SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report(Date of earliest event reported): December 7, 1998
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Berger Holdings, Ltd.
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(Exact Name of Registrant as Specified in Charter)
Pennsylvania 000-12362 23-2160077
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
805 Pennsylvania Boulevard, Feasterville, PA 19053
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(215) 355-1200
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Item 2. Acquisition of Assets.
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The Registrant acquired all of the assets (the "Assets") of Sheet Metal
Manufacturing Co., Inc., a Delaware corporation ("Sheet Metal"), pursuant to a
certain Asset Purchase Agreement (the "Agreement"), dated as of December 2,
1998, by and among the Registrant, Sheet Metal and Bund Capital Limited
Partnership, a Maryland limited partnership and the 95% shareholder of Sheet
Metal. Sheet Metal engages in the manufacture and sale to distributors of roof
drainage products. The Assets, which include primarily inventory and equipment
utilized in Sheet Metal's business, are being moved to the Registrant's existing
facilities. The Assets also include accounts receivable.
As consideration for the Assets, the Registrant paid to Sheet Metal
$3,650,000 in cash at closing. The Registrant also agreed to make quarterly
principal payments to Sheet Metal for a period of fifteen months aggregating
$1,477,910 (subject to certain post-closing adjustments), plus interest at a
floating annual rate equal to the prime rate as quoted by the Wall Street
Journal plus one percent. The book value of the Assets was approximately
$3,900,000.
The funds used by the Registrant in regard to the transactions
contemplated by the Agreement were obtained from working capital and its credit
facility with Summit Bank, N.A., the amount of which was increased to
$11,900,000 in connection with the acquisition of the Assets.
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Item 7. Financial Statements, Pro Formal Financial Information
and Exhibits.
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In accordance with Rule 3-05(b)(i) and Article 11 under Regulation S-X,
as referenced by Items 7(a) and 7(b) of Form 8-K, the Registrant is required to
furnish (i) the below-listed financial statements of Sheet Metal and (ii)
certain pro forma information with regard to the Registrant in filing this Form
8-K. Such financial statements and pro forma information will be filed as part
of an amendment to this Form 8-K as soon as practicable following the date of
filing hereof, but, in accordance with Item 7(a)(4) of Form 8-K, not later than
60 days after the date that the initial report on Form 8-K must be filed.
(i) The Balance Sheet of Sheet Metal (audited) at December 31,
1996 and December 31, 1997 and (unaudited) at
September 30, 1998; and
(ii) The Statement of Income and Statement of Cash Flow of Sheet Metal
(audited) for the years ended December 31, 1995, December 31, 1996
and December 31, 1997 and (unaudited) for the nine months ended
September 30, 1998.
The Registrant has furnished the exhibits enumerated on the included
Exhibit Index. In accordance with Item 601(b)(2) of Regulation S-K, the
schedules to the documents filed herewith as exhibits are not filed. Such
agreements contain, where applicable, lists of such schedules, a copy of any of
which the Registrant agrees to furnish supplementally to the Securities and
Exchange Commission upon request.
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Signatures
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERGER HOLDINGS, LTD.
Dated: December 22, 1998 By:/s/Joseph F. Weiderman
Joseph F. Weiderman
President
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Exhibit Index
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The following exhibits are filed as part of this Current Report on Form 8-K:
Exhibit
No. Item
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2.1 Asset Purchase Agreement, dated as of December 2,
1998, by and among the Registrant, Sheet Metal and
Bund Capital Limited Partnership.
2.2 Amendment to Amended and Restated Loan and
Security Agreement, dated as of December 7, 1998,
by and among Berger Financial Corp., a Delaware
corporation, Berger Bros Company, a Pennsylvania
corporation and Summit Bank, N.A.
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ASSET PURCHASE AGREEMENT
BY AND AMONG
BERGER HOLDINGS, LTD.,
SHEET METAL MANUFACTURING CO., INC.
AND
BUND CAPITAL LIMITED PARTNERSHIP
Dated as of December 2, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
ASSETS AND LIABILITIES 1
1.1 Assets to be Purchased 1
1.2 Assumption of Liabilities 2
ARTICLE II
PURCHASE PRICE; ADJUSTMENTS TO PURCHASE PRICE 2
2.1 Purchase Price 2
2.2 Adjustments to Purchase Price 3
2.3 Adjustments and Allocations 5
2.4 Application of Adjustment to the Purchase Price 5
2.5 Allocation of Purchase Price 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER 6
3.1 Corporate Status; Authority 6
3.2 Due Authorization; Validity of Agreement 6
3.3 Title to Assets; No Affiliates 6
3.4 Condition of Assets; Accounts Receivable 6
3.5 Conflicts; Consents of Third Parties. 7
3.6 Financial Statements 7
3.7 Intangible Property 7
3.8 Employee Benefits 8
3.9 Labor 8
3.10 Litigation 9
3.11 Compliance with Laws 9
3.12 Related Party Transactions9
3.13 Actions since October 31, 1998 10
3.14 Taxes 11
3.15 Material Contracts 12
3.16 Environmental Matters 12
3.17 No Misrepresentation 12
3.18 Brokers 13
3.19 Disclaimer of other Representations and Warranties 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER 13
4.1 Organization and Good Standing 13
4.2 Due Authorization; Validity of Agreement 13
4.3 Conflicts; Consents of Third Parties 14
4.4 Brokers 14
4.5 No Misrepresentation 14
ARTICLE V
CLOSING; DELIVERIES AT CLOSING 14
ARTICLE VI
CONDUCT OF BUSINESS PENDING CLOSING15
6.1 Conduct of the Business of Seller 15
6.2 Conduct of the Business of Buyer 16
ARTICLE VII
COVENANTS 16
7.1 Preservation of Records 16
7.2 Noncompetition Agreement 17
7.3 Financial Statements 17
7.4 Employees of Seller 18
7.5 Delivery of Assets; Other Arrangements 18
7.6 Satisfaction of Conditions19
7.7 Access 19
7.8 Customer Matters 19
7.9 Destruction of Certain Assets 19
7.10 Change of Corporate Name 20
7.11 Schedule 2.5 20
ARTICLE VIII
CONDITIONS TO CLOSING 20
8.1 Conditions to Each Party's Obligations 20
8.2 Conditions to Obligations of Buyer 20
8.3 Conditions to Obligations of Seller21
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, LIMITATION OF LIABILITY,
INDEMNIFICATION 21
9.1 Statements as Representations 22
9.2 Survival of Representations and Warranties 22
9.3 General Indemnity 22
9.4 Limitation of Liability 23
9.5 Interest on Indemnification Obligations 23
9.6 Indemnification Procedure 23
9.7 Remedies Exclusive 25
ARTICLE X
MISCELLANEOUS 25
10.1 Certain Definitions 25
10.2 Confidentiality; Non-Disparagement 29
10.3 Expenses 29
10.4 Termination 29
10.5 Further Assurances 29
10.6 Arbitration 30
10.7 Entire Agreement; Amendments and Waivers. 30
10.8 Governing Law 30
10.9 Bulk Transfer Laws 30
10.10 Table of Contents and Headings 31
10.11 Notices 31
10.12 Binding Nature of Agreement; Assignment 32
10.13 Severability 32
10.14 Counterparts 32
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SCHEDULES AND EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Subordinated Note
Schedule 1.1(a) - Equipment
Schedule 1.1(b) - Equipment Leases
Schedule 1.1(f) - Intellectual Property
Schedule 2.2(a)(ii) - Selected Inventory Valuations by Buyer
Schedule 2.5 - Allocation of Purchase Price
Schedule 3.4(a)(1) - Equipment not in Good Operating Order
Schedule 3.4(a)(2) - Other Equipment
Schedule 3.5 - Consents
Schedule 3.6(a) - Audited Financial Statements
Schedule 3.6(b) - Unaudited Financial Statements
Schedule 3.7 - Intangible Property
Schedule 3.8 - Employee Benefits
Schedule 3.9(a) - Labor
Schedule 3.9(b) - Certain Employees
Schedule 3.10 - Litigation
Schedule 3.12 - Related Party Transactions
Schedule 3.13 - Actions Since October 31, 1998
Schedule 3.15 - Material Contracts
Schedule 3.16 - Environmental Matters
Schedule 4.3 - Consents
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of December 2, 1998
(the "Agreement"), by and among Berger Holdings, Ltd., a Pennsylvania
corporation ("Buyer"), Sheet Metal Manufacturing Co., Inc., a Delaware
corporation ("Seller") and Bund Capital Limited Partnership ("Bund"), a Maryland
limited partnership (solely with respect to Sections 7.2 and 9.3 of this
Agreement).
W I T N E S S E T H:
WHEREAS, Seller is currently engaged in the manufacturing and
sale to distributers of roof drainage products (the "Business"); and
WHEREAS, Buyer desires to purchase, and Seller desires to
sell, the Assets (as defined below) on the terms set forth below.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties hereby agree
as follows:
ARTICLE I
ASSETS AND LIABILITIES
1.1 Assets to be Purchased. On the Closing Date (as hereinafter defined)
and subject to the terms and conditions contained in this Agreement, Seller
shall sell, transfer, assign and deliver to Buyer, and Buyer shall purchase,
assume and accept from Seller, free and clear of all liens and encumbrances, all
right, title and interest in and to the following assets owned by Seller (the
"Assets"):
(a) all of the equipment, machinery, racking and trucks owned by Seller
listed on Schedule 1.1(a) hereto (collectively, the "Equipment");
(b) the leases for equipment, machinery, racking and trucks leased by
Seller listed on Schedule 1.1(b) hereto (the "Equipment Leases");
(c) all Seller's inventory held for resale and all of Seller's raw
material, work in process, finished products, wrapping, supply and packaging
items and similar items, all related to the Business, excluding broken or
damaged goods, Excluded Inventory and Old Inventory (both as defined in Section
2.2 below) (collectively, the "Inventory");
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(d) all Seller's trade accounts receivable, including the Old Receivables
(as defined in Article X below) (the "Receivables");
(e) all sales information related to the Business, sorted by customer, for
all periods subsequent to January 1, 1996 and (except as they may be destroyed
by Seller or retained by Seller solely for its own use) all computer data bases
related to the Business; and
(f) all trademarks, service marks, trade names, logos and other
intellectual property of Seller related to the Business, including without
limitation Seller's interest, if any, in the name "Sheet Metal" and any
variations thereof, all of Seller's know-how and trade secrets, and those items
set forth on Schedule 1.1(f) hereto;
1.2 Assumption of Liabilities. Except for liabilities under the Equipment
Leases accruing, arising out of or relating to events occurring after the
Closing Date, Buyer shall not assume and shall in no event be liable for any
debts, liabilities or obligations of Seller (hereinafter referred to as the
"Seller Liabilities"), whether fixed or contingent, known or unknown, liquidated
or unliquidated, secured or unsecured, or otherwise and regardless of when they
arose or arise, including, but not limited to, (i) all liabilities attributable
to any Employee Benefit Plans of Seller or otherwise arising out of any
employment relationships between Seller (or any Affiliate of Seller) and any
employees of Seller (or any Affiliate of Seller) and (ii) any environmental
liabilities or obligations.
ARTICLE II
PURCHASE PRICE; ADJUSTMENTS TO PURCHASE PRICE
2.1 Purchase Price. The aggregate consideration (the "Purchase Price") paid
or payable to (i) Seller by Buyer in exchange for the sale, transfer, assignment
and delivery of the Assets, subject to adjustments pursuant to Section 2.2, and
in consideration of its agreement pursuant to Section 7.2 hereof, and (ii) Bund,
in consideration of its agreement pursuant to Section 7.2 hereof, shall consist
of the following:
(a) Upon the execution of this Agreement, cash in the amount of Two Hundred
Fifty Thousand Dollars ($250,000) (the "Deposit"), to be delivered by wire
transfer of immediately available funds to an interest-bearing escrow account
maintained by First Union National Bank in accordance with the terms of the
Escrow Agreement attached as Exhibit A hereto. If the Closing contemplated by
this Agreement does not occur for any reason other than (i) the breach of this
Agreement by Seller or (ii) the failure to be satisfied of any of the conditions
set forth in Section 8.2(a)-(f) hereof, Seller shall retain the Deposit,
together with all interest thereon, as liquidated damages. If Closing does not
occur for such enumerated reasons, Buyer shall recover the entire Deposit,
together with all interest thereon. If the Closing hereunder occurs, the Deposit
and the interest thereon shall be paid to Seller and applied against the
Purchase Price.
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(b) On the Closing Date, cash (the "Cash") in the amount of Three Million
Six Hundred Fifty Thousand Dollars ($3,650,000), minus the amount of the
Deposit, together with all interest thereon, to be delivered by wire transfer of
immediately available funds to an account designated by Seller; and (c) On the
Closing Date, the promissory note of Berger Bros Company, in the original
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000), in
the form attached hereto as Exhibit B (the "Note"). Three Hundred Thousand
Dollars ($300,000) of the principal amount of the Note shall be paid on each of
March 1, 1999, June 1, 1999, September 1, 1999, December 1, 1999 and March 1,
2000. Interest at the floating Prime Rate plus one percent (1%) on the
outstanding principal balance of the Note shall be paid in arrears as set forth
in the Note.
2.2 Adjustments to Purchase Price
(a) Inventory Valuation.
(i) The value of the Inventory as of the Closing (the "Inventory Value")
shall be determined in accordance with this Section 2.2(a). If the Inventory
Value exceeds One Million Eight Hundred and Fifty-Five Thousand Dollars
($1,855,000), then the Purchase Price shall be increased, by the amount of such
excess, by an increase in the principal amount of the Note as set forth in
Section 2.4. If the Inventory Value is less than One Million Eight Hundred and
Fifty-Five Thousand Dollars ($1,855,000), then the Purchase Price shall be
decreased, by the amount of such difference, by a decrease in the principal
amount of the Note as set forth in Section 2.4. The Inventory Value shall equal
the sum of Seller's vendor cost for each item of Inventory (which, as to
non-finished goods shall include, without limitation, all freight and other
vendor charges and, as to finished goods, shall include, without limitation, all
freight and other vendor charges and a reasonable allocation for the cost of
labor and overhead) calculated on a "first-in, first-out" basis, as adjusted
pursuant to the following sentence (the "Inventory Cost"). The Inventory Cost of
each item of Inventory shall be adjusted as follows: (A) Inventory acquired by
Seller less than 12 months prior to the Closing Date shall be valued at 100% of
the Inventory Cost; (B) Inventory acquired by Seller more than 12 months and
less than 24 months prior to the Closing Date shall be valued at 50% of the
Inventory Cost; and (C) the Inventory Cost of Inventory acquired by Seller more
than 24 months prior to the Closing Date (the
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"Old Inventory") shall be deemed to be zero. In no event shall the Inventory
Value exceed One Million Nine Hundred Thousand Dollars ($1,900,000).
(i) If Buyer demonstrates a fair market value for any item of Inventory
(utilizing, for this purpose, Seller's purchasing volume with respect to such
item) that is lower than the Inventory Cost of such item as determined in
accordance with Section 2.2(a)(i), then such fair market value shall be deemed
to be the Inventory Cost of such item for purposes of determining the Inventory
Value. Buyer shall notify Seller regarding its determination of the fair market
value of Inventory in accordance with Section 2.3; provided, that Buyer will
notify Seller of its valuation of the items of Inventory listed on Schedule
2.2(a)(ii) three (3) Business Days prior to Closing.
(i) Seller may, at its option, retain any Inventory, in which event such
Inventory shall be excluded from the calculation of Inventory Value
(collectively, the "Excluded Inventory").
(i) Buyer and Seller shall attempt to agree on the Inventory Value prior to
Closing. If they are not able to so agree, the Inventory Value, for purposes of
Closing, shall be calculated in accordance with Section 2.3.
(b) Accounts Receivable Valuation.
(i) The Purchase Price shall be decreased, on a dollar-for-dollar basis, in
accordance with Section 2.4 hereof, for each dollar that the Current Receivables
(as defined in Article IX below) as of the Closing Date (the "Closing
Receivables Amount") is less than One Million Eight Hundred Nineteen Thousand
Dollars ($1,819,000). The Purchase Price shall be further decreased, on a
dollar-for-dollar basis, in accordance with Section 2.4 hereof, for each dollar
that the aggregate amount collected with respect to the Receivables by nine
months after Closing (the "Collection Period") is less than the Closing
Receivables Amount. In the event that the amount of Receivables collected during
the Collection Period exceeds the Closing Receivables Amount, Buyer shall pay
such excess to Seller promptly after the end of the Collection Period. For nine
months after Closing, Buyer will use its best commercially reasonable efforts to
collect the Receivables, provided that Buyer will not be required to commence
litigation with respect to the Receivables or to refer the Receivables to a
third party for collection. During the Collection Period, Buyer shall provide
Seller with a monthly statement of outstanding balances of collected
Receivables, which statement shall also reflect sales to and collections from
customers of Seller. Seller shall be
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entitled to all Receivables to the extent that a reduction in Purchase Price is
effected pursuant to this subsection. Seller shall also be entitled at any time
to the return of any Receivable specified by Seller to Buyer whereupon the
Purchase Price will be reduced accordingly in accordance with Section 2.4
hereof. Until three months after the earlier of (i) the end of the Collection
Period or (ii) such time as Buyer collects an amount with respect to the
Receivables equal to the Closing Receivables Amount, Seller shall also be
entitled to reasonable access to Buyer's books to verify calculations pursuant
to this Section 2.2.
(ii) Cash received by Buyer with respect to Receivables from customers of
Seller shall be applied to the Receivables in the following manner:
(A) All or any portion of any payment from a customer to which Buyer had at
least Two Thousand Five Hundred Dollars ($2,500) in sales during the twelve
months prior to the Closing Date, which payment identifies a specific invoice
number of Seller or a specific invoice number (dated prior to the Closing Date)
of Buyer, shall be applied in the manner directed by such customer.
(B) All or any portion of any payment from a customer to which Buyer had at
least Two Thousand Five Hundred Dollars ($2,500) in sales during the twelve
months prior to the Closing Date, which payment does not identify a specific
invoice number of Seller or Buyer, or does identify a specific invoice number
(dated after the Closing Date) of Buyer, shall be applied against the
Receivables from such customer (in chronological order beginning with the
Receivable with the earliest invoice date) until the total amount of the
Receivables from such customer has been reduced to zero.
(C) Any payment from a customer to which Buyer had less than Two Thousand
Five Hundred Dollars ($2,500) in sales during the twelve months prior to the
Closing Date, notwithstanding any specific notation by such customer as to
invoice number, shall be applied against the Receivables from such customer (in
chronological order beginning with the Receivable with the earliest invoice
date) until the total amount of the Receivables from such customer has been
reduced to zero.
Provided, however, that the application of clauses (A), (B) and (C) of this
Section 2.2(b)(ii) shall not operate to reduce a Receivable to the extent (but
only to the extent) that the customer making the payment in question has
identified a bona fide dispute with respect to the payment of such Receivable.
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2.3 Adjustments and Allocations. In the event that agreement is not reached
on the Inventory Value prior to Closing, Seller's reasonable estimate made in
accordance with Section 2.2 hereof shall be utilized for purposes of Closing.
Management representatives from Buyer and Seller shall monitor the loading of
Inventory in accordance with Section 7.5. During such process, Buyer's
representatives shall notify Seller's representatives if Buyer disagrees with
the Inventory Cost of any item of Inventory; provided, that such disagreement
may be based only on (i) the Inventory Cost, (ii) the age or (iii) the condition
of such item of Inventory. Thereafter, the representatives of Buyer and Seller
shall attempt to resolve any dispute as to such Inventory Cost. If they cannot
agree as to such value, Buyer shall not be obligated to load such item of
Inventory. Only the Inventory Cost of items actually loaded, or rejected
pursuant to Section 7.5(d), shall be included in the final calculation of
Inventory Value. The Purchase Price shall be increased or decreased, as
appropriate, by the amount by which the Inventory Value determined pursuant to
this Section 2.3 exceeds or is less than, as the case may be, Seller's estimate
of the Inventory Value made in accordance with Section 2.2 hereof. The loading
of any item of Inventory shall constitute Buyer's confirmation, as between Buyer
and Seller, that such item is in good and saleable condition in the ordinary
course of business within the meaning of Section 3.4.
2.4 Application of Adjustment to the Purchase Price. Any increase or
decrease to the Purchase Price pursuant to this Article II shall be accomplished
by an increase or decrease, as appropriate, in the original principal amount of
the Note. Any decrease to the Purchase Price pursuant to this Article II shall
be accomplished by a decrease in the principal amount of the Note (which shall
reduce the amounts of the remaining principal payments under the Note on a pro
rata basis) and then, if necessary, by decreasing the Cash to be delivered at
Closing (or, if necessary, by repayment by Seller of Cash delivered at Closing).
Any increase to the Purchase Price pursuant to this Article II shall be
accomplished by an increase in the principal amount of the Note (which shall
increase the amounts of the remaining principal payments under the Note on a pro
rata basis).
2.5 Allocation of Purchase Price. The Purchase Price shall be allocated for
all applicable tax and accounting purposes, including without limitation filings
required under Section 1060 of the Internal Revenue Code of 1986, as amended,
and all regulations thereunder, as set forth on Schedule 2.5 hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer, subject to any exceptions
listed on Schedule 3 hereto, which exceptions specifically reference or
cross-reference the applicable sections of this Article III, as follows:
3.1 Corporate Status; Authority. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on
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its business as now conducted. Seller has the full power and authority to
execute and deliver this Agreement and any and all other documents or
instruments to be executed and/or delivered by Seller in connection herewith
(collectively, the "Seller Purchase Documents") and to perform its obligations
hereunder and thereunder.
3.2 Due Authorization; Validity of Agreement. The execution, delivery and
performance of this Agreement and the Seller Purchase Documents by Seller has
been duly authorized and approved by all necessary corporate action on the part
of Seller. This Agreement has been duly executed and delivered by Seller and,
assuming the due execution and delivery of this Agreement by Buyer, constitutes
the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as such enforceability may be limited by the
effect of bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity). Assuming due execution and
delivery by Buyer, the Seller Purchase Documents will constitute the valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms.
3.3 Title to Assets; No Affliates. Seller has good and marketable title to
all the Assets, which at the time of Closing will be free and clear of all
Liens. None of the Assets is held by Seller on consignment. No Affiliate of
Seller is engaged in the Business or owns assets used in the Business.
3.4 Condition of Assets; Accounts Receivable.
(a) The Inventory is in good condition and saleable in the ordinary course
of business. Except as set forth on Schedule 3.4(a)(1), the Equipment is in good
operating order, normal wear and tear excepted. Except for the Equipment, the
equipment subject to the Equipment Leases and as set forth on Schedule 3.4(a)(2)
(which, as to each material item of Equipment listed thereon, contains a
description of the party that received such item upon disposal thereof by
Seller), no equipment, machinery, racking or trucks (other than items the
original cost of which would not exceed Ten Thousand Dollars ($10,000)
individually or Forty Thousand Dollars ($40,000) in the aggregate) have been
used in the Business by Seller since January 1, 1996.
(b) As of November 18, 1998, the aggregate face amount of the trade
accounts receivable of Seller the invoice date of which was greater than sixty
(60) and less than ninety (90) days prior to such date was not more than Seventy
Thousand Dollars ($70,000), and the face amount of the trade accounts receivable
of Seller the invoice date of which was greater than ninety (90) days prior to
such date was not more than Forty Thousand Dollars ($40,000).
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3.5 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 3.5 hereto, the execution and delivery
by Seller of this Agreement and of the Seller Purchase Documents, the
consummation by Seller of the transactions contemplated hereby and thereby and
compliance by Seller with any of the provisions hereof or thereof will not (i)
conflict with, or result in the breach of, any provision of the certificate of
incorporation or by-laws of Seller, (ii) conflict with, violate, result in the
breach or termination of, constitute a default under, or give rise to any right
of acceleration under, any Contract to which Seller is a party or by which
Seller or any of its properties or assets is bound or (iii) violate any Law or
Order of any Governmental Body by which Seller is bound.
(b) Except as set forth on Schedule 3.5, no waiver, Order or Permit of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Seller in connection with the execution and delivery
of this Agreement or the Seller Purchase Documents or the compliance by Seller
with any of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby.
3.6 Financial Statements. Seller has delivered to Buyer audited financial
statements of Seller at December 31, 1997 and for the year then ended, which
audited financial statements are attached hereto as Schedule 3.6(a). Seller has
delivered to Buyer unaudited financial statements as of October 31, 1998 and for
the ten months then ended, which unaudited financial statements are attached
hereto as Schedule 3.6(b). The information set forth on Schedule 3.6(b)
regarding the sales of Seller by customer and by product or metal mix is true
and correct in all material respects, subject to adjustments that would not, in
the aggregate, have a Material Adverse Effect.
3.7 Intangible Property. Schedule 3.7 hereto contains a complete and
correct list of each material trademark, trade name, logo, service mark,
copyright, patent, pending patent application, shopright, item of know-how,
trade secret, computer program and item of computer software and the like and
other items commonly known as intellectual property (collectively, the
"Intellectual Property") owned or used by Seller in the operation of the
Business, including without limitation the name "Sheet Metal," which is the only
name used by Seller in the operation of the Business, as well as all
registrations thereof and pending applications therefor, and each license or
other agreement relating thereto. Except as set forth on Schedule 3.7, each of
the foregoing is owned by the party shown on such schedule as owning the same,
free and clear of all Liens and is in good standing and does not conflict with
the rights of any other Person. To the Knowledge of Seller, there have been no
claims made and Seller has not received any notice that any of the foregoing is
invalid or conflicts with the asserted rights of others. Seller is not under any
obligation to pay any royalties or similar payments. In the last ten (10) years,
Seller has not done business at any address other than the addresses listed on
Schedule 3.7.
3.8 Employee Benefits.
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(a) The transactions contemplated by this Agreement will not result in any
liability of Buyer or any officer, director, employee, agent or Affiliate of
Buyer under any employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or under
any other non-cash compensation arrangement, any deferred compensation plan or
arrangement, any profit sharing plan, any stock option plan, any employee
perquisites required to be continued or under which payments are required to be
made in the future, any severance pay plans, practices or policies, any vacation
plans, practices or policies, any nonqualified supplementary executive
retirement plans or arrangements, any termination or parachute contracts, any
rabbi trusts or secular trusts, or other plan, program, agreement or arrangement
which provides any benefits to current or former employees of Seller with
respect to which Seller currently contributes or has any liabilities or
obligations (collectively, "Employee Benefit Plans").
(b) Except as set forth on Schedule 3.8 hereto, none of the Employee
Benefit Plans constitutes a multiple employer plan as defined in Section 4063
and 4064 of ERISA, (ii) a multiemployer plan (as defined in Section 4001(a)(3)
of ERISA) or (iii) a "benefit plan," within the meaning of Section 5000(b)(l) of
the Code providing continuing benefits after the termination of employment
(other than as required by Section 4980B of the Code or Part 6 of Title I of
ERISA and at the former employee's or his or her beneficiary's sole expense).
(c) No provision of this Agreement shall create any third-party beneficiary
rights in any employee and former employee (including any beneficiary or
dependent thereof) of Seller in respect of continued employment (or resumed
employment), and no provision hereof shall create any such third-party
beneficiary rights in any such Person in respect of any benefits that may be
provided, directly or indirectly, under any employee benefit plan or
arrangement, including the currently existing Employee Benefit Plans.
(d) For all purposes of this Section 3.8, "Seller" shall have the meaning
set forth in the Recitals hereto and also include any trade or business (whether
or not incorporated) under common contract with Seller within the meaning of
Sections 414(b), (c), (m) or (o) of the Code.
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3.9 Labor.
(a) Except as set forth on Schedule 3.9(a), (i) Seller is in material
compliance with all applicable, federal, state, local and foreign laws and
regulations respecting employment and employment practices, labor relations,
terms and conditions of employment and wages and hours; (ii) there is no unfair
labor practice complaint or charge against Seller threatened or pending before
the National Labor Relations Board or any comparable state, local or foreign
agency or other Governmental Entity; (iii) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the Knowledge of Seller, threatened
against or involving Seller; (iv) no representation question exists respecting
the employees of Seller; (v) no grievance which will have a Material Adverse
Effect is pending and no claim therefor has been asserted; (vi) Seller is not a
party to any collective bargaining agreement; (vii) Seller shall be responsible
for any notifications required by federal, state and local WARN Acts as a result
of this transaction; (viii) since January 1, 1997, neither Seller nor any
Affiliate of Seller has received notice by charge, complaint, citation, claim or
grievance that it has violated or is alleged to have violated federal, state or
local laws or regulations or common law concerning the health and safety of
Seller Personnel, unlawful discrimination in employment, unlawful employment
practices, wages and hours, terms or conditions of employment or any other
employment-related law, regulation or common law, with respect to any Seller
Personnel or any applicant for a position as Seller Personnel; and (ix) no claim
is pending which alleges Seller or any Affiliate of Seller has violated federal,
state or local laws or regulations or common law concerning the health and
safety of Seller Personnel, unlawful discrimination in employment, unlawful
employment practices, wages and hours, terms or conditions of employment or any
other employment-related law, regulation or common law, with respect to any
Seller Personnel or any applicant for a position as Seller Personnel.
(b) To the Knowledge of Seller, no present or former employee of Seller
(other than the persons listed on Schedule 3.9(b)) is presently engaged or has
threatened to engage in competition with the Business.
3.10 Litigation. Except as set forth on Schedule 3.10, there is no suit,
action, charge, proceeding, investigation, claim or order pending or, to the
Knowledge of Seller, threatened, against Seller (or, to the Knowledge of Seller,
pending or threatened against any of the officers, directors or key employees of
Seller with respect to their business activities on behalf of Seller), or to
which Seller is otherwise a party, before any court, or before any Governmental
Body.
3.11 Compliance with Laws. Seller possesses all material Permits of and
from all Governmental Bodies necessary to own or lease its respective properties
and assets and to conduct the Business. No proceeding has been threatened or
commenced that seeks to, or could reasonably be anticipated to, cause the
suspension, modification, revocation or withdrawal of any Permit, the
suspension, modification, revocation or withdrawal of which would be reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
Seller is currently,
<PAGE>
and at all times has been, in material compliance with all Laws applicable to
it, except for such lack of compliance which would not be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect. Seller has
not received any written or oral communication alleging that Seller or the
operations thereof may be in violation of any Law or any Permit, or may have any
liability under any Law, which violation or liability would be reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect.
3.12 Related Party Transactions. Except as set forth in Schedule 3.12, none
of Seller or any of its officers, employees or Affiliates (i) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is (A) a
competitor, supplier, customer, landlord, tenant, creditor or debtor of Seller,
(B) engaged in a business related to the Business or (C) a participant in any
transaction related to the Business to which Seller is a party or (ii) is a
party to any Contract or transaction with Seller. Since January 1, 1996, Seller
has not transferred any equipment or other assets, the original cost of which
(other than as to dies) did not exceed Five Thousand Dollars ($5,000)
individually or Fifteen Thousand Dollars ($15,000) in the aggregate, to any
employee of Seller or any of Seller's Affiliates, and has not assisted any such
employee or Affiliate in establishing a business that might compete in any
manner with the Business.
3.13 Actions since October 31, 1998. Except as shown on Schedule 3.13, or
as contemplated by this Agreement, since October 31, 1998, there has not been,
with respect to Seller, any:
(a) Material Adverse Effect with respect to the Assets or the Business;
(b) termination or amendment of, or a failure in any material respect to
perform obligations or the occurrence of any default under, any contract, lease,
agreement or license that has had or could reasonably be expected to have a
Material Adverse Effect;
(c) failure to maintain in full force and effect substantially the
same level and types of insurance coverage, or destruction, damage to, or
loss of any asset of Seller (whether or not covered by insurance) that has
had or could have a Material Adverse Effect;
(d) change in accounting or business principles, methods or practices
(including, without limitation, changes in (i) inventory, equipment or
supply cost systems or (ii) practices or time periods for billing
customers);
(e) except as otherwise contemplated by this Agreement, sale,
assignment, or transfer of any tangible or intangible asset, including any
rights to Intellectual Property, except in the ordinary course of business
and consistent with past practice;
(f) waiver or release of any material right or claim related to the
Business, except for cancellations, waivers and releases in the ordinary
course of business and
<PAGE>
consistent with past practice which do not exceed Two Thousand Five Hundred
Dollars ($2,500) individually or Twenty-Five Thousand Dollars ($25,000) in the
aggregate;
(g) disposition of or lapse, which such disposition or lapse could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, of any patent, trademark, trade name or copyright
or any application for the foregoing or any license, permit or
authorization to use any of the foregoing;
(h) revaluation of any assets of Seller;
(i) amendment or termination of any material Contract to which Seller
is a party, or Permit related to the Business;
(j) subjecting to Liens of any asset of Seller related to the
Business, other than pursuant to financing arrangements existing
immediately prior to October 31, 1998;
(k) return of previously ordered equipment or supplies to the
manufacturer or suppliers thereof, except in the ordinary course of
business and consistent with past practice;
(l) transfer, sale or other disposition of any Asset from Seller
without full consideration being paid, including, without limitation, by
dividend or other distribution; or
(m) agreement or understanding to take any of the actions described
above in this Section 3.13.
3.14 Taxes.
(a) "Taxes" shall mean any tax (whether income, excise, customs, sales
or use, value added, ad valorem, real or personal property, license,
transfer, employment, social security or any other kind of tax or
contribution no matter how denominated), or any assessment, levy, impost,
withholding, or other governmental charge in the nature of a tax, and shall
include all additions to tax, interest, penalties and fines with respect
thereto; and "Tax Returns" shall mean all reports, estimates, information
statements and returns of any nature, including amended versions of any of
the foregoing, relating to or required to be filed in connection with any
Taxes pursuant to the statutes or regulations of any federal, state, local
or foreign government taxing authority.
(b) Seller has filed all Tax Returns that are required to be filed on
or before the date hereof. All such returns are true, correct and complete
in all material respects. All Taxes for which Seller is or will be liable
and that are due on or before the date hereof (including, without
limitation, Taxes shown to be due on all Tax Returns filed on or before the
date hereof) have been paid, and all Taxes which are required to be
withheld or collected by Seller have been duly withheld and collected and,
to the extent required, have been paid to the appropriate governmental
authority or properly deposited as required by applicable law.
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(c) Seller has not been audited by any taxing authority in the last
five years or been notified of, and to the Knowledge of Seller there has
not been, any attempt or threat to audit Seller with respect to any Taxes
relating to the Business.
(d) Seller is not obligated to file any Tax Returns in any country
other than the United States.
(e) There are no Tax Returns which Seller is currently required to
file with respect to any period that includes any day prior to Closing and
any day after Closing.
3.15 Material Contracts. Schedule 3.15 sets forth all Contracts
relating to the Business between Seller and any customer or supplier which
obligate any party thereto, by their terms, to make payments or accept
liability in an aggregate amount greater than One Hundred Thousand Dollars
($100,000). There have been made available to Buyer true and complete
copies of each of such Contracts.
3.16 Environmental Matters.
(a) Except as set forth on Schedule 3.16, Part I, Seller is, and all
Operating Facilities (including all owners or operators thereof) are, in
material compliance with the Environmental Laws. Except as set forth in
Schedule 3.16, Part II, to the Knowledge of the Seller, Seller has not
received any communication (written or oral) or knows of any pending or
threatened communication that alleges that Seller or any Operating Facility
(including, with respect to any Operating Facility, all owners or operators
thereof) is not in such compliance. To the Knowledge of Seller, all permits
and licenses held on the date hereof by Seller pursuant to Environmental
Laws are identified in Schedule 3.16, Part III. To the Knowledge of Seller,
all Materials of Environmental Concern have been properly disposed of in
accordance with the Environmental Laws.
(b) Except as set forth in Schedule 3.16, Part IV, there is no
Environmental Claim pending against Seller or any Operating Facility or, to
the Knowledge of the Seller, threatened against Seller or any Operating
Facility, or threatened or pending against any Person whose liability for
any Environmental Claim Seller has or may have retained or assumed either
contractually or by operation of law.
(c) Except as set forth on Schedule 3.16, Part V, there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release or threatened
release, emission, discharge, disposal or presence of any Materials of
Environmental Concern, that, to the Knowledge of Seller, forms the basis of
any Environmental Claim or allegation of material noncompliance with any
Environmental Law against Seller, any Operating Facility or any Person
whose liability for any Environmental Claim Seller has or may have retained
or assumed either contractually or by operation of law.
<PAGE>
(d) Without in any way limiting the generality of the foregoing, to
the Knowledge of Seller, (i) all underground storage tanks, if any, and the
capacity and contents of such tanks, if any, currently or formerly located
on property owned or leased by Seller are identified on Schedule 3.16, Part
VI, (ii) except as set forth on Schedule 3.16, Part VII, there is no
asbestos or presumed asbestos contained in or forming a part of any
building or structure owned or leased by Seller, (iii) except as set forth
on Schedule 3.16, Part VIII, no polychlorinated biphenyls (PCBs) are
present at any property owned or leased by Seller and (iv) all property now
or previously owned or leased by Seller is identified on Schedule 3.16,
Part IX.
3.17 No Misrepresentation. No representation or warranty of Seller
contained in this Agreement or in any exhibit or schedule hereto or in any
certificate or other agreement or instrument furnished by Seller to Buyer
pursuant to the terms hereof contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
3.18 Brokers. No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Seller in connection with the
transactions contemplated by this Agreement and no Person is entitled to
any fee or commission or like payment from Buyer in respect thereof.
3.19 Disclaimer of other Representations and Warranties. Except as set
forth in this Article III, Seller makes no representation or warranty,
express or implied, at law or in equity, in respect of any of its assets
(including, without limitation, the Assets), liabilities or operations,
including without limitation, with respect to merchantability or fitness
for any particular purpose, and any such representations or warranties are
hereby expressly disclaimed. Buyer hereby acknowledges and agrees that,
except to the extent expressly set forth in this Article III, Buyer is
purchasing the Assets on an "as-is, where-is" basis.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and has all requisite corporate power and
authority to own, lease and operate its properties and to carry out its
business as now conducted. Buyer has the full power and authority to
execute and deliver this Agreement and any and all other documents or
instruments to be executed and/or delivered by Buyer in connection herewith
(collectively, the "Buyer Purchase Documents") and to perform its
obligations hereunder and thereunder.
4.2 Due Authorization; Validity of Agreement. The execution, delivery
and performance of this Agreement and any and all other documents or
instruments to be executed
<PAGE>
and/or delivered by Buyer in connection herewith (collectively, the "Buyer
Purchase Documents") have been duly authorized and approved by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and, assuming the due execution and delivery of this
Agreement by Seller, constitutes the valid and binding obligation of Buyer,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by the effect of bankruptcy, insolvency or similar
laws affecting creditors' rights generally or by general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity). Assuming due execution and delivery by Seller, the Buyer Purchase
Documents will constitute the valid and binding obligations of Buyer,
enforceable against it in accordance with their respective terms.
4.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 4.3 hereto, none of the execution
and delivery by Buyer of this Agreement and of the Buyer Purchase
Documents, the consummation by Buyer of the transactions contemplated
hereby and thereby or compliance by Buyer with any of the provisions hereof
or thereof will (i) conflict with, or result in the breach of, any
provision of the certificate of incorporation or by-laws of Buyer, (ii)
conflict with, violate, result in the breach or termination of, constitute
a default under, or give rise to any right of acceleration under, any
Contract to which Buyer is a party or by which Buyer or its properties or
assets is bound or (iii) violate any Law or Order of any Governmental Body
by which Buyer is bound.
(b) Except as set forth on Schedule 4.3, no waiver, Order or Permit
of, or declaration or filing with, or notification to, any Person or
Governmental Body is required on the part of Buyer in connection with the
execution and delivery of this Agreement or the Buyer Purchase Documents or
the compliance by Buyer with any of the provisions hereof or thereof, or
the consummation of the transactions contemplated hereby or thereby.
4.4 Brokers. No Person has acted, directly or indirectly, as a broker,
finder or financial advisor for Buyer in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment from Seller in respect thereof.
4.5 No Misrepresentation. No representation or warranty of Buyer
contained in this Agreement or in any exhibit or schedule hereto or in any
certificate or other agreement or instrument furnished by Buyer to Seller
pursuant to the terms hereof contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
<PAGE>
ARTICLE V
CLOSING; DELIVERIES AT CLOSING
(a) Closing Date. The Closing of the transaction provided for in this
Agreement (herein sometimes called the "Closing") shall take place at 10:00
a.m. on December 7, 1998, at the offices of Wolf, Block, Schorr and
Solis-Cohen LLP, Twelfth Floor Packard Building, 111 South 15th Street,
Philadelphia, PA, or such other place and time as shall be agreed to
between the parties hereto; provided, however, that if, on December 7,
1998, any of the conditions to Closing specified in Article VIII hereof has
not been satisfied or waived, either party shall have the right to delay
the time of Closing until such condition is satisfied or waived, subject to
the parties' right to terminate this Agreement pursuant to Section 10.4.
The date and time of Closing is sometimes herein called the "Closing Date."
(b) Deliveries by Seller at Closing. At Closing, Seller will deliver
or cause to be delivered to Buyer the following: (i) copies of the minutes
of the Board of Directors and shareholders of Seller authorizing the
execution and performance of this Agreement and all ancillary agreements,
certified by the Secretary of Seller; (ii) a bill of sale and general
assignment and other applicable transfer instruments transferring to Buyer
good title to all of the Assets; (iii) a certificate, dated the Closing
Date, executed by the President and Secretary of Seller, to the effect that
the conditions set forth in Sections 8.2(a) through 8.2(f) hereof have been
satisfied; and (iv) all such further documents, instruments and agreements
which may be reasonably requested by Buyer or its counsel in order to more
effectively transfer title to the Assets to Buyer, or to effectuate and
carry out any provision of this Agreement.
(c) Deliveries by Buyer at Closing. At the Closing, Buyer will deliver
or cause to be delivered to Seller the following: (i) the Cash; (ii) the
Note; (iii) a certificate of the Secretary of Buyer, dated the Closing
Date, certifying that all necessary action has been taken to authorize the
consummation by Buyer of the transactions contemplated by this Agreement
and the Buyer Purchase Documents; (iv) copies of the minutes of the
respective Boards of Directors of Buyer and Berger Bros Company authorizing
the execution and performance of this Agreement and all ancillary
agreements, certified by the Secretary of Buyer or Berger Bros Company, as
the case may be; (v) a certificate, dated the Closing Date, executed by an
authorized officer of Buyer, to the effect that the conditions set forth in
Sections 8.3(a) and 8.3(b) hereof have been satisfied; and (vi) all such
further documents, instruments and agreements which may be reasonably
requested by Seller or its counsel in order to effectuate and carry out the
provisions of this Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING CLOSING
6.1 Conduct of the Business of Seller. Between the date hereof and the
Closing hereunder Seller will:
<PAGE>
(a) Use its reasonable efforts not to cause any of the representations
or warranties of Seller herein contained to be untrue as of Closing;
(b) Operate the Business in the ordinary course of business,
consistent with past practice;
(c) Not enter into any Contract relating to the Business with any
party, other than Contracts for the sale of merchandise and Contracts for
the purchase of materials and supplies in the ordinary and usual course of
business, and not amend, modify or terminate any Contracts relating to the
Business without the prior written consent of Buyer;
(d) Use its best efforts to preserve Seller's relationships with its
customers and suppliers;
(e) Not reveal, orally or in writing, to any party, other than Buyer
and Buyer's authorized agents, any of the business procedures and practices
followed by Seller in the conduct of the Business, or any technology used
in the processing, evaluation or manufacture of any of the products of the
Business;
(f) Maintain in full force and effect all of the insurance policies
relating to the Business as in effect immediately prior to the date of this
Agreement and make no change in any insurance coverage without the prior
written consent of Buyer;
(g) Keep all of the Equipment in good order and repair and perform all
necessary repairs and maintenance in accordance with past practices, normal
wear and tear excepted;
(h) Continue to maintain all of Seller's usual business books and
records in accordance with its past practices and not change its method of
accounting;
(i) Not issue any capital stock or any option, warrant or right
relating thereto;
(j) Not waive any right or cancel any claim relating to the Business
or the Assets other than in the ordinary course of business;
(k) Maintain Seller's corporate existence and not merge or consolidate
with any other entity;
(l) Except as may be required to comply with the terms hereof, comply
with all provisions of all Contracts and all applicable laws, rules and
regulations; and
<PAGE>
(m) Not negotiate with any other person the sale or other transfer of
the Assets, or the capital stock of Seller, or any similar transaction.
6.2 Conduct of the Business of Buyer. Between the date hereof and the
Closing hereunder, Buyer will use its reasonable efforts not to cause any
of the representations or warranties of Buyer herein contained to be untrue
as of Closing.
ARTICLE VII
COVENANTS
7.1 Preservation of Records. Seller and Buyer agree that each of them
shall preserve and keep the records held by them relating to the Business
for a period of three (3) years from the date hereof and shall make such
records and personnel available to the other as may be reasonably required
by such party in connection with, among other things, any insurance claims
by, Legal Proceedings against or governmental investigations of Seller or
Buyer or any of their respective Affiliates or in order to enable Seller or
Buyer to comply with their respective obligations under this Agreement and
each other agreement, document or instrument contemplated hereby. In the
event either Seller or Buyer wishes to destroy such records after that
time, such party shall first give ninety (90) days prior written notice to
the other and such other party shall have the right at its option and
expense, upon prior written notice given to such party within that ninety
(90) day period, to take possession of the records within one hundred and
eighty (180) days after the date of such notice.
7.2 Noncompetition Agreement.
(a) Duration and Extent of Noncompetition Agreement. For a period of
five (5) years from the date hereof, neither Seller nor Bund, nor any
Affiliate of either of the foregoing, shall directly or indirectly engage
in (as owner, employee, agent, consultant, director, officer, independent
contractor or otherwise), or directly or indirectly be financially
interested in, any business in the United States or Canada that is engaged
in the manufacture of roof drainage products of any type or material.
Nothing in the foregoing sentence shall be deemed, however, to prevent
Seller from (i) owning securities of any publicly-owned corporation engaged
in any such business, provided that the total amount of securities of each
class owned by the Seller or Bund in such publicly-owned corporation does
not exceed five percent (5%) of the outstanding securities of such class,
(ii) acquiring the securities or assets of any entity that engages in the
manufacture, production or distribution of roof drainage products, so long
as the annual sales of such entity of roof drainage products during the
twelve months prior to such acquisition do not exceed (A) One Million
Dollars ($1,000,000) or (B) ten percent (10%) of the total sales of such
entity during such period, or (iii) collecting or selling any Asset or
Receivable not transferred to Buyer, or received back from Buyer by Seller,
in accordance with the terms of this Agreement.
(b) Remedies for Breach. Seller and Bund acknowledge that the
restrictions contained in Section 7.2(a) are reasonable and necessary in
order to protect Buyer's
<PAGE>
legitimate interests and that any violation thereof would result in
irreparable injury to Buyer. Seller and Bund therefore acknowledge and
agree that, in the event of any violation thereof, Buyer shall be
authorized and entitled to obtain, from any court of competent
jurisdiction, preliminary and permanent injunctive relief as well as an
equitable accounting of all profits or benefits arising out of such
violation, which rights and remedies shall be cumulative and in addition to
any other rights or remedies to which Buyer may be entitled. In the event
that Section 7.2(a) is held to be in any respect an unreasonable
restriction upon Seller or Bund, then the court so holding may reduce the
territory to which it pertains and/or the period of time in which it
operates, or effect any other change to the extent necessary to render such
subparagraph enforceable by said court.
(c) Extension of Noncompetition Agreement. In the event that any court
of competent jurisdiction determines that Seller or Bund has committed a
breach or violation of the restriction contained in Section 7.2(a), the
period therein specified shall abate during the time of any violation
thereof and that portion of such period remaining at the time of
commencement of any violation shall not begin to run until such violation
has ceased.
7.3 Financial Statements. Subsequent to Closing, Seller shall direct
its independent accountants to cooperate with the independent accountants
of Buyer as may be reasonably necessary with respect to Buyer's compliance
with the relevant reporting requirements under the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, and Regulation
S-X promulgated by the United States Securities and Exchange Commission,
and the cost of such cooperation by Seller's independent accountants, but
not more than an aggregate of Ten Thousand Dollars ($10,000), shall be paid
by Seller.
7.4 Employees of Seller. Buyer shall have no obligation, at any time,
to hire any employee of Seller. So long as Paul Njagu remains an employee
of Seller, Seller shall make available to Buyer the full-time services of
Mr. Njagu for One Hundred Twenty (120) days after Closing. Mr. Njagu shall
remain an employee of Seller at Seller's or Bund's offices during such
period, but Buyer shall reimburse Seller in an amount equal to Mr. Njagu's
current base salary and employee benefits ($55,000 per year in the
aggregate) during such period. Buyer shall also have the right, but not the
obligation, to hire Mr. Njagu and/or Burt Gordon as a full-time employee,
or participate in arranging employment for Mr. Njagu and/or Mr. Gordon with
any third party (in any case subject to the agreement of Mr. Njagu and Mr.
Gordon) and, immediately upon the execution of this Agreement, may commence
discussions with either of them. If Mr. Njagu is employed by Buyer, Buyer
shall direct Mr. Njagu to spend sufficient time to collect the Receivables.
Seller shall be responsible for negotiating with any affected unions or
labor organizations about the effects of this transaction on Seller's
employees. Buyer has no such obligation and shall not be responsible for
any failure of Seller to negotiate.
7.5 Delivery of Assets; Other Arrangements.
(a) Subsequent to Closing, Buyer shall have up to twenty-three (23)
Business Days to take delivery of the Assets. Seller shall provide Buyer
with free and clear
<PAGE>
access to the Assets for such purpose on all Business Days and non-Business
Days beginning on the Closing Date and for sixty (60) days thereafter.
Seller shall cause the last piece of finished product to be left in the
rollers of applicable Equipment when made available to Buyer. Buyer's
employees (at Buyer's cost) shall transport the Assets to the loading dock
of Seller. Buyer's employees (at Buyer's cost) shall load the Assets and
transport them. Employees of both Buyer and Seller (at the cost of their
respective employers) shall identify and count the Assets prior to loading
them, and compare them against a delivery manifest, provided by Buyer, in
order to assure that all the Assets are available for loading and loaded.
Seller shall be responsible for providing insurance and security with
respect to the Assets during the 23 Business Day delivery period. Buyer
shall be liable for any damages to Seller's building caused by Buyer's
employees and agents in connection with the loading of the Assets.
(b) If Buyer does not take delivery of all of the Assets within
twenty-three (23) Business Days, then Buyer shall pay to Seller as damages,
for each Business Day on which Assets to be taken by Buyer remain on the
premises of Seller, an escalating fee as follows: One Hundred Dollars
($100) on the first extra Business Day, Two Hundred Dollars ($200) on the
second extra Business Day, Three Hundred Dollars ($300) on the third extra
Business Day, with further increase of One Hundred Dollars ($100) for each
extra Business Day through the end of the sixty (60) day period referred to
in Section 7.5(d); provided, that Buyer shall not be liable for the damages
set forth in this Section 7.5(b) for such number of "extra days" as is
equal to the number of days, if any, that Buyer is prevented from having
reasonable access to the Assets for any reason, including, without
limitation, as a result of the actions of any employee, or former employee,
of Seller.
(c) Buyer shall have the right, instead of taking delivery of any item
of Equipment in accordance with Section 7.5(a), to arrange for a third
party to remove such item of Equipment from the premises of Seller in
accordance with the procedures set forth in Section 7.5(a). Buyer shall be
liable for any damages to Seller's building caused by any such third
parties in connection with the loading of the Assets.
(d) Buyer shall have the further right to reject any of the Assets
without any reduction in the Purchase Price (if such Assets otherwise meet
the standards specified elsewhere in this Agreement), and shall have no
responsibility for the care, maintenance or removal from the premises of
Seller of any such rejected Assets. Seller shall have the right to reclaim
any Assets that are not removed from Seller's premises within 60 days after
the Closing Date, without any reduction in the Purchase Price; provided,
that such 60 day period shall be extended, without any penalty to Buyer,
for such number of "extra days" as is equal to the number of days, if any,
that Buyer is prevented from having reasonable access to the Assets for any
reason, including, without limitation, as a result of the actions of any
employee, or former employee, of Seller.
(e) For as long as is reasonably required by Buyer after Buyer has
taken delivery of the Assets, Seller shall provide Buyer with such
information as is reasonably
<PAGE>
requested by Buyer to assist Buyer in returning any Assets to, and seeking
reimbursement or replacement goods from, the supplier thereof.
7.6 Satisfaction of Conditions . Each of the parties hereto shall use
their reasonable commercial efforts to cause the conditions of the Closing
in the control of such party to be satisfied as promptly as practicable.
7.7 Access. Buyer and Seller shall provide reasonable access at
reasonable times and upon reasonable notice to representatives of each
other, subject to Section 10.2(b), for purposes of confirming the accuracy
of the information set forth herein and for other purposes reasonably
related to effectuating the transactions contemplated hereby, including,
without limitation, for purposes of Buyer's compliance with the
requirements of the any securities laws.
7.8 Customer Matters. Seller shall satisfy any obligations to its
customers with respect to rebates for sales made during 1998 through the
Closing Date with the rebate rates based on the total volume of sales by
Seller during 1998 through the Closing Date.
7.9 Destruction of Certain Assets. Seller shall destroy or cause to be
destroyed, or rendered unintelligible, any information regarding the
operations of Seller, including, without limitation, computer databases,
except for any records or copies thereof provided to Buyer or retained by
Seller. Seller shall not permit any third party to have access to or copies
of such records, except (i) as is required to be disclosed in order to
comply with a judicial order or decree or with any law or regulation of any
governmental authority or (ii) to Seller's attorneys, accountants and other
advisors.
7.10 Change of Corporate Name. As soon as practicable following
Closing, Seller shall change its corporate name to a new name which shall
not include the words "sheet metal" or similar words.
7.11 Schedule 2.5. On or before the Closing Date, Seller shall provide
to Buyer Schedule 2.5, which has not been attached at the date of this
Agreement.
<PAGE>
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Each Party's Obligations. The respective obligations
of each party to consummate the transactions contemplated hereby shall be
subject to the fulfillment, at or prior to the Closing Date, of the
condition that no preliminary or permanent injunction or other order,
decree or ruling issued by any court of competent jurisdiction nor any
statute, rule, regulation or order entered, promulgated or enacted by any
Governmental Entity shall be in effect which would prevent the consummation
of the transactions contemplated hereby, and no action, suit, claim or
proceeding brought by a governmental authority before any domestic court,
governmental agency, commission or administrative or regulatory authority
shall have been commenced and be pending which seeks to restrain, prevent
or materially delay or restructure the transactions contemplated hereby or
which otherwise questions the validity or legality of any such
transactions;
8.2 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Seller shall have performed or complied in all material respects
with all obligations and agreements required to be performed or complied
with by Seller hereunder at or prior to the Closing Date;
(b) each of the representations and warranties of Seller contained in
this Agreement is now, and at all times after the date of this Agreement to
and including the time of Closing shall be, true and correct in all
material respects;
(c) all consents, approvals and waivers required by Seller from third
parties, if any, required to consummate the transactions contemplated
hereby shall have been obtained;
(d) no litigation, governmental action or other proceedings involving
Seller which could reasonably be expected to have a Material Adverse Effect
on Buyer shall be threatened in good faith or commenced against Seller with
respect to any matter;
(e) other than (i) as caused by factors generally applicable to the
industry of which the Business is a part or general economic conditions or
(ii) as related to objections to the transactions contemplated by this
Agreement by the customers or employers of Seller, no Material Adverse
Effect shall have occurred with respect to the Business or the Assets
subsequent to the date of this Agreement;
<PAGE>
(f) all documents required to be delivered to Buyer by Seller at or
prior to Closing shall have been delivered or shall be tendered at the time
and place of Closing; and
(g) Buyer shall have obtained the consent of Summit Bank, N.A. to the
transactions contemplated by this Agreement.
8.3 Conditions to Obligations of Seller. The obligation of Seller to
consummate the transactions contemplated hereby shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) Buyer shall have performed or complied in all material
respects with all obligations and agreements required to be performed
or complied with by it hereunder at or prior to the Closing Date;
(b) each of the representations and warranties of Buyer contained
in this Agreement is now, and at all times after the date of this
Agreement to and including the time of Closing shall be, true and
correct in all material respects;
(c) all consents, approvals and waivers required by Buyer from
third parties, if any, required to consummate the transactions
contemplated hereby shall have been obtained;
(d) no litigation, governmental action or other proceedings
involving Buyer which could reasonably be expected to have a Material
Adverse Effect on Buyer shall be threatened in good faith or commenced
against Buyer with respect to any matter; and
(e) all Cash and documents (including, without limitation,
the Note) required to be delivered to Seller by Buyer at or prior
to the Closing shall have been delivered or shall be tendered at
the time and place of Closing.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, LIMITATION OF LIABILITY, INDEMNIFICATION
9.1 Statements as Representations. The representations
contained in Article III and Article IV hereof shall be deemed a
representation and warranty as such terms are used in this
Article IX.
9.2 Survival or representations and Warranties. The
representations and warranties of Seller and Buyer contained
herein shall survive for eighteen months after the Closing Date,
except that the representations and warranties of Seller set
forth in Sections 3.3, 3.8, 3.9, 3.14 and 3.16 shall survive
until the expiration of the applicable statute of limitations.
All covenants, obligations and agreements of Buyer and Seller
contained herein shall survive the Closing Date.
<PAGE>
9.3 General Indemnity.
(a) Seller shall (and, with respect only to clause (viii)
hereof, Bund and Seller jointly and severally shall) indemnify
and hold harmless Buyer and its Affiliates (the "Buyer Group"),
from, against and in respect of any and all damages, claims,
liabilities or expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees (collectively,
"Damages"), resulting from, incurred in connection with or
arising out of or otherwise in respect of (i) the breach of any
representation or warranty of Seller, provided that Buyer
notifies Seller thereof during the applicable period of survival
as provided in Section 9.2, (ii) the nonfulfillment of any
unwaived covenant or agreement on the part of Seller set forth in
this Agreement or in any agreement or certificate executed and
delivered by Seller pursuant to this Agreement, (iii) all
liabilities for Taxes of Seller or any of its Affiliates for any
period prior to or subsequent to the Closing Date, (iv) any and
all liabilities, obligations, or responsibilities of Seller or
any of its Affiliates with respect to any Seller Personnel, or
any spouse, dependent or family member of any Seller Personnel,
resulting from, relating to or arising out of any action or
failure to act which occurred on, prior to or subsequent to the
Closing Date, including, without limitation, obligations,
liabilities and responsibilities with respect to any (1)
discrimination or civil rights claims, wrongful discharge claims,
unfair labor practice charges or other charges, claims,
complaints or grievances relating to labor relations, employment,
employment contracts or contracts for the provision of services,
with Seller or any Affiliate of Seller; (2) claims or actions
under federal, state or local WARN Acts for improper notification
of a plant closing or mass layoff (3) accidents, events or other
occurrences compensable under any applicable workers'
compensation or similar state or federal law, except to the
limited extent that such obligations, liabilities or
responsibilities are required by applicable law to be assumed by
Buyer; and (4) pension plan, severance plan or policy,
termination or indemnity payment, salary continuation agreement
or practice, special bonuses or any similar costs or obligations,
(v) all liabilities of Seller, whether incurred on, prior to, or
subsequent to the Closing Date, including without limitation any
liabilities with respect to any Environmental Claim or
Environmental Laws and claims of infringement of Intellectual
Property rights of others with respect to actions or failures to
act prior to the Closing, (vi) all litigation resulting from,
incurred in connection with or arising out of or otherwise in
respect of the conduct of the Business on or prior to the
Closing, (vii) any and all fees and expenses and other
transaction costs, including, without limitation, attorneys'
fees, financial advisors' fees or accountants' fees incurred by
Seller or any of its Affiliates, in each case in connection with
this Agreement or the transactions contemplated by this
Agreement, (viii) any and all liabilities of Seller for which
Buyer may become liable pursuant to the operation of bulk sales
laws or with respect to Employee Benefit Plans and (ix) any and
all actions, suits, claims, proceedings, investigations, audits,
examinations, demands, assessments, fines, judgments,
settlements, interest, penalties, costs, remedial actions and
other expenses (collectively, "Actions") pertaining to or arising
out of any of the foregoing in this Section 9.3(a).
(b) Buyer shall indemnify and hold harmless Seller from,
against and in respect of any and all Damages resulting from,
incurred in connection with or arising out of or
<PAGE>
otherwise in respect of (i) the breach of any representation or warranty of
Buyer for such period of survival as provided in Section 9.2, (ii) the
nonfulfillment of any unwaived covenant or agreement on the part of Buyer
set forth in this Agreement or in any agreement or certificate executed and
delivered by Buyer pursuant to this Agreement,(iii) the nonfulfillment of
any unwaived covenant or agreement on the part of Buyer set forth in this
Agreement or in any agreement or certificate executed and delivered by
Buyer pursuant to this Agreement, (iv) any and all fees and expenses,
including, without limitation, attorneys' fees, financial advisors' fees,
accountants' fees and brokers' or finders' fees, incurred by Seller in
connection with this Agreement or the transactions contemplated by this
Agreement, (v) the conduct of the Business by Buyer subsequent to the
Closing Date and (vi) any and all Actions pertaining to or arising out of
any of the foregoing in this Section 9.3(b).
9.4 Limitation of Liability. The liability of Seller under
this Article IX shall be limited to the amount of the Purchase
Price, and the liability of Bund under this Article IX shall be
limited to the aggregate amount of any and all liabilities of
Seller for which Buyer may become liable pursuant to Section
9.3(a)(viii).
9.5 Interest of Indemnification Obligations. In the case of
any payments in respect of the indemnification obligations set
forth in Section 9.3, interest shall accrue on the amount of such
payment from the date payment is made by the Person seeking
indemnification until the same is reimbursed at a rate per annum
equal to the Prime Rate plus five percent, but not more than the
maximum rate permitted by applicable law.
9.6 Indemnification Procedure. All claims for
indemnification by a Person entitled to be indemnified hereunder
(an "Indemnitee") by another Person (an "Indemnitor"), shall be
asserted and resolved as follows:
(a) In the event that any claim or demand for which an
Indemnitee may claim indemnity is asserted against or sought to
be collected from an Indemnitee by a third party, the Indemnitee
shall notify the Indemnitor within fifteen (15) days following
the receipt by the Indemnitee of such claim or demand, specifying
the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which
estimate shall not be conclusive of the final amount of such
claim and demand) (the "Claim Notice"); provided, however, that
the failure so to notify the Indemnitor will not relieve the
Indemnitor from any liability it may have to the Indemnitee under
this Article IX unless, and only to the extent that, such failure
so to notify results in prejudice to the Indemnitor.
(b) An Indemnitor shall have thirty (30) days from the date
on which the Claim Notice is duly given (the "Notice Period") to
notify an Indemnitee (i) whether or not it disputes the liability
of the Indemnitor to the Indemnitee hereunder with respect to
such claim or demand and (ii) whether or not the Indemnitor
desires, at its sole cost and expense, to defend the Indemnitee
against such claim or demand; provided, however, that the
Indemnitor shall not be entitled to assume the defense of any
proceeding pursuant to Section 9.6(b)(ii) unless it has accepted
and assumed in writing the obligation to indemnify the Indemnitee
with respect to
<PAGE>
Damages arising from or relating to such claim or demand. If an Indemnitor
does not notify an Indemnitee within the Notice Period that it disputes its
liability to the Indemnitee, the Indemnitor shall be liable for the amount
of any Damages related thereto.
(c) In the event an Indemnitor notifies an Indemnitee within
the Notice Period that it desires to defend the Indemnitee
against such claim or demand from the Indemnitee, then except as
hereinafter provided the Indemnitor shall defend, at its sole
cost and expense, the Indemnitee by appropriate proceedings,
shall use its best efforts to settle or prosecute such
proceedings to a final conclusion in such a manner as to avoid
any risk of the Indemnitee becoming subject to any injunctive or
other equitable order for relief or to liability for any other
matter, and shall control the conduct of such defense; provided,
however, that the Indemnitor shall not, without the prior written
consent of the Indemnitee, consent to the entry of any judgment
against the Indemnitee or enter into any settlement or compromise
which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to the Indemnitee of a
release, in form and substance reasonably satisfactory to the
Indemnitee, from all liability in respect of such claim or
litigation. If the defendants in any such claim or demand include
both the Indemnitor and the Indemnitee, and the Indemnitee,
following consultation with and notice to the Indemnitor, shall
have received the opinion of outside counsel, reasonably
acceptable to the Indemnitor, stating that there may be legal
defenses or rights available to the Indemnitee which are
different from, in actual or potential conflict with, or
additional to those available to the Indemnitor, the Indemnitee
shall have the right to select one law firm to act at the
Indemnitor's expense as separate counsel, on behalf of the
Indemnitee. In addition, if the Indemnitee desires to participate
in, but not control, any other defense or settlement, it may do
so at its sole cost and expense. So long as the Indemnitor is
defending in good faith any such claim or demand, the Indemnitee
shall not settle such claim or demand without the consent of the
Indemnitor, which consent shall not be unreasonably withheld or
delayed.
(d) In the event an Indemnitee should have a claim against
an Indemnitor hereunder which does not involve a claim or demand
being asserted against or sought to be collected from the
Indemnitee by a third party, the Indemnitee shall promptly send a
Claim Notice with respect to such claim to the Indemnitor;
provided, however, that the failure so to notify the Indemnitor
will not relieve the Indemnitor from any liability it may have to
the Indemnitee under this Article IX unless, and only to the
extent that, such failure so to notify results in prejudice to
the Indemnitor. If the Indemnitor does not notify the Indemnitee
within the Notice Period that it disputes such claim, the
Indemnitor shall be liable for the amount of any Damages related
thereto.
9.7 Remedies Exclusive. The remedies provided in this
Article IX, which Buyer may exercise by, among other methods, set
off against the Note and Buyer's right to injunction and other
equitable relief, are (except as to claims of fraud) exclusive
and shall preclude assertion by any party hereto of any other
rights or the seeking of any other remedies against any party
hereto.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 Certain Definitions.
For purposes of this Agreement, the following terms shall
have the meanings specified in this Section 10.1:
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with
such Person.
"Assets" shall have the meaning set forth in Section 1.1 hereof.
"Bund" shall have the meaning set forth in the Preamble hereto.
"Business" shall have the meaning set forth in the Recitals hereto.
"Business Day" means any weekday of the year on which
federally chartered banking institutions in Philadelphia,
Pennsylvania, are open to the public for conducting business and
are not required or authorized to close, except that December 23,
December 24, December 25, December 31 and January 1 shall not be
deemed Business Days under this Agreement.
"Buyer" shall have the meaning set forth in the Preamble hereto.
"Buyer Purchase Documents" shall have the meaning set forth
in Section 4.1 hereof.
"Cash" shall have the meaning set forth in Section 2.1 hereof.
"Closing Receivables Amount" shall have the meaning set forth
in Section 2.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contract" means any oral or written contract, agreement,
indenture, note, bond, loan, instrument, lease, commitment,
employment agreement, covenant not to compete or other
arrangement or agreement.
"Current Receivables" means all Seller's trade accounts
receivable, the invoice date of which is less than 90 days prior
to the Closing Date.
"Deposit" shall have the meaning set forth in Section 2.1 hereof.
<PAGE>
"Employee Benefit Plans" shall have the meaning set forth in
Section 3.8 hereof.
"Environmental Claim" means any notice by a Person alleging
actual or potential liability (including, without limitation,
potential liability for any investigatory cost, cleanup cost,
governmental response cost, natural resources damage, property
damage, diminution in property value, personal injury, fine or
penalty) arising out of, based on or resulting from the presence,
use, handling, emission, transport, disposal, discharge or
release or threatened release of any Material of Environmental
Concern at any location, whether or not owned by Seller.
"Environmental Laws" mean all federal, state, local and
foreign laws, ordinances, rules, regulations or common law
relating to pollution or protection of human health or safety or
the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
including, without limitation, those relating to the emission,
discharge, release or threatened release, presence, manufacture,
processing, distribution, use, existence, treatment, storage,
disposal, transport, recycling, reporting or handling of
Materials of Environmental Concern.
"Equipment" shall have the meaning set forth in Section 1.1 hereof.
"Equipment Leases" shall have the meaning set forth in Section 1.1 hereof.
"ERISA" shall have the meaning set forth in Section 3.8 hereof.
"Escrow Agreement" shall mean the Escrow Agreement
attached as Exhibit A hereto.
"Excluded Inventory" shall have the meaning set forth
in Section 2.2 hereof.
"Governmental Body" means any government or
governmental or regulatory body thereof, or political
subdivision thereof, whether federal, state, local or
foreign, or any agency, instrumentality or authority
thereof, or any court or arbitrator (public or private).
"Indemnitee" shall have the meaning set forth in Section 9.6 hereof.
"Indemnitor" shall have the meaning set forth in Section 9.6 hereof.
"Intellectual Property" shall have the meaning set forth in Section 3.7
hereof.
"Inventory" shall have the meaning set forth in Section 1.1 hereof.
"Inventory Value" shall have the meaning set forth in Section 2.2 hereof.
<PAGE>
"Knowledge of Seller" means the actual knowledge of the
senior management personnel of Seller as of the date of this
Agreement.
"Law" means any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule,
regulation or other requirement, including, without
limitation, any Environmental Laws.
"Legal Proceeding" means any judicial, administrative
or arbitral actions, suits, charges, proceedings (public or
private), claims or governmental proceedings.
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of
first refusal, easement, servitude, transfer restriction
under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever, but
excluding any purchase orders or other commitments to
customers with respect to Inventory.
"Material Adverse Effect" means any material adverse
effect related to the condition (financial or otherwise),
properties, assets, liabilities, businesses, operations or
results of operations of the Business.
"Materials of Environmental Concern" means hazardous
chemicals, pollutants, contaminants, wastes and other toxic
or hazardous substances or any other materials or substances
that are defined in or regulated under any Environmental
Laws.
"Note" shall have the meaning set forth in Section 2.1 hereof.
"Old Inventory"shall have the meaning set forth in Section 2.2 hereof.
"Old Receivables" means all Seller's trade accounts
receivable, the invoice date of which is greater than 89
days prior to the Closing Date.
"Operating Facility" means any operating facility which
is owned by Seller or used by Seller in the operation of the
Business.
"Order" means any order, injunction, judgment, decree,
ruling, writ, assessment or arbitration award.
"OSHA" means the Occupational Safety and Health Act of
1970, as amended, and any other Federal, state or local
statute, law, ordinance, code, rule or regulation or
judicial or administrative order or decree regulating,
relating to or imposing liability or standards of conduct
concerning employee safety and/or health, as now or at any
time hereafter in effect.
"Owners" shall have the meaning set forth in Section 2.1 hereof.
"Patents" means any and all United States or foreign patents owned by
Seller.
<PAGE>
"Permits" means any approvals, authorizations,
consents, licenses, permits or certificates, including
without limitation any Permits required to handle any
Material of Environmental Concern or otherwise required
under any Environmental Law.
"Person" means any individual, corporation,
partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental
Body or other entity.
"Prime Rate" means the prime rate quoted by the Wall
Street Journal (Eastern Edition) from time to time.
"Purchase Price" shall have the meaning set forth in Section 2.1 hereof.
"Receivables" shall have the meaning set forth in Section 1.1 hereof.
"Retained Liabilities" shall have the meaning set forth in Section 1.3
hereof.
"Seller" shall have the meaning set forth in the Preamble hereto.
"Seller Liabilities" shall have the meaning set forth in Section 1.3
hereof.
"Seller Personnel" means any present or former
employee, director, officer, agent, independent contractor,
advisor, leased worker, consultant, broker or representative
of Seller.
"Seller Purchase Documents" shall have the meaning set
forth in Section 3.1 hereof.
"Subsidiary" of a Person means any other Person of
which a majority of the outstanding voting securities or
other voting equity interests are owned, directly or
indirectly, by such Person.
"Taxes" shall have the meaning set forth in Section 3.9 hereof.
"Tax Return"shall have the meaning set forth in Section 3.9 hereof.
<PAGE>
10.2 Confidentiality; Non-Disparagement.
(a) Except as agreed by Buyer and Seller, prior to
Closing, the parties shall keep the existence of this
Agreement in confidence, will not discuss the transactions
described herein with any person except their respective
equity owners, principals, accountants, attorneys, lenders
and advisors and will not otherwise reveal the contents of
this Agreement except to the extent necessary to fulfill the
conditions of Closing and as required by applicable law
(including, without limitation, rules promulgated by the
Commission); provided, that subsequent to execution of this
Agreement, Buyer shall issue a press release with respect
thereto, a draft of which release Buyer shall provide to
Seller such that Seller shall have a reasonable opportunity
to comment thereon prior to publication thereof.
(b) For a period of five (5) years after the date of
this Agreement, the parties shall use reasonable care to
maintain the confidentiality of any Confidential Information
received under this Agreement, except insofar as written
approval of the other party to release such information,
signed by an authorized representative thereof, is obtained.
(c) Neither Seller nor any Affiliate of Seller will
make any written or oral, public or private statements that
comment adversely, criticize or otherwise disparage Buyer,
or any of its directors, officers, partners, employees,
services or products or the honesty, integrity, ability or
financial condition of Buyer or any of its directors,
officers, partners, or employees. Buyer agrees that it and
its directors, officers and employees will not make any
written or oral, public or private statements that comment
adversely, criticize or otherwise disparage Seller or its
honesty, integrity, ability or financial condition.
10.3 Expenses. Except for applicable transfer taxes on
the sale of the Assets and fees related to the Escrow
Agreement (all of which shall be shared equally by Buyer and
Seller) the parties shall each bear their own expenses
incurred in connection with the negotiation and execution of
this Agreement and each other agreement, document and
instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and
thereby.
10.4 Termination. This Agreement may be terminated by
written agreement of the parties hereto or by either Buyer
or Seller if Closing has not occurred by December 31, 1998
(provided that no breach by the terminating party was
responsible for the Closing not occurring by such date),
and, in such event, this Agreement shall have no further
force or effect and there shall be no liability to the
parties hereto except that the parties shall continue to be
liable for any breach of this Agreement occurring prior to
such termination and Sections 10.2(a), 10.2(b), 10.2(c),
10.3, 10.6 and 10.8 shall survive such termination.
10.5 Further Assurances. Each of Seller and Buyer
agrees to execute and deliver (and, if applicable, file)
such other documents or agreements and to take such other
action as may be reasonably necessary or desirable, without
payment of further consideration, for
<PAGE>
the implementation of this Agreement and the consummation and effectuation
of the transactions contemplated hereby.
10.6 Arbitration.
(a) The parties hereto waive their rights to seek
remedies in court, including any right to a jury trial, and
agree that in the event of any dispute arising between the
parties, such dispute shall be settled by arbitration to be
conducted in Philadelphia, Pennsylvania in accordance with
the rules of the American Arbitration Association ("AAA")
applying the laws of Pennsylvania. Disputes will not be
resolved in any other forum or venue. The parties hereto
understand that any party's right to appeal or to seek
modification of rulings in an arbitration is severely
limited. Any award rendered by the arbitrators shall be
final and binding and judgment may be entered upon it in any
court of competent jurisdiction in Pennsylvania or any other
applicable jurisdiction. The fees payable to the AAA shall
be shares equally by Buyer and Seller. Notwithstanding the
foregoing, the parties agree that they shall retain the
right to institute court actions for injunctive and other
non-monetary equitable relief.
(b) Each of the parties hereto hereby consents to
process being served by any party to this Agreement in any
suit, action or proceeding by the mailing of a copy thereof
in accordance with the provisions of Section 10.11.
10.7 Entire Agreement; Amendments and Waivers. This
Agreement (including the schedules and exhibits hereto), the
Seller Purchase Documents and the Buyer Purchase Documents
represent the entire understanding and agreement between the
parties hereto with respect to the subject matter hereof and
can be amended, supplemented or changed, and any provision
hereof or thereof can be waived, only by written instrument
making specific reference to this Agreement or specific
Seller Purchase Document or Buyer Purchase Document signed
by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action
taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty,
covenant or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement
or specific Seller Purchase Document or Buyer Purchase
Document shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other
or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
10.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the
Commonwealth of Pennsylvania without giving effect to
principles of conflicts of law.
<PAGE>
10.9 Bulk Transfer Laws. Buyer acknowledges that Seller
will not comply with the provisions of any bulk transfer
laws of any jurisdiction in connection with the transactions
contemplated by this Agreement.
10.10 Table of Contents and Headings. The table of
contents and section headings of this Agreement are for
reference purposes only and are to be given no effect in the
construction or interpretation of this Agreement.
10.11 Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed
given when delivered personally, sent by nationally
recognized overnight courier or mailed by certified mail,
return receipt requested, to the parties (and shall also be
transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other
address as a party may have specified by notice given to the
other party pursuant to this provision):
If to Buyer:
805 Pennsylvania Boulevard
Feasterville, PA 19053
Attention: Joseph F. Weiderman, President
Telephone No: (215) 355-1200 (ext. 120)
Telecopy No: (215) 953-7750
with a copy to:
Wolf, Block, Schorr and Solis-Cohen LLP
Twelfth Floor Packard Building
111 South 15th Street
Philadelphia, Pennsylvania 19102-2678
Attention: Jason M. Shargel, Esquire
Telephone No: (215) 977-2216
Telecopy No: (215) 977-2334
provided that after July 4, 1999 copies of notices shall be
addressed to:
22nd Floor, 1650 Arch Street
Philadelphia, PA 19107
<PAGE>
If to Seller or Bund:
c/o Malcolm Bund & Associates, Inc.
7200 Wisconsin Avenue
Suite 306
Bethesda, Maryland 20814
Attention: Sydney Martin, Vice President Finance
Telephone No: (301) 913-0111
Telecopy No: (301) 941-8120
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, DC 20004
Attention: Bruce E. Rosenblum
Telephone No: (202) 637-2200
Telecopy No: (202) 637-2201
10.12 Binding Nature of Agreement; Assignment. This
Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal
representatives, successors and assigns. No party may assign
or transfer its rights or obligations under this Agreement
without the prior written consent of the other parties
hereto; provided, however, that (a) Buyer may transfer its
rights and obligations under this Agreement, upon written
notice to Seller of such assignment, to any Affiliate of
Buyer, subject to Buyer's agreement to remain liable at all
times for any of its obligations under this Agreement prior
to such assignment, (b) Seller may transfer its rights and
obligations under this Agreement, upon written notice to
Buyer of such assignment, to any Affiliate of Seller,
subject to the agreement of each of Seller and Bund to
remain liable at all times for all of its obligations under
this Agreement prior to such assignment and subject to
Buyer's retaining all rights of offset and similar rights,
(c) Seller may assign its rights to the deposit to any
Person, upon written notice to Buyer of such assignment,
subject to the agreement of Seller to remain liable at all
times for all of its obligations under this Agreement with
respect to the Deposit prior to such assignment and subject
to Buyer's retaining all rights of offset and similar rights
with respect to the Deposit.
10.13 Severability. If any provision of this Agreement
is invalid or unenforceable, the balance of this Agreement
shall remain in effect.
10.14 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all
such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of
copies hereof each signed by less than all, but together
signed by all of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
BERGER HOLDINGS, LTD.
By: /s/ Joseph F. Weiderman
Name: Joseph F. Weiderman
Title: President
SHEET METAL MANUFACTURING CO., INC.
By: /s/ Sydney E. Martin
Name: Sydney E. Martin
Title: Vice President
SOLELY WITH RESPECT TO SECTIONS 7.2 AND 9.3:
BUND CAPITAL LIMITED PARTNERSHIP
By: Malcolm Bund & Associates, Inc., its
general partner
By: /s/ Sydney E. Martin
Name: Sydney E. Martin
Title: Vice President
<PAGE>
AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amendment to Amended and Restated Loan and Security Agreement
(this "Amendment") is made this 7th day of December, 1998 by and among Berger
Financial Corp. ("BFC"), a Delaware corporation, Berger Bros Company ("BBC"), a
Pennsylvania corporation and Berger Holdings, Ltd. ("BHL"), a Pennsylvania
corporation, each with its chief executive office at 805 Pennsylvania Boulevard,
Feasterville, Pennsylvania 19053, and Summit Bank ("Bank"), a New Jersey bank
having offices at 4900 Route 70, Pennsauken, New Jersey 08109-4792. BFC and BBC
are hereinafter collectively referred to and obligated as "Borrower." Borrower
and BHL are hereinafter collectively referred to and obligated as "Obligors."
BACKGROUND
A. Pursuant to the terms and subject to the conditions set forth in that certain
Amended and Restated Loan Agreement dated January 2, 1998 between Borrower and
Bank (the "Loan Agreement") and related instruments, agreements and documents
(collectively, along with the Loan Agreement, the "Financing Agreements"),
Borrower is currently indebted to Bank for repayment of (i) a revolving credit
facility made available by Bank to Borrower in a principal sum of up to Seven
Million ($7,000,000.00) Dollars (the "Revolving Credit"), which indebtedness is
further evidenced by that certain Revolving Credit Note dated January 2, 1998 in
the principal sum of Seven Million ($7,000,000.00) Dollars executed and
delivered by Borrower to Bank (the "Revolving Credit Note"); and (ii) a term
loan made by Bank to Borrower in the principal sum of One Million Nine Hundred
Sixty Thousand ($1,960,000.00) Dollars (the "Term Loan"), which indebtedness is
further evidenced by that certain Term Loan Note dated January 2, 1998 in the
principal sum of One Million Nine Hundred Sixty Thousand ($1,960,000.00) Dollars
executed and delivered by Borrower to Bank (the "Term Loan Note"). The Revolving
Credit Note and the Term Loan Note are hereinafter collectively referred to as
the "Original Notes."
B.
C. To induce Bank to enter into the Financing
Agreements, pursuant to the terms and subject to the
conditions set forth in certain Amended and Restated Surety
Agreement dated January 2, 1998 executed and delivered by
BHL to Bank (the "Surety Agreement"), BHL guaranteed, as a
surety, all existing and future debts, liabilities and
obligations of Borrower to Bank including, without
limitation, the debts, liabilities and obligations evidenced
by the Original Notes. To secure BHL's indebtedness to Bank
as a surety for the debts, liabilities and obligations of
Borrower to Bank, pursuant to a certain Security Agreement
dated August 21, 1997 between BHL and Bank, BHL granted Bank
continuing liens on and security interests in and to all of
BHL's existing and future accounts, chattel paper,
contracts, documents, equipment, fixtures, general
intangibles, goods, instruments, inventory, investment
property and the cash and non-cash proceeds thereof, all as
more fully described in such Security Agreement.
D.
E. Concurrently herewith, pursuant to the terms and subject to the
conditions of a certain Asset Purchase Agreement dated as of December 2, 1998 by
and between BHL and Sheet Metal Manufacturing Co., Inc. ("Sheet Metal"), a
Delaware corporation, and Bund Capital Limited Partnership, a Maryland limited
partnership (the "Asset Purchase Agreement"), the rights under which have been
assigned by BHL to BBC on this date, BBC has agreed to purchase certain assets
from Sheet Metal (the "Acquired Assets"), all as more fully described in the
<PAGE>
Asset Purchase Agreement. Obligors have requested that Bank (i) consent to the
transactions described in the Asset Purchase Agreement, (ii) finance, in part,
the acquisition by BBC of the Acquired Assets, and to further fund Borrower's
working capital needs and (iii) amend the Financing Agreements to provide for,
among other things, an increase in the Revolving Credit and the Term Loan, and
Bank is willing to do so under the terms and subject to the conditions set forth
in this Amendment.
F.
G. To provide additional financing for the acquisition by
BBC of the Acquired Assets, pursuant to the terms and subject to the conditions
of the Asset Purchase Agreement, Sheet Metal is providing unsecured, subordinate
purchase money financing in the sum of up to One Million Five Hundred Thousand
($1,500,000.00) Dollars, which subordinated indebtedness is evidenced by a
certain Floating Rate Subordinated Note due March 1, 2000 of even date herewith
in the principal sum of up to One Million Five Hundred Thousand ($1,500,000.00)
Dollars executed and delivered by BBC to Sheet Metal (the "Sheet Metal
Subordinated Note").
H.
I. All capitalized terms not otherwise defined in this
Amendment shall have the meanings ascribed to such terms in the Loan Agreement.
J.
K. NOW, THEREFORE, with the foregoing background deemed incorporated
hereinafter by this reference and hereby made a part hereof, the parties hereto,
intending to be legally bound hereby, further covenant and agree as follows:
L.
1. Confirmation of Existing Indebtedness. Obligors hereby unconditionally
acknowledge and confirm that: (a) the unpaid principal indebtedness of Borrower
to Bank evidenced by the Revolving Credit Note is, as of December 3, 1998, Five
Million Three Hundred Thirty-Two Thousand Forty-Two and 54/100 ($5,332,042.54)
Dollars; (b) interest on the outstanding principal balance of the Revolving
Credit has been paid through November 30, 1998; (c) the unpaid principal
indebtedness of Borrower to Bank evidenced by the Term Loan Note is One Million
Six Hundred Thousand Six Hundred Sixty-Six and 63/100 ($1,600,666.63) Dollars;
(d) interest on the outstanding principal balance of the Term Loan has been paid
through November 30, 1998; and (e) the foregoing sums, together with continually
accruing interest and any related costs, fees and expenses are, as of the date
hereof, owing without claim, counterclaim, right of recoupment, defense or set
off of any kind or of any nature whatsoever.
2.
3. Ratification of Financing
Agreements. Obligors hereby ratify, confirm and reaffirm in all respects and
without condition, all of the terms, covenants and conditions set forth in the
Financing Agreements, and hereby agree that each of them remain unconditionally
liable to Bank in accordance with the respective terms, covenants and conditions
of such instruments, agreements and documents, and that all Collateral, liens,
security interests and pledges created pursuant thereto and/or referred to
therein continue unimpaired and in full force and effect, and secure and shall
continue to secure all of the Obligations.
<PAGE>
1. Warranties and Representations.
2.
(a) All warranties and representations set forth in the Loan Agreement and the
Surety Agreement are hereby respectively reasserted and restated by Borrower and
BHL (as applicable) as of the date hereof as if the same were set forth at
length herein. Obligors acknowledge that such warranties and representations
(and the warranties and representations set forth herein) are being specifically
relied upon by Bank as a material inducement to Bank to enter into this
Amendment and increase the Revolving Credit and the Term Loan.
(b)
(c) As a further inducement to Bank to enter into this Amendment, Obligors
further represent and warrant to Bank that:
(d)
(i) Each Obligor has the power, authority and capacity to enter into and
perform this Amendment and all related instruments, agreements and
documents, and to incur the Obligations herein and therein provided for,
and such Obligor has taken all proper and necessary corporate action to
authorize the execution, delivery and performance of this Amendment and
related instruments, agreements and documents;
(ii)
(iii) This Amendment, the Replacement Revolving Credit Note, the
Replacement Term Loan Note (both as hereinafter defined) and the other
Financing Agreements are valid, binding and enforceable against each
Obligor in accordance with their respective terms;
(iv)
(v) No consent, approval or authorization of, or filing,
registration or qualification with, any Person is required to be obtained by any
Obligor in connection with the execution and delivery of this Amendment;
(vi)
(vii) The Asset Purchase Agreement and all related instruments, agreements and
documents are legal, valid, binding and enforceable in accordance with their
respective terms;
(viii)
(ix) Subject only to payment of the consideration for
the acquisition of the Acquired Assets, the transactions described in the Asset
Purchase Agreement and all related instruments, agreements and documents have
been consummated in accordance with all applicable Law; and
(x)
(xi) No Event of Default or Potential Default has occurred under the
Financing Agreements.
(xii)
3. Amendments to Loan Agreement. Under the terms and subject to the conditions
set forth in this Amendment, the Loan Agreement and the other Financing
Agreements are hereby amended as follows:
4.
<PAGE>
Paragraph 1.5 of the Loan Agreement is hereby amended
and restated to read in its entirety as follows:
(a)
1.5 "Borrowing Base" means, at any time, an amount shown on the
most current Borrowing Base Certificate executed and
delivered by Borrower to Bank equal to the lesser of:
1.5.1 Nine Million Five Hundred Thousand ($9,500,000.00) Dollars
("Maximum Line Amount"); or
1.5.2 An amount up to the sum of (a) eighty-five
(85%) percent of the net outstanding amount of Eligible
Accounts, after deducting therefrom all payments, adjustments
and credits applicable thereto, and (b) the lesser of (i)
fifty (50%) percent of the value (determined on the basis of
the lower of cost or market value) of Eligible Inventory and
(ii) Four Million Five Hundred Thousand ($4,500,000.00)
Dollars. The foregoing percentage advance rates are subject to
periodic examination and analysis by Bank and, as a result
thereof, and in Bank's discretion exercised reasonably and in
good faith, are subject to change.
(a) The definition for "Subordinated Indebtedness" as set forth in paragraph 1.4
of the Loan Agreement shall hereinafter be deemed to include, in addition to the
Indebtedness specified in Exhibit 1.40 of the Loan Agreement, the Indebtedness
evidenced by the Sheet Metal Subordinated Note.
(b)
(c) The terms "Revolving Credit" and "Term Loan" as used in the Loan
Agreement shall hereafter refer to the Revolving Credit and the Term Loan,
respectively, as increased pursuant to the terms and subject to the
conditions of this Amendment.
(d)
(e)Notwithstanding anything to the contrary set forth in Paragraph 2.4 of
the Loan Agreement, so long as there has occurred no Event of Default or
any Potential Default which is continuing, for the period of ninety (90)
days following the date of this Amendment, the Revolving Credit may include
loans, advances and extensions of credit in excess of the Borrowing Base
(collectively, the "Permitted Overadvances") in an aggregate amount of up
to One Million Five Hundred Thousand ($1,500,000.00) Dollars; provided,
however, at no time shall the amount outstanding under the Revolving Credit
exceed the Maximum Line Amount. If at any time the Permitted Overadvances
shall, for any reason, exceed One Million Five Hundred Thousand
($1,500,000.00) Dollars, Borrower shall immediately repay to Bank such
amount as may be necessary to eliminate such excess and, on the
ninety-first (91st) day following the date hereof, and on each thirtieth
(30th) day thereafter, the aggregate amount of unpaid Permitted
Overadvances shall be reduced by Two Hundred Fifty Thousand ($250,000.00)
Dollars so that on the two hundred fortieth (240th) day following the date
hereof there shall be no Permitted Overadvances outstanding.
(f)
<PAGE>
(g) The definition for "Revolving Credit Note" as set forth in Paragraph
2.5 of the Loan Agreement shall hereinafter be deemed to refer to the
Replacement Revolving Credit Note (as defined in Paragraph 5 hereof).
(h)
(i) The definition for "Term Loan Note" as set forth in Paragraph 2.8 of
the Loan Agreement shall hereinafter be deemed to refer to the Replacement
Term Loan Note (as defined in Paragraph 7 hereof).
(j)
(k) A new Paragraph 1.44 is hereby added to the Loan Agreement to
read in its entirety as follows:
(l)
1.44 "Year 2000 Problem" means any significant risk of
computer hardware or software used in the business or
operations of Borrower will not, in the case of dates or time
periods occurring after December 31, 1999, function at least
as effectively and reliability as in the case of times or time
periods occurring before January 1, 2000.
(a) A new Paragraph 5.1.19A is hereby added to the Loan Agreement
to read in its entirety as follows:
(b)
5.1.19A Borrower has reviewed its operations with a view to
assessing whether its business will, in the receipt,
transmission, processing, manipulation, storage, retrieval,
retransmission, or other utilization of data be vulnerable to
a Year 2000 Problem. Based on such review, Borrower has no
reason to believe that a Material Adverse Effect will occur
with respect to its business or operations resulting from a
Year 2000 Problem:
(a) A new Paragraph 6.1.19A is hereby added to the Loan Agreement
to read in its entirety as follows:
(b)
6.1.19A Borrower shall take all action necessary to assure
that its computer based system is able to process effectively
data, including dates on and after January 1, 2000, without
any Year 2000 Problem. At the request of Bank, Borrower shall
provide Bank with assurances and substantiations reasonably
acceptable to Bank as to Borrower's capacity to process data
on and after January 1, 2000 without any Year 2000 Problem:
(a) Paragraph 6.3.1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following:
(b)
6.3.1 Borrower and Surety shall at all times maintain a ratio
of Senior Liabilities (defined to be all Liabilities minus the
long-term portion of Subordinated Indebtedness) to Tangible
Capital Funds (defined to be Tangible Net Worth plus the
long-term portion of Subordinated Indebtedness) of not more
than 2.25 to 1.00 from December 7, 1998 through March 31,
1999, and at all times after March 31, 1999, a ratio of Senior
Liabilities to Tangible Capital Funds of not more than 2.00 to
1.00;
<PAGE>
1. Replacement Revolving Credit Note. Contemporaneously herewith, Borrower shall
execute and deliver to Bank its Replacement Revolving Credit Note in the
principal sum of Nine Million Five Hundred Thousand ($9,500,000.00) Dollars (the
"Replacement Revolving Credit Note") to evidence the Obligations with respect to
the loans and advances made or to be made by Bank to or for the benefit of
Borrower under the Revolving Credit (as increased hereby), all as more fully
described in the Replacement Revolving Credit Note, the terms, covenants and
conditions of which are hereby deemed incorporated herein by this reference and
made a part hereof. The Replacement Revolving Credit Note replaces and
supersedes, but does not extinguish any unpaid Obligations evidenced by or
constitute a novation of, the Revolving Credit Note.
2.
3. Disbursement of Term Loan Increase. Upon satisfaction of the conditions
precedent set forth herein, Bank shall disburse to Borrower the sum of
Seven Hundred Ninety-Nine Thousand Three Hundred Thirty-Three and 37/100
($799,333.37) Dollars (the "Term Loan Increase") on account of the Term
Loan.
4.
5. Replacement Term Loan Note. Contemporaneously herewith, Borrower shall
execute and deliver to Bank its Replacement Term Loan Note in the principal
sum of Two Million Four Hundred Thousand ($2,400,000.00) Dollars (the
"Replacement Term Loan Note") to evidence the Obligations with respect to
the loans and advances made or to be made by Bank to or for the benefit of
Borrower under the Term Loan (as increased hereby), all as more fully
described in the Replacement Term Loan Note, the terms, covenants and
conditions of which are hereby deemed incorporated herein by this reference
and made a part hereof. The Replacement Term Loan Note replaces and
supersedes, but does not extinguish any unpaid Obligations evidenced by or
constitute a novation of, the Term Loan Note.
6.
7. Conditions Precedent. Bank's obligations under this Amendment are
subject to the following conditions precedent (all instruments, agreements
and documents to be in form and substance satisfactory to Bank and its
counsel):
8.
(a) Borrower shall duly execute and/or deliver, or cause to be duly
executed and/or delivered, to Bank the following:
(b)
(i) This Amendment;
(ii)
(iii) The Replacement Revolving Credit Note;
(iv)
(v) The Replacement Term Loan Note;
(i) A certified (as of the date of this Amendment) copy of resolutions of each
Obligor's board of directors authorizing the execution, delivery and performance
of this Amendment.
<PAGE>
(ii)
(iii) A certificate (as of the date of this Amendment)
of each Obligor's corporate secretary as to the incumbency and signatures of the
officers of such Obligor executing this Amendment;
(iv)
(v) Evidence, including, without limitation, Uniform Commercial Code
searches and (where applicable) copies of UCC-3 termination statements
executed by each Sheet Metal's secured creditors, that upon acquisition by
BBC of the Acquired Assets, the Acquired Assets shall be free and clear of
all liens and security interests, except for liens in favor of Bank, which
secure the Obligations, and liens that constitute Permitted Liens.
(vi)
(vii) Copies of all documents evidencing the terms and
conditions of Borrower's Subordinated Indebtedness including, without
limitation, Subordinated Indebtedness in favor of Sheet Metal;
(viii)
(ix) The written opinion of Borrower's and BHL's counsel, dated the date
hereof and addressed to Bank;
(x)
(xi) Proof satisfactory to Bank that Borrower has
obtained all required property, liability and casualty insurance with respect to
all of its real and personal property (including the Acquired Assets). Bank
shall be named as lender loss payee, mortgagee and additional insured, as its
interest may appear, on all such policies of insurance and its interests shall
be insured notwithstanding acts or negligence on the part of Borrower;
(xii)
(xiii) Copies of the Asset Purchase Agreement and all instruments, agreements
and documents relative to the acquisition by BBC of the Acquired Assets;
(xiv)
(xv) A pro forma Borrowing Base Certificate of even date herewith, which is
effective immediately after BBC's acquisition of the Acquired Assets;
(xvi)
(xvii) Evidence of the acquisition by BBC of the Acquired Assets pursuant to the
Asset Purchase Agreement and all related instruments, agreements and documents
and, without limiting the generality of the foregoing, evidence of the
consummation of the transactions described in such documents in accordance with
all applicable Law;
(xviii) A facility fee in the amount of Twenty-Five Thousand
($25,000.00) Dollars;
(xix)
(xx) A letter from Borrower to Bank authorizing the
Bank to disburse the Term Loan Increase, as well as any amounts to be disbursed
under the Revolving Credit to Sheet Metal on account of the purchase price for
the Acquired Assets, together with wiring instructions for Sheet Metal; and
(xxi) Such other instruments, agreements and documents as Bank may reasonably
require.
(xxii)
(b) No Event of Default or Potential Default shall have occurred
and be continuing.
(c)
<PAGE>
2. Condition Subsequent. Within ninety (90) days of the
date hereof, Borrower shall deliver to Bank an appraisal of the portion of the
Acquired Assets which are fixed assets (the "Acquired Fixed Assets"). Such
appraisal shall be based on an orderly liquidation of the Acquired Fixed Assets.
If the Term Loan Increase exceeds eighty (80%) percent of the appraised value of
the Acquired Fixed Assets, then Borrower shall prepay such excess within thirty
(30) days of the delivery of said appraisal to Bank.
3.
4. No Waiver of Defaults. This Amendment is not and shall not be deemed to
be a waiver of any defaults or Events of Default or Potential Defaults
which may now exist or hereafter occur under the Financing Agreements.
5.
6. No Obligation to Extend. Borrower acknowledges and agrees that,
notwithstanding anything to the contrary set forth in this Amendment, Bank
has no obligation to further amend the Financing Agreements or otherwise
restructure the indebtedness described in this Amendment, and that neither
Bank nor its representatives have made any agreements with, or commitments
or representations or warranties to, Borrower (either in writing or orally)
other than as expressly stated in this Amendment. Nothing contained in this
Amendment, or any compliance with the terms of this Amendment or any of the
instruments, agreements or documents referred to in this Amendment, shall
impose any obligation on the part of Bank to consummate a further
restructure of the indebtedness described in this Amendment or provide any
further financial or other accommodation.
7.
8. Integrated Agreement. This Amendment and all of the instruments,
agreements and documents executed and/or delivered or to be executed and/or
delivered in conjunction with this Amendment shall be effective upon the
date of execution hereof and thereof by all parties hereto and thereto, and
shall be deemed incorporated into and made a part of the Financing
Agreements. All such instruments, agreements and documents, and this
Amendment, shall be construed as integrated and complementary of each
other, and as augmenting and not restricting Bank's rights, remedies,
benefits and security. If, after applying the foregoing, an inconsistency
still exists, the provisions of this Amendment shall constitute an
amendment thereto and shall govern and control.
9.
10. Expenses of Bank. Borrower shall pay all expenses
(including the reasonable fees and expenses of legal counsel to Bank) relating
to preparation, negotiation, administration and enforcement of this Amendment
and the Financing Agreements.
11.
12. Governing Law. This Amendment shall be
governed by and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania.
13.
14.
<PAGE>
15.Seal. This Amendment is intended to take effect as an instrument under
seal.
16.
17. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Loan
and Security Agreement to be duly executed and delivered the day and year first
above written.
18.
19. Attest: BERGER FINANCIAL CORP., a
20. Delaware corporation
21.
22.
23. By:/s/ Theodore A. Schwartz By:/s/ Joseph F. Weiderman
24. Name: Theodore A. Schwartz Joseph F. Weiderman,
25. Title: Chief Executive Officer President
26.
27. [Corporate Seal]
28.
29.
30. Attest: BERGER BROS COMPANY, a
31. Pennsylvania corporation
32.
33.
34. By:/s/ Theodore A. Schwartz By:/s/ Joseph F. Weiderman
35. Name: Theodore A. Schwartz Joseph F. Weiderman,
36. Title: Chief Executive Officer President
37.
38. [Corporate Seal]
39.
40.
41. Attest: BERGER HOLDINGS, LTD., a
42. Pennsylvania corporation
43.
44.
45. By:/s/ Theodore A. Schwartz By:/s/ Joseph F. Weiderman
46. Name: Theodore A. Schwartz Joseph F. Weiderman,
47. Title: Chief Executive Officer President
48.
49. [Corporate Seal]
50.
51. SUMMIT BANK
52.
53.
54. By:/s/ Phyllis Briley-Geiser
55. Phyllis Briley-Geiser,
56. Vice President
