<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File No. 0-3134
June 30, 1996
PARK-OHIO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
OHIO 34-6520107
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23000 EUCLID AVENUE 44117
CLEVELAND, OHIO (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including 216/692-7200
area code
Indicate by check mark whether the registrant:
(1) Has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or for such shorter period that the
registrant was required to file such reports):
and (2) Has been subject to such filing requirements for the past 90 days.
YES X NO
--- --------
Number of shares outstanding of registrant's Common Stock, par value $1.00 per
share, as of July 31, 1996: 10,970,331 including 562,500 shares held in escrow.
The Exhibit Index is located on page 16.
1
<PAGE> 2
INDEX
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
- - ------- ---------------------
Item 1. Financial Statements (Unaudited)
Consolidated condensed balance sheets - June 30, 1996 and
December 31, 1995
Consolidated condensed statements of income - Six months and
three months ended June 30, 1996 and 1995
Consolidated condensed statements of cash flows - Six months
ended June 30, 1996 and 1995
Notes to consolidated condensed financial statements -
June 30, 1996
Independent accountants' review report
Item 2. Management's Discussion
PART II. OTHER INFORMATION
- - -------- -----------------
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
- - ---------
EXHIBIT INDEX
2
<PAGE> 3
PART I
------
FINANCIAL INFORMATION
----------------------
3
<PAGE> 4
CONSOLIDATED CONDENSED BALANCE SHEETS
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1996 1995
-------------- ------------
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 1,512 $ 2,662
Accounts receivable, less allowances for
doubtful accounts of $1,085,000 at June 30,
1996 and $787,000 at December 31, 1995 65,472 55,121
Inventories 76,801 80,702
Deferred taxes 8,000 8,000
Other current assets 3,749 3,935
------------ ------------
Total Current Assets 155,534 150,420
Property, Plant and Equipment 100,499 94,117
Less accumulated depreciation 52,963 49,691
------------ ------------
47,536 44,426
Excess Purchase Price Over Net Assets Acquired, net 41,208 41,991
Net Assets Of Discontinued Operations 32,905 33,694
Deferred Taxes 11,400 15,400
Other Assets 18,195 15,816
------------ ------------
$ 306,778 $ 301,747
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 21,966 $ 30,859
Accrued expenses 16,620 17,013
Current portion of long-term liabilities 6,967 5,829
------------ ------------
Total Current Liabilities 45,553 53,701
Long-Term Liabilities, less current portion
Long-term debt 99,045 92,450
Other postretirement benefits 29,156 30,562
Other 6,823 6,845
------------ ------------
135,024 129,857
Convertible Senior Subordinated Debentures 22,235 22,235
Shareholders' Equity
Capital stock, par value $1 a share:
Serial Preferred Stock -0- -0-
Common Stock 10,408 10,402
Additional paid-in capital 49,233 49,184
Retained earnings 44,325 36,368
------------ ------------
103,966 95,954
------------ ------------
$ 306,778 $ 301,747
============ ============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. Certain amounts have been
reclassified for comparative purposes.
See notes to consolidated condensed financial statements.
4
<PAGE> 5
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
(In Thousands - Except Per Share Data)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
----------------------- -------------------------
1996 1995 1996 1995
------- ------- -------- --------
<S> <C> <C> <C> <C>
Net sales $90,693 $88,311 $181,547 $130,642
Cost of products sold 75,262 73,364 150,587 107,488
------ ------ ------- -------
Gross profit 15,431 14,947 30,960 23,154
Selling, general and administrative expenses 9,360 8,867 18,832 13,722
------ ------ ------- -------
Operating income 6,071 6,080 12,128 9,432
Interest expense 1,959 1,668 3,851 2,274
----- ----- ----- -----
Income from continuing operations before income
taxes 4,112 4,412 8,277 7,158
Income taxes 1,562 191 3,145 241
----- --- ----- ---
Income from continuing operations 2,550 4,221 5,132 6,917
Income from discontinued operations, net of tax in 1996 1,326 600 2,825 1,644
----- --- ----- -----
Net Income $3,876 $4,821 $7,957 $8,561
====== ====== ====== ======
Per common share:
Continuing operations $ .23 $ .39 $ .46 $ .71
Discontinued operations .12 .06 .26 .17
--- --- --- ---
Net income $ .35 $ .45 $ .72 $ .88
====== ====== ====== ======
Common shares used in the computation 11,112 10,734 11,002 9,710
====== ====== ====== =====
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
(In Thousands)
<CAPTION>
Six Months Ended
June 30
--------------------------------
1996 1995
------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 7,957 $ 8,561
Adjustments to reconcile net income to net
cash provided (used) by continuing operations:
Discontinued operations (2,825) (1,644)
Depreciation and amortization 4,271 3,033
Deferred taxes 4,000 -0-
------- --------
13,403 9,950
Changes in operating assets and liabilities of continuing operations excluding
acquisitions of businesses:
Accounts receivable (10,351) (9,121)
Inventories and other current assets 4,087 (5,464)
Accounts payable and accrued expenses (9,286) 865
Other (4,025) (1,917)
------- --------
Net Cash Used by Continuing Operations (6,172) (5,687)
Net Cash Provided by Discontinued Operations 3,432 524
------- --------
Net Cash Used by Operations (2,740) (5,163)
INVESTING ACTIVITIES
Purchases of property, plant and equipment, net (6,199) (6,446)
Cost of acquisitions, net of cash acquired -0- (33,394)
------- --------
Net Cash Used by Investing Activities (6,199) (39,840)
FINANCING ACTIVITIES
Proceeds from bank arrangements for acquisitions -0- 33,894
Proceeds from bank arrangements for operations 9,500 11,160
Payments on bank borrowing (1,766) (82)
Issuance of common stock under stock option plan 55 -0-
------- --------
Net Cash Provided from Financing Activities 7,789 44,972
------- --------
Increase (Decrease) in Cash and Cash Equivalents (1,150) (31)
Cash and Cash Equivalents at Beginning
of Period 2,662 2,172
------- --------
Cash and Cash Equivalents at End of
Period $ 1,512 $ 2,141
======= ========
</TABLE>
See notes to consolidated condensed financial statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
June 30, 1996
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three and
six-month periods ended June 30, 1996 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995. Certain amounts for the prior periods have been
reclassified for comparative purposes.
NOTE B - ACQUISITION OF RB&W CORPORATION
On March 31, 1995, the Company acquired all of the shares of RB&W
Corporation ("RB&W")in exchange for 2,023,000 shares of the Company's common
stock ($11.50 market value as of March 31, 1995) and cash of $30,968,000. The
transaction has been accounted for as a purchase.
The table below reflects the fair value of the net assets acquired of RB&W:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Cash $ 510
Accounts receivable 29,551
Inventories 36,131
Property, plant and equipment 5,591
Excess purchase price over net assets acquired 25,596
Deferred tax assets 13,300
Other assets 12,620
Notes payable (28,739)
Trade accounts payable (21,524)
Accrued expenses (9,172)
Long-term liabilities (9,622)
-------
Total Cost of Acquisition $54,242
=======
</TABLE>
The following unaudited pro forma results of continuing operations assume the
acquisition occurred on January 1, 1995. These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
the results of continuing operations which actually would have resulted had the
acquisition occurred on the date indicated.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1995
--------------------
(In thousands-Except
per share data)
<S> <C>
Net sales $177,674
Gross profit 27,774
Income from continuing operations 5,901
Income from continuing operations per common share $ .55
</TABLE>
7
<PAGE> 8
NOTE C - INVENTORIES
The components of inventory consist of the following:
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
-------------- --------------
(In thousands)
<S> <C> <C>
In process and finished goods $ 55,324 $ 58,215
Raw materials and supplies 21,477 22,487
-------------- --------------
$ 76,801 $ 80,702
============== ==============
</TABLE>
NOTE D - INCOME TAXES
Effective December 31, 1995, the Company recorded the deferred tax assets
relating to anticipated future income tax benefits from utilization of net
operating loss carryforwards. As a result, as of January 1, 1996, the Company
began to fully provide for Federal income taxes. Income tax expense from
continuing operations for the three and six-months periods ended June 30, 1995
was reduced by $1,500,000 and $2,500,000, respectively due to the utilization of
net operating loss carryforwards.
NOTE E - SHAREHOLDERS' EQUITY
Capital stock consists of the following:
Serial Preferred Stock:
Authorized - 632,470 shares; none issued
Common Stock:
Authorized - 20,000,000 shares
Issued and outstanding - 10,407,831 shares at June 30, 1996 and
10,401,831 at December 31, 1995. The increase in outstanding shares
results from the issuance of 6,000 common shares upon the exercise
of stock options.
NOTE F - NET INCOME PER COMMON SHARE
Net income per common share is based on the average number of common shares
outstanding and assumes the exercise of outstanding dilutive stock options and
the issuance of certain additional shares subject to earn-out provisions. On a
fully diluted basis, both net income and common shares outstanding are adjusted
to assume the conversion of the convertible senior subordinated debentures.
Fully diluted earnings per share were as follows for the three and six-month
periods ended June 30, 1996 and June 30, 1995, respectively.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------- ----------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Continuing operations $ .23 $ .39 $ .46 $ .71
Discontinued operations .11 .05 .23 .15
------ ------ ------ ------
Net Income $ .34 $ .44 $ .69 $ .86
====== ====== ====== ======
Common shares used in the computation 12,263 11,885 12,243 10,861
====== ====== ====== ======
</TABLE>
8
<PAGE> 9
NOTE G - SUBSEQUENT EVENT
On July 31, 1996, the Company completed the sale of substantially all of the
assets of Bennett Industries, Inc. ("Bennett"), a wholly-owned subsidiary which
manufactures plastic containers, to North American Packaging Corporation, an
indirect wholly-owned subsidiary of Southcorp Holdings Limited, an Australian
company, for approximately $50 million in cash, resulting in a pretax gain of
approximately $14 million to be recognized in the third quarter of 1996. The
results of operations and changes in cash flows for Bennett have been classified
as discontinued operations for all periods presented in the related Consolidated
Condensed Statements of Income and the Consolidated Condensed Statements of Cash
Flows, respectively. Interest expense has been allocated to discontinued
operations based on the ratio of net assets discontinued to the total net assets
of the consolidated entity plus consolidated debt. The assets and liabilities
of Bennett have been classified in the Consolidated Condensed Balance Sheets as
Net Assets of Discontinued Operations. The Company now operates in two industry
segments: manufactured products and logistics.
Summary operating results of the discontinued operations for the three and
six-month periods ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
--------------------- ---------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales $21,733 $21,109 $41,551 $41,588
Costs and Expenses 19,619 20,509 37,021 39,944
------- ------- ------- -------
Income from discontinued operations before income
taxes 2,114 600 4,530 1,644
Income taxes 788 -0- 1,705 -0-
------- ------- ------- -------
Net income from discontinued operations $ 1,326 $ 600 $ 2,825 $ 1,644
======= ======= ======= =======
</TABLE>
9
<PAGE> 10
Independent Accountants' Review Report
Board of Directors and Shareholders
Park-Ohio Industries, Inc.
We have reviewed the accompanying consolidated condensed balance sheet of
Park-Ohio Industries, Inc. and subsidiaries as of June 30, 1996, and the related
consolidated condensed statements of income for the three-month and six-month
periods ended June 30, 1996 and 1995, and the consolidated condensed statements
of cash flows for the six-month periods ended June 30, 1996 and 1995. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated condensed financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Park-Ohio Industries, Inc. and
subsidiaries as of December 31, 1995, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended, not
presented herein, and in our report dated February 22, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated condensed balance
sheet as of December 31, 1995, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
July 19, 1996
Cleveland, Ohio
10
<PAGE> 11
MANAGEMENT'S DISCUSSION
RESULTS OF OPERATIONS
FIRST HALF 1996 VERSUS FIRST HALF 1995
On July 31, 1996, substantially all of the assets of Bennett Industries,
Inc., a wholly owned subsidiary of the Company, which manufactures plastic
containers, were sold to North American Packaging Corporation, an indirect
wholly-owned subsidiary of Southcorp Holding Limited of Australia for
approximately $50 million in cash. Accordingly, the results of operations and
changes in cash flows of Bennett have been classified as discontinued operations
for all periods presented in the consolidated condensed statements of income and
cash flows. The assets and liabilities of Bennett have been classified in the
consolidated condensed balance sheets as net assets of discontinued operations.
The Company now operates in two industry segments: manufactured products and
logistics.
Effective March 31, 1996, the Company acquired all of the shares of RB&W
Corporation (RB&W) in exchange for $31 million in cash and 2.0 million of its
common shares in a transaction valued at $54.2 million. The combination has
been accounted for as a purchase and, accordingly, the operations of RB&W are
included in the consolidated financial statements as of that date. The metal
forming business of RB&W is included within the manufactured products segment,
and the supply chain management business comprises the Company's logistics
segment.
Net sales from continuing operations increased by $50.9 million or 39% in the
first six months of 1996 from the corresponding period of the prior year. Of the
sales increase, approximately $47 million pertains to incorporating RB&W in the
consolidated results for the entire six months of 1996 with the remainder
pertaining to acquisitions made subsequent to the second quarter of 1995.
Gross profit from continuing operations rose to $31.0 million in the current
period from $23.2 million in the first half of 1995. RB&W accounted for
practically all of the increase. Consolidated gross margins were 17.1% of sales
in the current period and 17.8% in the first half of 1995.
Selling, general and administrative costs from continuing operations
increased by 37% in the period primarily as a result of incorporating RB&W into
the consolidated results for the entire first half of 1996. Of the total
increase of $5.1 million, 87% pertains to RB&W and the remainder to increased
sales. As a percentage of sales, consolidated selling, general and
administrative costs accounted for 10.4% of the sales dollar in the current
period and 10.5% in the corresponding period of the prior year.
Interest expense from continuing operations increased by $1.6 million in the
current period due to higher levels of debt outstanding during the period.
Average debt outstanding for the period increased from $73.2 million in 1995 to
$123.7 million in 1996. The increase in borrowings was caused by the acquisition
of RB&W and higher levels of revolving credit debt to support increased sales
and production. Interest rates for the period are approximately the same as in
the first six months of 1995.
As of December 31, 1995, the Company recorded the deferred tax assets
relating to anticipated future income benefits from utilization of net operating
loss carryforwards. As a result, as of January 1, 1996, the Company began to
fully provide for Federal income taxes. At December 31, 1995, the Company and
its subsidiaries had net operating loss carryforwards for tax purposes of
approximately $26.0 million available to offset future taxable income. For
financial reporting purposes, the Company has additional net operating loss
carryforwards relating to deductible temporary differences, the most significant
of which relates to other postretirement benefits. Federal income tax expense
from continuing operations for the 1995 period was reduced by $2.5 million due
to the utilization of net operating loss carryforwards.
SECOND QUARTER 1996 VERSUS SECOND QUARTER 1995
Net sales from continuing operations increased by $2.4 million or 3% in the
current period from the corresponding period of the prior year. The increased
sales pertains to companies acquired subsequent to the second quarter of 1995.
Gross profit from continuing operations rose to $15.4 million in the current
period from $14.9 million in the second quarter of 1995 and is primarily
attributable to internal growth. Consolidated gross margins were approximately
17% of sales in both periods.
11
<PAGE> 12
Selling, general and administrative costs from continuing operations
increased by 6% in the period primarily as a result of increased sales. As a
percentage of sales, consolidated selling, general and administrative costs
approximated 10% of the sales dollar in both periods.
Interest expense from continuing operations increased by $291 thousand in the
second quarter of 1996 due to higher levels of debt outstanding during the
period. Average debt outstanding for the period increased from $102.5 million
in 1995 to $126.6 million in 1996. The increase in borrowings was caused by
higher levels of revolving credit debt to support increased sales and
production. Interest rates have fallen somewhat from the year earlier period
when they averaged 7.65%.
LIQUIDITY AND SOURCES OF CAPITAL
Current financial resources (working capital and available bank borrowing
arrangements) and anticipated funds from continuing operations are expected to
be adequate to meet current cash requirements, including capital expenditures.
The Company's recent growth has largely been fueled by acquisitions. In the
event additional capital resources are needed for other opportunities in the
near future, the Company believes adequate financing is either in place or would
be available. In addition, on July 31, 1996 the Company applied the net
proceeds from the sale of Bennett (approximately $49 million) to reduce
outstanding bank borrowings. The Company currently has in place a $125 million
bank agreement of which $55 million is borrowed as of August 5, 1996.
During the six-month period ended June 30, 1996, the Company generated $13.4
million from continuing operations before changes in operating assets and
liabilities. After giving effect to the use of $19.6 million in the operating
accounts and $3.4 million provided from discontinued operations, the Company
used $2.7 million in operating activities. This amount coupled with capital
expenditures of $6.2 million was funded by an increase in bank borrowings of
$9.5 million.
12
<PAGE> 13
REVIEW BY INDEPENDENT ACCOUNTANTS
The condensed consolidated financial statements at June 30, 1996, and for
the three-month and six-month periods then ended have been reviewed, prior to
filing, by Ernst & Young LLP, the Company's independent accountants, and their
report is included herein.
13
<PAGE> 14
PART II
-------
OTHER INFORMATION
-----------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of shareholders was held on May 23, 1996.
(c) The following matters were voted upon at the annual meeting of
shareholders:
Proposal to approve the one time grant to Mr. Crawford, Chairman and Chief
Executive Officer, of a non-statutory stock option to purchase 500,000 shares
of common stock.
<TABLE>
<S> <C>
8,369,763 Affirmative votes
298,115 Negative votes
53,758 Abstentions
1,005,711 Non votes
</TABLE>
Proposal to approve the adoption of the Company's 1996 Non-employee
Director Stock Option Plan.
<TABLE>
<S> <C>
8,602,968 Affirmative votes
175,048 Negative votes
73,343 Abstentions
875,988 Non votes
</TABLE>
Proposal to ratify the appointment of Ernst & Young as independent auditors for
the current year ending December 31, 1996.
<TABLE>
<S> <C>
9,679,248 Affirmative votes
23,582 Negative votes
24,517 Abstentions
-0- Non votes
</TABLE>
ITEM 5. OTHER INFORMATION
On July 31, 1996 (the "Closing Date"), substantially all of the assets of
Bennett Industries, Inc. ("Bennett"), a wholly owned subsidiary of the
Company, were sold to North American Packaging Corporation ("NAMPAC"), an
indirect wholly-owned subsidiary of Southcorp Holdings Limited, pursuant to the
Asset Purchase Agreement, dated as of May 28, 1996, (the "Agreement"), among
the Company, Bennett, and NAMPAC. NAMPAC also acquired the stock of two
wholly-owned subsidiaries of Bennett which held certain intangible assets and
certain operating assets, and NAMPAC assumed certain liabilities identified in
the Agreement. In consideration of the sale of the assets and stock, NAMPAC
paid Bennett $48,502,955 in cash and $1,500,000 in cash was placed in escrow on
the Closing Date. The escrow will be released after final determination of the
net tangible assets acquired on the Closing Date. The consideration paid by
NAMPAC to acquire the assets of Bennett was determined by arm's length
negotiation between NAMPAC, Bennett and the Company.
The assets of Bennett acquired by NAMPAC include real property, machinery
and equipment, accounts receivable, inventory, proprietary rights, executory
agreements, books and records, and permits.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
(2) Asset Purchase Agreement dated as of May 28, 1996 among North
American Packaging Corporation, as Buyer, Bennett Industries, Inc.
as Seller, and Park-Ohio Industries, Inc.
(11) Computation of net income per common share
(15) Letter re: unaudited financial information
(27) Financial data schedule (Electronic Filing Only)
14
<PAGE> 15
(99) Unaudited pro forma condensed financial statements
The Company did not file any reports on Form 8-K during the three months ended
June 30, 1996.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PARK-OHIO INDUSTRIES, INC.
------------------------------------
(Registrant)
By /s/ J.S. WALKER
----------------------------------
Name: J.S. Walker
Title: Vice President and Chief
Financial Officer
Dated August 14, 1996
--------------------------------
15
<PAGE> 16
EXHIBIT INDEX
QUARTERLY REPORT ON FORM 10-Q
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
FOR THE QUARTER ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
EXHIBIT
- - -------
<S> <C>
2 Asset Purchase Agreement dated as of May 28, 1996 among North American Packaging Corporation, as Buyer, Bennett
Industries, Inc, as Seller, and Park-Ohio Industries, Inc.
11 Computation of net income per common share
15 Letter re: unaudited financial information
27 Financial data schedule (Electronic filing only)
99 Unaudited pro forma condensed financial statements
</TABLE>
16
<PAGE> 1
Exhibit (2)
ASSET PURCHASE AGREEMENT
Dated as of May 28, 1996
Among
North America Packaging Corporation, as Buyer,
Bennett Industries, Inc., as Seller,
and
Park-Ohio Industries, Inc.
<PAGE> 2
T A B L E O F C O N T E N T S
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
DEFINITIONS
<S> <C> <C>
1.1. Definitions................................................................................ 1
ARTICLE II.
PURCHASE AND SALE
2.1. Purchased Assets........................................................................... 6
2.2. Excluded Assets............................................................................ 8
2.3. Assumed Liabilities........................................................................ 8
2.4. Excluded Liabilities....................................................................... 9
ARTICLE III.
PURCHASE PRICE
3.1. Purchase Price............................................................................. 9
3.2. Determination of Final Closing Date Net Tangible Assets.................................... 9
3.3. Adjustment................................................................................. 10
ARTICLE IV.
CLOSING
4.1. Closing Date............................................................................... 11
4.2. Payment on the Closing Date................................................................ 11
4.3. Buyer's Additional Closing Date Deliveries................................................. 11
4.4. Seller's Closing Date Deliveries........................................................... 12
4.5. Optional Transfer of Purchased Assets to Subsidiary;
Transfer of Subsidiary Capital Stock..................................................... 13
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
5.1. Organization of Seller and Parent.......................................................... 14
5.2. Authority of Seller and Parent............................................................. 14
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
5.3. Financial Statements....................................................................... 14
5.4. Operations Since December 31, 1995......................................................... 15
5.5. No Undisclosed Liabilities................................................................. 15
5.6. Taxes...................................................................................... 16
5.7. Title to and Condition of Purchased Assets................................................. 16
5.8. Inventory.................................................................................. 17
5.9. Accounts Receivable........................................................................ 17
5.10. Governmental Permits....................................................................... 17
5.11. Real Property.............................................................................. 18
5.12. Personal Property.......................................................................... 18
5.13. Personal Property Leases................................................................... 18
5.14. Patents, Trademarks and Intellectual Property Rights....................................... 19
5.15. Employees and Related Agreements; ERISA.................................................... 19
5.16. Employee Relations......................................................................... 20
5.17. Contracts.................................................................................. 21
5.18. Status of Contracts........................................................................ 22
5.19. No Violation, Litigation or Regulatory Action.............................................. 22
5.20. Insurance.................................................................................. 22
5.21. No Finder.................................................................................. 22
5.22. Material Reports........................................................................... 23
5.23. Product Recall............................................................................. 23
5.24. Accuracy of Warranties..................................................................... 23
5.25. PIM, Inc................................................................................... 23
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1. Organization of Buyer...................................................................... 23
6.2. Authority of Buyer......................................................................... 23
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6.3. No Finder.................................................................................. 24
6.4. Financial Ability.......................................................................... 24
ARTICLE VII.
ACTION PRIOR TO THE CLOSING DATE
7.1. Investigation of Seller by Buyer........................................................... 24
7.2. Preserve Accuracy of Representations and Warranties........................................ 24
7.3. Consents of Third Parties; Governmental Approvals.......................................... 24
7.4. Operations Prior to the Closing Date....................................................... 25
7.5. Antitrust Law Compliance................................................................... 26
ARTICLE VIII.
ADDITIONAL AGREEMENTS
8.1. Taxes...................................................................................... 26
8.2. Employees and Employee Benefit Plans....................................................... 27
8.3. Post-Closing Remittances................................................................... 29
8.4. Receivables................................................................................ 29
8.5. Conveyance and Transfer of Owned Real Property............................................. 29
8.6. Non-Competition............................................................................ 30
8.7. Product Repair or Replacement.............................................................. 31
8.8. Dunellen................................................................................... 31
8.9. No Additional Liability.................................................................... 32
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
9.1. No Misrepresentation or Breach of Covenants and Warranties................................. 33
9.2. No Material Adverse Change................................................................. 33
9.3. No Restraint............................................................................... 33
9.4. Necessary Governmental Approvals........................................................... 33
9.5. Necessary Consents......................................................................... 33
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9.6. Instrument of Assignment................................................................... 33
9.7. Escrow Agreement........................................................................... 33
9.8. Supply Agreement........................................................................... 33
9.9. Lease Agreement............................................................................ 33
9.10. Services Agreement......................................................................... 33
ARTICLE X.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND PARENT
10.1. No Misrepresentation or Breach of Covenants and Warranties................................. 34
10.2. No Restraint............................................................................... 34
10.3. Instrument of Assumption................................................................... 34
10.4. Escrow Agreement........................................................................... 34
10.6. Supply Agreement........................................................................... 34
10.7. Lease Agreement............................................................................ 34
10.8. Services Agreement......................................................................... 34
ARTICLE XI.
INDEMNIFICATION
11.1. Indemnification by Seller and Parent....................................................... 34
11.2. Indemnification by Buyer................................................................... 36
11.3. Notice of Claims........................................................................... 37
11.4. Third Person Claims........................................................................ 38
ARTICLE XII.
ENVIRONMENTAL MATTERS
12.1. Scope...................................................................................... 38
12.2. Representations and Warranties of Seller and Parent Regarding
Environmental Matters.................................................................... 38
12.3. Indemnification by Seller and Parent for
Environmental Matters.................................................................... 39
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12.4. Indemnification by Buyer for Environmental Matters......................................... 39
ARTICLE XIII.
TERMINATION
13.1. Termination................................................................................ 40
13.2. Notice of Termination...................................................................... 40
13.3. Effect of Termination...................................................................... 40
ARTICLE XIV.
GENERAL PROVISIONS
14.1. Survival of Obligations.................................................................... 41
14.2. Confidential Nature of Information......................................................... 41
14.3. No Public Announcement..................................................................... 41
14.4. Notices.................................................................................... 42
14.5. Successors and Assigns..................................................................... 42
14.6. Access to Records after Closing............................................................ 43
14.7. Entire Agreement; Amendments............................................................... 43
14.8. Institution of Legal Proceedings........................................................... 43
14.9. Interpretation............................................................................. 43
14.10. Waivers.................................................................................... 43
14.11. Expenses................................................................................... 44
14.12. Partial Invalidity......................................................................... 44
14.13. Execution in Counterparts.................................................................. 44
14.14. Further Assurances......................................................................... 44
14.15 No Intention to Liquidate or Sell PIM...................................................... 45
14.16 Set-Off.................................................................................... 45
14.17. Governing Law.............................................................................. 45
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LIST OF EXHIBITS
----------------
Exhibit A Escrow Agreement
Exhibit B Instrument of Assignment
Exhibit C Instrument of Assumption
Exhibit D Opinion of Counsel to Buyer
Exhibit E Opinion of Counsel to Seller and Parent
Exhibit F Services Agreement
Exhibit G Supply Agreement
Exhibit H Lease Agreement for Peotone, Illinois Facility
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LIST OF SCHEDULES
-----------------
Schedule 2.1(A) Permitted Encumbrances
Schedule 2.1(K) Assets of Affiliates
Schedule 2.2 Excluded Receivables
Schedule 3.2 Inventory Valuation Principles
Schedule 4.2 Wire Transfer Instructions
Schedule 5.1 Qualifications
Schedule 5.2 Consents
Schedule 5.3 Financial Statements
Schedule 5.4(A) Material Adverse Changes
Schedule 5.4(B) Conduct of Business
Schedule 5.5 Undisclosed Liabilities
Schedule 5.6 Taxes
Schedule 5.7 Availability of Assets
Schedule 5.8 Inventory
Schedule 5.10 Governmental Permits
Schedule 5.11(A) Owned Real Property
Schedule 5.11(B) Leased Real Property
Schedule 5.11(C) Other Real Property
Schedule 5.12 Personal Property
Schedule 5.13 Personal Property Leases
Schedule 5.14 Patents and Trademarks
Schedule 5.15(A) Employee Agreements
Schedule 5.15(G) Conflicts of Interest
Schedule 5.15(H) Employee Liabilities
Schedule 5.16 Employee Relations
Schedule 5.17 Contracts
Schedule 5.18 Status of Contracts
Schedule 5.19 Litigation
Schedule 5.20 Insurance Policies
Schedule 5.23 Product Recall
Schedule 12.2 Environmental Matters
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of May 28, 1996 among North
America Packaging Corporation, a Nevada corporation ("Buyer"), Bennett
Industries, Inc., an Illinois corporation ("Seller"), and Park-Ohio Industries,
Inc., an Ohio corporation and the owner of all of the capital stock of Seller
("Parent").
WHEREAS, Seller is engaged in the manufacture and sale of plastic
pails, plastic drums and blow molded bottles up to six gallons, lids, handles
and covers therefor, for the food products, chemicals, industrial coating and
building product industries (the "Business", which term shall exclude products
for which Parent's safety cap has an application);
WHEREAS, the Business is conducted at (i) the manufacturing
facility located at 12735 Kirby Road, Cleveland, Ohio, (ii) the manufacturing
facility located at 4002 Montdale Drive, Valparaiso, Indiana, (iii) the
manufacturing and warehouse facility located at 2160 Lithonia Industrial
Boulevard, Lithonia, Georgia, (iv) the manufacturing facility located at Foot of
South Second off Rock Avenue, Dunellen, New Jersey, (v) the manufacturing
facility at 1647 Truman Street, San Fernando, California, (vi) the office
facility located at 515 First Street, Peotone, Illinois, and (vii) certain
leased warehouses (or portions thereof) set forth in Schedule 5.11 (B)
(collectively, the "Operations Sites"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, substantially all of the assets and properties of the
Business, all on the terms and subject to the conditions set forth herein;
WHEREAS, in connection with the purchase of assets of the Business
Buyer desires to obtain the covenant not-to-compete of Seller, Parent and Edward
F. Crawford ("Crawford"), and Seller, Parent and Crawford desire to enter into a
covenant not-to-compete upon the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed among Seller, Buyer and
Parent as follows:
ARTICLE I.
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms have the
meanings specified or referred to in this SECTION 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by this
Agreement.
"ADDITIONAL PAYMENT" has the meaning specified in Section 3.2.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
"AGREED ACCOUNTING PRINCIPLES" means generally accepted accounting
principles in the United States consistently applied in preparing the Balance
Sheets.
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"AGREED RATE" means the prime rate published by The Wall Street
Journal, as that rate may vary from time to time, or if that rate is no longer
published, a comparable rate.
"ASSUMED LIABILITIES" has the meaning specified in SECTION 2.3.
"BALANCE SHEET" means the balance sheets of Seller as of February
29, 1996, and as of December 31, 1995 and 1994 included in SCHEDULE 5.3.
"BUSINESS" has the meaning specified in the first recital to this
Agreement.
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments and
documents being or to be executed and delivered by Buyer under this Agreement or
in connection herewith.
"BUYER GROUP MEMBER" means Buyer and its Affiliates, directors,
officers, employees, agents, attorneys and consultants and their respective
successors and assigns.
"CALCO" shall have the meaning specified in SECTION 4.5.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 ET SEQ., any amendments
thereto, any state analogs, and any regulations thereunder.
"CLAIM NOTICE" has the meaning specified in SECTION 11.3(a).
"CLEAN AIR ACT" means the Clean Air Act, 42 U.S.C. Sections 7401
ET SEQ., any amendments thereto, including the Clean Air Act Amendments of 1990,
any state analogs and any regulations promulgated thereunder.
"CLEAN WATER ACT" means the Federal Water Pollution Control Act,
33 U.S.C Sections 1251 ET SEQ., any amendments thereto, any state analogs and
any regulations thereunder.
"CLOSING" means the closing of the transfer of the Purchased
Assets from Seller to Buyer.
"CLOSING CASH PAYMENT" has the meaning specified in
SECTION 3.1(a).
"CLOSING DATE" has the meaning specified in SECTION 4.1.
"CLOSING DATE BALANCE SHEET" has the meaning specified in
SECTION 3.2.
"CLOSING DATE NET TANGIBLE ASSET SUMMARY" has the meaning
specified in SECTION 3.2.
"CLOSING DATE NET TANGIBLE ASSETS" means the net tangible assets
set out in the Closing Date Net Tangible Asset Summary.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLECTIVE BARGAINING AGREEMENT" means, with respect to the
Seller's facility in Lithonia, Georgia, the International Leather Goods.
Plastics and Novelty Workers Union. AFL-CIO and its Southern Joint Board
(1994-1997), and, with respect to the Seller's facility in
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<PAGE> 11
Valparaiso, Indiana, the International Brotherhood of Teamsters Union, Local No.
142 (1995-1999).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement dated August 9, 1995, between Buyer and Seller.
"CONTAMINANT" means any waste, pollutant, hazardous or toxic
substance or waste, petroleum, petroleum-based substance or waste, special
waste, or any constituent of any such substance or waste and any material the
exposure to, presence, use, generation, treatment, storage, release, disposal,
handling, clean-up or remediation of which is regulated by any Environmental
Law.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"CRAWFORD" has the meaning specified in the fifth paragraph of
this Agreement.
"EMPLOYEE PLAN" has the meaning specified in SECTION 5.15(b).
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"ENVIRONMENTAL ENCUMBRANCE" means an Encumbrance in favor of any
Governmental Body for (i) any liability under any Environmental Law, or (ii)
damages arising from, or costs incurred by such Governmental Body in response
to, a Release or threatened Release of a Contaminant into the environment.
"ENVIRONMENTAL LAW" means all Requirements of Law derived from or
relating to all federal, state and local laws or regulations relating to or
addressing the environment, health or safety, including but not limited to
common law, CERCLA, Clean Air Act, Clean Water Act, EPCRA, OSHA, RCRA and TSCA
and any state or local equivalent thereof.
"ENVIRONMENTAL PERMITS" has the meaning specified in
Section 12.2(b).
"EPCRA" means the Emergency Planning and Community Right-to-Know
Act of 1986, 42 U.S.C. Sections 11001 ET SEQ., any amendments thereto, any state
analogs, and any regulations thereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ESCROW AGREEMENT" means the Escrow Agreement in the form of
EXHIBIT A.
"ESCROW AMOUNT" has the meaning specified in SECTION 3.1(a).
"EXCLUDED ASSETS" has the meaning specified in SECTION 2.2.
"EXCLUDED LIABILITIES" has the meaning specified in SECTION 2.4.
"EXCLUDED RECEIVABLES" has the meaning specified in SECTION 2.2.
"EXPENSES" means any and all reasonable expenses incurred in
connection with investigating, defending or asserting any claim, action, suit or
proceeding incident to any matter indemnified against hereunder (including,
without limitation, court filing fees, court costs,
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<PAGE> 12
arbitration fees or costs, witness fees, and reasonable fees and disbursements
of legal counsel, investigators, expert witnesses, accountants and other
professionals).
"FEBRUARY NET TANGIBLE ASSET SUMMARY" means the net tangible asset
summary included in SCHEDULE 5.3.
"FINAL CLOSING DATE NET TANGIBLE ASSETS" has the meaning specified
in SECTION 3.2.
"GOVERNMENTAL BODY" means any U.S. and foreign federal, state,
local or other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in SECTION 5.10.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment in
the form of EXHIBIT B.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in
the form of EXHIBIT C.
"INVENTORY" has the meaning specified in SECTION 2.1(c).
"IRS" means the Internal Revenue Service.
"KNOWLEDGE OF PARENT" or phrases of similar import means matters
actually known to E. Crawford, J. Walker, J. Murray and R. Cozean.
"KNOWLEDGE OF SELLER" or phrases of similar import means matters
actually known to R. Bourg, J. Regas, E. Boris and R. Swanson following
reasonable due inquiry of those employees of Seller whose normal
responsibilities include the areas of inquiry, provided that in no event shall
reasonable due inquiry require collection of any data or information beyond that
which may be in the possession of the responsible employees at the time of
inquiry.
"KNOWLEDGE OF SELLER REGARDING ENVIRONMENTAL MATTERS" means
matters actually known to R. Bourg, J. Regas, E. Boris, R. Swanson, G. Little,
J. Gordon and S. Rauch.
"LEASE AGREEMENT" means the Lease Agreement in the form of
EXHIBIT H.
"LEASED REAL PROPERTY" has the meaning specified in
SECTION 5.11(b).
"LOSSES" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges.
"MATERIAL ADVERSE CHANGE" means a change (other than a change
resulting from a change to the industry as a whole) that results in a decrease
of ten percent or more in the value of the Business. The parties agree that this
definition shall only be used in connection with SECTION 9.2 and otherwise no
implication shall be made from this definition to the definition of "material"
or any variant thereof in this Agreement.
"NON-COMPETE PERIOD" has the meaning specified in SECTION 8.6.
"OPERATIONS SITES" has the meaning specified in the second recital
to this Agreement.
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"ORDINARY COURSE LIABILITIES" has the meaning specified in
SECTION 2.3(b).
"OSHA" means the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 ET SEQ., any amendments thereto, any state analogs, and any
regulations thereunder.
"OWNED REAL PROPERTY" has the meaning specified in
SECTION 5.11(a).
"PARENT" has the meaning specified in the first paragraph of this
Agreement.
"PERMITTED ENCUMBRANCES" means the Encumbrances, liens, charges,
assessments, imperfections and exceptions specifically set forth on SCHEDULE
2.1A hereto.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
Governmental Body.
"PIM" means PIM, Inc., an Illinois corporation.
"PROPERTY" means any real or personal property (tangible,
intangible or mixed), plant, building, facility, structure, underground storage
tank, equipment or unit, or other asset owned, leased or operated by Seller and
used in the operation of the Business.
"PURCHASE PRICE" has the meaning specified in SECTION 3.1.
"PURCHASED ASSETS" has the meaning specified in SECTION 2.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C
Sections 6901 ET SEQ., any amendments thereto, any state analogs, and any
regulations thereunder.
"REAL PROPERTY" has the meaning specified in SECTION 5.11(b).
"RECEIVABLES" has the meaning specified in SECTION 2.1.
"REFUND PAYMENT" has the meaning specified in Section 3.2.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into, on or out of any
Real Property, including the movement of Contaminants through or in the air,
soil, surface water, groundwater or Real Property.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threatened Release or minimize the
further Release of Contaminants or (iii) investigate and determine if a remedial
response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"REPORTED ENVIRONMENTAL MATTERS" means all environmental issues or
matters contained in the environmental reports provided to Seller's attorneys by
Buyer's attorneys prior to the signing of this Agreement.
"REQUIREMENTS OF LAW" means any federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted, adopted or issued by
any Governmental Body.
"SELLER" has the meaning specified in the first paragraph of this
Agreement. Seller shall include PIM for purposes of the following SECTIONS to
this Agreement: 5.1, 5.5, 5.6, 5.7,
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5.14, 5.16, 5.17, 5.18, 5.19, 5.20 and 5.21. Seller shall include Calco for
purposes of the following Sections to this Agreement: 5.1, 5.5, 5.6, 5.7, 5.14,
5.17, 5.19 and 5.21.
"SELLER AGREEMENTS" has the meaning specified in SECTION 5.18.
"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Seller under this
Agreement or in connection herewith.
"SELLER GROUP MEMBER" means Seller and its Affiliates, directors,
officers, employees, agents, attorneys and consultants and their respective
successors and assigns.
"SELLER'S AUDITORS CERTIFICATE" has the meaning specified in
SECTION 3.2.
"SERVICES AGREEMENT" means the Services Agreement in the form of
EXHIBIT F.
"STRADDLE PERIOD" means any taxable year or period applicable to
PIM or Calco beginning before and ending after the Closing.
"SUPPLY AGREEMENT" means the Supply Agreement in the form of
EXHIBIT G.
"TAX" (and, with correlative meaning, "Taxes" and "Taxable") means
any federal, state, county, local or foreign income, alternative or add-on
minimum, gross income, gross receipts, property, sales, use, transfer, license,
excise, franchise, employment, payroll, withholding or minimum tax, ad valorem,
customs duty, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalty or fine, addition to tax or
additional amount imposed by any Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"TERRITORY" has the meaning specified in SECTION 8.6.
"TRADING LIABILITIES" has the meaning specified in SECTION 2.3(a).
"TSCA" means The Toxic Substance Control Act of 1976, 15 U.S.C.
Sections 2601 ET SEQ., any amendments thereto, any state analogs, and any
regulations thereunder.
"WARN ACT" means the Worker Adjustment Retraining Act of 1988.
ARTICLE II.
PURCHASE AND SALE
2.1. PURCHASED ASSETS. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Seller shall sell, transfer,
assign, convey and deliver to Buyer, and Buyer shall purchase from Seller, free
and clear of all Encumbrances (except for Permitted Encumbrances), all of the
assets and properties of Seller of every kind and description, wherever located,
real, personal or mixed, tangible or intangible, used in connection with the
operations of the Business as such assets shall exist on the Closing Date,
including such assets reflected in the Closing Date Balance Sheet (herein
collectively called the "Purchased Assets"). The Purchased Assets shall include,
without limitation:
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(a) REAL PROPERTY. All real property and interests therein
employed in the conduct of the Business, including all land, plant, warehouse
and office facilities and other improvements and fixtures attached to said real
property and including specifically but without limitation the Owned Real
Property described in SCHEDULE 5.11(A) and all interest in the Leased Real
Property described in SCHEDULE 5.11(B).
(b) MACHINERY AND EQUIPMENT. All machinery and equipment
(including spare parts), data processing hardware and software, vehicles,
furniture, fixtures, capital expenditures in process, tools, dies, molds, and
similar tangible personal property, whether leased or owned, employed in the
conduct of the Business, and including specifically but without limitation those
items listed and described in SCHEDULE 5.12 and SCHEDULE 5.13.
(c) INVENTORY. All inventories consisting of raw materials, work
in process and finished goods and supplies employed in the conduct of the
Business as the same may exist at the Closing (the "Inventory").
(d) RECEIVABLES. All notes and trade and other accounts receivable
generated by the Business, as the same may exist at the Closing but not
including any accounts receivable owing from any Seller Group Member
("Receivables"), except that in no event shall Buyer acquire any individually
invoiced Receivable that has been outstanding for more than ninety (90) days as
of the Closing Date.
(e) PROPRIETARY RIGHTS. All trademarks, trade names and service
marks (and all goodwill associated therewith), registered or unregistered, and
the applications for registration thereof, all patents and applications therefor
and all copyrights, licenses, software, technology, trade secrets, know-how,
customer lists, formulas, processes, designs, inventions, developments and
confidential business information, whether patentable or not, developed by or
for Seller or relating to the Business and all other proprietary information and
rights employed by or utilized in the conduct of the Business, including without
limitation, those items listed on SCHEDULE 5.14 and the name "Bennett
Industries".
(f) EXECUTORY AGREEMENTS. The rights of Seller under any executory
contract to which it is a party excluding any agreement giving rise to an
Excluded Liability, but including, without limitation, those listed or described
on SCHEDULE 5.17 and the following, if any: any license agreement, promissory
note, guaranty, loan agreement, security agreement, indemnity agreement,
subordination agreement, indenture, mortgage, lease (whether or not capitalized
and including those listed in SCHEDULE 5.13), conditional sale or title
retention agreement, any purchase order or contract with any customer or
supplier of Seller to the extent that such purchase order or contract is not
fulfilled by Seller on the Closing Date.
(g) CERTAIN RIGHTS OF SELLER. All claims, rights and causes of
action of Seller against third parties, including claims, rights and causes of
action against third parties arising under warranties from vendors and others in
connection with the Business.
(h) BOOKS AND RECORDS. All books and records (including all data
and other information stored on discs, tapes or other media) relating to the
Business, including, without limitation, employee records (to the extent allowed
by law).
(i) GOVERNMENTAL PERMITS. All Governmental Permits of Seller
relating to the Business, including those listed on SCHEDULE 5.10, to the extent
assignable.
(j) PIM, INC. All of the issued and outstanding shares of PIM.
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(k) OTHER ASSETS. All other assets of Seller, or assets of
Seller's Affiliates scheduled in SCHEDULE 2.1(K), employed in (and claims,
rights and causes of action arising from) the conduct of the Business, whether
real, personal, tangible, intangible or mixed, including books, records and
files (including all personnel files), any prepaid expenses, and any utility
deposits, all except as specifically excluded in SECTION 2.2.
2.2. EXCLUDED ASSETS. Notwithstanding the provisions of SECTION
2.1, the Purchased Assets shall not include the following (herein referred to as
the "Excluded Assets"):
(a) All cash, cash equivalents, bank accounts, certificates of
deposit, investment securities, commercial paper and any other marketable
securities or similar investments of Seller;
(b) All accounts receivable that have been outstanding and
uncollected for more than ninety (90) days on the Closing Date and any amounts
owing from any Seller Group Member (the "Excluded Receivables"), including
Excluded Receivables set forth in SCHEDULE 2.2 hereto;
(c) All corporate minute books and stock transfer books and the
corporate seal of Seller;
(d) All refunds of any Tax for which Seller is liable pursuant to
SECTION 8.1;
(e) Segregated funds and other assets maintained by Seller on
behalf of persons now or heretofore employed by Seller;
(f) The lease of the facility located in Dunellen, New Jersey;
(g) Title to any real property located in Peotone, Illinois; and
(h) At the option of Buyer, provided in writing to Seller at least
10 days prior to the Closing Date, title to the real property located in Alta
Loma, California; provided, however, that the adjustment to the Purchase Price
in the event Buyer decides to acquire the Alta Loma property shall be an
increase of $150,000.
2.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall deliver
to Seller the Instrument of Assumption, pursuant to which Buyer assumes and
agrees to discharge only the following obligations and liabilities of Seller in
accordance with their respective terms and subject to the respective conditions
thereof, and no others:
(a) Liabilities of Seller for "Accounts Payable" and "Accrued
Expenses" as reflected on the December 31, 1995 Balance Sheet (in the amounts as
reflected on the Closing Date Balance Sheet) ("Trading Liabilities") with the
exception of any liabilities attributable to Taxes, an Employee Plan or
liabilities owing to any Seller Group Member or liabilities borne by Seller
pursuant to other provisions of this Agreement;
(b) Liabilities incurred in the ordinary course of the Business
since December 31, 1995 that are of the same type as those reflected on the
December 31, 1995 Balance Sheet (in the amounts reflected on the Closing Date
Balance Sheet) ("Ordinary Course Liabilities");
(c) Liabilities and obligations of Seller to be paid or performed
consistent with past practice in the ordinary course of the Business after the
Closing Date under (i) the leases, contracts and other agreements to be assumed
by Buyer as listed in SCHEDULES 5.11(B), 5.13, 5.14, 5.15(A) and 5.17, and (ii)
the leases, contracts and other agreements not required by the terms of SECTIONS
5.11, 5.13, 5.14, 5.15 and 5.17 to be listed in a Schedule to this Agreement to
be
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assumed by Buyer, except, in each case, to the extent such liabilities and
obligations, but for a breach or default by Seller, would have been paid,
performed or otherwise discharged on or prior to the Closing Date or to the
extent the same arise out of any such breach or default;
(d) Liabilities and obligations arising out of Reported
Environmental Matters; and
(e) Liabilities and obligations arising from or in connection with
product recalls, servicing, repairs, returns or replacements relating to
products manufactured or sold by or on behalf of Seller on or prior to the
Closing Date to the extent of liabilities not in excess of $50,000.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
2.4. EXCLUDED LIABILITIES. Buyer shall not assume or be obligated
to pay, perform or otherwise discharge any liability or obligation of Seller or
Seller's Affiliates, direct or indirect, known or unknown, absolute or
contingent, not expressly assumed by Buyer in SECTION 2.3 pursuant to the
Instrument of Assumption, including but not limited to, any liability or
obligation to a third party for any personal injury or property damage incurred
or arising on or prior to the Closing Date (all such liabilities and obligations
not being assumed being herein called the "Excluded Liabilities").
ARTICLE III.
PURCHASE PRICE
3.1. PURCHASE PRICE. The price for the Purchased Assets (the
"Purchase Price") shall be determined in accordance with this SECTION 3.1 and
SECTION 3.2 and shall be equal to (a) US$48,502,955 (the "Closing Cash Payment")
plus (b) US$1,500,000 (the "Escrow Amount"); adjusted
(i) in the event the Final Closing Date Net Tangible Assets
are greater than US$31,195,479, by adding the amount of such
excess; or
(ii) in the event the Final Closing Date Net Tangible
Assets are less than US$31,195,479, by deducting the amount of
such deficiency.
The numerical amounts set forth in clause (i) and (ii) of this SECTION 3.1 are
derived from the Adjusted February Net Tangible Asset Summary included in
SCHEDULE 5.3.
3.2. DETERMINATION OF FINAL CLOSING DATE NET TANGIBLE ASSETS. Not
later than 60 calendar days after the Closing Date, Seller's auditors shall
deliver to Buyer a certificate (the "Seller's Auditors Certificate"), which
certificate shall contain: (i) an audited balance sheet prepared in accordance
with Agreed Accounting Principles reflecting the Purchased Assets and the
Assumed Liabilities as of the opening of business on the Closing Date (the
"Closing Date Balance Sheet"); (ii) an audited net tangible asset summary being
an adjusted balance sheet prepared from the Closing Date Balance Sheet by
eliminating those categories of assets not contained in the February Net
Tangible Asset Summary (the "Closing Date Net Tangible Asset Summary"); and
(iii) a statement of the Purchase Price calculated in accordance with this
ARTICLE III. The Closing Date Net Tangible Assets shall be the net tangible
assets disclosed in the Closing Date Net Tangible Asset Summary. The parties
agree that any bad debt reserve reflected in Accounts Receivable on the Closing
Date Balance Sheet shall be adjusted to reflect the exclusion of the Excluded
Receivables. Buyer and its independent public accountants shall be permitted to
observe the taking of inventories by Seller and its representatives in
connection with the preparation of the Closing Date Balance Sheet and the
Closing Date Net Tangible Asset Summary
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and will be permitted to review any work papers generated in connection
therewith. Such inventories shall be taken in accordance with the inventory
valuation principles set forth in SCHEDULE 3.2 and otherwise in accordance with
the Agreed Accounting Principles. If the Purchase Price on Seller's Auditors
Certificate exceeds the sum of the Closing Cash Payment and the Escrow Amount,
within 5 business days after receipt by Buyer of Seller's Auditors Certificate,
Buyer shall pay to Seller by wire transfer of immediately available funds to
such bank account of Seller as Seller shall designate in writing to Buyer, the
excess of the Purchase Price as stated in Seller's Auditors Certificate over the
sum of the Closing Cash Payment plus the Escrow Amount, plus interest on such
excess from the Closing Date to the date of payment thereof at the Agreed Rate
("Additional Payment"). If the Purchase Price on Seller's Auditors Certificate
is less than the Closing Cash Payment, within 5 business days after receipt by
Buyer of Seller's Auditors Certificate, Seller shall pay to Buyer by wire
transfer of immediately available funds to such bank account of Buyer as Buyer
shall designate in writing to Seller, the amount of such difference plus
interest on the difference from the Closing Date to the date of payment thereof
at the Agreed Rate ("Refund Payment"). Promptly after receipt by Buyer of
Seller's Auditors Certificate, Buyer and its independent public accountants
shall review the Closing Date Balance Sheet and the Closing Date Net Tangible
Asset Summary, including all related work papers and shall conduct such other
reviews as they reasonably deem necessary, and, within 30 days after receipt of
Seller's Auditors Certificate, Buyer shall notify Seller in writing whether or
not Buyer disputes the Closing Date Balance Sheet, the Closing Date Net Tangible
Asset Summary or the calculation of the Purchase Price contained in Seller's
Auditors Certificate (and, if Buyer does dispute Seller's Auditors Certificate,
such notice shall include a statement giving reasonable detail in writing as to
the nature and reasons for such dispute). If Buyer does dispute such Seller's
Auditors Certificate and if Seller and Buyer are unable to resolve such dispute
within 30 days of receipt by Seller of Buyer's written notice thereof, then the
determination of the Closing Date Net Tangible Assets and the Purchase Price
shall be promptly submitted by the Parties to Price Waterhouse, who shall
resolve any disputes concerning the Closing Date Balance Sheet and/or the
Closing Date Net Tangible Asset Summary and whose determination of the Closing
Date Net Tangible Assets and the Purchase Price shall be final and binding on
the Buyer and Seller; provided, however, that such accounting firm shall be
instructed by Buyer and Seller to complete its determination of the Closing Date
Net Tangible Assets and Purchase Price within 45 days of its engagement by Buyer
and Seller. The expenses of such accounting firm in making such preparation and
determination shall be borne by the party whose written calculation of the
Purchase Price is further from the Purchase Price as finally determined by Price
Waterhouse than is the other party's written calculation of the Purchase Price.
The Closing Date Net Tangible Assets, as finally determined pursuant to this
SECTION 3.2, is called the "Final Closing Date Net Tangible Assets."
3.3. ADJUSTMENT. Not later than five days after the determination
of the Final Closing Date Net Tangible Assets and the Purchase Price pursuant to
SECTIONS 3.1 and 3.2:
(i) if the Purchase Price exceeds (a) the Closing Cash
Payment plus the Additional Payment or (b) the Closing Cash
Payment minus the Refund Payment, the portion of the Escrow Amount
constituting such excess shall be released to Seller and the
remainder returned to Buyer pursuant to the terms of the Escrow
Agreement; or
(ii) if (a) the Closing Cash Payment plus the Additional
Payment or (b) the Closing Cash Payment minus the Refund Payment
exceeds the Purchase Price, the Escrow Amount shall be returned to
Buyer pursuant to the terms of the Escrow Agreement and Seller
shall pay to Buyer, by wire transfer of immediately available
funds to such bank account of Buyer as Buyer shall designate in
writing to Seller, an amount equal to the excess of the Closing
Cash Payment plus the Additional Payment over the Purchase Price,
plus interest on such excess from the Closing Date to the date of
payment thereof at the Agreed Rate.
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ARTICLE IV.
CLOSING
4.1. CLOSING DATE. The Closing shall be consummated at 10:00 A.M.,
local time, on July 1, 1996, or such other date as may be agreed upon by Buyer
and Seller after the conditions set forth in ARTICLES IX and X have been
satisfied, at the offices of Gardner, Carton & Douglas in Chicago, Illinois, or
at such other time or at such other place as shall be agreed upon by Buyer and
Seller. The time and date on which the Closing is actually held is referred to
herein as the "Closing Date."
4.2. PAYMENT ON THE CLOSING DATE. Subject to fulfillment or waiver
of the conditions set forth in ARTICLE IX, at Closing Buyer shall pay Seller an
amount equal to the Closing Cash Payment by wire transfer of immediately
available funds to the account specified in SCHEDULE 4.2.
4.3. BUYER'S ADDITIONAL CLOSING DATE DELIVERIES. Subject to
fulfillment or waiver of the conditions set forth in ARTICLE IX, at Closing
Buyer shall deliver to Seller all the following:
(a) Copies of Buyer's Certificate of Incorporation certified as of
a recent date by the Secretary of State of the State of Nevada;
(b) Certificate of good standing of Buyer issued as of a recent
date by the Secretary of State of the State of Nevada;
(c) Certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably satisfactory to
Seller, as to (i) no amendments to the Certificate of Incorporation of Buyer
since a specified date; (ii) the by-laws of Buyer; (iii) the resolutions of the
Board of Directors of Buyer authorizing the execution and performance of this
Agreement and the contemplated transactions; and (iv) incumbency and signatures
of the officers executing this Agreement and any Buyer Ancillary Agreement;
(d) Opinion of counsel to Buyer substantially in the form
contained in EXHIBIT D;
(e) The Instrument of Assumption duly executed by Buyer;
(f) The Supply Agreement duly executed by Buyer;
(g) The Escrow Agreement duly executed by Buyer;
(h) The Lease Agreement duly executed by Buyer;
(i) The Services Agreement duly executed by Buyer; and
(j) The certificate contemplated by SECTION 10.1, duly executed by
the President or any Vice President of Buyer.
4.4. SELLER'S CLOSING DATE DELIVERIES. Subject to fulfillment or
waiver of the conditions set forth in ARTICLE X, at Closing Seller shall deliver
or cause to be delivered to Buyer all the following:
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(a) Copies of the Certificate of Incorporation of Seller, PIM and
Parent, each certified as of a recent date by the Secretaries of State of the
States of Illinois, with respect to Seller and PIM, and Ohio, with respect to
Parent;
(b) Certificate of good standing of Seller, PIM and Parent, each
issued as of a recent date by the Secretaries of State of the States of
Illinois, with respect to Seller and PIM, and Ohio, with respect to Parent;
(c) Certificate of the secretary or an assistant secretary of each
of Seller, PIM and Parent, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to (i) no amendments to their respective
company's Certificate of Incorporation since a specified date; (ii) their
respective company's by-laws; (iii) the resolutions of the Board of Directors of
Seller and Parent, authorizing the execution and performance of this Agreement
and the contemplated transactions; and (iv) incumbency and signatures of the
officers of their respective companies' executing any agreement contemplated
hereby;
(d) Opinion of counsel to Seller, PIM and Parent substantially in
the form contained in EXHIBIT E;
(e) The Instrument of Assignment duly executed by Seller;
(f) The Supply Agreement duly executed by Seller;
(g) The Escrow Agreement duly executed by Seller;
(h) The Lease Agreement duly executed by Seller;
(i) The Services Agreement duly executed by Seller;
(j) Stock Certificate of PIM representing all issued and
outstanding shares, together with stock power duly executed in blank;
(k) All corporate minute books and stock transfer books and the
corporate seal, if any, of PIM;
(l) Certificates of title or origin (or like documents) with
respect to any vehicles or other equipment included in the Purchased Assets for
which a certificate of title or origin is required in order to transfer title;
(m) All consents, waivers or approvals obtained by Seller with
respect to the Purchased Assets or the consummation of the transactions
contemplated by this Agreement;
(n) The certificate contemplated by SECTION 9.1 duly executed by
the duly authorized officers of Seller;
(o) A special warranty deed or its equivalent in the applicable
jurisdiction with respect to each of the parcels of Owned Real Property, duly
executed by Seller and in customary form;
(p) An assignment with respect to each of the leases of real
estate described in SCHEDULE 5.11(B), duly executed by Seller, containing any
necessary consent of the landlord thereto and otherwise in customary form, it
being understood that, notwithstanding anything to the contrary contained in
this Agreement, the failure by Seller to obtain a required consent with respect
to any Leased Real Property under this Agreement shall not excuse Buyer from
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<PAGE> 21
performing hereunder if, at the Closing, Seller shall have agreed to indemnify
Buyer from and against any loss arising out of the failure by Seller to have
obtained such consent;
(q) The ALTA Form B-1992 Owner's Title Insurance Policy or
marked-up unconditional binder for such insurance including all required
endorsements, dated as of the Closing Date and showing title to the Owned Real
Property in the name of Buyer, all as provided in SECTION 8.5 hereof;
(r) All required real estate transfer declaration or exemption
certificates and any other documents as may be otherwise necessary to transfer
title of the Owned Real Property to Buyer;
(s) All affidavits and other statements as may be reasonably
required by the title insurance company in order to issue the title insurance
policy contemplated by SECTION 8.5 hereof;
(t) Such other bills of sale, assignments and other instruments of
transfer or conveyance as Buyer may reasonably request or as may be otherwise
necessary to evidence and effect the sale, assignment, transfer, conveyance and
delivery of the Purchased Assets to Buyer; and
(u) Evidence satisfactory to Buyer that all Encumbrances over the
Purchased Assets have been released other than Permitted Encumbrances.
(v) Evidence satisfactory to Buyer that Seller has changed its
name to a name bearing no resemblance to "Bennett Industries, Inc."
In addition to the above deliveries, Seller shall take all steps and actions as
Buyer may reasonably request or as may otherwise be necessary to put Buyer in
actual possession or control of the Purchased Assets.
4.5. OPTIONAL TRANSFER OF PURCHASED ASSETS TO SUBSIDIARY; TRANSFER
OF SUBSIDIARY CAPITAL STOCK. At Buyer's or Seller's option, exercised at least
10 days prior to Closing in writing, either Buyer or Seller may cause the Seller
to transfer all or any part of the Purchased Assets located within the State of
California to a newly organized corporation, organized by Seller ("Calco"). If
Buyer or Seller exercises such option and if in pursuance thereof Seller
transfers any of such Purchased Assets to Calco, Seller agrees that Calco shall
not incur any liabilities (other than liabilities of Calco with respect to
transfer taxes), enter into any contracts, hire any employees or retain any
consultants prior to the Closing Date and then Seller shall at Closing transfer,
assign and deliver to Buyer all of the issued and outstanding capital stock of
Calco.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller and Parent represent and
warrant, jointly and severally, to Buyer and agree as follows:
5.1. ORGANIZATION OF SELLER AND PARENT. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois. Seller is duly qualified to transact business as a foreign
corporation and is in good standing in each of the jurisdictions listed in
SCHEDULE 5.1, which constitute all of the jurisdictions in which the operation
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of the Business requires Seller to qualify to transact business as a foreign
corporation. Seller has the corporate power and authority to own or lease and to
operate and use the Purchased Assets as now employed. Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio.
5.2. AUTHORITY OF SELLER AND PARENT. Each of Seller and Parent has
the corporate power and authority to execute and deliver this Agreement and all
of the Seller Ancillary Agreements and to perform their respective obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements by Seller and Parent have been
duly authorized and approved by Seller's and Parent's respective boards of
directors and by Seller's sole stockholder, Parent, and do not require any
further authorization or consent on the part of Seller or Parent. This Agreement
has been duly authorized, executed and delivered by each of Seller and Parent
and is the legal, valid and binding obligation of each of them enforceable in
accordance with its terms, and each of the Seller Ancillary Agreements has been
duly authorized by Seller and upon execution and delivery by Seller will be a
legal, valid and binding obligation of Seller enforceable in accordance with its
terms, in each case subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles.
Except as set forth in SCHEDULE 5.2, neither the execution and
delivery of this Agreement nor any of the Seller Ancillary Agreements nor the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof or
thereof will:
(i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination
or cancellation or a loss of rights under, or result in the
creation or imposition of any Encumbrance upon any of the
Purchased Assets, under (1) the charter or By-laws of Parent or
Seller, (2) any Seller Agreement, (3) any other material note,
instrument, agreement, mortgage, lease, license, franchise, permit
or other authorization, right, restriction or obligation to which
Parent or Seller is a party or any of the Purchased Assets is
subject or by which Parent or Seller is bound, (4) any Court Order
to which Parent or Seller is a party or any of the Purchased
Assets is subject or by which Parent or Seller is bound or (5) any
Requirements of Laws affecting Parent or Seller or the Purchased
Assets, or
(ii) require the approval, consent, authorization or act
of, or the making by Parent or Seller of any declaration, filing
or registration with, any Person.
5.3. FINANCIAL STATEMENTS. SCHEDULE 5.3 contains the financial
statements of Seller as of December 31, 1995 and 1994. Such financial statements
and the financial statements of Seller as of February 29, 1996, which are also
included in SCHEDULE 5.3, are complete and correct in all material respects and
present fairly the financial position and results of operations of Seller as of
and for the period ended February 29, 1996, and as of and for the periods ended
December 31, 1995 and 1994 in accordance with Agreed Accounting Principles. The
February Net Tangible Asset Summary, which is also included in SCHEDULE 5.3, is
correctly derived from Seller's February 29, 1996 balance sheet.
5.4. OPERATIONS SINCE DECEMBER 31, 1995. (a) Except as set forth
in SCHEDULE 5.4(A), since December 31, 1995, there has been no material adverse
change in the Purchased Assets, or the operations, business prospects or
financial condition of Seller.
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<PAGE> 23
(b) Except as set forth in SCHEDULE 5.4(B), since December 31,
1995, Seller has conducted the Business only in the ordinary course. Without
limiting the generality of the foregoing, since December 31, 1995, except as set
forth in such Schedule, Seller has not:
(i) sold, leased (as lessor), transferred or otherwise
disposed of (including any transfers to any of Seller's
Affiliates), or mortgaged or pledged, or imposed or suffered to be
imposed any Encumbrance on, any of the assets utilized in the
Business, except for inventory and minor amounts of personal
property sold or otherwise disposed of in the ordinary course of
business and except for Permitted Encumbrances;
(ii) canceled any debts owed to or claims held by it
(including the settlement of any claims or litigation) other than
in the ordinary course of business;
(iii) created, incurred or assumed, or agreed to create,
incur or assume, any indebtedness for borrowed money (other than
money borrowed or advances from any of its Affiliates in the
ordinary course of business) or entered into, as lessee, any
capitalized lease obligations (as defined in Statement of
Financial Accounting Standards No. 13);
(iv) accelerated or delayed collection of notes or
accounts receivable in advance of or beyond their regular due
dates or the dates when the same would have been collected in the
ordinary course of business;
(v) delayed or accelerated payment of any account payable
or other liability beyond or in advance of its due date or the
date when such liability would have been paid in the ordinary
course of business;
(vi) made, or agreed to make, any distribution of assets to
any of its Affiliates; or
(vii) instituted any increase in any compensation payable
to any employee or in any profit-sharing, bonus, incentive,
deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other benefits promised to,
accrued by or made available to employees of Seller.
(c) Except as set forth in SCHEDULE 5.4(B), since the date of its
incorporation, PIM has not incurred any liabilities, entered into any contracts,
hired any employees or retained any consultants.
5.5. NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE
5.5 or reflected on the Balance Sheet as of December 31, 1995, to the Knowledge
of Seller or the Knowledge of Parent, Seller is not subject to any material
liability or obligation (whether absolute, contingent, accrued or otherwise) of
any nature whatsoever, whether arising out of contract, tort, statute or
otherwise. Since December 31, 1995, except as set forth in SCHEDULE 5.5, to the
Knowledge of Seller or the Knowledge of Parent, Seller has not incurred any
liability, whether absolute, contingent, accrued or otherwise, except for
liabilities incurred in the ordinary course of business that, in the aggregate,
have not and will not materially adversely affect the Purchased Assets or the
operations or financial condition of Seller. To the Knowledge of Seller or the
Knowledge of Parent, there is no basis for assertion against Seller of any
liability or obligation (whether absolute, contingent, accrued or otherwise) not
adequately reflected, reserved against or given effect to on the Balance Sheet
as of December 31, 1995 or in SCHEDULE 5.5 except for Ordinary Course
Liabilities.
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<PAGE> 24
5.6. TAXES. To the Knowledge of Seller and the Knowledge of
Parent, Seller has accurately prepared and timely filed (including all
extensions) all material federal, foreign, state, county, municipal and local
income, excise, customs, capital, sales, use, transfer, business, property and
other Tax Returns. All Taxes shown as owing by Seller on all such Tax Returns
have been fully paid or properly accrued on or prior to the Closing Date. Except
as set forth on the attached SCHEDULE 5.6, to the Knowledge of Seller and the
Knowledge of Parent:
(a) All Tax Returns prepared and filed by Seller are true and
correct and properly reflect the Taxes due in all material respects for the
periods covered thereby.
(b) All Taxes which are called for as due by the Tax Returns or
which have been subsequently assessed by any taxing authority and agreed to by
Seller have been properly accrued or paid.
(c) There has been no intentional disregard of any statute,
regulation, rule or revenue ruling in the preparation of any Tax Return
applicable to Seller or the Business.
(d) There are no Tax liens on any of the properties or assets of
Seller except for liens for current Taxes not yet due and payable or for Taxes
that Seller is contesting in good faith through appropriate proceedings.
(e) Seller has not waived any law or regulation fixing, or
consented to the extension of, any period of time for assessment of any Taxes
relating to Seller which waiver or consent is currently in effect.
(f) All Taxes which Seller is obligated to withhold from amounts
owing to any employee, creditor or third party have been fully paid or properly
accrued.
(g) All material Tax deficiencies asserted or assessed against
Seller have been paid or properly accrued.
(h) There are no material elections, consents or agreements with
tax authorities other than those reflected on Tax forms filed with Tax
authorities.
5.7. TITLE TO AND CONDITION OF PURCHASED ASSETS. (a) Seller has,
and on the Closing Date will have, good and marketable title to (or valid and
enforceable leasehold, license or similar interests in) all of the Purchased
Assets, free and clear of all Encumbrances other than Permitted Encumbrances and
those disclosed and described in SCHEDULE 5.7, none of which individually or in
the aggregate materially impair the utility, value or marketability of the
Purchased Assets. The documents of transfer to be executed by Seller and Parent
and delivered to Buyer at the Closing will be sufficient to convey good and
marketable title to (or valid and enforceable leasehold, license or similar
interests in) the same, free and clear of all Encumbrances other than Permitted
Encumbrances and those disclosed on SCHEDULE 5.7 and indicated thereon as being
assumed by Buyer, and other than as may be imposed by Buyer. Except as disclosed
on SCHEDULE 5.7 attached hereto, all of the properties and assets which are (i)
owned or leased by Seller or (ii) used to operate the Business as presently
operated are, except for the Excluded Assets, included in the Purchased Assets.
(b) All the rights, properties and assets which are used by Seller
in the carrying on and conduct of the Business, are either (i) owned by Seller,
(ii) granted, leased or licensed to Seller under one of the contracts,
agreements, arrangements, commitments or plans listed in the Schedules hereto to
the extent required to be disclosed therein or (iii) disclosed on SCHEDULE 5.7.
The Purchased Assets are being delivered to the Buyer "as is, where is,"
exclusive of any
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warranties, either express or implied, except for those provided in this SECTION
5.7 and SECTION 5.11.
(c) SCHEDULE 5.7 also sets forth a description of all material
services provided by any Seller Affiliate with respect to the Business.
5.8. INVENTORY. Subject to reserves for obsolete, damaged and slow
moving items reflected on the Balance Sheet as of December 31, 1995 (with such
reserves to be appropriately reflected on the Closing Date Balance Sheet), the
Inventory is of a quality and quantity which can be sold, used or consumed in
the normal course of Business. Except as set forth in SCHEDULE 5.8, the material
inventories of Seller are located at, or are in transit to, the Operations
Sites.
5.9. ACCOUNTS RECEIVABLE. Other than the Excluded Receivables, the
accounts receivable constituting a portion of the Purchased Assets reflected on
the Balance Sheet are, and all accounts receivable reflected on the Closing Date
Balance Sheet will be, good and valid receivables arising from the sale of goods
and services in the ordinary course of business and, respectively, have been
collected or are current and, to the Knowledge of Seller or the Knowledge of
Parent, will be collected in the ordinary course at the aggregate amount
recorded therefor on the books and records of Seller as of the Closing (subject
to no counterclaims or offset), net of the applicable bad debt reserve, if any,
properly recorded on such books and records (on the basis that the accounts
receivable are all outstanding less than 90 days and not necessarily on the
basis of Agreed Accounting Principles).
5.10. GOVERNMENTAL PERMITS. (a) Seller owns, holds or possesses
all licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body which are necessary to entitle Seller to
own or lease, operate and use the Purchased Assets and to operate the Business
as currently operated (herein collectively called "Governmental Permits").
SCHEDULE 5.10 sets forth a list and brief description, including the name of the
Governmental Body and the expiration date, of each Governmental Permit in effect
as of the date of this Agreement, except for such incidental licenses, permits
and other authorizations which would be readily obtainable by any qualified
applicant without undue burden in the event of any lapse, termination,
cancellation or forfeiture thereof. Complete and correct copies of all of the
Governmental Permits listed in SCHEDULE 5.10 have heretofore been delivered to
Buyer by Seller.
(b) Except as set forth in SCHEDULE 5.10, (i) Seller has fulfilled
and performed its obligations under each of the Governmental Permits, and, to
the Knowledge of Seller or the Knowledge of Parent, no event has occurred or
condition or state of facts exists which constitutes or, after notice or lapse
of time or both, would constitute a breach or default under any such
Governmental Permit or which permits or, after notice or lapse of time or both,
would permit revocation or termination of any such Governmental Permit; (ii) no
notice of cancellation, of default or of any dispute concerning any Governmental
Permit, or of any event, condition or state of facts described in the preceding
clause, has been received by Seller; and (iii) each of the Governmental Permits
is valid, subsisting and in full force and effect and each Governmental Permit
of Seller may be assigned and transferred to Buyer in accordance with this
Agreement and will continue in full force and effect thereafter, in each case
without (x) the occurrence of any breach, default or forfeiture of rights
thereunder, or (y) the consent, approval, or act of, or the making of any filing
with, any Governmental Body.
5.11. REAL PROPERTY. (a) SCHEDULE 5.11(A) contains a brief
description of each parcel of real property owned by Seller and being
transferred to Buyer pursuant to this Agreement (the "Owned Real Property")
(showing the record title holder and legal description thereof).
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(b) SCHEDULE 5.11(B) sets forth a list and brief description of
each lease or similar agreement (showing the parties thereto, annual rental,
expiration date, renewal and purchase options, if any, and the improvements
thereon, the uses being made thereof, and the location and the legal description
of the real property covered by such lease or other agreement) being assumed by
Buyer under which Seller is lessee of, or holds or operates, any real property
owned by any third Person and used in or relating to the Business (the "Leased
Real Property"). The Owned Real Property and the Leased Real Property are
collectively referred to herein as the "Real Property."
(c) SCHEDULE 5.11(C) contains a brief description of each parcel
of real property (i) that has heretofore been used in the conduct of the
Business during the past 5 years by Seller, and (ii) is not described, listed or
set forth in SCHEDULE 5.11(A) or SCHEDULE 5.11(B) hereto.
(d) Seller has title to the Owned Real Property free and clear of
all Encumbrances whatsoever except for Permitted Encumbrances. Seller's
occupation, possession and use of the Leased Real Property has not been
disturbed and no claim has been asserted or, to the Knowledge of Seller or the
Knowledge of Parent, threatened, adverse to the rights of Seller to the
continued occupation, possession and use of the Leased Real Property, as
currently utilized and as presently contemplated to be utilized.
(e) All buildings, structures, improvements, fixtures, facilities,
equipment, all components of all buildings, structures and other improvements
included within the Real Property, including but not limited to the roofs and
structural elements thereof and the heating, ventilation, air conditioning,
plumbing, electrical, mechanical, sewer, waste water, storm water, paving and
parking equipment, systems and facilities included therein (collectively, the
"Improvements"), are being delivered to Buyer "as is, where is," exclusive of
any and all warranties, express or implied, except for such warranties as are
provided in this SECTION 5.11 and SECTION 5.7. No Person other than Seller owns
any Improvements necessary to the operation of the Business, except for leased
Improvements disclosed on SCHEDULE 5.11(B).
5.12. PERSONAL PROPERTY. SCHEDULE 5.12 contains a detailed list as
of May 24, 1996 of all machinery, equipment, vehicles, furniture and other
personal property owned by Seller having an original cost of $5,000 or more and
used in or relating to the Business.
5.13. PERSONAL PROPERTY LEASES. SCHEDULE 5.13 contains as of the
date of this Agreement a brief description of each lease or other agreement or
right, whether written or oral (including in each case the annual rental, the
expiration date thereof and a brief description of the property covered), under
which Seller is lessee of, or holds or operates, any machinery, equipment,
vehicle or other tangible personal property owned by a third Person and used by
or relating to the operation of the Business, except those which are terminable
by Seller without penalty on 30 days' or less notice or which provide for annual
rentals of less than $5,000.
5.14. PATENTS, TRADEMARKS AND INTELLECTUAL PROPERTY RIGHTS. (a)
SCHEDULE 5.14 contains as of the date of this Agreement a list of:
(i) all United States and foreign patents and patent
applications, all trademarks, service marks and trade names for
which United States, state or foreign registrations have been
issued or applied for, and all other trademarks, service marks and
trade names, owned by Seller or in which Seller holds any right,
license or interest used in or relating to the Business, showing
in each case the product, device, process, service or business
covered thereby, the registered or other owner, expiration date
and number, if any;
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(ii) all agreements, commitments, contracts,
understandings, licenses, assignments and indemnities relating or
pertaining to any asset, property or right of the character
described in the preceding clause to which Seller is a party,
showing in each case the parties thereto;
(iii) all licenses or agreements pertaining to mailing
lists, know-how, trade secrets, inventions, disclosures or uses of
ideas used in or relating to the Business to which Seller is a
party, showing in each case the parties thereto; and
(iv) all registered assumed or fictitious names under
which Seller is conducting business or has within the previous
five years conducted business.
(b) Except as set forth in SCHEDULE 5.14, no proceedings are
pending or, to the Knowledge of Seller or the Knowledge of Parent, threatened
against Seller which challenge the validity or ownership of any patent,
trademark, trade name or service mark or the ownership of any other right or
property described in SCHEDULE 5.14, and to the Knowledge of Seller or the
Knowledge of Parent there is not any infringing use of any of the same by any
other Person.
(c) The operations, activities, products, equipment, machinery or
processes of the Business do not infringe the patents, trademarks, service
marks, trade names, copyrights or other property rights of any other Person.
(d) Except as set forth in SCHEDULE 5.14, there are no patents or
patent applications; trademarks, service marks, trade dress, trade names,
corporate names, or any applications to register any of the foregoing;
copyrights or copyright registrations; mask works or mask work registrations;
trade secrets or other proprietary rights or any licenses to or from third
parties with respect to any of the foregoing (including, without limiting the
generality of the foregoing, all computer software, data and documentation)
relating to the Business.
5.15. EMPLOYEES AND RELATED AGREEMENTS; ERISA. (a) Except as
identified in either SECTION 1.1 or SCHEDULE 5.15(A), Seller is not a party to
or bound by any oral or written:
(i) employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by Seller
without penalty on notice of 30 days or less under which the only
monetary obligation of Seller is to make current wage or salary
payments and provide current fringe benefits), consulting,
advisory or service agreement, deferred compensation agreement,
confidentiality agreement or covenant not to compete; or
(ii) contract or agreement with any officer, director or
employee (other than employment agreements disclosed in response
to clause (i) or excluded from the scope of clause (i)), agent, or
attorney-in-fact of Seller.
(b) For purposes of this Agreement, the term "Employee Plan"
includes any pension, retirement, savings, disability, medical, dental, health,
life (including without limitation any individual life insurance policy under
which any employee of Seller is the named insured and as to which Seller or
Parent makes premium payments, whether or not Seller or Parent is the owner,
beneficiary or both of such policy), death benefit, group insurance,
profit-sharing, deferred compensation, stock option, stock purchase, bonus,
incentive, vacation pay, severance pay, or other employee benefit plan, trust,
arrangement, contract, agreement, policy or commitment (including, without
limitation, any pension plan as defined in Section 3(2) of ERISA ("Pension
Plan"), any multiemployer plan within the meaning of Section 4001 of ERISA and
any welfare plan as defined in Section 3(1) of ERISA ("Welfare Plan"), and other
compensation arrangement), whether or not any of the foregoing is funded or
insured and whether written or
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oral, which is intended to provide or does in fact provide benefits to any or
all employees of Seller, and (i) to which Seller or Parent is a party or by
which Seller or Parent (or any of the rights, properties or assets of Seller or
Parent) is bound, or (ii) with respect to which Seller or Parent has any
liability (whether or not Seller or Parent still maintains such plan, trust,
arrangement, contract, agreement, policy or commitment).
(c) The Employee Plans conform to and have been administered in
substantial compliance with their terms and applicable laws and regulations
(including, without limitation, the substantive and procedural requirements of
ERISA and the Code) such that no condition or fact exists, and no act or
omission has occurred, as of or prior to the Closing with respect to the
Employee Plans that could have an adverse effect on, or result in liability of,
Buyer or any Buyer Group Member or any lien upon the Business or the Purchased
Assets.
(d) Seller has made available for inspection by Buyer documents
that describe all the material features of the Employee Plans.
(e) Neither Seller nor Parent has any liabilities for
post-retirement welfare benefits, including retiree medical benefits, relating
to Seller's employees.
(f) Seller has complied with the Immigration and Naturalization
Service Form I-9 requirements with respect to Seller's employees.
(g) Except as set forth in SCHEDULE 5.15(G), neither Seller nor
Parent is involved in any transaction or other situation with any employee,
officer, director or Affiliate of Seller which may be generally characterized as
a "conflict of interest," including, but not limited to, direct or indirect
interests in the business of competitors, suppliers or customers of Seller and
Parent.
(h) Except for any liability to Seller's salaried employees under
the Seller policy entitled "Separation Allowance for Salaried Employees of
Park-Ohio Industries, Inc." (as revised on June 25, 1992), or as disclosed in
any Collective Bargaining Agreement, or as set forth on SCHEDULE 5.15(H), or as
reflected and adequately reserved for on the balance sheet as of December 31,
1995 and to be reflected and adequately reserved for on the Closing Date Balance
Sheet, there are no liabilities arising out of or pursuant to any Collective
Bargaining Agreement or any other policy, practice, agreement or plan applicable
to all or individual employees of Seller, including, without limitation, any
liability for vacation pay, sick days, severance pay, call-in pay, jury duty
pay, encampment pay, funeral pay, overtime pay, special wage guarantees or leave
of absence pay.
5.16. EMPLOYEE RELATIONS. (a) Except as set forth in SCHEDULE
5.16, Seller is in compliance with all applicable Requirements of Law with
respect to employment, employment practices (including, but not limited to,
verification required under the Immigration Reform and Control Act of 1986. as
amended), terms and conditions of employment and wages, overtime pay, and hours.
Seller has not engaged in any unfair labor practices and has not illegally
discriminated with regard to employment on the basis of age, color, national
origin, race, religion, sex, handicap, or on the basis of any other legally
prohibited category or classification.
(b) Except as set forth in SCHEDULE 5.16, there are no unfair
labor practice charges or complaints pending or, to the Knowledge of Seller or
the Knowledge of Parent, threatened against Seller before the National Labor
Relations Board, there are no discrimination charges threatened or pending
before any federal, state or local agency or authority, there are no complaints,
charges or citations threatened or pending under OSHA or any state or local
occupational safety act or regulation and there are no other employment related
legal, administrative proceedings, governmental investigations, compliance
reviews, audits or
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enforcement proceedings of any kind threatened or pending against Seller which
could materially adversely affect Seller or the Business.
5.17. CONTRACTS. (a) Except as set forth in SCHEDULE 5.17, Seller
is not a party to or bound by:
(i) any contract for the purchase or sale of real property;
(ii) any contract for the purchase of raw materials which
Seller reasonably anticipates will involve the payment of more
than $5,000 after the date hereof or which extends beyond June 30,
1996;
(iii) any contract for the sale of products which Seller
reasonably anticipates will involve the payment of more than
$5,000 after the date hereof or which extends beyond June 30,
1996;
(iv) any contract for the purchase, licensing or
development of software which Seller reasonably anticipates will
involve the payment of more than $5,000;
(v) any consignment, distributor, dealer, manufacturer's
representative, sales agency, advertising representative or
advertising or public relations contract which Seller reasonably
anticipates will involve the payment of more than $5,000 after the
date hereof or which extends beyond June 30, 1996;
(vi) any guarantee of the obligations of customers,
suppliers, officers, directors, employees, Affiliates or others;
(vii) any agreement which provides for the incurrence by
Seller of debt for borrowed money;
(viii) any agreement pursuant to which Seller is subject to
an obligation of confidentiality or noncompetition;
(ix) any contract not made in the ordinary course; or
(x) any other contract, agreement, commitment,
understanding or instrument which is material to the Business.
(b) ASSIGNMENT. All of the contracts, agreements, commitments or
licenses described above which are intended to be assigned to Buyer hereunder
are fully assignable to Buyer by Seller without the consent of any third party,
except as indicated on SCHEDULE 5.17. To the Knowledge of Seller or the
Knowledge of Parent, none of the other parties to any such contracts, leases,
agreements, commitments or licenses described above intend to terminate or
materially alter the provisions of such contracts, leases, agreements,
commitments, or licenses either as a result of transactions contemplated hereby,
or otherwise.
5.18. STATUS OF CONTRACTS. Except as set forth in SCHEDULE 5.18 or
in any other Schedule hereto, each of the leases, contracts and other agreements
of Seller listed in SCHEDULES 5.11(B), 5.13, 5.14, 5.15 and 5.17 (collectively,
the "Seller Agreements") constitutes a valid and binding obligation of Seller
and, to the Knowledge of Seller or the Knowledge of Parent, the other parties
thereto (subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general application relating to or affecting creditors' rights
and to general equity principles) and is in full force and effect. Seller is not
in, or alleged to be in, material breach or material default under, any of the
Seller Agreements and, to the Knowledge of Seller or the Knowledge of Parent,
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no other party to any of the Seller Agreements is in material breach or material
default thereunder, and no event has occurred and no condition or state of facts
exists which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by Seller or, to the Knowledge of Seller or
the Knowledge of Parent, by any such other party. True and complete copies of
all Seller Agreements, including any amendments thereto, have been delivered to
Buyer, and such agreements constitute the legal, valid and binding obligation of
Seller and, to the Knowledge of Seller or the Knowledge of Parent, the other
parties thereto.
5.19. NO VIOLATION. LITIGATION OR REGULATORY ACTION. Except as set
forth in SCHEDULE 5.19:
(i) Except as to the Owned Real Property, Seller has
complied in all material respects with all Requirements of Law and
Court Orders which are applicable to the Purchased Assets or the
Business; as to the Owned Real Property, Seller has not received
any notice that it has not complied with in any material respect
regarding any Requirement of Law or Court Order which is
applicable to the Owned Real Property.
(ii) as of the date hereof, there are no claims, suits,
proceedings or investigations pending or, to the Knowledge of
Seller or the Knowledge of Parent, threatened against Seller in
respect of the Purchased Assets which could have a material
adverse effect on the Purchased Assets or the operations or
financial condition of Seller or the Business;
(iii) as of the date hereof, there is no action, suit or
proceeding pending or, to the Knowledge of Seller or the Knowledge
of Parent, threatened which questions the legality or propriety of
the transactions contemplated by this Agreement; and
(iv) Seller is not aware of any circumstances relating to
goods manufactured in the course of the Business which may give
rise, either presently or in the future to: (a) a product
liability action; (b) an obligation to take action by way of
product recall; or (c) the need to withdraw any goods from sale.
5.20. INSURANCE. Seller or its Affiliates maintain, with respect
to the Purchased Assets and the products produced by the Business, policies of
fire and extended coverage and casualty, liability and other forms of insurance.
All such policies and all claims made by Seller under any insurance policy since
June 1, 1993 are listed as described on SCHEDULE 5.20 hereto.
5.21. NO FINDER. Neither Seller nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or similar intermediary for or on account of the transactions
contemplated by this Agreement.
5.22. MATERIAL REPORTS. There has been no material report relating
in whole or in part to the Business by any accountant or financial or management
consultant in the period of three years before the date of this Agreement which
has not been disclosed to Buyer.
5.23. PRODUCT RECALL. Except as set forth in SCHEDULE 5.23, none
of the products of the Business has in the period of five years immediately
preceding the date of this Agreement been the subject of a product recall.
5.24. ACCURACY OF WARRANTIES. To the Knowledge of Seller or the
Knowledge of Parent, no representation or warranty by Seller or Parent in this
Agreement, and no Exhibit or Schedule attached to this Agreement and no
certificate delivered at Closing in connection with this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained in such representation, warranty, Exhibit,
Schedule
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or certificate not misleading. This SECTION 5.24 shall apply in respect of
SCHEDULE 12.2, but will not apply in respect of representations and warranties
contained in SECTION 12.2 or any Exhibit or certificate insofar as the same
concern environmental matters.
5.25. PIM, INC. Seller owns 100% of the issued and outstanding
shares of PIM, Inc., all of which are duly authorized, validly issued, fully
paid and nonassessable. There are no outstanding options, warrants or other
rights to acquire securities of PIM. For purposes of this SECTION 5.25, PIM
shall include Calco if the option referred to in Section 4.5 is exercised.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller and Parent to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer hereby represents
and warrants to Seller and Parent as follows:
6.1. ORGANIZATION OF BUYER. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has full corporate power and authority to own or lease and to operate and use
its properties and assets and to carry on its business as now conducted.
6.2. AUTHORITY OF BUYER. Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
Buyer's board of directors and do not require any further authorization or
consent of Buyer or its stockholders. This Agreement has been duly authorized,
executed and delivered by Buyer and is the legal, valid and binding agreement of
Buyer enforceable in accordance with its terms, and each of the Buyer Ancillary
Agreements has been duly authorized by Buyer and upon execution and delivery by
Buyer will be a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms, in each case subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application relating to
or affecting creditors' rights and to general equity principles.
Neither the execution and delivery of this Agreement or any of the
Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination
or cancellation or a loss of rights under (1) the Certificate of
Incorporation or By-laws of Buyer, (2) any material note,
instrument, agreement, mortgage, lease, license, franchise, permit
or other authorization, right, restriction or obligation to which
Buyer is a party or any of its properties is subject or by which
Buyer is bound, (3) any Court Order to which Buyer is a party or
by which it is bound or (4) any Requirements of Law affecting
Buyer, or
(ii) require the approval, consent, authorization or act
of, or the making by Buyer of any declaration, filing or
registration with, any Person.
6.3. NO FINDER. Neither Buyer nor any Person acting on its behalf
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement.
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6.4. FINANCIAL ABILITY. Buyer has the financial ability to
consummate the transactions contemplated by this Agreement and has furnished
Seller with evidence thereof.
ARTICLE VII.
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
7.1. INVESTIGATION OF SELLER BY BUYER. Seller shall afford or
cause to afford to Buyer Group Members reasonable access during normal business
hours to the offices, properties, employees and business and financial records
(including computer files, retrieval programs and similar documentation) of
Seller to the extent Buyer shall reasonably deem necessary or desirable and
shall furnish to Buyer or its representatives such additional information
concerning the Purchased Assets and the Business as shall be reasonably
requested; provided, however, that (i) Seller shall not be required to violate
any obligation of confidentiality to which it is subject in discharging its
obligations pursuant to this SECTION 7.1, and (ii) Seller shall not be required
to deliver customer lists or information regarding individual customer margins
or executive employees until after receipt of the approval required under
SECTION 7.5. The access afforded to Buyer under this SECTION 7.1 shall include,
without limitation, (i) the opportunity for Buyer Group Members to meet with J.
Murray to discuss any developments in the condition of the Purchased Assets or
the financial condition of the Business, and (ii) the opportunity to review any
and all monthly and other periodic financial reports prepared in connection with
the Business.
7.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of
the parties hereto shall refrain from taking any action which would render any
representation or warranty contained in this Agreement inaccurate as of the
Closing Date. Each party shall promptly notify the other of any action, suit or
proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. Seller shall promptly notify Buyer of any
lawsuit, claim, proceeding or investigation that may be threatened, brought,
asserted or commenced against Seller which would have been listed in SCHEDULE
5.19 if such lawsuit, claim, proceeding or investigation had arisen prior to the
date hereof.
7.3 CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS. (a) Seller
and Buyer will act diligently and reasonably to secure, before the Closing Date,
the consent, approval or waiver, in form and substance reasonably satisfactory
to Buyer, from any party to any Seller Agreement, including the PPG letter
agreement regarding production of drums, required to be obtained to assign or
transfer any such Agreements to Buyer or to otherwise satisfy the conditions set
forth in SECTION 9.5; provided, however, that neither Seller nor Buyer shall
have any obligation to offer or pay any consideration in order to obtain any
such consents or approvals; and provided, further, however, that the Seller
shall not make any agreement or understanding affecting the Purchased Assets or
the Business as a condition for obtaining any such consents or waivers except
with the prior written consent of Buyer.
(b) During the period prior to the Closing Date, Seller and Buyer
shall act diligently and reasonably, and shall cooperate with each other, to
achieve consummation of the transactions contemplated by this Agreement by the
date specified in SECTION 13.1(A), including but not limited to, securing any
consents and approvals of any Governmental Body required to be obtained by them
in order to assign or transfer any Governmental Permits to Buyer, permitting the
consummation of the transactions contemplated by this Agreement, or otherwise
satisfying the conditions set forth in SECTION 9.4 (including, without
limitation, promptly responding to any second requests for information which may
be received under the HSR Act); provided, however,
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that Seller shall not make any agreement or understanding affecting the
Purchased Assets or the Business as a condition for obtaining any such consents
or approvals except with the prior written consent of Buyer.
7.4. OPERATIONS PRIOR TO THE CLOSING DATE. (a) Parent shall cause
Seller to operate and carry on the operations of the Business only in the
ordinary course and substantially as presently operated. Consistent with the
foregoing, Parent shall cause Seller to use its reasonable efforts consistent
with good business practice to preserve the goodwill of the suppliers,
contractors, licensors, employees, customers, distributors and others having
business relations with the Business.
(b) Notwithstanding SECTION 7.4(A), except as expressly
contemplated by this Agreement or except with the express prior written approval
of Buyer, Parent shall cause Seller to not:
(i) make any material change in operations of the Business;
(ii) make any capital expenditure or enter into any
contract or commitment therefor in excess of $5,000;
(iii) enter into any contract, agreement, undertaking or
commitment which would have been required to be set forth in
SCHEDULE 5.17 if in effect on the date hereof or enter into any
contract which cannot be assigned to Buyer or a permitted assignee
of Buyer under SECTION 14.5;
(iv) enter into any contract for the purchase of real
property or for the sale of any Owned Real Property or exercise
any option to purchase real property listed in SCHEDULE 5.11A or
any option to extend a lease listed in SCHEDULE 5.11B; provided,
however, that if Buyer requests Seller to refrain therefrom, Buyer
shall indemnify Seller against damage and loss resulting therefrom
in the event that this transaction shall not close in accordance
with this Agreement due to no fault of Seller;
(v) sell, lease (as lessor), transfer or otherwise dispose
of (including any transfers to any of its Affiliates), or mortgage
or pledge, or impose or suffer to be imposed any Encumbrance on,
any of the Purchased Assets, other than inventory and minor
amounts of personal property sold or otherwise disposed of in the
ordinary course of business and other than Permitted Encumbrances;
(vi) cancel any debts owed to or claims held by it
(including the settlement of any claims or litigation) other than
in the ordinary course of business;
(vii) create, incur or assume, any indebtedness for
borrowed money or enter into, as lessee, any capitalized lease
obligation (as defined in Statement of Financial Accounting
Standards No. 13);
(viii) accelerate or delay collection of any notes or
accounts receivable generated by the Business in advance of or
beyond their regular due dates or the dates when the same would
have been collected in the ordinary course of the business;
(ix) delay or accelerate payment of any account payable or
other liability of the Business beyond or in advance of its due
date or the date when such liability would have been paid in the
ordinary course of business;
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(x) make any payment of cash other than in the ordinary
course of business or distribution of assets to any of its
Affiliates;
(xi) make any change in the accounting policies applied in
the preparation of the financial statements contained in SCHEDULE
5.3;
(xii) make any changes in current wages, bonuses, benefits
or other terms or conditions or employment of Seller's employees
not in the ordinary course of business;
(xiii) extend credit to any customer that is the subject of
a bankruptcy proceeding; or
(xiv) agree to do any of the foregoing.
(c) Parent and Seller shall cause PIM to not incur any liabilities
except transfer or income tax liabilities, enter into any contracts, hire any
employees or retain any consultants.
7.5. ANTITRUST LAW COMPLIANCE. Buyer and Seller shall diligently
and in good faith cooperate with each other and with the Federal Trade
Commission and the Antitrust Division of the Department of Justice to lodge the
notifications and further information required to be filed under the HSR Act, or
any rules and regulations promulgated thereunder, with respect to the
transactions contemplated hereby and to seek early termination and expiration of
the HSR waiting period. Each party warrants that all such filings by it will be,
as of the date filed, true and accurate and in accordance with the requirements
of the HSR Act and any such rules and regulations. Each of Buyer and Seller
agrees to make available to the other such information as each of them may
reasonably request relative to its business, assets and property as may be
required of each of them to file any additional information requested by such
agencies under the HSR Act and any such rules and regulations.
ARTICLE VIII.
ADDITIONAL AGREEMENTS
8.1. TAXES. (a) Seller shall be liable for and shall pay, before
the same shall become delinquent, all Taxes (whether assessed or unassessed)
applicable to the Business or the Purchased Assets, in each case attributable to
all periods ending at the time of or prior to the Closing Date and, with respect
to any Straddle Period, the portion of such Straddle Period ending at the time
of the Closing. Buyer shall be liable for and shall pay, before the same shall
become delinquent, all Taxes applicable to the operation of the Purchased Assets
after the Closing Date and, with respect to any Straddle Period, the portion of
such Straddle Period beginning immediately after Closing. For purposes of this
SECTION 8.1(A), any Straddle Period shall be treated on a "closing of the books"
basis as two partial periods, one ending on the Closing Date and the other
beginning after the Closing Date.
(b) Any Tax attributable to the sale, transfer or delivery of the
Purchased Assets (but in no event including any income Tax other than Indiana
Gross Income Tax applicable to the Valparaiso, Indiana real property) shall be
borne equally by Buyer and Seller. Buyer and Seller agree to timely sign and
deliver such certificates or forms as may be necessary or appropriate to
establish an exemption from (or otherwise reduce), or file Tax Returns with
respect to, such Taxes.
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(c) Seller or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this SECTION
8.1. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will not
relieve the other party from its liability hereunder.
(d) After the Closing, each of Parent, Seller and Buyer shall (and
shall cause their respective Affiliates to):
(i) make available to the other and to any taxing authority
as reasonably requested all information, records, and documents
relating to Taxes relating to Seller or the Purchased Assets;
(ii) provide timely notice to the other in writing of any
pending or threatened Tax audits or assessments relating to Seller
or the Purchased Assets for taxable periods for which the other
may have a liability under this SECTION 8.1, although failure to
do so shall not relieve the other party of its liability
thereunder; and
(iii) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax
audit or information request with respect to any such taxable
period.
8.2. EMPLOYEES AND EMPLOYEE BENEFIT PLANS. (a) At least ten
(10) days prior to the Closing, Seller will provide Buyer a then-current list of
all employees of Seller (other than employees employed at Seller's Dunellen, New
Jersey facility) including all employees who are on layoff, family or medical
leave or other authorized leave status, and who are entitled to reemployment or
reinstatement under any applicable statute or under any contract or policy of
Seller and specifying each such employee's name, date of hire, date of birth,
plant or location, job title or classification, wage or salary, full-time or
part-time status, exempt or nonexempt status (under the Fair Labor Standards
Act), and, as to the employee who is on any form of layoff or authorized leave,
the form of such layoff or leave and the date as of which such layoff or leave
is expected to end (collectively, "Seller Employees"). To the extent Seller
determines necessary, such list shall be updated by Seller prior to the Closing
to enable Buyer to comply with its obligations under this SECTION 8.2.
(b) On or before the Closing, Buyer will offer employment at
will (except to the extent that Buyer in its discretion offers employment other
than at will) to the non-union Seller Employees, other than to those Seller
Employees who as of the Closing Date are receiving long-term disability
benefits.
(c) Buyer will offer employment to all union-represented
employees of Seller employed at Seller's facilities in Valparaiso, Indiana and
Lithonia, Georgia on substantially identical terms as are set forth in the
Collective Bargaining Agreement at each respective facility. Seller will
cooperate with Buyer so that Buyer may secure the Union's consent to Buyer's
assumption of the Collective Bargaining Agreements.
(d) Seller Employees who are on layoff, family or medical
leave, jury duty, funeral leave or other short-term leave status and who,
according to Seller, are entitled to reemployment or reinstatement will be
immediately transferred to comparable leave status with Buyer and will be
offered active employment pursuant to SECTIONS 8.2(B) and (C) hereof, subject to
Buyer's employment policies and further conditional upon the individual's
ability to return to active employment status prior to the expiration of the
individual's leave status.
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(e) All Seller Employees who accept Buyer's offer of
employment by the date specified in Buyer's offer of employment ("Transferred
Employees") shall be employed by Buyer as of the Closing Date.
(f) Buyer further agrees to assume responsibility for giving
any and all notices required by WARN or similar state law or regulation from and
after the Closing Date, to assume liability for any alleged failure to give such
notice, and to indemnify and hold Seller and Parent harmless for any and all
claims asserted under WARN or any similar state law or regulation, because of a
"plant closing" or "mass layoff" occurring on or after the Closing.
(g) Neither Seller nor any Affiliate of Seller will solicit
for employment any Transferred Employee for a period of five (5) years after the
Closing Date; PROVIDED, HOWEVER, that nothing herein shall prohibit Seller or
any Affiliate of Seller from extending an offer of employment to, or rehiring,
any such employee whose employment with Buyer is terminated by Buyer, with the
exception of any covenant not to compete agreed to by Buyer and such employee.
(h) Seller will bear the cost and expense of all workers'
compensation claims asserted and arising out of any injury sustained by
employees of Seller on or before the Closing Date.
(i) Buyer shall be responsible for, and shall indemnify and
hold Seller and Parent harmless from any Losses or Expenses incurred in
connection with the termination, on or after the Closing Date, of any Seller
Employee, including without limitation, any severance pay under the Seller
policy entitled "Separation Allowance for Salaried Employees of Park-Ohio
Industries, Inc." (as revised on June 25, 1992).
(j) Seller's or Parent's Welfare Plans which provide medical
benefits to Seller Employees shall be liable for the payment of benefits to
eligible Seller Employees and their eligible dependents for claims related to
services performed and supplies furnished prior to the Closing Date. In
addition, such Welfare Plans shall continue to be liable for the payment of
benefits for any Transferred Employee (or dependent of a Transferred Employee)
who is hospitalized or otherwise receiving in-patient care as of the Closing
Date in the same manner as if such Transferred Employee were an employee of
Seller, until such Transferred Employee or dependent is discharged from the
in-patient facility.
(k) Seller and Parent agree that Seller shall pay to each
Transferred Employee his or her vacation pay to the extent earned but not used
as of the Closing Date.
(l) Buyer shall be responsible and liable for any claim of any
Transferred Employee which claim is based upon any occurrence after the Closing
Date.
(m) Seller shall retain all liability for any health care
continuation coverage required to be provided under Section 4980B of the Code
and Part 6 of Subtitle B of Title 1 of ERISA to employees (and their spouses and
dependents) with respect to qualifying events occurring on or prior to the
Closing Date.
(n) Seller shall bear the cost and expense of short term
disability benefits under Seller's or Parent's Welfare Plans for any Transferred
Employee, who is receiving such benefits as of the Closing Date, until the
earlier of (i) the date such individual recovers from such short term
disability, or (ii) the end of the short term disability benefit period under
the applicable Seller's or Parent's Welfare Plan.
(o) Subject to applicable law, Seller and Parent agree that
the tax-qualified Pension Plans sponsored by Seller or Parent in which Seller
Employees who become Transferred
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Employees participate shall, solely for purposes of vesting, give credit for
service with Buyer. Buyer shall provide Seller with any data which Seller
reasonably requests to determine Transferred Employees' periods of vesting
service with Buyer following the Closing Date. Notwithstanding the foregoing,
Seller or Parent may take any and all action Seller or Parent deems appropriate
to cause such participants to become fully vested under such Pension Plans at
any earlier time.
(p) Buyer shall cover all Transferred Employees under
"employee benefit plans" within the meaning of Section 3(3) of ERISA which
provide benefits that are comparable in the aggregate to those benefits provided
under employee benefit plans maintained by the Buyer for its other employees. In
addition, effective as of the Closing Date, Buyer shall provide coverage to
Transferred Employees under Buyer's group health plan, as defined in Section
607(1) of ERISA and Code Section 5000(b)(1) (or under a Buyer-sponsored group
health plan that is designed to be as nearly as possible a continuation of the
Parent's or Seller's group health plan in which such Transferred Employees
participated immediately before the Closing Date) although any pre-existing
condition limitation or exclusion under such group health plan shall be applied
only to the extent, including the duration thereof, that such Transferred
Employees were or would have been (but for their nonparticipation in Seller's or
Parent's group health plan) subject to such limitation or exclusion under
Seller's or Parent's group health plan immediately before the Closing Date. A
Transferred Employee's service with Seller shall be taken into account for the
purpose of determining eligibility for participation and vesting (but not for
the purpose of determining benefit accruals) under any "employee benefit plan"
within the meaning of Section 3(3) of ERISA maintained by Buyer in which such
Transferred Employee participates.
8.3. POST-CLOSING REMITTANCES. If, after the Closing Date,
Seller shall receive any remittance from any account debtors with respect to any
accounts or notes receivable included in the Purchased Assets, Seller shall
endorse such remittance in the form in which received to the order of Buyer and
forward it to Buyer promptly following receipt thereof. Conversely, if, after
the Closing Date, Buyer or its Affiliates shall receive any remittance from any
account debtors not in payment of any accounts or notes receivables included in
the Purchased Assets, or not otherwise payable to Buyer or its Affiliates, then
Buyer or its Affiliates, as applicable, shall endorse such remittance to the
order of Seller and forward it to Seller promptly following receipt thereof.
8.4. RECEIVABLES. Seller agrees that it will not employ any
extraordinary collection efforts (including the initiation of litigation) with
respect to any of the Excluded Receivables unless it shall have first given
Buyer at least five (5) days' advance written notice thereof.
8.5. CONVEYANCE AND TRANSFER OF OWNED REAL PROPERTY. Title to
the Owned Real Property shall be conveyed by special warranty deed or its
equivalent in the applicable jurisdiction subject to no Encumbrances except for
Permitted Encumbrances. Not less than thirty (30) days prior to Closing, Seller
shall deliver a current binding commitment for the issuance of a standard 1992
Form B ALTA fee owner's title insurance policy (the "Title Commitment") insuring
title to each parcel of the Owned Real Property in Buyer as prospective fee
owner, in an amount requested by Buyer (but in no event being deemed to
compromise Seller's right to allocate value to all of such property), to be
issued by First American Title Insurance Company in the case of the Owned Real
Property located in Ohio, and either First American Title Insurance Company or
Ticor Title Insurance Company in the case of the Owned Real Property located in
Indiana, covering fee simple title to the Owned Real Property and showing title
in Seller, containing a commitment to issue an owner's form of comprehensive
endorsement, a zoning 3.1 endorsement, an extended coverage endorsement and such
other endorsements as Buyer may reasonably require. At Closing, Seller shall
cause to be delivered to Buyer the final title insurance policy for the Owned
Real Property dated as of the date of Closing issued in favor of Buyer and
otherwise in
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accordance with the Title Commitment as described hereinabove, subject to no
Encumbrances other than the Permitted Encumbrances. If a title policy cannot be
issued at Closing, Seller shall cause to be delivered to Buyer a marked-up
unconditional binder for such insurance dated as of the Closing Date, in a form
approved by Buyer and otherwise in accordance with the Title Commitment as
described hereinabove subject to no Encumbrances other than the Permitted
Encumbrances. Not less than thirty (30) days prior to Closing, Seller shall also
deliver surveys (the "Surveys") of the Owned Real Property made by a registered
land surveyor bearing a certificate addressed to Buyer and Buyer's title
insurance company, signed by the surveyor, certifying that the survey was
actually made on the ground and that there are no encumbrances except as shown,
and complying with the 1990 minimum detail requirements for ALTA/ACSM Land Title
Surveys or such lesser survey standard provided the applicable title insurance
company accepts such survey for purposes of deleting any title exception for
survey matters. The costs of all premiums and other expenses relating to such
survey and title insurance policy and commitment including, without limitation,
the title insurance premium and all transfer taxes and recording fees payable by
reason of the delivery or recording of the warranty deeds to the Owned Real
Property, shall be borne equally by Seller and Buyer. Within 10 days after
receipt by Buyer of the Title Commitment and Survey, Buyer shall notify Seller
in writing of its disapproval of any exception set forth in the Title Commitment
or matter shown on the Survey that do not constitute a Permitted Encumbrance. In
disapproving any such survey matter or title exception, Buyer shall be obligated
to act reasonably. If Seller cures the objection or provides affirmative title
insurance coverage, Buyer's objections shall be deemed satisfied. If any
objections are not timely communicated to Seller in writing, any and all such
objections shall be deemed waived and the same shall be deemed to be Permitted
Encumbrances hereunder. Upon receipt of Buyer's objections to matters in the
Title Commitment or Survey, Seller shall have 10 days to cure such objections or
notify Buyer that Seller is unable to cure all of such objections. If Seller
does not cure any such objections, Buyer shall have the option to accept title
subject to such item, in which case the objection shall become a Permitted
Encumbrance, or to terminate this Agreement. Notwithstanding the foregoing,
Seller shall be under no obligation to bring any action or spend any money in
order to render title marketable in accordance with the provisions of this
Agreement.
8.6. NON-COMPETITION. As a material inducement for Buyer to enter
into and consummate the transactions contemplated by this Agreement, Seller,
Parent and Crawford shall not, for the period set forth below (the "Non-Compete
Period"):
(a) Directly or indirectly, on their own behalf, or on behalf of
any other person, firm, corporation, trust, or other entity, and whether acting
as an officer, director, employee, partner, agent, consultant or otherwise,
engage in, or assist in any way, financially or otherwise, any person, firm,
corporation, trust or other entity that is engaged, or which proposes to engage,
in the Business within the United States or any other place where the Business
has been conducted prior to or is conducted or proposed to be conducted on the
Closing Date (the "Territory");
(b) Directly or indirectly solicit, attempt to solicit, or
otherwise divert, or attempt to divert, any participant, supplier or customer of
the Business for a purpose or with a result that is competitive with the
Business;
provided, however, that participation as a holder of fewer than 5% of the
outstanding shares or other equity interests of a company with a market
capitalization in excess of US $100,000,000 whose shares or other equity
interests are publicly traded shall not violate this SECTION 8.6.
The Non-Compete Period shall expire on the date that is five (5)
years from the Closing Date.
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If any court of competent jurisdiction shall finally hold that
the time, territory or any other provision set forth in this SECTION 8.6
constitutes an unreasonable restriction, such provision of this SECTION 8.6
shall not be rendered void, but shall apply as to such time, territory or to
such other extent as such court may determine constitutes a reasonable
restriction under the circumstances involved. Seller, Parent and Crawford
acknowledge that the restrictions contained in this SECTION 8.6 are reasonable
and necessary to protect the legitimate interests of Buyer and that any breach
by Seller, Parent or Crawford of any provision hereof will result in irreparable
injury to Buyer. Seller, Parent and Crawford acknowledge that Buyer shall be
entitled to preliminary and permanent injunctive relief in any action seeking to
enforce the provisions of this SECTION 8.6. Seller, Parent and Crawford
acknowledge that Buyer shall be entitled to an equitable accounting of all
earnings, profits or other benefits arising from such breach and shall be
entitled to receive such other damages, direct or consequential, as may be
appropriate.
8.7. PRODUCT REPAIR OR REPLACEMENT. Without limiting the
obligations of Seller, Buyer, consistent with past practice and upon receipt of
defective product claims after the Closing Date, may, with Seller's consent
(which shall not be unreasonably withheld) received within one week following
receipt by Seller of Buyer's documentation, repair or replace any products
manufactured or supplied by Seller before Closing provided that:
(i) the repair or replacement is required to be
carried out by Seller under terms and conditions of sale
usually provided by Seller to its customers or any term or
condition (other than a condition or warranty as to title)
imposed or implied by law in respect of that sale;
(ii) Buyer has the personnel and operates the
equipment necessary, or has a regular source of supply, to
enable it to effect that repair or replacement; and
(iii) Seller shall pay Buyer for the cost of labor
and materials for repairs or replacements carried out by Buyer
under this SECTION 8.7 to the extent such costs exceed
$50,000, and then only for the excess of such costs over
$50,000.
8.8 DUNELLEN. Notwithstanding any other provision of this
Agreement concerning the purchase of assets located at the leased facility in
Dunellen, New Jersey ("Dunellen"), the treatment of employees at Dunellen, and
Closing of the transactions contemplated by this Agreement, Buyer, Seller and
Parent agree that:
(a) Operations at Dunellen will cease as soon as is
practicable after the Closing, and in all events by
the date that is 90 days after the Closing, or such
other date as is mutually agreed by the parties, with
the intent that the Purchased Assets located at
Dunellen will be transferred by Buyer at Buyer's
expense to other manufacturing facilities of Buyer.
Buyer will make all reasonable efforts to complete
such transfer as soon as is practicable while at the
same time minimizing the disruption of operations.
Seller will cooperate with Buyer and facilitate the
staged removal of Purchased Assets from Dunellen
while making all reasonable efforts to maintain
manufacturing operations.
(b) Buyer and Seller will enter into the Supply Agreement
substantially in the form set forth in EXHIBITS G and
the Services Agreement substantially in the form set
forth in EXHIBIT F prior to Closing.
(c) Title to the Purchased Assets located at Dunellen
will not pass to Buyer at Closing (notwithstanding
the inclusion of such assets in the Closing
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Date Net Tangible Assets and payment of the purchase
price therefor) but shall pass to Buyer on the
earlier of the following dates in each case:
(i) the date upon which the relevant item is
removed from the Dunellen facility; or
(ii) the date of cessation of business operations
at the Dunellen facility by Seller.
(d) Seller shall procure a month-to-month extension of
the lease at Dunellen from May 31, 1996 until the
earlier of:
(i) cessation of business operations at Dunellen
by Seller; or
(ii) the date that is 90 days after the Closing,
or such other date as is mutually agreed by
the parties.
(e) Buyer shall reimburse Seller for any and all
severance payments made, or required to have been
made under applicable laws, and arising in connection
with the termination of employees at Dunellen after
the Closing, including all employees at the Dunellen
site to whom Buyer has not made an offer of
employment by the date of cessation of business
operations at Dunellen. Seller agrees that it shall
not modify or change its severance policy without
prior agreement of Buyer.
8.9 NO ADDITIONAL LIABILITY. Notwithstanding any other
provision of this Agreement, no Buyer Group Member will have any liability to
any Seller Group Member arising out of the statement of present intention set
forth in SECTION 14.15 or actions subsequent to the date hereof.
ARTICLE IX.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the
option of Buyer, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no breach by Seller or Parent in the
performance of any of each of their covenants and agreements herein; each of the
representations and warranties of Seller and Parent contained in this Agreement
shall be true and correct on the date hereof and the Closing Date as though made
on the Closing Date (except to the extent that they expressly relate to an
earlier date), except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing by
Buyer; and there shall have been delivered to Buyer a certificate to such
effect, dated the Closing Date, signed on behalf of Seller by the President or
any Vice President of Seller.
9.2. NO MATERIAL ADVERSE CHANGE. Between the date hereof and
the Closing Date, there shall have been no Material Adverse Change in the
operations or financial condition of the Business from that known to Buyer on
the date hereof which the parties have been unable, through good faith
negotiations, to accommodate by an agreed adjustment to the Purchase Price.
9.3. NO RESTRAINT. The waiting period under the HSR Act shall
have expired or been terminated and no injunction or restraining order shall
have been issued by any court of
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competent jurisdiction and be in effect which restrains or prohibits the
transactions contemplated hereby.
9.4. NECESSARY GOVERNMENTAL APPROVALS. Buyer shall have
received all approvals and actions of or by all Governmental Bodies which are
necessary to consummate the transactions contemplated hereby other than those as
to which the failure to possess would not have a material adverse effect on the
operation of the Purchased Assets and other than those which under applicable
law can be transferred to Buyer after Closing without monetary loss or
substantial risk of forfeiture or loss of material rights thereunder.
9.5. NECESSARY CONSENTS. Seller shall have received consents,
in form and substance reasonably satisfactory to Buyer, to the assignment of the
Seller Agreements (except for the Collective Bargaining Agreements and the PPG
letter agreement) which require consent of the other party or parties for
assignment to Buyer.
9.6. INSTRUMENT OF ASSIGNMENT. Seller shall have executed and
delivered to Buyer the Instrument of Assignment.
9.7. ESCROW AGREEMENT. Seller shall have executed and
delivered to Buyer the Escrow Agreement.
9.8. SUPPLY AGREEMENT. Seller shall have executed and
delivered to Buyer the Supply Agreement.
9.9. LEASE AGREEMENT. Seller shall have executed and delivered
to Buyer the Lease Agreement.
9.10. SERVICES AGREEMENT. Seller shall have executed and
delivered to Buyer the Services Agreement.
Notwithstanding the failure of any one or more of the
foregoing conditions, Buyer may proceed with the Closing without satisfaction,
in whole or in part, of any one or more of such conditions and without written
waiver. No waiver, written or otherwise, in connection with proceeding with the
Closing shall be deemed or in any way considered a waiver or relinquishment of
the right to bring an action subsequent to Closing for any damage, loss, claim
or other expense relating to a breach or inaccuracy in any representation,
warranty, covenant or agreement.
ARTICLE X.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND PARENT
The obligations of Seller and Parent under this Agreement
shall, at the option of Seller, be subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
10.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no breach by Buyer in the performance of any
of its covenants and agreements herein; each of the representations and
warranties of Buyer contained in this Agreement shall be true and correct on the
date hereof and the Closing Date as though made on the Closing Date, except for
changes therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Seller or any transaction
contemplated by this Agreement; and there shall have been delivered to Seller a
certificate to such effect, dated the Closing Date and signed on behalf of Buyer
by the President or any Vice President of Buyer.
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10.2. NO RESTRAINT. The waiting period under the HSR Act shall
have expired or been terminated, and no injunction or restraining order shall
have been issued by any court of competent jurisdiction and be in effect which
restrains or prohibits any material transaction contemplated hereby.
10.3. INSTRUMENT OF ASSUMPTION. Buyer shall have executed and
delivered to Seller the Instrument of Assumption.
10.4. ESCROW AGREEMENT. Buyer shall have executed and
delivered to Seller the Escrow Agreement.
10.5. SUPPLY AGREEMENT. Buyer shall have executed and
delivered to Seller the Supply Agreement.
10.6. LEASE AGREEMENT. Buyer shall have executed and delivered
to Seller the Lease Agreement.
10.7. SERVICES AGREEMENT. Buyer shall have executed and
delivered to Seller the Services Agreement.
Notwithstanding the failure of any one or more of the
foregoing conditions, Seller may proceed with the Closing without satisfaction,
in whole or in part, of any one or more of such conditions and without written
waiver. No waiver, written or otherwise, in connection with proceeding with the
Closing shall be deemed or in any way considered a waiver or relinquishment of
the right to bring an action subsequent to Closing for any damage, loss, claim
or other expense relating to a breach or inaccuracy in any representation,
warranty, covenant or agreement.
ARTICLE XI.
INDEMNIFICATION
11.1. INDEMNIFICATION BY SELLER AND PARENT. (a)
Notwithstanding the Closing and notwithstanding any investigation made by or on
behalf of Buyer, Seller and Parent agree, jointly and severally, to indemnify
and hold harmless each Buyer Group Member from and against any and all Losses
and Expenses incurred by such Buyer Group Member in connection with or arising
from:
(i) any breach by Seller or Parent of any of its
covenants, obligations or agreements in this Agreement (other
than SECTIONS 8.1, 8.3, 8.4, 11.4, 14.2, 14.6, 14.11 and
14.14) or in any Seller Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy
of any representation of Seller or Parent contained or
referred to in this Agreement, including the representations
and warranties contained in SECTION 12.2, but excluding the
representations and warranties contained in SECTIONS 5.2, 5.6,
5.7(A) except as it relates to the Owned Real Property, and
5.21, or any certificate delivered by or on behalf of Seller
pursuant hereto;
(iii) the breach or inaccuracy of the
representations and warranties set forth in SECTIONS 5.2, 5.6,
5.7(A) except as it relates to the Owned Real Property, and
5.21, or the breach of the covenants set forth in SECTIONS
8.1, 8.3, 8.4, 11.4, 14.2, 14.6, 14.11, and 14.14;
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(iv) the assertion or attempted assertion against
any Buyer Group Member of any Excluded Liability other than
liabilities arising under Environmental Laws, as to which no
indemnity shall apply; provided, however, that nothing in this
clause (iv) of this SECTION 11.1(A) shall alter the
indemnification provided to Buyer by Seller and Parent (A)
pursuant to CLAUSE (II) of this SECTION 11.1(A) with respect
to representations and warranties contained in SECTION 12.2,
and (B) pursuant to SECTION 12.3(A);
(v) the failure of Seller or Parent to comply with
any applicable bulk sales law, except that this clause shall
not affect the obligation of Buyer to pay and discharge the
Assumed Liabilities and no indemnification is made by Seller
with respect to the Assumed Liabilities; or
(vi) the assertion or attempted assertion against
any Buyer Group Member of any liability or obligation of PIM,
or Calco other than with respect to transfer taxes, incurred,
or arising out of activities occurring, prior to Closing;
provided, however, that Seller and Parent shall be required to indemnify and
hold Buyer harmless under clauses (i) and (ii) of this sentence only for Losses
and Expenses arising from a claim for breach that exceeds $30,000, and only when
the aggregate amount of such Losses and Expenses exceeds $250,000, in which case
Seller and Parent shall indemnify and hold Buyer harmless only for the amount of
such Losses and Expenses in excess of the $250,000.
(b) The indemnification provided for in SECTION 11.1(A) and
5.7(A) as it relates to the Owned Real Property shall terminate on September 30,
1997 (and no claims shall be made by any Buyer Group Member under this SECTION
11.1 thereafter), except that the indemnification by Seller and Parent shall
continue as to:
(i) the representations and warranties contained in
SECTIONS 5.2, 5.6, 5.7(A) except as it relates to the Owned
Real Property and 5.21, as to which no time limitation shall
apply;
(ii) the covenants of Seller and Parent set forth in
SECTIONS 8.1, 8.2, 8.3, 8.4, 11.4, 14.2, 14.6, 14.11 and
14.14, as to all of which no time limitation shall apply;
(iii) any Excluded Liability (other than liabilities
arising under Environmental Laws, the indemnities for which
are described in SECTION 11.1(A) and SECTION 12.3(A)), as to
which no time limitation shall apply;
(iv) any liability indemnified pursuant to CLAUSE
(VI) of SECTION 11.1(A), as to which no time limitation shall
apply; and
(v) any Loss or Expense, or any event, fact or
circumstance of which any Buyer Group Member has notified
Seller in accordance with the requirements of SECTION 11.3 on
or prior to the date such indemnification would otherwise
terminate in accordance with this SECTION 11.1, as to which
the indemnification obligation of Seller and Parent shall
continue until the liability of Seller and Parent shall have
been determined pursuant to this ARTICLE XI, and Seller or
Parent shall have reimbursed all Buyer Group Members for the
full amount of such Losses and Expenses in accordance with
this ARTICLE XI.
(c) Buyer shall not be entitled to indemnification under
CLAUSE (A)(II) of this SECTION 11.1 with respect to a breach or inaccuracy of
any representation of Seller in ARTICLE V,
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to the extent that Buyer had knowledge of such breach as of the Closing Date;
provided, however, that the state of Buyer's knowledge shall not in any way
relieve Seller and Parent of their indemnity obligations under clauses (A)(I),
(A)(III), (A)(IV), (A)(V) and (A)(VI) of this SECTION 11.1 and under SECTION
12.3.
11.2. INDEMNIFICATION BY BUYER. (a) Buyer agrees to indemnify
and hold harmless each Seller Group Member from and against any and all Losses
and Expenses incurred by such Seller Group Member in connection with or arising
from:
(i) any breach by Buyer of any of its covenants,
obligations or agreements in this Agreement (other than
SECTIONS 8.1, 8.3, 8.4, 11.4, 14.2, 14.6, 14.11 and 14.14) or
in any Buyer Ancillary Agreement;
(ii) any breach of any warranty or the inaccuracy
of any representation of Buyer contained or referred to in
this Agreement (other than SECTIONS 6.2 and 6.3) or in any
certificate delivered by or on behalf of Buyer pursuant
hereto;
(iii) any liabilities or obligations arising under
Environmental Laws to the extent attributable to ownership or
operation of the Business, the Purchased Assets and the Real
Property by Buyer after Closing;
(iv) the breach or inaccuracy of the
representations and warranties set forth in SECTIONS 6.2 and
6.3 or the breach of the covenants set forth in SECTIONS 8.1,
8.3, 8.4, 11.4, 14.2, 14.6, 14.11 and 14.14;
(v) the assertion or attempted assertion against
any Seller Group Member of any Assumed Liability other than
liabilities and obligations arising out of Reported
Environmental Matters, for which see SECTION 12.4.
provided, however, that Buyer shall be required to indemnify and hold Seller
harmless under CLAUSES (I) and (II) of this sentence only for Losses and
Expenses arising from a claim for breach that exceeds $30,000, and only when the
aggregate amount of such Losses and Expenses exceeds $250,000, in which case
Buyer shall indemnify and hold Seller harmless only for the amount of such
Losses and Expenses in excess of the $250,000.
(b) The indemnification provided for in this SECTION 11.2
shall terminate on September 30, 1997 and no claims shall be made by any Seller
Group Member under this SECTION 11.2 thereafter), except that the
indemnification by Buyer shall continue as to:
(i) the covenants of Buyer set forth in SECTIONS 8.1,
8.2, 8.3, 8.4, 11.4, 14.2, 14.6, 14.11 and 14.14, as to all of
which no time limitation shall apply;
(ii) the representations and warranties contained in
SECTIONS 6.2 and 6.3, as to which no time limitation shall
apply;
(iii) any Assumed Liability, as to which no time
limitation shall apply;
(iv) any liabilities or obligations arising under
Environmental Laws to the extent attributable to ownership or
operation of the Business, the Purchased Assets and the Real
Property by Buyer after Closing, as to which no time
limitation shall apply; and
(v) any event, fact or circumstance of which any
Seller Group Member has notified Buyer in accordance with the
requirements of SECTION 11.3 on or prior
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<PAGE> 45
to the date such indemnification would otherwise terminate in
accordance with this SECTION 11.2, as to which the
indemnification obligation of Buyer shall continue until the
liability of Buyer shall have been determined pursuant to this
ARTICLE XI, and Buyer shall have reimbursed all Seller Group
Members for the full amount of such Loss and Expense in
accordance with this ARTICLE XI.
(c) Seller shall not be entitled to indemnification under
CLAUSE (A)(II) of this SECTION 11.2 with respect to a breach or inaccuracy of
any representation of Buyer in ARTICLE VI, to the extent that Seller had
knowledge of such breach as of the Closing Date; provided, however, that the
state of Seller's knowledge shall not in any way relieve Buyer from the
indemnity obligations under clauses (A)(I), (A)(III), (A)(IV) and (A)(V) of this
SECTION 11.2 and under SECTION 12.4.
11.3. NOTICE OF CLAIMS. (a) Any Buyer Group Member or Seller
Group Member (the "Indemnified Party") seeking indemnification hereunder shall
give to the party obligated to provide indemnification to such Indemnified Party
(the "Indemnitor") a notice (a "Claim Notice") describing in reasonable detail
the facts giving rise to any claim for indemnification hereunder and shall
include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed hereunder
or in connection herewith upon which such claim is based; provided, however,
that a Claim Notice in respect of any action at law or suit in equity by or
against a third Person as to which indemnification will be sought shall be given
promptly after the action or suit is commenced.
(b) Any Losses or Expenses shall be calculated in such a way
so as to (A) deduct (i) any insurance recovery in respect thereof and (ii) the
amount of any tax benefit actually realized (or to be realized) by the
Indemnified Party (or any of its Affiliates) with respect to such Losses or
Expenses (after giving effect to the tax effect of receipt of the
indemnification payments), and (B) add the amount of any tax actually incurred
by the Indemnified Party (or any of its Affiliates) with respect to such Losses
or Expenses (after giving effect to the tax effect of receipt of the
indemnification payments). All Losses or Expenses which are indemnified
hereunder shall be treated by the parties as adjustments to the Purchase Price
and shall be reported by the parties as such in any tax returns or reports they
may be required to prepare or file in connection with the payment or receipt
thereof.
11.4. THIRD PERSON CLAIMS. (a) Subject to SECTION 11.4(B), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing reasonably acceptable to the Indemnitor, the defense, compromise
or settlement of any third Person claim, action or suit against such Indemnified
Party as to which indemnification will be sought by any Indemnified Party from
any Indemnitor hereunder, and in any such case the Indemnitor shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnified Party in connection therewith;
provided, that the Indemnitor may participate, through counsel chosen by it and
at its own expense, in the defense of any such claim, action or suit as to which
the Indemnified Party has so elected to conduct and control the defense thereof;
and provided, further, that the Indemnified Party shall not, without the written
consent of the Indemnitor (which written consent shall not be unreasonably
withheld), pay, compromise or settle any such claim, action or suit, except that
no such consent shall be required if, following a written request from the
Indemnified Party, the Indemnitor shall fail, within 14 days after the making of
such request, to acknowledge and agree in writing that, if such claim, action or
suit shall be adversely determined, such Indemnitor has an obligation to provide
indemnification hereunder to such Indemnified Party. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit, provided that in such event the
Indemnified Party shall waive any right to indemnity therefor hereunder.
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(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where Seller is the
Indemnitor, will have no continuing effect in any material respect on the
operation of the Purchased Assets, then the Indemnitor shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise or
settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and appeals
as may be reasonably requested by the Indemnitor in connection therewith;
provided, that the Indemnified Party may participate,through counsel chosen by
it and at its own expense, in the defense of any such claim, action or suit as
to which the Indemnitor has so elected to conduct and control the defense
thereof. Notwithstanding the foregoing, the Indemnified Party shall have the
right to pay, settle or compromise any such claim, action or suit, provided that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder.
ARTICLE XII.
ENVIRONMENTAL MATTERS
12.1. SCOPE. Notwithstanding any other section of this
Agreement, this ARTICLE XII and ARTICLE XI and SECTIONS 2.3, 2.4, 5.5, 5.10,
5.24 and 7.1 contain (i) the complete and entire agreement between Buyer, on the
one hand, and Seller and Parent, on the other, and sets forth the
responsibilities, liabilities, rights and remedies of Buyer, on the one hand,
and Seller and Parent, on the other, vis a vis each other, in respect of the
matters discussed herein and therein and (ii) the sole representations,
warranties, indemnities and agreements made by Buyer and Seller with respect to
such matters.
12.2. REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
REGARDING ENVIRONMENTAL MATTERS. Seller and Parent represent and warrant,
jointly and severally, to Buyer that except for Reported Environmental Matters
and matters in SCHEDULE 12.2:
(a) To the Knowledge of Seller Regarding Environmental Matters
or the Knowledge of Parent, the operations of the Business for the last five
years have been and currently are in material compliance with all Environmental
Laws.
(b) To the Knowledge of Seller Regarding Environmental Matters
or the Knowledge of Parent, Seller owns, holds or possesses all licenses,
franchises, permits, privileges, immunities, approvals and other authorizations
from a Governmental Body which are necessary to entitle Seller to own or lease,
operate and use the Purchased Assets and to operate the Business as currently
operated and which are required under the Environmental Laws (herein
collectively called "Environmental Permits". SCHEDULE 12.2 sets forth a list of
each Environmental Permit held by Seller.
(c) To the Knowledge of Seller Regarding Environmental Matters
or the Knowledge of Parent, Seller has received no notice of any claim, and
there are no circumstances which may lead to any claim, arising out of operation
of the Business by Seller which could give rise to material liability under
applicable Environmental Laws.
(d) To the Knowledge of Seller Regarding Environmental Matters
or the Knowledge of Parent, no Contaminants have been released or disposed of by
Seller or any other Person, on, in, at or beneath the Real Property.
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<PAGE> 47
(e) To the Knowledge of Seller Regarding Environmental Matters
or the Knowledge of Parent, Seller has not stored, treated, arranged for the
transportation of, transported or disposed of any Hazardous Waste, as that term
is defined in RCRA or any analogous state or local statute, law or regulation,
at any off-site facility, meaning any location other than the Real Property.
12.3. INDEMNIFICATION BY SELLER AND PARENT FOR ENVIRONMENTAL
MATTERS.
(a) Seller and Parent agree, jointly and severally, to defend,
indemnify and hold harmless each Buyer Group Member from and against any and all
Losses and Expenses incurred by such Buyer Group Member in connection with or
arising from any liabilities or obligations arising under Environmental Laws (as
they may be amended after Closing) arising out of: (a) the treatment, storage,
transportation, disposal, or arrangement for disposal, of Contaminants by Seller
prior to Closing at any off-site facility, meaning any location other than the
Real Property (provided that any release or migration of Contaminants from the
Real Property shall not be covered by this SECTION 12.3(A)); and (b) the
ownership or operation by Seller prior to Closing of any assets or property not
acquired by Buyer under this Agreement; provided, however, that with respect to
any liabilities or obligations arising under Environmental Laws that are not
addressed by the express indemnity obligations in SECTION 12.3 and 12.4 hereof,
or in CLAUSE (II) of SECTION 11.1(A) or CLAUSE (III) of SECTION 11.2(A), the
parties intend that their respective responsibility for such environmental
liabilities or obligations shall be governed by law applied without implication
from the definition of Excluded Liabilities.
(b) The indemnification provided for in this SECTION 12.3
shall continue forever.
(c) The notice procedures and provisions set forth in SECTION
11.3 and SECTION 11.4 shall apply to this SECTION 12.3.
12.4. INDEMNIFICATION BY BUYER FOR ENVIRONMENTAL MATTERS.
(a) Buyer agrees to defend, indemnify and hold harmless Seller
and Parent from and against all Losses and Expenses incurred by Seller or Parent
in connection with or arising from any liabilities or obligations arising out of
Reported Environmental Matters except and to the extent that such liabilities or
obligations have been the subject of an act, misstatement or omission by Seller
or Parent which would constitute a breach of any representation or warranty
contained in SECTION 12.2 and Buyer did not have knowledge of such breach
irrespective of any time limitation applicable to those representations and
warranties, in which case there shall be no indemnification under this SECTION
12.4(A); provided, however, that with respect to any liabilities or obligations
arising under Environmental Laws that are not addressed by the express indemnity
obligations in SECTIONS 12.3 and 12.4 hereof, or in clause (II) of SECTION
11.1(A) or clause (III) of SECTION 11.2(A), the parties intend that their
respective responsibility for such environmental liabilities or obligations
shall be governed by law applied without implication from the definition of
Excluded Liabilities.
(b) The indemnification provided for in this SECTION 12.4
shall continue forever.
(c) The notice procedures and provisions set forth in SECTION
11.3 and SECTION 11.4 shall apply to this SECTION 12.4.
ARTICLE XIII.
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<PAGE> 48
TERMINATION
13.1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of Buyer and Seller;
(b) by Buyer or Seller (i) if the Closing shall not have
occurred within thirty (30) days after receipt of the approval required in
SECTION 7.5 (or such later date as may be mutually agreed to by Buyer and
Seller) or (ii) at any time after September 30, 1996);
(c) by Buyer in the event of any material breach by Seller of
any of Seller's agreements, representations or warranties contained herein and
the failure of Seller to cure such breach within thirty days after receipt of
notice from Buyer requesting such breach to be cured;
(d) by Seller in the event of any material breach by Buyer of
any of Buyer's agreements, representations or warranties contained herein and
the failure of Buyer to cure such breach within fourteen days after receipt of
notice from Seller requesting such breach to be cured; or
(e) by Buyer or Seller if any court of competent jurisdiction
in the United States or other United States Governmental Body shall have issued
an order, decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby or requiring Buyer to divest any Purchased Assets as a
condition to not contesting the transactions contemplated by this Agreement.
13.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to SECTION 13.1 shall give notice of such termination to
the other party to this Agreement.
13.3. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this ARTICLE XIII, all further obligations of
the parties under this Agreement (other than SECTIONS 13.3, 14.2 and 14.11)
shall be terminated without further liability of any party to the other,
provided that nothing herein shall relieve any party from liability for its
willful breach of this Agreement and provided, further, that Buyer shall make no
attempt to hire any executive employee for a period of 5 years following such
termination, except that Buyer may solicit any executive employee terminated by
Seller.
ARTICLE XIV.
GENERAL PROVISIONS
14.1. SURVIVAL OF OBLIGATIONS. All representations,
warranties, covenants and obligations contained in this Agreement shall survive
the consummation of the transactions contemplated by this Agreement; provided,
however, that, except as otherwise provided in ARTICLE XI and ARTICLE XII, the
representations and warranties contained in ARTICLES V and VI shall terminate on
September 30, 1997. Except as otherwise provided herein, no claim shall be made
for the breach of any representation or warranty contained in ARTICLE V or VI or
under any certificate delivered with respect thereto under this Agreement after
the date on which such representations and warranties terminate as set forth in
this SECTION 14.1. Each of the representations and warranties of the parties
made herein or in any other document or agreement executed and delivered in
connection herewith is to be treated as a separate warranty, undertaking and
representation in respect of each statement made and the interpretation of any
statement made is not restricted by reference to or inference from any other
statement.
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<PAGE> 49
14.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the other party all copies of nonpublic
documents and materials which have been furnished in connection therewith. Such
documents, materials and information shall not be communicated to any third
Person (other than, in the case of Buyer, to its counsel, accountants, financial
advisors, environmental consultants or lenders, and in the case of Seller, to
its counsel, accountants or financial advisors). No other party shall use any
confidential information in any manner whatsoever except solely for the purpose
of evaluating the proposed purchase and sale of the Purchased Assets; provided,
however, that after the Closing Buyer may use or disclose any confidential
information included in the Purchased Assets or otherwise reasonably related to
the Purchased Assets. The obligation of each party to treat such documents,
materials and other information in confidence shall not apply to any information
which (i) is or becomes available to such party from a source other than such
party, (ii) is or becomes available to the public other than as a result of
disclosure by such party or its agents, (iii) is required to be disclosed under
applicable law or judicial process, but only to the extent it must be disclosed,
or (iv) such party reasonably deems disclosure necessary to obtain any of the
consents or approvals contemplated hereby, but only to the extent disclosure is
necessary to obtain such consents or approvals.
14.3. NO PUBLIC ANNOUNCEMENT. Neither Buyer nor Seller shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law, in which
case the other party shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued;
provided that the foregoing shall not preclude communications or disclosures
necessary to implement the provisions of this Agreement or to comply with the
accounting, Securities and Exchange Commission and Australian Stock Exchange
disclosure obligations.
14.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to Buyer, to:
North America Packaging Corporation
100 Galleria Parkway
Suite 900
Atlanta, Georgia 30339
Attention: Mr. James L. Sherbert, Jr.
with a copy to:
Gardner, Carton & Douglas
321 N. Clark Street
Suite 3400
Chicago, Illinois 60610
Attention: Mr. Robert J. Wilczek
If to Seller, Crawford or Parent, to:
Park-Ohio Industries, Inc.
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<PAGE> 50
23000 Euclid Avenue
Cleveland, Ohio 44117
Attention: Mr. Edward F. Crawford
with a copy to:
Squire, Sanders & Dempsey
4900 Society Center
127 Public Square
Cleveland, Ohio 44114
Attention: Mary Ann Jorgenson
or to such other address as such party may indicate by a notice delivered to the
other party hereto.
14.5. SUCCESSORS AND ASSIGNS. (a) The rights of either party
under this Agreement shall not be assignable by such party hereto prior to the
Closing without the written consent of the other, except that some or all of the
rights of Buyer hereunder may be assigned prior to the Closing, without the
consent of Seller, to any Affiliate of Buyer, provided that Buyer shall not be
released from any of its obligations hereunder by reason of such assignment.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns. The
successors and permitted assigns hereunder shall include without limitation, in
the case of Buyer, any permitted assignee as well as the successors in interest
to such permitted assignee (whether by merger, liquidation (including successive
mergers or liquidations) or otherwise). Nothing in this Agreement, expressed or
implied, is intended or shall be construed to confer upon any Person other than
the parties and successors and assigns permitted by this SECTION 14.5 any right,
remedy or claim under or by reason of this Agreement.
14.6. ACCESS TO RECORDS AFTER CLOSING. For a period of five
(5) years after the Closing Date, Seller and its representatives shall have
reasonable access to all of the books and records of Seller transferred to Buyer
hereunder to the extent that such access may reasonably be required by Seller in
connection with matters relating to or affected by the operations of the
Business prior to the Closing Date. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours. Seller
shall be solely responsible for any costs or expenses incurred by it pursuant to
this SECTION 14.6. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such five-year period, Buyer shall, prior to
such disposition, give Seller a reasonable opportunity, at Seller's expense, to
segregate and remove such books and records as Seller may select. At the
expiration of such five-year period, Seller shall have a reasonable opportunity,
at Seller's expense, to segregate and remove such books and records as Seller
may elect.
For a period of five (5) years after the Closing Date, Buyer
and its representatives shall have reasonable access to all of the books and
records relating to the Business which Seller or any of its affiliates may
retain after the Closing Date. Such access shall be afforded by Seller and its
affiliates upon receipt of reasonable advance notice and during normal business
hours. Buyer shall be solely responsible for any costs and expenses incurred by
it pursuant to this SECTION 14.6. If Seller or any of its affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such five-year period, Seller shall, prior to such disposition, give Buyer a
reasonable opportunity, at Buyer's expense, to segregate and remove such books
and records as Buyer may select. At the expiration of such five-year period,
Buyer shall have a reasonable opportunity, at Buyer's expense, to segregate and
remove such books and records as Buyer may elect.
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<PAGE> 51
14.7. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or letters of intent between or among any of the parties hereto,
including without limitation the Confidentiality Agreement. This Agreement shall
not be amended, modified or supplemented except by a written instrument signed
by an authorized representative of each of the parties hereto.
14.8. INSTITUTION OF LEGAL PROCEEDINGS. No party to this
Agreement shall institute legal proceedings against any other party to this
Agreement, in connection with the sale and purchase of the Business or this
Agreement, except for (i) breach of any representations, warranties, covenants,
or indemnities set forth in this agreement, (ii) fraud, (iii) enforcement of a
non-compete obligation or (iv) in connection with any claim or action by any
government agency or third party.
14.9. INTERPRETATION. Article titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein.
14.10. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
14.11. EXPENSES. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and accountants; provided, however,
that Buyer and Seller shall each pay one-half of all costs and expenses
associated with the proposed transfer of real estate regardless of whether the
transactions contemplated by this Agreement are consummated.
14.12. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
14.13. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each of Seller and Buyer.
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<PAGE> 52
14.14. FURTHER ASSURANCES. On the Closing Date Seller shall
(i)deliver to Buyer such other bills of sale, deeds, endorsements, assignments
and other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to Buyer and its counsel, as Buyer may reasonably
request or as may be otherwise reasonably necessary to vest in Buyer all the
right, title and interest of Seller in, to or under any or all of the Purchase
Assets, and (ii) take all steps as may be reasonably necessary to put Buyer in
actual possession and control of all the Purchased Assets. From time to time
following the Closing, Seller shall execute and deliver, or cause to be executed
and delivered, to Buyer such other instruments of conveyance and transfer as
Buyer may reasonably request or as may be otherwise necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot be
transferred or assigned effectively without the consent of third parties which
consent has not been obtained prior to the Closing, to cooperate with Buyer at
its request in endeavoring to obtain such consent promptly. Notwithstanding
anything in this Agreement to the contrary, this Agreement shall not constitute
an agreement to assign any license, certificate, approval, authorization,
agreement, contract, lease, easement or other commitment included in the
Purchased Assets if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach thereof.
14.15. NO INTENTION TO LIQUIDATE OR SELL PIM. Buyer has no
present intention to liquidate, sell, transfer or otherwise dispose of the
shares of PIM, Inc.
14.16. SET-OFF. Buyer and Seller agree that neither will
set-off amounts due under any of the Lease Agreement, the Supply Agreement, the
Services Agreement, SECTION 8.3 hereof or ARTICLE III hereof against any amounts
due under any other of such Agreements, Section or Article.
14.17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Illinois, except in the case of the Owned Real
Property, as to which the applicable local law shall govern.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written.
Buyer:
NORTH AMERICA PACKAGING
CORPORATION
By: /s/ J.L. Sherbert
--------------------------------
Name: J.L. Sherbert
Title: President
Seller:
BENNETT INDUSTRIES, INC.
By: /s/ Robert T. Bourg
--------------------------------
Name: Robert T. Bourg
Title: President
Crawford:
EDWARD F. CRAWFORD
By: /s/Edward F. Crawford
--------------------------------
(Signing solely as an obligor under SECTION
8.6 of this Agreement. In no event shall
this signature be construed as giving rise
to any right or obligation of Crawford,
acting in his individual capacity, under any
Article or Section of this Agreement save
SECTION 8.6.)
Parent:
PARK-OHIO INDUSTRIES, INC.
By: /s/ John J. Murray
--------------------------------
Name: John J. Murray
Title: President
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<PAGE> 1
EXHIBIT 11
----------
PARK-OHIO INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(In Thousands - Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income from continuing operations $2,550 $4,221 $5,132 $6,917
Amortization of imputed goodwill associated (21) (21) (42) (42)
with the earnout shares ------ ------ ------ ------
Income from continuing operations related to
shareholders of Common Stock (Primary) 2,529 4,200 5,090 6,875
Interest (net of income taxes in 1996) associated with
convertible senior subordinated debentures 264 403 528 806
------ ------ ------ ------
Income from continuing operations related to
shareholders of Common Stock (Fully
diluted) $2,793 $4,603 $5,618 $7,681
====== ====== ====== ======
Discontinued operations $1,326 $ 600 $2,825 $1,644
====== ====== ====== ======
Net income related to shareholders of Common
Stock (Primary) $3,855 $4,800 $7,915 $8,519
====== ====== ====== ======
Net Income related to shareholders of Common
Stock (Fully diluted) $4,119 $5,203 $8,443 $9,325
====== ====== ====== ======
PRIMARY COMPUTATION
Average shares outstanding during the
period 10,407 10,402 10,405 9,361
Effect of General Aluminum Mfg. Company
earnout shares deemed to be issued 188 188 188 188
Effect of dilutive stock options based on
the treasury stock method using the
average market price for the period 517 144 409 161
------ ------ ------ ------
Shares used 11,112 10,734 11,002 9,710
====== ====== ====== ======
Per share of Common Stock:
Continuing operations $ .23 $ .39 $ .46 $ .71
Discontinued operations .12 .06 .26 .17
------ ------ ------ ------
Net income $ .35 $ .45 $ .72 $ .88
====== ====== ====== ======
FULLY DILUTED COMPUTATION
Average shares outstanding per primary
computation above 11,112 10,734 11,002 9,710
Additional effect of dilutive stock
options based on the treasury stock
method using the end of period market
price, if higher than the average
market price -0- -0- 90 -0-
Effect of assuming conversion of the
Convertible Senior Subordinated
Debentures 1,151 1,151 1,151 1,151
------ ------ ------ ------
Shares used 12,263 11,885 12,243 10,861
======= ====== ====== ======
Per share of common stock:
Continuing operations $ .23 $ .39 $ .46 $ .71
Discontinued operations .11 05 .23 .15
------- ------ ------ ------
Net income $ .34 $ .44 $ .69 $ .86
======= ====== ====== ======
</TABLE>
<PAGE> 1
EXIHIBIT 15
Exhibit (15) Letter Re: Unaudited Financial Information
Board of Directors and Shareholders
Park-Ohio Industries, Inc.
We are aware of the incorporation by reference in the Registration Statements on
Form S-3 and Forms S-8 (relating to the 1992 Stock Option Plan and the
Individual Account Retirement Plan) of Park-Ohio Industries, Inc. for the
registration of 363,094 shares, 350,000 shares and 1,500,000 shares,
respectively, of its common stock of our report dated July 19, 1996, relating to
the unaudited condensed consolidated interim financial statements of Park-Ohio
Industries, Inc., which are included in its Form 10-Q for the quarter ended June
30, 1996.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
July 19, 1996
Cleveland, Ohio
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000076282
<NAME> PARK-OHIO INDUSTRIES, INC.
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 1,512
<SECURITIES> 0
<RECEIVABLES> 65,472
<ALLOWANCES> 1,085
<INVENTORY> 76,801
<CURRENT-ASSETS> 155,534
<PP&E> 100,499
<DEPRECIATION> 52,963
<TOTAL-ASSETS> 306,778
<CURRENT-LIABILITIES> 45,553
<BONDS> 121,280
<COMMON> 10,408
0
0
<OTHER-SE> 93,558
<TOTAL-LIABILITY-AND-EQUITY> 306,778
<SALES> 181,547
<TOTAL-REVENUES> 181,547
<CGS> 150,587
<TOTAL-COSTS> 150,587
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,851
<INCOME-PRETAX> 8,277
<INCOME-TAX> 3,145
<INCOME-CONTINUING> 5,132
<DISCONTINUED> 2,825
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,957
<EPS-PRIMARY> .72
<EPS-DILUTED> .69
</TABLE>
<PAGE> 1
EXHIBIT 99
Unaudited Pro Forma Condensed Financial Statements
The following unaudited pro forma condensed balance sheet as of June 30,
1996 and the pro forma condensed combined statements of income for the six
month period ended June 30, 1996 and for the year ended December 31, 1995, give
effect to the Park-Ohio Industries, Inc. ("Park-Ohio") sale of substantially
all of the assets of Bennett Industries, Inc. for approximately $50,000,000.
The pro forma information is based on the historical consolidated financial
statements of Park-Ohio under the assumptions and adjustments set forth in the
accompanying notes to the pro forma condensed financial statements.
The pro forma information is presented for illustrative purposes only and
may not be indicative of the results that actually would have occurred if the
Park-Ohio sale of substantially all of the assets of Bennett Industries, Inc.
occured during the periods presented. The pro forma condensed financial
statements should be read in conjunction with the historical consolidated
financial statements and notes thereto of Park-Ohio.
1
<PAGE> 2
PARK-OHIO INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 1,512 $ 1,512
Accounts receivable 65,472 1,500 (A) 66,972
Inventories 76,801 76,801
Deferred taxes 8,000 8,000
Other current assets 3,749 3,749
-------- --------- --------
Total Current Assets 155,534 1,500 157,034
Property, Plant and Equipment 100,499 100,499
Less accumulated depreciation 52,963 52,963
-------- --------
47,536 47,536
Excess Purchase Price Over Net Assets Acquired, net 41,208 41,208
Net Assets Of Discontinued Operations 32,905 (32,905)(A) 0
Deferred Taxes 11,400 (5,795)(A) 5,605
Other Assets 18,195 18,195
-------- --------- --------
$306,778 $ (37,200) $269,578
======== ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 21,966 $ 21,966
Accrued expenses 16,620 2,575 (A) 19,195
Current portion of long-term liabilities 6,967 6,967
-------- --------- --------
Total Current Liabilities 45,553 2,575 48,128
Long-Term Liabilities, less current portion
Long-term debt 99,045 (48,503)(A) 50,542
Other postretirement benefits 29,156 29,156
Other 6,823 6,823
-------- --------- --------
135,024 (48,503) 86,521
Convertible Senior Subordinated Debentures 22,235 22,235
Shareholders' Equity
Common Stock 10,408 10,408
Additional paid-in capital 49,233 49,233
Retained earnings 44,325 8,728 (A) 53,053
-------- --------- --------
103,966 8,728 112,694
-------- --------- --------
$306,778 $ (37,200) $269,578
======== ========= ========
</TABLE>
See notes to unaudited pro forma condensed financial statements.
2
<PAGE> 3
PARK-OHIO INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Net sales $181,547 $181,547
Cost of products sold 150,587 150,587
-------- --------
Gross profit 30,960 30,960
Selling, general and administrative expenses 18,832 18,832
Interest expense 3,851 $(1,092) (B) 2,759
-------- ------- --------
Income from continuing operations before income taxes 8,277 1,092 9,369
Income taxes 3,145 415 (B) 3,560
-------- ------- --------
Income from continuing operations $ 5,132 $ 677 $5,809
======== ======= ========
Per common share $ .46 $ .53
======== ========
Common shares used in the computation 11,002 11,002
======== ========
</TABLE>
See notes to unaudited pro forma condensed financial statements.
3
<PAGE> 4
PARK-OHIO INDUSTRIES, INC.
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT
Year Ended December 31, 1995
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Net sales $289,501 $289,501
Cost of products sold 244,306 244,306
-------- --------
Gross profit 45,195 45,195
Selling, general and administrative expenses 26,371 26,371
Interest expense 5,911 (2,083) (B) 3,828
-------- ------- --------
Income from continuing operations
before income taxes 12,913 2,083 14,996
Income taxes (6,900) 6,300 (C) (600)
-------- ------- --------
Income from continuing operations $ 19,813 $(4,217) $ 15,596
======== ======= ========
Per common share $ 1.93 $ 1.52
======== ========
Common shares used in the computation 10,257 10,257
======== ========
</TABLE>
See notes to unaudited pro forma condensed financial statements.
4
<PAGE> 5
PARK-OHIO INDUSTRIES, INC.
Notes to Unaudited Pro Forma Condensed Financial Statements
A) Sale of substantially all of the net assets of Bennett Industries,
Inc. for $50,003,000 of which $1,500,000 was placed in escrow and
$48,503,000 was used to reduce bank debt. Accrued expenses were
adjusted by $2,575,000 for the liabilities not assumed by the buyer
and the costs of completing the transaction. A gain of $8,728,000
resulted after providing a tax provision of $5,795,000.
B) Reduction in interest expense from continuing operations resulting from
revised debt structure and the related income tax effect.
C) The pre-tax gain on the sale of Bennett of $14,500,000 and the
reduction in interest expense of $2,083,000 would have utilized
$6,300,000 of net operating loss carryforwards, resulting in a
reduction in the impact on net income from continuing operations as a
result of reversing valuation allowances in the fourth quarter of
1995. (See Note E of the Consolidated Financial Statements for the
year ended December 31, 1995.)
5
