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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): February 28, 2000
GENESIS WORLDWIDE INC.
(Exact name of Registrant as specified in its charter)
OHIO 1-1997 34-4307810
---- ------ ----------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
2600 KETTERING TOWER, DAYTON, OH 45423
-------------------------------- -----
(Address of principal executive offices) (Zip code)
937-910-9300
------------
(Registrant's telephone number including area code)
NOT APPLICABLE
--------------
(Former name and former address, if changed since last report)
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ITEM 2. DISPOSITION OF ASSETS
On February 11, 2000, Genesis Worldwide Inc. ( the "Company") sold substantially
all the assets of the Machine Tool Division for $7.7 million in cash. The group
acquiring the business is led by management of the business together with a
Syracuse, New York based venture capital firm, Cygnus Management Group, LLC.
There is no material relationship between Cygnus Management Group, LLC and the
Company or any affiliate, director, or officer of the Company or any associate
of any director or officer of the Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
( a ) Not applicable
( b ) Pro forma financial information
( 1 ) Pro forma condensed consolidated balance sheet of the
Company and subsidiaries as of September 30, 1999.
( 2 ) Pro forma condensed statements of consolidated operations
of the Company and Subsidiaries for the nine months
ended September 30, 1999 and the fiscal year ended
December 31, 1998.
( c ) Exhibits
( 2.1 ) Asset-Purchase Agreement
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GENESIS WORLDWIDE INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited Pro Forma Financial Statements have been prepared from
the historical statements of Genesis Worldwide Inc. and Subsidiaries (the
"Company"). As more fully set forth in Item 2 of this Report on Form 8-K, the
Company sold its Machine Tool Division on February 11, 2000.
The pro forma adjustments give effect to the disposition of the Company's
Machine Tool Division in the pro forma condensed consolidated balance sheet as
if the disposition had occurred on September 30, 1999 and in the pro forma
condensed statements of consolidated operations as if the disposition of the
Machine Tool Division had occurred at the beginning of the periods presented.
The pro forma information does not purport to be indicative of the results of
operations or the financial position which would have actually been obtained if
the disposition transactions had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be indicative
of results of operations or financial positions which may be obtained in the
future.
The pro forma financial information has been prepared by the Company and all
calculations have been made by the Company based upon assumptions deemed
appropriate by the Company. Certain of these assumptions are set forth in the
notes to pro forma statements.
The pro forma financial statements should be read in conjunction with the
Company's historical consolidated financial statements and the notes thereto
contained in its Annual Report on Form 10-K for the year ended December 31, 1998
and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
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<TABLE>
<CAPTION>
GENESIS WORLDWIDE INC. AND SUBSIDIARIES
PRO FORMA CONDENSED BALANCE SHEETS
AS OF SEPTEMBER 30, 1999
(In thousands)
Sale of Machine Pro Forma As
As Reported Tool Division Adjustments Adjusted
----------- ------------- ----------- --------
CURRENT ASSETS:
<S> <C> <C> <C> <C>
Cash $ 1,446 $ 25 $ $ 1,421
Accounts receivable 25,412 3,286 22,126
Costs and estimated earnings in excess of
billings on uncompleted contracts 9,770 9,770
Inventories 23,093 9,862 13,231
Prepaid and other expense 1,911 37 1,874
Deferred income taxes 4,934 $ 4,934
---------- ----------- ---------
Current assets 66,566 13,210 53,356
Property, Plant & Equipment - Net 32,341 4,570 27,771
Investment in Joint Ventures 1,543 1,543
Prepaid Pension Costs 20,236 20,236
Deferred Income Taxes 1,229 1,229
Goodwill 64,700 64,700
Other Assets 7,042 925 6,117
---------- ----------- ---------
$193,657 $ 18,705 $174,952
========== =========== =========
Short-term borrowings
Current portion of long-term debt 4,450 4,450
Accounts payable 16,118 1,853 14,265
Accrued liabilities 19,552 2,075 17,477
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,917 7,917
Long-term debt in technical default 79,500 (79,500) (2) 0
---------- ----------- -------- ---------
Current liabilities 127,537 3,928 (79,500) 44,109
Postretirement Benefits 3,547 3,547
Long-Term Debt 15,562 (7,738) (1)
79,500 (2) 87,324
Other Long-Term Liabilities 685 524 161
SHAREHOLDERS' EQUITY:
Preferred stock 14 14
Common stock 9,495 9,495
Unearned compensation, restricted stock (35) (35)
Retained earnings 36,926 14,253 7,738 (1) 30,411
Accumulated other comprehensive income (74) (74)
---------- ----------- ----------- ---------
46,326 14,253 7,738 39,811
---------- ----------- ----------- ---------
$193,657 $ 18,705 $174,952
========== =========== =========== =========
</TABLE>
(1) Proceeds from sale of the Machine Tool Division used to pay down debt.
(2) Waiver of default received after September 30, 1999 Form 10-Q was
filed so debt is reclassified as long-term for this pro forma.
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<TABLE>
<CAPTION>
GENESIS WORLDWIDE INC. AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
FORTHE NINE MONTHS ENDED SEPTEMBER 30, 1999
(In thousands except per share amounts)
Sale of Machine Pro Forma As
As Reported Tool Division Adjustments Adjusted
----------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $88,480 $ 12,267 $76,213
Cost of sales 69,085 10,514 58,571
Selling general and administrative
Expenses 16,349 2,973 13,376
Amortization of goodwill 891 891
------- -------- -------- -------
Operating income (loss) 2,155 (1,220) 0 3,375
Interest expense (2,965) 493 (1) 2,472
Other income (expense) 1,754 1,719 35
------- -------- -------- -------
Income (loss) before income taxes 944 499 493 938
Income tax provision (benefit) 661 180 177 (2) 658
------- -------- -------- -------
Net income (loss) $ 283 $ 319 316 $ 280
======= ======== ======== =======
Net income (loss) per common share
- basic and diluted $ .07 $ .08 .08 $ .07
======= ======== ======== =======
Average common share
Basic 3,948 3,948 3,948 3,948
Diluted 3,963 3,963 3,963 3,963
</TABLE>
(1) Proceeds from sale of the Machine Tool Division of $7,738 assumed to be
used to pay down debt at 1/1/99 with an assumed average interest rate
of 8.5%.
(2) Effective tax rate of 36%.
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<TABLE>
<CAPTION>
GENESIS WORLDWIDE INC. AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands except per share amounts)
Sale of Machine Pro Forma As
As Reported Tool Division Adjustments Adjusted
----------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $79,066 $30,433 $48,633
Cost of sales 63,113 26,132 36,981
Selling general cash administrative 12,625 3,775 8,850
expenses ------- ------- -------
Operating income 3,328 526 2,802
Interest expense (368) 368 (1)
Other income (expense) 223 23 126 (1) 326
expenses ------- ------- --------- -------
Income (loss) before income taxes 3,183 549 494 3,128
Income tax provision (benefit) 1,100 192 173 (2) 1,081
------- ------- --------- -------
Net income (loss) $ 2,083 $ 357 $ 321 $ 2,047
======= ======== ========= =======
Net income (loss) per common share
- basic and diluted $ .55 $ .09 $ .09 $ .54
======= ======== ========= =======
Average common share
Basic 3,768 3,768 3,768 3,768
Diluted 3,768 3,768 3,768 3,768
</TABLE>
(1) Proceeds from sale of Machine Tool Division of $7,738 was used in the
Pro Forma Financial Statements to eliminate interest expense (average
interest rate of 6.75%) and then to increase interest income with an
assumed interest rate of 5.5%.
(2) Effective tax rate for 1998 is the rate in effect for 1998 which was
35%.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GENESIS WORLDWIDE INC.
Date: February 28, 2000
------------------
By: /s/ Karl A. Frydryk
-------------------------------
Karl A. Frydryk
Vice President and Chief Financial Officer
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of February 7, 2000 between GENESIS WORLDWIDE
INC., an Ohio corporation ("Seller"), and NEW MONARCH MACHINE TOOL, INC., a New
York corporation ("Buyer"), under the following circumstances:
A. The Machine Tool Division of Seller designs, manufactures and sells
machining centers at its plant in Cortland, New York (the "Machine Tool
Division"); and
B. Upon the terms and conditions of this Agreement, Seller desires to sell
to Buyer, and Buyer desires to purchase from Seller, substantially all of the
assets and business of the Machine Tool Division.
NOW, THERFORE, Seller and Buyer agree as follows:
SECTION 1. DEFINITIONS. For the purpose of this Agreement, any amendments
hereto and any Exhibit attached hereto or Schedule described herein, and in
addition to terms defined elsewhere herein, the following terms shall have the
following meanings, except as otherwise expressly provided or unless the context
otherwise requires:
1.01 "PURCHASED ASSETS" means the following assets, as the same shall
exist on the Closing Date:
(a) all machinery, equipment (including, but not limited to,
building equipment and computer equipment), tools, furniture,
furnishings, vehicles and other fixed assets owned by Seller, wherever
located, used primarily in the conduct of Business, including, but not
limited to, all of the same listed on SCHEDULE 1.01(A) (the "FIXED
ASSETS");
(b) all finished products, work-in-process, construction-in-
progress, raw materials, spare parts and supplies owned by Seller and
located at the Cortland Real Estate or in the possession of
distributors for the Business (the "INVENTORY");
(c) the Cortland Real Estate;
(d) all rights of Seller in the Proprietary Rights listed on
SCHEDULE 4.07;
(e) all accounts and notes receivable, deposits and advances
(including, but not limited to, travel advances and advances on
purchases by the Business) arising out of the Business, other than
intercompany accounts between or among the Business and the Seller
(the "RECEIVABLES");
(f) all of Seller's rights in, to and under the Contracts;
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(g) all of Seller's rights in, to and under the Permits;
(h) the Records;
(i) all prepaid expenses applicable to the Business (the "PREPAID
ASSETS");
(j) the Unisign Agreement; and
(k) the Spinner Agreement.
provided, however, that notwithstanding anything to the contrary herein
contained, the term "Purchased Assets" shall not include any of the following
assets of the Business (which shall be retained by Seller and are hereinafter
referred to as the "EXCLUDED ASSETS"):
(i) cash and cash equivalents and bank accounts;
(ii) all rights of Seller or the Business under any contract,
agreement, understanding, arrangement or commitment to which the only
parties thereto are the Business and the Seller or an Affiliate of
Seller, or any intercompany account between or among them;
(iii) all rights of Seller under any patent, trademark, trade
name or copyright and all other intellectual property rights, trade
secrets or proprietary information, or processes of Seller, other than
the Proprietary Rights listed on SCHEDULE 4.07 and the non-exclusive
right to use any know-how or processes currently being used by the
Business;
(iv) all rights of Seller with respect to any policies or
contracts of insurance, deposits thereunder and all claims of Seller
under such policies and contracts;
(v) litigation claims and benefits to the extent they arise
therefrom (other than product warranty claims against third parties
which arise out of the Business) listed in SCHEDULE 1.01(V);
(vi) any interest in, or assets related to, Employee Plans;
(vii) all books and records of the Business which are
specifically excluded from Records at Section 1.26;
(viii) all rights of Seller under this Agreement, including the
proceeds of the sale contemplated herein and other payments to Seller
contemplated herein;
(ix) all intercompany accounts between or among the Business,
Seller and/or its Affiliates; and
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(x) the assets lis ted as excluded on Schedule 1.01(x).
1.02 "AFFECTED EMPLOYEES" means all of the following persons:
(a) all persons employed by Seller primarily in the conduct of
the Business as of the Closing; and
(b) all persons employed by Seller primarily in the conduct of
the Business who are absent from work on the Closing Date on account
of short-term disability, layoff, leave of absence, vacation or for
other reasons, whether or not they return to active employment with
Buyer after the Closing, and whose last day of active employment was
with Seller.
1.03 "AFFILIATE" of a named party means any entity in control of,
controlled by or under common control with such named party.
1.04 "ASSUMED LIABILITIES" means the liabilities and obligations of
Seller existing as of the Effective Time which relate to, or arise out of,
the Business or the Purchased Assets, including:
(a) the Current Liabilities; and
(b) the Selected Long-Term Liabilities.
(c) all obligations and liabilities of Seller for repair or
replacement of, and rebates, product returns and product warranties
relating to, products and services of the Business shipped or
performed, respectively, prior to the Effective Time (whether or not
adequately reflected on the Closing Net Operating Asset Statement);
Buyer shall also assume liabilities and obligations of Seller arising or
accruing after the Effective Time, as follows:
(i) all obligations of Seller under the Contracts and all
obligations of Seller under the Permits;
(ii) obligations under letters of credit and performance
guarantees disclosed on SCHEDULE 1.04; and
(iii) any and all liabilities, obligations and commitments of
Seller specifically undertaken by Buyer pursuant to other provisions
of this Agreement.
Notwithstanding the foregoing, it is expressly acknowledged and agreed that
"Assumed Liabilities" shall not include, and Buyer shall not be liable for, the
following:
(1) all obligations and liabilities of Seller with respect
to any actions, suits or proceedings arising out of or relating
to the
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operation of the Business or the Purchased Assets prior to the
Closing, except for obligations that arise as a result of the
non-performance by Buyer of an Assumed Liability;
(2) any intercompany accounts between or among the Business,
Seller and/or its Affiliates;
(3) any indebtedness of Seller or its Affiliates for
borrowed money, other than lease obligations solely for assets
included in the Purchased Assets;
(4) any liabilities for federal, state or local income and
franchise taxes which arise out of the Business for any and all
periods (or portions thereof) prior to the Effective Time, except
amounts withheld from employees incurred in the ordinary course
of business and reflected on the Closing Net Operating Assets
Statement;
(5) any liabilities for sales and use taxes which arise out
of the Business for any and all periods (or portions thereof
prior to the Effective Time) except Assumed Liabilities incurred
in the ordinary course of business and reflected on the Closing
Net Operating Assets Statement;
(6) any liability associated with or relating to the
Employee Agreements, except for accrued wages and benefits
reflected on the Closing Net Operating Assets Statement, and
Employee Plans, except as specifically assumed by Buyer under the
terms of this Agreement;
(7) the Collective Bargaining Agreement; and
(8) any liability listed on SCHEDULE 1.04 as not being
assumed.
1.05 "BUSINESS" means the business of the Monarch Machine Tool
Division of Seller as such business has been conducted by Seller at the
Seller's Cortland, New York facility immediately prior to the Effective
Time.
1.06 "PURCHASE PRICE" shall have that meaning ascribed to it in
Section 2.02.
1.07 "CLOSING" means the closing for which provision is made in
Section 3.
1.08 "CLOSING ASSETS VALUE" shall have the meaning ascribed to it in
Section 2.03.
1.09 "CLOSING DATE" means the date of the Closing.
1.10 "CLOSING NET OPERATING ASSETS STATEMENT" shall have the meaning
ascribed to it in Section 2.03.
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1.11 "CLOSING NET OPERATING ASSETS VALUE" shall have the meaning
ascribed to it in Section 2.03.
1.12 "CODE" means the Internal Revenue Code of 1986, as amended.
1.13 "COLLECTIVE BARGAINING AGREEMENT" means the Agreement dated
November 13, 1999 between Monarch Machine Tool Division of Genesis
Worldwide Inc. and the International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America on behalf of itself and its
Local Union No. 802.
1.14 "CONTRACTS" means all contracts, agreements, leases,
understandings, arrangements, commitments, sales orders, product
quotations, purchase orders to which Seller is a party or by which Seller
is bound and which relate primarily to the Business or the Purchased Assets
in each case as the same may exist as of the Effective Time, including, by
way of example, but not limitation, the following: (i) any distribution,
sales, agency, manufacturer's representative or similar contract relating
to the sale or distribution of the products or services of the Business or
the Purchased Assets; (ii) any contract involving the future purchase of
materials, supplies, equipment or services; (iii) any contract for the
future sale of products or services; (iv) any lease of machinery,
equipment, furniture, furnishings, vehicles or other assets ordinarily
located at the Cortland Real Estate entered into by Seller which relate
primarily to the Business or the Purchased Assets; (v) any licensing
arrangement, joint venture or partnership agreement; (vi) any contract or
commitment for charitable contributions; (vii) any guaranty of obligations
of third-parties; (viii) any agreement which restricts Seller from doing
business of the type conducted by the Business anywhere in the world; (ix)
any contract (other than this Agreement) for the sale of any of the
Purchased Assets; and (x) any lease of the Purchased Assets under which
Seller is the lessor; provided, however, the term "CONTRACT" shall not
include any Employee Plan. A "MATERIAL CONTRACT" is any Contract other
than: (a) a contract or series of contracts or commitment involving
expenditures of less than $15,000 in the aggregate; (b) a customer
quotation, contract or commitment made or entered into in the ordinary
course of business of the Business at prices consistent with the past
practices of the Business which does not involve more than $15,000 in
sales; or (c) any contract for the purchase of materials, supplies or
equipment entered into in the ordinary course of business of the Business
which does not involve an expenditure in excess of $15,000.
1.15 "CORTLAND REAL ESTATE" means the real property and facility owned
by Seller and located at 641 NYS Route 13, Cortland, New York, as further
described on SCHEDULE 1.15.
1.16 "CURRENT LIABILITIES" means all accounts payable, leasing
obligations, customer deposits and other current liabilities of the
Business, all liabilities to employees of the Business for accrued
vacations and accrued payroll, all liabilities of the Business for accrued
but unpaid taxes other than the tax obligations retained by the Seller
pursuant to Section 1.04, all liabilities of the Business for commissions,
all liabilities of the Business for accrued utilities and all other current
liabilities of the Business except those excluded in clauses (1) through
(6) of Section 1.04, but in each case only to the extent reflect on the
Closing Net Operating Assets Statement.
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1.17 "EFFECTIVE TIME" means the time of consummation of the
transactions contemplated herein on the Closing Date.
1.18 "EMPLOYEE PLANS" shall have the meaning ascribed to it at Section
4.11.
1.19 "ENVIRONMENTAL REQUIREMENTS" means all federal, state and
municipal statutes, regulations and similar provisions having force or
effect of law, including all required orders, permits, licenses and
approvals, with respect to environmental, public health and air quality
matters, including, without limitation, those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
control or cleanup of any contaminant, waste, hazardous materials or
substances, chemical substances or mixtures, pesticides, toxic compounds or
materials, petroleum products or byproducts, asbestos, polychlorinated
biphenyls or radiation.
1.20 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.21 "ESCROW AGREEMENT" means the Escrow Agreement in the form of
Exhibit A.
1.22 "ESCROW DEPOSIT" means the escrow deposit under the Escrow
Agreement.
1.23 "EXHIBIT" means any of the exhibits attached to and made a part
of this Agreement.
1.24 "FINANCIAL STATEMENTS" shall have that meaning ascribed to it in
Section 4.15.
1.25 "INTERIM BALANCE SHEET" shall have that meaning ascribed to it in
Section 4.15.
1.26 "KNOWN TO SELLER" or "TO SELLER'S KNOWLEDGE" means any
information known to any officer of Seller or Wayne W. Hanna.
1.27 "PERMITS" means the federal, state, local and other governmental
and regulatory licenses, permits, orders, approvals and authorizations
which relate to, or are necessary to conduct, the Business or own the
Purchased Assets.
1.28 "PRE-CLOSING VIOLATION OF ENVIRONMENTAL REQUIREMENTS" means a
violation occurring prior to the Effective Time of any applicable
Environmental Requirement arising from or in connection with the Business.
1.29 "PROPRIETARY RIGHTS" means all patents and patent applications,
trademarks, service marks, copyrights, trade names, trade dress, trade
secrets, inventions,
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processes, designs, know-how, software, data, documentation and all similar
rights used in or associated with the Business, including all registrations
and applications and renewals for any of the foregoing and all goodwill
associated therewith and any licenses of the foregoing.
1.30 "PURCHASE PRICE" shall have the meaning ascribed to in at Section
2.02.
1.31 "RECORDS" means a copy of the general ledger of the Business and
originals or copies of all property and equipment records, production
records, engineering records, purchasing and sales records, personnel and
payroll records, accounting records, customer and vendor lists, and other
records and files material to or primarily used in the Business or which
primarily relate tot he Business or the Purchased Assets; provided,
however, "Records" shall not include the original of the general ledger of
the Business, tax returns of Seller and policies or contracts of insurance,
but Buyer shall be permitted to examine and make copies of such documents
provided Buyer certifies to Seller that it needs access to such information
for a bona fide business purpose reasonably satisfactory to Seller.
1.32 "SCHEDULE" means any of the Schedules included in the "Schedules
to Asset Purchase Agreement" signed by the parties as of the date of this
Agreement.
1.33 "SELECTED LIABILITIES" shall have the meaning ascribed to it in
Section 2.03.
1.34 "SELECTED LONG-TERM LIABILITIES" means liabilities under
long-term capital leases, liabilities for license fees under the Unisign
Agreement and all other long-term liabilities of the Business except those
excluded in clauses (1) through (8) of Section 1.04 and those listed on
SCHEDULE 1.34 as excluded, but in each case only to the extent reflected on
the Closing Net Operating Assets Statement.
1.35 "SELLER'S 401(k) PLANS" means the Genesis Worldwide Inc. 401(k)
Savings Plan and the Genesis Worldwide Inc. 401(k) Savings Plans for
Bargaining Unit Employees.
1.36 "SPINNER AGREEMENT" means the agreement between Seller and
Spinner Werkzeugmaschinenfabrik GmbH dated September 1, 1997, a true and
correct copy of which has been delivered to Buyer.
1.37 "UNISIGN AGREEMENT" means the agreement between Seller and
Unisign B.V. dated on or about November 10, 1998, a true and correct copy
of which has been delivered to Buyer.
SECTION 2. PURCHASE AND SALE OF ASSETS; PURCHASE PRICE.
2.01 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
of this Agreement, at the Closing, Seller shall sell, convey, assign,
transfer and deliver the Purchased Assets and Assumed Liabilities to Buyer,
and Buyer shall purchase and acquire from Seller, the Purchased Assets at
the Closing and assume the Assumed Liabilities.
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2.02 THE PURCHASE PRICE. Subject to the terms and conditions
hereinafter set forth, the consideration to be given by Buyer to Seller for
the purchase and sale of the Purchased Assets (the "Purchase Price") shall
be $8,000,000.
2.03 CLOSING NET OPERATING ASSETS STATEMENT. At the Closing, Seller
shall deliver to Buyer a statement of the net operating assets of the
Business as of the Closing Date (the "Closing Net Operating Assets
Statement") prepared from the books and records of the Business, in a
manner consistent with the manner in which the Interim Balance Sheet was
prepared (except as otherwise provided in this Section 2.03). The Closing
Net Operating Assets Statement shall show: (i) the aggregate net book
values of the Fixed Assets, the Inventory, the Cortland Real Estate, the
Receivables, the Prepaid Assets, the Unisign Agreement and other assets of
the Business being transferred to Buyer as of the Closing Date (the sum of
such aggregate net book values hereinafter being referred to as the
"Closing Assets Value"), and (ii) the aggregate book amounts of the Current
Liabilities and the Selected Long-Term Liabilities as of the Closing Date
(the sum of such aggregate book amounts hereinafter being referred to as
the "Selected Liabilities"). The Closing Net Operating Assets Statement
shall reflect all year end audit adjustments. Regardless of generally
accepted accounting principles: (a) any reserves for excess or obsolete
inventory carried in the book value of Inventory in the Closing Net
Operating Assets Statement shall be the same dollar amount as such reserves
carried on the books of the Business on September 30, 1999; (b) no
depreciation or amortization will be charged against any of the Purchased
Assets subsequent to September 30, 1999; and (c) no change shall be made in
the amount of the LIFO reserve as of September 30, 1999. The Closing Net
Operating Assets Statement shall also show the amount determined by
subtracting the amount of the Selected Liabilities from the Closing Assets
Value (the "Closing Net Operating Assets Value").
Such Closing Net Operating Assets Statement delivered at Closing shall
be represented and warranted to Buyer by Seller as being prepared from the
books and records of the Business in a manner consistent with the Interim
Balance Sheet (with the exceptions noted in Section 2.03) and as being
correct and accurate in all material respects.
2.04 PAYMENT OF THE PURCHASE PRICE. Subject to Section 12.01(b), at
Closing, the Purchase Price shall be paid by Buyer by wire transfer of
immediately available funds to the account specified by Seller in writing
to Buyer at least five (5) days prior to the Closing Date.
2.05 PURCHASE PRICE ALLOCATION. For purposes of Section 1060 of the
Code, the Purchase Price shall be allocated among the Purchased Assets in
the manner set forth on SCHEDULE 2.05 hereto. Buyer and Seller thereafter
shall be bound by such allocation and shall complete their respective
Internal Revenue Service Forms 8594 accordingly.
SECTION 3. CLOSING.
3.01 TIME AND PLACE OF CLOSING. The Closing under this Agreement shall
take place at the offices of Altman & Wolfson, LLP, 100 East Washington
Street, Syracuse, New York 13202, at 2:00 p.m., local time, on February 11,
2000, or such other time and place as shall be mutually agreed by Seller
and Buyer. The parties will cooperate to accommodate a Closing
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by mail and/or other means of communication so that, if reasonably
practicable, the physical presence of Seller or its representatives will
not be required at the foregoing Closing location.
3.02 SELLER'S DELIVERIES. At the Closing, Seller shall, subject to the
fulfillment to its reasonable satisfaction of the conditions set forth in
Section 10 or its waiver thereof, deliver to Buyer:
(a) the Bill of Sale and Assignment and Assumption of Liabilities
Agreement, substantially in the form attached hereto as EXHIBIT B,
dated the Closing Date and duly executed by an authorized officer of
Seller, conveying to Buyer the Purchased Assets, free of all liens and
encumbrances, except for Permitted Exceptions;
(b) assignments (in form satisfactory to Buyer) of all rights of
Seller in the Proprietary Rights, including assignments of the
trademarks in a form acceptable for filing in the U.S. Patent and
Trademark Office and/or foreign patent agency, as applicable;
(c) a warranty deed with lien covenant dated as of the Closing
Date and duly executed by an authorized officer of Seller, conveying
the Cortland Real Estate to Buyer;
(d) a certificate, dated as of the Closing Date and executed by a
duly authorized officer of Seller, certifying that the conditions set
forth in Section 9 have been satisfied;
(e) the written consent of Unisign B.V. and Spinner
Werkzeugmaschinenfabrik GmbH to the assignment to Buyer of the Unisign
Agreement and the Spinner Agreement;
(f) copies of the resolutions of Seller's Board of Directors
authorizing the transactions contemplated hereby, certified by the
Secretary (or an Assistant Secretary) of Seller as being in full force
and effect on the Closing Date;
(g) releases and UCC termination statements from any and all
third parties having a security interest in all or a portion of the
Purchased Assets or such other evidence of termination of such
security interests as is reasonably acceptable to Buyer;
(h) an irrevocable letter of credit in favor of escrow agent
under the Escrow Agreement (the "Escrow Agent") in the amount of
$400,000 in the form annexed hereto as Exhibit C (the "Letter of
Credit") drawn on ING (U.S.) Capital LLC, to be held pursuant to the
Escrow Agreement; and
(i) such other documents and instruments as are required to be
delivered to Buyer by Seller pursuant to this Agreement at or prior to
Closing.
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3.03 BUYER'S DELIVERIES. At the Closing, Buyer shall, subject to the
fulfillment to its reasonable satisfaction of the conditions set forth in
Section 9 or its waiver thereof, deliver to Seller or Escrow Agent (where
indicated) the following:
(a) an amount equal to the Purchase Price, payable in cash by wire
transfer of immediately available funds to such bank account of Seller as
Seller may specify.
(b) in the event the Letter of Credit is not delivered to the Escrow
Agent, Buyer shall deliver $400,000 out of the Purchase Price to the Escrow
Agent specified in the Escrow Agreement.
(c) the Bill of Sale and Assignment and Assumption of Liabilities
agreement substantially in the form attached hereto as EXHIBIT B, dated the
Closing Date and duly executed by an authorized officer of Buyer;
(d) a certificate, dated the Closing Date and executed by a duly
authorized officer of Buyer, certifying that the conditions set forth in
Section 10 have been satisfied;
(e) copies of the resolutions of Buyer's Board of Directors
authorizing the transactions contemplated hereby, certified by the
Secretary (or an Assistant Secretary) of Buyer as being in full force and
effect on the Closing Date;
(f) sales tax exemption certificate for the sale of inventories of
Seller; and
(g) such other documents and instruments as are required to be
delivered to Seller by Buyer pursuant to this Agreement at or prior to the
Closing.
3.04 PROHIBITION ON ASSIGNMENT. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement shall not constitute an agreement to
assign any right, title or interest in, to or under any Contract or Permit or
any claim or right of any benefit arising thereunder or resulting therefrom if
an attempted assignment or transfer thereof, without the consent of a third
party, would constitute a breach thereof or in any way adversely affect the
rights of Buyer or Seller thereunder, unless any such required consent is
obtained. Seller shall use its best efforts to obtain, and Buyer agrees to
cooperate with Seller in its efforts to obtain the consent of any such third
party tot he assignment or transfer thereof to Buyer in all cases in which such
consent is required for assignment or transfer. To the extent that any of the
Contracts are not assigned to Buyer at Closing, and until such Contracts have
been assigned, the performance obligations of Seller shall, as between Seller
and Buyer, be deemed to be subleased or subcontracted to Buyer. The Purchase
Price shall not be reduced or increased by reason of the non-assignability or
subcontracting of any of the Contracts. Notwithstanding the foregoing, consent
to the assignment of the Unisign and Spinner Agreements shall be a precondition
of Buyer to close on the transactions contemplated by the terms of this
Agreement.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants the following to Buyer as of the date of this Agreement:
4.01 CORPORATE ORGANIZATION AND AUTHORITY OF SELLER. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio with full power and authority to own the Purchased Assets,
to carry on the Business and to execute, deliver and perform this Agreement.
Seller's execution and delivery of this Agreement and any other agreements to be
executed and delivered by it at the Closing and the performance by Seller of the
transactions contemplated by this Agreement and such other agreements have been
duly authorized by all necessary corporate actions and proceedings on the part
of Seller. Seller is qualified to transact business as a foreign corporation in
the State of New York.
4.02 ENFORCEABILITY. This Agreement and each other agreement to be executed
and delivered by Seller at the Closing is a valid and legally binding obligation
of Seller, enforceable against Seller in accordance with its terms. Neither the
execution and delivery of this Agreement or any such other agreement nor the
performance by Seller of the terms and provisions hereof or thereof will: (i)
violate the Amended Articles of Incorporation or Code of Regulations of Seller,
(ii) violate any law, rule or regulation or any injunction or order to which
Seller is a party or by which Seller or any of the Purchased Assets are bound,
or (iii) result in a breach or violation of any term or provisions of,
constitute a default under, or result in or permit an acceleration of, any
indenture, mortgage, lease or other agreement or instrument to which Seller is a
party or by which Seller or any of the Purchased Assets is bound.
4.03 THIRD PARTY CONSENTS. Except as set forth on SCHEDULE 4.03, to
Seller's Knowledge, no authorization, consent or approval of any third party
(including, without limitation, any governmental entity) is necessary to permit
the sale and transfer of the Purchased Assets to Buyer on the terms and
conditions set forth in this Agreement, except pursuant to the Hart-Scott-Rodino
Act, if applicable.
4.04 TITLE TO ASSETS. Except as otherwise set forth on SCHEDULE 4.04,
Seller has good and marketable title to all of the tangible and intangible
personal property constituting part of the Purchased Assets and good and
marketable title to the real property constituting part of the Purchased Assets,
free and clear of all liens, encumbrances, security interests and restrictions
of any nature whatsoever (collectively, "Encumbrances"), other than: (i) liens
for current taxes and assessments not yet due and payable or for taxes that
Seller is contesting in good faith through appropriate proceedings; (ii)
purchase money liens and liens securing rental payments under capital lease
arrangements; (iii) mechanics', materialmen's and similar liens arising in the
ordinary course of the Business described on SCHEDULE 4.04 which are not yet
delinquent or which are being contested in good faith; (iv) legal highways,
zoning and building laws, codes and ordinances; (v) any easement restriction,
covenant or reservation of record; or (vi) any matter which is disclosed by a
survey of the Cortland Real Property dated July 16, 1999, or as such survey may
be updated, and made part of Schedule 4.04 (collectively, the "Permitted
Exceptions"). At the Closing, Seller will convey to Buyer good and marketable
title to the tangible and intangible personal property constituting part of the
Purchased Assets, free and clear of all Encumbrances other than the Permitted
Exceptions.
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4.05 ENVIRONMENTAL MATTERS.
(a) Except as set forth on SCHEDULE 4.05:
(i) The Business is and has been in material compliance within
the past five (5) years with all applicable Environmental
Requirements. Seller has received no notice, report or information
regarding any liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), or any corrective, investigatory or
remedial obligations, arising under Environment Requirements with
respect to the present operations or (with respect to circumstances
existing currently or within the past five (5) years) properties of
the Business, or the operations conducted or circumstances existing
within the past five (5) years on properties held by the Business
within the past five (5) years.
(ii) Seller has obtained, and is in compliance with all terms and
conditions of, all permits, licenses and other authorizations required
pursuant to Environmental Requirements for the occupation of the
Cortland Real Estate and the conduct of the Business.
(iii) None of the following exists at the Cortland Real Estate:
asbestos-containing material in any form or condition; polychlorinated
biphenyl-containing materials or equipment; underground storage tanks;
or any other toxic or hazardous material regulated by Environmental
Requirements.
(iv) The transactions contemplated by this Agreement do not
impose any obligations under Environmental Requirements for site
investigation or cleanup or notification to or consent of any
government agencies or third parties.
(v) To Seller's Knowledge, based on Environmental Requirements,
as currently in effect, no facts, events or conditions relating to the
Cortland Real Estate or past operations of the Business, will, except
for events occurring after the Closing Date, (1) prevent, hinder or
limit continued compliance by Seller with Environmental Requirements
in its conduct of the Business at the Cortland Real Estate, (2) give
rise to any corrective, investigatory or remedial obligations on the
part of Seller pursuant to Environmental Requirements with regard to
its occupancy of the Cortland Real Estate or the operation of the
Business, or (3) give rise to any liabilities on the part of Seller
(whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental Requirements with regard to its occupancy of
the Cortland Real Estate or the operation of the Business, including,
without limitation, those liabilities relating to onsite or offsite
hazardous substance releases, personal injury, property damage or
natural resources damage.
(vi) Seller has not assumed any liabilities or obligations of any
third party under Environmental Requirements.
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(b) Seller had delivered or made
available to Buyer true, complete and correct copies
of all environmental reports, analyses, tests or
monitoring in the possession of Seller pertaining the
Cortland Real Estate or off-site disposal by the
Business when such relates to potential liability of
Buyer under Environmental Requirements.
4.06 FIXED ASSETS. The Fixed Assets constitute all machinery,
equipment and other fixed assets which are required for the operation of the
Business in substantially the same manner as it was being operated immediately
prior to the date of this Agreement.
4.07 INTELLECTUAL PROPERTY. SCHEDULE 4.07 sets forth a
complete and correct list of all licensed, registered, filed or issued
Proprietary Rights owned by Seller and used primarily in the Business other than
general know-how used in the Business or non-customized, commercially available
software and other than Excluded Assets. With regard to such Proprietary Rights:
(a) Seller owns and possesses all right, title and interest in and to, or has a
written and enforceable license to use, all of such Proprietary Rights except as
set forth on SCHEDULE 4.07, free and clear of all Encumbrances (other than
Permitted Exceptions); (b) Seller has received no notice of any claim by any
third party contesting the validity, enforceability, use or ownership of any
Proprietary Rights, nor, to Seller's Knowledge, is any such claim threatened;
and (c) to Seller's Knowledge, the Business has not infringed, misappropriated
or otherwise conflicted in any material respect with any Proprietary Rights of
any third party. Subject to the provisions of Section 8.11, all Proprietary
Rights set forth on SCHEDULE 4.07 will be owned by or available for use by Buyer
immediately subsequent to Closing on identical terms and conditions as currently
owned or used. Seller has made the necessary filings and recordations and has
paid all required fees to record and maintain the Business' ownership of all
registered Proprietary Rights.
4.08 MATERIAL CONTRACTS. SCHEDULE 4.08 contains a list of all
Material Contracts which relate to the Business. All Material Contracts set
forth on SCHEDULE 4.08 are valid, binding, in full force and effect and
enforceable against each party thereto and no violation, breach or default
exists with respect to such Material Contracts. Seller is not in breach of any
Material Contract set forth on SCHEDULE 4.08, nor to Seller's Knowledge is any
person in material breach of any such agreement. True and complete copies of all
written Material Contracts set forth on SCHEDULE 4.08 have been delivered to
Buyer.
4.09 PERMITS. SCHEDULE 4.09 contains a list of all federal,
state, local and other governmental licenses, permits, approvals and
authorizations, if any, which are held or used by Seller in connection with the
Business, all of which are in full force and effect, except as listed on
Schedule 4.09. Except as otherwise described on SCHEDULE 4.09, no proceeding is
pending or, to Seller's Knowledge, threatened with respect to the revocation or
limitation of any such license, permit, approval or authorization and such
Permits will be in full force and effect on the Closing Date.
4.10 EMPLOYEES. SCHEDULE 4.10 contains a list of all
collective bargaining agreements, other contracts with labor unions and
employment agreements presently in effect
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covering any employee of the Machine Tool Division (collectively, the
"Employment Agreements"). True and correct copies of each of the Employee
Agreements have been delivered to Buyer. Except as otherwise set forth on
SCHEDULE 4.10: (i) there is no labor strike, dispute or work stoppage or lockout
actually pending or, to Seller's Knowledge, threatened against or affecting
Seller; (ii) Seller is in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (iii) there is no unfair labor
practice charge, grievance or complaint against Seller pending or, to Seller's
Knowledge, threatened; (iv) no charges with respect to or relating to Seller are
pending before the Equal Employment Opportunity Commission or any other
governmental entity responsible for the prevention of unlawful employment
practices; and (v) Seller has not received any written notice of the intent of
any other governmental entity responsible for the enforcement of labor or
employment laws to conduct an investigation with respect to or relating to
Seller.
4.11 EMPLOYEE BENEFITS. Set forth on SCHEDULE 4.11 is a list
of all "employee benefit plans" (as defined in Section 3(3) of ERISA) maintained
or contributed to by Seller as of the date of this Agreement with respect to any
of its employees who perform services primarily for the Business (collectively,
the "Employee Plans"). Seller has delivered to Buyer true and complete copies of
each of the Employee Plans and (if applicable) copies of the most recent
Internal Revenue Service determination letters (including determination letters
of plan termination), annual reports and actuarial reports with respect to the
Employee Plans. Each Employee Plan and all related trusts, insurance contracts
and funds (as applicable) have been maintained, funded and administered in
compliance in all material respects with all applicable laws and regulations,
including, but not limited to, ERISA and the Code. No Employee Plan has incurred
any accumulated funding deficiency, whether or not waived, and none of the
assets of the Company are subject to any lien arising under Section 302(f) of
ERISA or Section 412(n) of the Code. Except as set forth on SCHEDULE 4.11, no
Employee Plan provides any health, life or other welfare benefits to retired or
former employees of the Business, other than as required by Section 4980B of the
Code. Seller has no liability or potential liability (including, but not limited
to, actual or potential withdrawal liability) with respect to (i) any
multi-employer plan within the meaning of Section 4001(a)(3) of ERISA, or (ii)
any Employee Plan of the type described in Section 4063 and 4064 of ERISA or in
Section 413(c) of the Code (and regulations promulgated thereunder). Except as
set forth on Schedule 4.11, each Employee Plan that is intended to be qualified
under Section 401(a) of the Code, and each trust forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service as
to the qualification under the Code of such Employee Plan and the tax exempt
status of such related trust, and nothing has occurred since the date of such
determination letter that could reasonably be expected to adversely affect the
qualification of such Employee Plan or the tax exempt status of such related
trust.
4.12 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
4.12, to Seller's Knowledge the Business has not been and is not being conducted
in violation of any federal, state or local law, statute, ordinance, rule,
regulation or court or administrative order, including, without limitation, any
of the same that relate to health and safety in the work place, zoning or
building standards.
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4.13 LITIGATION. Except as described on SCHEDULE 4.13, there
are no claims, actions, suits or proceedings pending or, to the Knowledge of
Seller, threatened against or affecting Seller relating to the Business, at law
or in equity, or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, wherever
located.
4.14 TAXES. Seller has filed, in a timely manner, all
requisite federal, state, local and other governmental income, payroll, excise,
sales, personal property, real estate and franchise tax reports or returns
required to be filed for the Business and has paid in a timely manner all taxes,
interest and penalties due in accordance with such returns.
4.15 FINANCIAL STATEMENTS. Seller has delivered to Buyer true
and complete copies of Seller's (i) audited financial statements of Seller for
the year ended December 31, 1998, (ii) unaudited financial statements of the
Machine Tool Division for the year ended December 31, 1998, and (iii) unaudited
balance sheet of the Machine Tool Division as of December 31, 1999 (the "Interim
Balance Sheet") and related statements of operations for the period then ended
(collectively, the "Financial Statements"). The Financial Statements present
fairly, in all material respects, the financial condition of the Machine Tool
Division and the results of its operations as of the dates thereof and for the
respective periods then ended in accordance with generally accepted accounting
principles, consistently applied (subject to normal year-end adjustments, the
lack of footnotes and other presentation items, and other exceptions set forth
in SCHEDULE 4.15).
4.16 INTERIM CHANGES. Except as set forth on SCHEDULE 4.16,
since the date of the Interim Balance Sheet there has not been:
(a) any change in the financial condition, assets,
liabilities, personnel or operations of the Business or in the
Business' relationships with suppliers, distributors or others with
whom it has business dealings, other than changes which individually or
in the aggregate do not have a material adverse effect;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the Business;
(c) any bonus granted or increase in the compensation
or benefits paid or to become payable to any employees of the Business;
(d) any transfer, lease, license or other disposition
of assets, including Proprietary Rights, of the Business other than
sales of inventory in the ordinary course of business;
(e) any Encumbrances placed on any of the Purchased
Assets other than Permitted Exceptions;
(f) any new Contract (or amendment to any existing
Contract) entered into obligating the Business to purchase goods or
services for a period of 90 days or more
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or obligating the Business to pay in excess of $15,000, any new
distributorship agreement, any amendment or termination of any Material
Contract relating to the Business;
(g) any other transaction not in the ordinary course
of business that, individually or in the aggregate, could have a
material adverse effect; or
(h) any commitment with respect to the foregoing.
4.17 NO COMMISSIONS. Except for a fee payable to Seale &
Associates, LLC, no commissions or brokers' or finders' fees are payable by,
through or on account of any acts of Seller or any of its shareholders, officers
or representatives in connection with this Agreement or the transactions
contemplated thereby.
4.18 TRANSFER OF ASSETS. THE PURCHASED ASSETS SHALL BE
TRANSFERRED AND ASSIGNED BY SELLER TO BUYER ON AN "AS IS, WHERE IS" BASIS
WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING,
BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE), EXCEPT FOR SUCH REPRESENTATIONS AND WARRANTIES AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT, AND IN THE INSTRUMENTS OF TRANSFER,
CONVEYANCE AND ASSIGNMENT TO BE CONVEYED TO BUYER PURSUANT TO SECTION 3.02.
4.19 INSURANCE. SCHEDULE 4.19 contains a complete listing of
all policies of insurance carried in respect of the Business and the Purchased
Assets, including the type and amount of coverage, deductible levels and
expiration dates. All premiums due with respect to such policies have been paid
and such policies are in full force and effect and will remain in full force and
effect through the Closing Date. SCHEDULE 4.19 also includes a list of any
pending insurance claims relating to the Business other than employee claims
under travel, accident, health, life or disability insurance. Seller is not in
default or breach with respect to any provision contained in any such insurance
policies, nor has Seller failed to give any notice or to present any potential
claim thereunder in due and timely fashion.
4.20 DISCLOSURE. No information supplied by Seller in this
Agreement or the Schedules or Exhibits hereto, or in the financial statements,
certificates or other writings furnished by Seller to Buyer or any of its
representatives prior to the date hereof, contains any untrue statement of
material fact or omits or shall omit to state any material fact necessary to
make the statements herein or therein, in the light of circumstances under which
they were made, not misleading. No warranty or representation is made in this
Agreement as to the future viability of the Business.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants the following to Seller as of the date of this
Agreement:
5.01 CORPORATE ORGANIZATION AND AUTHORITY. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York and has
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full power and authority to execute, deliver and perform this Agreement. Buyer's
execution and delivery of this Agreement and any other agreements to be executed
and delivered by it at the Closing and the performance by Buyer of the
transactions contemplated by this Agreement and any such other agreements have
been duly authorized by all necessary corporate actions and proceedings on the
part of Buyer. Buyer is duly qualified to do business (or will be qualified to
do business as of the Closing Date) as a foreign corporation under the laws of
the State of New York.
5.02 ENFORCEABILITY. This Agreement and each agreement to be
executed and delivered by Buyer at the Closing is a valid and legally binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms. Neither the execution of this Agreement or any such other
agreement by Buyer nor the performance by Buyer of the various terms and
provisions hereof or thereof will: (i) violate the articles or certificate of
incorporation or bylaws of Buyer, (ii) violate any law, rule or regulation or
any injunction or order to which Buyer is a party or by which it or any of its
property is bound, or (iii) result in a breach or violation of any term or
provision of, constitute a default under, or result in or permit an acceleration
of, any indenture, mortgage, lease or other agreement or instrument to which
Buyer is a party or by which it or any of its property is bound.
5.03 LITIGATION. There are no claims, actions, suits or
proceedings now pending or, to the best of the knowledge of Buyer, 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, wherever located, which may impair the ability of
Buyer to perform this Agreement or any other agreement to be entered into
pursuant hereto or which questions the validity or propriety of this Agreement
or any such other agreement or of action taken hereunder or thereunder in
connection with this Agreement.
5.04 THIRD PARTY CONSENTS. No authorization, consent or
approval of any third party (including, without limitation, any governmental
entity) is necessary to permit Buyer to purchase the Purchased Assets on the
terms and conditions set forth in this Agreement, other than pursuant to the
Hart-Scott-Rodino Act, if applicable.
5.05 NO COMMISSIONS. No commissions or brokers' or finders'
fees are payable by, through or on account of any acts of Buyer or its
representatives in connection with this Agreement or the transactions
contemplated hereby.
SECTION 6. CERTAIN COVENANTS OF SELLER.
6.01 CONDUCT OF BUSINESS PRIOR TO CLOSING. Except as described
in SCHEDULE 6.01,unless the prior written consent of Buyer is otherwise
obtained, which consent shall not be unreasonably withheld, between the date
hereof and the Effective Time, the Business will be conducted in the ordinary
course of business, that is, substantially in the same manner as it previously
has been carried on by Seller, using the same methods of manufacture, purchase,
sale, lease, accounting and operating, provided that, without Buyer's consent,
Seller, with respect to the Business and Purchased Assets:
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(i) will not enter into, adopt or amend, or alter the
contribution policies under, any Employee Plan (other than as are
applicable generally to the employees of Seller);
(ii) will not enter into or amend any Employee Plan
(other than as are applicable generally to the employees of Seller),
increase the salaries or compensation of any employees of the Business
or pay any bonuses or similar compensation to any of the employees of
the Business, except as provided in Employee Plans in effect on the
date of this Agreement;
(iii) will not enter into any agreement for the
purchase, sale or other disposition of, or purchase, sell or otherwise
dispose of, any equipment, supplies, inventory, investments or other
assets (other than sales of inventory, purchases of parts, materials
and supplies, in each case in the ordinary course of business of the
Business);
(iv) will not make any capital expenditure (or enter
into commitments therefor) with respect to the Business which is
individually in excess of $10,000, or which, in the aggregate, exceed
$25,000; provided, however, that Seller shall continue any existing
capital expenditure projects or programs listed in SCHEDULE 6.01 in a
manner consistent with the performance of such projects or programs
prior to the date of this Agreement;
(v) will not enter into or terminate any material
contract, commitments, arrangement or transaction relating to the
Business or the Purchased Assets other than in the ordinary course of
business consistent with past practices; and
(vi) will continue its present insurance coverage
with respect to the Business and the Purchased Assets in full force and
effect.
6.02 ENVIRONMENTAL CLEANUP.
(a) Prior to the Closing Date, Seller shall either
(i) remove the 22 barrels set forth on ATTACHMENT 6.02(A) (the
"Barrels") from the Cortland Real Estate in a manner which complies
with the applicable Environmental Requirements, or (ii) deliver to
Buyer at the Closing evidence of the making of arrangements to have the
Barrels removed within 14 days after the Closing Date in a manner which
complies with the applicable Environmental Requirements. In either
case, Seller shall incur all expenses associated with the removal and
disposal of the Barrels and the materials contained therein.
(b) If necessary to bring the Cortland Real Estate in
compliance with the applicable Environmental Requirements, Seller shall
either obtain the air permit, storm water permit and the septic system
permit, if any, listed on SCHEDULE 4.05 at subparagraphs (a), (b), (c)
and (e) of 4.05(i) and (ii) (collectively, the "Identified Permits"),
or shall reimburse Buyer for reasonable out-of-pocket expenses incurred
in the
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obtaining of such Identified Permits, including, but not limited to,
filing fees, fines, penalties, assessments and reasonable consulting
fees.
6.03 EXCLUSIVITY.
(a) From the date hereof through the earliest of (i)
the Closing Date, or (ii) the termination of this Agreement pursuant to
Section 12; or (iii) February 5, 2000, unless Buyer shall have
delivered to Seller a bank commitment letter providing for the
financing described in Section 9.04, reasonably satisfactory to Seller
as to terms consistent with current banking practices in financing of
the type contemplated, Seller shall not, directly or indirectly,
through an officer, director, employee, stockholder, agent, partner,
affiliate or otherwise (1) enter into any Contract, agreement,
agreement in principle or other commitment (whether or not legally
binding) relating to any business combination with, or acquisition or
purchase of, all or a significant portion of the assets of the
Business, or relating to any other similar transaction (a "COMPETING
TRANSACTION"), (2) solicit, initiate or encourage the submission of any
proposal or offer from any Person (including any of its officers,
directors, employees and agents) relating to any Competing Transaction,
or (3) participate in any discussions or negotiations regarding,
furnish to any other Person any information with respect to, or
otherwise cooperate with, assist, participate in, facilitate or
encourage, any effort or attempt by any Person to effect a Competing
Transaction. Seller shall notify Buyer promptly of any proposal
received by Seller on or after the date hereof regarding a Competing
Transaction (or any inquiry or contact made after the date hereof with
any Person with respect thereto), and shall advise Buyer of the
contents thereof (and, if in written form, provide Buyer with copies
thereof).
(b) Notwithstanding the foregoing, if Seller receives
an unsolicited offer to purchase the Business, and the Board of
Directors of Seller, based upon a written opinion of counsel,
reasonably determines, in the exercise of its fiduciary duties, that
such offer should be accepted, Seller shall promptly communicate to
Buyer the material terms of any proposal, whether written or oral, or
the substance of any such discussions. If Seller accepts such offer,
Seller or Buyer may terminate this Agreement and, thereafter, Seller
shall, upon consummation of the transaction, or six (6) months from the
date of termination, whichever occurs first, pay to Buyer a
cancellation fee of $50,000, which amount Seller agrees is reasonable
to compensate Buyer for its efforts and expenses incurred up to the
time of such breach. Any offer received from any entity contacted by
Seale & Associates, LLC, or any of its employees, agents or sub-agents
in connection with a proposed transaction involving the Business shall
not be deemed an unsolicited offer for purposes of this Section 6.03.
6.04 NONCOMPETE.
(a) Seller agrees that during the five (5) year
period following the Closing Date (the "NONCOMPETE PERIOD"), that it
shall not, directly or indirectly, for itself or for any other Person,
partnership, corporation, company, limited liability company, limited
liability partnership or other entity, participate in a business in
competition with the Business as of the Closing Date anywhere in the
United States of America. For
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purposes of this Agreement, the phrase "a business in competition with
the Business" means the business of designing, manufacturing, selling
and servicing vertical machining centers, production machining centers,
precision lathes/turning centers and vertical traveling column
machining centers. For purposes of this Agreement, the term
"participate" includes any direct or indirectly interest in any
enterprise, whether as an officer, director, employee, partner, member,
sole proprietor, agent, representative, independent contractor,
consultant, franchiser, franchisee, creditor, owner or otherwise;
provided that the term "participate" shall not include ownership of
less than 2 percent of the stock of a publicly held corporation whose
stock is traded on a national securities exchange or in the
over-the-counter market.
(b) Notwithstanding the Seller's agreement not to
compete, Seller may be acquired by an entity in competition with the
Business so long as following such acquisition Seller or the successor
to Seller does not operate a competitive business at any facility owned
by Seller on the Closing Date.
(c) From the date hereof through the
end of the Noncompete Period, Seller shall not,
directly or indirectly, (i) induce or attempt to
induce any current employee of the Business to leave
the employ of Buyer or in any way interfere with the
relationship between Buyer and any employee thereof,
or (ii) induce or attempt to induce any customer or
supplier of the Business to cease doing business with
Buyer.
(d) Seller agrees that this
covenant is reasonable with respect to its duration,
geographical area and scope.
6.05 AUDIT ADJUSTMENTS. At least two (2) days prior to the
Closing Date, Seller shall deliver to Buyer a complete and accurate list of all
fiscal 1999 year-end adjustments to the Financial Statements, including all
audit adjustments either proposed or waived.
SECTION 7. CERTAIN COVENANTS OF BUYER.
7.01 PERSONNEL REQUIRED IN RESPONSE TO LITIGATION. Buyer
agrees to make certain former employees of the Business available to Seller as
reasonably required by Seller after the Closing Date in the event that any
litigation which Seller is required to defend is commenced or previously was
commenced against Seller with regard to the Business. Seller agrees to reimburse
Buyer for reasonable out-of-pocket expenses incurred by Buyer in connection with
requests by Seller pursuant to this Section 7.01.
7.02 CONFIDENTIALITY. Buyer agrees that any information
contained in any Schedule or Exhibit to this Agreement or otherwise provided to
Buyer pursuant to this Agreement shall be held by Buyer as confidential
information in accordance with, and shall be subject to the terms of, that
certain confidentiality agreement dated February 2, 2000, as amended on February
3, 2000, entered into in connection with the transactions contemplated hereby
(the "Confidentiality Agreement") between Seller and Buyer. The terms of the
Confidentiality Agreement are hereby incorporated by reference herein and shall
continue in full
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force and effect, and if this Agreement is terminated or if the Closing shall
not have occurred for any reason whatsoever, the Confidentiality Agreement shall
thereafter remain in full force and effect in accordance with its terms.
SECTION 8. CERTAIN ADDITIONAL AGREEMENTS AND COVENANTS OF BUYER AND
SELLER.
8.01 CONSUMMATION OF THE TRANSACTIONS. Upon the terms and
subject to the conditions of this Agreement, each of the parties hereto agrees
to use its best efforts (i) to take, or cause to be taken, all such actions and
to do, or cause to be done, all other things necessary to carry out its
obligations hereunder; (ii) to cause the conditions to the obligations of the
other party hereto to be satisfied prior to or at the Closing; and (iii) to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement, including obtaining all waivers,
permits, consents and approvals and effecting all registrations, filings and
notices with or to third parties or governmental or public bodies or authorities
which are necessary in connection with the transactions contemplated by this
Agreement; provided, however, that this Section 8.01 shall not require either
party to waive any condition for its benefit or any performance hereunder by the
other party or to make any payment to any third party, whether private or
governmental, or to expend any funds or incur any economic burden in connection
with obtaining the consent of any third party, whether private or governmental;
and provided, further, that this Section 8.01 shall not require such party to
take any action, the result of which, in its reasonable judgment, would be to
impose material limitations on its ability to consummate and retain the full
benefits of the transactions contemplated hereby.
8.02 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, Buyer
and Seller will mutually agree on any announcement or correspondence with or to
the public or customers, suppliers or employees of Seller about the terms and
conditions of this Agreement or the transactions contemplated hereby unless such
announcement is required by law in the good faith opinion of counsel and, in
such case, the announcing or corresponding party will notify the other party and
provide it, in advance, with a copy of the public disclosure and an opportunity
to comment on such proposed disclosure. On or after the Closing Date, Seller and
Buyer will not disclose the amount of the Purchase Price without the consent of
the other or unless required to do so by law.
8.03 BULK SALES LAWS. Seller and Buyer hereby waive compliance
with the provisions of any applicable bulk sales or other similar laws.
8.04 ITEMS RECEIVED AFTER EFFECTIVE TIME. Seller shall
promptly pay or transfer to Buyer, if and when received, any amounts or other
items which shall be received by Seller after the Effective Time in respect of
any receivables or other Purchased Assets transferred and assigned to Buyer.
Buyer shall promptly pay to Seller, if an when received, any amounts or other
items which shall be received by Buyer after the Effective Time which are not
transferred to Buyer pursuant to this Agreement.
8.05 ACCESS TO RECORDS. Buyer agrees that on and after the
Closing it will permit Seller and its representatives, during normal business
hours, to have access to and
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examine and make copies of all of the Records which are delivered to Buyer
pursuant hereto, provided that Seller certifies that it requires such
information in connection with the preparation of tax returns or another bona
fide business purpose reasonably satisfactory to Buyer. Buyer also agrees that
it will cooperate with Seller and make information available to Seller as
reasonably requested by Seller in connection with litigation involving the
Business or Purchased Assets for which Seller has retained liability under this
Agreement. Seller agrees that it will use its best efforts to prevent the
disclosure to any person or use by any person of any confidential information
which is delivered to Seller pursuant to this Section 8.05 other than pursuant
to a court order or subpoena or with respect to tax returns and other reports
required by law. All Records which are delivered to Buyer hereunder will be
preserved by Buyer and all Records which are not delivered to Buyer hereunder
will be preserved by Seller, in each case, for a period of seven (7) years
following the Closing.
8.06 FURTHER ASSURANCES. Each party shall, at the request of
the other party, do and perform or cause to be done and performed all such
further acts and furnish, execute and deliver such other documents, instruments,
certificates, notices or other further assurances as counsel for the requesting
party may reasonably request, from time to time, to consummate more effectively
the transactions contemplated by this Agreement or to vest in Buyer all of
Seller's right, title and interest in the Purchased Assets.
8.07 EXPENSES; SALES AND OTHER TRANSFER TAXES. Except as
otherwise provided in this Agreement, each party will pay all fees and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby; provided, however, that all sales, transfer and similar
taxes incurred in connection with this Agreement and the transactions
contemplated hereby, if any, shall be borne by Buyer. Buyer and Seller agree to
file all necessary documentation with respect to such taxes.
8.08 SURVEY AND TITLE COMMITMENT.
(a) Seller has obtained and delivered to Buyer a
survey of the Cortland Real Estate (the "Survey") dated July 16, 1999,
prepared by a registered surveyor licensed in the State of New York.
Seller makes no representation or warranty regarding the accuracy or
completeness of the Survey or Buyer's reliance on the Survey.
(b) Seller has obtained and delivered to Buyer a
commitment for a lender's policy of title insurance dated June 4, 1999
and issued by Cortland Abstract & Title Services, Inc. (the "Title
Company") concerning the Cortland Real Estate (the "Commitment").
Seller makes no representation or warranty regarding the accuracy or
completeness of the Commitment or Buyer's reliance on the Commitment.
8.09 EMPLOYEE MATTERS.
(a) EMPLOYMENT OF AFFECTED EMPLOYEES. Seller shall
terminate the employment of each Affected Employee as of the Closing
Date. Buyer agrees to offer employment (at no less than over one-half
time) to at least 80 percent of the Affected Employees who were
employed by Seller immediately prior to the Closing Date.
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(b) WORKERS' COMPENSATION. Buyer shall assume and be
responsible for the administration of all claims, losses, damages and
expenses and other liabilities and obligations relating to or arising
out of all workers' compensation claims of Affected Employees which are
pending as of the Closing and which are reflected on the Closing Net
Operating Statement as an Assumed Liability. Seller shall, at all
times, maintain sufficient workers' compensation coverage to pay
workers' compensation claims not being assumed by Buyer.
(c) WARN ACT LIABILITY. Buyer will not, within sixty
(60) days after the Effective Time, cause any "plant closing" or "mass
layoff" at the Business, as such actions are defined in the Workers
Adjustment and Retraining Act of 1988, unless all notices, as required
by such Act, have been given not less than sixty (60) days prior to
such plant closing or mass layoff. Buyer further agrees that Buyer will
not incur, and will indemnify Seller against, any liability incurred
under such Act by reason of actions or omissions of Buyer after the
Closing Date with respect to employees of the Business.
(d) Any notice given Affected
Employees regarding the proposed sale of the Business
to Buyer, termination of employment by Seller and by
Buyer announcing offer of employment shall be
submitted by the appropriate party to the other at
least twenty-four (24) hours prior to such
announcement, and the parties agree to cooperate in
connection with the dissemination of such
announcements.
8.10 EMPLOYEE BENEFIT MATTERS.
(a) SELLER PLAN CESSATION BENEFITS; BUYER INDEMNITY.
Effective as of the Closing Date, neither Seller, Seller Health Plan,
Seller FSA Plan nor any associated person shall: (i) accept employee
contributions with respect to periods of coverage after the Closing
Date; nor (ii) have any further obligation to provide any medical,
dental, FSA, life, disability coverage or benefits to any Affected
Employee or any such similar benefits to such or similarly situated
persons, except for any benefit obligations incurred prior to the
Closing Date and any inpatient stays which include the Closing Date.
Buyer shall fully indemnify the Seller for any failure to provide
health coverage subsequent to the Closing Date, regardless of any legal
obligation of Seller which may exist under COBRA or other applicable
law to provide such coverage.
(b) COBRA COVERAGE. Notwithstanding subsection (a),
within 14 days after the Closing Date, Seller shall offer each Affected
Employee (whether or not hired by Buyer) and his dependents
continuation coverage under Section 4980B of the Code for his and/or
his dependents' coverage or benefits under Seller's self-insured group
health plan (the "Seller Health Plan") or the Seller's flexible
spending account plan providing medical reimbursement benefits (the
"Seller Medical FSA Plan"). With respect to each Affected Employee or
dependent who elects continuation coverage, the Seller, Seller Health
Plan and Seller Medical FSA Plan shall: (i) accept employee
contributions from or for such Affected Employee or dependent; and (ii)
provide
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coverage and benefits as required by COBRA and for the duration as
required by COBRA. Buyer agrees to fully indemnify Seller for the
foregoing COBRA coverage and benefits and, therefore, reimburse Seller
(within 30 days of receipt) of all claims submitted to Buyer which are
in excess of the employee contributions received by Seller for such
COBRA coverage and benefits (with such excess claims being calculated
on a calendar quarter basis).
(c) SELLER 401(K) PLANS. Following the Closing Date
and receipt by Seller of an IRS determination letter that distributions
are permitted under Section 401(k)(10)(A)(ii) and the regulations
thereunder regarding disposition of a trade or business, the Seller's
qualified savings plans under Section 4.01(a) and 4.01(k) of the Code
(the "Seller's 401(k) Plans") which cover the Affected Employees shall
make distributions: (i) to each Affected Employee who is a participant
in the Seller 401(k) Plans and who accepts employment with Buyer; (ii)
during a period and in a manner prescribed by such regulations in
accordance with the provisions of the Plans and applicable law; and
(iii) which include any outstanding participant loan of the Affected
Employee. The Buyer Savings Plan, if any, if directed by the Affected
Employee, shall accept a direct rollover or rollover contribution from
the Seller's 401(k) Plans of any such distribution, including any
outstanding participant loan therein. Prior to such rollovers, the
Buyer shall provide Seller with a written representation of the
qualified status of the Buyer Savings Plan, if any, under Sections
401(a) and 401(k) of the Code.
(d) SELLER UNION PENSION PLAN. Following the Closing
Date, the Seller's qualified pension plan under Section 401(a) of the
Code, which covers Affected Employees whose employment is subject to
the Collective Bargaining Agreement (the "Seller Union Pension Plan"),
shall: (i) pay benefits to any such Affected Employee only at the time
and manner as provided under the Plan for retired and terminated
participants (and thereby generally no sooner than age 60 early
retirement age); and (ii) consistent therewith, make immediate,
involuntary cashout distributions of benefits having a lump sum value
of $5,000 or less to any Affected Employee who is a participant therein
and who accepts employment with Buyer, with such distributions being
made as soon as reasonably practicable following the Closing Date. The
Buyer Savings Plan (if any), if directed by the Affected Employee,
shall accept a direct rollover or rollover contribution from the Seller
Union Pension Plan of any such involuntary cashout distribution. Prior
to such rollovers, Buyer shall provide Seller with a written
representation of the qualified status of the Buyer Savings Plan under
Sections 401(a) and 401(k) of the Code.
(e) SELLER CASH BALANCE PLAN. Following the Closing
Date, the Seller's qualified cash balance pension plan under Section
401(a) of the Code, which covers Affected Employees whose employment is
not subject to the Collective Bargaining Agreement (the "Seller Cash
Balance Plan") shall make distributions to any Affected Employee only
after Seller receives a favorable IRS determination letter for the
Buyer Savings Plan (if any). When made, the Buyer Savings Plan (if any)
shall accept a direct rollover or rollover contribution from the Seller
Cash Balance Plan of any distribution directed by the Affected
Employee. Prior to such rollovers, Buyer shall provide Seller
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with a written representation of the qualified status of the Buyer
Savings Plan (if any) under Sections 401(a) and 401(k) of the Code.
8.11 TRADEMARKS. Buyer agrees that Seller may continue to use
the registered trademarks included in the Purchased Assets and shown in
Attachments 4.07(a) - 4.07(d) to SCHEDULE 4.07 (the "Trademarks") solely to
identify its metal coil processing equipment from and after the Closing Date for
a period not exceeding six (6) months after the Closing Date on a royalty free
basis. Seller will use its best efforts to phase out use of such Trademarks as
soon as practical, but in any case will cease use thereof within such six (6)
month period. Seller shall not acquire rights in such Trademarks except for the
limited grant set forth above. Buyer agrees that Buyer shall not use or license
such trademarks in the coil processing equipment business (consisting of
machines for coil processing, sheet and strip metal winding and unwinding,
coating, corrugating, forming, galvanizing, leveling, pickling, punching,
riveting, shearing, stacking and slitting for both ferrous and non-ferrous
material) and that such restriction shall be binding on any successor and
assignee of Buyer. At Seller's request, Buyer shall take such action (including,
but not limited to, litigation), as reasonably requested by Seller to prevent
the infringement of such Trademarks by any other persons, provided that Seller
shall bear the expenses (including reasonable attorneys' fees) of such actions.
SECTION 9. CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer
are subject to satisfaction, prior to or at the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Buyer):
9.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement, and the
statements contained in the Schedules, shall have been true and correct in all
material respects when made and, except as contemplated or permitted herein or
therein or except as consented to by Buyer in writing, shall continue to be true
and correct in all material respects as of the Effective Time with the same
effect as though made at the Effective Time, and Seller shall have performed and
complied with, in all material respects, all covenants, agreements, obligations
and conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
9.02 LITIGATION. No action, suit or proceeding relating to the
transactions contemplated hereby shall be instituted by any party and remain
pending in which there is, or is likely to be, sought a temporary, preliminary
or permanent judgment, order or decree restraining or enjoining consummation of
the transactions contemplated hereby or requiring any holding separate or
divestiture of any substantial portion of the Purchased Assets by Buyer.
9.03 CONSENTS AND APPROVALS. All government approvals and
agreements and consents of any parties necessary to consummation by Seller of
the transactions contemplated by this Agreement shall have been obtained and
delivered to Buyer, except with respect to assignment of certain contracts as
provided in Section 3.04 hereof.
9.04 FINANCING. Buyer shall have obtained funds sufficient to
enable Buyer to consummate the transactions contemplated by this Agreement and
to provide the Business with adequate working capital on such terms as are
satisfactory to Buyer.
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9.05 TITLE POLICY. Buyer shall have caused one or more
nationally recognized title insurance companies selected by Buyer (each a "TITLE
COMPANY") to have issued a fee owner's title insurance policy to Buyer with
respect to the Cortland Real Estate in a form and substance satisfactory to
Buyer insuring Buyer and issued as of the Closing Date by such Title Company,
showing Buyer to have a fee simple title to the Cortland Real Estate, subject
only to Permitted Exceptions.
Notwithstanding the foregoing, if, on or prior to the
Closing Date, it should appear that the Cortland Real Estate is affected by any
material outstanding liens, encumbrances or interests (other than Permitted
Exceptions), Seller may adjourn the Closing Date for a period not to exceed
thirty (30) days for the purpose of using its best efforts to remove such liens,
encumbrances or interests. In the event such liens, encumbrances or interests
are not removed or cured within such thirty (30) day period, Buyer may accept
such title as Seller may be able to convey, without any reduction of the
Purchase Price, or terminate this Agreement upon notice to Seller.
The existence of mortgages, liens or encumbrances other
than the Permitted Exceptions shall not be objections to title to the Cortland
Real Estate, provided that properly executed instruments, in recordable form,
necessary to satisfy the same are delivered to Buyer on the Closing Date,
together with any recording or filing fees required in connection therewith.
9.06 CONSENTS TO ASSIGNMENT OF UNISIGN AND SPINNER AGREEMENTS.
Seller has delivered to Buyer the consent of Unisign and Spinner to the
assignment of the Unisign and Spinner Agreements.
9.07 OTHER CONDITIONS. Seller and Buyer shall have entered
into a transitional services agreement, substantially in the form of EXHIBIT D,
whereby Seller shall provide information systems support services to Seller for
a period not to exceed six (6) months from the Closing.
SECTION 10. CONDITIONS TO SELLER' OBLIGATIONS. The obligations of
Seller under this Agreement are subject to satisfaction, prior to or at Closing,
of each of the following conditions (all or any of which may be waived in whole
or in part by Seller):
10.01 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained herein shall have been true
and correct in all material respects when made and, except as otherwise provided
or permitted herein or except as consented to by Seller in writing, shall
continue to be true and correct in all material respects on and as of the
Effective Time with the same effect as though made at the Effective Time, and
Buyer shall have performed and complied with, in all material respects, all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
10.02 LITIGATION. No actions, suit or proceeding relating to
the transactions contemplated hereby shall be instituted by any party and remain
pending in which there is, or is
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likely to be sought, a temporary, preliminary or permanent judgment, order or
decree restraining or enjoining consummation of the transactions contemplated
hereby.
10.03 CONSENTS AND APPROVALS. Unless waived by Buyer, all
approvals, agreements and consents of any parties necessary to Buyer's
consummation of the transactions contemplated by this Agreement shall have been
obtained by Buyer and delivered to Seller.
SECTION 11.INDEMNIFICATION.
11.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties set forth in this Agreement and in
any agreement or certificate delivered pursuant hereto shall survive the
Closing, but shall terminate and expire 18 months after the Closing Date, except
that the representations and warranties of Seller set forth in Section 4.04
shall survive without limitation on time and that the representations and
warranties set forth in Section 4.05 shall survive for five (5) years following
the Closing Date.
11.02 INDEMNIFICATION.
(a) From and after the Closing Date, Seller shall
indemnify, defend and hold Buyer and each of its affiliates, directors,
officers and employees, and the successors and assigns of any of them,
harmless from and against all claims, liabilities, losses, damages,
expenses, costs of settlement and demands of any character whatsoever
(including, by way of example, but not limitation, attorneys' fees
incurred defending against third party claims to which this Section
11.02 is applicable, but not including attorneys' fees incurred in
connection with disputes between the parties to this Agreement)
(collectively, "Damages") imposed upon or incurred by any of them and
which arise out of: (i) any liability or obligation of Seller not
expressly assumed by Buyer pursuant to this Agreement; (ii) the matters
described on Schedule 4.13; (iii) Pre-Closing Violations of
Environmental Requirements; (iv) any misrepresentation or inaccuracy in
any representation or warranty made by Seller in this Agreement; (v)
any nonfulfillment of a covenant or any other agreement on the part of
Seller set forth in this Agreement; (vi) any failure by Seller to
comply with any applicable law with respect to bulk sales; (vii) the
fee payable to Seale & Associates, LLC, which is referred to in Section
4.17; and (viii) all actions, suits, proceedings and judgments incident
to any of the foregoing.
(b) From and after the Closing Date, Buyer shall
indemnify, defend and hold Seller and each of its affiliates,
directors, shareholders, officers and employees, and the successors and
assigns of any of them, harmless from and against all Damages imposed
upon or incurred by any of them and which arise out of: (i) the Assumed
Liabilities; (ii) any misrepresentation or inaccuracy of a
representation or warranty made by Buyer in this Agreement; (iii) any
nonfulfillment of a covenant or any other agreement on the part of
Buyer set forth in this Agreement; (iv) the ownership, use or operation
of the Purchased Assets after the Closing; and (v) all actions, suits,
proceedings and judgments incident to any of the foregoing.
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(c) Any claim for indemnification under this Section
11.02 shall be valid only if the party seeking the indemnification
notifies the other party in writing of the basis for the claim within
18 months following the Closing, except that there shall be no time
limit within which a claim for a breach of the representations and
warranties set forth in Section 4.04 must be brought and that a claim
for indemnification under Section 4.05 may be brought prior to five (5)
years after the Closing Date. If a claim for indemnification is to be
made by a party (an "Indemnified Party") against another party (the
"Indemnifying Party"), the Indemnified Party shall give written notice
to the Indemnifying Party as soon as practicable and, in any event,
within ten (10) days after the Indemnified Party becomes aware of any
fact, condition or event which gives rise to a claim for which
indemnification may be sought under this Section 11. If any lawsuit or
enforcement action is filed against an Indemnified Party, written
notice thereof (together with copies of all pleadings received by the
Indemnified Party) shall be given to the Indemnifying Party as promptly
as practicable (and in any event within five (5) business days after
receipt). The Indemnifying Party shall be entitled, if it so elects, to
take of the defense and investigation of such lawsuit or action and to
employ and engage attorneys of its own choice reasonably acceptable to
the Indemnified Party to handle and defend the same, at the
Indemnifying Party's cost, risk and expense, provided that the
Indemnifying Party and its counsel proceed with reasonable diligence
and in good faith with respect thereto. The Indemnified Party shall
cooperate in all reasonable respects with the Indemnifying Party and
such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
Indemnified Party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action or any
appeal arising therefrom. If the Indemnifying Party has acknowledged to
the Indemnified Party its obligation to indemnify the Indemnified Party
hereunder with respect to a lawsuit or action, the Indemnified Party
shall not settle such lawsuit or enforcement action without the prior
written consent of the Indemnifying Party. If the Indemnifying Party
has not so acknowledged its obligation, the Indemnified Party shall not
settle such lawsuit except after not less than ten (10) business days'
prior written notice to the Indemnifying Party.
(d) Notwithstanding any other provision of this
Agreement, Seller shall not be liable under this Section 11.02 for any
Damages unless and until the aggregate cumulative amount of such
Damages exceeds $75,000 (the "Basket Amount"), and then shall be liable
only to the extent that the aggregate cumulative amount of such Damages
exceeds the Basket Amount. In no event shall the aggregate amount of
Seller's liabilities hereunder exceed $3,500,000. Notwithstanding the
foregoing, the Basket Amount does not apply to any Pre-Closing
Violation of Environmental Requirements, any misrepresentation or
inaccuracy in any representation or warranty made by Seller in Section
4.05 or any nonfulfillment of any covenant or other agreement on the
part of Seller set forth in Section 6.02.
(e) Any post-closing environmental investigations
made by Buyer not required by governmental directive will be solely at
Buyer's expenses. Buyer will not take any post-closing environmental
remedial actions that would result in payment from Seller without prior
discussion and agreement with Seller (which agreement shall not be
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unreasonably withheld or delayed), except that Buyer may take actions
required by applicable law or governmental order without Seller's
agreement. Any post-closing environmental remedial actions undertaken
by Buyer that would result in payment from Seller will be undertaken by
Buyer utilizing the least cost solution.
(f) The rights of indemnification provided for under
this Section 11 shall be the sole remedy which any party to this Agreement may
have at law or in equity (including, without limitation, rescission) in the
event of any breach of the provisions of this Agreement, except as otherwise
specifically provided in Section 12.
SECTION 12. ERMINATION, AMENDMENT AND WAIVER.
12.01 TERMINATION OF AGREEMENT. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual agreement of Seller and Buyer;
(b) by Buyer, (i) in the event the
Closing Net Operating Assets Statement delivered to
Buyer does not reflect Closing Net Operating Assets
Value of at least $13.5 million, and (ii) Seller's
failing to agree to reduce the Purchase Price by the
difference between $13.5 million and the Closing Net
Operating Asset Value;
(c) by written notice by either Seller or Buyer if
Closing shall not have occurred by February 18, 1999, provided that the
failure to consummate the transactions contemplated hereby is not a
result of the failure by the party so electing to terminate this
Agreement to perform any of its obligations hereunder;
(d) by Seller if Buyer has not delivered to Seller,
on or before the close of business on February 9, 2000, a bank
commitment letter reasonably satisfactory to Seller (acting in good
faith and not in an arbitrary or capricious manner) providing for the
financing described in Section 9.04, but only if Seller notifies Buyer
in writing that such letter is not satisfactory (and the reasons it is
not satisfactory) by the later of the close of business on February 7,
2000 and 48 hours after Seller actually receives such notice;
(e) by Buyer, if there has been a material violation
or breach by Seller of any of the agreements, representations or
warranties contained in this Agreement, unless Seller has informed
Buyer that such violation or breach will be cured on or before the
Closing Date and it is in fact so cured; and
(f) by Seller, if there has been a material violation
or breach by Buyer of any of the agreements, representations or
warranties contained in this Agreement, unless Buyer has informed
Seller that it will be cured on or before the Closing Date.
12.02 EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Buyer or Seller as provided in Section 12.01, this
Agreement shall forthwith be of no
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further force and effect (except that the provisions of Sections 7.02 and 8.02
shall continue in full force and effect) and there shall be no liability on the
part of Buyer or Seller, except based upon: (i) a material and willful breach by
a party of any of its obligations under this Agreement, or (ii) the obligations
set forth in Sections 7.02 and 8.02.
12.03 AMENDMENT, EXTENSION AND WAIVER. At any time prior to
the Closing Date, Buyer and Seller may (a) amend this Agreement, (b) extend the
time for the performance of any of the obligations or other acts of the parties
hereto, (c) waive any inaccuracies in the representations wand warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained herein; provided,
however, that any such amendment must be in writing and must be signed by each
of the parties hereto and the agreement with respect to any such extension or
waiver must be in writing and must be signed by the party or parties agreeing to
such extension or waiver.
SECTION 13. MISCELLANEOUS.
13.01 ASSIGNMENT; NO THIRD-PARTY RIGHTS. This Agreement shall
be binding upon and shall inure to the benefit of, and be enforceable by, the
parties hereto and their permitted successors and assigns. This Agreement may
not be assigned by either party without the prior written consent of the other,
except that Seller may assign any and all rights to receive payment pursuant to
this Agreement without such consent.
13.02 ENTIRE AGREEMENT. This Agreement and the agreements to
be executed in connection herewith set forth the entire agreement and
understanding of the parties in respect of the transactions contemplated hereby
and supersedes all prior agreements, arrangements and understandings relating to
the subject matter hereof. All Schedules and Exhibits and any documents and
instruments delivered pursuant to any provisions hereof are expressly made a
part of this Agreement as fully as though completely set forth herein.
13.03 SECTION AND OTHER HEADINGS; NUMBER. The section and
other headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Words used in this Agreement in the singular number shall be held to include the
plural, and vice versa, unless the context requires otherwise.
13.04 NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given: (i) on the date of service if served personally on the
party to whom notice is to be given, (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and telephonic
confirmation of receipt is obtained promptly after completion of transmission,
(iii) on the day after delivery to Federal Express or similar overnight courier
or the Express Mail service maintained by the United States Postal Service, or
(iv) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by registered or certified mail, postage prepaid and properly
addressed, to the party as follows:
If to Seller:
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Genesis Worldwide Inc.
2600 Kettering Tower
Dayton, Ohio 45402
Fax: (937) 910-9305
ATTENTION: Richard E. Clemens
With a copy to:
Thompson, Hine & Flory LLP
2000 Courthouse Plaza NE
P.O. Box 8801
Dayton, Ohio 45401-8801
ATTENTION: Joseph M. Rigot, Esq.
If to Buyer:
James F. Poole, Jr.
New Monarch Machine Tool, Inc.
100 East Washington Street, Suite 206
Syracuse, New York 13202
With a copy to:
Altman & Wolfson, LLP
100 East Washington Street
Syracuse, New York 13202
Or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
13.05 LAW GOVERNING. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
without regard to its conflict of law rules.
13.06 COUNTERPARTS. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
13.07 RESOLUTION OF DISPUTES.
(a) In the event a dispute between the parties arises
under the terms of this Agreement, either party may send to the other a
letter of dispute setting forth in particular the subject matter of the
dispute (the "Disputed Matter"). The parties shall meet at the offices
of Seller in Dayton, Ohio, or such other place as may be mutually
agreeable to them, not later than 20 days after the date of the receipt
of the letter of dispute for the purposes of negotiating a settlement
of the Disputed Matter.
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(b) In the event that either party determines, after
compliance with Section 13.07(a), that the Disputed Matter cannot be
resolved by the parties, the Disputed Matter shall be submitted to
binding arbitration before a panel of three arbitrators in Buffalo, New
York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association; provided, however, that (i) the
parties engage in prehearing discovery to the full extent provided in
the Federal Rules of Civil Procedure, and (ii) evidentiary rules
contained in the Federal Rules of Civil Procedure shall govern the
submission of evidence at the arbitration hearings. Judgment upon the
award by the arbitrators may be entered in any court having
jurisdiction thereof. As part of such award, the arbitrators may
establish their fees and expenses in connection therewith. The fees and
expenses of the arbitrators shall be apportioned between the parties by
the arbitrators in accordance with the findings and results of the
arbitration.
IN WITNESS WHEREOF, each of the parties hereto have caused this
Agreement to be executed by its respective officers thereunto duly authorized as
of the date first above written.
GENESIS WORLDWIDE INC.
By:
---------------------------------------
Name:
Title:
NEW MONARCH MACHINE TOOL, INC.
By:
---------------------------------------
Name:
Title:
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