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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 31, 1998
Intermet Corporation
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(Exact name of registrant as specified in its charter)
Georgia 0-13787 58-1563873
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number
5445 Corporate Drive, Suite 200, Troy, Michigan 48098
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(Address of principal executive offices) (Zip Code)
(248) 952-2500
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Registrant's telephone number, including area code
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Item 2. Acquisition or Disposition of Assets
On December 31, 1998, pursuant to an Asset Purchase Agreement dated as of
December 2, 1998 (the "Agreement") between Intermet Corporation, a Georgia
corporation ("Registrant") and Quadion Corporation, a Minnesota corporation
("Quadion"), Tool Products, Inc., a Delaware corporation and a wholly-owned
subsidiary of Registrant ("Subsidiary") acquired the assets of the Tool Products
operating division of Quadion (the "Business"). The consideration for the
Business was $58,988,000 in cash (subject to certain post-closing adjustments)
plus assumption of certain of the obligations of Quadion related to the
Business. The assumed obligations include ordinary payables and existing
contractual obligations, including certain equipment leases, associated with
operation of the Business and an existing obligation of approximately $4,500,000
in certain industrial development bonds used to finance a facility of the
Business in Jackson, Tennessee. The Registrant has guaranteed the performance by
subsidiary of all of Registrant's obligations under the Agreement. The
Registrant believes that the consideration represents a fair market value for
the Business based on its assets and the past and prospective earnings of the
Business.
The funds required to purchase the Business were obtained in part pursuant to a
Third Amended and Restated Credit Agreement dated as of November 14, 1996 (the
"Credit Agreement") among Registrant, SunTrust Bank, Atlanta, NBD Bank, First
Union National Bank of North Carolina and certain other banks (the "Banks").
Under the Credit Agreement, the Banks have provided to the Registrant a senior
unsecured revolving credit facility in the aggregate amount of $200 million (the
"Revolving Credit Facility"). Advances under the Revolving Credit Facility and
cash on hand were used to finance the acquisition of the Business.
The Business is engaged in the manufacture and sale of precision engineered,
close tolerance aluminum die castings for the automotive electronics industry.
It also manufactures die castings for other applications in the motor vehicle,
electronics, communications, power tool and recreation industries. The Business
has manufacturing locations in New Hope, Minnesota and Jackson, Tennessee.
The purchased assets are presently used in the business described above and the
Registrant presently intends to continue to use the assets for such purposes.
Item 7. Financial Statement and Exhibits
(c) Exhibits
(2) 1. Asset Purchase Agreement dated as of December 2, 1998 between
Intermet Corporation and Quadian Corporation
(2) 2. Contents of Omitted Schedules to Asset Purchase Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERMET CORPORATION
By: /s/ Walter T. Knollenberg
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Walter T. Knollenberg
Corporate Controller
(Principal Accounting Officer)
Dated: January 14, 1999
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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1. Asset Purchase Agreement
2. Contents of Omitted Schedules to Asset Purchase
Agreement
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EXHIBIT (2)1.
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of December 2,
1998 by and between INTERMET CORPORATION, a Georgia corporation, (the "Buyer")
and QUADION CORPORATION, a Minnesota corporation, (the "Seller").
RECITALS:
WHEREAS, the Seller desires to sell to the Buyer substantially all of
the assets and properties used in the Business;
WHEREAS, the Buyer desires to purchase from the Seller such assets and
properties of the Seller, pursuant to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used herein, the following terms have the following
meanings:
"Accounts Receivable" means Seller's accounts receivable related to the
Business.
"Adjusted Net Worth" means the net worth of the Division calculated in
the manner set forth in Schedule 1.1(a).
"Closing Approvals" means those approvals and consents to be obtained
prior to Closing as designated on Schedule 4.1(d) and Section 5.6 of the
Disclosure Schedule.
"Contracts" means all of Seller's personal property leases and other
agreements, supply agreements, licenses, purchase orders from customers,
purchase orders to suppliers, contracts and commitments related to the Business,
including without limitation, the leases, agreements, contracts and commitments
relating to or necessary to the conduct and operation of the Business set forth
on Schedule 1.1(b) attached hereto in existence on the Closing Date.
"Business" means all of the business, products, support and services of
the division of the Seller directly related to the design, development,
manufacture, marketing, sale and distribution of precision engineered, close
tolerance, aluminum die castings.
"Division" means the Tool Products division of Seller which conducts
the Business.
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"Environmental Laws" means any statute, rule, regulation, ordinance,
order, code, standard, and any judicial or administrative interpretation
thereof, and any judicial or administrative order, judgment or decree pertaining
to (a) the protection of health, safety and the indoor or outdoor environment
(including industrial hygiene), (b) the conservation, management or use of
natural resources and wildlife; (c) the protection or use of surface water and
ground water, (d) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, release, threatened
release, abatement, removal, control, investigation, evaluation, labeling,
testing, remediation or handling of, or exposure to any Hazardous Materials, (e)
pollution (including and release or threatened release to air, land, surface or
ground water) and includes without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Section 1801, et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 6901, et seq.), the Federal Water Pollution
Control Act, as amended (33 U.S.C. Sections 1251, et seq.), the Clean Air Act,
as amended (42 U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act,
as amended (15 U.S.C. Sections 2601, et seq.) and the Clean Water Act, as
amended (33 U.S.C. Sections 1251, et seq.).
"GE Debt" means the promissory notes to General Electric Capital
Corporation and The Fifth Third Leasing Company set forth on Schedule 4.1(e)
hereto.
"Hazardous Materials" means any substance designated, defined or
determined to be hazardous or toxic under any Environmental Law, including but
not limited to asbestos, solvents, pollutants, chemicals, flammables,
contaminants, gasoline, petroleum products, crude oil, explosives, radioactive
materials, hazardous materials or toxic materials, substances, or wastes, or
polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended to date.
"Inventory" means all inventory, work in progress, raw materials,
finished products, supplies, packaging and shipping containers and materials of
the Seller (on-site, off-site and consigned) used in the Business.
"Jackson Lease" means the Lease Agreement dated as of January 1, 1989
between the Industrial Development Board of the City of Jackson (Tennessee) and
Quadion Corporation and related documentation, including The Indenture of Trust
dated as of January 1, 1989, between the Industrial Development Board of the
City of Jackson (Tennessee) and U.S. Bank Trust National Association, formerly
known as First Trust National Association and the Remarketing Agreement with FBS
Capital Markets Group dated as of January 1, 1989 and any document which creates
a security interest in the assets of Seller.
"Knowledge" or "best knowledge" or the like, when used with respect to
the Seller, means the actual knowledge, after due inquiry, of Robert W. Carlson,
Jr., Charles Schmidt,
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James R. Lande, Donald C. Pyatt, Gerald A. Thurk, Steve Grotkin, Dave Twomey,
Gregg Peterson, Richard Kulla and Bobby Fulgham.
"Permitted Encumbrances" means any encumbrance set forth on Schedule
1.1(c).
"Permitted Liens" means the liens set forth on Schedule 1.1(d), liens
for taxes or governmental assessments, charges or claims the payment of which is
not yet due, liens imposed by applicable law incurred in the ordinary course of
business for sums not yet delinquent or immaterial in amount and being contested
in good faith, and liens constituting or securing executory obligations under
any lease. Permitted Liens shall also include Permitted Encumbrances.
"Post-Closing Tax Period" means any tax period (or portion thereof)
ending after the Closing Date.
"Pre-Closing Tax Period" means any tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
"Tool Crib Inventory" means those items listed on the Tool Crib
Inventory list as of September 25, 1998 provided to Buyer, with changes in the
ordinary course of business through the date of Closing.
"US Real Property" means the Seller's real property related to the
Business located in Jackson, Tennessee, and New Hope, Minnesota excluding the
Winettka lease. Unless the context otherwise requires, references to the
Jackson, Tennessee real property means a reference to the leasehold interest
created by the Jackson Lease.
1.2 Index of Other Defined Terms. In addition to terms defined above,
the following terms shall have the respective meanings given to them in the
Sections set forth below:
Defined Term Section
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Aggregate Consideration 3.1
Agreement Preamble
Assets 2.1
Assumed Liabilities 4.1
Basket 10.3
Benefit Plan 5.21
Buyer Preamble
Cap 10.3
Claims 10.1
Closing 8.1
Closing Balance Sheet 3.2
Closing Date 8.1
Closing Date Statement 3.2
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Code 3.3
Confidential Information 7.14
Customers 5.18
Disclose 7.12
Disclosure Schedule 5.1
Drop Dead Date 11.1(d)
ERISA 5.21
Excluded Assets 2.2
Excluded Records 2.1(j)
Financial Information 5.8
Incremental Tax Amount 3.3
Information 7.12
Notice of Dispute 9.1
Plan 5.21
Property Laws 5.29
Purchase Price 3.1
Seller Preamble
Statement of Objections 3.2
Transferred Employees 7.6
Vendors 5.18
ARTICLE II
TRANSFER OF ASSETS
2.1 Purchase and Sale of Assets. At the Closing and on the Closing
Date, on the terms and conditions set forth herein, the Seller shall sell,
assign, transfer and deliver to the Buyer and the Buyer shall purchase from the
Seller, all of the Assets, free and clear of all liens, encumbrances, security
interests, options, pledges of any kind whatsoever, except for Permitted Liens
and Permitted Encumbrances other than the Excluded Assets. The assets,
properties and rights to be sold by the Seller and purchased by the Buyer under
this Agreement (collectively, the "Assets") are:
a. the US Real Property;
b. the Accounts Receivable as set forth on a listing delivered by
Seller at Closing and reasonably acceptable to Buyer;
c. the Inventory as set forth on a listing delivered by Seller at
Closing and reasonably acceptable to Buyer;
d. all machinery, equipment, furniture, fixtures, vehicles,
computer hardware and software and other personal property of the Seller used in
the Business set forth on Schedule 2.1(d) attached hereto;
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e. all of the following items used by the Seller in the conduct and
operation of the Business: (i) customer and contact lists, including names,
addresses and telephone numbers, (ii) sales, product and promotional data,
catalogs, brochures, literature, forms, mailing lists, art work, photographs and
advertising materials, (iii) vendor lists, including names, addresses and the
names of their representatives, (iv) product specifications and plans and
drawings related thereto, and (v) trade secrets, technical information and
technical know-how;
f. all of the prepaid expenses, deposits and credits and other
current assets relating to the Business set forth in Schedule 2.1(f) hereto;
g. subject to the provisions of Section 2.4 below, all of the
Seller's rights under the Contracts;
h. all backlog, orders, contracts and commitments for the sale of
products sold by the Business;
i. subject to the provisions of Section 2.4 below, all permits,
approvals, qualifications, and the like issued by any government or governmental
unit, agency, board, body, or instrumentality, whether foreign, federal, state,
local or otherwise relating to or necessary to the conduct and operation of the
Business set forth on Schedule 2.1(i) which by their express terms are
assignable;
j. all business records relating to the Business (but excluding any
records which relate in whole or part to Seller's other businesses, any tax
analysis and workpapers and core corporate records, including minute books of
Seller's Board of Directors and Shareholders, (the "Excluded Records"));
k. all rights of the Seller under express or implied warranties
from the manufacturers or suppliers of the Assets to the extent such rights are
transferable (but excluding such rights insofar as the same pertain to
liabilities retained by the Seller hereunder);
l. the Tool Crib Inventory in existence at the Closing Date; and
m. except as specifically provided in Schedule 2.2, all other
assets, properties, claims, rights and interests of the Seller which directly
relate to the Business (excluding Quadion corporate level assets) and exist on
the Closing Date, of every kind and nature and description, whether tangible or
intangible, real, personal or mixed.
2.2 Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include the items set forth on Schedule 2.2 attached hereto (the "Excluded
Assets").
2.3 Instruments of Transfer and Assignment. On the Closing Date the
Seller shall deliver or cause to be delivered to the Buyer duly executed bills
of sale, deeds (which, with respect to the US Real Property in New Hope, shall
be a general warranty deed), licenses and such other instruments of transfer and
assignment as may be necessary to vest in the Buyer,
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subject to Section 2.4 and the Assumed Liabilities, good and valid title to, and
all of the Seller's right, title and interest in and to, the Assets, free and
clear of all liens, encumbrances, options and pledges of any kind other than
Permitted Liens and Permitted Encumbrances, which bills of sale, deeds, licenses
and other instruments of transfer and assignment shall be in form and substance
reasonably satisfactory to the Buyer. All taxes in the nature of sales, transfer
or conveyance taxes imposed by any federal, foreign, state or local government
upon the purchase and sale of the Assets or otherwise upon the transactions
contemplated hereby shall be paid by the Seller.
2.4 Consents to Assignments. Nothing in this Agreement or the documents
to be executed and delivered at the Closing shall be deemed to constitute an
assignment or an attempt to assign any permit, contract or other agreement to
which the Seller is a party, if the attempted assignment thereof without the
consent of the other party to such permit, contract or other agreement would
constitute a breach thereof or affect in any way the rights of the Seller
thereunder. If any such consent shall not be obtained at or prior to the
Closing, or if an attempted assignment would be ineffective or would adversely
affect the Seller's rights thereunder, the Seller shall cooperate in any
arrangement the Buyer may reasonably request (provided that the payment of money
to any party shall not be required) to provide for the Buyer the benefits under
such permit, contract or other agreement. Seller will use reasonable efforts
prior to the Closing to transfer to Buyer all required registrations, permits,
licenses and authorizations, and in the case of pending applications, will use
reasonable efforts to amend such applications to show that Buyer is the
applicant. Seller will cooperate fully with Buyer (and after the Closing, at
Buyer's expense) in order to transfer such required registrations, permits,
licenses and authorizations, or to obtain new ones, as the case may be, as
required, and Seller will cooperate with Buyer in preparing (and after the
Closing, at Buyer's expense) and executing any and all documents necessary to
obtain any of such required registrations, permits, licenses and authorizations.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. Subject to the adjustment provided for in Section
3.2 below, Buyer agrees to pay, and Seller agrees to accept as the purchase
price for the Assets (a) the sum of One Million Three Hundred Fifty Three
Thousand Dollars ($1,353,000) for Seller's Tool Crib Inventory and the sum of
Fifty-Seven Million Six Hundred Thirty-Five Thousand Dollars ($57,635,000) with
respect to the other Assets (such payments are collectively referred to as the
"Purchase Price"), in each case by wire transfer of immediately available funds
to an account as the Seller may designate, plus (b) the assumption and payment
of the Assumed Liabilities (the sum of the Purchase Price plus the Assumed
Liabilities is referred to as the "Aggregate Consideration").
3.2 Purchase Price Adjustment.
(a) Not more than forty-five (45) days following the Closing Date the
Seller shall prepare and deliver to Buyer a calculation of the Adjusted Net
Worth as of the Closing Date (the
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"Closing Balance Sheet"), together with a statement by Seller of the difference
between the Adjusted Net Worth at September 25, 1998 as shown on Schedule 1.1(a)
hereto and the Adjusted Net Worth as shown on the Closing Balance Sheet
(together with the Closing Balance Sheet, the "Closing Date Statement").
(b) Upon receipt of the Closing Date Statement, Buyer (and at Buyer's
expense, its independent certified public accountants) shall be permitted during
the succeeding thirty (30) day period to examine, and Seller shall make
available, the books and records relied upon by Seller in preparing the Closing
Balance Sheet and the Closing Date Statement. As promptly as practicable, and in
no event later than the last day of such thirty (30) day period, Buyer shall
either inform Seller in writing that the Closing Date Statement is acceptable,
or object to the Closing Date Statement by delivering to Seller a written
statement setting forth a specific description of Buyer's objections to the
Closing Date Statement (the "Statement of Objections") and Buyer's calculation
of any disputed amounts.
(c) If Buyer shall fail to deliver its Statement of Objections as set
forth above within such thirty (30) day period, then the Closing Date Statement
shall be deemed to have been accepted by Buyer. If a Statement of Objections is
delivered, Buyer and Seller shall attempt in good faith to resolve any dispute
within fifteen (15) days. If Seller and Buyer are unable to resolve the dispute
within such fifteen (15) days, Buyer and Seller shall engage the Chicago office
of a "Big 5" accounting firm reasonably acceptable to Buyer and Seller to
resolve any unresolved objections. The fees of such firm shall be paid by Seller
if Buyer's calculation of disputed amounts as set forth in the Statement of
Objections is closer to such accountant's final determination than Seller's
determination, and otherwise such fees shall be paid by Buyer. Such firm's
resolution of the dispute shall be conclusive and binding upon the parties and
non-appealable and shall not be subject to further review under the dispute
resolution provisions of Article IX.
(d) If the Adjusted Net Worth as shown on the Closing Balance Sheet
exceeds the Adjusted Net Worth at September 25, 1998 as shown on Schedule 1.1(a)
hereto, Buyer shall pay Seller the difference between the Adjusted Net Worth as
shown on the Closing Balance Sheet and the Adjusted Net Worth at September 25,
1998 as shown on Schedule 1.1(a) hereto. If the Adjusted Net Worth at September
25, 1998 as shown on Schedule 1.1(a) hereto exceeds the Adjusted Net Worth as
shown on the Closing Balance Sheet, then Seller shall pay Buyer the difference
between the Adjusted Net Worth at September 25, 1998 as shown on Schedule 1.1(a)
hereto and the Adjusted Net Worth as shown on the Closing Balance Sheet. The
amount of any payment hereunder shall be increased by an interest factor, equal
to the reference rate publicly announced by U.S. Bank (or other major financial
institution agreed to by the parties) on the Closing Date. Such interest shall
accrue from the Closing Date through and including the date such payment is
made, with such prime rate being compounded annually. Such payments shall be
made in immediately available funds within five (5) days after deemed acceptance
of or resolution of disputes related to the Closing Date Statement.
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3.3 Allocation of Aggregate Consideration. The Buyer and the Seller
shall each file with its federal income tax return for the tax year in which the
Closing Date occurs, in accordance with Section 1060 of the Internal Revenue
Code of 1986 (the "Code"), an Asset Allocation Statement on Form 8594,
allocating to the Assets transferred on the Closing Date an amount equal to the
Seller's tax basis of such assets on the Closing Date. The allocation shall be
consistent with any statement of value set forth in the deeds to the US Real
Property. Each party agrees not to assert, in connection with any tax return,
tax audit or other similar proceeding, any allocation of the Aggregate
Consideration which differs from the allocation set forth herein.
ARTICLE IV
ASSUMPTION OF LIABILITIES
4.1 Assumption. The Buyer is not assuming or agreeing to assume or
discharge any liability or obligation of the Seller whatsoever, whether now
existing or hereafter incurred, including without limitation, any liability or
obligation relating to the Assets or the sale thereof, excepting only the
following (the "Assumed Liabilities") for which Buyer agrees to be solely
responsible:
a. those liabilities and obligations of the Seller related to
future performance to be discharged or performed after the Closing Date under
the Contracts (other than those designated as not being transferred to Buyer on
Section 5.16 of the Disclosure Schedule);
b. all accounts payable related to the Business, which will be set
forth on a payables schedule delivered by Seller to Buyer at the Closing;
c. all obligations relating to contractual warranty commitments
related to the Business, including any such contractual commitments for products
sold or manufactured prior to the Closing Date;
d. all liability for leases and equipment leases set forth on
Schedule 4.1(d) which are related to the Business; and
e. those liabilities and obligations of the Seller related to the
Business set forth on Schedule 4.1(e).
Except as otherwise provided in this Agreement, Buyer will not assume,
and Seller will continue to be responsible for, and will pay, satisfy and
perform all claims, demands, liabilities and obligations of Seller of any kind,
whether fixed or contingent, known or unknown, and whether existing as of the
Closing Date or arising thereafter, arising out of events, transactions or facts
that have occurred, arisen or existed on or prior to the Closing Date (including
the manufacture or shipment of goods), or Seller's ownership and operation of
the Business prior to the Closing Date. Without limiting the generality of the
foregoing, Buyer will not assume any obligation or liability related to (i) the
property formerly owned and operated by the Division in
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Addison, Illinois or (ii) any Contract not being transferred to Buyer as set
forth on Section 5.16 of the Disclosure Schedule.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
THE SELLER
The Seller hereby represents and warrants to and agrees with the Buyer
as follows, all of which representations, warranties and agreements are made as
of the date of this Agreement and as of the Closing Date:
5.1 Disclosure Schedule. The disclosure schedule attached hereto as
Schedule 5.1 hereto (the "Disclosure Schedule") is divided into sections which
correspond to the Sections of this Agreement. Any item on the Disclosure
Schedule shall be considered an exception to all representations and warranties
even if not specifically cross referenced or referred to herein.
5.2 Organization, Good Standing, Power, Etc. The Seller is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation. The Seller is qualified to do business and is
in good standing in each jurisdiction in which the character and location of the
assets or the nature of the Business transacted by the Seller makes such
qualification necessary or the failure to qualify would have a material adverse
effect on the business, operations or financial condition of the Business. The
Seller has all the requisite corporate power and authority to own or lease and
operate the Assets and the Business and carry on the Business and to consummate
the transactions contemplated hereby.
5.3 Articles of Incorporation and Bylaws. The Seller has furnished the
Buyer with (a) the Articles of Incorporation of the Seller, as amended to date
and (b) the Bylaws of the Seller, as amended to date. Such Articles of
Incorporation and Bylaws are in full force and effect.
5.4 Other Information. None of the information and documents which have
been or may be furnished by the Seller or any representatives of the Seller to
the Buyer, or any of their representatives in connection with the transactions
contemplated hereby, or in or pursuant to this Agreement, or in connection with
the Buyer's and its representative's review of the Business of Seller, is or
will be, materially false or misleading.
5.5 Authorization of Agreement. The execution, delivery and performance
of this Agreement by the Seller and consummation of the transactions
contemplated hereby have been duly and effectively authorized by the Board of
Directors of the Seller and no other corporate proceedings are necessary to
authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Seller and
constitutes the valid and binding obligation of the Seller enforceable in
accordance with its terms.
5.6 Effect of Agreement, Etc. Except as set forth on the Disclosure
Schedule, the execution, delivery and performance of this Agreement by the
Seller and consummation by
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Seller of the transactions contemplated hereby will not, with or without the
giving of notice and the lapse of time, or both, (a) violate any provision of
law, statute, rule or regulation to which the Seller is subject, (b) violate any
judgment, order, writ or decree of any court applicable to the Seller, (c) have
any material effect on, or be a material violation of, any of the permits,
licenses, orders or approvals relating to the Business or the ability of the
Buyer to make use of such permits, licenses, orders or approvals, or (d) result
in a breach of or conflict with any term, covenant, condition or provision of,
result in a modification or termination of, constitute a default under, or
result in the creation or imposition of any lien, security interest,
restriction, charge or encumbrance upon any of the Assets (other than Permitted
Liens and the Assumed Liabilities) pursuant to any Articles of Incorporation,
Bylaws, organizational documents, commitment, contract or other agreement or
instrument to which the Seller is a party or by which any of the Assets is or
may be bound or affected or from which the Seller derives benefit with respect
to the Business.
5.7 Consents and Approvals. Except as set forth on the Disclosure
Schedule, no permit, application, notice, transfer, consent, approval, order,
qualification, waiver from, or authorization of, or declaration, filing or
registration with, any governmental authority is necessary in connection with
the execution and delivery by the Seller of this Agreement or the consummation
by the Seller of the transactions contemplated hereby and no consent of or
notice to any third party is required to consummate any of the transactions
contemplated hereby.
5.8 Financial Information. The unaudited balance sheets of the Division
as of the last Friday in September of 1998, 1997 and 1996 and the unaudited
income statements for the annual periods then ended are attached to the
Disclosure Schedule (the "Financial Information"). Except as set forth on the
Disclosure Schedule, the Financial Information (a) is in accordance with the
books and records of the Seller, (b) presents fairly in all material respects
the operations and financial condition of the Division for the periods and as of
the dates indicated, and (c) was prepared in accordance with generally accepted
accounting principles consistently applied (except for the omission of
footnotes).
5.9 No Undisclosed Liabilities, Claims, Etc. Except as set forth on the
Disclosure Schedule, the Seller has no outstanding liabilities or obligations,
whether accrued, absolute, contingent or otherwise, relating to the Business,
except (i) to the extent reflected or taken into account in determining net
worth in the most recent balance sheet included in the Financial Information and
required to be accrued under generally accepted accounting principles
consistently applied; (ii) to the extent specifically set forth in or
incorporated by express reference in the Disclosure Schedule or any of the other
schedules attached hereto; (iii) normal liabilities incurred in the ordinary
course of business since the date of the most recent interim Financial
Information of a type and in an amount consistent with the liabilities set forth
in the Financial Information and not inconsistent with Section 5.15 hereof, and
(iv) the Contracts. It is expressly agreed that Buyer shall have no claim for
breach of the foregoing warranty related to an undisclosed liability which is
not assumed by Buyer under Section 4.1.
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5.10 Product Warranties. The amounts reflected as warranty reserves are
adequate to provide the amount required by generally accepted accounting
principles consistently employed by Seller.
5.11 Litigation. Except as set forth in the Disclosure Schedule, there
is no claim, action, suit, proceeding, arbitration, investigation or hearing or
notice of hearing pending or to the best of Seller's knowledge threatened,
relating to or affecting the Business or any of the Assets or, with respect to
any employment matter, an employee, any applicant for employment, or the
transactions contemplated by this Agreement. No such claim, action, suit,
proceeding, arbitration, investigation or hearing will prevent the closing of
this Agreement or the consummation of the transaction contemplated hereby.
5.12 Taxes. Except as set forth in the Disclosure Schedule, (a) the
Seller has prepared and filed, with the appropriate foreign, federal, state and
local tax authorities, all income, excise and other tax returns required to be
filed by the Seller related to the Business as of the date hereof and the Seller
has paid all taxes required to be paid by Seller related to the Business, the
Assets or activities conducted in connection therewith, including without
limitation taxes shown on such returns to be due or which have become due
pursuant to any assessments, deficiency notice, 30 day letter or similar notice
received by it; (b) there are no claims pending or threatened for taxes against
the Seller attributable to the Business known to the Seller in excess of the
amounts reflected on the books and the Financial Information for such taxes; (c)
the Seller has paid or provided adequate reserves for all federal, state and
local income, profits, franchise, sales, use, occupation, property, excise or
other taxes attributable to the Business of the Seller and which may have a
material adverse financial effect on Buyer; and (d) no deficiencies on any of
the Seller's tax returns or reports attributable to or otherwise allocable to
the Business known to the Seller have been threatened in writing as of the date
hereof.
5.13 Accounts Receivable and Accounts Payable. All Accounts Receivable
reflected on the Financial Information, and to be in existence on the Closing
Date, represent sales actually made or leases entered into in the ordinary
course of business or valid claims as to which substantial performance has been
rendered. Except to the extent reserved against the Accounts Receivable and as
set forth on the Disclosure Schedule, no material counterclaims or offsetting
claims with respect to the Accounts Receivable are pending or, to the knowledge
of the Seller, threatened. The listing of Accounts Receivable attached to the
Disclosure Schedule is true and correct (including the aging thereon) as of the
date of preparation and no material change has occurred since the date of
preparation, except in the ordinary course of business. The accounts payable of
the Seller reflected on the Financial Information and to be in existence on the
Closing Date arose, or will arise, from bona fide transactions in the ordinary
course of business, and all such accounts payable either have been paid, are not
yet due and payable under the Seller's payment policies and procedures or are
being contested by the Seller in good faith. The listing of accounts payable
attached to the Disclosure Schedule provided by Seller is true and correct as of
the date of preparation and no material change has occurred since that date,
except in the ordinary course of business.
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5.14 Inventory and Backlog. The Inventory is (a) except to the extent
of normal scrap quantities incurred in the production process and except to the
extent of reserves therefor in the Financial Information, salable or usable in
the normal course of the Business, (b) at levels consistent with past practices
of the Business, and (c) carried on the books of the Seller pursuant to the
normal inventory valuation policies of the Seller, as reflected in the Financial
Information.
5.15 Absence of Certain Changes or Events. Except as set forth on the
Disclosure Schedule, since September 25, 1998, the Seller has conducted the
Business only in the ordinary course and consistent with past practices and the
Seller has not with respect to the Business:
a. suffered any damage, destruction or loss of any of the Assets,
whether or not covered by insurance, in excess of Fifty Thousand Dollars
($50,000);
b. suffered any change in its financial condition, assets,
liabilities or business or suffered any other event or condition of any
character which individually or in the aggregate had or has a material adverse
effect on the financial condition or earnings of the Business;
c. paid, discharged or satisfied any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) of or relating to the
Business except in each case in the ordinary course of business;
d. waived any claims or rights of substantial value of or relating
to the Business, except in each case in the ordinary course of business;
e. pledged or permitted the imposition of any lien on (other than
Permitted Liens and the Assumed Liabilities) or sold, assigned, transferred or
otherwise disposed of any of the Assets used in or relating to the Business,
except the sale of Inventory in the ordinary course of business;
f. made any change in any method of accounting or accounting
principle or practice;
g. except for de minimus adjustments, written up or down the value
of the Inventory of the Business or determined as collectible any notes or
Accounts Receivable of or arising out of the Business that were previously
considered to be uncollectible, except for write-ups or write-downs and other
determinations in the ordinary course of business and consistent with past
practice;
h. granted any general increase in the compensation payable or to
become payable to its officers or employees (including any such increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) or
any special increase in the compensation payable or to become payable to any
such officer or employee, or made any bonus payments to any such officer or
employee, except for normal merit and cost of living increases in the ordinary
course of business and in accordance with past practice;
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i. lost any Customer or Vendor listed on Section 5.18 of the
Disclosure Schedule;
j. made capital commitments on behalf of or relating to the
Business in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate;
k. failed to maintain accounts receivable, inventory, accounts
payable and other tangible capital accounts relating to the Business;
l. incurred indebtedness for borrowed money, or assumed,
guaranteed, endorsed or otherwise as an accommodation become responsible for the
obligations of any other individual, firm or corporation, or made loans or
advances to any other individual, firm or corporation;
m. conducted the Business in any manner other than in the ordinary
course;
n. agreed, whether in writing or otherwise, to take any action
described in this Section 5.15.
5.16 Contracts. Schedule 1.1(b) and 4.1(d) and Section 5.16 of the
Disclosure Schedule contain a complete and accurate list of (i) all Contracts
written or oral, with annual revenues for the most recently completed fiscal
year in excess of $50,000 or costs for the most recently completed fiscal year
in excess of $50,000, and (ii) all other Contracts, whether written or oral,
that are not in the ordinary course of business, in each case entered into by
the Seller related to the Business. Except as set forth on Schedule 1.1(b) or
4.1(d) or Section 5.16 of the Disclosure Schedule, (i) all of the Contracts are
in full force and effect and enforceable against the other parties thereto in
accordance with their terms; and (ii) no event has occurred or circumstance
exists which, with the giving of notice or the lapse of time or both, would
constitute a default or an event of default by the Seller under any of the
Contracts, and to the Seller's knowledge no event has occurred or circumstance
exists that, with the giving of notice or the lapse of time or both, would
constitute a default or an event of default under any of the Contracts by any
other party thereto.
5.17 OSHA; Environmental. (a) The Seller has not received any written
notice from a governmental authority that its operations and Assets have not
been or are presently not in compliance with OSHA and any applicable state
provisions and its Assets and operations of Seller related to the Business are
in material compliance with OSHA and any applicable state law provisions.
(b) Except as set forth on the Disclosure Schedule:
(i) Seller's assets and the operations of Seller related to the
Business are and have been in all material respects in compliance with
all applicable Environmental Laws;
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(ii) Seller has not deposited or caused to be deposited, nor has
there been deposited, on, under or about any facility of the Business,
including without limitation into the ambient air, surface water,
groundwater, land surface, or subsurface strata, any Hazardous
Materials, except in compliance with Environmental Laws;
(iii) Seller has not used any facility owned or leased by it
related to the Business to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce, process or in any
manner deal with Hazardous Materials, except in compliance with
applicable Environmental Laws;
(iv) Seller has had and has obtained all required registrations,
permits, licenses, and other authorizations which are required under
federal, state and local laws and regulations relating to pollution or
protection of the environment, including, but not limited to, all
Environmental Laws and including all laws relating to emissions,
discharges, releases, or threatened releases of Hazardous Materials or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials, in each case relating to the Business;
(v) Seller has been and is in compliance in all material
respects with all terms and conditions of such required registrations,
permits, licenses and authorizations, and has been and is also in
compliance with all other material limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in all Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, in each case relating to the Business;
(vi) There has been and is no civil, criminal, or administrative
action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or
threatened relating in any way to (a) the Environmental Laws or any
regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated, or approved thereunder, or
(b) relating to the release into the environment by Seller of any
Hazardous Materials, whether or not occurring at or on a site owned,
leased or operated by Seller, in each case relating to the Business;
(vii) Seller has timely filed all reports, obtained all required
approvals, generated and maintained all required data, documentation
and records required by the Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter
issued, entered, promulgated, or approved thereunder, in each case
relating to the Business;
(viii) no facility related to the Business (a) as to which
Hazardous Materials generated by Seller have come to be located,
stored, treated or disposed of, or (b) for which Seller is responsible
and at which Hazardous Materials have been located, stored, treated or
disposed of, has been placed or is proposed to be placed on the
National Priorities List of hazardous waste sites, or any equivalent
state list;
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(ix) Seller has provided or otherwise made available to Buyer all
reports, records, data, site assessments and other documents concerning
Hazardous Materials located or disposed of at any facility of Seller
related to the Business, or compliance with any Environmental Law, or
any other environmental subject which relates to the Business. Seller
acknowledges that Buyer will rely on such information in making Buyer's
environmental assessment of the Business;
(x) All underground storage tanks at the U.S. Real Property are
in a state of good condition and repair and have not leaked, nor are
they presently leaking any of their contents, and have been identified,
registered and operated as required by any applicable Environmental
Law, or in the case of former underground storage tanks have been
removed or closed as required by any applicable Environmental Law; and
(xi) Except in connection with the assignment of permits, Seller
is not required to provide a written notice of any kind to Buyer or to
any environmental agency with respect to the Assets sale that is the
subject of this agreement.
5.18 Customers and Vendors. The Disclosure Schedule sets forth correct
and complete lists of the customers which resulted in revenues for the Business
during the most recently completed fiscal year in excess of $500,000
("Customers") and vendors ("Vendors") of the Business during the most recently
completed fiscal year which resulted in expenditures for the Business in such
fiscal year in excess of $200,000. Except as set forth in the Disclosure
Schedule, there are no outstanding material disputes with any Customer or Vendor
listed thereon and no Customer or Vendor listed thereon has refused to continue
to do business with the Seller or has stated its intention not to continue to do
business with the Seller in any material respect. Since December 31, 1997, there
has not been any material shortage or unavailability of the raw materials
necessary to manufacture the products sold by the Business, and, to the
knowledge of the Seller, there is no current shortage or unavailability which
leads it to believe that any such shortages will occur within 12 months from the
date hereof.
5.19 Books and Records. The books of account and other financial and
corporate records of the Seller related to the Accounts Receivable, Inventory
and fixed assets of the Business are in all material respects substantially
complete and correct and are maintained in accordance with good business
practices.
5.20 Employment Matters. (a) Except as provided in the Disclosure
Schedule, Seller is in material compliance with all laws, rules and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours with respect to employees of the Business. The
Seller has withheld all amounts required by law or agreement to be withheld from
the wages or salaries of, and other payments to, its employees and any former
employees and is not liable for any arrearage of wages, salaries or other
payments to such employees and any former employees or any taxes or penalties
for failure to comply with any of the foregoing.
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(b) There are no pending and within the last five years have not been
any demands for recognition of a union as collective bargaining agent for all or
any part of the employees of the Business. The Seller is not a party to any
collective bargaining or other labor agreement with respect to the Business and
there is no unfair labor practice charge or complaint against Seller pending or
threatened before the National Labor Relations Board or any other comparable
authority with respect to the Business.
5.21 Employee Benefit Plans. (a) Seller's defined contribution plan
related to the Business (the "Plan") is being administered in accordance with
the documents and instruments governing such Plan, and such documents and
instruments are consistent with those provisions of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations adopted pursuant
thereto ("ERISA") which are effective and operative as of the date of this
Agreement. The Plan has received a favorable determination letter from the
Internal Revenue Service. The Plan complies in all material respects with
applicable provisions of ERISA and the Code. No "reportable event" as defined in
Section 4043(b) of ERISA has occurred with respect to the Plan. The Plan has not
incurred any material accumulated funding deficiency within the meaning of
Section 302 of ERISA or Section 412 of the Code, whether or not waived, and the
Seller has not incurred any material liability (including any material
contingent liability to the Pension Benefit Guaranty Corporation) with respect
to the Plan that is not reflected in the Financial Information in accordance
with generally accepted accounting principles. Neither the Plan nor any trust
created thereunder nor any trustee or administrator thereof has engaged in a
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
All defined benefit plans related to the Business have been terminated and
Seller has no on-going liabilities or obligations with respect to such defined
benefit plans. Seller has received a determination letter from the Internal
Revenue Service that termination of the defined benefit plans complied with the
Code. At no time has the Seller contributed to or had any employees of the
Business who were covered by any multiemployer plan, as such term is defined in
Section 3(37) of ERISA, which is a defined benefit plan.
(b) The Disclosure Schedule contains a list of each "employee
pension benefit plan" (as defined in section 3(2) of ERISA), "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), pension plan, severance,
stock option, stock purchase, deferred compensation plan or arrangement, and
other employee fringe benefit plan or arrangement currently maintained,
contributed to or required to be maintained or contributed to by Seller for the
benefit of any present or former employees of the Business or their dependents
(all the foregoing being herein called "Benefit Plans"). Seller has delivered to
Buyer true, complete and correct copies of (1) each Benefit Plan and related
trust (or, in the case of any unwritten Benefit Plans, descriptions thereof),
(2) the most recent summary plan description for each Benefit Plan (if any such
description was required), and (3) the most recent Form 5500 for each Benefit
Plan, and (4) a copy of the Plan's favorable determination letter.
(c) The Seller and its affiliates comply with the applicable
requirements of Section 4980B(f) of the Code, with respect to each Benefit Plan
that is a group health plan (as such term is defined in Section 5000(b)(1) of
the Code).
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(d) There is no pending or, to the best of the knowledge of
Seller, threatened claim, (other than routine claims for benefits) by, on behalf
of or against any of the Benefit Plans or related trusts.
(e) The post-retirement health benefits currently provided by
Seller to the Transferred Employees are set forth solely in the applicable
benefit Plan documents and there are no contracts, commitments or other
arrangements, whether written or oral, to provide any different or additional
post-retirement health care benefits or others welfare or fringe benefits except
as described in such plan documents. The current cost of such post-retirement
health benefits is reflected in the Financial Information in accordance with
generally accepted accounting principles.
5.22 Employees. The Disclosure Schedule sets forth a complete and
accurate list of all current employees (excluding temporary employees) of the
Business as of the date set forth in the Disclosure Schedule, showing for each:
name, hire date, current job title or description, current salary level and any
bonus, commission or other remuneration calculated as set forth in the
Disclosure Schedule. Except as set forth on the Disclosure Schedule, none of the
employees (including leased employees) of the Business is currently on
short-term or long-term disability, absence, maternity or other leave of
absence.
5.23 Defects in Products or Designs; Product Safety. Except as set
forth on the Disclosure Schedule, there have been no claims of material defects
in any product shipped to customers that would adversely affect the performance
or quality of such product. Each product has been designed, manufactured,
packaged and labeled in substantial compliance with all regulatory, engineering,
industrial and other codes specified by the customer.
5.24 Finder. There is no person or entity that is entitled to a
finder's fee or any type of commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with the Seller other than the fees of Piper Jaffray Inc. which
are payable by Seller.
5.25 Sufficiency of Assets. Except as otherwise provided in this
Agreement or the Disclosure Schedule and except for the Excluded Assets and any
consent to assignment of a contract, license or permit, which is not received
prior to Closing, the Assets to be transferred by the Seller at the Closing Date
will include all of Seller's assets, including fixed assets, intangible assets,
licenses, permits, contracts and rights that relate to, arise from, are used or
held by the Seller in the operation of the Business, except for the Excluded
Assets. Such assets are sufficient for the operation of the Business as
presently conducted.
5.26 Governmental Authorizations. Except as set forth on the Disclosure
Schedule, the Seller has all licenses, permits or other authorizations from
governmental, regulatory or administrative agencies or authorities required for
the operation of the Business in the manner presently conducted, each of which
will be in full force and effect on the Closing Date except to the extent
failure to obtain any such license does not have a material adverse effect. A
list of all such material governmental authorizations is set forth on the
Disclosure Schedule.
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5.27 Compliance with Applicable Laws. Except as set forth on the
Disclosure Schedule, the Seller has been, for the prior two years, is, and on
the Closing Date will continue to be, in compliance in all respects with all
applicable laws (including duties imposed by common law), rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state, local and foreign) having jurisdiction over, applicable to or
otherwise concerning the Business, the Assets, and the products and employees of
the Seller related to the Business, except to the extent any non-compliance
would not have a material adverse effect.
5.28 Title to Assets; Absence of Liens and Encumbrances, Etc.
(a) Schedule 2.1(d) contains a summary description of all of the
Seller's material fixed assets relating to the Business (other than the Real
Property and the Excluded Assets). As of the Closing Date and except for the
Assumed Liabilities and subject to Section 2.4, the Seller will own all right,
title and interest in and to the Assets, free and clear of all liens,
encumbrances, security interests, options and pledges, other than Permitted
Liens.
(b) The leases and other agreements or instruments included in the
Contracts, under which the Seller holds, leases or is entitled to the use of any
personal property used in the Business, are in full force and effect and all
rentals, or other payments payable thereunder prior to the date hereof have been
duly paid and the Seller enjoys peaceable and undisturbed possession under all
such leases.
5.29 U.S. Real Property.
(a) Except as set forth on the Disclosure Schedule, to the best of
Seller's knowledge, there are no physical or mechanical defects in any of the
improvements on the U.S. Real Property which would materially impair the
intended use of the U.S. Real Property, and all such improvements are in good
operating condition and repair (subject to normal wear and tear);
(b) Except as set forth on the Disclosure Schedule, the current
use and operation of the U.S. Real Property are fully entitled, without
restriction or conditions, and are in compliance with applicable codes,
ordinances, rules, laws, regulations and requirements, including, without
limitation, those applicable to subdivisions, construction of improvements,
zoning, land use, public safety, and the Americans with Disabilities Act
(collectively, "Property Laws"), except for such restrictions or conditions or
such non-compliance as could not reasonably be expected to have a material
adverse effect, and Seller has received no written notice of non-compliance with
any Property Laws which has not been resolved;
(c) There are no zoning or other land-use regulation proceedings
or any change or proposed change in any applicable Property Laws, which could
detrimentally affect the use or operation of the U.S. Real Property, except for
such proceedings, changes or proposed changes as could not reasonably be
expected to have a material adverse effect on the Business and Assets, and
Seller has not received written notice of any special assessment proceedings
affecting the U.S. Real Property which has not been resolved;
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(d) To the best of Seller's knowledge, all water, sewer, gas,
electric, telephone and drainage facilities and all other utilities required by
law or for the present use and operation of the U.S. Real Property are installed
to the property lines of the U.S. Real Property, are all connected and operating
pursuant to valid permits, are adequate to service the U.S. Real Property and to
permit compliance with all Property Laws and the present usage of the U.S. Real
Property, and are connected to the U.S. Real Property by means of one or more
public or private easements extending from the U.S. Real Property to one or more
public streets, public rights-of-way or utility facilities;
(e) Seller has obtained all approvals, easements and rights-of-way
(and all such items are currently in full force and effect) required from
private parties for the present use and operation of the U.S. Real Property and
to ensure free and unimpeded vehicular and pedestrian ingress to and egress from
the U.S. Real Property as required to permit the present usage of the U.S. Real
Property;
(f) Seller is the sole owner of good, marketable and insurable fee
simple title (or with respect to the Jackson Lease, a leasehold interest) to the
U.S. Real Property, free and clear of all liens, security interests, covenants,
conditions, rights-of-way, easements and encumbrances of any kind or character
whatsoever, subject only to the Permitted Encumbrances, the Assumed Liabilities
as noted in the Schedules hereto and the matters shown on any commitment
obtained by Buyer;
(g) Seller has not committed nor obligated itself in any manner
whatsoever to sell the U.S. Real Property, or any portion thereof, to any party
other than Buyer. Seller has not hypothecated or assigned any rents or income
from the U.S. Real Property, or any portion thereof, in any manner except
pursuant to secured financing to be assumed or discharged at Closing.
5.30 Personal Property. (a) Seller has a legal, valid and binding
leasehold interest in all material leased personal property used in the
Business.
(b) Except as set forth in the Disclosure Schedule, all tangible
personal properties and assets which are used in the Business are structurally
sound and are in operating condition and repair (subject to normal wear and
tear) and are adequate for the uses to which they are put, except for such
required routine replacement, maintenance and repair, which, if not performed,
could not reasonably be expected to have a material adverse effect on the
Business.
5.31 No Infringement. To the knowledge of the Seller, none of the
operations, activities, products or publications of the Business infringes or
has infringed on any patent, trademark, trade name, copyright or other
intellectual property right of a third party.
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ARTICLE VI
REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
THE BUYER
The Buyer hereby represents, warrants and covenants to and agrees with
the Seller as follows, all of which representations, warranties and agreements
are made as of the date of this Agreement and, except as they may be modified by
Buyer in writing prior to or in connection with the Closing, as of the Closing
Date:
6.1 Organization, Etc. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation. The Buyer has the corporate power to execute, deliver and perform
this Agreement and consummate the transactions contemplated hereby.
6.2 Authorization of Agreement. The execution, delivery and performance
of this Agreement and the documents to be executed at the Closing has been duly
authorized and approved by the Board of Directors of the Buyer. This Agreement
is, and the documents to be executed at Closing will be, valid and binding
obligation of the Buyer enforceable in accordance with its terms, except that
such enforcement may be limited by (a) bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally, and (b) general
principles of equity, regardless of whether enforcement is sought in a
proceeding in equity or at law.
6.3 Approvals. Except for filings under the HSR Act, no consent or
approval is required of any person or entity, private or governmental, for the
execution, delivery and performance of this Agreement by the Buyer, and neither
such execution, delivery or performance, nor the consummation of the
transactions contemplated herein, breach any provision of the Buyer's Articles
of Incorporation or Bylaws or any law, rule, regulation, judgment, order,
decree, agreement, instrument or arrangement that would have a material adverse
effect on the Buyer's ability to perform its obligations hereunder.
6.4 Finder. There is no person or entity that is entitled to a finder's
fee or any type of commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with the Buyer.
6.5 Effect of Agreement, Etc. The execution, delivery and performance
of this Agreement and the documents to be executed at the Closing by the Buyer
and consummation by Buyer of the transactions contemplated hereby will not, with
or without the giving of notice and the lapse of time, or both, (a) violate any
provision of law, statute, rule or regulation to which the Buyer is subject, (b)
violate any judgment, order, writ or decree of any court applicable to the
Buyer, or (c) result in the breach of or conflict with any term, covenant,
condition or provision of, result in the modification or termination of,
constitute a default under, the Articles of Incorporation or Bylaws of the
Buyer, or any commitment, contract or other agreement or instrument to which the
Buyer is a party.
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6.6 Projections. In connection with Buyer's investigation of the
Business, Buyer has received from Seller certain estimates, projections,
forecasts, plans, budgets and pro-forma information. Buyer acknowledges that
there are uncertainties inherent in attempting to make such estimates,
projections, forecasts, plans, budgets and pro-forma information, that Buyer is
familiar with such uncertainties, that Buyer is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all estimates,
projections, forecasts, plans, budgets and pro-forma information furnished to
it, and that Buyer will not in the absence of fraud assert any claim against
Seller or its subsidiaries or affiliates or any of their respective directors,
officers, employees, agents or representatives or hold any of them liable in
connection with such estimates, projections, forecasts, plans, budgets and
pro-forma information.
6.7 Financial Condition. Buyer has the liquidity and financial
condition to consummate the transaction without any financing (except for any
financing in place or available to Buyer as of the date hereof which is not
subject to any material conditions) and knows of no reason why it cannot timely
consummate the transactions contemplated herein prior to the time set forth in
the first sentence of Section 8.1.
ARTICLE VII
COVENANTS OF THE PARTIES
7.1 Operation Of Business Prior To Closing. Between the date hereof and
the earlier of the termination of this Agreement pursuant to Article XI hereof
or the Closing Date:
(a) Negative Covenants. Seller covenants and agrees with Purchaser
that, except (1) as contemplated by this Agreement, or (2) with the prior
written consent of Buyer, which consent shall not be unreasonably withheld or
delayed, it shall not do any of the following with respect to the Business and
the Assets:
(i) other than in the ordinary course of business, sell or
otherwise dispose of any material Assets, cancel any debts or claims
involving any person related to the Business or Assets, or pledge,
assign or otherwise convey, or cause any lien to be placed upon any
Asset other than Permitted Liens or the Assumed Liabilities;
(ii) amend its Articles of Incorporation or Bylaws in any way
that could reasonably be expected to have a material adverse effect
either on the Business and the Assets or on the prospects for
consummating the transactions contemplated by this Agreement;
(iii) permit its corporate existence or any permit to be
suspended, lapsed, revoked or modified in any way that could reasonably
be expected to have a material adverse effect on the Business or the
Assets;
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(iv) amend or terminate any Contract in a manner that would
have a material adverse effect on the Business or the Assets (provided
that Manufacturer's Representative Agreements on Schedule 1.1(b) may be
renewed on identical terms);
(v) allow any insurance policy relating to the Business or
any Asset to be amended or terminated without replacing such policy
with a policy providing substantially equivalent coverage, insuring
comparable risks and issued by an insurance company financially
comparable to the prior insurance company;
(vi) except as would not be material or except pursuant to
any agreements disclosed in the Disclosure Schedule or for normal
salary adjustments consistent with past practice, increase any benefits
payable, termination pay policies or employment agreements with any
employee of the Business or amend any Benefit Plans;
(vii) make or commit to make any capital expenditures in
excess of $50,000 individually or $200,000 in the aggregate (other than
acquisition of the new Buhler); or
(viii) enter into any transaction, commit to enter into any
transaction, or take any other action out of the ordinary course of
business.
(b) Affirmative Covenants. Seller shall use all reasonable efforts,
in the ordinary course of business, to:
(i) maintain its assets and properties used in the Business
in a manner consistent with their current state, reasonable wear and
tear, damage by fire and other casualty excepted;
(ii) comply in all respects with all applicable laws
affecting the Business, except for such noncompliance as could not
reasonably be expected to have a material adverse effect on the
Business and Assets;
(iii) pay accounts payable of the Business in accordance with
Seller's past practice (other than with respect to the new Buhler); and
(iv) preserve its relationships with suppliers to the
Business and others having business relations with the Business.
7.2 Approvals, Consents, Etc. Each party shall use its reasonable
efforts to consummate the transactions contemplated hereby prior to the time set
forth in Section 8.1 and to obtain in writing prior to the Closing Date all
Closing Approvals and such action as is necessary to assume the Assumed
Liabilities (including taking all action necessary to obtain the consent of the
other parties to the Jackson Lease and the GE Debt) and shall deliver to the
other party copies of such approvals and consents in form and substance
reasonably satisfactory to the other party. Buyer and Seller shall proceed
diligently and in good faith to make and coordinate filings under
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the HSR Act as promptly as practicable (and in no event more than five business
days subsequent to the execution of this Agreement) and to the extent feasible
shall make such filings on the same date and each of Buyer and Seller shall
request early termination of the waiting period.
7.3 Further Assurances. After the Closing Date, the Seller shall, at
the request and expense of the Buyer, execute, acknowledge and deliver to the
Buyer without further consideration, all such further assignments, conveyances,
endorsements, consents and other documents as the Buyer may reasonably request
(a) to transfer to and vest in the Buyer and protect its right, title and
interest in, all of the Assets, (b) to aid in the collection of Accounts
Receivable, (c) obtain any consent required to an assignment of a Contract or a
Commitment, and (d) otherwise to consummate the transactions contemplated by
this Agreement. Buyer shall take such action to further and more completely
evidence the assumption and performance of the Assumed Liabilities and provide
assistance in preparation of the Closing Date Statement as shall be reasonably
requested by Seller.
7.4 Access Prior to Closing. At all times prior to the Closing Date (or
if earlier, the date this Agreement is terminated), the Seller shall provide the
Buyer and its representatives with reasonable access to, and will make available
for inspection and review, all properties, personnel, books, records and
accounts of the Seller relating to the Business in order that the Buyer may have
a reasonable opportunity to make such investigation as it shall desire to make
of the Business during normal business hours. It is understood that the Buyer
after reasonable prior notice to Seller shall be permitted to maintain personnel
on the premises of the Seller during normal business hours to observe all
aspects of the operations of the Business and to confer with the Seller's
management, attorneys, accountants and other third parties reasonably requested
for verification of any information obtained pursuant to such observations.
7.5 Turn Over. Seller shall promptly remit to Buyer after receipt any
funds received after the Closing Date with respect to the Contracts and Assets
to be transferred hereunder or any other funds remitted by customers of the
Business after the Closing Date which are part of the Assets acquired hereunder.
7.6 Seller's Employees; Retirement Benefits. (a) Prior to the Closing
Date, the Buyer shall make employment offers to the employees on Section 5.22 of
the Disclosure Schedule ("Transferred Employees") (except those designated as
having been terminated) and such employment offer shall include comparable
salaries, job responsibilities and benefits (and so that such employees shall
retain their employment dates for purposes of accruing benefits under Buyer's
benefit plans). Buyer shall notify Seller of its plans to comply with the
preceding sentence in a timely fashion prior to the Closing and at such time
provide Seller with any offer letter and other materials to be used in
connection with such offer and such plans, letter and material shall be
reasonably acceptable to Seller. For two years from the Closing, Buyer shall pay
any Transferred Employee hired hereunder who is terminated by Buyer with a
severance payment in accordance with Seller's involuntary severance policy in
effect on the Closing (with any such employee receiving full credit for her or
his past service with Seller).
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(b) Buyer shall initially provide the Transferred Employees with
post-retirement health benefits equivalent to those provided to the Transferred
Employees and their spouses and dependents under Seller's Plans in effect prior
to the Closing, with such Transferred Employees receiving credit for prior
service at Seller. Buyer shall indemnify Seller for any further costs Seller
incurs (whether Seller would be reimbursed by insurance or not) in providing
such benefits to the Transferred Employees and/or their dependents after the
Closing Date.
(c) Following the Closing, Buyer shall have the right to amend or
terminate any employee benefit plan, including post-retirement health care,
including changing the amount of any employer contribution or the type and level
of benefits provided; provided however the indemnity in the second sentence of
Section 7.6(b) shall remain in full force and effect notwithstanding such
termination.
(d) Seller will provide notice to each Transferred Employee of his
or her right to elect COBRA continuation coverage under Seller's group health
plans as a result of his or her termination of employment with Seller. Seller
will further provide each Transferred Employee with a certificate of creditable
coverage as required by the Health Insurance Portability and Accountability Act.
7.7 Access After the Closing. Seller shall afford Buyer reasonable
access to the Excluded Assets and Excluded Records (including related computers
and computer records) or core corporate records retained by Seller necessary to
prepare tax returns and to review the Closing Date Statement, or Closing Balance
Sheet, or operate the Business and Buyer shall afford Seller reasonable access
to records acquired hereunder necessary for Seller to operate its business, to
prepare its tax returns and to prepare the Closing Date Statement. After the
Closing Buyer shall afford Seller reasonable access to any records acquired
hereunder for legitimate business purposes.
7.8 Taxes. (a) Cooperation. The parties hereto agree to furnish or
cause to be furnished to one another, upon request, as promptly as practicable,
such information and assistance relating to the Assets, the Assumed Liabilities
and the Business as is reasonably necessary for the filing of all tax returns,
and making of any election related to taxes, the preparation for any audit by
any taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any tax return. The parties hereto shall cooperate with
each other in the conduct of any audit or other proceeding related to taxes
involving the Business and each shall execute and deliver such other documents
as are necessary to carry out the intent of this Section 7.8(a).
(b) Allocations. All property taxes (including, with respect to the
Jackson property, payments in lieu of taxes) levied with respect to the U.S.
Real Property and any personal property included in the Assets for a taxable
period that includes (but does not end on) the Closing Date shall be apportioned
between Seller and Buyer as of the Closing Date based on the number of days of
such taxable period included in the Pre-Closing Tax Period and the number of
days of such taxable period included in the Post-Closing Tax Period. Seller
shall be
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liable for the proportionate amount of such taxes that is attributable to the
Pre-Closing Tax Period, and Purchaser shall be liable for the proportionate
amount of such taxes that is attributable to the Post-Closing Tax Period. Within
a reasonable period after the Closing, Seller and Buyer shall present a
statement to the other setting forth the amount of reimbursement to which each
is entitled under this Section 7.8(b), together with such supporting evidence as
is reasonably necessary to calculate the proration amount. The proration amount
shall be paid by the party owing it to the other within thirty (30) days after
delivery of such statement. Buyer and Seller shall cooperate prior to the
Closing to agree to mutually acceptable allocations with respect to any other
cost typically allocated in connection with similar real property closings.
7.9 Environmental Matters. (a) Prior to the Closing Date, Buyer will
be permitted, at its expense, to conduct or have conducted such environmental
assessments, investigations and audits that it deems necessary, including Phase
I or Phase II assessments.
(b) Buyer shall provide Seller with a copy of any environmental
report promptly upon receipt of same. Buyer and Seller shall keep confidential
the results of such investigations except as required under any Environmental
Law or by other legal process. Buyer shall repair any and all damage caused by
it with respect to its inspection of the U.S. Real Property.
7.10 Leases. Upon completion of the plant in Reynosa, Mexico and
possession thereof by Seller, Seller shall sub-lease Buyer a portion of such
plant by entering into a sublease with Buyer (and/or taking an assignment of
Seller's interest in Tool Products Mexico S. de R.L. de C.V.) under terms and
conditions as the parties may agree upon, which terms and conditions, including
rent, will be substantially equivalent to those that are customary and
reasonable in such leases. In the event the parties cannot agree on such terms
and conditions, the dispute resolution provisions of Article IX shall apply. It
is expressly understood that such agreement is not a condition to closing the
transactions hereunder. Seller shall incur no liability to Buyer if such plant
is not completed or if Seller does not take possession thereof in a timely
fashion.
7.11 No Solicitation. From the date hereof until the Closing Date or
the date this Agreement is terminated pursuant to Article XI and except with
respect to the permitted disposition of assets in the ordinary course of
business, the Seller shall not, and shall ensure that each of its directors,
officers, consultants, counsel, accountants, investment advisors and other such
representatives and agents shall not, solicit or entertain offers from,
negotiate with, or enter into any agreement with, any third party relating to
the acquisition of any of the Assets, in whole or in part whether by way of
asset sale, stock sale, merger, consolidation, recapitalization or any other
form of transaction, other than dispositions of Inventory in the ordinary course
of business.
7.12 Confidentiality. (a) Each of the parties hereto agrees that it
will not use, or permit the use of, any of the information relating to any other
party hereto or the Assets or the Business with respect to the transactions
contemplated herein ("Information") in a manner or for a purpose detrimental to
such other party or otherwise than in connection with the transaction, and that
they will not disclose, divulge, provide or make accessible (collectively,
"Disclose"), or permit the Disclosure of, any of the Information to any person
or entity, other than their
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respective directors, officers, employees, investment advisors, accountants,
counsel and other authorized representatives and agents (who shall be bound by
this Section 7.12), except as may be required by judicial or administrative
process or, in the opinion of such party's counsel, by other requirements of
law; provided, however, that prior to any Disclosure of any Information
permitted hereunder, the disclosing party shall first obtain the recipients'
undertaking to comply with the provisions of this subsection with respect to
such information. The term "Information" as used herein shall not include any
information relating to a party which the party disclosing such information can
show: (i) to have been in its possession prior to its receipt from another party
hereto; (ii) to be now or to later become generally available to the public
through no fault of the disclosing party; (iii) to have been available to the
public at the time of its receipt by the disclosing party; (iv) to have been
received separately by the disclosing party in an unrestricted manner from a
person entitled to disclose such information; or (v) to have been developed
independently by the disclosing party without regard to any information received
in connection with this transaction. Each party hereto also agrees to promptly
return to the party from whom it originally received such information all
original and duplicate copies of written materials containing Information should
the transactions contemplated herein not occur. A party hereto shall be deemed
to have satisfied its obligations to hold the Information confidential if it
exercises the same care as it takes with respect to its own similar information.
(b) In the event the Closing occurs, Section 7.12(a) shall have no
further force and effect except with respect to any Information with respect to
Seller generally (i.e., any Information provided that is not related exclusively
to the Business) in the possession of Buyer.
7.13 Seller's Name. Buyer shall use reasonable efforts to remove the
name "Quadion" and any Quadion trademark from buildings, vehicles, signs,
machinery, tooling, packaging, brochures and the like acquired hereunder within
60 days from the Closing. Seller will grant and convey to Buyer, without any
warranty, Seller's interest in and right to use the name Tool Products.
7.14 Non-Competition. (a) Seller acknowledges that in and as a result
of its ownership of the Assets and operation of the Business, it has made use
of, acquired, and/or added to confidential information of a special and unique
nature deriving independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use
(specifically excluding any information generally available to the public at
large or disclosed by Buyer to third parties or any information disclosed
because Seller has a legal obligation to make such disclosure). Such
information, to the extent it relates to the Business, is hereinafter referred
to as "Confidential Information" and includes, without limitation, the following
information to the extent related exclusively to the Business: customers,
vendors, products, systems, technical data, know-how, data files, manuals,
confidential reports, the amounts paid by or to customers, licensors, licensees,
and vendors, the amounts paid for products and services, and other trade secrets
and information Seller knows or has reason to know, or will know or have reason
to know, and that Buyer intends or expects to remain confidential. As a material
inducement to Buyer to enter into this Agreement, Seller covenants and agrees
that it shall not, from and after the Closing and for a period of five (5) years
following the Closing Date, divulge or disclose for any purpose whatsoever any
Confidential
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Information except to the extent such information is or becomes generally
available to the public at large or disclosed by Buyer to third parties or any
information disclosed because Seller has a legal obligation to make such
disclosure.
(b) During the five (5) year period following the date of this
Agreement, the Seller shall not except as may be required by law or as may be
done with Buyer's written consent, directly or indirectly, either as a
shareholder, member, principal, co-partner, agent, financier, lender,
consultant, manager or in any other individual or representative capacity
whatsoever (i) engage in any activities relating to the Business in the United
States of America, (ii) solicit, serve, divert or assist any person in so
soliciting, servicing or diverting any customers or vendors of Buyer or any of
its affiliates to the extent such actions are related to the Business, (iii)
solicit the employment of any of the employees of Seller that are employed by
Buyer pursuant to this Agreement. The foregoing shall not apply to the
activities of any entity of which Seller owns or beneficially owns less than 10
percent of the outstanding voting power.
(c) This Section shall be of no force and effect in event more
than fifty percent of the voting securities of Seller are acquired by a third
party or after a merger (whether or not Seller is the surviving company) which
results in more than 50% of the voting securities of Seller being owned by a
third party, in each case if such third party is already conducting operations
in the Business.
7.15 Payroll. At the request of Buyer, Seller shall process Buyer's
payroll related to the Division for a period not to exceed three months
following the Closing Date. Buyer shall reimburse Seller for its out-of-pocket
costs related thereto. Buyer shall use reasonable efforts to minimize the time
Seller must process its payroll under this Section. Seller will use reasonable
efforts to assist Buyer in transferring payroll processing to any alternative
source as of or subsequent to Closing.
7.16 Physical Inventory. Seller shall conduct a physical inventory of
the tool crib concurrently with the Closing and Buyer shall be allowed to
participate in and observe such inventory.
ARTICLE VIII
CLOSING
8.1 Closing. The closing (the "Closing") of the transactions
contemplated hereby shall occur as soon as practicable after the satisfaction or
waiver of the conditions set forth in this Article VIII. The Closing will be
held at the offices of Leonard, Street and Deinard, P.A., Suite 2300, 150 South
Fifth Street, Minneapolis, MN 55402 at 10:00 a.m. or at such other time and
place as the parties mutually agree. The parties agree to use reasonable efforts
to cause the Closing to occur on December 31, 1999. The date upon which the
Closing occurs is referred to herein as the "Closing Date."
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8.2 Buyer's Conditions to Closing. The obligations of the Buyer under
this Agreement are subject to the satisfaction of the following conditions as of
the Closing Date, any or all of which conditions may be waived by the Buyer in
its sole discretion:
(a) Accuracy of Representations, Warranties and Agreements. The
representations and warranties made by the Seller herein shall be true and
correct on the date of this Agreement and at the Closing Date in all material
respects with the same effect as though made at such time (except to the extent
the Buyer shall waive the same). This condition to closing shall be deemed met
notwithstanding breaches of representations and warranties which do not exceed
$10,000 individually or $50,000 in the aggregate. The Seller shall have
performed and complied in all material respects with all agreements, covenants
and conditions required by this Agreement to be performed and complied with by
it at or prior to the Closing Date; and the Seller shall have delivered to the
Buyer a certificate of its an officer certifying to such compliance and
completion.
(b) Consents and Approvals; HSR. The Buyer shall have received all
Closing Approvals in form and substance reasonably satisfactory to the Buyer.
Any waiting period (and any extension thereof) under the HSR Act applicable to
the transactions contemplated hereby shall have expired or been terminated.
(c) Transfer Documents. The Seller shall have executed and
delivered a bill of sale and deeds conveying the Assets to the Buyer in form
reasonably satisfactory to the Buyer and its counsel and any other instrument
required by Section 1.3, including assignments of contracts and leases free and
clear of all encumbrances other than Permitted Liens and the Assumed
Liabilities.
(d) Motor Vehicles. The Seller shall have executed and delivered
certificates of title and assignments thereof for all motor vehicles transferred
to the Buyer as part of the Assets.
(e) Assets. The Seller shall have delivered a list of the
Inventory, Accounts Receivable and fixed assets as of the close of business on a
date as close as practicable to the Closing Date, which list shall be reasonably
satisfactory to Buyer.
(f) Litigation. No temporary restraining order, preliminary or
permanent injunction, or cease and desist order, issued by any court or
governmental authority preventing the transfers contemplated hereby or the
consummation of the Closing, shall be in effect at the Closing Date, and no
proceeding by any court or governmental authority seeking to restrict or
prohibit the transfer and exchange contemplated hereby or the consummation of
the Closing shall be pending or threatened on the Closing Date.
(g) Secretary's Certificate. The Buyer shall have received a
certificate of the Secretary of the Seller with respect to the resolutions
adopted by the Board of Directors of the Seller, as applicable, approving this
Agreement and the transactions contemplated hereby.
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(h) Good Standing Certificates, Etc. The Buyer shall have received
a certificate dated within five (5) days before the Closing Date from the office
of the Secretary of State of Minnesota certifying that Seller is validly
existing and in good standing under the laws of its state of incorporation.
(i) Lien Search. The Seller, at its expense, shall have arranged
for and the Buyer shall have received UCC search reports, reasonably
satisfactory to the Buyer and its counsel, of a reputable search company
indicating that there are no liens, mortgages, encumbrances, charges or other
rights of third parties (other than Permitted Liens and the Assumed Liabilities
and encumbrances noted in the Schedules and Exhibits hereto) of record.
(j) Opinion of Counsel to the Seller. The Buyer shall have received
the opinion of Leonard, Street and Deinard, PA, dated the Closing Date, in the
form set forth in Exhibit 8.2(j).
(k) Title Insurance. A commitment for an Owners Policy of Title
Insurance on an ALTA standard form from First American Title shall have been
issued to Buyer with respect to the U.S. Real Property, at Seller's expense (it
being understood Buyer will pay the related premium for the policies).
(l) Jackson Lease. Buyer shall have (i) either replaced the letter
of credit issued for the account of Seller to secure Seller's obligations under
the Jackson lease on terms and conditions acceptable to Buyer, and each
applicable rating agency shall have affirmed that Buyer's letter of credit shall
not affect the rating on the related bonds or (ii) made other arrangements with
respect to the letter of credit satisfactory to Buyer.
8.3 Seller's Conditions to Closing. The obligations of the Seller under
this Agreement are subject to the satisfaction of the following conditions as of
the Closing Date, any or all of which may be waived by the Seller in its sole
discretion:
(a) Accuracy of Representations, Warranties and Agreements. The
representations, warranties and agreements of the Buyer herein shall be true and
correct on the date of this Agreement and at the Closing Date in all material
respects with the same effect as though made at such time (except to the extent
the Seller waives the same); the Buyer shall have performed and complied in all
material respects with all agreements, covenants, and conditions to be performed
or complied with by it at or prior to the Closing Date; and the Buyer shall have
delivered to the Seller a certificate of an officer dated the Closing Date
certifying to such compliance and completion.
(b) Consents and Approvals. The Seller shall have received all
Closing Approvals in form and substance reasonably satisfactory to the Seller.
Any waiting period (and any extension thereof) under the HSR Act applicable to
the transactions contemplated hereby shall have expired or be terminated.
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(c) Litigation. No temporary restraining order, preliminary or
permanent injunction, or cease and desist order, issued by any court or
governmental authority preventing the transfers contemplated hereby or the
consummation of the Closing, shall be in effect at the Closing Date, and no
proceeding by any court or governmental authority seeking to restrict or
prohibit the transfer and exchange contemplated hereby or the consummation of
the Closing shall be pending or threatened on the Closing Date.
(d) Secretary's Certificate. The Seller shall have received a
certificate of the Secretary of the Buyer with respect to the resolutions
adopted by the Board of Directors of the Buyer approving this Agreement and the
transactions contemplated hereby.
(e) Opinion of Counsel to the Buyer. The Seller shall have received
the opinion of Dickinson, Wright, PLLC and Kilpatrick & Cody, counsel to the
Buyer, addressed to the Seller, dated at the Closing Date, in the form set forth
in Exhibit 8.3(e) attached hereto.
(f) Purchase Price. The Purchase Price shall have been paid by wire
transfer to an account designated by Seller.
(g) Assumption Agreement. An Assumption Agreement, pursuant to
which the Buyer will assume all obligations of Seller under the Assumed
Liabilities in the form set forth as Exhibit 8.4(g) attached hereto.
(h) Jackson Lease. Buyer shall have either (i) replaced the letter
of credit issued for the account of Seller to secure Seller's obligations under
the Jackson Lease (with the letter of credit issued on behalf of Seller being
returned to Seller), each applicable rating agency shall have affirmed that
Buyer's letter of credit shall not affect the rating on the related bonds, and
Seller shall have been released of all obligations under the Jackson Lease or
(ii) made other arrangements with respect to the letter of credit acceptable to
Seller. Seller shall have been released from all future obligations under the
Jackson Lease.
(i) GE Debt. Seller shall have been released from all obligations
with respect to the GE Debt.
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ARTICLE IX
DISPUTE RESOLUTION
9.1 Initial Meeting. In the event that there is a dispute arising out
of or relating to this Agreement (other than a dispute to be resolved pursuant
to Section 3.2), the parties shall attempt in good faith to resolve such
disputes promptly by negotiation between the parties. Either party may give the
other party written notice that a dispute exists (a "Notice of Dispute"). The
Notice of Dispute shall include a statement of such party's position. Within ten
(10) days of the delivery of the Notice of Dispute, the parties shall meet at a
mutually acceptable time and place, and thereafter as long as they reasonably
deem necessary, to attempt to resolve the dispute. All documents and other
information or data on which each party relies concerning the dispute shall be
furnished or made available on reasonable terms to the other party at or before
the first meeting of the parties as provided by this Section 9.1.
9.2 Mediation. If the dispute has not been resolved by negotiation
within 30 days of the delivery of a Notice of Dispute, or if the parties have
failed to meet within 10 days of the Notice of Dispute, the parties shall
endeavor to settle the dispute by mediation under the then current CPR Model
Mediation Procedure for Business Disputes. Unless otherwise agreed, the parties
shall select a mediator from the CPR Panels of Neutrals and shall notify CPR to
initiate the selection process.
9.3 Binding Arbitration. Any controversy or claim arising out of or
relating to this Agreement or any agreement or document in connection therewith,
the breach, termination or validity thereof, or the transactions contemplated
herein (including any question arising as to whether or not any dispute falls
within the terms of this Section or the selection of arbitrators but excluding
any dispute to be resolved pursuant to Section 3.2) if not settled by
negotiation or mediation as provided in Section 9.1 and Section 9.2, shall be
settled by arbitration in Chicago, Illinois, in accordance with the CPR Rules
for Non-Administered Arbitration of Business Disputes, by three arbitrators. Any
party may initiate arbitration from and after 60 days following the delivery of
a Notice of Dispute if the dispute has not then been settled by negotiation or
mediation. The arbitrators shall be appointed by the parties as provided by CPR
Rule 5, Selection of Arbitrators. The arbitration procedure shall be governed by
the United States Arbitration Act, 9 U.S.C. Sections 1-16, and the award
rendered by the arbitrators shall be final and binding on the parties and may be
entered in any court having jurisdiction thereof.
9.4 Discovery. Each party shall have discovery rights as provided by
the Federal Rules of Civil Procedure; provided, however, that all such discovery
shall be commenced and concluded within ninety (90) days of the initiation of
arbitration.
9.5 Expeditious Proceedings. It is the intent of the parties that any
arbitration shall be concluded as quickly as reasonably practicable. Unless the
parties otherwise agree, once commenced, the hearing on the disputed matters
shall be held four days a week until concluded, with each hearing date to begin
at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators shall use all
reasonable efforts to issue the final award or awards within a period of five
business days
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after closure of the proceedings. Failure of the arbitrators to meet the time
limits of this Section 9.5 shall not be a basis for challenging the award.
9.6 Attorneys' Fees. The arbitrators may instruct the non-prevailing
party to pay all costs of the proceedings, including the fees and expenses of
the arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party, but only for the prevailing party that shall have complied
with the provisions of Sections 9.1 and Section 9.2 above. In the absence of
such instruction, each party shall be instructed to bear its own costs and to
pay its proportionate share of the fees and expenses of the arbitrators.
9.7 Equitable Relief. Nothing herein shall be construed to prevent any
party from seeking equitable relief in any court of competent jurisdiction to
restrain or prohibit any breach or threatened breach of any covenant of the
parties set forth in this Agreement, whether or not the parties have first
sought to resolve the dispute through negotiation, mediation or arbitration
pursuant to this Article IX.
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ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Seller. The Seller covenants and agrees with
the Buyer that it shall indemnify the Buyer and its directors, and officers, and
their successors, heirs and legal representatives and hold them harmless from,
against and in respect of any and all costs, losses, claims, contribution
claims, liabilities, fines, penalties, damages, response costs, remedial action
costs, clean-up costs and expenses (including interest which may be imposed in
connection therewith and court costs and fees and reasonable disbursements of
counsel) (hereinafter referred to as "Claims") arising out of or with respect
to:
a. any liabilities or obligations of the Seller other than the
Assumed Liabilities;
b. any material breach of any of the representations, warranties,
covenants or agreements made by the Seller in this Agreement or in any other
agreement or certificate executed and delivered by the Seller pursuant hereto;
and
c. any claim, suit or litigation resulting from any matter
indemnified under this Section 10.1.
10.2 Indemnification by Buyer. The Buyer hereby covenants and agrees
with the Seller that it shall indemnify the Seller and its directors, officers,
and successors, heirs and legal representatives, and hold them harmless from,
against and in respect of any and all Claims, arising out of or with respect to:
a. the operation of the Business or the Assets by the Buyer or its
successors, assigns or transferees on and following the Closing Date;
b. the Buyer's assuming and agreeing to pay, perform and discharge
the obligations of the Seller related to future performance to be discharged or
performed after the Closing Date under the Assumed Liabilities;
c. any breach of any of the representations, warranties, covenants
or agreements made by the Buyer in this Agreement or in any other agreement or
certificate executed and delivered by Buyer pursuant hereto; and
d. any claim, suit or litigation resulting from any matter
indemnified under this Section 10.2.
10.3 Limits. No claim for indemnification may be made by any party
hereto except to the extent the aggregate amount of such Claims by such party
exceed Two Hundred Fifty Thousand Dollars ($250,000) (the "Basket") and the
aggregate Claims indemnified against shall not exceed twenty-five percent (25%)
of the adjusted Purchase Price (the "Cap"). The foregoing
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Basket and Cap shall not apply to any Claim by Seller for indemnification from
Buyer with respect to (i) Buyer's failure to timely perform and discharge the
Assumed Liabilities and (ii) any payment or indemnification due Seller pursuant
to Sections 3.2, 3.3, 7.6, 7.8, 7.10 (with respect to any lease entered into
under such Section) and 10.2(b). The foregoing Basket and Cap shall not apply to
any Claim by Buyer for indemnification from Seller pursuant to Section 3.2 or
with respect to obligations and liabilities of the Business that are not Assumed
Liabilities. No claim for indemnification shall be made (i) by either party for
indirect, special, consequential or punitive damages or (ii) by Buyer for any
breach of any representation, warranty or covenant of this Agreement of which
Buyer has knowledge prior to the Closing as a result of its due diligence
investigation or otherwise.
10.4 Upon the assertion by any third party of a claim that may give
rise to a right to indemnification Section 10.1 or Section 10.2, the party
indemnified (the "Indemnified Party") shall promptly notify the other party (the
"Indemnifying Party") in writing of the existence of such claim. Upon written
notification to the Indemnified Party delivered within seven (7) days after
receipt of notice from the Indemnified Party of the assertion of any such claim,
the Indemnifying Party may undertake the defense, compromise or settlement of
such claim, provided that:
(a) the Indemnifying Party shall timely provide to the Indemnified
Party all information with respect to such defense, compromise or settlement as
such Indemnified Party may request;
(b) such Indemnifying Party shall not assume any position or take
any action in connection with such defense, compromise or settlement that would
impose an obligation on the Indemnified Party, it being understood that such
Indemnifying Party would be acting solely on its own behalf, for its own account
and at its own risk.
In the event that such Indemnifying Party does not undertake the
defense, compromise or settlement of such claim as provided in the foregoing,
the Indemnified Party shall have the right to undertake the defense, compromise
or settlement of such claim on behalf of, for the account of, and at the risk of
the Indemnifying Party. The Indemnified Party shall, however, notify the
Indemnifying Party of any compromise or settlement of any such claim.
10.5 Exclusive Remedy. The indemnification set forth in this Article X
shall be the sole and exclusive remedy of the parties against the other for
breach of the representations, warranties and covenants of this Agreement and
any Agreement or document executed in connection herewith.
10.6 Insurance and Taxes. Any claim for indemnification hereunder shall
be reduced by any insurance payment to be received by the party claiming
indemnification and any net tax benefit to be realized by such indemnity with
respect to the matter for which indemnification is sought.
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ARTICLE XI
TERMINATION
11.1 Termination. Anything in this Agreement to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated herein abandoned:
a. by the mutual written consent of all of the parties hereto at
any time prior to the Closing;
b. by the Buyer in the event of a material breach by the Seller of
any provision of this Agreement, which breach is not remedied within ten (10)
days after receipt of notice thereof (or if earlier, the Drop Dead Date);
c. by the Seller in the event of a material breach by the Buyer of
any provision of this Agreement, which breach is not remedied within ten (10)
days after receipt of notice thereof (or if earlier, the Drop Dead Date);
d. by either party if the Closing does not occur on or before
January 31, 1999 (the "Drop Dead Date"); provided that neither party will be
entitled to terminate this agreement pursuant to this Section 11.1d if such
person's willful breach of this agreement has prevented satisfaction of the
conditions or consummation of the transactions contemplated hereby at or prior
to such time.
In the event this Agreement is terminated, no party shall have any
obligation or liability to the other party for the transactions contemplated
herein or for breach of any representation, warranty or covenant of this
Agreement or any document executed in connection herewith, except for the
provisions which survive pursuant to the next paragraph hereof.
The provisions set forth in Article IX and Sections 7.12, 12.1, 12.6
and 12.8 shall survive any termination.
11.2 Risk of Loss. The risk of loss to the Assets and all liability
with respect to injury and damage occurring in connection therewith shall be the
sole responsibility of the Seller until the time of the Closing.
ARTICLE XII
GENERAL
12.1 Expenses. The Buyer and the Seller shall pay their own respective
expenses and the fees and expenses of their respective counsel and accountants
and other experts.
12.2 Survival of Representations and Warranties. The representations,
warranties in this Agreement and in any ancillary certificate or document shall
survive the Closing for a period of two (2) years from the Closing Date, except
the representations and warranties contained in
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Sections 5.2, 5.5, 5.12, 5.28(a), 5.29(f), 6.2 and 6.6 which shall survive for
the period of the applicable statute of limitations. All covenants shall survive
the Closing for the applicable statute of limitations.
12.3 Waivers. No action taken pursuant to this Agreement, including any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action, or 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 shall not operate or be construed
as a waiver of any subsequent breach. The waiver by any party hereto at or
before the Closing Date of any condition to its obligations hereunder which is
not fulfilled shall preclude such party from seeking redress from the other
party hereto for breach of any representation, warranty, covenant or agreement
contained in this Agreement related to such waiver.
12.4 Binding Effect; Benefits; Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns, heirs and legal representatives. Except as
otherwise set forth herein, nothing in this Agreement, express or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement. No party may assign its
rights hereunder without the consent of the other party except in connection
with the sale of substantially all of such party's assets, and except that Buyer
shall be permitted to assign this agreement to a wholly-owned subsidiary so long
as such subsidiary assumes the obligations of Buyer under this Agreement and
makes the representations and warranties set forth in Article VI and Buyer
unconditionally guarantees the obligations of the subsidiary under this
Agreement and the documents executed in connection therewith at the Closing.
12.5 Notices. All notices, requests, demands and other communications
which are required to be or may be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
transmitted by facsimile or three (3) days after deposit by certified or
registered first class mail, postage prepaid, return receipt requested, to the
party to whom the same is so given or made:
If to the Seller, to: Quadion Corporation
3630 Wooddale Avenue
Minneapolis, MN 55440
Attention: Robert W. Carlson, Jr.
Fax:(612) 927-1422
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With a copy to: Leonard, Street and Deinard, P.A.
150 South Fifth Street, Suite 2300
Minneapolis, MN 55402
Attention: Morris M. Sherman, Esq.
Fax: (612) 335-1657
If to the Buyer, to: Intermet Corporation
5445 Corporate Drive
Suite 200
Troy, MI 48098-2883
Attention: Alan J. Miller, General Counsel
Fax: (248) 952-2512
or to such other address or facsimile number as such party shall have specified
by notice to the other party hereto.
12.6 Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto) constitutes the entire agreement and supersedes all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof and cannot be changed or terminated orally.
No representations or warranties, express or implied, are made with respect to
the Business, Division, Seller, or the Assets except as expressly set forth
herein.
12.7 Headings. The Section and other headings contained in this
Agreement are for reference purposes only and shall not be deemed to be a part
of this Agreement or to affect the meaning or interpretation of this Agreement.
12.8 Governing Law. This Agreement shall be construed as to both
validity and performance and enforced in accordance with and governed by the
laws of the state of Minnesota, without giving effect to the choice of law
principles thereof.
12.9 Amendments. This Agreement may not be modified or changed except
by an instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.
12.10 Severability. The invalidity of all or any part of any
representation, warranty, covenant or indemnification Section of this Agreement
shall not render invalid the remainder of this Agreement or the remainder of
such Section. If any representation, warranty, covenant or indemnification
Section of this Agreement or portion thereof is so broad as to be unenforceable,
it shall be interpreted to be only so broad as is enforceable.
12.11 Press Releases. Neither Seller nor Buyer shall, without the prior
approval of the other party, issue any press release or written statement for
general circulation relating to the transactions contemplated hereby, except as
required by law or the regulation of any stock exchange (but each party shall
still endeavor to allow the other party reasonable opportunity to review and
comment to the extent feasible).
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12.12 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument. However, in making proof hereof it shall be necessary
to produce only one copy hereof signed by the party to be charged. Signature
pages delivered by facsimile to this Agreement or any document delivered in
connection herewith or at the Closing shall be binding to the same extent as an
original.
[Remainder of page is blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective names by an officer thereunto duly authorized on the
date first above written.
SELLER: BUYER:
QUADION CORPORATION INTERMET CORPORATION
By: By:
--------------------------------- --------------------------------
Its: Its:
----------------------------- ----------------------------
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EXHIBIT (2)2.
Contents of Omitted Schedules to Asset Purchase Agreement
(a copy of any of the omitted Schedules will be
furnished to the Commission upon request)
Schedule Description
- -------- -----------
1.1(a) Net Assets Transferred
1.1(b) Contracts
1.1(c) Permitted Encumbrances
1.1(d) Permitted Liens
2.1(d) Personal Property
2.1(f) Prepaid Items
2.1(i) Permits
2.2 Excluded Assets
4.1(d) Assumed Leases
4.1(e) Other Assumed Obligations
5.6 Effect of Agreement
5.7 Consents and Approvals
5.8 Financial Information
5.9 Undisclosed Liabilities
5.11 Litigation
5.12 Taxes
5.13 Accounts Receivable and Accounts Payable
5.15 Absence of Certain Changes or Events
5.16 Contracts and Commitments
5.17 OSHA;Environmental
5.18 Customers and Vendors
5.20 Employment Matters
5.21 Employee Benefit Plans
5.22 Employees
5.23 Defects in Products or Designs
5.25 Sufficiency of Assets
5.26 Governmental Authorizations
5.27 Compliance with Applicable Laws
5.29 U.S. Real Property
5.30 Personal Property
