that could
provide the basis for any work stoppage or other labor dispute. This is no
lockout of any employees by the Seller, and no such action is contemplated by
the Seller;
(d) The Seller has complied in all respects with all Legal
Requirements 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; and
(e) The Seller is not liable for the payment of any taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
4.23 INTELLECTUAL PROPERTY.
(a) INTELLECTUAL PROPERTY ASSETS -- The term "Intellectual
Property Assets" includes:
(i) The name Carroll George, Inc., all fictional business
names, trading names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) All patents and patent applications (collectively,
"Patents");
(iii) All copyrights in both published works and unpublished
works that are material to the Business (collectively, "Copyrights");
(iv) All rights in mask works (collectively, "Rights in
Mask Works"); and
(v) All know-how, trade secrets, confidential information,
software, technical information, process technology, plans, drawings, and
blueprints (collectively, "Trade Secrets"); owned, used, or licensed by the
Seller as licensee or licensor.
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(b) AGREEMENTS - SCHEDULE 4.23(b) contains a complete and
accurate list and summary description, including any royalties paid or
received by the Seller, of all agreements relating to the Intellectual
Property Assets to which the Seller is a party or by which the Seller is
bound, except for any license implied by the sale of a product and common
software programs with a value of less that $1,000. There are no outstanding
and, to Shareholder's and Seller's Knowledge, no threatened disputes or
disagreements with respect to any such agreement and any Intellectual
Property Assets owned, used or licensed by Seller.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS - The Intellectual
Property Assets are all those necessary for the operation of the Seller's
businesses as they are currently conducted. The Seller is the owner of all
right, title, and interest in and to each of the Intellectual Property
Assets, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets.
(d) PATENTS
(i) The Seller does not own, use or license any Patent.
(ii) To Shareholder's and Seller's Knowledge, none of the
products manufactured and sold, nor any process or know-how used, by the
Seller infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
(e) TRADEMARKS
(i) Other than the name "Carroll George, Inc.", the Seller
does not own, use or license any Marks. The Seller is the owner of all
right, title, and interest in and to each of the Marks, free and clear
of all Encumbrances.
(ii) To Shareholder's and Seller's Knowledge, there is no
potentially interfering trademark or trademark application of any third
party.
(iii) To Shareholder's and Seller's Knowledge, no Mark is
infringed or, has been challenged or threatened in any way. To
Shareholder's and Seller's Knowledge, none of the Marks used by the
Seller infringes or is alleged to infringe any trade name, trademark, or
service mark of any third party.
(f) COPYRIGHTS
(i) The Seller is the owner of all right, title, and
interest in and to each of the Copyrights, free and clear of all liens,
security interests, charges, encumbrances, equities and other adverse
claims. The Seller owns no registered Copyrights.
(ii) To Shareholder's and Seller's Knowledge, none of the
subject matter of any of the Copyrights infringes or is alleged to
infringe any copyright, trade name, trademark, or service mark of any
third party.
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(g) TRADE SECRETS
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in
detail and content to identify and explain it and to allow its full and
proper use without reliance on the special knowledge or memory of others.
(ii) Seller and the Shareholder have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of the
Trade Secrets.
(iii) The Seller has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. The Trade Secrets
are not part of the public knowledge or literature, and, to
Shareholder's and Seller's Knowledge, have not been used, divulged, or
appropriated either for the benefit of any Person (other than the
Seller) or to the detriment of the Seller. No Trade Secret is subject to
any adverse claim or has been challenged or threatened in any way.
4.24 CERTAIN PAYMENTS. Since March 30, 1998, neither the Seller nor any
director, officer, agent, or employee of the Seller, or to Shareholder's and
Seller's Knowledge any other Person associated with or acting for or on
behalf of the Seller, has directly or indirectly (a) made any contribution,
gift, bribe, rebate, payoff, influence payment, kickback, or other payment to
any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, or (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Seller or any affiliate of the Seller, or (b) established or
maintained any fund or asset that has not been recorded in the books and
records of the Seller.
4.25 DISCLOSURE.
(a) No representation or warranty of Shareholder and Seller in
this Agreement and no statement in the underlying schedules omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) No notice given pursuant to Section 3.01(l) will contain any
untrue statement or omit to state a material fact necessary to make the
statements therein or in this Agreement, in light of the circumstances in
which they were made, not misleading.
(c) There is no fact known to Shareholder or Seller that has
specific application to Shareholder or the Seller (other than general
economic or industry conditions) and that materially adversely affects the
assets, business, prospects, financial condition, or results of operations of
the Seller that has not been set forth in this Agreement or the underlying
schedules.
4.26 BROKERS OR FINDERS. Shareholder, Seller and their agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement.
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4.27 RELATIONSHIP WITH RELATED PERSONS. Except as set forth in SCHEDULE
4.27, neither Seller nor any Related Person of Seller or of the Shareholder
has, or since March 30, 1998 has had, any interest in any property (whether
real, personal, or mixed and whether tangible or intangible), used in or
pertaining to the Seller's business. Neither Seller nor any Related Person of
Seller or of the Shareholder owns, or since March 30, 1998 has owned, of
record or as a beneficial owner, an equity interest or any other financial or
profit interest in any Person that has (i) had business dealings or a
material financial interest in any transaction with the Seller, or (ii)
engaged in competition with the Seller with respect to any line of the
products or services of the Seller (a "Competing Business") in any market
presently served by the Seller. Except as set forth in SCHEDULE 4.27, neither
Seller nor any Related Person of Seller or of the Shareholder is a party to
any Contract with, or has any claim or right against, the Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller and the Shareholder
that:
5.01 CORPORATE ORGANIZATION AND POWER. The Buyer is a corporation duly
organized and validly existing under the laws of the State of Minnesota, with
full power and authority to enter into this Agreement and perform its
obligations hereunder and is in good standing in the jurisdictions where it
transacts business.
5.02 AUTHORIZATION. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all requisite action and no
other proceedings on its part are necessary to authorize the execution,
delivery or performance of this Agreement. This Agreement constitutes a valid
and binding obligation of Buyer, enforceable in accordance with its terms.
5.03 NO VIOLATION. Buyer is not subject to or obligated under its
Organizational Documents any Legal Requirement, or any agreement or
instrument, or any license, franchise or permit, or subject to any Order,
which would be breached or violated by its execution, delivery or performance
of this Agreement.
5.04 GOVERNMENTAL AUTHORITIES; CONSENTS. No Consent, is required to be
obtained by Buyer in connection with its execution, delivery and performance
of this Agreement or the Contemplated transactions hereby.
5.05 BROKERAGE. There are no claims for brokerage commissions or
finders' fees in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of Buyer
or its shareholders.
5.06 LITIGATION. There are Proceedings, or Orders pending or, to the
Buyer's Knowledge, threatened against or affecting Buyer at law or in equity,
or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic
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or foreign, which might adversely affect Buyer's performance under this
Agreement or the consummation of the transactions contemplated hereby.
5.07 CLOSING DATE. All of the representations and warranties contained
in this Article V and elsewhere in this Agreement and all information
delivered in any schedule, attachment or exhibit hereto are true and correct
in all material respects on the date of this Agreement and will be true and
correct on the Closing Date, except to the extent that Buyer has advised the
Seller or the Shareholder otherwise in writing prior to the Closing.
ARTICLE VI
TERMINATION
6.01 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual consent of the Seller and Buyer,
(b) (i) by Buyer if any of the conditions in Section 2.01 has
not been satisfied as of the Closing Date or if satisfaction of such
condition is or becomes impossible (other than through the failure of Buyer
to comply with its obligations under this Agreement) and Buyer has not waived
such condition on or before the Closing Date; or
(ii) by Seller, if any of the conditions in Section 2.02
has not been satisfied as of the Closing Date or if satisfaction of such
condition is or becomes impossible (other than through the failure of Seller
or Shareholder to comply with its obligations under this Agreement) and
Seller has not waived such condition on or before the Closing Date; or
(c) by either Buyer or the Seller if the transactions
contemplated hereby have not been consummated by December 28, 1999, or such
later date as the parties may agree, provided that neither Buyer nor the
Seller will be entitled to terminate pursuant to this Section 6.01(c) if such
person has failed to comply fully with its obligations under this Agreement.
6.02 EFFECT ON TERMINATION. Each party's right of termination under
Section 6.01 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not
be an election of remedies. If this Agreement is terminated pursuant to
Section 6.01, all further obligations of the parties under this Agreement
will terminate, except that the obligations in Sections 8.02 and 8.05 will
survive; provided, however, that if this Agreement is terminated by a party
because of the Breach of the Agreement by the other party or because one or
more of the conditions to the terminating party's obligations under this
Agreement are not satisfied as a result of the other party's failure to
comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 SURVIVAL. Notwithstanding the provisions of Section 7.02(a)-(c),
(a) the representations and warranties contained in Articles IV and V will
survive the Closing Date for a period of two (2) years with respect to claims
asserted against the Seller, the Shareholder, or the Buyer (except that no
time limitation shall be applicable to representations or warranties covering
title or taxes, or obligations arising out of the waiver of compliance with
respect to bulk transfer requirements under Section 1.04 hereof). If a Notice
of Claim is not delivered within the applicable period, the indemnification
provisions of Section 7.02 shall not apply.
7.02 INDEMNIFICATION.
(a) The Seller and the Shareholder, jointly and severally, agree
to indemnify and hold the Buyer and its successors and assigns, harmless
against any Damages incurred by Buyer, which may arise out of or be in
respect of (i) any breach or violation of this Agreement by the Seller or the
Shareholder; (ii) any inaccuracy, omission or misrepresentation in or breach
of any of the warranties, representations, covenants or agreements made by
the Seller or the Shareholder in this Agreement; (iii) any inaccuracy,
omission or misrepresentation in any Exhibit, the Schedules, financial
statements delivered to Buyer pursuant to Section 4.05 or any other
certificate, document, instrument or affidavit furnished by the Seller or
Shareholder in accordance with the provisions of this Agreement; and (iv) any
and all claims, debts, liabilities, taxes and other obligations of the Seller
or Shareholder, whether accrued, absolute, contingent or otherwise, including
without limitation, those relating to the Unassumed Liabilities, not
expressly agreed to be assumed or undertaken as Assumed Liabilities by the
Buyer pursuant to this Agreement.
(b) The Buyer agrees to indemnify and hold the Seller and
Shareholder, and their respective successors and assigns, harmless against
any Damages incurred by Seller or Shareholder, which may arise out of or be
in respect of (i) any breach or violation of this Agreement by the Buyer,
(ii) any inaccuracy, omission or misrepresentation in or breach of any of the
warranties, representations, covenants or agreements made by the Buyer in
this Agreement, (iii) any inaccuracy, omission or misrepresentation in any
certificate, document, instrument or affidavit furnished by the Buyer in
accordance with the provisions of this Agreement, and (iv) any and all
claims, debts, liabilities and obligations assumed by the Buyer as Assumed
Liabilities pursuant to this Agreement.
(c) Promptly upon obtaining knowledge of any claim, event,
statements of facts or demand which has given rise to, or could reasonably
give rise to, a claim for indemnification hereunder, and in no event later
than the period described in Section 7.01, any party seeking indemnification
under this Section 7.02 (an "Indemnified Party") shall give written notice of
such claim or demand ("Notice of Claim") to the party from which
indemnification is sought (an "Indemnifying Party"), setting forth the amount
of the claim. The Indemnified Party shall furnish to the Indemnifying Party,
in reasonable detail, such information as it may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it, any written claim, demand,
invoice, billing or other document evidencing or asserting the same). No
failure or delay by the Indemnified Party in the performance of the foregoing
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shall reduce or otherwise affect the obligation of any Indemnifying Party to
indemnify and hold the Indemnified party harmless, except to the extent that
such failure or delay shall has adversely affected the Indemnifying Party's
ability to defend against, settle or satisfy any liability, damage, loss,
claim or demand for which the Indemnified Party is entitled to
indemnification hereunder.
(d) If the claim or demand set forth in the Notice of Claim
given by the Indemnified Party pursuant to Section 7.02(c) of this Agreement
is a claim or demand asserted by a third party, the Indemnifying Party shall
have twenty (20) days after the Date of the Notice of Claim (as that term is
hereinafter defined) to notify the Indemnified Party in writing of its
election to defend such third party claim or demand on behalf of the
Indemnified Party. If the Indemnifying Party elects to defend such third
party claim or demand, and shall reasonably cooperate with the Indemnifying
Party in its defenses, the Indemnified Party shall make available to the
Indemnifying Party and its agents and representatives all records and other
materials which are reasonably required in the defense of such third party
claim or demand, and so long as the Indemnifying Party is defending such
third party claim or demand in good faith, the Indemnified Party shall not
pay, settle or compromise such third party claim or demand. If the
Indemnifying Party elects to defend such third party claim or demand, the
Indemnified Party shall have the right to participate in the defense of such
third party claim or demand at its own expense. If the Indemnifying Party
does not elect to defend such third party claim or demand, or does not defend
such third party claim in good faith, the Indemnified Party shall have the
right, in addition to any other right or remedy it may have hereunder, at the
Indemnifying Party's expense, to defend such third party claim or demand;
provided, however, that (i) the Indemnified Party shall not have any
obligation to participate in the defense of, or defend, any such third party
claim or demand; and (ii) the Indemnified Party's defense of or its
participation in the defense of any such third party claim or demand shall
not in any way diminish or lessen the obligations of the Indemnifying Party
under the agreements of indemnification set forth in this Section 7.02. In
the event the Indemnified Party so chooses to defend a third party claim or
demand, the Indemnifying Party shall make available to the Indemnified Party
and its agents and representatives, all records and other materials which are
in the possession or under the control of the Indemnifying Party and which
are reasonably required in the defense of such third party claim or demand
and shall otherwise cooperate with, and assist the Indemnified Party in the
defense of such third party claim or demand.
(e) Except for third party claims being defended in good faith,
the Indemnifying Party shall satisfy its obligations hereunder in cash within
thirty (30) days after the Date of Notice of Claim.
(f) The term "Date of the Notice of Claim" as used in this
Section 7.02 shall mean:
(i) the third business day after the date of the postmark
on the registered or certified mail containing the Notice of Claim; or
(ii) if the Notice of Claim is personally delivered, the
date of such personal delivery.
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(g) Seller and Shareholder will have no liability (for
indemnification or otherwise) with respect to the matters described in
Section 7.02(a)(i)-(iii), but excluding Section 7.02(a)(iv), until the total
of all Damages with respect to such matters exceeds $75,000 (inclusive of any
warranty claims honored by Buyer pursuant to Section 1.01(c)(iii) hereof),
and then only up to a maximum Seller's and Shareholder's liability of
$1,500,000. However, this Subsection (g) will not apply to representations or
warranties covering title, taxes, environmental matters, obligations arising
out of the waiver of compliance with respect to bulk transfer requirements
under Section 1.04 hereof, or any breach of any of Seller's and Shareholder's
representations and warranties of which Seller or Shareholder had knowledge
at any time prior to the date on which such representation and warranty is
made or any intentional breach by Seller or Shareholder of any covenant or
obligation, and Seller and the Shareholder will be jointly and severally
liable for all Damages with respect to such breaches.
(h) Buyer will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 7.02(b)(i)-(iii),
but excluding Section 7.02(b)(iv), until the total of all Damages with
respect to such matters exceeds $75,000, and then only for the amount by
which such Damages exceed $75,000. However, this Subsection (h) will not
apply to any breach of any of Buyer's representations and warranties of which
Buyer had knowledge at any time prior to the date on which such
representation and warranty is made or any intentional breach by Buyer of any
covenant or obligation, and Buyer will be liable for all Damages with respect
to such breaches.
7.03 TERMINATION OF EMPLOYEES. As of the Closing Date, Seller shall
terminate all employees of Seller employed in the operation of the Business
(collectively, the "Seller Employees") and Buyer will hire such of the Seller
Employees as Buyer may deem necessary and appropriate (collectively, the
"Hired Employees"). The employment of the Hired Employees by Buyer shall be
on terms and conditions as Buyer, in its sole discretion, may deem
appropriate. Except for the amounts included in the Accrued Current
Liabilities under Subsection 1.01(c)(i) above, nothing herein shall obligate
Buyer to assume the liability and obligations of Seller for any unemployment
benefits accrued through the Closing Date, any pension plan benefits, welfare
plan benefits or other employment benefits to which the Hired Employees claim
to be entitled by virtue of their employment with Seller. Nothing in this
Section 7.03 shall prohibit Buyer from modifying any of the terms of
employment of any Hired Employee after the Closing Date (including, without
limitation, such employee's compensation, sick days, vacation days, job
description, title, severance and termination benefits, and welfare or
pension benefits). Notwithstanding anything to the contrary in this
paragraph, Buyer agrees to exercise all reasonable efforts to modify its
employee benefit plans to recognize years of service with Seller for
determination of vacation time and other employee benefits for those
employees rehired by Buyer. Buyer agrees that all Hired Employees will be
immediately provided with group health, dental and life insurance, with no
waiting period, on terms comparable to the benefits currently provided to
such employees by Seller. The Buyer represents that it has no definite plans
to carry out a plant closing or mass layoff as those terms are defined at 29
U.S.C. Section 2101(a) within sixty (60) days of the Closing Date. The Buyer
is responsible for giving any notice as may be required by the Worker
Adjustment Retraining Notification Act in connection with (I) its failure to
hire all of the Seller Employees on the Closing Date, (ii) its subsequent
termination or layoff of any Hired Employees, or (iii) a reduction in hours
of work of any Hired Employee.
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7.04 CERTAIN TAX MATTERS.
(a) The Seller shall be responsible for the timely preparation
and filing, at its own expense, of all returns for Taxes of Seller with
respect to all periods ending before, on, or after the Closing Date. The
Seller shall be liable for any Taxes imposed on the Seller and Buyer shall
not be required to pay or reimburse the Seller for any such Taxes.
(b) (i) If in connection with an examination, investigation,
audit or other proceedings of any Tax return described in (a) above, any
governmental body or authority issues in writing to Buyer, a notice of
deficiency, a proposed adjustment to Taxes or an assertion of claim or demand
concerning the tax period covered by such return, Buyer shall notify the
Seller of its receipt of such written communication from the governmental
body or authority within fifteen (15) business days after receiving such
notice of deficiency, proposed adjustment or assertion of claim or demand;
(ii) The Seller shall have the sole and exclusive right,
power and authority to contest (at its own expense) any such assessment,
proposal, claim, demand or other proceedings in connection with any
notice, proposal, investigation, assessment, audit, examination or any
other proceedings of any kind whatsoever in connection with any return
described in (a) or (b)(i) above;
(iii) Seller shall have full right, power and authority to
take (at its own expense) any and all actions and do any and all things
on behalf of itself, which it deems necessary or appropriate in
connection with any of such proceedings, including without limitation,
litigating or settling any claims, or waiving the provisions of any
applicable statute of limitations.
7.05 EMPLOYEE BENEFIT PLANS.
(a) HEALTH PLAN MATTERS. Buyer will cooperate with Seller so
that the coverage currently provided Hired Employees and their dependents
under the Seller's Health Plan will terminate as of the Closing Date. Buyer
shall indemnify and hold Seller harmless from and against any and all
liability for claims incurred under Buyer's Health Plan after the Closing
Date. Except for Assumed Liabilities in the amounts reflected on Schedule
1.01(c)(i) related to accrued expenses under Seller's Health Plan, Seller
shall indemnify and hold Buyer harmless from and against any and all
liability for claims incurred under the Seller's Health Plan by Hired
Employees or their dependents which arise on or prior to the Closing Date.
The Seller and Shareholder shall also retain and be responsible for all
liabilities, both prior to and after Closing, under the Seller's or
Shareholder's health plan for any employee, former employee and any other
persons who are not Hired Employees, including any employees of Seller who
are on a leave of absence or disability as of Closing.
(b) PENSION PLAN. Effective as of Closing, Hired Employees shall
cease to accrue benefits, but shall continue to be participants, under the
Seller's or Shareholder's Pension Plans (the "Seller's Pension Plan"). As
soon as practicable after the Closing Date, the Buyer shall designate one or
more defined contribution employee pension plans (the "Buyer's Pension Plan")
and the Seller and Buyer shall agree upon and designate a transfer date
("Transfer Date"). Buyer represents and covenants that Buyer's Pension Plan
shall comply with all requirements of the Code and ERISA and
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shall be tax qualified as of the Transfer Date. The Seller shall cause the
trustee of the Seller's Pension Plan to transfer on the Transfer Date to the
trusts forming a part of the Buyer's Pension Plan cash and promissory notes
representing plan loans in an amount equal to the vested and unvested account
balances of as of the Transfer Date of Hired Employees.
7.06 CHANGE CORPORATE NAME. As soon as practicable after the Closing,
the Seller will, and the Shareholder will cause the Seller to, take all
action necessary to change the corporate name of the Seller to CGI
Liquidating Co.
ARTICLE VIII
MISCELLANEOUS
8.01 PRESS RELEASES AND ANNOUNCEMENTS. No press release related to this
Agreement or the transactions contemplated herein, or other announcement to
the employees, customers, or suppliers of the Seller will be issued without
the joint approval of Buyer and the Seller.
8.02 EXPENSES. Each party shall pay and be responsible for its expenses
whether or not the transactions contemplated by this Agreement are
consummated.
8.03 FURTHER TRANSFERS. The Seller and Shareholder will execute and
deliver such further instruments of conveyance and transfer and take such
additional action as Buyer may reasonably request to effect, consummate,
confirm or evidence the transfer to Buyer of the Purchased Assets. The Seller
and Shareholder will execute such documents as may be necessary to assist
Buyer in preserving or perfecting its rights in the Purchased Assets and will
also do such acts as are necessary to perform their representations,
warranties and agreements herein.
8.04 TRANSITION ASSISTANCE. Neither the Seller nor the Shareholder will
in any manner take any action which is designed, intended, or might be
reasonably anticipated to have the effect of discouraging customers,
suppliers, lessors, and other business associates from maintaining the same
business relationships with Buyer after the date of this Agreement as were
maintained with the Seller prior to the date of this Agreement.
8.05 CONFIDENTIALITY. If the transactions contemplated hereby are not
consummated, none of the parties to this Agreement will use or disclose to
third parties (except to the extent publicly available or obtainable from
independent sources) confidential information obtained by them regarding any
other party.
8.06 AMENDMENT AND WAIVER.
(a) This Agreement may be amended, or any provision of this
Agreement may be waived, provided that any such amendment or waiver will be
binding upon the Seller and Shareholder only if such amendment or waiver is
set forth in a writing, expressly purporting to amend this Agreement,
executed by the Seller and Shareholder and that any such amendment or waiver
will be binding upon Buyer only if such amendment or waiver is set forth in a
writing executed by Buyer.
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(b) No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any
person under or by reason of this Agreement.
8.07 NOTICES. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be
in writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested. Notices, demands and
communications to Buyer, the Seller, and the Shareholder will, unless another
address is specified in writing, be sent to the address indicated below:
TO THE SELLER AND SHAREHOLDER:
c/o Daryl Lindemann
Morton Industrial Group, Inc.
1021 West Birchwood
P.O. Box 429
Morton, Illinois 61550
Telecopy No.: (309) 263-1841
With a Copy to: Gene A. Petersen, Esq.
Husch & Eppenberger
401 Main Street, Suite 1400
Peoria, Illinois 61602
Telecopy No.: (309) 637-4928
Buyer: c/o Churchill Capital, Inc.
Attn: Robert L. Davis
333 S. 7th Street, Suite 2400
Minneapolis, MN 55402
Telecopy No. (612) 673-6630
With a Copy to: Dennis O'Malley, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 S. 8th Street
Minneapolis, MN 55402-2205
Telecopy No. (612) 371-3207
8.08 ASSIGNMENT.
(a) This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that
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neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by the Seller without the prior written consent of
Buyer.
(b) Buyer may (at any time prior to the Closing), at its sole
discretion, assign in whole or in part its rights and obligations pursuant to
this Agreement, including, without limitation, the right to purchase the
Purchased Assets and the obligation to assume the Assumed Liabilities, to one
or more of its affiliates.; provided that in the event of any such
assignment, Buyer will guarantee the obligations of any such assignee under
this Agreement (such guarantee to be in form and substance reasonably
satisfactory to the Seller).
(c) Buyer may, at its sole discretion, direct the Seller to
convey the Purchased Assets, in whole or in part, to one or more of its
affiliates.
8.09 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
8.10 NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
person.
8.11 CAPTIONS. The captions used in this Agreement are for convenience
of reference only and do not constitute a part of this Agreement and will not
be deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and
construed as if no caption had been used in this Agreement.
8.12 COMPLETE AGREEMENT. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the
parties, written or oral, which may have related to the subject matter hereof
in any way. This Agreement is not intended to confer upon any other person
any rights or remedies hereunder.
8.13 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together will constitute one and
the same instrument.
8.14 GOVERNING LAW. The law of the State of Illinois will govern all
questions concerning the construction, validity and interpretation of this
Agreement and the performance of the obligations imposed by this Agreement.
8.15 LITIGATION. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to recover its reasonable
attorneys' fees and expenses from the losing party.
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8.16 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified or referred to in this Section 8.16.
"Accounts Receivable - As defined in Section 1.01(a)(i).
"Accrued Current Liabilities" - Seller's accrued current liabilities, to
the extent reflected in accordance with GAAP on the accounting records of
Seller as of the Closing Date and listed on SCHEDULE 1.01(c)(i), for (a)
payroll, commissions, vacation pay, and holiday pay; (b) Seller's portion of
payroll taxes; (c) property taxes; and (d) claims under Seller's Health Plan.
Accrued Current Liabilities shall not include any amounts for Seller's or
Shareholder's income taxes or sales or use taxes, or amounts withheld from
employees' wages or commissions.
"Allocation" -- As defined in Section 1.05.
"Applicable Contract" -- Any Contract (a) under which the Seller has or
may acquire any rights, (b) under which the Seller has or may become subject
to any obligation or liability, or (c) by which the Seller or any of the
assets owned or used by the Seller is or may become bound.
"Assignment" -- As defined in Section 1.03(b)(viii).
"Assumed Liabilities" -- As defined in Section 1.01(c).
"Balance Sheet" -- As defined in Section 4.05.
"Best Efforts" -- The efforts that a prudent person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"Breach" -- A "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by a Person) or other occurrence or circumstance
that is or was inconsistent with such representation, warranty, covenant,
obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"Business" -- As defined in the Recitals to this Agreement.
"Buyer" -- As defined in the first paragraph of this Agreement.
"Closing" -- As defined in Section 1.03(a).
"Closing Date" - As defined in Section 1.03(a).
"Closing Date Working Capital Balance Sheet" - The balance sheet to be
prepared by Shareholder containing a statement of Current Assets and Accrued
Current Liabilities as of the Closing Date and delivered to Buyer within the
time period set forth in SECTION 1.06 hereof and
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prepared in accordance with GAAP applied on a basis consistent in form with
the Balance Sheet of Seller as of October 28, 1999.
"Code" -- The Internal Revenue Code of 1986, as amended, or any
successor law, and regulations issued by the IRS pursuant to the Internal
Revenue Code of 1986, as amended, or any successor law.
"Consent" -- Any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" -- All of the transactions contemplated by
this Agreement, including without limitation: (a) the sale of the Purchased
Assets to Buyer; (b) the execution, delivery, and performance of the
Assignment, the Noncompetition Agreement, and the Transition Agreement; (c)
the performance by Buyer, Seller and Shareholder of their respective
covenants and obligations under this Agreement; (d) Buyer's acquisition and
ownership of the Purchased Assets; and (e) Buyer's acquisition of the certain
assets of Morton Metalcraft Co. of South Carolina.
"Contract" -- Any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Current Assets" - The book value of the Purchased Assets sold,
conveyed, assigned, and transferred to Buyer at Closing and properly
includible on the Closing Date Working Capital Balance Sheet under the
captions "Net Receivables", "Inventory", and "Prepaid Expenses."
"Damages" - Any loss, liability, claim, damage, expense (including costs
of investigation and defense and reasonable attorneys' fees) or diminution of
value, whether or not involving a third party claim.
"Date of Notice of Claim" -- As defined in Section 7.02(f).
"Disputed Item" - An item contained in the Closing Date Working Capital
Balance Sheet or the Working Capital Asset Valuation Statement to which the
Buyer objects as provided in SECTION 1.06 hereof.
"Encumbrances" -- Any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting (in the case of any security), transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment" -- Soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwater, drinking water
supply, stream sediments, ambient air (including indoor air), plant and
animal life, and any other environmental medium or natural resource.
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"Environmental, Health, and Safety Liabilities" -- Any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and relating to:
(a) Any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) Fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
remedial, or inspection costs and expenses arising under Environmental Law or
Occupational Safety and Health Law;
(c) Financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Law of Occupational Safety
and Health Law (whether or not such Cleanup has been required or requested by
an Governmental Body or any other Person) and for any natural resource
damages; or
(d) Any other compliance, corrective, or remedial measures required
under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action" will include the types
of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA").
"Environmental Law" -- Any Legal Requirement in effect on or prior to
Closing designed:
(a) To advise appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or
materials, violations or discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment;
(b) To prevent or acceptably minimize the release of pollutants or
hazardous substances or materials into the Environment;
(c) To reduce the quantities, prevent the release, and minimize the
hazardous characteristics of wastes that are generated;
(d) To assure that products are designed, formulated, packaged, or
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) To protect resources, species, or ecological amenities;
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(f) To acceptably minimize the risks inherent in transportation of
hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) To clean up pollutants that have been released, prevent the threat
of release, or pay the costs of such clean up or prevention; or
(h) To make responsible parties pay private parties, or groups of
them, for damages done to their health or Environment, or to permit
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" -- The Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"ERISA Affiliate" - Any other Person that, together with the Seller,
would be treated as a single employer under Section 414 of the Code.
"Facilities" -- Any real property, leaseholds, or other interests
currently or formerly owned or operated by the Seller (or any predecessor
Person) and any buildings, plants, structures, or equipment currently or
formerly owned, leased, or operated by the Seller (or any predecessor Person).
"GAAP" -- Generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the Balance Sheet and
the other financial statements referred to in Section 2.4(b) were prepared.
"Governmental Authorization" -- Any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
"Governmental Body" -- Any:
(a) Nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) Federal, state, local, municipal, foreign, or other government;
(c) Governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity
and any court or other tribunal);
(d) Multi-national organization or body; or
(e) Body exercising, or entitled or purporting to exercise any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"Hazardous Activity" -- The distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation,
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treatment, or use (including any withdrawal or other use of groundwater) of
hazardous materials in, or under, about, or from the Facilities or any part
thereof into the Environment, and any other act, business, operation, or
thing that increases the danger, or risk of danger, or poses an unreasonable
risk of harm to persons or property on or off the Facilities, or that may
affect the value of the Facilities or the Seller.
"Hazardous Materials" -- Includes any (i) "hazardous substance,"
"pollutants," or "contaminant" (as defined in Sections 101(14), (33) of
CERCLA or the regulations designated pursuant to Section 102 of CERCLA and
found at 40 C.F.R. Section 302), including any element, compound, mixture,
solution, or substance that is or may be designated pursuant to Section 102
of CERCLA; (ii) substance that is or may be designated pursuant to Section
311(b)(2)(A) of the Federal Water Pollution Control Act, as amended (33
U.S.C. Sections 1251, 1321(b)(2)(A)) ("FWPCA"); (iii) hazardous waste having
the characteristics identified under or listed pursuant to Section 3001 of
the Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections
6901, 6921) ("RCRA") or having characteristics that may subsequently be
considered under RCRA to constitute a hazardous waste; (iv) substance
containing petroleum, as that term is defined in Section 9001(8) of RCRA; (v)
toxic pollutant that is or may be listed under Section 307(a) of FWPCA; (vi)
hazardous air pollutant that is or may be listed under Section 112 of the
Clean Air Act, as amended (42 U.S.C. Sections 7401, 7412); (vii) imminently
hazardous chemical substance or mixture with respect to which action has been
or may be taken pursuant to Section 7 of the Toxic Substances Control Act, as
amended (15 U.S.C. Sections 2601, 2606); (viii) source, special nuclear, or
by-product material as defined by the Atomic Energy Act of 1954, as amended
(42 U.S.C. Section 2001 et seq.); (ix) asbestos, asbestos-containing
material, or urea formaldehyde or material that contains it; (x) waste oil
and other petroleum products; and (xi) any other toxic materials,
contaminants, or hazardous substances or wastes pursuant to any Environmental
Law.
"Hired Employees" - As defined in Section 7.03.
"Indemnified Party" -- As defined in Section 7.02(c).
"Indemnifying Party" - As defined in Section 7.02(c).
"Intellectual Property Assets" -- As defined in Section 4.23(a).
"Interim Balance Sheet" -- As defined in Section 4.05.
"IRS" -- The United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" -- An individual will be deemed to have "Knowledge" of a
particular fact or other matter if:
(a) Such individual is actually aware of such fact or other matter; or
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(b) A prudent individual could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact
or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has
at any time served, as a director, officer, partner, executor, or trustee of
such Person (or in any similar capacity) has, or at any time had, Knowledge
of such fact or other matter. For purposes of Section 4.20, the Knowledge of
the Seller and the Shareholder includes the Knowledge of Melissa Edgington,
who is directly responsible for environmental compliance matters with respect
to the Seller. For purposes of this Agreement, the Knowledge of the Seller
includes not only the Knowledge of Seller's directors and officers, but also
the Knowledge of the following individuals: Jerry Wells and Melissa Edgington.
"Legal Requirement" -- Any federal, state, local, municipal, foreign,
international, multinational, or other constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
"Lenders" -- As defined in Section 1.03(b)(x).
"Noncompetition Agreement" -- As defined in Section 1.03(b)(vii).
"Notice of Claim" -- As defined in Section 7.02(c).
"Occupational Safety and Health Law" -- Any Legal Requirement in effect
on or prior to Closing designed to provide safe and healthful working
conditions and to reduce occupational safety and health hazards, and any
program, whether governmental or private (such as those promulgated or
sponsored by industry associations and insurance companies), designed to
provide safe and healthful working conditions.
"Order" -- Any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" -- An action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of
such Person;
(b) Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
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(c) Such action is similar in nature and magnitude to actions
customarily taken, without any separate or special authorization, in the
ordinary course of the normal day-to-day operations of other Persons that are
in the same line of business as such Person.
"Organizational Documents" -- (a) the articles or certificate of
incorporation and the by-laws of a corporation; (b) the partnership agreement
and any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in
connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
"Person" -- Any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, or other entity or
Governmental Body.
"Plan" -- As defined in Section 2.13.
"Proceeding" -- Any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative,
or informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or arbitrator.
"Purchased Assets" -- As defined in Section 1.01(a).
"Real Estate" -- As defined in Section 1.01(a)(v).
"Related Person" -- With respect to a particular individual:
(a) Each other member of such individual's Family;
(b) Any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) Any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) Any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) Any Person that holds a Material Interest in such specified Person;
(c) Each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
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(d) Any Person in which such specified Person holds a Material
Interest; and
(e) Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural
person who is related to the individual or the individual's spouse within the
second degree, and (iv) any other natural person who resides with such
individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of voting securities or other voting interests representing at least 5%
of the outstanding voting power of a Person or equity securities or other
equity interests representing at least 5% of the outstanding equity
securities or equity interests in a Person.
"Release" -- Any spilling, leading, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment.
"Representative" -- With respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of
such Person, including legal counsel, accountants, and financial advisors.
"Retained Assets" -- As defined in Section 1.01(b).
"Securities Act" -- The Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller" -- As defined in the first paragraph of this Agreement.
"Seller Employees" - As defined in Section 7.03.
"Seller's Health Plan" - Morton Industrial Group Health Care Payment
Plan effective January 1, 1999, as amended.
"Shareholder" -- As defined in the first paragraph of this Agreement.
"Subsidiary" -- With respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct
the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or more of
its Subsidiaries; when used without reference to a particular Person,
"Subsidiary" means a Subsidiary of the Seller.
"Tax" -- Any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty),
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deficiency, or other fee, and any related charge or amount (including any
fine, penalty, interest, or addition to tax), imposed, assessed, or collected
by or under the authority of any Governmental Body.
"Transition Agreement" -- As defined in Section 1.03(b)(ix).
"Unassumed Liabilities" -- As defined in Section 1.01(d).
"Working Capital" - Current Assets minus Accrued Current Liabilities.
"Working Capital Asset Value Statement" -- The detailed calculation of
the value of the Current Assets as of the Closing Date, including a detail of
the inventory and accounts receivable.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
CARROLL GEORGE, INC.
By:
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Its
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MORTON INDUSTRIAL GROUP, INC. ADVANCED COMPONENT TECHNOLOGIES, INC.
By: By:
----------------------------- -----------------------------
Its Its
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