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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) FEBRUARY 5, 1996
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MET-COIL SYSTEMS CORPORATION
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-14057 42-1027215
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(State or Other Jurisdiction (Commission File No.) (I.R.S. Employer No.)
of Incorporation)
5486 SIXTH STREET SW, CEDAR RAPIDS, IOWA 52404
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(Address or Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (319) 363-6566
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 5, 1996 the Registrant sold certain assets and certain
liabilities of its wholly owned subsidiary Rowe Machinery and Automation, Inc.
("Rowe") to Mestex, Ltd. ("Mestex") a subsidiary of Mestek, Inc. for $3 million
in cash and an adjustable promissory note with a face value of $1.1 million
payable within 90 days. The note balance is subject to adjustments related to
a physical inventory count and an analysis of slow moving inventory and
uncollectible receivables. The proceeds from this sale will be used to retire
debt.
The assets sold represent the rights to manufacture two product lines
known as the "Press Feed" and "Cut-To-Length" product lines, all of the
intangible assets related to these product lines, the Rowe name and the
associated inventory and accounts receivable. The liabilities assumed include
accounts payable and customer deposits also related to these two product lines.
Mestex will lease the Rowe facilities including machinery and equipment, for
$40,000 per month for at least a one year period.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Not applicable
(b) Proforma financial information
The following proforma financial information is filed as part
of this report:
Condensed Consolidated Balance Sheets as of December 31, 1995.
Condensed Consolidated Statements of Operations for the year
ended May 31, 1995, and six months ended November 30, 1995.
Notes to Condensed Consolidated Financial Statements
(c) Exhibits
The exhibits filed herewith are listed in the exhibit index on
page 7 hereof.
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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 hereunto duly authorized.
Date: February 15, 1996 Met-Coil Systems Corporation
By: Joseph H. Ceryanec\s\
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Name: Joseph H. Ceryanec
Title: Vice President-Finance and
Chief Financial Officer
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MET-COIL SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except shares)
<TABLE>
<CAPTION>
December 31, December 31,
1995 1995
Proforma
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<S> <C> <C>
Current assets
Cash $ 633 $ 633
Cash, restricted for debt repayment 505 20
Trade receivables, net 5,684 4,898
Notes and other receivables 786 1,845
Inventories 13,460 11,260
Prepaid expenses 1,169 1,159
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Total current assets 22,237 19,815
Property and equipment, net 6,641 6,255
Investments and other assets 2,496 2,496
Intangibles, net 2,833 2,833
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TOTAL ASSETS $ 34,207 $ 31,399
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Current liabilities
Notes payable to banks and current maturities of long-term debt $ 16,880 $ 13,395
Accounts payable and accrued liabilities 7,331 6,056
Customer deposits and progress billings 3,110 2,448
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Total current liabilities 27,321 21,899
Long-term debt 3,960 3,960
Other 794 794
Preferred stock, convertible and redeemable at $13 per share 3,604 3,604
Stockholders' Equity (Deficit):
Common stock, $.01 par value, authorized 10,000,000 shares; 31 31
1996 issued 3,063,783
Additional paid-in capital 16,163 16,163
Retained earnings (deficit) (17,789) (15,175)
Foreign currency translation 252 252
Common stock in treasury, at cost, 28,000 shares (129) (129)
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Net equity (deficit) (1,472) 1,142
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 34,207 $ 31,399
=============================================================================================================================
</TABLE>
See notes to condensed consolidated financial statements
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MET-COIL SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended Six Months Ended
May 31, 1995 November 30, 1995
As Proforma As Reported Proforma
Reported (Unaudited) (Unaudited) (Unaudited)
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<S> <C> <C> <C> <C>
Net revenues $ 43,775 $ 32,751 $ 20,815 $ 16,697
Cost of goods sold 34,316 25,898 16,742 13,356
Operating expenses 9,495 7,341 4,361 3,505
Interest expense, net 2,690 2,363 1,391 1,228
Other expense, net 336 309 40 116
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Loss before income taxes (3,062) (3,160) (1,719) (1,508)
Income taxes --- --- --- ---
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Net loss $ (3,062) $ (3,160) $ (1,719) $ (1,508)
Preferred stock dividends 130 130 108 108
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Net loss applicable to common stock $ (3,192) $ (3,290) $ (1,827) $ (1,616)
==================================================================================================================================
Weighted average common and
common equivalent shares 2,871 2,871 2,997 2,997
==================================================================================================================================
Net loss per common and
common equivalent share $ (1.12) $ (1.15) $ (0.61) $ (0.54)
==================================================================================================================================
</TABLE>
See notes to condensed consolidated financial statements
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MET-COIL SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying Condensed Statements of Operations have been derived from
statements previously presented in the Company's Annual Report on Form 10-K for
the year ended May 31, 1995 and the Company's Quarterly Report on Form 10-Q for
the quarter ended November 30, 1995 and should be read in connection with the
financial statements and notes thereto included in such reports. Results for
the six months are not necessarily indicative of the results for a full year.
The accompanying proforma statements include adjustments to reflect the sale of
the operations and certain assets and liabilities related to two product lines
of the Rowe subsidiary as of June 1, 1994 with respect to the proforma
Condensed Consolidated Statement of Operations for the year ended May 31, 1995
and December 31, 1995 with respect to the proforma Condensed Consolidated
Balance Sheet and June 1, 1995 with respect to the proforma Condensed
Consolidated Statement of Operations for the six months ended November 30,
1995.
As more fully described in Item 2 herein, the purchase price for the sale of
the two product lines of $3 million in cash and an adjustable promissory note
for $1.1 million. The Company will realize a gain of approximately $2.6
million from this sale.
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EXHIBITS LIST AND INDEX
Filed Herewith
Exhibit Unless Otherwise
Number Description Indicated
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2 Agreement for the Purchase and Sale of ---
Assets dated as of January 12, 1996 by and
among Rowe Machinery and Automation,
Inc., Mestex, Ltd. and Met-Coil Systems
Corporation
2.a Amendment to Agreement for the Purchase ---
and Sale of Assets dated as of January 12,
1996 by and among Rowe Machinery and
Automation, Inc., Mestex, Ltd. and Met-Coil
Systems Corporation
<PAGE> 1
EXHIBIT - 2
AGREEMENT FOR THE PURCHASE AND SALE OF ASSETS
AGREEMENT made as of this 12th day of January, 1996, by and between
Met-Coil Systems Corporation, a Delaware corporation located at 5486 6th
Street, S.W., Cedar Rapids, Iowa 52404, ("Met-Coil"), Rowe Machinery &
Automation, Inc., a Texas corporation, located at 811 Regal Row, Dallas, Texas
("Seller"), and Mestex, Ltd., a Texas limited partnership with offices located
at 4830 Transport Drive, Dallas, Texas 75247 ("Purchaser").
RECITALS
A. Met-Coil is the owner of all right, title and interest in and to all
of the issued and outstanding shares of Rowe.
B. Seller is the owner of certain assets including machinery, equipment,
and other tangible personal property, inventory, work-in-process, rights under
agreements, accounts or notes receivable, intellectual property, permits,
goodwill and other books, records, information and materials required or
appropriate for the continued operation of that certain business that
manufactures and sells the line of press feed and cut-to-length machinery,
equipment, accessories and related repair and service parts sold under the name
Rowe (the "Rowe Business") (as further defined in Section 1 of this Agreement).
C. Met-Coil and Seller desire and intend to sell the assets and certain
liabilities associated with the Rowe Business of Seller to Purchaser at the
price and on the terms and conditions hereinafter set forth.
D. Purchaser desires and intends to purchase the assets and assume
certain liabilities of Seller associated with the Rowe Business at the price
and on the terms and conditions hereinafter set forth.
AGREEMENTS
NOW, THEREFORE, in consideration of the terms hereof, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Purchase and Sale of Assets
1.1. The Assets. Upon the closing of the transactions
contemplated under this Agreement on January 31, 1996, or such other date as
mutually agreed by the parties (the "Closing Date"), and subject to the terms
and conditions contained in this Agreement, Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser shall purchase, acquire
and accept from Seller, free and clear of all liens, encumbrances, restrictions
and adverse charges of any nature whatsoever, except as may be
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permitted by Section 7.7, all of the assets, rights, interests,
properties and goodwill of every nature whatsoever, tangible or intangible and
wheresoever situated, required or appropriate for the continued operation of
the Rowe Business which is further defined as the manufacture, application,
design, development, engineering, distribution and sale of various models and
types of press feeding and cut-to-length automation equipment and machinery and
the parts and accessories related thereto set forth by name and drawing number
category in Schedule 1.1 attached hereto. The assets, rights, interests,
properties and goodwill sold, transferred, conveyed, assigned and delivered by
Seller to Purchaser hereunder (collectively, the "Assets") shall include, but
shall not be limited to the following:
1.1.1. Personal Property. All of the jigs, dies,
patterns, and tooling fixtures of Seller used in the Rowe Business identified
in Schedule 1.1.1 (the "Personal Property"), together with any rights of Seller
to all warranties, if any, and to the extent assignable, received from the
manufacturers and sellers of such items, all as relates to the operation of the
Rowe Business;
1.1.2. Inventory. All saleable, usable, undamaged, non-obsolete
and non-slow-moving inventory of Seller relating to the Rowe Business including
raw materials, work-in-process, and finished goods (the "Inventory") to be
physically counted on or about the Closing Date and listed and attached to this
Agreement thereafter as Schedule 1.1.2;
1.1.3. Material Agreements. Subject to required consents (by
customers of Seller, lessors and tangible asset suppliers), all right, title
and interest of Seller in, to and under executory contracts (including the
right to the return of any and all deposits), the sales backlog and other
contract rights and agreements to provide equipment and services to the Rowe
Business customers of Seller, representative agreements, leases of personal
property, licenses, purchaser orders, sale orders and joint venture,
partnership and other agreements related to the ownership or operation of the
Rowe Business all as identified and listed by Purchaser in Schedule 1.1.3 that
shall be affirmatively and expressly assumed by Purchaser (the "Material
Agreements");
1.1.4. Intellectual Property. All patents, patent applications,
trademarks (including the trademark "Rowe"), service marks, tradenames,
copyrights and copyright applications and licenses with respect to any of the
foregoing all as identified in Schedule 1.1.4 and all inventions, inventor's
notes, discoveries, trade secrets, ideas, proprietary processes and formulae,
whether patentable or not, improvements, engineering drawings,
computer-assisted design and manufacturing data, bills of material, designs and
specifications (including design choices), computer software and laboratory
certifications, proprietary and trade rights and data, ideas and know-how,
whether patentable or not, and all shop rights, manufacturing data, licenses,
and other intellectual property and all correspondence related thereto that are
used in
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the Rowe Business (all of which are hereinafter collectively referred to as the
"Intellectual Property"); however, notwithstanding the foregoing, nothing
herein shall be deemed a transfer of any rights to intellectual property
related to the Fen-Pro machinery operations of Seller;
1.1.5. Receivables. All accounts or notes receivable, prepaid
expenses and contract rights of Seller relating to the Rowe Business as of the
Closing Date, including those identified in Schedule 1.1.5 attached hereto,
arising from the operation of the Rowe Business (the "Receivables");
1.1.6. Permits. All of Seller's right, title and interest in and
to any and all permits, licenses, authorizations, certifications, consents,
orders, registrations and approvals or any federal, state or local governmental
entity or certifying or regulatory agency or authority required of Seller or
otherwise necessary or advisable for the operation of the Rowe Business as set
forth on Schedule 1.1.6 attached hereto (the "Permits") to the extent the same
are transferable or assignable to Purchaser;
1.1.7. Books and Records. All of Seller's right, title and
interest in or to all books of account, records, files and invoices, including
but not limited to technical and scientific literature, all invoice files kept
by serial number, model or customer and correspondence related thereto, all
production data, testing data, equipment maintenance data, employee files,
payroll information system, accounting records, inventory records, purchasing
records, engineering records, sales and sales promotional data, advertising
materials, customer lists and customer data, cost and pricing information,
supplier and vendor lists, installation and maintenance manuals, business
plans, supply reference catalogs and any other records and data used in
connection with the Rowe Business (whether in computer software, data or any
other form) (the "Books and Records") other than the minute book and records of
shareholder and director action by Seller; and
1.1.8. Goodwill. The goodwill associated with the Rowe Business
(the "Goodwill").
1.2. Conveyance of Assets. The sale, transfer, conveyance,
assignment and delivery of the Assets provided for in this Section 1 shall be
made by (i) a duly executed bill of sale, evidencing the warranty provisions of
this Agreement, and substantially in the form of Exhibit 1.2 attached hereto
(the "Bill of Sale") and (ii) such other good and sufficient instruments of
conveyance and transfer as shall be reasonably necessary to vest in Purchaser
as of the Closing Date, full title to the Assets being sold, transferred,
conveyed, assigned and delivered hereunder.
1.3 Off-Site Assets. All tangible Assets held at any location
other than the Dallas facility of Seller are described on Schedule 1.3 which
schedule includes a description of each of such
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assets, its type, the name and address of the vendor or customer holding such
assets and, if such asset is held pursuant to an agreement, a copy or
description of such agreement is attached to the schedule.
2. Excluded Assets. The assets excluded from this Agreement (the
"Excluded Assets") are all assets of Seller not specifically identified in
Section 1.
3. Purchase Price
3.1. Calculation of Purchase Price. The purchase price (the
"Purchase Price") of the Assets to be acquired by Purchaser from Seller shall
be the sum of the following:
3.1.1. The amount of Three Million and 00/100 Dollars
($3,000,000.00) for the Personal Property, Material Agreements, Intellectual
Property, Permits, Books and Records and Goodwill; and
3.1.2. An amount equal to the net tangible asset value
defined as the following:
(a) the actual value on the Closing Date of the Inventory
calculated pursuant to the terms of Section 7.15(a) of the Agreement, plus the
actual value of the collectible Receivables as described in Section 7.12 of the
Agreement that are purchased by Purchaser,
(b) less the value of all of the obligations of Seller
including all trade accounts payable, customer deposits and other obligations
of and associated with the Rowe Business that are expressly assumed by
Purchaser under this Agreement.
3.2 Payment of Purchase Price
3.2.1 On the Closing Date, the portion of the Purchase Price
identified in Section 3.1.1 of the Agreement shall be paid by Purchaser
delivering to Seller a promissory note in the amount of $3.0 million
substantially in the form attached hereto as Exhibit 3.2.1 (the "Initial
Note"). The Initial Note shall be payable within five (5) business days of
Met-Coil and Seller completing the refinancing of its debt currently held by
Harris Bank as lead lender, on December 31, 1996, whichever is earlier. The
parties are deferring the payment of the Purchase Price under the Initial Note
in order to insure a smooth transition of the Rowe Business and the continued,
uninterrupted operation of the Dallas manufacturing facility. Purchaser
desires to purchase the Assets of Seller; however, Purchaser's agreement to pay
a premium amount of Purchase Price is expressly conditioned upon a smooth
transition of the Rowe Business and continued operation in the Dallas
manufacturing facility. A stable lending relationship among Met-Coil, Seller
and its secured lenders is deemed by Purchaser to be essential to a smooth
transition. Therefore, the payment of the Purchase Price in cash shall be
delayed until the new lending
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relationship contemplated by Seller and Met-Coil and represented to
Purchaser by Seller and Met-Coil to be imminent, is executed, delivered and
funded. In the event that such a new lending relationship is not closed and
Met-Coil seeks bankruptcy protection or otherwise ceases to engage in business,
the value of the Rowe Business and the Assets to Purchaser would be
substantially diminished. Consequently, the Initial Note contains a provision
that the Purchase Price will be readjusted significantly downward in the event
of a bankruptcy or dissolution of Met-Coil.
3.2.2 On the Closing Date the portion of the Purchase Price
identified in Section 3.1.2 shall be paid by Purchaser delivering to Seller an
adjustable note substantially in the form attached hereto as Exhibit 3.2.2 (the
"Adjustable Note"). The terms, conditions, covenants and procedures whereby the
principal amount of the Adjustable Note shall be adjusted based upon the actual
count of the Inventory, the application of the terms of the representations and
warranties set forth in Sections 7.12 and 7.15 of the Agreement and the
covenant of Seller set forth in Section 10.7 of this Agreement, are set forth
more fully in Section 3.3 of this Agreement and the Adjustable Note. The
amount of any state or local transfer, conveyance or recordation taxes imposed
by the state or municipality on the transfer of title of the Personal Property
shall be paid by Seller.
3.3 Adjustment to Principal Amount of Adjustable Note
3.3.1 Adjustment. Purchaser and Seller agree that the
original principal amount of the Adjustable Note has been calculated by adding
the face amount of the accounts receivable of Seller at the latest date
available prior to the Closing Date but not earlier than December 31, 1995, and
the amount of the book value of the inventory of Seller at the latest date
available prior to the Closing Date but not earlier than November 30, 1995, and
subtracting therefrom the value of the trade accounts payable, customer
deposits, accrued liabilities and other obligations of Seller that will be
expressly assumed by Purchaser at the latest date available prior to the
Closing Date but not earlier than December 31, 1995. Purchaser and Seller
further agree that the principal amount of the Adjustable Note shall be
adjusted upward or downward as appropriate, dollar for dollar, as follows:
(a) downward by the amount of the value of all
liabilities and obligations of Seller relating to and arising from the
ownership and operation of the Assets and the Rowe Business prior to the
Closing Date (whether unrecorded trade accounts payable, accrued liabilities,
customer deposits or other obligations of Seller), that were not included in
the initial determination of the original principal amount of the Adjustable
Note, that have been paid or accrued for payment by Purchaser at the time of
the final calculation of the principal amount due under the Adjustable Note;
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(b) downward by the aggregate amount of the face
value of all accounts receivable of Seller that was used in determining the
original principal amount of the Adjustable Note, that are not collected by
Purchaser by May 31, 1996;
(c) upward or downward, as the case may be, by the
amount that the value of the Inventory of Seller, determined based upon the
physical count thereof held on or about the Closing Date, exceeds or falls
short of the amount of the value of the inventory of Seller that was used in
determining the original principal amount of the Adjustable Note;
(d) downward by an amount equal to the value of those
items in the inventory of Seller determined by the authorized representatives
of Purchaser and Seller to be obsolete, damaged, defective or without
manufacturing value;
(e) downward by an amount equal to the value of those
slow-moving items in the inventory of Seller determined by the authorized
representatives of Purchaser and Seller to be not consumable in the ordinary
course of the manufacture and sale of the products of the Rowe Business in the
24-month period after the Closing Date; and
(f) downward by an amount equal to fifty percent
(50%) of the value of those slow-moving items in the inventory of Seller
determined by the authorized representatives of Purchaser and Seller to be not
consumable in the ordinary course of the manufacture and sale of the products
of the Rowe Business in the 12-month period after the Closing Date but not
otherwise included as slow-moving items under Section 3.3.1(e).
Any inventory of Seller determined to be slow-moving under Section 3.3.1(e) of
the Agreement shall remain the property of Seller and it shall be segregated
from the Inventory transferred to Purchaser and disposed of at Seller's
discretion. Any inventory of Seller determined to be slow-moving under Section
3.3.1(f) of the Agreement shall be included in the Inventory transferred to
Purchaser hereunder.
3.3.2 Terms Relating to Adjustment. Seller shall use
its best efforts to value the physical count of the Inventory to be taken
immediately after the Closing Date at its earliest convenience, but not later
than forty (40) days after the Closing Date. The parties shall work together
making such personnel and records available as necessary to determine and
finalize the adjustments to the principal amount of the Adjustable Note in good
faith at their earliest convenience based upon the valuation of the physical
count of the Inventory, the calculations and standards set forth in Section
3.3.1, the representations and warranties set forth in Sections 7.12 and 7.15
of the Agreement and the covenant of Seller set forth in Section 10.7 of the
Agreement. The final adjusted amount payable and the calculation of the
adjustments to the Adjustable Note shall be set forth in a memorandum of
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understanding prepared and executed by the authorized representative of each of
the parties. The adjusted amount due under the Adjustable Note shall be paid
in cash to Seller within five (5) business days of the execution of such
memorandum of understanding and upon such payment the Adjustable Note shall be
stamped "paid in full", canceled and returned to Purchaser.
4. Allocation of Purchase Price. The Purchase Price shall be allocated
by the parties hereto among the Assets as set forth in a memorandum of
allocation delivered on the Closing Date substantially in the form attached
hereto as Exhibit 4.0 (the "Memorandum of Allocation"). Notwithstanding any
allocation by the parties, Purchaser agreed to purchase and Seller has agreed
to sell the Assets, and the allocation is not intended and shall not be deemed
to constitute an agreement between the parties to transfer less than all of the
Assets. Furthermore, such allocation has been made solely to ascribe fair
value to the Assets and any benefits deriving therefrom shall not inure to any
other third party.
5. Assumption of Liabilities
Upon the Closing Date, Purchaser shall assume or discharge the
following liabilities of Seller:
5.1. Assumed Liabilities. Those trade accounts payables and
customer deposits and other obligations of Seller associated with the Rowe
Business as specifically set forth by Purchaser and Seller in Schedule 5.1
attached hereto as they exist as of the Closing Date.
5.2. Assumption of Material Agreements. The obligations and
liabilities of Seller with respect to the assignment to Purchaser of the
Material Agreements described in Section 1.1.3 and listed on Schedule 1.1.3.
5.3. Limits on Assumption. Except for the assumptions or
discharges of liabilities described in Sections 5.1 and 5.2, Purchaser shall
not assume (a) other liabilities, obligations and commitments of Seller,
whether fixed or contingent, legal or equitable, mature or inchoate, written or
oral, express or implied, known or unknown, including, but not limited to those
related to taxes, employment practices, employee benefits and pensions, implied
warranty, maintenance and products or professional liability, and
environmental, health and safety obligations all related to, arising from or in
connection with the Rowe Business for products manufactured and services
performed prior to the Closing Date and (b) those liabilities, obligations and
commitments of Seller that arise after the Closing Date, and the
indemnification provisions contained in Article 16 shall apply to any liability
of Seller which is not assumed by Purchaser and which is asserted or claimed by
any person against Purchaser.
5.4. Assignment of Contracts and Rights. Notwithstanding anything
in this Agreement to the contrary, this Agreement shall
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not constitute an agreement to assign the Material Agreements or any
claim, contract, license, lease, commitment, sales order, purchase order or any
claim or right or any benefit arising thereunder or resulting therefrom if the
agreement to assign or attempt to assign, without the consent of a third party,
would constitute a breach thereof or in any way adversely affect the rights of
Purchaser or Seller thereunder. Until such consent is obtained, or if an
attempted assignment thereof would be ineffective or would affect the rights of
Seller thereunder so that the Purchaser would not in fact receive all such
rights, Purchaser and Seller will cooperate with each other in any arrangement
designed to provide for Purchaser the benefits of, and to permit Purchaser to
assume, insofar as expressly set forth herein, stated liabilities under the
Material Agreement including enforcement at the request and expense and for the
benefit of Purchaser of any and all rights of Seller against a third party
thereto arising out of the breach or cancellation thereof by such third party
or otherwise. Any transfer or assignment to Purchaser by Seller of any
property or property rights or any contract or agreement which shall require
the consent or approval of any third party shall be made subject to such
consent or approval being obtained.
6. Covenants Against Competition
6.1. Covenant Not to Compete. Met-Coil and Seller each covenant and agree
that neither it nor its affiliates shall at any time within the five (5) year
period immediately following the Closing Date (a) have any ownership interest
in any firm, corporation, partnership, proprietorship or other business that
engages with third parties in the activities now engaged in and in the
territory served by the Rowe Business with respect to the press feed portion of
the Rowe Business and (b) use any proprietary information, drawings or designs
with respect to the cut-to-length portion of the Rowe Business for its own or
any third parties' benefit or account, so long as Purchaser or any affiliate or
successor thereof, remains engaged in the Rowe Business; provided, however,
that Seller may own, directly or indirectly, solely as an investment,
securities, or any entity which are publicly traded if Seller does not,
directly or indirectly, own five percent (5%) or more of any class of
securities of any such competitive entity. It is further understood by the
parties that Iowa Precision Industries, an affiliate of Met-Coil, is in the
business of manufacturing cut-to-length lines and will continue to operate in
that market in a competitive capacity subject only to the express prohibitions
of this Section 6.1.
6.2. Non-competition Agreement. The obligations of Met-Coil and
Seller under this Section 6 shall be set forth fully in a noncompetition
agreement substantially in the form attached hereto as Exhibit 6.2 (the
"Noncompetition Agreement"). The Noncompetition Agreement shall be executed by
Met-Coil and Seller on the Closing Date.
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6.3. Remedies. Without waiving the Purchaser's rights to monetary
damages, all parties to this Agreement acknowledge that the breach of the
obligations contained in this Article 6 would result in substantial but
indeterminable harm to Purchaser, that the restraints imposed are reasonable,
that there is no adequate remedy at law for a breach of such obligations, and
that therefore injunctive relief, specific performance or other equitable
remedies are appropriate to enforce the obligations undertaken in this Article
6. In the event that a court finds that the term, territory, or scope of this
Article 6 is too broad to be enforceable, Seller and Purchaser further agree
that a reformation of the terms of this Article 6 is appropriate and should be
undertaken by the court in order to protect the value of the Assets being
conveyed pursuant to this Agreement as a going concern, and to provide for the
enforceability of the obligations contained in this Article 6 to the fullest
extent allowed by law and equity.
7. Representations and Warranties of Seller
Seller (and, where applicable, Met-Coil) represents and warrants to
Purchaser as of the Closing Date as follows:
7.1. Corporate Existence. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas and
Met-Coil is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and Seller knows of no violation of the
requirement for good standing in any other jurisdiction in which it is required
to be qualified to carry on the Rowe Business. Seller has full corporate power
and authority to carry on the Rowe Business as now being conducted. Met-Coil
currently owns all of the issued and outstanding shares of Seller subject to
the lien and secured interest of Harris Bank as agent for the secured lenders
which will not be released at the Closing Date.
7.2. Due Authorization and Enforceability. Seller and Met-Coil
have full corporate power and authority to execute and deliver this Agreement,
the Certificate of Assumption, the Bill of Sale, Memorandum of Allocation,
Noncompetition Agreement, Lease Agreement, Guarantee and the other documents,
instruments and agreements to which each is a party to be delivered upon the
Closing Date (collectively, the "Related Agreements"), and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Related Agreements by Seller and Met-Coil and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate actions and no other corporate action or
proceeding on the part of Seller or Met- Coil is necessary to authorize the
execution and delivery of this Agreement or the Related Agreements or the
consummation by Seller of the transactions contemplated hereby or thereby other
than the consent of Harris Bank as agent for the secured lenders, which consent
is a condition to closing. This Agreement and the Related Agreements have been
duly executed and delivered by Seller and Met-Coil, as
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applicable, and this Agreement and the Related Agreements are legal,
valid and binding obligations of Seller and Met-Coil, enforceable against each
of Seller and Met-Coil in accordance with their terms.
7.3. No Conflicts. Except as set forth in Schedule 7.3, neither
the execution and delivery of this Agreement or the Related Agreements nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with or violate any provision of the Articles of Incorporation or
Bylaws of either of Seller and Met-Coil, (ii) conflict with or violate any law,
rule, regulation, ordinance, order, writ, injunction, judgment or decree
applicable to the Rowe Business or by which any of the Assets are bound or
affected or (iii) conflict with or result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination or cancellation of,
or accelerate the performance required by or maturity of, or result in the
creation of any security interest, lien, charge or encumbrance on any of the
Assets pursuant to any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, permit, license, franchise, lease, contract or other
instrument or obligation to which Seller is a party or by which any of the
Assets are bound or affected; except those Liens permitted by Section 7.7 and
in the case of (ii) or (iii) above, for such conflicts, violations, breaches,
defaults, terminations, cancellations and accelerations which in the aggregate
will not have a material adverse effect on the Rowe Business.
7.4. Financial Statements. Attached as Schedule 7.4 are the
balance sheets of Seller as of the fiscal year ended May 31, 1995, and as of
the interim period ended November 30, 1995, and the related statements of
income, for the respective fiscal year and interim period then ended (all of
the financial statements referred to above in this Section 7.4 are herein
collectively referred to as the "Seller Financial Statements"). The Seller
Financial Statements fairly present the assets, liabilities and financial
position of Seller as of the respective dates set forth therein and the results
of operations and changes in financial position of Seller for the respective
periods set forth therein; the Seller Financial Statements have been prepared
in each case in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved.
7.5 No Material Changes. Except as set forth in Schedule 7.5,
since May 31, 1995, (i) there have been no changes in the Assets or the
liabilities (actual or contingent) of Seller or in the nature and prospects of
the Rowe Business or its condition (financial or otherwise) which have in the
aggregate been material and adverse to the Rowe Business, and, (ii) Seller has
operated the Rowe Business in the ordinary course and consistent with past
practice.
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7.6 All Necessary Assets. The Assets (including the Personal
Property, Inventory, Material Agreements, Intellectual Property, Receivables,
Permits, Books and Records and Goodwill) being sold, transferred, conveyed,
assigned and delivered by Seller under this Agreement constitute all of the
assets used by Seller in the conduct of the Rowe Business, except for the land,
building, improvements, machinery and equipment and office furniture of Seller
which is not being conveyed to Purchaser under this Agreement.
7.7 Title to Assets. Seller warrants that Seller has good and
marketable title to the Assets transferred hereunder and, upon consummation of
the transactions contemplated by this Agreement, including execution and
delivery of the Bill of Sale or other instruments of transfer, Purchaser will
acquire title to the Assets, free and clear of all mortgages, pledges, liens,
security interests, assignments, conditional sales agreements, encumbrances,
claims or charges of any kind ("Liens"), except for (i) Liens created by
Purchaser and, (ii) Liens set forth on Schedule 7.7 which Seller shall satisfy
immediately or prior to the Closing Date. At the Closing Date, none of the
Assets will be subject to any commitment or other arrangement for its sale or
use by third parties except under Material Agreements disclosed in Schedule
1.1.3.
7.8 Condition of Assets. Except as set forth in Schedule 7.8, the
Personal Property included in the Assets set forth in Schedule 1.1.1 is in good
operating condition and repair, ordinary wear and tear excepted and is
reasonably satisfactory for the purposes for which the Assets are being used,
and is capable of being used to carry on the Rowe Business.
7.9 Compliance with Laws. The operation of the Rowe Business and
the use of the Assets comply in all material respects with all applicable laws,
ordinances, rules, decrees, orders and regulations, including federal and state
and local environmental laws and rules and laws related to employment,
benefits, and pensions (collectively the "Laws"), except for such failures to
comply which in the aggregate will not have a material adverse effect on the
Assets or Rowe Business. Seller has obtained all necessary permits, licenses,
certificates, exemptions, orders and approvals and has filed all required
notices with federal, state and local governmental bodies that are required by
applicable law for the use of the Assets and in order to conduct the Rowe
Business as presently conducted, all of which are valid and effective on the
date of this Agreement and will be valid at the Closing Date, and all payments,
fees and costs thereof have been paid in full to the date of this Agreement and
will be paid in full at the Closing Date. Seller has not received notice of
any violations of any Laws or regulations or any covenants or contracts with
respect to the Rowe Business or any of the Assets, and to Seller's knowledge,
no such notice of violations is pending or has been threatened.
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7.10 Absence of Litigation. There are no judgments or other
judicial or administrative orders outstanding against Seller, nor is there any
action, suit or proceeding at law or in equity or by or before any governmental
or administrative instrumentality or other agency now pending or, to the
knowledge of Seller, threatened against or affecting Seller, the Assets or any
of Seller's property or rights which, if adversely determined, might materially
impair the right or ability of Seller to carry on the Rowe Business as it is
now conducted or as proposed to be conducted or would materially adversely
affect the financial condition of Seller. A true, correct and complete list of
all suits or proceedings at law, in equity or by or before any governmental or
administrative instrumentality or other agency and other litigation (whether
material or not) pending or threatened against Seller, or settled within the
last five (5) years noting those which involve the Rowe Business is attached
hereto as Schedule 7.10. Seller is not in default in any material respect under
any applicable statute, rule, order, certificate or regulation of any
governmental authority having jurisdiction over it. Seller has conducted the
Rowe Business in such a manner so that there have been no occurrences that have
given or will give rise to products liability or breach of warranty on the part
of Seller.
7.11 Material Agreements. Schedule 1.1.3 is an accurate and
complete list of all of Seller's Material Agreements of any kind as to which
the rights and/or obligations are being assumed or discharged by Purchaser.
There are no other Material Agreements being assumed by Purchaser. Each of the
Material Agreements is valid and effective in accordance with its terms. True
and correct copies of the Material Agreements have been supplied to Purchaser
by Seller, appropriately identified in order that such Material Agreements can
be identified on Schedule 1.1.3. At the Closing Date, all consents to the
assumptions of the obligations of Seller by Purchaser under the Material
Agreements will have been obtained. All other executory contract rights or
obligations of Seller related to the Rowe Business, not listed on Schedule
1.1.3 and therefore not being assumed by Purchaser, are listed in Schedule
7.11. No party to any of the Material Agreements (including Seller) is in
material default thereunder and no event has occurred which with the passage of
time or the giving of notice or both would constitute a material default under
any of the Material Agreements.
7.12 Receivables. The Receivables being conveyed hereunder and
listed in Schedule 1.1.5, will, at the Closing Date, be owned by Seller, free
and clear of all claims, encumbrances, credits, backcharges, counterclaims,
setoffs and deductions, and are not subject to additional requirements of
performance by Seller, and such Receivables have not been billed or collected
for a greater percentage of the work done or materials supplied than has
actually been performed or supplied by Seller, except as set forth in Schedule
7.12. Seller guarantees to Purchaser that every dollar of the Receivables
shall be collected by Purchaser.
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7.13 Patents and Trademarks. Schedule 1.1.4 lists all patents, patent
applications, trademarks and service marks and applications therefor, owned by
Seller and heretofore used in the conduct of the Rowe Business, none of which
has been held or stipulated to be invalid in any litigation which has been
concluded and the validity of none of which has been questioned in any
litigation currently pending or which, to the best knowledge of Seller, has
been threatened. Seller owns or possesses and will have conveyed to Purchaser
at the Closing Date all Intellectual Property used in the Rowe Business, and
the Intellectual Property does not, to the best knowledge of Seller, infringe
any patent or other rights owned by others, nor has Seller received any notice
of conflict thereof with the asserted rights of others.
7.14 Related Party Agreements. No affiliate, officer or
director of Seller or Met-Coil or any related person has, directly or
indirectly, entered into any transaction with Seller relating to the Rowe
Business, except for any arrangements reflected on the Seller Financial
Statements and described in Schedule 7.14. For purposes of this Agreement, the
term "related person" shall mean and include any person related to any
affiliate, officer or director of Seller or Met-Coil by blood or by marriage,
or any corporation, partnership, proprietorship, trust or other entity in which
any officer or director of Seller (or any spouse, ancestor or descendant of the
same) has more than a five percent (5%) legal or beneficial interest.
7.15 Inventory. The Inventory of Seller included in the Assets
(whether raw materials, purchased components, manufactured parts,
work-in-process, finished goods or other) does not contain any damaged,
defective, slow- moving (defined as more than a one years' supply under normal
conditions of sale) or obsolete items which are not currently usable or
saleable in the ordinary course of the Rowe Business.
(a) Raw materials and purchased components shall be
valued individually at the lower of acquisition costs or market value in
accordance with GAAP consistently applied. Acquisition costs shall be
determined on an item-by-item, FIFO basis and shall be determined by using the
standard costs of Seller in effect at a date no later than October 31, 1995,
adjusted upward or downward on a case-by-case basis to account for instances
where standard costs differ materially from acquisition costs or market costs.
Work-in-process consisting of manufactured parts, sub- assemblies and equipment
in the process of being assembled and finished goods shall be valued at the sum
of the value of the raw material and purchased components, direct labor and
factory burden applicable to said items of work-in-process and finished goods
as further set forth herein: (i) raw materials and purchased components shall
be valued at the lower of acquisition costs or market value in accordance with
GAAP consistently applied, (ii) direct labor shall be valued at Seller's labor
standards and rates which are based on standard direct labor minutes multiplied
by the standard direct
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labor rate in effect at December 31, 1995, and (iii) standard factory burden
shall be expressed as a percentage of standard direct labor costs, for the
respective products, which percentage shall be those used by Seller as of
December 31, 1995, adjusted to eliminate the cost of (i) the wages, fringe
costs and expenses of the service department that are not directly related to
pre-shipment service of products, and (ii) any costs inconsistent with GAAP in
the calculation of burden.
(b) The value at which the Inventory is shown on the
Seller Financial Statements for the interim period ending November 30, 1995,
has been determined in accordance with the standard valuation policy of Seller,
consistently applied and in accordance with GAAP.
(c) All items of Inventory on hand at the Dallas
facility of Seller that are included in the physical counts at the Closing
Date, but not yet set forth or reflected in Seller's accounts payable reported
in the Seller Financial Statements, shall be disclosed to Purchaser on Schedule
7.15.
(d) All items of Inventory (and their location) held
at locations other than Seller's Dallas facility at the Closing Date shall be
disclosed fully to Purchaser on Schedule 1.3.
7.16 Taxes. With respect to the Rowe Business and the Assets
being conveyed under this Agreement, Seller has filed all federal, state,
county and local tax returns, including information returns, which it is
required by law to file and has paid all income, payroll, withholding, gross
receipts, excise, occupation, sales, use or other taxes, assessments and other
governmental charges due in respect of such returns, except to the extent that
any such taxes are being contested in good faith and as to which adequate
reserves have been set aside and Seller has accrued all taxes not yet due.
Since December 31, 1995, Seller has not incurred any taxes other than taxes
incurred in the ordinary course of business, and all such taxes are fully
reserved against on the books of Seller. Seller is not delinquent in the
payment of any amount of taxes, and there are no Liens for any taxes upon the
Assets of Seller, except Liens for current taxes not yet due that are fully
reserved for on the Seller Financial Statements. All taxes that Seller was or
is required by law to withhold or collect, have been and are being withheld or
collected by it and have been or are being held by it for such payment. All
tax returns required to be filed by or on behalf of Seller have been prepared
and filed in accordance with all applicable laws or requirements and accurately
reflect the taxable income (or other measure of Tax) of the party filing the
tax returns. All such tax returns, estimates, reports and declarations are
complete and accurate and disclose all taxes required to be paid for the
periods covered thereby. True and complete copies of federal and state income
or franchise tax returns of Seller for each of the fiscal years ended May 31,
1994 and May 31, 1995 have been delivered to Purchaser. Except as disclosed on
Schedule 7.16, no audit, action, suit, investigation,
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claim, assessment or examination with respect to taxes is now pending or
currently in progress with respect to Seller and, to the best of Seller's
knowledge, there is no basis therefor. Seller has not received from the
Internal Revenue Service or from any other tax authority from any state,
foreign, county, local, or other jurisdiction a notice of underpayment of
taxes, a proposed assessment of taxes, proposed adjustment to any tax returned,
filed or other deficiency that it has not been paid.
7.17 No Misrepresentation or Material Non-disclosures. Neither
this Agreement nor the Related Agreements, nor any other document, certificate
or statement furnished to Purchaser in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading. There
is no fact known to Seller which materially adversely affects or in the future
may (so far as can now be foreseen) materially adversely affect the Rowe
Business or the Assets which has not been set forth in this Agreement.
7.18 Guaranteed Obligations. Seller has not directly or
indirectly guaranteed, become a surety or accommodation party for, endorsed
(other than collection or deposit in the ordinary course of business),
discounted with recourse, or agreed (contingently or otherwise) to purchase or
repurchase, or otherwise acquire any indebtedness from any entity, nor agreed
to supply or advance funds to any person, firm, corporation or other entity,
nor indemnified any person, firm, corporation or other entity.
7.19 No Defective Products. The products of the Rowe Business
previously manufactured and sold by Seller have, where necessary, been
qualified under and comply in all respects with the specifications and
requirements of applicable rating and compliance agencies and safety standards.
Except for express warranties disclosed in Schedule 7.27, Seller retains the
obligation to pay for the satisfaction of any customer claims for deficiencies
in its products as more fully set forth in Article 5 of this Agreement.
7.20 Employee Benefit Plans
(a) Set forth in Schedule 7.20(a) is a true and complete
list of each "employee pension benefit plan" (as such term is defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
and the regulations promulgated thereunder ("ERISA")) maintained by Seller or
an ERISA Affiliate (as defined in Section 7.20(e) below), or with respect to
which Seller or an ERISA Affiliate is or will be required to make any payment,
or which provides or will provide benefits to present or prior employees of
Seller or an ERISA Affiliate due to such employment (the "Pension Plans"). Set
forth in Schedule 7.20(a) is a true and complete list of each "employee welfare
benefit plan" (as such term is defined in Section 3(1) of ERISA) maintained by
Seller, or with respect to which Seller is or will be required to make any
payment, or which provides or will provide benefits to
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present or prior employees of Seller due to such employment (the "Welfare
Plans") (the Pension Plans and Welfare Plans together being the "ERISA Benefit
Plans"). Neither Seller nor any ERISA Affiliate (i) maintains or has
maintained, or (ii) is or was required to make any payment with respect to, any
"employee pension benefit plan" (as such term is defined in Section 3(2) of
ERISA) ever subject to Section 302 of ERISA. No ERISA Benefit Plan or prior
Pension Plan is or was a "multi employer plan" (as such term is defined in
Section 3(37) of ERISA).
(b) Other than those plans and programs listed in Schedule
7.20(a), Schedule 7.20(b) is a true and complete list of each of the following
to which Seller is a party or with respect to which it is or will be required
to make any payment (the "Non-ERISA Commitments"):
(i) each retirement, savings, profit sharing,
deferred compensation, severance, stock ownership, stock purchase, stock
option, performance, bonus, incentive, vacation or holiday pay, hospitalization
or other medical, disability, life or other insurance, or other welfare,
benefit or fringe benefit plan, policy, trust, understanding or arrangement of
any kind, whether written or oral; and
(ii) each employee collective bargaining agreement
and each agreement, understanding or arrangement of any kind, whether written
or oral, with or for the benefit of any present or prior officer, director,
employee or consultant (including, without limitation, each employment,
compensation, deferred compensation, severance or consulting agreement or
arrangement and any agreement or arrangement associated with a change in
ownership of Seller).
Seller has delivered to Buyer correct and complete copies of (i) all written
Non-ERISA Commitments and (ii) all insurance and annuity policies and contracts
and other documents relevant to any Non-ERISA Commitment. Schedule 7.20(b)
also contains a complete and accurate description of all oral Non-ERISA
Commitments.
(c) Seller has delivered to Buyer with respect to each
ERISA Benefit Plan correct and complete copies, where applicable, of (A) all
plan documents and amendments thereto, trust agreements and amendments thereto
and insurance and annuity contracts and policies, (B) the current summary plan
description, (C) the Annual Reports (IRS Form 5500 series) and accompanying
schedules, as filed, for the most recently completed three plan years for which
such reports have been filed, (D) the financial statements for the most
recently completed three plan years for which such statements have been
prepared, (E) the most recent determination letter issued by the Internal
Revenue Service and the application submitted with respect to such letter and
(F) all correspondence with the Internal Revenue Service, Department of Labor
and Pension Benefit Guaranty Corporation concerning any controversy.
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(d) Each Pension Plan which is intended to qualify under
Section 401(a) of the Code is so qualified under the Code as amended to the
date hereof and no circumstance exists which might cause such plan to cease
being so qualified. With respect to each ERISA Benefit Plan, (i) there is no
pending or, to the best knowledge of Seller, threatened claim, (ii) all
contributions and premiums due have been made on a timely basis and are
deductible by Seller, (iii) no "prohibited transaction" described in Section
406 of ERISA or Section 4975 of the Code has occurred, and (iv) Seller has no
potential liability under ERISA or the Code. Each of the ERISA Benefit Plans
(i) has been administered in accordance with its terms and (ii) complies in
form, and has been administered in accordance, with the requirements of ERISA
and, where applicable, the Code. No liability has been asserted (whether or
not such liability is being litigated) against Seller or any affiliate of
Seller in connection with any employee pension benefit plan (as defined in
Section 3(2) of ERISA), including but not limited to, any withdrawal liability
(as described in Section 4201 of ERISA) with respect to any multi employer plan
(as defined in Section 3(37) of ERISA). There are no reserves, assets, surplus
or prepaid premiums with respect to any Welfare Plan. Seller and each ERISA
Affiliate has complied with the health care requirements of Part 6 of Title I
of ERISA. Seller has no obligation to provide health or death benefits to its
prior employees or any other person other than while an employee of Seller,
except as specifically required by Part 6 of Title I of ERISA. The
consummation of the transactions contemplated by this Agreement will not (i)
entitle any individual to severance pay, or (ii) accelerate the time of
payment, vesting or increase the amount of compensation due to any such
individual. Seller has not taken any action or failed to take any action which
will subject Seller or has subjected Seller to liability under the Worker
Adjustment and Retraining Notification Act of 1988.
(e) For purposes of the Agreement, "ERISA Affiliate"
means (i) any corporation which at any time on or before the Closing Date is or
was a member of the same controlled group of corporations (within the meaning
of Section 414(b) of the Code) as Seller; (ii) any partnership, trade or
business (whether or not incorporated) which at any time on or before the
Closing Date is or was under common control (within meaning of Section 414(c)
of the Code) with Seller; and (iii) any entity which at any time on or before
the Closing Date is or was a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as either Seller, any
corporation described in clause (i) or any partnership, trade or business
described in clause (ii).
7.21 Employment Activity. To the best of Seller's knowledge, Seller
is in compliance with all applicable laws respecting employment, employment
practices, non-discrimination in employment and employment practices, and terms
and conditions of employment and wages, and is not engaged in any unfair labor
practice. There is no employment discrimination or unfair labor practice
charge or complaint against Seller pending before the
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National Labor Relations Board, the Equal Employment Opportunity Commission or
any other federal, state or local governmental agency arising out of Seller's
activities, and Seller has no knowledge of any facts or information which would
give rise thereto; there is no labor strike or labor disturbance pending or
threatened against Seller nor is any grievance currently being asserted
thereat; and Seller has not experienced a work stoppage or other material labor
difficulties thereat except as set forth on Schedule 7.21 attached hereto.
7.22 No Indebtedness. Seller does not have any outstanding
indebtedness to any person or entity, except for such indebtedness as is set
forth on Schedule 7.22 attached hereto and the lender(s) of any such
indebtedness has consented to the transfer of the Assets to Purchaser hereunder
free and clear of all Liens. For purposes of the Agreement, "Indebtedness"
shall mean all items which in accordance with GAAP would be included in
determining total liabilities secured by any Lien on property owned or
acquired, whether or not such a liability shall have been assumed, liabilities
in respect of all leases, whether capitalized or operating, and guarantees,
indemnities, endorsements (other than for collection in the ordinary course of
business) and other contingent obligations, whether secured or not in respect
to the obligations of other persons or entities.
7.23 Environmental Matters. Seller has all permits, licenses, and
other authorizations which are required as of the date of this Agreement and
the Closing Date for the operation of the Rowe Business under federal, state,
local and foreign laws relating to pollution and protection of the environment,
including, without limitation, the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., as amended ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601,
et seq., as amended ("CERCLA"), the Clean Air Act, 42 U.S.C. Section 7401, et
seq., as amended ("CAA"), the Clean Water Act, 33 U.S.C. Section 1251, et seq.
("CWA"), the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.
("TSCA"), and any other applicable federal, state or local laws, statutes,
ordinances and regulations relating to the physical or environmental condition
of property and to the maintenance, record-keeping and disposition of any
underground tanks and relating to emissions, discharges, releases or threatened
releases, of pollutants, contaminants, petroleum oils, chemicals or industrial,
hazardous or toxic materials or waste into the environment (including, without
limitation, ambient water, surface water, groundwater, land surface or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum oils, chemicals or industrial, hazardous
toxic materials or waste or any regulation, order, decree or judgment issued,
entered, promulgated or approved thereunder (the "Environmental Laws"). With
respect to the conduct of its business, its operations, its properties, and its
use of owned and leased properties, Seller is in compliance in all material
respects with all terms and conditions of the required permits, licenses and
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authorizations necessary under the Environmental Laws, and is also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws as in effect on the date hereof.
There is no pending civil or criminal litigation, notice of violation or
administrative proceeding arising out of the business or activities of Seller
and/or its shareholders or affiliates, including without limitation any pending
litigation, notice or proceeding relating in any way to the Environmental Laws
(including notices, demands, letters or claims under RCRA, CERCLA, CAA, CWA,
TSCA and similar foreign, state and local laws. There is no threatened civil
or criminal litigation, notice of violation or administrative action arising
out of the business activities of Seller, including without limitation, any
threatened litigation, notice or proceeding relating in any way to the
Environmental Laws. Except as disclosed on Schedule 7.23, Seller is not aware
of any past or present events, conditions, circumstances, practices, incidents
or actions which may give rise to any legal liability, or otherwise form the
basis of any claim, action, suit, proceeding, hearing or investigation against
or involving Seller arising out of any violation or alleged violation of the
Environmental Laws or any circumstances which could reasonably be expected to
interfere with or prevent continued compliance with the Environmental Laws in
effect on the date hereof or the Closing Date. To the best of Seller's and
Met-Coil's knowledge, no hazardous substances, pollutants, petroleum oils or
fraction, contaminants or hazardous waste including, but not limited to,
asbestos, "PCB's" and urea formaldehyde are contained in or have been, from any
source whatsoever, generated, released, spilled, stored or deposited over,
beneath or on the Dallas facility of Seller, or on adjoining properties, by
Seller, or, to the best of Seller's knowledge, any other person, EXCEPT only
such substances as have been fully disclosed to Purchaser on Schedule 7.23
attached hereto.
7.24 Approvals and Consents. Except as set forth on Schedule 7.24,
no consent, authorization or approval of, or waiver or exemption by, or filing
with any other person or entity is required in connection with the execution,
delivery or performance of this Agreement by Seller or Met-Coil or the
consummation by Seller of the transactions contemplated hereby.
7.25 Insurance. Attached hereto on Schedule 7.25 is a complete and
correct list of all policies of insurance of which Seller is the owner, insured
or beneficiary, or covering the Rowe Business or any of the Assets for any
policy period after June 1, 1992. Such Schedule indicates for each policy the
carrier, names of all insured parties thereunder (including the named insured
and additional insured parties, if any), risks insured, the amounts of
coverage, deductibles and retentions, if any and any pending claims thereunder.
Except as set forth on Schedule 7.25, all premiums under such policies for
periods through the date hereof have been paid and through the Closing Date
will be paid. No notice of cancellation or non-renewal with respect to or
disallowance of any
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claim under, or increase of the premium for any such insurance policy has been
received by Seller.
7.26 Other Intangibles. The vendor and customer lists of Seller
related to the Rowe Business attached hereto on Schedule 7.26 are true and
complete as of the Closing Date; and the engineering drawings, bills of
material, manufacturing data, software and data collection services and other
intangibles conveyed to Purchaser as described in Section 1.1.6 are all of such
items used in the Rowe Business that are in the possession of Seller. Except
as set forth on Schedule 7.26, there exists no actual or, to the knowledge of
Seller, threatened termination, cancellation or material limitation of, or
material modification in, the business relationship of Seller with any customer
or supplier.
7.27 Warranties. Set forth on Schedule 7.27 are the express warranty
terms and disclaimers for all forms of warranties given (or extended warranties
sold) by Seller during the ten-year period prior to the Closing Date with
respect to the Rowe Business for product sold or services related thereto
performed by Seller. Under the Rowe name, Seller, in operating the Rowe
Business, has not sold any parts or equipment or performed any services related
thereto which fail to comply with any express or implied warranties or
guarantees of Seller applicable to such parts or equipment or services related
thereto.
8. Representations and Warranties of Purchaser
Purchaser represents and warrants to Seller as of the Closing Date as
follows:
8.1 Corporate Existence. Purchaser is a limited partnership
duly formed, validly organized and existing in good standing under the laws of
the State of Texas. Purchaser has full power and authority to own its assets
and to carry on its business as and where such business is now conducted.
8.2 Due Authorization and Enforceability. Purchaser has full
power and authority to execute and deliver this Agreement and the Related
Agreements to which it is a party, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements to which it is a party, by Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action and no other action or proceeding on the part of Purchaser is
necessary to authorize the execution and delivery by Purchaser of this
Agreement or Related Agreements to which it is a party or the consummation by
Purchaser of the transactions contemplated hereby or thereby. This Agreement
and the Related Agreements to which Purchaser is a party have been duly
executed and delivered by Purchaser and this Agreement and the Related
Agreements to which Purchaser is a party are legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with
their stated terms.
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8.3 No Conflicts. Neither the execution and delivery of this
Agreement or the Related Agreements to which Purchaser is a party, nor the
consummation of the transactions contemplated hereby or thereby will (i)
conflict with or violate any provision of the Partnership Agreement or other
formation documents of Purchaser, (ii) conflict with or violate any law, rule,
regulation, ordinance, order, writ, injunction, judgment or decree applicable
to Purchaser or by which any of its properties or assets are bound or affected
or (iii) conflict with or result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights or termination or cancellation of, or
result in the creation of any lien, charge or encumbrance on any of their
assets or properties pursuant to any of the terms, conditions, or provisions
of, any note, bond, mortgage, indenture, permit, license, franchise agreement,
lease, contract, or other instrument or obligation to which Purchaser is a
party or by which any of Purchaser's properties or assets are bound or
affected; except, in the case of (ii) and (iii) above, for such conflicts,
violations, breaches, defaults, terminations, cancellations and accelerations
which in the aggregate will not have a material adverse effect on the ability
of Purchaser to consummate the transactions contemplated by this Agreement and
the Related Agreements to which it is a party.
9. Survival of Representations and Warranties. The representations and
warranties made in this Agreement or pursuant hereto shall survive the
execution and delivery of this Agreement and the conclusion and closing of the
transactions contemplated hereby.
10. Covenants
10.1 Retention of Records. Purchaser hereby covenants that for a
period of seven (7) years following the Closing Date, Purchaser will retain,
at Purchaser's sole expense, the Books and Records of Seller relating to the
operation of the Rowe Business prior to the Closing Date. During such period,
Purchaser will afford to Seller, its counsel and accountants, during normal
business hours, reasonable access to such books, records and other data, to the
extent that such access may reasonably be required to facilitate the
preparation by Seller of such tax returns as they may be required to file with
respect to Seller and the investigation, litigation and final disposition of
any claims which may be made against Seller. Following the expiration of such
seven (7) year period, Purchaser may dispose of any such books, records and
other data; provided, however, that before disposing of any such materials it
will first notify Seller and permit Seller at its sole expense, to remove such
materials.
10.2 Further Actions. Upon the terms and subject to the
conditions hereof, each of the parties hereto agrees to use its best efforts or
take or cause to be taken all action and to do or
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cause to be done all things necessary, proper and advisable to
consummate the transactions contemplated by this Agreement, the Related
Agreements and other documents necessary to close this transaction, and shall
use its best efforts to obtain all necessary waivers, consents and approvals
and to effect all necessary registrations and filings. In addition, Seller
covenants and agrees that it will take all actions and execute and deliver all
documents, instruments, and agreements necessary to assist Purchaser in the
removal of all Liens whether set forth in Schedule 7.7 or not, after Purchaser
has satisfied its obligations (pursuant to its assumption of Seller's
liabilities) for the underlying indebtedness of such Liens.
10.3 Press Releases. Purchaser and Seller will consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement with a national securities exchange. Notwithstanding the
foregoing, Seller shall, simultaneously with the Closing, notify its employees
and creditors of the sale of assets contemplated by this Agreement,
specifically noting that Purchaser is not assuming liabilities beyond those
described in this Agreement.
10.4 Lease Agreement. Purchaser and Seller shall enter into a
lease for the occupation and use by Purchaser of the Dallas facility, including
the manufacturing office and building, machinery and equipment and tooling, of
Seller, substantially in the form of Exhibit 10.4 attached hereto (the "Lease
Agreement") which Lease Agreement shall be effective on the Closing Date.
10.5 Receipt of Funds. After the Closing Date, each of Purchaser
and Seller shall segregate any monies or other amounts paid to either of them
in respect of receivables or assets that belong to the other party whether
received in a lock-box account or otherwise, and each party shall pay over and
remit to the other party any such monies and amounts weekly after receipt
thereof. Each of Purchaser and Seller shall take all reasonable actions,
including the giving of timely notices to assure that the covenants set forth
in this Section 10.5 are faithfully and timely fulfilled.
10.6 Rowe Employees.
10.6.1 Potential Employees. Effective as of the Closing
Date, Purchaser or an agent or affiliate of Purchaser may offer employment to
any of Seller's personnel now working at the Dallas facility of Seller (a
"Potential Employee"), except those employees whom Seller intends to retain as
set forth on Exhibit 10.6.1 ( "Retained Employees"). Any Potential Employee
who accepts any such offer of employment and who commences employment upon the
terms of such offer on or after the Closing Date is an "Accepting Employee".
Seller shall be responsible and liable for any required
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notification and payments under the Worker Adjustment and Retraining
Notification Act of 1988.
10.6.2 Separation Benefits. Purchaser will not assume or
have any liability, responsibility or obligation under any of the Pension
Plans, Welfare Plans or Non-ERISA Commitments of Seller or Met-Coil. Seller
will be responsible and liable for and discharge at or prior to Closing all
obligations to, for or on behalf of all Retained Employees and Potential
Employees under any Pension Plans, Welfare Plans and Non-ERISA Commitments,
including, without limitation, the cost of accrued and unpaid wages, unpaid
bonuses, stock options, severance pay, accrued vacation pay, pay for personal
days, holidays, and sick leave, the cost of retirement benefits and pensions,
the cost of payroll taxes, including FICA, Federal Unemployment Insurance,
State Unemployment Insurance and Federal and State withholding, and the cost of
health insurance, dental insurance, disability insurance, life insurance and
the like. Seller also will be responsible and liable for the costs of
administration and compliance with COBRA (as defined in Section 10.6.5 of this
Agreement) or similar group health contribution coverage benefits under federal
and state law, and the costs of liability and defense of claims related to the
wrongful or discriminatory termination of employment for Accepting Employees
who do not remain as employees of Purchaser after the termination of the Lease
Agreement or voluntarily leave the employ of Purchaser prior thereto
(collectively such costs and those set forth in the sentence prior hereto shall
be defined as "Separation Benefits").
10.6.3 Eligibility of Accepting Employees. For purposes of
eligibility for employment plans, programs and for vacation during employment
with Purchaser, Purchaser's policies or those of its affiliates as set forth
from time to time hereafter shall be applied in accordance with their terms and
conditions to all Accepting Employees. The service of Accepting Employees with
Seller prior to the Closing Date shall be recognized for purposes of
eligibility for vacation accrued in accordance with and subject to the terms
and conditions of Purchaser's or its affiliates' applicable vacation policies
as stated from time to time.
10.6.4 Claims of Accepting Employees. Seller hereby
agrees to indemnify and hold harmless Purchaser, its agents, officers or
directors, employees, and affiliates against any liabilities, costs or expenses
(including reasonable attorneys' fees) resulting from claims made by any
Retained Employees or Potential Employees for Separation Benefits. Subject to
the accuracy of the representations of Seller contained herein, Purchaser
hereby agrees to indemnify Seller, its agents, officers, directors, employees
and subsidiaries against any liabilities, costs or expenses including
reasonable attorney's fees) resulting from claims made by any Accepting
Employees relating to acts and omissions of Purchaser with respect to the
employment of such Accepting Employees by Purchaser after the Closing Date.
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10.6.5 Health Benefits. With respect to any Accepting
Employees of Seller who do not remain as employees of Purchaser after the
termination of the Lease Agreement, Seller shall promptly reimburse Purchaser
for the cost of administration of group health continuation coverage required
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") for
any qualifying event or as required under applicable state law.
10.7 Discharge of Liabilities. Seller will pay and discharge in
due course after the Closing Date, and hold Purchaser harmless from, all
liabilities and obligations of Seller relating to and arising from the
ownership and operation of the Assets and the Rowe Business prior to the
Closing Date, (whether unrecorded accounts payable, accrued liabilities,
customer deposits or other obligations), it being understood that Purchaser is
assuming no liabilities or obligations of Seller other than those expressly set
forth in Article 5 of this Agreement. If Seller fails to pay and discharge any
such liabilities and, in the case of bona fide disputes regarding such
liabilities, fails to disclose to Purchaser the existence of and all facts
relating to such bona fide disputes, Purchaser may, without having any duty,
pay or discharge such liabilities of Seller and offset such amounts paid from
the Adjustable Note as set forth in Section 3.3(a) of this Agreement or use the
indemnification provisions of Article 16 of this Agreement.
11. Closing
11.1 Closing. The closing of the transaction contemplated by this
Agreement (the "Closing") shall be held on the 31st day of January, 1996 or
such other date as mutually agreed by the parties, at the offices of
_________________________________ in______________________________ at _______
__.m., local time, or at such other time and place as the parties may agree.
11.2 Closing Events. At the Closing upon the Closing
Date:
11.2.1 Purchaser shall deliver to Seller the Initial Note
and the Adjustable Note.
11.2.2 Seller shall execute and deliver to Purchaser the Bill
of Sale.
11.2.3 Seller shall provide to Purchaser any and all required
written consents to assumption of the Material Agreements.
11.2.4 Purchaser shall execute and deliver to Seller the
Certificate of Assumption, in the form attached hereto as Exhibit 11.2.4 for
those liabilities of Seller assumed by Purchaser pursuant to Section 5.1 of
this Agreement.
11.2.5 Purchaser shall have received a written legal opinion
from counsel to Seller substantially in the form attached hereto as Exhibit
11.2.5.
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11.2.6 Seller shall have received from the Chief Executive
officer and the Chief Financial Officer of Purchaser and Purchaser shall have
received from the Chief Executive Officer and the Chief Financial Officer of
Seller, a certificate that, as to such party, the representations and
warranties made by such party are true as of the Closing Date, and that all
covenants to be performed by such parties have been performed.
11.2.7 The parties shall complete and execute the Memorandum of
Allocation.
11.2.8 Seller shall have received from the Secretary of
Purchaser and Purchaser shall have received from the Secretaries of each of
Seller and of Met-Coil a certificate setting forth, as to such party, the
corporate resolutions or partnership actions authorizing and approving the
execution, delivery and performance of the Agreement and the other documents to
be executed by that party in connection herewith, and a good standing
certificate or similar document from the applicable Secretary of State of each
party's state of incorporation or formation.
11.2.9 Purchaser shall have received from the counsel of
Seller (a) a copy of a UCC search of the Texas central file for all filings of
financing statements under Seller's and Met-Coil's name, and (b) a copy of a
tax lien, suit and judgment search of the records of any county where the real
or personal property of Seller is located.
11.2.10 Seller and Purchaser shall execute and deliver the
Lease Agreement in the form set forth in Exhibit 10.4 of the Agreement.
11.2.11 Met-Coil shall execute and deliver the Guarantee in
the form set forth in Exhibit 16.6 of this Agreement.
11.2.12 Seller and Met-Coil shall execute and deliver the
Non-Competition Agreement in the form set forth in Exhibit 6.2 of this
Agreement.
11.2.13 Seller and Met-Coil shall obtain from its secured
and judgment creditors and lenders and deliver to Purchaser such lien releases,
terminations and other documents necessary to assure Purchaser to its
satisfaction that the Assets are being transferred by Seller to Purchaser under
this Agreement free and clear of all liens and encumbrances.
12. Conditions to Purchaser's Obligation to Complete Closing
The obligation of Purchaser to purchase and pay for the Assets at Closing
shall be subject to the satisfaction, prior to or concurrently with the Closing
Date, of each of the following express conditions precedent, unless waived by
Purchaser:
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12.1 Consents and Releases. Seller shall have obtained and
delivered to Purchaser (based upon Purchaser's assumption thereof) any and all
required consents to the assignment of the Material Agreements and the lien and
judgment releases and terminations of security interests described in Section
11.2.13 of this Agreement so that the Assets may be transferred by Seller to
Purchaser free and clear of all liens and encumbrances.
12.2 Governmental Approvals. Purchaser and Seller shall have
obtained all requisite government approvals, if any, for their participation in
the transactions contemplated under this Agreement.
12.3 Accuracy of Representations. The representations and
warranties of Seller shall be true and correct in all material respects at the
Closing Date, and Seller shall have complied with all covenants set forth in
this Agreement.
12.4 Closing Documents Delivered. Seller shall have executed and
delivered the documents, certificates, instruments and agreements and done the
acts required of Seller in connection with the Closing as described in Section
11.
12.5 No Prohibition. No order, statute, rule, regulation,
executive order, injunction, stay, decree or restraining order shall have been
enacted, entered, promulgated or enforced by any court or competent
jurisdiction or governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated hereby.
12.6 Bankruptcy. Neither Seller or Met-Coil shall be the subject of a
petition for reorganization or liquidation under the Federal bankruptcy laws,
or under state insolvency laws, nor shall an assignment for the benefit of
creditors or any similar protective proceeding or act or event of bankruptcy
have occurred.
12.7 Non-Fulfillment Date. In the event that one or more of the
foregoing conditions in this Section 12 is not fulfilled by the date of March
15, 1996, Purchaser may, upon notice to Seller or Met-Coil, on or prior to
Closing, elect either (i) to waive the condition and proceed to Closing; or
(ii) terminate this Agreement without any further liability on the part of
either of the parties except that the foregoing shall not relieve either of the
parties from liability for damages actually incurred as a result of breach of
this Agreement.
13. Conditions to Seller's obligation to Complete the Closing
The obligation of Seller to sell and convey the Assets at the Closing
shall be subject to the satisfaction, prior to or concurrently with the Closing
Date, of each of the following express conditions precedent:
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13.1 Government Approvals. Purchaser and Seller have obtained all
requisite government approvals, if any, for their participation in transactions
contemplated under this Agreement.
13.2 Accuracy of Representations. The representations and
warranties of Purchaser shall be true and correct in all material respects at
the Closing Date, and for Purchaser shall have complied with all of its
covenants set forth in this Agreement.
13.3 Closing Documents Delivered. Purchaser shall have executed
and delivered the documents, certificates, instruments and agreements and done
the acts required of Purchaser in connection with the Closing, as described in
Section 11.
13.4 No Prohibition. No order, statute, rule, regulation,
executive order, injunction, stay, decree or restraining order, shall have been
enacted, entered, promulgated or enforced by any court or competent
jurisdiction or governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated hereby.
14. Post-Closing Covenants
14.1 Bulk Sale. Seller hereby agrees to indemnify and save and hold
harmless Purchaser, its shareholders, directors and officers from and against
any and all claims, losses, damages, costs or expenses of any kind or
character, including attorneys' fees, other than those expressly assumed by
Purchaser, arising out of or resulting from failure to comply with the "Uniform
Commercial Code -- Bulk Transfers" of the State of Texas or of such other state
as to which such act or equivalent act applies or may apply to the transactions
contemplated by this Agreement.
14.2 Further Accrued Liabilities. In the event that liabilities of
Seller related to the Rowe Business not disclosed in this Agreement shall be
discovered after the Closing Date, Purchaser may demand in writing and Seller
shall promptly satisfy such liability and provide evidence thereof to
Purchaser; and if such demand is not satisfied in full by Seller, or Seller, in
the case of a bona fide dispute regarding the liability, is not defending the
dispute, Purchaser may, but is not required to, assume or discharge such
liability and (a) offset such amount against any obligations of Purchaser to
Seller, (b) make a demand in writing to Seller for reimbursement and Seller
shall promptly reimburse Purchaser, or (c) seek redress under the
indemnification procedure set forth in Article 16 of this Agreement.
15. Amendment and Waiver
15.1 Amendment. This Agreement may be amended only by a writing executed
by the authorized representatives of Purchaser and Seller.
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15.2 Waiver. Any party hereto may (a) agree to extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of the party hereto to any such extension or waiver shall
be valid only if set forth in an instrument in writing signed by the authorized
representative of such party.
16. Indemnification
16.1 Purchaser Indemnification. For a period of thirty-six (36)
months following the Closing Date, Purchaser hereby agrees to indemnify and
hold Seller harmless, from and against any and all loss, liability (whether
known or unknown, actual or contingent, legal or equitable, mature or inchoate,
as guarantor or principal obligor, howsoever arising), claim, damage and
expense, including, but not limited to, reasonable attorneys, fees and amounts
reasonably expended in settlement of litigation, pending or threatened, after
the date hereof, incurred after the Closing Date and arising out of or relating
to: (i) any liabilities or obligations of the Rowe Business which were
expressly assumed by Purchaser under this Agreement; (ii) any material
misrepresentation or material breach of any of Purchaser's representations and
warranties set forth in this Agreement; or (iii) any material breach of any of
Purchaser's covenants or obligations under this Agreement.
16.2 Seller and Met-Coil Indemnification
16.2.1 For a period of thirty-six (36) months following the
Closing Date, Seller hereby agrees to indemnify and hold Purchaser harmless
from and against any and all loss, liability (whether known or unknown, actual
or contingent, legal or equitable, mature or inchoate, howsoever arising),
damage and expense, including but not limited to reasonable attorneys' fees and
amounts reasonably expended in settlement of litigation, pending or threatened,
incurred after the Closing Date and arising out of or relating to: (i) any
liabilities and obligations of Seller not expressly assumed by Purchaser under
the Agreement; (ii) any material misrepresentation or material breach of any of
Seller's representations and warranties set forth in this Agreement; (iii) any
material breach of any of Seller's covenants or obligations under this
Agreement; (iv) any liabilities and obligations of Seller related to the
operation of its other businesses including Fen-Pro; and (v) any material
breach of any of Seller's covenants under the Lease Agreement and the
Non-Competition Agreement.
16.2.2 For a period of thirty-six (36) months following the
Closing Date, Met-Coil hereby agrees to indemnify and hold Purchaser harmless
from and against any and all loss, liability (whether known or unknown, actual
or contingent, legal or equitable,
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mature or inchoate, howsoever arising), damage and expense, including
but not limited to reasonable attorneys' fees and amounts reasonably expended
in settlement of litigation, pending or threatened, incurred after the Closing
Date and arising out of or relating to: (i) any material misrepresentation or
material breach of any of Met-Coil's representations and warranties set forth
in the Agreement; and (ii) any material breach of any of Met-Coil's covenants
or obligations under this Agreement, the Guarantee and the Non-Competition
Agreement.
16.3 Procedure of Indemnification
16.3.1 Neither Purchaser nor Seller nor Met-Coil are required to
take any action or make any claim to any third person as a precondition of
seeking indemnification from the other(s) hereunder. The party seeking
indemnification (the "Claimant") shall promptly give notice to the indemnifying
party or parties of any matter or item which forms a basis for indemnification
hereunder (a "Claim"). The Claimant shall afford the indemnifying party or
parties, or their authorized representatives, the opportunity to defend,
discharge or compromise such Claim and examine the books and records of the
Claimant insofar as they relate to such Claim and to copy or make extracts
therefrom, and will (at the expense of the indemnifying party) provide full
cooperation of itself and its employees and agents with respect to such Claim.
At an indemnifying party's request and expense, the Claimant will assign any
claims or rights which the Claimant may have against any third party in an
action against the third parties, and, at the indemnifying party's expense, the
Claimant will cooperate fully with the indemnifying party in pursuing any such
claim or right.
16.3.2 The indemnifying party or parties may, within twenty
(20) days after the Claimant has given notice of the Claim, give notice to the
Claimant that the indemnifying party or parties intend to litigate or otherwise
attempt to resolve the claim identified in the Claimant's notice. Upon such
notice from the indemnifying party or parties to the Claimant: (1) the
indemnifying party or parties, or any of them, shall have the right, at their
sole cost and expense and without liability, cost or expense, to Claimant, to
prosecute any such proceeding, defend any such Claim or otherwise attempt to
resolve the Claim (including, but not limited to, settling such claim by paying
all amounts in settlement), and (ii) Claimant shall have the right to
participate at its expense in the defense of any such Claim. The indemnifying
party or parties shall keep the Claimant appraised of all material developments
in connection with any such Claim.
16.3.3. So long as any indemnifying party shall continue to
handle a Claim or proceeding in good faith, or until a final determination that
monies are payable by Claimant to a third person, the indemnifying party or
parties will not be obligated to pay to Claimant the monies so claimed.
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16.3.4 Notwithstanding the foregoing Section 16.3.3; if as a
result of any Claim, a judgment is entered against Claimant in a court of
competent jurisdiction, or a lien attaches to any property or asset of
Claimant, or any injunction, order or decree is obtained in any court of
competent jurisdiction which materially and adversely affects or threatens to
materially affect the assets, property, business or operations of Claimant,
Claimant will be entitled to discharge, compromise or settle such Claim in good
faith without the consent of the indemnifying party or parties.
16.3.5 All amounts incurred or paid by the Claimant for
which it is entitled to indemnification by the indemnifying party or parties
pursuant to the terms and conditions of this Agreement shall be promptly
reimbursed to it by the indemnifying party or parties if not reimbursed within
thirty (30) days of written request therefor, Claimant shall have the right to
offset from any other amounts it owes or may owe to the indemnifying party or
parties. In the event Claimant collects or retains an amount in excess of the
amount of claim or lien, including reasonable costs and expenses including
attorneys fees, Claimant shall return such funds to the indemnifying party.
Claimant shall cooperate in accordance with its best business judgment, in
attempting to cause third parties who are liable to it or to the indemnifying
party, to cause such third parties to reimburse the indemnifying party for
payment made by it to Claimant; and Claimant shall subrogate the indemnifying
party to Claimant's rights against third parties, with respect to claims paid
by the indemnifying party to Claimant.
16.4 Exclusive Remedy. So long as the indemnifying party is in
compliance with this Article 16, the remedies provided in this Article 16 shall
be exclusive, except for (a) remedies set forth elsewhere in this Agreement and
(b) specific performance or injunctive relief which shall be available
regardless of the provisions of this Article 16 so long as claims for specific
performance or injunctive relief are made within thirty six (36) months of the
Closing Date.
16.5 Limitation on Scope of Time Limitations. Notwithstanding the
foregoing, the time limitation set forth in Sections 16.1, 16.2.1 and 16.2.2 of
this Agreement, shall not apply to claims of fraud or actions to enforce
Article 6, Sections 7.2, 7.7, 7.16, 8.2, 10.1, 16.6 and Article 19 of this
Agreement.
16.6 Met-Coil Guarantee. In consideration of the execution of
this Agreement by Purchaser, and the benefit that flows therefrom to Met-Coil
as the sole shareholder of Seller, as well as for other considerations,
Met-Coil shall guarantee the obligations of Seller under this Agreement by the
execution and delivery of a guarantee substantially in the form attached hereto
as Exhibit 16.6 (the "Guarantee") and such Guarantee shall survive the
dissolution or liquidation of Seller and shall survive any statute of
limitations applicable to Seller.
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17. Notices
Any notices or other communications required or permitted hereunder or
otherwise in connection herewith shall be in writing and shall be deemed to
have been duly given when delivered in person or transmitted by facsimile
transmission or on receipt after dispatch by express, registered or certified
mail, postage prepaid, addressed as follows:
If to Seller:
Rowe Machinery & Automation, Inc.
c/o Met-Coil Systems Corporation
5486 6th Street, S.W.
Cedar Rapids, IA 52403
Attention: Raymond H. Blakeman
cc: Carroll J. Reasoner
Shuttleworth & Ingersoll, P.C.
500 Firstar Building
P.O. Box 2107
Cedar Rapids, IA 52406-2107
If to Purchaser:
Mestex, Ltd.
c/o Mestek, Inc.
260 North Elm Street
Westfield, Massachusetts 01085
Attention: R. Bruce Dewey
Senior Vice President
and General Counsel
or such other address as the person to whom notice is to be given has furnished
in writing to the other parties.
18. Further Assurance -- After Closing
18.1 Assurance of Seller and Met-Coil. At any time and from time to
time after the Closing Date, at Purchaser's request and without further
consideration, Seller and Met-Coil shall cooperate in good faith and promptly
execute and deliver all such further instruments or documents and perform such
other and further acts as Purchaser may reasonably request is in order to fully
conclude the transactions contemplated hereby.
18.2 Delivery of Notices. After the Closing Date, Seller and Met-Coil
shall promptly deliver to Purchaser any notices, correspondence and other
documents relating to the Assets being conveyed hereunder and the Rowe
Business, which are, from time to time, received by Seller and/or Met-Coil.
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19. Confidentiality
19.1 Proprietary information. Purchaser acknowledges its
receipt of substantial information from Seller concerning the Rowe Business.
All such information is hereinafter called the "Proprietary Information".
19.2 Nondisclosure. Seller and Met-Coil acknowledge that they are
now in possession of the same Proprietary Information concerning the Rowe
Business as described above in Section 19.1. Seller and Met-Coil agree to keep
all of the Proprietary Information confidential after the Closing Date, except
such Proprietary Information that becomes public information without the fault
of Seller or Met-Coil.
20. Entire Agreement -- Binding Effect. This Agreement (together with the
Exhibits and Schedules hereto, and the other agreements executed at the
Closing) sets forth the entire integrated understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior
agreements whether written or verbal. This Agreement may not be modified,
amended or terminated except in a writing signed by all of the parties hereto.
21. Assignment. No party to this Agreement shall have the right to assign
any of its rights and obligations hereunder without the prior written consent
of the other parties hereto. To the extent that such consent is given, this
Agreement and all provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
22. Miscellaneous
22.1 Expenses. Except as otherwise agreed herein, each party
hereto shall bear its own expenses incurred in connection with this Agreement
and the consummation of the transactions contemplated hereby.
22.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original instrument, but
all such counterparts together shall constitute one and the same instrument.
22.3 Governing Law. This Agreement is being made in and shall be
governed by and construed and enforced in accordance with the laws of the State
of Texas and the United States of America, except for the conflicts laws of
those jurisdictions.
22.4 No Third Party Rights. This Agreement, the Related Agreements
and the other agreements entered into at the Closing are solely for the benefit
of the parties hereto. No third person shall acquire any rights or claims by
reason of or under this Agreement, the Related Agreements or the other
agreements entered into at the Closing.
32
<PAGE> 33
22.5 Severability. Should any terms, provision or clause hereof,
or of any other agreement or document which is required by this Agreement, be
held to be invalid, such invalidity shall not affect or render invalid any
other provisions or clauses hereof or thereof the consideration or mutuality of
which can be given effect without such invalid provision, and all of which
shall remain in full force and effect. If any provision of this Agreement is
so broad as to be unenforceable, such provision shall be interpreted to be only
so broad as is enforceable under applicable law.
22.6 Headings. The headings to the sections of this Agreement are
inserted for convenience and reference only and are not intended to define or
limit the substance of any section.
22.7 Singular and Plural. Singular terms in this Agreement may
be deemed to include plural, and plural terms to include the singular.
22.8 No Brokerage Fees. Neither Seller nor Purchaser, nor any of
their officers, directors or employees, nor Met-Coil, has incurred any
liability for any brokerage fees, commissions, finders, fees or similar fees or
expenses for which either Seller, Purchaser or Met-Coil may be liable.
22.9 Exhibits and Schedules. The exhibits and schedules
referenced in this Agreement and attached hereto shall be deemed to be a part
of this Agreement and are incorporated herein by this reference.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal, with the intent that this be a sealed instrument, on the date first
above written.
SELLER: ROWE MACHINERY & AUTOMATION, INC.
CORPORATE SEAL
ATTEST:
BY: /s/ By: /s/
-------------------------- -------------------------
Joseph Ceryanec Raymond H. Blakeman, Chairman
PURCHASER: MESTEX, LTD.,
CORPORATE SEAL A Texas limited partnership
ATTEST:
By: GENTEX PARTNERS, INC.
By: /s/ Its General Partner
-----------------------
R. Bruce Dewey
By: /s/
--------------------------
Stephen M. Shea, Senior
Vice President-Finance
CORPORATE SEAL MET-COIL SYSTEMS CORPORATION
ATTEST:
By: /s/ By: /s/
---------------------- ----------------------
Joseph Ceryanec Raymond H. Blakeman, Chairman
33
<PAGE> 1
EXHIBIT - 2(a)
AMENDMENT TO AGREEMENT FOR THE
PURCHASE AND SALE OF ASSETS
This Amendment to the Agreement for the Purchase and Sale of Assets is
made as of this 5th day of February, 1996, by and between Met-Coil Systems
Corporation, a Delaware corporation, ("Met-Coil"), Rowe Machinery & Automation,
Inc., a Texas corporation, ("Seller"), and Mestex, Ltd., a Texas limited
partnership, ("Purchaser").
Met-Coil, Seller, and Purchaser entered into an Agreement for the
Purchase and Sales of Assets as of January 12, 1996 ("Agreement") and now to
desire to amend certain of the terms of that Agreement prior to Closing.
Met-Coil, Seller and Purchaser agree as follows:
1. The first paragraph of Section 1.1 of the Agreement is amended to read
as follows:
1.1 The Assets. Upon the closing of the transactions contemplated
under this Agreement on January 31, 1996, or such other date as mutually agreed
by the parties (the "Closing Date"), and subject to the terms and conditions
contained in this Agreement, Seller shall sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser shall purchase, acquire and accept from
Seller, free and clear of all liens, encumbrances, restrictions and adverse
charges of any nature whatsoever, except as may be permitted by Section 7.7,
all of the assets, rights, interests, properties and goodwill of every nature
whatsoever, tangible or intangible and wheresoever situated, required or
appropriate for the continued operation of the Rowe Business which is further
defined as the manufacture, application, design, development, engineering,
distribution and sale of various models and types of press feeding and
cut-to-length automation equipment and machinery and the parts and accessories
related thereto set forth by name and drawing number category in Schedule 1.1
attached hereto, and specifically excepting the assets listed in Section 2.
The assets, rights, interests, properties and goodwill sold, transferred,
conveyed, assigned and delivered by Seller to Purchaser hereunder
(collectively, the "Assets") shall include but not be limited to the following:
2. Section 2 of the Agreement is amended to read as follows:
2. Excluded Assets. The assets excluded from the Agreement (the
"Excluded Assets") are all of the assets of Seller not specifically identified
in Section 1, including without limitation the real property and fixtures of
Seller, any rents or profits from the rental of the real property or the right
to receive same, and all of the machinery located in the Seller's facility, any
rents or profits from the rental of the machinery or the right to receive same
and any rights of Seller in the Agreement and the Adjustable Note.
3. Section 3.2 of the Agreement is amended to read as follows:
<PAGE> 2
3.2 Payment of Purchase Price
3.2.1 On the Closing Date, the portion of the Purchase Price
identified in Section 3.1.1 of the Agreement shall be paid by Purchaser
delivering such amount in cash by wire transfer or other immediately available
funds to Seller (the "Initial Payment").
3.2.2 On the Closing Date the portion of the Purchase Price
identified in Section 3.1.2 shall be paid by Purchaser delivering to Seller an
adjustable note substantially in the form attached hereto as Exhibit 3.2.2 (the
"Adjustable Note"). The terms, conditions, covenants and procedures whereby
the principal amount of the Adjustable Note shall be adjusted based upon the
actual count of the Inventory, the application of the terms of the
representations and warranties set forth in Sections 7.12 and 7.15 of the
Agreement and the covenant of Seller set forth in Section 10.7 of this
Agreement are set forth more fully in Section 3.3 of this Agreement and the
Adjustable Note. The amount of any state or local transfer, conveyance or
recordation taxes imposed by the state or municipality on the transfer of title
of the personal property shall be paid by Seller.
4. Section 3.3.2 of the Agreement is amended to read as follows:
3.3.2 Terms Relating to Adjustment. Seller shall use its best
efforts to value the physical count of the Inventory to be taken immediately
after the Closing Date at its earliest convenience, but not later than thirty
(30) days after the Closing Date. The parties shall work together making such
personnel and records available as necessary to determine and finalize the
adjustments to the principal amount of the Adjustable Note in good faith at
their earliest convenience based upon the valuation of the physical count of
the Inventory, the calculations and standards set forth in Section 3.3.1, the
representations and warranties set forth in Section 7.12 and 7.15 of the
Agreement and the covenant of Seller set forth in Section 10.7 of the
Agreement. Notwithstanding the foregoing, forty-five days after the Closing
Date, Purchaser shall pay Seller in cash a partial payment under the Adjustable
Note of the greater of the amount of $200,000 or the sum of all categories of
the net tangible asset value as defined in Section 3.1.2 which are not in
dispute and are set forth in a preliminary memorandum of understanding executed
by the authorized representatives of each of the parties. The final adjusted
amount due under the Adjustable Note and the calculation of all remaining
adjustments to the Adjustable Note shall be payable in cash not later than
ninety days after the Closing Date, subject to reasonable reserve for amounts
in dispute. All such final adjustments shall be set forth in a memorandum of
understanding prepared and executed by the authorized representatives of each
of the parties.
In the event the parties are unable to agree upon any final
adjustments, such disputes shall be submitted to a partner at a national
accounting firm mutually selected by both sides with a determination to be made
no later than May 31, 1996.
5. Section 11.2.1 is amended to read:
<PAGE> 3
11.2.1 Purchaser shall deliver to Seller in cash the Initial Payment
and the Adjustable Note with the Adjustable Note.
6. Section 11.2.13 is amended by adding the following sentence at the end of
the section:
Purchaser shall have received from the secured lenders of Seller a
letter of nondisturbance subject to attornment and subordination in a form
acceptable to Purchaser which allows Purchaser the right to remain undisturbed
as a tenant of the real property of Seller and to use the machinery leased
under the Lease as long as Purchaser is a tenant in good standing under the
Lease.
7. All other provisions of the Agreement except as modified herein remain in
full force and effect.
MET-COIL SYSTEMS CORPORATION
BY: Raymond H. Blakeman\s\
----------------------------------
Raymond H. Blakeman, President
ROWE MACHINERY AND AUTOMATION,
INC.
BY: Raymond H. Blakeman\s\
----------------------------------
Raymond H. Blakeman, Chairman and
Senior Vice President
MESTEX, LTD., a Texas limited partnership
By: GENTEX PARTNERS, INC., its General
Partner
BY: R.B. Dewey\s\
--------------------------------
R.B. Dewey,
Vice President
