<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-15836
REXWORKS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 39-1406918
- ----------------------------------------- -------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
445 West Oklahoma Avenue
Milwaukee, WI 53207
- ----------------------------------------- -------------------------------------
(Address of principal executive office) (Zip Code)
P.O. Box 2037
Milwaukee, WI 53201
- ----------------------------------------- -------------------------------------
(Mailing address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: 414-747-7200
-------------
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 12 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
--- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of November 7, 1997.
Common Stock, $0.12 par value: 1,896,668 shares
<PAGE> 2
REXWORKS INC.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these interim financial statements be read
in conjunction with the financial statements for the years ended December 31,
1996 and 1995 and notes thereto, included in the Company's 1996 Form 10-K.
2
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REXWORKS INC.
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 30 DECEMBER 31
ASSETS 1997 1996
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 5,000 $ 5,000
Accounts receivable (less reserves of $125,000) 11,024,000 9,231,000
Inventories 7,963,000 8,832,000
Other current assets 446,000 460,000
------------- -------------
Total current assets 19,438,000 18,528,000
------------- -------------
DEFERRED INCOME TAX BENEFIT 969,000 969,000
NONCOMPETE AGREEMENT 786,000 1,228,000
OTHER ASSETS 826,000 918,000
PROPERTY, PLANT AND EQUIPMENT:
Land 36,000 36,000
Buildings and land improvements 1,445,000 1,445,000
Machinery and equipment 6,394,000 6,300,000
------------- -------------
7,875,000 7,781,000
Less accumulated depreciation (5,567,000) (5,141,000)
------------- -------------
Net property, plant and equipment 2,308,000 2,640,000
------------- -------------
TOTAL ASSETS $ 24,327,000 $ 24,283,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
3
<PAGE> 4
REXWORKS INC.
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
UNAUDITED
LIABILITIES AND SEPTEMBER 30 DECEMBER 31
STOCKHOLDERS' INVESTMENT 1997 1996
- ------------------------ -------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long term debt $ 7,639,000 $ 4,088,000
Accounts payable - trade 4,449,000 4,453,000
Accrued expenses:
Salaries and other benefits 831,000 964,000
Warranty 1,303,000 1,323,000
Product liability defense 1,872,000 1,657,000
Other 234,000 521,000
Deferred income taxes 298,000 253,000
Advances from customers 50,000 38,000
------------- -------------
Total current liabilities 16,676,000 13,297,000
LONG TERM DEBT - 2,984,000
------------- -------------
Total liabilities 16,676,000 16,281,000
STOCKHOLDERS' INVESTMENT:
Common stock, $.12 par value,
4,300,000 shares authorized, 1,896,668 shares
issued and outstanding 227,000 227,000
Additional paid-in capital 7,023,000 7,023,000
Treasury stock (26,000) (26,000)
Retained earnings 427,000 778,000
------------- -------------
Total stockholders' investment 7,651,000 8,002,000
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $ 24,327,000 $ 24,283,000
============= =============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
4
<PAGE> 5
REXWORKS INC.
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND RETAINED EARNINGS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------------- -------------------------
1997 1996 1997 1996
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 10,735,000 $10,395,000 $34,349,000 $ 38,176,000
COST OF SALES 8,652,000 8,439,000 27,906,000 30,356,000
------------ ----------- ----------- ------------
Gross profit 2,083,000 1,956,000 6,443,000 7,820,000
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 2,021,000 2,100,000 6,435,000 7,034,000
------------ ----------- ----------- ------------
Income from operations 62,000 (144,000) 8,000 786,000
OTHER (EXPENSE) INCOME:
Interest expense (173,000) (211,000) (519,000) (669,000)
Other (10,000) 22,000 (56,000) 63,000
------------ ----------- ----------- ------------
(Loss) income before income taxes and
extraordinary item (121,000) (333,000) (567,000) 180,000
(BENEFIT) PROVISION FOR INCOME
TAXES (44,000) (125,000) (216,000) 68,000
------------ ----------- ----------- ------------
Net (loss) income before extraordinary item (77,000) (208,000) (351,000) 112,000
EXTRAORDINARY ITEM
Gain on early retirement of debt, net of
income taxes of $129,000 214,000 214,000
------------ ----------- ----------- ------------
NET (LOSS) INCOME (77,000) 6,000 (351,000) 326,000
Retained Earnings,
Beginning of period 504,000 1,069,000 778,000 749,000
------------ ----------- ----------- ------------
RETAINED EARNINGS, END OF PERIOD $ 427,000 $ 1,075,000 $ 427,000 $ 1,075,000
============ =========== =========== ============
PER SHARE AMOUNTS:
Net (loss) income before extraordinary item (0.04) (0.11) (0.18) 0.06
Extraordinary item - 0.11 - 0.11
Net (loss) income (0.04) 0.00 (0.18) 0.17
Weighted average number of common
shares outstanding 1,927,000 1,918,000 1,917,000 1,913,000
============ =========== =========== ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements of operations.
5
<PAGE> 6
REXWORKS INC.
REXWORKS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (351,000) $ 326,000
Adjustments to reconcile net income to net cash
provided by (used for) operating
activities:
Depreciation and amortization 960,000 996,000
Gain on early retirement of debt (214,000)
Provision for deferred income taxes 45,000 122,000
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (1,793,000) 2,896,000
Decrease in inventories 869,000 2,855,000
Decrease (increase) in other current assets 14,000 (134,000)
Net decrease in other current liabilities (217,000) (3,272,000)
----------- ------------
Net cash provided by operating activities (473,000) 3,575,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (94,000) (402,000)
Investment in joint venture (10,000)
----------- ------------
Net cash (used for) investing activities (94,000) (412,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line-of-credit
agreement 567,000 (2,064,000)
Noncompete liability principal payments - (1,099,000)
----------- ------------
Net cash provided by financing activities 567,000 (3,163,000)
----------- ------------
Net increase in cash - -
CASH AT BEGINNING OF YEAR 5,000 5,000
----------- ------------
CASH AT END OF QUARTER $ 5,000 $ 5,000
=========== ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 518,000 $ 833,000
Income taxes (refunded) paid (42,000) 77,000
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
6
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REXWORKS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
(1) In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) which were necessary to a fair statement of the
results of the interim periods have been included in the preceding
financial statements. However, the results of operations for the nine
month period ended September 30, 1997 are not necessarily indicative of
results to be expected for the entire year. Certain items, including
income taxes, LIFO charges and various other accruals are included in
these statements based on current estimates for the entire year.
(2) Inventories
Substantially all inventories are stated at cost which does not exceed
market, determined on the last-in, first-out (LIFO) basis. Inventory
amounts as of September 30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
------------ -----------
<S> <C> <C>
At lower of cost (FIFO) or market:
Raw materials $ 110,000 $ 146,000
Work -in-process and components 6,017,000 6,550,000
Finished goods 4,525,000 4,825,000
------------ -----------
10,652,000 11,521,000
Excess of FIFO over LIFO cost (2,689,000) (2,689,000)
------------ -----------
Total inventories at LIFO $ 7,963,000 $ 8,832,000
============ ===========
</TABLE>
(3) Debt
Debt as of September 30, 1997 and December 31, 1996 is as follows:
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
------------ ------------
<S> <C> <C>
Borrowings under line-of-credit
agreement $ 7,639,000 $ 7,072,000
Less: Current portion (7,639,000) (4,088,000)
------------ ------------
Long term portion of debt $ - $ 2,984,000
============ ============
</TABLE>
7
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REXWORKS INC.
(4) Legal Proceedings
Product liability claims against the Company arise from time to time in
the ordinary course of business. The Company is currently party to a
number of legal proceedings involving product liability claims in a
number of states, some of which involve significant claims. These
proceedings are now pending before courts in various stages, or are in
discovery stages. In most instances, pending claims allege the Company
produced faulty product which led to injury. The Company generally
denies liability and intends to vigorously defend these proceedings.
The Company does not purchase product liability insurances because, in
the opinion of management, the premiums the Company would have to pay for
such insurance are not justified by the Company's historical and expected
future loss experience. Accordingly, all costs associated with product
liability claims must be paid by the Company and are not covered by
insurance.
As of November 6, 1997 there were nine open product liability cases
against the Company. One of these cases went to trial during 1997. The
Company lost this case and is currently planning an appeal. No other
cases are scheduled for trial during the remainder of 1997.
Management believes the Company has liability defenses for each of the
cases that may come to trial during the remainder of 1997 or in future
years, but does recognize there is an inherent uncertainty as to the
eventual resolution of unsettled claims. In the opinion of management,
any losses with respect to existing claims in excess of established
reserves will not have a material impact on the Company's operating
income or financial condition..
(5) Earnings per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards Number 128, "Earnings per
Share," which is effective for periods ending after December 31, 1997.
This Statement revised the calculation of earnings per share. The
Company will adopt this statement in its 1998 financial statements.
(6) Reporting Comprehensive Income
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards Number 130, "Reporting Comprehensive
Income," which is effective for periods beginning after December 15,
1997. This Statement establishes standards for the reporting and display
of comprehensive income and its components in a full set of general
purpose financial statements. The Company will adopt this statement in
its 1998 financial statements.
(7) Disclosures About Segments of an Enterprise and Related Information
The Financial Accounting Standards Board also recently issued Statement
of Financial Accounting Standards Number 131, "Disclosures About Segments
of an Enterprise and Related Information," which is effective for periods
beginning after
8
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REXWORKS INC.
December 15, 1997. This Statement revised the rules for reporting
information about segments of an enterprise in financial statements. The
Company will adopt this statement in its 1998 financial statements.
9
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REXWORKS INC.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
The following comments are provided to assist in the understanding of the
Company's operations as set forth in the consolidated financial statements.
ANALYSIS OF FINANCIAL CONDITION
Liquidity and Capitalization
Working capital and current ratio are financial measurements that provide an
indication of the Company's ability to meet its short-term obligations. This
data at September 30, 1997 and December 31, 1996 is as follows:
<TABLE>
<CAPTION>
September 30 December 31
1997 1996
------------ ------------
<S> <C> <C>
Current Assets $19,438,000 $18,528,000
Current Liabilities 16,676,000 13,297,000
Working Capital 2,762,000 5,231,000
Current Ratio 1.2 1.4
</TABLE>
Receivables increased by $1,793,000 to $11,024,000 at September 30, 1997 from
December 31, 1996. The increase was caused by higher levels of Trashmaster and
service parts receivables, offset partially by lower levels of mixer
receivables. Inventories declined by $869,000 to $7,963,000 at September 30,
1997 compared to December 31, 1996. The decline largely reflects lower levels
of finished Trashmaster machines.
Based on the proposed sale of the Company, the Company has chosen not to
negotiate an extension of its $10,000,000 line of credit with Bank One
Wisconsin, N.A. which is scheduled to expire on April 30, 1998. As a result,
all bank borrowings are now classified as current, and the current portion of
bank debt has increased to $7,639,000 at September 30, 1997 from $4,088,000 at
December 31, 1996. The Company had $2,361,000 available under its credit
facility at September 30, 1997.
In the event that the proposed sale of the Company is not consummated,
management believes that it will be able to extend the existing $10,000,000
line of credit facility without
10
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REXWORKS INC.
significant change in the terms and conditions of the agreement, and without
any significant change in the interest rate charged.
Management believes cash flows from operating activities for the balance of
1997 and 1998 will be positive, after adjusting cash flow from net income
(loss) for depreciation and amortization. Management also believes that the
Company's working capital needs over the next twelve months will not vary
materially from current levels. The Company has no current material
commitments for capital expenditures and has no plans for material expenditures
for the balance of 1997 and 1998. Therefore, in management's opinion, the
existing credit facility and anticipated future cash generated from operations
will be adequate to meet the Company's short- and long-term needs for capital
additions, as well as for any short-term fluctuations in the Company's level of
working capital.
RESULTS OF OPERATIONS
The Third Quarter, 1997 Compared To The Third Quarter, 1996
Net sales for the third quarter of 1997 increased by $340,000 (3.3%) to
$10,735,000 from the $10,395,000 reported in the third quarter of 1996. Sales
of concrete mixers fell by 23.7% ($764,000) as the Company continues to
experience lower than expected sales demand for these products. Sales of
landfill compaction equipment increased by 20.2% ($663,000) as sales to private
landfill operators rebounded after declining in 1996. Sales of grinding
equipment increased 7.5% ($162,000), reflecting stronger export sales in 1997
compared to 1996. Sales of service parts increased by 25.0% ($371,000) due to
the Company's efforts to increase mixer parts sales and generate additional
export parts sales.
Gross profit increased by $127,000 (6.5%) to $2,083,000 from the $1,956,000
reported in the third quarter of 1996. Gross profit as a percentage of sales
improved to 19.4% in the third quarter of 1997 compared to 18.8% in the third
quarter of 1996. Margins improved as a percentage of sales because of an
improved mix of sales, as the Company increased sales of higher margin landfill
compactors, grinders, and service parts, and experienced reduced sales volume
in its lower margin cement mixer line.
Selling, general and administrative expenses declined by $79,000 (3.8%) to
$2,021,000 for the third quarter of 1997 compared to $2,100,000 during the same
period one year ago. The Company made significant spending reductions for
salaries and employee benefits, reflecting efforts to balance the Company's
work force with the current level of sales. These spending reductions were
partially offset by increased provisions for legal costs associated with
product liability litigation.
Interest expense declined by $38,000 (18.0%) to $173,000 during the third
quarter of 1997 compared to $211,000 during the same period one year ago. The
reduction was due to lower levels of average indebtedness during the third
quarter of 1997 compared to the same period in 1996.
During the third quarter of 1996 the Company recorded an extraordinary gain on
the early retirement of debt of $214,000 (net of income taxes of $129,000).
This gain arose after the Company reached an agreement with the former owners
of its material reduction grinder
11
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REXWORKS INC.
product line to accept a payment of $860,000 in full satisfaction of the
Company's obligation to make future payments under the terms of a
non-competition agreement. Those obligations had been recorded on the
Company's books at $1,203,000, resulting in a pre-tax gain of $343,000 and an
net-of-tax gain of $214,000. There was no comparable item in 1997.
The provision for income tax expense was recorded at effective rates of 36% and
37% in 1997 and 1996, respectively. Changes in tax expense are largely the
result of changes in the level of pre-tax income.
The Nine Months Ended September 30, 1997 Compared to the Nine Months Ended
September 30, 1996
Net sales in the first nine months of 1997 declined by $3,827,000 (10.0%), from
$38,176,000 to $34,349,000. The sales decline affected all of the Company's
product lines, and was most significant in cement mixers ($2,401,000 or 20.1%)
and grinders ($897,000 or 9.5%). The declines were smaller in the Company's
landfill compaction, service parts, and contract machining lines, where sales
fell by $117,000 (1.1%), $112,000 (2.1%) and $299,000 (37.1%). The Company
continues to experience soft market demand for its concrete mixers, and
domestic sales demand for grinder products has been lower than the Company's
expectations and the prior year's results
Gross profit declined by $1,377,000 (17.6%), to $6,443,000 in the first nine
months of 1997 compared to $7,820,000 in the same period one year ago. Gross
profit as a percentage of sales fell to 18.8% in 1997 from 20.5% in 1996.
Roughly one half of the total decline in margin dollars was due to lower sales
volume, while the balance of the decline reflects lower margin percentages in
the Company's cement mixer and service parts business. These lower margins
reflect a change in sales mix toward products with lower margins.
Selling, general, and administrative expenses declined by $599,000 (8.5%) to
$6,435,000 in the first nine months of 1997 from $7,034,000 in the same period
last year. Of the total spending reduction, about $545,000 resulted from lower
spending on salaries and employee benefits, and reflects the impact of lower
levels of average employment in 1997 compared to 1996.
Interest expense declined by $150,000 (22.4%) to $519,000 in the first nine
months of 1997 compared to $669,000 in the same period one year ago. The
reduction reflects lower average borrowing levels in 1997 compared to 1996.
Other income and expense changed to $56,000 of expense in 1997 from $63,000 of
income in 1996. The 1997 amounts include $97,000 of expense associated with
dealer interest subsidy programs; there were no comparable expenses in the same
period in 1996.
During the third quarter of 1996 the Company recorded an extraordinary gain on
the early retirement of debt of $214,000 (net of income taxes of $129,000).
This gain arose after the Company reached an agreement with the former owners
of its material reduction grinder product line to accept a payment of $860,000
in full satisfaction of the Company's obligation to make future payments under
the terms of a non-competition agreement. Those obligations had been recorded
on the Company's books at $1,203,000, resulting in a pre-tax
12
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REXWORKS INC.
gain of $343,000 and an net-of-tax gain of $214,000. There was no comparable
item in 1997.
The provision for income tax expense was recorded at effective rates of
approximately 38% in both 1997 and 1996. Changes in tax expense are largely
the result of changes in the level of pre-tax income.
Forward Looking Statements
The forward-looking statements, or statements based on the Company's belief,
expectation, or opinion in this report are subject to many uncertainties. The
Company's actual results may differ materially from those described in the
forward-looking or other statements. Factors which could cause such a variance
to occur include, but are not limited to, changes in general economic
conditions in the geographical areas and market segments that the Company is
targeting for its products, access to sufficient debt or equity capital to meet
the Company's operating and financial needs, the inherent uncertainty of
litigation involving the Company's products, and the quality or price of
similar or comparable products offered by the Company's competitors.
13
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REXWORKS INC.
PART II OTHER INFORMATION
Item 5. Other
The Company has entered into a definitive agreement providing for the sale of
certain assets of the Company's compactor and material reduction grinder
business segments to CMI Corporation (NYSE - CMX). The Company has also
entered into a separate definitive agreement whereby, subsequent to the sale of
certain assets to CMI Corporation, a wholly owned subsidiary of Giuffre Bros.
Cranes, Inc. would be merged into the Company. The net proceeds of these
transactions, which the Company currently estimates to be approximately $5.00
to $5.25 per share after transaction-related expenses, would be distributed to
shareholders. Both transactions are expected to close in mid-December and are
subject to a number of conditions, including stockholder and regulatory
approval. There can be no assurances that these conditions will be satisfied
or that either of the transactions will be consummated on the terms currently
contemplated.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
------- ---------------------------------------
2.1 Asset Purchase Agreement dated as of
October 1, 1997 between the Company
and CMI Corporation.
2.2 Agreement and Plan of Merger dated as of
August 15, 1997 among the Company, GiuffRe
Bros. Cranes, Inc. and 13th Street
Acquisition Crop.
3.1 Restated Certificate of Incorporation.1
3.2 By-laws of Company, as amended.1
27 Financial Data Schedule
-----------------------
1 Incorporated herein by reference to the Company's Registration
Statement on Form S-18, Registration Number 33-12488
effective April 21, 1987.
(b) Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REXWORKS INC.
November 3, 1997 /s/ Thomas D. Lauerman
- -------------------- ------------------------------
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REXWORKS INC.
Date Thomas D. Lauerman
Vice President
and Chief Financial Officer
November 3, 1997 /s/ Laurance R. Newman
- ----------------------- ------------------------------
Date Laurance R. Newman
President and Chief
Executive Officer
15
<PAGE> 1
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CMI CORPORATION
AND
REXWORKS INC.
OCTOBER 1, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
TRANSFER OF ASSETS
1.01 Purchase and Sale of Assets................................. 1
1.02 Excluded Assets............................................. 2
ARTICLE II
LIABILITIES
2.01 Assumed Liabilities......................................... 3
2.02 Excluded Liabilities........................................ 3
2.03 Right to Contest............................................ 3
ARTICLE III
PURCHASE PRICE
3.01 Consideration............................................... 3
3.02 Amount and Payment of Purchase Price........................ 3
3.03 Closing Date Balance Sheet.................................. 4
3.04 Allocation of Purchase Price................................ 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.01 Organization and Qualification; Subsidiaries................ 5
4.02 Authority; Vote Required.................................... 5
4.03 No Conflict; Required Filings and Consents.................. 5
4.04 Permits; Compliance......................................... 6
4.05 Absence of Certain Changes or Events........................ 6
4.06 Absence of Litigation....................................... 7
4.07 Contracts; No Default....................................... 7
4.08 Intellectual Property Rights................................ 8
4.09 Insurance................................................... 9
4.10 Brokers..................................................... 9
4.11 Title to Properties......................................... 9
4.12 Proxy Statement............................................. 9
4.13 Inventory................................................... 9
4.14 Condition of Purchased Assets............................... 9
4.15 Accounts Receivable......................................... 10
4.16 Major Customers and Suppliers............................... 10
4.17 Product Warranty............................................ 10
4.18 Legal Compliance............................................ 10
4.19 Excluded Assets............................................. 10
4.20 Assigned Contracts.......................................... 10
4.21 Product Liability........................................... 10
4.22 Employee Benefit Plans; Labor Matters....................... 10
4.23 Taxes....................................................... 11
4.24 Environmental, Health and Safety............................ 11
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
5.01 Organization and Qualification.............................. 12
5.02 Authority................................................... 12
5.03 No Conflict; Required Filings and Consents.................. 13
5.04 Brokers..................................................... 13
5.05 Financing................................................... 13
ARTICLE VI
COVENANTS
6.01 Affirmative Covenants of Seller............................. 13
6.02 Negative Covenants of Seller................................ 14
6.03 Confidentiality Agreement................................... 14
6.04 Acquisition Proposals....................................... 14
6.05 Merger Agreement............................................ 15
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Proxy Statement............................................. 15
7.02 Meeting of Stockholders..................................... 16
7.03 Appropriate Action; Consents; Filings....................... 16
7.04 Update Disclosure........................................... 17
ARTICLE VIII
CLOSING
8.01 Closing..................................................... 17
ARTICLE IX
CLOSING CONDITIONS
9.01 Conditions to Obligations of Each Party Under This
Agreement................................................... 17
9.02 Additional Conditions to Obligations of Purchaser........... 18
9.03 Additional Conditions to Obligations to Seller.............. 20
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.01 Termination................................................. 21
10.02 Effect of Termination....................................... 22
10.03 Expenses.................................................... 22
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification by Seller................................... 23
11.02 Indemnification by Purchaser................................ 23
11.03 Arbitration Procedures...................................... 23
11.04 Matters Involving Third Parties............................. 25
</TABLE>
ii
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE XII
GENERAL PROVISIONS
12.01 Non-Survival of Representations and Warranties.............. 25
12.02 Notices..................................................... 26
12.03 Amendment................................................... 26
12.04 Waiver...................................................... 27
12.05 Headings.................................................... 27
12.06 Severability................................................ 27
12.07 Entire Agreement............................................ 27
12.08 Assignment.................................................. 27
12.09 Parties in Interest......................................... 27
12.10 Governing Law............................................... 27
12.11 Counterparts................................................ 27
12.12 Press Releases and Public Announcements..................... 27
12.13 Construction................................................ 28
12.14 Employees................................................... 28
12.15 WARN........................................................ 28
12.16 Access...................................................... 28
12.17 Bulk Sales.................................................. 28
12.18 Litigation Support.......................................... 28
12.19 Use of Marketing Materials.................................. 28
12.20 Further Assurances.......................................... 28
EXHIBITS
Exhibit A Balance Sheet of the Divisions as of June 28, 1997
Exhibit B General Bill of Sale
Exhibit C Assignment and Assumption Agreement
INDEX OF SCHEDULES
<CAPTION>
SCHEDULE DESCRIPTION
- -------- -----------
<S> <C>
1.01(a) Personal Property
1.01(b) Assigned Contracts
1.01(c) Vehicles
1.01(d) Intangible Assets
1.01(e) Licenses and Permits
1.01(i) Prepaid Items
1.01(k) Additional Personal Property
1.02(b) Excluded Real Property
1.02(g) Other Excluded Assets
2.01(e) Other Assumed Liabilities
4.00(a) Changes or Events Which Shall Not Constitute a Seller
Material Adverse Effect
4.00(b) Persons With Knowledge
4.01(a) Organization and Qualification
4.01(b) Subsidiaries
4.03(a) Consents, Approvals, Authorizations or Permits
4.04 Permits; Compliance
4.05 Absence of Certain Changes or Events
4.06(a) Litigation
4.06(b) Orders, Decrees, etc.
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
- -------- -----------
<C> <S>
4.07 Contracts
4.08 Intellectual Property Rights
4.09 Insurance
4.13 Inventory
4.14 Condition of the Purchased Assets
4.15 Accounts Receivable
4.16 Customers and Suppliers
4.17 Product Warranty
4.19 Excluded Assets
4.20 Assigned Contracts
4.21 Product Liability
4.22 Employee Benefit Plans; Labor Matters
4.23 Taxes
9.02(c) Third Party Consents
</TABLE>
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of October 1, 1997 (the
"Agreement"), is made and entered into between CMI CORPORATION, an Oklahoma
corporation ("Purchaser"), and REXWORKS INC., a Delaware corporation ("Seller").
RECITALS
A. Seller operates, among other things, two divisions which are engaged in
the business of manufacturing and selling landfill and embankment compactors and
material reduction grinders (the "Divisions").
B. Seller desires to sell to Purchaser and Purchaser desires to buy from
Seller substantially all assets and rights of Seller relating to the Divisions
on the terms and conditions set forth in this Agreement (the "Asset Sale").
AGREEMENTS
In consideration of the premises and the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I
TRANSFER OF ASSETS
1.01 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, Seller agrees to sell and deliver to Purchaser and Purchaser
agrees to purchase from Seller as of the Closing Date all of Seller's right and
title to and interest in all of the following assets, properties and rights (the
"Purchased Assets") relating to the Divisions (but expressly excluding therefrom
the Excluded Assets):
(a) Personal Property. All machinery, equipment, leasehold
improvements, supplies, tools, fixtures, spare parts, furniture,
furnishings and other personal property listed on Schedule 1.01(a)
("Personal Property").
(b) Contracts and Leases. All rights of Seller under (including,
without limitation, all Seller's right to receive goods and services and to
assert claims and to take other action with respect to breaches, defaults
and other violations pursuant to) the contracts and leases listed on
Schedule 1.01(b) (the "Assigned Contracts").
(c) Vehicles. All automobiles, trucks, trailers, automotive equipment
and other vehicles owned or leased by Seller and listed on Schedule 1.01(c)
(the "Vehicles").
(d) Intangible Assets. All of Seller's and its Subsidiaries'
intangible assets solely relating to the Divisions or used exclusively in
the operation of the Divisions (collectively, the "Intangible Assets")
including, without limitation, all of the following Intangible Assets to
the extent that they relate solely to the Divisions or are used exclusively
in the operation of the Divisions: (i) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof, (ii) all trademarks,
service marks, trade dress, logos, tradenames and corporate names, together
with all translations, adaptations, derivations and combinations thereof
and including all goodwill associated therewith, and all applications,
registrations and renewals in connection therewith, (iii) all copyrightable
works, all copyrights and all applications, registrations and renewals in
connection therewith, (iv) all mask works and all applications,
registrations and renewals in connection therewith, (v) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information
and business and marketing plans and proposals), (vi) all
<PAGE> 7
assignable computer software (including data and related documentation),
(vii) all data bases, compilations and directories (in whatever form or
medium), (viii) all copies and intangible embodiments thereof (in whatever
form or medium), and (ix) all Intangible Assets listed on Schedule 1.01(d).
(e) Licenses and Permits. All of Seller's rights in all government
licenses, approvals, permits and authorizations (and all applications,
registrations and renewals for the foregoing) listed on Schedule 1.01(e)
("Licenses and Permits").
(f) Inventory. All of Seller's inventories, spare parts and supplies
solely relating to the Divisions and all such items that Seller has ordered
but not physically received by the Closing Date ("Inventory").
(g) Records and Documents. All records, computer software and
documents, books, customer and member lists, sales leads and all other
sales and marketing information, credit information and correspondence,
plans and specifications, drawings and all other records and documents used
exclusively by Seller in connection with the operation of the Divisions
("Documents").
(h) Accounts and Notes Receivable. All of Seller's accounts and notes
receivable relating solely to the Divisions ("Accounts Receivable").
(i) Prepaids. All prepaid rents, utilities, deposits and other prepaid
items listed on Schedule 1.01(i).
(j) Certain Claims. All rights to causes of action, suits,
proceedings, judgments, claims and demands of any nature, whenever maturing
or asserted, solely relating to or arising directly out of (a) the
Purchased Assets, (b) the Assumed Liabilities, or (c) the operations of the
Divisions (or either of them).
(k) Additional Personal Property. At Purchaser's option, which may be
exercised by providing written notice to Seller not less than 10 days prior
to the Closing Date, Seller will replace each of the assets listed on
Schedule 1.01(k) with comparable used equipment of equal or better quality
and include such replacement equipment in the Purchased Assets without an
increase in the Net Value (as defined in section 3.03). The book value of
the equipment listed on Schedule 1.01(k) shall be included in the
calculation of the Net Value regardless of whether Purchaser exercises its
option with respect to replacement equipment pursuant to this section
1.01(k).
To the extent that any Purchased Asset is not assignable without the
consent of another person or entity, and to the extent such consent is not
obtained prior to Closing, this Agreement shall, subject to the rights of
any such person or entity, constitute an assignment of Seller's interest in
such Purchased Asset. Seller agrees, at its expense, to use its reasonable
best efforts to obtain the consent of such other person or entity to the
assignment of any such Purchased Asset to the Purchaser.
1.02. Excluded Assets. There shall be excluded from sale by Seller under
this Agreement all assets, properties and rights of Seller other than the
Purchased Assets specifically identified in section 1.01 above (the "Excluded
Assets"). The Excluded Assets shall include, without limitation, the following:
(a) Mixer Assets. All of Seller's right and title to and interest in
all assets, properties and rights relating to the Seller's division which
is engaged in the business of manufacturing and selling concrete mixers.
(b) Real Property. Seller's interest in the real estate listed on
Schedule 1.02(b).
(c) Cash. All cash (currency and coin), negotiable instruments,
securities, bank deposits and similar cash equivalents on hand at the
Closing Date ("Cash").
(d) Certain Contracts. All rights of Seller under any contracts,
agreements or commitments other than the Assigned Contracts specifically
identified on Schedule 1.01(b).
(e) Certain Claims. All rights to causes of action, suits,
proceedings, judgments, claims and demands of any nature, whenever maturing
or asserted, relating to or arising directly out of the Excluded Assets or
the Excluded Liabilities.
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<PAGE> 8
(f) Corporate Records. All corporate records, including but not
limited to, stockholder records, stock records, stock transfer journals,
board of directors and stockholder minutes, payroll and financial
information necessary for the preparation of Seller's tax returns and
satisfaction of other reporting requirements.
(g) Scheduled Assets. All assets listed on Schedule 1.02(g).
ARTICLE II
LIABILITIES
2.01 Assumed Liabilities. On the terms and subject to the conditions of
this Agreement, Purchaser shall, by written instrument, assume as of the Closing
Date and thereafter shall be obligated to pay and fully satisfy the liabilities
and obligations specifically identified below, and only such specifically
identified liabilities and obligations (collectively, the "Assumed
Liabilities"):
(a) The liabilities and obligations of Seller arising under the
Assigned Contracts.
(b) The liabilities of Seller for trade accounts payable solely
relating to the Divisions.
(c) Any and all liabilities and obligations of Seller arising from any
claims (whether known or unknown, asserted or unasserted, accrued or
unaccrued) with respect to any injury to individuals or property as a
result of the ownership, possession or use of any landfill and embankment
compactors or material reduction grinders manufactured by the Divisions
("Product Liabilities").
(d) Any and all liabilities and obligations of Seller arising from any
express or implied warranties (whether known or unknown, asserted or
unasserted, accrued or unaccrued) with respect to landfill and embankment
compactors or material reduction grinders manufactured by the Divisions
("Warranty Liabilities").
(e) The liabilities described on Schedule 2.01(e).
2.02 Excluded Liabilities. Notwithstanding anything to the contrary
contained in this Agreement, Purchaser will have no responsibility and will not
assume or be liable for any debts, liabilities or obligations of Seller or any
of its affiliates or any debts, liabilities or obligations of any kind or nature
relating to the respective businesses of Seller and its Subsidiaries, whenever
arising, and whether primary or secondary, direct or indirect, absolute or
contingent, contractual, tortuous or otherwise, other than the Assumed
Liabilities identified in section 2.01 above (all such liabilities other than
the Assumed Liabilities are collectively referred to as the "Excluded
Liabilities").
2.03 Right to Contest. The assumption and agreement of Purchaser to pay the
Assumed Liabilities when due will not prohibit Purchaser from contesting with
the obligee, in good faith and at Purchaser's expense, the amount, validity or
enforceability of any of the Assumed Liabilities.
ARTICLE III
PURCHASE PRICE
3.01 Consideration. In consideration of the sale, assignment, transfer and
conveyance of the Purchased Assets and the other undertakings of Seller in this
Agreement, and subject to the terms and conditions of this Agreement, Purchaser
shall (a) pay the Purchase Price as provided in this Article III, and (b) assume
the Assumed Liabilities as of the Closing Date as provided in section 2.01
above.
3.02 Amount and Payment of Purchase Price. The purchase price for the
Purchased Assets (the "Purchase Price") shall equal the sum of (a) the Net Value
(as defined in section 3.03 below), and (b) $3,167,000. At Closing, Purchaser
shall pay the Purchase Price to Seller by wire transfer of immediately available
funds.
3
<PAGE> 9
3.03 Closing Date Balance Sheet.
(a) Prior to Closing, the parties will cooperate in preparing a
balance sheet dated as of the Closing Date (the "Closing Date Balance
Sheet") reflecting the amount by which the value of the Purchased Assets as
of the Closing Date exceeds the Assumed Liabilities as of the Closing Date
(the "Net Value"). Purchaser and Seller agree that the Closing Date Balance
Sheet will be prepared in a manner consistent with the balance sheet as of
June 28, 1997 attached hereto as Exhibit A and will reflect an update of
the Preliminary Balance Sheet (as defined in Section 3.03(b) below).
Purchaser and Seller will endeavor in good faith to resolve any disputes in
the determination of the Net Value and the preparation of the Preliminary
Balance Sheet and the Closing Date Balance Sheet.
(b) Seller shall take a physical inventory (the "Closing Inventory")
of the Divisions as of the last day of the most recent month that is not
more than 30 days prior to the Closing Date (or such other date as Seller
and Purchaser shall mutually agree) and will prepare a preliminary balance
sheet as of the date of the Closing Inventory (the "Preliminary Balance
Sheet") reflecting the value of the Purchased Assets and the Assumed
Liabilities as of the date of the Preliminary Balance Sheet. Purchaser and
its representatives will have the right to participate in the taking of the
Closing Inventory. Not less than five days prior to Closing, Seller will
deliver a copy of the Preliminary Balance Sheet to Purchaser for its
review. Seller and Purchaser will cooperate to determine a method
reasonably acceptable to each party to make adjustments to and update the
Preliminary Balance Sheet for purposes of preparing the Closing Date
Balance Sheet.
3.04 Allocation of Purchase Price. The Purchase Price shall be assigned and
allocated to the Purchased Assets in the manner mutually agreed upon by the
parties. Purchaser and Seller agree to reflect such allocations in all reports
to governmental authorities, including, without limitation, with respect to all
taxes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The term "Seller Material Adverse Effect" as used in this Agreement shall
mean any change or effect that, individually or when taken together with all
other changes or effects, is materially adverse to the condition (financial or
otherwise), results of operations, businesses, properties, assets, or
liabilities of Seller relating to the Divisions; provided, however, that the
occurrence of any or all of the changes or events described on Schedule 4.00(a)
shall not, individually or in the aggregate, constitute a "Seller Material
Adverse Effect."
The term "Person" as used in this Agreement shall mean an individual,
corporation, partnership, association, trust, limited liability company,
unincorporated organization, other entity or group (as defined in section 13(d)
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act")).
The term "Affiliate" as used in this Agreement shall mean, with respect to
any Person, a Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
first mentioned Person. The term "control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
The term "Subsidiary" (or its plural) as used in this Agreement with
respect to Seller, Purchaser or any other Person shall mean any corporation,
partnership, joint venture or other legal entity of which Seller, Purchaser or
such other Person, as the case may be (either alone or through or together with
any other Subsidiary), owns, directly or indirectly, greater than 50% of the
stock or other equity interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
4
<PAGE> 10
With respect to any representation, warranty or statement of Seller in this
Agreement that is qualified by or to Seller's knowledge, such knowledge shall be
deemed to exist only if, at the time as of which such representation, warranty
or statement was made, any of the individuals listed on Schedule 4.00(b) had
actual knowledge, after reasonable investigation, of the matter to which such
qualification applies.
Except as set forth in the disclosure schedules delivered by Seller to
Purchaser prior to the execution of this Agreement, Seller represents and
warrants to Purchaser that the statements contained in this Article IV are true
and correct as of the date of this Agreement. The disclosure of any matter in
the disclosure schedules shall not necessarily be deemed an indication that such
matter is material or is required to be disclosed.
4.01 Organization and Qualification; Subsidiaries. Except as set forth on
Schedule 4.01(a), Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and is duly qualified and in
active status in each jurisdiction in which the nature of the business conducted
by it or the ownership or leasing of its properties makes such qualification
necessary, except such jurisdictions if any, where the failure to be so
qualified would not have a Seller Material Adverse Effect. A true and complete
list of all Seller's directly or indirectly owned Subsidiaries together with the
jurisdiction of incorporation or organization of each Subsidiary and the
percentage of each Subsidiary's outstanding capital stock or other equity
interest owned by Seller or another Subsidiary of Seller, is set forth on
Schedule 4.01(b).
4.02 Authority; Vote Required.
(a) Seller has the requisite corporate power and authority to execute
and deliver this Agreement, to perform its obligations under this Agreement
and to consummate the transactions contemplated by this Agreement, subject
to required approval of the holders of the common stock, par value $.12 per
share, of Seller ("Seller Common Stock"). The execution and delivery of
this Agreement by Seller and the consummation by Seller of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action, including such corporate action as may be required by
section 271 of the Delaware General Corporation Law (the "Delaware Law"),
and no other corporate proceedings on the part of Seller are necessary to
authorize this Agreement or to consummate the transactions contemplated by
this Agreement (other than with respect to the approval of this Agreement
by the holders of Seller Common Stock in accordance with the Delaware Law
and Seller's Certificate of Incorporation and By-Laws). This Agreement has
been duly executed and delivered by Seller and constitutes the valid and
binding obligation of Seller, enforceable against Seller in accordance with
its terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws relating to or affecting the rights and remedies of
creditors generally and by general principles of equity including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific performance, injunctive
relief or other equitable remedies, regardless of whether enforceability is
considered in a proceeding in equity or at law.
(b) The affirmative vote of the holders of at least a majority of the
outstanding shares of Seller Common Stock is the only vote of the holders
of any class or series of capital stock of Seller necessary to approve the
Asset Sale.
4.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Seller do not, and
the performance of this Agreement by Seller will not: (i) violate the
Certificate of Incorporation or By-Laws of Seller or any of its
Subsidiaries; (ii) subject to (x) obtaining the requisite approval of this
Agreement by the holders of at least a majority of the outstanding shares
of Seller Common Stock in accordance with the Delaware Law and Seller's
Certificate of Incorporation and By-Laws, (y) obtaining the consents,
approvals, authorizations and permits of, and making filings with or
notifications to, any governmental or regulatory authority, domestic or
foreign ("Governmental Entities"), pursuant to the applicable requirements,
if any, of the Exchange Act, the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules
5
<PAGE> 11
and regulations thereunder (the "HSR Act"), the applicable provisions of
the Delaware Law, and the requirements of the National Association of
Securities Dealers, Inc. ("NASD") or the NASDAQ National Market System, and
(z) giving the notices and obtaining the consents, approvals,
authorizations or permits described on Schedule 4.03(a), violate any
constitution, statute, regulation, rule, injunction, decree, ruling,
judgment, order or other restriction of any Governmental Entity or court to
which Seller or any of its Subsidiaries is subject or by which any of their
respective properties is bound, other than a potential violation under any
federal or state antitrust or similar laws, rules or regulations; or (iii),
except as set forth on Schedule 4.03(a), result in any material breach of
or constitute a material default (or an event that with notice or lapse of
time or both would become a material default) under, or give to any Person
any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the properties or
assets of Seller or any of its Subsidiaries, or require any notice pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument, arrangement or obligation
to which Seller or any of its Subsidiaries is a party or by which Seller or
any of its Subsidiaries or any of their respective properties is bound.
(b) The execution and delivery of this Agreement by Seller do not, and
the performance of this Agreement by Seller shall not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any Governmental Entity, except for applicable requirements, if any, of (i)
the Exchange Act, the HSR Act, and the requirements of the NASD and the
NASDAQ National Market System, and (ii) the consents, approvals,
authorizations or permits described on Schedule 4.03(a).
4.04 Permits; Compliance. Except as set forth on Schedule 4.04, Seller is
in possession of all franchises, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary
for Seller or any of its Subsidiaries to own, lease and operate its properties
or to carry on the business of the Divisions as it is now being conducted (the
"Seller Permits"), except for any Seller Permits the absence of which would not
have a Seller Material Adverse Effect. No suspension, revocation or cancellation
of any of the Seller Permits is pending or, to the knowledge of Seller, is
threatened. Neither Seller nor any of its Subsidiaries is operating in material
default under or material violation of (i) any constitution, statute,
regulation, rule, injunction, decree, ruling, judgment, order or other
restriction of any Governmental Entity or court to which Seller or any of its
Subsidiaries is subject or by which any of their respective properties is bound
or (ii) any of the Seller Permits.
4.05 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.05 or as contemplated by this Agreement, since December 31, 1996:
(a) Seller conducted the business of the Divisions in the ordinary
course and consistent with Seller's past practice;
(b) there has not been any Seller Material Adverse Effect;
(c) there has not been any change in the accounting methods or
practices followed by Seller or any Subsidiary, except as required by
generally accepted accounting principles ("GAAP");
(d) there has not been any sale, lease, transfer, assignment,
abandonment or other disposition of (including, without limitation, any
grant of an option or similar right to purchase) any asset which would be a
Purchased Asset other than for a fair consideration in the ordinary course
of business;
(e) Seller has not entered into any material transaction with any of
its officers, directors or employees;
(f) No party (including any of Seller and its Subsidiaries) has
accelerated, terminated, modified or canceled (prior to the expiration of
its term) any material agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses) relating to the
business of the Divisions and to which any of Seller and its Subsidiaries
is a party or by which any of its assets is bound;
(g) None of Seller and its Subsidiaries has delayed or postponed the
payment of accounts payable or other liabilities of any kind or nature
relating to the Divisions or the Purchased Assets outside the ordinary
course of business;
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<PAGE> 12
(h) None of Seller and its Subsidiaries has canceled, compromised,
waived, or released any right or claim (or series of related rights and
claims) relating to the Divisions or the Purchased Assets outside the
ordinary course of business;
(i) None of Seller and its Subsidiaries has granted any license or
sublicense of any rights under or with respect to any Intangible Assets;
(j) None of Seller and its Subsidiaries has experienced any damage,
destruction or loss (whether or not covered by insurance) to any material
assets of the Divisions, ordinary wear and tear excepted;
(k) None of Seller and its Subsidiaries has granted any increase in
the base compensation of, or made any other change in the employment terms
for, any employees of the Divisions outside the ordinary course of
business;
(l) None of Seller and its Subsidiaries has adopted, amended, modified
or terminated any bonus, profit-sharing, incentive, severance or other
plan, contract or commitment for the benefit of any of the employees of the
Divisions (or taken any such action with respect to any other employee
benefit plan);
(m) None of Seller and its Subsidiaries has sold or otherwise
transferred any Intangible Asset; and
(n) neither Seller nor any Subsidiary has entered into any commitment
or other agreement to do any of the foregoing.
4.06 Absence of Litigation.
(a) Schedule 4.06(a) lists all claims, actions, suits, litigation, or
arbitrations or, to the knowledge of Seller, investigations or proceedings
relating to the Divisions (or either of them) or any of the Purchased
Assets, at law or in equity, which are pending or, to the knowledge of
Seller, threatened, and which involve in excess of $25,000. There is no
action pending seeking to enjoin or restrain any of the transactions
contemplated by this Agreement.
(b) Except as set forth on Schedule 4.06(b), neither Seller nor any of
its Subsidiaries is subject to any continuing order of, consent decree,
settlement agreement or other similar agreement (oral or written) with or,
to the knowledge of Seller, continuing investigation by, any Governmental
Entity with respect to the business of the Divisions.
4.07 Contracts; No Default.
(a) Schedule 4.07 lists:
(i) each contract or agreement to which Seller or any of its
Subsidiaries is a party concerning a partnership, joint venture or
similar arrangement with another Person or materially limiting the right
of Seller or any of its Subsidiaries prior to the Closing Date, or
Purchaser or any of its Subsidiaries at or after the Closing Date, to
engage in, or to compete with any Person in, any business of the
Divisions including each contract or agreement containing exclusivity
provisions restricting the geographical area in which, or the method by
which, any business may be conducted by Seller or any of its
Subsidiaries prior to the Closing Date, or by the Purchaser or any of
its Subsidiaries after the Closing Date;
(ii) each distributorship or other dealer or distribution agreement
which Seller or any of its Subsidiaries is a party relating to the
Divisions or any of the products manufactured or sold by either of the
Divisions;
(iii) each contract relating to the Divisions or the Purchased
Assets that would be required to be filed pursuant to Item 601(10) of
Regulation S-K under the Securities Act if Seller were filing a
Registration Statement on Form S-1 on the date of this Agreement.
(b) None of the distributors or former distributors identified in
Schedule 4.07 paid to Seller any fee or other consideration of any kind for
the right to become a distributor of any products manufactured by Seller.
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<PAGE> 13
4.08 Intellectual Property Rights.
(a) To the knowledge of Seller, (i) Seller owns or has the right to
use pursuant to license, sublicense or other agreement all Intangible
Assets, without any conflict or alleged conflict with the rights of any
other Person, and (ii) Seller has taken all necessary action to maintain
and protect each Intangible Asset. Each Intangible Asset owned or used by
Seller immediately prior to the Closing hereunder will be owned or
available for use by Purchaser on substantially similar terms and
conditions immediately subsequent to the Closing hereunder.
(b) To the knowledge of Seller, with respect to the operation of the
Divisions, none of Seller and its Subsidiaries has infringed upon or
misappropriated any intellectual property rights of third parties, and none
of Seller and the directors and officers (and employees with responsibility
for intellectual property matters) of Seller and its Subsidiaries has
received any charge, complaint, claim, demand or notice alleging any such
infringement or misappropriation (including any claim that any of Seller
and its Subsidiaries must license or refrain from using any intellectual
property rights of any third party). To the knowledge of Seller, no third
party has infringed upon or misappropriated in any material respect any
intellectual property rights included in the Intangible Assets.
(c) Schedule 4.08(c) identifies each patent or registration which has
been issued to Seller with respect to any of the Intangible Assets,
identifies each pending patent application or application for registration
which Seller has made with respect to any of the Intangible Assets,
identifies each copyright, trade name, service name, unregistered trademark
and unregistered service mark used by Seller in connection with the
operation of the Divisions and the manufacture, marketing and distribution
of the products manufactured by the Divisions and identifies each license,
agreement or other permission which Seller has granted to any third party
with respect to any of its Intangible Assets (together with any
exceptions). Seller has made available to Purchaser correct and complete
copies of all such patents, registrations, applications, licenses,
agreements and permissions (as amended to date) and all other written
documentation evidencing ownership and prosecution (if applicable) of each
such item. With respect to each Intangible Asset required to be identified
in Schedule 4.08(c), except as set forth on Schedule 4.08(c):
(i) Seller possesses all right, title and interest in and to the
Intangible Asset, free and clear of any security interest, lien,
license, or other encumbrance;
(ii) the Intangible Asset is not subject to any outstanding
injunction, judgment, order, decree or ruling;
(iii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the knowledge of Seller, is
threatened which challenges the legality, validity, enforceability, use
or ownership of the Intangible Asset; and
(iv) none of Seller and its Subsidiaries has ever agreed to
indemnify any Person for or against any infringement or misappropriation
with respect to the Intangible Asset.
(d) Schedule 4.08(d) identifies each Intangible Asset that any third
party owns and that Seller and its Subsidiaries use in the operation of the
Divisions pursuant to license, sublicense, agreement or permission. Seller
has made available to Purchaser correct and complete copies of all such
licenses, sublicenses, agreements and permissions (as amended to date).
With respect to each Intangible Asset required to be identified in Schedule
4.08(d), except as set forth on Schedule 4.08(d):
(i) the license, sublicense, agreement or permission covering the
Intangible Asset is legally valid, binding, enforceable and in full
force and effect;
(ii) the license, sublicense, agreement or permission will continue
on substantially similar terms following the consummation of the
transaction contemplated hereby;
(iii) Seller is not in breach or default of the license,
sublicense, agreement or permission and has not repudiated any
provisions thereof;
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(iv) to Seller's knowledge, no other party to the license,
sublicense, agreement or permission is in breach or default or has
repudiated any provision thereof and no event has occurred which with
notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder;
(v) with respect to each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are true and
correct with respect to the underlying license;
(vi) the underlying Intangible Asset is not subject to any
outstanding injunction, judgment, order, decree, ruling or charge;
(vii) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or, to the knowledge of Seller, is
threatened which challenges the legality, validity or enforceability of
the underlying Intangible Asset; and
(viii) none of Seller and its Subsidiaries has granted any
sublicense or similar right with respect to the license, sublicense,
agreement or permission.
4.09 Insurance. All policies and binders of insurance for professional
liability, directors and officers, property and casualty, fire, liability,
worker's compensation and other customary matters held by or on behalf of Seller
or its Subsidiaries ("Insurance Policies") are identified on Schedule 4.09 and
have been made available to Purchaser. The Insurance Policies are in full force
and effect. To the knowledge of Seller, neither Seller nor any of its
Subsidiaries has failed to give any notice of any claim under any Insurance
Policy in due and timely fashion, nor to the knowledge of Seller, has any
coverage for claims been denied, which failure or denial has had or would have a
Seller Material Adverse Effect.
4.10 Brokers. No broker, finder or investment banker other than ABN AMRO
Chicago Corporation is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon any arrangements made by or on behalf of Seller.
4.11 Title to Properties. Seller has or will have at Closing good and
marketable title to, or a valid leasehold or contractual interest in, all
Purchased Assets, free and clear of all mortgages, liens, security interests,
rights of first refusal, easements or other similar encumbrances ("Liens"),
except Liens (a) for taxes not yet due and payable, or (b) which relate to any
of the Assumed Liabilities.
4.12 Proxy Statement. The definitive Proxy Statement and related materials
will comply with the Exchange Act in all material respects. The definitive proxy
materials will not contain an untrue statement of material fact or omit a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they will be made, not misleading; provided,
however, that Seller makes no representation or warranty with respect to any
information that the Purchaser supplies to Seller in writing for use in
connection with such proxy materials.
4.13 Inventory. The Inventory consists of raw materials and supplies,
manufactured and purchased parts, goods in process and finished goods, all of
which are merchantable and fit for the purpose for which they were procured or
manufactured, subject only to the reserve for inventory writedown set forth on
the balance sheet attached hereto as Exhibit A (as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice of
the Divisions). Except as described on Schedule 4.13, no Inventory has been
consigned to others. The quantity of Inventory is sufficient and adequate for,
but is not materially in excess of the level appropriate to, the conduct of the
business of the Divisions as it previously has been conducted. Seller has not
made any purchase commitments in excess of normal, ordinary and usual
requirements.
4.14 Condition of Purchased Assets. No maintenance outside the ordinary
course of business is needed with respect to the Purchased Assets. None of the
Purchased Assets or other assets owned, leased, occupied or operated by Seller
in connection with the business of the Divisions, or the ownership, leasing or
operation thereof, is in violation of any law, ordinance, code, rule or
regulation. Except as set forth on Schedule 4.14, the Purchased Assets are in
all respects in good condition and working order (reasonable wear and tear
excepted) and are adequate, in quality and quantity, for the operation of the
business of the Divisions.
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4.15 Accounts Receivable. All Accounts Receivable of the Seller and those
existing as of the Closing Date represent valid claims for bona fide,
arms-length sales of goods and services actually made by Seller in the ordinary
course of its business. All of the Accounts Receivable are valid receivables
subject to no setoffs or counterclaims, and are current (within 180 days) and
collectible (or have been collected) in the ordinary course of business using
normal collection practices at the aggregate recorded amounts thereof, net of an
allowance for doubtful account in the amount of $83,800 as of August 23, 1997.
Schedule 4.15 sets forth an aging schedule of the Accounts Receivable as of
August 23, 1997, and such schedule is correct and complete in all material
respects.
4.16 Major Customers and Suppliers. Schedule 4.16 sets forth (a) a list of
the ten largest customers of the Divisions for each of the fiscal years ended
December 31, 1995 and December 31, 1996 (determined on the basis of the total
dollar amount of net revenues) showing the dollar amount of net revenues from
each such customer during each such year, (b) a list of the ten largest
suppliers of the Divisions in terms of dollar volume of purchases during such
fiscal years, and (c) a list as of a recent date of all purchase orders for
finished goods accepted by the Company with respect to products manufactured by
either of the Divisions.
4.17 Product Warranty. Schedule 4.17 sets forth a general description of
all warranty, guaranty and indemnity provisions provided by Seller with respect
to the business of the Divisions. There are no claims pending or, to Seller's
knowledge, threatened against Seller or any of its Subsidiaries for warranty
obligations relating to the business of the Divisions, except claims which in
the aggregate involve an amount that is consistent with Seller's past practice.
4.18 Legal Compliance. Each of the Divisions has complied in all material
respects with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder of
federal, state, local and foreign governments (and all agencies thereof)), and
no material action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand or notice has been filed or commenced against Seller or, to the
knowledge of Seller, threatened against Seller alleging any failure so to
comply.
4.19 Excluded Assets. Schedule 4.19 lists all material machinery, equipment
and intangible assets not included in the Purchased Assets that are used
primarily in the operation of the Divisions and the manufacture, marketing and
distribution of landfill and embankment compactors and material reduction
grinders.
4.20 Assigned Contracts. With respect to each Assigned Contract, except as
set forth on Schedule 4.20:
(a) the contract or lease is legal, valid, binding, enforceable and in
full force and effect;
(b) the benefits and burdens of such contract or lease will continue
on substantially similar terms following consummation of the transactions
contemplated hereby;
(c) Seller is not in breach or default under the contract or lease and
has not repudiated any provision of the contract or lease; and
(d) to Seller's knowledge, no other party is in breach or default
under the contract or lease, no other party has repudiated any provision of
the contract or lease, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification or acceleration under the contract or lease.
4.21 Product Liability. To the knowledge of Seller, except as set forth on
Schedule 4.21, there is no present (and Seller has no knowledge of any facts
which could reasonably be expected to result in any future) action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against
Seller or either of the Divisions giving rise to any liability arising out of
any injury to individuals or property as a result of the ownership, possession
or use of any product manufactured, sold, leased or delivered by either of the
Divisions.
4.22 Employee Benefit Plans; Labor Matters.
(a) Schedule 4.22(a) lists or describes any pension, retirement,
savings, disability, medical, dental, health, life (including any
individual life insurance policy as to which Seller is the owner,
beneficiary or
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both), death benefit, group insurance, profit sharing, deferred
compensation, stock option, bonus incentive, vacation pay, severance pay,
"cafeteria" or "flexible benefit" plan under section 125 of the Internal
Revenue Code of 1986 as amended (the "Code"), or other employee benefit
plan, trust, arrangement, contract, agreement, policy or commitment, under
which employees of Seller or its Subsidiaries are entitled to participate
by reason of their employment with Seller or its Subsidiaries, (i) to which
Seller or a Subsidiary is a party or a sponsor or a fiduciary thereof or
(ii) with respect to which Seller or a Subsidiary has made payments,
contributions or commitments, or has any liability (collectively, the
"Employee Benefit Plans").
(b) The Employee Benefit Plans have been operated and administered by
Seller in compliance in all material respects with all applicable laws
relating to employment or labor matters, including without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
the Code and all contributions required under such plans have been made as
required.
(c) Each Employee Benefit Plan that is intended to be tax qualified
under section 401(a) of the Code has received, or Seller has applied for or
will in a timely manner apply for, a favorable determination letter from
the Internal Revenue Service (the "IRS") stating that the Plan meets the
requirements of the Code and that any trust or trusts associated with the
plan are tax exempt under section 501(a) of the Code.
(d) Neither Seller nor any of its Subsidiaries maintains, and neither
Seller nor any of its Subsidiaries has maintained or contributed to, any
defined benefit plan covering employees of Seller or its Subsidiaries
within the meaning of section 3(35) of ERISA or any multiemployer plan.
(e) Schedule 4.22(e) sets forth a list of all written employment
agreements, employment contracts or understandings relating to employment
(other than relating to "at-will" employment) to which Seller or any of its
Subsidiaries is a party.
4.23 Taxes. Seller and its Subsidiaries have filed or caused to be filed
with the appropriate Governmental Entity, all federal, state, municipal, and
local income, franchise, excise, sales, real and personal property, and other
tax returns and reports that are required to be filed, and neither Seller nor
any of its Subsidiaries is delinquent in the payment of any material taxes shown
on such returns or reports or on any material assessments for any such taxes
received by it and has otherwise complied in all material respects with all
legal requirements applicable to Seller and its Subsidiaries with respect to all
income, sales, use, real or personal property, excise or other taxes. Except as
set forth on Schedule 4.23, neither Seller nor any of its Subsidiaries has
executed or filed with the Internal Revenue Service any agreement extending the
period for assessment and collection of any federal tax. Neither Seller nor any
of its Subsidiaries is a party to any pending action or proceeding, nor, to the
knowledge of Seller, has any action or proceeding been threatened, by any
Governmental Entity for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted against Seller or any of its
Subsidiaries. Each of Seller and its Subsidiaries has withheld and paid all
taxes required to have been withheld and paid in connection with all amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other third party.
4.24 Environmental, Health and Safety.
(a) To the knowledge of Seller, each of Seller, its Subsidiaries and
their respective predecessors and Affiliates has complied with all
Environmental, Health, and Safety Laws (defined below), and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against any of them alleging any
failure so to comply. Without limiting the generality of the preceding
sentence, to the knowledge of Seller, each of Seller, its Subsidiaries and
their respective predecessors and Affiliates has obtained and been in
compliance in all material respects with all of the terms and conditions of
all permits, licenses, and other authorizations which are required under,
and has complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety
Laws.
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(b) To the knowledge of Seller, none of Seller and its Subsidiaries
has any liability for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any
employee or other individual or for any reason under any Environmental,
Health and Safety Law.
(c) All properties and equipment used in the operation of the
Divisions have been free of asbestos, PCBs, methylene chloride,
trichloroethylene, 1,2-trans-dichloroethylene, dioxins, dibenzofurans, and
other hazardous substances or wastes.
(d) There is no pending audit known to Seller by any foreign, federal,
state, or local governmental authority with respect to groundwater, soil,
or air monitoring; the storage, burial, release, transportation, or
disposal of hazardous substances or wastes; or the use of underground
storage tanks by any of Seller, its Subsidiaries and their respective
predecessors and Affiliates or relating to the facilities of any of Seller,
its Subsidiaries and their respective predecessors and Affiliates. None of
Seller and its Subsidiaries has any agreement with any foreign, federal,
state, or local governmental authority or any other third party relating to
any such environmental matter or environmental cleanup.
(e) For purposes of this Agreement, the term "Environmental, Health,
and Safety Laws" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health Act of 1970,
each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state and local governments
(and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous,
or toxic materials or wastes into ambient air, surface water, groundwater
or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous. or toxic
materials or wastes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The term "Purchaser Material Adverse Effect" as used in this Agreement
shall mean any change or effect that, individually or when taken together with
all such other changes or effects, is materially adverse to the condition
(financial or otherwise), results of operations, business, properties, assets or
liabilities of Purchaser and its Subsidiaries, taken as a whole.
Purchaser represents and warrants to Seller that the statements contained
in this Article V are true and correct as of the date of this Agreement.
5.01 Organization and Qualification. Purchaser is a corporation, duly
incorporated, validly existing and in good standing under the laws of the State
of Oklahoma, and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted.
5.02 Authority. Purchaser has the requisite corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder, and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Purchaser, and the consummation by Purchaser of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by Purchaser and constitutes a legal, valid and binding obligation of
Purchaser enforceable against Purchaser in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
relating to or affecting the rights and remedies of creditors generally and by
general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific
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performance, injunctive relief or other equitable remedies, regardless of
whether enforceability is considered in a proceeding in equity or at law.
5.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not, (i) violate
the Certificate of Incorporation or By-Laws or equivalent organizational
documents of Purchaser, (ii) subject to obtaining the consents, approvals,
authorizations and permits of, and making filings with or notifications to,
any Governmental Entity pursuant to the applicable requirements, if any, of
the Exchange Act and the HSR Act, conflict with or violate any laws
applicable to Purchaser or by which any of its properties is bound or
affected, except such as would not have a Purchaser Material Adverse
Effect.
(b) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser shall not, require any
consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Entities, except as described in section
5.03(a) above.
5.04 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser.
5.05 Financing. Purchaser has the ability to and intends to finance the
aggregate of the Purchase Price pursuant to Article III with cash on hand and
utilization of existing credit facilities. Purchaser will use its best efforts
to ensure the continued availability of such financing and pay such amounts in
accordance with the terms of this Agreement and will not take any action between
the date hereof and the Closing Date which would impair its ability to obtain
such financing.
ARTICLE VI
COVENANTS
6.01 Affirmative Covenants of Seller. Seller covenants and agrees that
prior to the Closing Date, unless otherwise contemplated by this Agreement or
consented to in writing by Purchaser, Seller will and will cause each of its
Subsidiaries to:
(a) operate the Divisions in the ordinary course of business and
consistent with its past practice (provided, however, that Seller will not
cause or permit the Divisions to engage in any practice, take any action or
enter into any transaction of the sort described in Section 4.05 above);
(b) use reasonable efforts to preserve intact the Divisions and the
assets thereof, and maintain its rights and franchises, retain the services
of its respective officers and key employees and maintain the relationships
with its respective key customers, lessors, licensors and suppliers with
respect to the Divisions;
(c) subject to the provisions of the Purchaser Confidentiality
Agreement (as hereinafter defined), confer with Purchaser at its reasonable
request to report operational matters of a material nature relating to the
Divisions and to report the general status of the ongoing operations of the
Divisions;
(d) maintain compliance with all permits, laws, rules, regulations and
orders applicable to the Divisions; and
(e) maintain the Purchased Assets in good working order and condition,
ordinary wear and tear excepted.
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6.02 Negative Covenants of Seller. Except as contemplated by this Agreement
or consented to in writing by Purchaser, from the date of this Agreement until
the Closing Date, Seller shall not do, and shall not permit any of its
Subsidiaries to do, any of the following:
(a) increase the compensation payable to any employee of either of the
Divisions, except for increases in salary or wages payable or to become
payable in the ordinary course of business and consistent with the policies
currently in effect;
(b) enter into or establish any new compensation plan or employee
benefit plan;
(c) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other Person (other than the purchase of
assets from suppliers or vendors in the ordinary course of business and
consistent with Seller's past practice);
(d) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any assets of the Divisions, except for
dispositions of inventory and supplies in the ordinary course of business
and consistent with Seller's past practice;
(e) change any of its methods of accounting in effect at December 31,
1996 or make or rescind any express or deemed election relating to taxes,
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, or
change any of its methods of reporting income or deductions for federal
income tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending December 31, 1996, except in
either case as may be required by law, the IRS, or GAAP or in the ordinary
course of business consistent with past practice; provided, however, that
Seller shall immediately notify Purchaser of any such change or other
action;
(f) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except as approved by Purchaser in advance;
(g) guarantee any debts or obligations of any Person; or
(h) agree in writing or otherwise to do any of the foregoing.
6.03 Confidentiality Agreement. The parties will, and will cause their
respective officers, employees, accountants, consultants, legal counsel and
other representatives to, comply with all of their respective obligations under
the Confidentiality Agreement dated December 3, 1996 between Seller and
Purchaser concerning Seller's confidential information (the "Purchaser
Confidentiality Agreement").
6.04 Acquisition Proposals. Upon execution of this Agreement, Seller and
its Subsidiaries and their respective officers, directors, employees, agents and
advisors (a) will immediately cease any existing discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal
(as hereinafter defined), and (b) (except as described in the next sentence)
shall not participate in any new discussions or negotiations with respect to any
Acquisition Proposal. Seller may, directly or indirectly, furnish information
and access, in each case only in response to requests that were not solicited by
Seller (or any officer, director, employee, agent or advisor on its behalf)
after the date of this Agreement, to any corporation, partnership, person or
other entity or group (each, a "Potential Purchaser") pursuant to
confidentiality agreements, and may participate in discussions and negotiate
with a Potential Purchaser concerning any Acquisition Proposal, if such
Potential Purchaser has submitted a written proposal to the Board of Directors
relating to any such transaction, and the Board of Directors determines in good
faith after consultation with independent legal counsel that the failure to
provide such information or access or to engage in such discussions or
negotiations would be inconsistent with their fiduciary duties to Seller's
stockholders under applicable law. Seller shall notify Purchaser immediately if
any such request or proposal, or any inquiry or contact with any Person with
respect thereto, is made and shall keep Purchaser apprised of all developments
that could reasonably be expected to culminate in the Board withdrawing,
modifying or amending its
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recommendation of the Asset Sale and the other transactions contemplated by this
Agreement. Seller has entered into confidentiality agreements with other third
parties substantially in the form of the Purchaser Confidentiality Agreement.
Seller agrees not to release any third party from, or waive any provision of,
any confidentiality or standstill agreement to which Seller is a party unless,
in the opinion of the Board of Directors after consultation with independent
legal counsel, the failure to provide such release or waiver would be
inconsistent with its fiduciary duties to Seller's stockholders under applicable
law. For purposes of this section 6.04, the term "Acquisition Proposal" means
any proposal or offer for a merger, asset acquisition or other business
combination involving the acquisition, directly or indirectly, of the Divisions
or any assets of the Divisions.
6.05 Merger Agreement. Notwithstanding anything else in this Agreement to
the contrary, the parties agree that on or prior to the Closing Date Seller may
take such actions as are contemplated in the Agreement and Plan of Merger, dated
as of August 15, 1997 (the "Merger Agreement"), by and among Seller, Giuffre
Bros. Cranes, Inc. ("Giuffre") and 13th Street Acquisition Corp. ("Giuffre
Sub"). On the Closing Date, Seller may consummate the transactions contemplated
by the Merger Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.01 Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
Seller shall prepare and file with the SEC, and shall use all reasonable
efforts to have promptly cleared by the SEC, and promptly thereafter shall
mail to its stockholders, a proxy statement and a form of proxy
(collectively, the "Proxy Statement"), as may be amended and supplemented,
to be used in connection with the special meeting (the "Stockholders'
Meeting") of Seller's stockholders to consider the Asset Sale (the
"Stockholders' Meeting"). Seller shall provide Purchaser with a reasonable
opportunity to review and comment upon the Proxy Statement prior to its
filing with the SEC and distribution to Seller's stockholders, and
Purchaser shall use reasonable efforts to provide its comments thereon as
promptly as practicable after delivery of the Proxy Statement to Purchaser
and its legal counsel. Seller shall notify Purchaser promptly of the
receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for amendments or supplements to the Proxy
Statement and will supply Purchaser with copies of all correspondence
between Seller and its representatives, on the one hand, and the SEC or the
members of its staff, on the other hand, with respect to the Proxy
Statement. Seller and Purchaser shall each use reasonable efforts to obtain
and furnish information required to be included in the Proxy Statement; and
Seller, after consultation with Purchaser, shall use reasonable efforts
(and Purchaser agrees to reasonably cooperate with Seller in connection
therewith) to respond promptly to any comments made by the SEC with respect
to the Proxy Statement and cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time. Seller shall notify
Purchaser of its intention to mail the Proxy Statement to the stockholders
of Seller at least 48 hours prior to the intended time of such mailing. The
Proxy Statement shall include the recommendation of Seller's Board of
Directors in favor of the Asset Sale and approval of this Agreement, unless
independent outside legal counsel to Seller shall advise Seller's Board of
Directors and the directors' fiduciary duties under applicable law make
such recommendation inappropriate.
(b) The information included in the Proxy Statement shall not, at the
date the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to stockholders or at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. If at any time prior to the Stockholders'
Meeting, any event or circumstance relating to Seller or any of its
Subsidiaries, or its or their respective officers or directors, is
discovered by Seller which should be set forth in a supplement to the Proxy
Statement, Seller shall promptly inform Purchaser. All documents that
Seller is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Exchange Act.
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(c) Each of the parties will file (and Seller will cause each of its
Subsidiaries to file) any Notification and Report Forms and related
material that it may be required to file with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice under
the HSR Act, will use its reasonable best efforts to obtain (and Seller
will cause each of its Subsidiaries to use its reasonable best efforts to
obtain) an early termination of the applicable waiting period, and will
make (and Seller will cause each of its Subsidiaries to make) any further
filings pursuant thereto that may be necessary, proper, or advisable.
7.02 Meeting of Stockholders. As promptly as practicable after the
execution of this Agreement, Seller shall take all action necessary or
appropriate in accordance with the Delaware Law and its Certificate of
Incorporation and By-Laws to convene the Stockholders' Meeting, and Seller shall
consult with Purchaser in connection therewith. Seller shall use reasonable
efforts to solicit from the stockholders of Seller proxies in favor of the Asset
Sale and shall take all other actions necessary or advisable to secure the vote
or consent of stockholders required by the Delaware Law to approve this
Agreement, including the retention of proxy solicitation agents if requested by
Purchaser, unless otherwise required by the applicable fiduciary duties of
directors or officers of Seller.
7.03 Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions herein provided, Seller and
Purchaser shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do or cause to be done, all things
necessary, proper or advisable under applicable law or otherwise to
consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, (ii) obtain from all Governmental
Entities all consents, licenses or orders required to be obtained by
Purchaser or Seller or any of their respective Subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Asset Sale, and (iii) make all necessary
notifications and filings and thereafter make any other required
submissions with respect to this Agreement and the Asset Sale required
under (A) the Exchange Act and any other applicable federal or state
securities laws, (B) the HSR Act and (C) any other applicable law; provided
that Purchaser and Seller shall cooperate with each other in connection
with the making of all such filings. Seller and Purchaser shall furnish to
each other all information required for any application or other filing to
be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Proxy Statement)
in connection with the transactions contemplated by this Agreement.
(b) (i) Seller and Purchaser shall give (or cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause
their respective Subsidiaries to use, all reasonable efforts to obtain any
third-party consents, (A) necessary to consummate the transactions
contemplated in this Agreement, (B) disclosed or required to be disclosed
in the disclosure schedules to this Agreement, or (C) required to prevent a
Seller Material Adverse Effect from occurring prior to the Closing Date.
(ii) In the event that any party shall fail to obtain any third-party
consent described in subsection (b)(i) above, such party shall use
reasonable efforts, and shall take any such actions reasonably requested by
the other party to minimize any adverse effect upon the other party, its
Subsidiaries and its businesses resulting, or which could reasonably be
expected to result after the Closing Date, from the failure to obtain such
consent.
(c) From the date of this Agreement until the Closing Date, Seller
shall promptly notify Purchaser in writing of any pending or, to the
knowledge of Seller, threatened action, proceeding or investigation by any
Governmental Entity or any other Person (i) challenging or seeking damages
in connection with the Asset Sale, (ii) alleging that the consent of such
Governmental Entity or Person may be required in connection with the Asset
Sale or this Agreement, (iii) seeking to restrain or prohibit the
consummation of the Asset Sale or otherwise limit the right of Purchaser or
its Subsidiaries to own or operate all or any portion of the businesses or
assets of the Divisions, or (iv) involving any of the Purchased Assets or
either of the Divisions.
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(d) From the date of this Agreement until the Closing Date, Purchaser
shall promptly notify Seller in writing of any pending or, to the knowledge
of Purchaser, threatened action, proceeding or investigation by any
Governmental Entity or any other Person (i) challenging or seeking material
damages in connection with the Asset Sale or (ii) seeking to restrain or
prohibit the consummation of the Asset Sale or otherwise limit the right of
Purchaser or its Subsidiaries to own or operate all or any portion of the
business or assets of the Divisions.
(e) From the date of this Agreement until the Closing Date, Seller
shall promptly notify Purchaser in writing of (i) any amendments made to
the Merger Agreement, and (ii) any additional agreements between Seller and
Giuffre.
7.04 Update Disclosure. From and after the date of this Agreement until the
Closing Date, each party shall promptly notify the other party hereto by written
update to its disclosure schedules ("Update Schedule") of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
reasonably likely to cause any condition to the obligations of any party to
effect the Asset Sale and the other transactions contemplated by this Agreement
not to be satisfied, (ii) the failure of Seller or Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it pursuant to this Agreement which would be
reasonably likely to result in any condition to the obligations of any party to
effect the Asset Sale and the other transactions contemplated by this Agreement
not to be satisfied, or (iii) of any changes to the information contained in its
disclosure schedules (including any change to any representations or warranties
herein as to which no schedule has been created as of the date hereof but as to
which a schedule would have been required hereunder to have been created on or
before the date hereof if such change had existed on the date hereof). No
disclosure by any party pursuant to this Section 7.04, however, shall cure any
breach of any representation or warranty made by such party as of the date of
this Agreement.
ARTICLE VIII
CLOSING
8.01 Closing. Unless this Agreement shall have been terminated pursuant to
Section 10.01 and subject to the fulfillment or waiver of each of the conditions
set forth in Article IX, the closing ("Closing") of the transactions pursuant to
this Agreement shall take place at (a) the offices of Reinhart, Boerner, Van
Deuren, Norris & Rieselbach, s.c., 1000 North Water Street, Milwaukee, Wisconsin
53202, at the same time as the effective time of the merger pursuant to the
Merger Agreement or (b) at such other time and place as the parties hereto shall
mutually agree. Notwithstanding anything to the contrary herein, without the
prior written consent of Purchaser, the Closing shall not occur prior to
December 15, 1997.
ARTICLE IX
CLOSING CONDITIONS
9.01 Conditions to Obligations of Each Party Under This Agreement. The
respective obligations of each party to effect the transactions contemplated by
this Agreement shall be subject to the satisfaction on or prior to the Closing
Date of the following conditions, any or all of which may be waived by the
parties hereto, in whole or in part, to the extent permitted by applicable law:
(a) Stockholder Approval. This Agreement and the Asset Sale shall have
been approved by the requisite vote of the stockholders of Seller in
accordance with the Delaware Law and the Certificate of Incorporation and
By-Laws of Seller.
(b) No Action or Proceeding. There shall not have been instituted and
there shall not be pending any action or proceeding by a Governmental
Entity, and no such action or proceeding shall have been approved by a
Governmental Entity with authority to institute such an action or
proceeding, before any court of competent jurisdiction or governmental
agency or regulatory or administrative body, and no order or decree shall
have been entered in any action or proceeding before such court, agency or
body of
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competent jurisdiction: (i) imposing or seeking to impose limitations on
the ability of Purchaser to acquire or hold or to exercise full rights of
ownership of any of the Purchased Assets; (ii) imposing or seeking to
impose limitations on the ability of Purchaser to combine and operate the
business and assets of the Divisions with any of Purchaser's Subsidiaries
or other operations; (iii) imposing or seeking to impose other sanctions,
damages or liabilities arising out of the Asset Sale on Purchaser, Seller
or any of their officers or directors; (iv) requiring or seeking to require
divestiture by Purchaser of all or any material portion of the Divisions or
the assets thereof; or (v) restraining, enjoining or prohibiting or seeking
to restrain, enjoin or prohibit the consummation of the Asset Sale, in each
case, with respect to clauses (i) through (iv) above, which would or is
reasonably likely to result in a Seller Material Adverse Effect on or prior
to or after the Closing Date or, with respect to clauses (i) through (v)
above, which would or is reasonably likely to subject any of their
respective officers or directors to any penalty or criminal liability.
Notwithstanding the foregoing, prior to invoking the condition set forth in
this section 9.01(b), the party seeking to invoke it shall have used its
reasonable efforts to have any such pending or approved action or
proceeding withdrawn or dismissed or such order or decree vacated.
(c) HSR Act. The applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been
terminated.
(d) Other Approvals or Notices. All other consents, waivers, approvals
and authorizations required to be obtained from, and all filings or notices
required to be made with, any Governmental Entity by Purchaser or Seller or
any Subsidiary prior to consummation of the transactions contemplated in
this Agreement shall have been obtained from and made with all required
Governmental Entities, except for such consents, waivers, approvals or
authorizations which the failure to obtain, or such filings or notices
which the failure to make, would not have a Seller Material Adverse Effect
prior to or after the Closing Date or a Purchaser Material Adverse Effect
before or after the Closing Date or be reasonably likely to subject Seller,
Purchaser, or any of their respective Subsidiaries or any of their
respective officers, directors, employees, agents or representatives to
substantial penalty or criminal liability.
9.02 Additional Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the transactions contemplated in this Agreement are also
subject to the satisfaction on or prior to the Closing Date of the following
conditions, any or all of which may be waived, in whole or in part, by Purchaser
in its sole discretion:
(a) Representations and Warranties. Each of the representations and
warranties of Seller contained in this Agreement shall have been true and
correct in all material respects when made and the information contained
therein, as updated by any Update Schedule, taken as a whole, shall not
have materially adversely changed; and each of the representations and
warranties of Seller contained in this Agreement shall be true and correct
in all material respects as of the Closing Date. Purchaser shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Seller to that effect.
(b) Agreements and Covenants. Seller shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date, except to the extent failure to perform is caused by or is consented
to by Purchaser. Purchaser shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of Seller to that effect.
(c) Consents Under Agreements. Seller shall have obtained the third
party consents described on Schedule 9.02(c)(i). Seller shall have obtained
a third party consent with respect to each agreement described on Schedule
9.02(c)(ii) that Seller and Purchaser reasonably agree is required pursuant
to applicable law to effectively assign to Purchaser all of Seller's rights
under any such agreement. Seller shall have obtained all other third-party
consents described in subsection 7.03(b)(i), except those for which the
failure to obtain such consents and approvals would not have a Seller
Material Adverse Effect prior to or after the Closing Date or a Purchaser
Material Adverse Effect before or after the Closing Date, other than as
contemplated by subsection 7.03(b)(ii).
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(d) Opinion of Counsel. The Purchaser shall have received an opinion
of Reinhart, Boerner, Van Deuren, Norris & Rieselbach, s.c. counsel to
Seller, addressed to Purchaser, dated as of the Closing Date, and
reasonably satisfactory in form and substance to Purchaser and its counsel,
to the following effect:
(i) Seller is a corporation existing under the laws of the State of
Delaware and, based solely on a certificate of the Secretary of State of
Delaware, (a) has filed with the Secretary of State during its most
recently completed report year the required annual report; (b) is not
the subject of a proceeding under the Delaware Law to cause its
administrative dissolution; (c) no determination has been made by the
Secretary of State that grounds exist for such action with respect to
Seller; (d) no filing has been made with the Secretary of State of a
decree of dissolution with respect to Seller; and (e) no Certificate of
Dissolution of Seller has been filed with the Secretary of State. Seller
and its Subsidiaries have the corporate power to carry on their
respective businesses as currently being conducted.
(ii) This Agreement is a legal, valid and binding obligation of
Seller (a) except as this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b)
subject to general principles of equity including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and
the possible unavailability of specific performance, injunctive relief
or other equitable remedies, regardless of whether considered in a
proceeding in equity or at law. Counsel expresses no opinion with
respect to section 10.03(e), section 10.03(g) or section 10.03(h) of
this Agreement. The execution, delivery and performance by Seller of the
Agreement have been duly authorized by all necessary corporation action,
including the requisite approval of the stockholders of Seller. Under
the Delaware Law and Seller's Certificate of Incorporation and By-Laws,
Seller's stockholders and Board of Directors properly approved the Asset
Sale in accordance with the terms of the Agreement.
(iii) The execution and delivery of the Agreement and the
performance by Seller of its terms do not [a] contravene or conflict
with any provision of the Certificate of Incorporation or By-Laws of
Seller; or [b] violate any order, judgment or decree of any court or
governmental instrumentality to which Seller or any of its assets is
subject and of which such counsel has knowledge.
(iv) To the knowledge of such counsel, there is no action, suit,
investigation or proceeding pending or threatened against Seller or any
assets, properties or rights of Seller by or before any court,
arbitrator or administrative or governmental body which questions the
validity of this Agreement or any action which has been or is to be
taken by Seller hereunder.
(e) Deliveries on or Prior to Closing. Seller shall have delivered or
cause to be delivered to Purchaser the following documents at or prior to
Closing:
(i) A General Bill of Sale duly executed by Seller, in the form
attached hereto as Exhibit B.
(ii) A written consent to the transfer or assignment to Purchaser
of any of the Purchased Assets, including the Assigned Contracts, where
the consent of any other party may be required for such assignment or
transfer.
(iii) Assignments of all United States and foreign patents, patent
applications, trademarks and trade names and other similar Intangible
Assets to be transferred in accordance with section 1.01(d), duly
executed by Seller.
(iv) Titles and registrations to all Vehicles, duly executed by
Seller.
(v) Certificate of status of Seller issued by the Secretary of
State of Delaware and other appropriate jurisdictions within one week of
the Closing Date.
(vi) The Assignment and Assumption Agreement duly executed by
Seller, in the form attached hereto as Exhibit C (the "Assignment and
Assumption Agreement").
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(vii) Releases of mortgages, liens and/or financing statements to
reflect the termination of any Liens against, or security interest in,
any of the Purchased Assets.
(viii) Such other documents as Purchaser reasonably deems necessary
or appropriate to vest in it good and marketable title to all or any
part of the Purchased Assets, free and clear of all liens, encumbrances
and other rights as provided in this Agreement.
(f) Toll Manufacturing Agreement. Seller, Giuffre and Purchaser shall
have entered into a Toll Manufacturing Agreement in a form reasonably
satisfactory to Seller, Giuffre and Purchaser.
(g) No Material Adverse Change. Since the date of this Agreement, no
condition or fact shall have occurred which, as of the Closing Date, is or
may have a Seller Material Adverse Effect.
(h) Bulk Sales. The parties shall have complied in all material
respects with the provisions of the Wisconsin Bulk Sales Act.
(i) Non-Competition Agreements. Seller and Giuffre each shall have
entered into a Non-Competition Agreement with Purchaser in a form
reasonably satisfactory to Purchaser, Seller and Giuffre.
9.03 Additional Conditions to Obligations of Seller. The obligation of
Seller to effect the transactions contemplated in this Agreement is also subject
to the satisfaction on or prior to the Closing Date of the following conditions,
any or all of which may be waived, in whole or in part, by Seller in its sole
discretion:
(a) Representations and Warranties. Each of the representations and
warranties of Purchaser contained in this Agreement shall have been true
and correct in all material respects when made and the information
contained therein, as updated by any Update Schedule, taken as a whole,
shall not have materially adversely changed; and each of the
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects as of the Closing Date.
Seller shall have received a certificate of the Chief Executive Officer and
Chief Financial Officer of Purchaser to that effect.
(b) Agreements and Covenants. Purchaser shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date. Seller shall have received a certificate of the
Chief Executive Officer and Chief Financial Officer of Purchaser to that
effect.
(c) Fairness Opinion. Seller shall have received from ABN AMRO Chicago
Corporation an opinion, dated as of the date of the Proxy Statement, to the
effect that the Purchase Price is fair to Seller's stockholders from a
financial point of view.
(d) Opinion of Counsel. Seller shall have received an opinion of
Hartzog Conger & Cason, counsel to Purchaser, addressed to Seller, dated as
of the Closing Date, and reasonably satisfactory in form and substance to
Seller and its counsel, to the following effect:
(i) Purchaser is a corporation existing in good standing under the
laws of the State of Oklahoma, based solely on a certificate of the
Oklahoma Secretary of State.
(ii) The execution, delivery and performance of this Agreement has
been duly authorized by all requisite corporate action on the part of
Purchaser. The Agreement constitutes the legally valid and binding
obligations of Purchaser, enforceable in accordance with its terms,
subject to the following qualifications: [a] the enforceability against
Purchaser of the Agreement in accordance with its terms may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally; [b] the enforceability of the
Agreement is subject to the effect of general principles of equity
including, without limitation, the possible unavailability of specific
performance or injunctive relief or other equitable remedies regardless
of whether considered in a proceeding in equity or at law; and [c] no
opinion is expressed as to any provision of the Agreement providing for
the indemnification of persons for liability under federal or other
securities laws or with respect to section 10.03(h).
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(iii) Execution and delivery of the Agreement and the performance
of the Purchaser of its terms do not [a] contravene or conflict with any
provision of the Certificate of Incorporation or By Laws of the
Purchaser; or [b] violate any order, judgment or decree of any Oklahoma
or federal court or governmental instrumentality to which Purchaser or
any of its assets is subject and of which such counsel has knowledge.
(iv) To the knowledge of such counsel, there is no action, suit,
investigation or proceeding pending or threatened against the Purchaser
or any assets, properties or rights of Purchaser by or before any court,
arbitrator or administrative or governmental body which questions the
validity of the Agreement or any action which has been or is to be taken
by the Purchaser thereunder.
(e) Deliveries on or Prior to Closing. Purchaser shall have delivered
or cause to be delivered to Seller the following documents at or prior to
Closing:
(i) Wire transfer of immediately available funds in the amount of
the Purchase Price.
(ii) A certificate of status for Purchaser issued by the Secretary
of State of Oklahoma within one week of the Closing Date.
(iii) The Assignment and Assumption Agreement duly executed by
Purchaser.
(iv) Such other documents as Seller reasonably deems necessary and
appropriate to document the transfer of the Purchased Assets and the
assumption of the Assumed Liabilities.
(f) Effectiveness of the Merger. The transactions contemplated by the
Merger Agreement shall have closed simultaneously with the Closing under
this Agreement.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.01 Termination. This Agreement may be terminated upon written notice by
the terminating party at any time prior to the Closing, whether before or after
approval of this Agreement and the Asset Sale by the stockholders of Seller:
(a) by mutual written consent of Purchaser and Seller;
(b) by either Purchaser or Seller in the event the conditions to such
party's (the "Nonfailing Party") obligations under Article IX shall not
have been met or waived by the Nonfailing Party on or prior to January 31,
1998, but only if the party terminating has not caused the condition giving
rise to termination to be not satisfied through its own action or inaction;
(c) by either Purchaser or Seller if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or
any Governmental Entity preventing or prohibiting consummation of the Asset
Sale shall have become final and nonappealable;
(d) by Purchaser, if (A) the Proxy Statement does not include the
recommendation of Seller's Board of Directors in favor of this Agreement
and the Asset Sale, or (B) the Board of Directors of Seller withdraws,
modifies or changes in a manner materially adverse to Purchaser its
recommendation of this Agreement or the Asset Sale or shall have resolved
to do any of the foregoing, or (C) the Board of Directors of Seller shall
have recommended to the stockholders of Seller any proposed acquisition of
the Divisions by any Person or any "group" (as such term is defined under
section 13(d) of the Exchange Act) other than Purchaser and its Affiliates
by (i) merger, consolidation, share exchange, business combination or other
similar transaction providing for the acquisition of the Divisions or a
substantial part of the assets of the Divisions, (ii) purchase of all or a
substantial part of the assets of Seller relating to the Divisions, or
(iii) the acquisition of more than 50% of Seller's outstanding equity
securities (other than pursuant to the Merger) (a "Competing Transaction")
or resolved to do so, or (D) a tender offer or exchange offer for 50% or
more of the outstanding shares of capital stock of Seller is commenced, and
the Board of Directors of Seller, within 10 business days after such tender
offer or exchange offer is so
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commenced, either fails to recommend against acceptance of such tender
offer or exchange offer by its stockholders or takes no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders;
(e) by Seller if, in the exercise of its judgment as to its fiduciary
duties to its stockholders as imposed by applicable law and, after
consultation with and receipt of advice from outside legal counsel,
Seller's Board of Directors determines that such termination is required by
reasons of any Competing Transaction being made or proposed;
(f) by either Purchaser or Seller, if any Update Schedule of the other
party contains disclosures of any fact or condition which makes untrue, or
shows to have been untrue, any representation or warranty by the other
party in this Agreement, unless concurrently with the delivery of the
Update Schedule, the other party represents and warrants that the disclosed
fact or condition can and will be corrected at the other party's expense
prior to the Closing Date (but in no event more than 30 days after the
delivery of the Update Schedule); provided that the effect of the fact or
condition so disclosed upon the representation or warranty so affected
constitutes a Seller Material Adverse Effect or Purchaser Material Adverse
Effect, as applicable; or
(g) by either Purchaser or Seller, at any time after the Stockholders'
Meeting, in the event this Agreement and the Asset Sale are not approved by
the requisite vote of the stockholders of Seller in accordance with the
Delaware Law and the Certificate of Incorporation and By-Laws of Seller.
10.02 Effect of Termination. Subject to the remedies of the parties set
forth in section 10.03(c), in the event of the termination of this Agreement
pursuant to section 10.01, this Agreement shall forthwith become void, and,
subject to sections 10.03(c), (d), (e), (f), (g) and (h), there shall be no
liability under this Agreement on the part of Purchaser or Seller or any of
their respective officers or directors and all rights and obligations of each
party hereto shall cease.
The Purchaser Confidentiality Agreement shall survive any termination of this
Agreement.
10.03 Expenses.
(a) Except as provided in section 10.03(c), section 10.03(d), section
10.03(f), section 10.03(g) and section 10.03(h), all Expenses incurred by
the parties shall be borne solely and entirely by the party which has
incurred the same. Seller shall pay for all Expenses related to printing,
filing and mailing the Proxy Statement and all SEC and other regulatory
filing fees incurred in connection with the Proxy Statement.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and
consultants to a party and its Affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Proxy Statement, the solicitation of
stockholder approvals and all other matters related to the closing of the
transactions contemplated by this Agreement.
(c) Seller and Purchaser each agree that with respect to any
termination of this Agreement pursuant to section 10.01(b) as a direct
result of a material intentional breach by a party of any of its covenants
or agreements contained in this Agreement, all remedies available to the
other party either in law or equity shall be preserved and survive the
termination of this Agreement.
(d) If all conditions to the obligations of a party at Closing
contained in Article IX of this Agreement have been satisfied (or waived by
the party entitled to waive such conditions), and the other party does not
proceed with the Closing, all remedies available to the party seeking to
proceed, either at law or in equity, on account of such failure to close,
including, without limitation, the right to seek specific performance of
this Agreement as well as the right to pursue a claim for damages on
account of a breach of this Agreement, shall be preserved and shall survive
any termination of this Agreement.
(e) Notwithstanding anything to the contrary herein, Seller agrees
that if this Agreement is terminated pursuant to section 10.01(d) or
section 10.01(e), Seller shall pay to Purchaser an amount
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equal to the greater of (i) $400,000, and (ii) 20% of the amount by which
the aggregate consideration with respect to the Divisions in any Competing
Transaction exceeds the Purchase Price, provided that, solely for purposes
of this section 10.03(e)(ii), the Purchase Price shall be computed based on
the balance sheet attached hereto as Exhibit A and, if the Competing
Transaction involves the acquisition of all of Seller, whether by merger,
tender offer or otherwise, then the consideration with respect to the
Divisions in the Competing Transaction shall equal 66.8% of the total
consideration in the Competing Transaction. Such payment shall be made as
promptly as practicable but in no event later than the third business day
following termination of this Agreement and shall be made by wire transfer
of immediately available funds to an account designated by Purchaser.
(f) Seller and Purchaser shall share equally the filing fee for any
required filing under the HSR Act.
(g) Notwithstanding anything herein to the contrary, Seller agrees
that if this Agreement is terminated pursuant to section 10.01(b) as a
direct result of the failure to satisfy the condition to Seller's
obligations contained in section 9.03(f), then Seller shall reimburse
Purchaser for its Expenses up to $200,000. Such payment shall be made not
later than the third business day following receipt by Seller of written
notice from Purchaser describing in reasonable detail the amount of
Expenses to be reimbursed by Seller pursuant to this section 10.03(g).
(h) Notwithstanding anything herein to the contrary, Seller and
Purchaser each agree that if this Agreement is terminated pursuant to
section 10.01(b) as a direct result of a material breach by a party of any
of its representations or warranties contained in this Agreement, the
breaching party shall reimburse the nonbreaching party for its Expenses up
to $200,000. Such payment shall be made not later than the third business
day following receipt by the breaching party of written notice from the
nonbreaching party describing in reasonable detail the amount of Expenses
to be reimbursed by the breaching party pursuant to this section 10.03(h).
ARTICLE XI
INDEMNIFICATION
11.01 Indemnification By Seller. Seller shall indemnify and hold harmless
Purchaser and its shareholders, directors, officers, employees and other agents
(collectively, the "Purchaser Indemnitees") in respect of any and all damages,
losses, liabilities, payments, obligations, penalties, claims, litigation,
demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses (including, without limitation, reasonable fees, disbursements and
expense of attorneys, accountants and other professional advisors and of expert
witnesses and costs of investigation and preparation) of any kind or nature
whatsoever (collectively, "Losses") asserted against or incurred by any
Purchaser Indemnitee as a result of, in connection with or arising out of (a)
any of the Excluded Liabilities, or (b) any claims made under the provisions of
the Worker Adjustment and Retraining Notification Act (29 U.S.C. sec.sec.
2101-2109) and the regulations promulgated thereunder ("WARN") arising in
connection with the transactions contemplated by this Agreement.
11.02 Indemnification by Purchaser. Purchaser shall indemnify and hold
harmless Seller and its stockholders, directors, officers, employees and other
agents (collectively, the "Seller Indemnitees") in respect of any and all Losses
asserted against or incurred by any Seller Indemnitee as a result of, in
connection with, or arising out of any of the Assumed Liabilities.
11.03 Arbitration Procedure.
(a) Purchaser and the Seller agree that the arbitration procedure set
forth below shall be the sole and exclusive method for resolving and
remedying claims for Losses arising out of the provisions of section 11.01
and section 11.02 (the "Disputes"). Nothing in this section 11.03 shall
prohibit a party hereto from instituting litigation to enforce any Final
Determination (as defined below) or availing itself of the other remedies
set forth in this Agreement. The parties hereby agree and acknowledge that,
except as otherwise provided in this section 11.03 or in the Commercial
Arbitration Rules of the American Arbitration Association as in effect from
time to time, the arbitration procedures and any Final
23
<PAGE> 29
Determination hereunder shall be governed by, and shall be enforced
pursuant to the Uniform Arbitration Act and applicable provisions of,
Delaware law.
(b) In the event that any Purchaser Indemnitee or Seller Indemnitee
(the "Indemnified Party") asserts that there exists a Dispute, such
Indemnified Party shall deliver a written notice to the party alleged to
have indemnification obligations pursuant to this Agreement (the
"Indemnifying Party") specifying the nature of the asserted Dispute and
requesting a meeting to attempt to resolve the same. If no such resolution
is reached within ten business days after such delivery of such notice, the
Indemnified Party delivering such notice of Dispute (the "Disputing
Person") may, within 30 business days after delivery of such notice,
commence arbitration hereunder by delivering to the Indemnifying Party
involved therein a notice of arbitration (a "Notice of Arbitration") and by
filing a copy of such Notice of Arbitration with the Chicago office of the
American Arbitration Association. Such Notice of Arbitration shall specify
the matters as to which arbitration is sought, the nature of any Dispute,
the claims of each party to the arbitration and shall specify the amount
and nature of any Losses, if any, sought to be recovered as a result of any
alleged claim, and any other matters required by the Commercial Arbitration
Rules of the American Arbitration Association as in effect from time to
time to be included therein, if any.
(c) The Indemnified Party on the one hand and the Indemnifying Party
on the other hand each shall select one independent arbitrator expert in
the subject matter of the Dispute (the arbitrators so selected shall be
referred to herein as "Seller's Arbitrator" and "Purchaser's Arbitrator"
respectively). In the event that either party fails to select an
independent arbitrator as set forth herein within 20 days from delivery of
a Notice of Arbitration, then the matter shall be resolved by the
arbitrator selected by the other party. Seller's Arbitrator and Purchaser's
Arbitrator shall select a third independent arbitrator expert in the
subject matter of the dispute, and the three arbitrators so selected shall
resolve the matter according to the procedures set forth in this section
11.03. If Seller's Arbitrator and Purchaser's Arbitrator are unable to
agree on a third arbitrator within 20 days after their selection, Seller's
Arbitrator and Buyer's Arbitrator shall each prepare a list of three
independent arbitrators. Seller's Arbitrator and Purchaser's Arbitrator
shall each have the opportunity to designate as objectionable and eliminate
one arbitrator from the other arbitrator's list within seven days after
submission thereof, and the third arbitrator shall then be selected by lot
from the arbitrators remaining on the lists submitted by Seller's
Arbitrator and Purchaser's Arbitrator.
(d) The arbitrator(s) selected pursuant to section 11.03(c) will
determine the allocation of the costs and expenses of arbitration based
upon the percentage which the portion of the contested amount not awarded
to each party bears to the amount actually contested by such party. For
example, if Purchaser submits a claim for $1,000, and if the Seller
contests only $500 of the amount claimed by Purchaser, and if the
arbitrator(s) ultimately resolves the dispute by awarding Purchaser $300 of
the $500 contested, then the costs and expenses of arbitration will be
allocated 60% (i.e., 300 - 500) to the Seller and 40% (i.e., 200 - 500) to
Purchaser.
(e) The arbitration shall be conducted under the Commercial
Arbitration Rules of the American Arbitration Association as in effect from
time to time, except as otherwise set forth herein or as modified by the
agreement of all of the parties to this Agreement. The arbitrator(s) shall
so conduct the arbitration that a final result, determination finding,
judgment and/or award (the "Final Determination") is made or rendered as
soon as practicable, but in no event later than 90 business days after the
delivery of the Notice of Arbitration nor later than 10 days following
completion of the arbitration. The Final Determination must be agreed upon
and signed by the sole arbitrator or by at least two of the three
arbitrators (as the case may be). The Final Determination shall be final
and binding on all parties and there shall be no appeal from or
reexamination of the Final Determination, except for fraud, perjury,
evident partiality or misconduct by an arbitrator prejudicing the rights of
any party and to correct manifest clerical errors.
(f) The Purchaser Indemnitees and the Seller Indemnitees may enforce
any Final Determination in any state or federal court having jurisdiction
over the Dispute. For the purpose of any action or
24
<PAGE> 30
proceeding instituted with respect to any Final Determination, each party
hereto hereby irrevocably submits to the jurisdiction of such courts,
irrevocably consents to the service of process by registered mail or
personal service and hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may have or hereafter have as to
personal jurisdiction, the laying of the venue of any such action or
proceeding brought in any such court and any claim that any such action or
proceeding brought in such court has been brought in an inconvenient forum.
11.04 Matters Involving Third Parties.
(a) If any third party shall notify any Indemnified Party with respect
to any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any Indemnifying Party under this section 11, then
the Indemnified Party shall promptly (and in any event within ten business
days after receiving notice of the Third Party Claim) notify the
Indemnifying Party in writing; provided, however, that no delay on the part
of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder, except to the extent
the Indemnifying Party thereby is materially prejudiced. Such notice shall
describe the claim, the amount thereof (to the extent then known and
quantifiable), and the basis thereof, in each case to the extent known to
the Indemnified Party.
(b) The Indemnifying Party will have the right at any time to assume
and thereafter conduct the defense of the Third Party Claim with counsel of
his or its choice reasonably satisfactory to the Indemnified Party; so long
as (i) the Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of the Third
Party Claim that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Losses the Indemnified Party may
suffer resulting from or in connection with the Third Party Claim, (ii) the
Indemnifying Party will have the financial resources to defend against the
Third Party Claim and fulfill its indemnification obligations hereunder,
(iii) the Third Party Claim involves only money damages and does not seek
an injunction or other equitable relief, and (iv) the Indemnifying Party
conducts the defense of the Third Party Claim actively and diligently.
(c) Unless and until the Indemnifying Party assumes the defense of the
Third Party Claim as provided in section 11.04(b) above, however, the
Indemnified Party may defend against the Third Party Claim in any manner it
reasonably may deem appropriate.
(d) If the Indemnifying Party has the right, but does not assume
control of defense of any claim in accordance with this section 11.04, then
the Indemnifying Party may nonetheless participate (at its own expense) in
the defense of such claim and the Indemnified Party will consult with the
Indemnifying Party in respect of such defense. If the Indemnifying Party
has the right and does assume control of defense of any claim in accordance
with this section 11.04, then the Indemnified Party may nonetheless
participate (at its own expense) in the defense of such claim and the
Indemnifying Party will consult with the Indemnified Party in respect of
such defense.
(e) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with paragraph 11.04(b) above, (i) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld
unreasonably), and (ii) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
ARTICLE XII
GENERAL PROVISIONS
12.01 Non-Survival of Representations, Warranties and Certain
Covenants. The respective representations, warranties and covenants of the
parties in this Agreement shall expire with, and be terminated and extinguished
upon, consummation of the Asset Sale or termination of this Agreement, and,
except as otherwise provided in Section 10.03(c), thereafter neither Seller,
Purchaser nor any of their respective
25
<PAGE> 31
officers, directors or employees shall have any liability whatsoever with
respect to any such representation, warranty or covenant. Notwithstanding
anything to the contrary herein, the obligations of the parties set forth in
Article X, Article XI and Article XII shall survive the consummation of the
Asset Sale. This section 12.01 shall have no effect upon any other obligation of
the parties hereto, whether to be performed before or after consummation of the
transactions contemplated by this Agreement.
12.02 Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made upon receipt, if delivered personally, on the third business day
following deposit in the U.S. mail if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or when sent by electronic transmission to the telecopier
number specified below with receipt acknowledged:
(a) If to Purchaser:
CMI Corporation
I-40 and Morgan Road
P.O. Box 1985
Oklahoma City, OK 73101
Telecopier No. 405-491-2417
Attention: Mr. Jim D. Holland, Senior Vice President
With a copy to:
Hartzog Conger & Cason
1600 Bank of Oklahoma Plaza
201 Robert S. Kerr
Oklahoma City, OK 73102
Telecopier No. 405-235-7329
Attention: John Robertson, Esq.
(b) If to Seller:
Rexworks Inc.
445 West Oklahoma Avenue
Milwaukee, WI 53207
Facsimile: 414-747-7345
Attention: Mr. Laurance R. Newman, President and
Chief Executive Officer
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
Milwaukee, WI 53202
Telecopier No: 414-298-8097
Attention: James M. Bedore, Esq.
12.03 Amendment. This Agreement may be amended by the parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Closing; provided, however, that after approval of this Agreement by the
stockholders of Seller, no amendment may be made without further approval of
such stockholders, which amendment would reduce the amount or change the type of
consideration to be received by Seller upon consummation of the Asset Sale. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.
26
<PAGE> 32
12.04 Waiver. At any time prior to the Closing, any party may (a) extend
the time for the performance of any of the obligations or other acts of any
other party, (b) waive any inaccuracies in the representations and warranties of
any other party contained in this Agreement or in any document delivered
pursuant to this Agreement, or (c) waive compliance by any other party with any
of the agreements or conditions contained in this Agreement. Notwithstanding the
foregoing, no failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
12.05 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
12.06 Severability. If any term or other provision of this Agreement is
finally adjudicated by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
12.07 Entire Agreement. This Agreement (together with the Purchaser's
Confidentiality Agreement, the Exhibits, the disclosure schedules to this
Agreement and the other documents delivered pursuant hereto), constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof including, without limitation, that certain
letter of intent dated August 15, 1997 between Purchaser and Seller.
12.08 Assignment. This Agreement shall not be assigned, whether by
operation of law or otherwise, without the prior written consent of the parties
hereto. Notwithstanding the preceding sentence, Purchaser may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Purchaser nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
12.09 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of and be enforceable by each party and its respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
12.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law,
provided, however, that if any court of competent jurisdiction determines not to
construe this Agreement in accordance with the laws of the State of Delaware,
then this Agreement shall be governed by, and construed in accordance with, the
laws of the State of Oklahoma, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
12.11 Counterparts. This Agreement may be executed by facsimile and in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
12.12 Press Releases and Public Announcements. No party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other party; provided,
however, that any party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in
27
<PAGE> 33
which case the disclosing party will use its reasonable best efforts to advise
the other party prior to making the disclosure).
12.13 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
12.14 Employees. Purchaser shall not assume and shall not be deemed to have
assumed any obligation in respect of any employee of Seller or its Subsidiaries,
any employee benefit plans or any other similar obligations (including, but not
limited to wages, severance pay and vacation pay) of Seller or its Subsidiaries
to their employees who are employed at or in connection with the Divisions or
otherwise. Purchaser shall not assume and shall not be deemed to have assumed
any employee insurance or benefit plan or formal or informal practice maintained
by or contributed to by Seller or its Subsidiaries.
12.15 WARN. Seller shall be responsible for all notices and liabilities
required under WARN.
12.16 Access. From the date of this Agreement until the Closing Date,
Seller shall, and Seller shall cause each of its Subsidiaries to, afford
Purchaser and its representatives full and complete access to the books and
records, financial statements, tax returns and tax records, facilities,
employees and such other information of Seller and its Subsidiaries as Purchaser
may reasonably request to evaluate the business, operations, properties, assets,
liabilities and prospects of the Divisions. In connection therewith,
representatives of Purchaser shall be entitled to consult with the
representatives, officers and employees of Seller and its Subsidiaries. Such
access to information and any such consultations shall be conducted in a manner
not to unreasonably interfere with the operation of the business of Seller and
its Subsidiaries.
12.17 Bulk Sales. The parties acknowledge that it is the intent of the
parties to comply with the terms of the Wisconsin Bulk Sales Act. Seller shall
use all reasonable efforts to take or cause to be taken all appropriate action,
and do or cause to be done all things necessary, proper or advisable, to comply
with the terms of the Wisconsin Bulk Sales Act.
12.18 Litigation Support. In the event and for so long as Purchaser is
contesting or defending any action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand in connection with any of the Assumed
Liabilities, Seller will use reasonable efforts to cooperate with Purchaser and
its counsel in the contest or defense, make available its personnel and provide
such testimony and access to its books and records that shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of Purchaser.
12.19 Use of Marketing Materials. For a period of one year after the
Closing Date, Purchaser shall be entitled to use without charge any and all of
the current stock of sales and marketing materials used by Seller in connection
with the operation of the Divisions, but solely to the extent permitted by the
Agreement regarding trademarks dated April 23, 1982 between Rexnord, Inc. and
Seller.
12.20 Further Assurances. After the Closing, Seller shall from time to
time, at the request of Purchaser and at Purchaser's sole cost and expense,
execute and deliver to Purchaser such other instruments of conveyance and
transfer and take such other action as Purchaser may reasonably request so as to
more effectively transfer, assign and deliver and vest in Purchaser title to the
Purchased Assets as provided in this Agreement.
REXWORKS INC.
BY /s/ Thomas D. Lauerman
-------------------------------------
Thomas D. Lauerman, Vice President
Administration and Chief Financial
Officer
CMI CORPORATION
BY /s/ Jim D. Holland
-------------------------------------
Jim D. Holland, Senior Vice President
28
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
By and Among
GIUFFRE BROS. CRANES, INC.
13TH STREET ACQUISITION CORP.
and
REXWORKS INC.
August 15, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
THE MERGER
<S> <C>
1.01 The Merger.................................................. 1
1.02 Effective Time.............................................. 1
1.03 Effect of the Merger........................................ 1
1.04 Certificate of Incorporation; By-Laws....................... 1
1.05 Directors and Officers...................................... 1
1.06 Taking Necessary Action; Further Action..................... 2
1.07 The Closing................................................. 2
ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities.................................... 2
2.02 Dissenting Shares........................................... 2
2.03 Exchange of Certificates.................................... 3
2.04 Stock Options............................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification; Subsidiaries................ 4
3.02 Certificate of Incorporation; By-Laws....................... 5
3.03 Capitalization.............................................. 5
3.04 Authority; Vote Required.................................... 5
3.05 No Conflict; Required Filings and Consents.................. 6
3.06 Permits; Compliance......................................... 7
3.07 Reports; Financial Statements............................... 7
3.08 Absence of Certain Changes or Events........................ 7
3.09 Absence of Litigation....................................... 8
3.10 Contracts; No Default....................................... 8
3.11 Employee Benefit Plans; Labor Matters....................... 8
3.12 Taxes....................................................... 9
3.13 Intellectual Property Rights................................ 9
3.14 Insurance................................................... 9
3.15 Brokers..................................................... 9
3.16 Title to Properties......................................... 9
3.17 Labor Matters............................................... 10
3.18 Proxy Statement............................................. 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND ACQUIROR SUB
4.01 Organization and Qualification; Subsidiaries................ 10
4.02 Authority................................................... 10
4.03 No Conflict; Required Filings and Consents.................. 11
4.04 Ownership of Acquiror Sub; No Prior Activities.............. 11
4.05 Financing................................................... 11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company........................ 11
5.02 Negative Covenants of the Company........................... 12
5.03 Confidentiality Agreement................................... 13
5.04 Acquisition Proposals....................................... 13
5.05 Sale of Divisions........................................... 14
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement............................................. 14
6.02 Meeting of Shareholders..................................... 15
6.03 Appropriate Action; Consents; Filings....................... 15
6.04 Update Disclosure; Breaches................................. 16
6.05 Public Announcements........................................ 16
6.06 Indemnification............................................. 16
6.07 Obligations of Acquiror Sub................................. 17
6.08 Employee Benefits and Compensation.......................... 17
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party Under This
Agreement................................................... 17
7.02 Additional Conditions to Obligations of Acquiror and
Acquiror Sub................................................ 18
7.03 Additional Conditions to Obligations of the Company......... 20
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination................................................. 21
8.02 Effect of Termination....................................... 22
8.03 Expenses.................................................... 22
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties.............. 23
9.02 Notices..................................................... 23
9.03 Amendment................................................... 23
9.04 Waiver...................................................... 24
9.05 Headings.................................................... 24
9.06 Severability................................................ 24
9.07 Entire Agreement............................................ 24
9.08 Assignment.................................................. 24
9.09 Parties in Interest......................................... 24
9.10 Governing Law............................................... 24
9.11 Counterparts................................................ 24
9.12 Press Releases and Public Announcements..................... 24
9.13 Construction................................................ 24
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of August 15, 1997 (the
"Agreement"), is made and entered into among GIUFFRE BROS. CRANES, INC., a
Delaware corporation ("Acquiror"), 13TH STREET ACQUISITION CORP., a Delaware
corporation and a wholly-owned subsidiary of Acquiror ("Acquiror Sub") and
REXWORKS INC., a Delaware corporation (the "Company").
RECITAL
The respective Boards of Directors of Acquiror, Acquiror Sub and the
Company have determined that it is advisable and in the best interests of the
respective corporations and their shareholders that Acquiror Sub be merged with
and into the Company in accordance with the Delaware General Corporation Law
(the "Delaware Law") and the terms of this Agreement, pursuant to which the
Company will be the surviving corporation and will become a wholly-owned
subsidiary of Acquiror (the "Merger").
AGREEMENTS
In consideration of the representations, warranties, covenants and
agreements set forth in this Agreement, the parties agree:
ARTICLE I
THE MERGER
1.01 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Delaware Law, at the Effective Time,
Acquiror Sub shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Acquiror Sub shall cease and the
Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation"). Acquiror Sub and the Company are sometimes
collectively referred to in this Agreement as the "Constituent Corporations."
1.02 Effective Time. As promptly as practicable after the satisfaction or,
if permissible, waiver of the conditions set forth in Article VII, the parties
shall cause the Merger to be consummated by filing the Certificate of Merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware in such form as required by, and executed in accordance with, the
relevant provisions of the Delaware Law and shall take all such further actions
as may be required by law to make the Merger effective upon the filing of the
Certificate of Merger (the date and time of such effectiveness being the
"Effective Time"); provided, however, that the Effective Time shall not be
earlier than November 1, 1997.
1.03 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the Delaware Law. Without
limiting the generality of, and subject to the provisions of, the Delaware Law,
at the Effective Time, except as otherwise provided in this Agreement, all the
property, interests, assets, rights, privileges, immunities, powers and
franchises of Acquiror Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities, duties and obligations of Acquiror Sub
and the Company shall become the debts, liabilities, duties and obligations of
the Surviving Corporation.
1.04 Certificate of Incorporation; By-Laws. At the Effective Time, the
Certificate of Incorporation, as amended by the amendments thereto set forth in
Exhibit A (which amendments shall become effective only at the Effective Time),
and the By-Laws of Acquiror Sub shall be the Certificate of Incorporation and
the By-Laws of the Surviving Corporation. The name of the Surviving Corporation
shall be Rexworks Inc.
1.05 Directors and Officers. The directors of Acquiror Sub immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Acquiror Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until their respective
successors are duly elected or appointed and qualified.
<PAGE> 5
1.06 Taking Necessary Action; Further Action. Acquiror, Acquiror Sub and
the Company, respectively, shall each use its reasonable efforts to take all
such action as may be necessary or appropriate to effectuate the Merger under
the Delaware Law at the time specified in section 1.02. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all properties, interests, assets, rights,
privileges, immunities, powers and franchises of either of the Constituent
Corporations, the officers of the Surviving Corporation are fully authorized in
the name of each Constituent Corporation or otherwise to take, and shall take,
all such lawful and necessary action.
1.07 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Reinhart, Boerner,
Van Deuren, Norris & Rieselbach, s.c., 1000 North Water Street, Milwaukee,
Wisconsin 53202, or at such other place as the parties hereto shall mutually
agree, and will be effective at the Effective Time.
ARTICLE II
CONVERSION OF SECURITIES
2.01 Conversion of Securities. At the Effective Time by virtue of the
Merger and without any further action on the part of Acquiror, Acquiror Sub, the
Company, the Surviving Corporation or the holders of any of the following
securities:
(a) each share of the common stock, $.12 par value, of the Company
("Company Common Stock") issued and outstanding immediately prior to the
Effective Time (other than (i) shares of Company Common Stock owned by
Acquiror, Acquiror Sub or the Company or any direct or indirect subsidiary
of Acquiror, Acquiror Sub or the Company and (ii) any Dissenting Shares (as
defined in section 2.02)) shall be canceled and extinguished and be
converted into and become a right to receive a cash payment of $1.6139 per
share, without interest (the "Purchase Price" or the "Merger
Consideration"); provided, however, that the Purchase Price shall be
subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split or other change in the number of shares of
Acquiror Common Stock outstanding;
(b) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time and owned by Acquiror, Acquiror Sub
or the Company or any direct or indirect subsidiary of Acquiror, Acquiror
Sub or the Company shall be canceled and extinguished and no payment shall
be made with respect thereto;
(c) each share of common stock, $.01 par value, of Acquiror Sub issued
and outstanding immediately prior to the Effective Time shall be converted
into one fully paid and nonassessable share of common stock, $.01 par
value, of the Surviving Corporation ("Surviving Corporation Common Stock");
and
2.02 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary, if
section 262 of the Delaware Law ("Subchapter 262") shall be applicable to
the Merger, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
who have not voted such shares in favor of the Merger, who shall have
delivered, prior to any vote on the merger, a written objection to the
Merger in the manner provided in Subchapter 262 and who as of the Effective
Time, shall not have effectively withdrawn or lost such right to
dissenters' rights ("Dissenting Shares") shall not be converted into or
represent a right to receive the Merger Consideration pursuant to section
2.01, but the holders thereof shall be entitled only to such rights as are
granted by Subchapter 262. Each holder of Dissenting Shares who becomes
entitled to payment for such shares pursuant to Subchapter 262 shall
receive payment therefor from the Surviving Corporation in accordance with
the Subchapter 262; provided, however, that if any such holder of
Dissenting Shares shall have effectively withdrawn such holder's demand for
appraisal of such shares or lost such holder's right to appraisal and
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payment of such shares under Subchapter 262, such holder or holders (as the
case may be) shall forfeit the right to appraisal of such shares and each
such share shall thereupon be deemed, as of the Effective Time, to have
been canceled, extinguished and converted into and represent the right to
receive payment from the Surviving Corporation of the Merger Consideration
as provided in section 2.01.
(b) The Company shall give Acquiror (i) prompt notice of any written
demand for fair value, any withdrawal of a demand for fair value and any
other instrument served pursuant to Subchapter 262 received by the Company,
and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for fair value under such Subchapter 262. The Company
shall not, except with the prior written consent of Acquiror, voluntarily
make any payment with respect to any demand for fair value or offer to
settle or settle any such demand.
2.03 Exchange of Certificates.
(a) Prior to the Effective Time, Acquiror shall designate a bank or
trust company (the "Exchange Agent") to act as exchange agent in effecting
the exchange of the Merger Consideration for certificates representing
shares of Company Common Stock entitled to payment pursuant to section 2.01
(the "Certificates"). Immediately prior to the Effective Time, Acquiror
shall deposit with the Exchange Agent an amount equal to the aggregate
Merger Consideration (assuming there are no Dissenting Shares). The deposit
will consist of cash sufficient in the aggregate for the Exchange Agent to
make full payment of the Merger Consideration to the holders of all of the
outstanding shares of Company Common Stock. The Exchange Agent shall hold
such sums in escrow for the purposes set forth in section 2.01(b).
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each record holder of Certificates a letter of transmittal and
instructions for use in surrendering Certificates and receiving the
applicable Merger Consideration therefor. The form of the transmittal
letter shall have been prepared by Acquiror, subject to the approval of the
Company, prior to the Effective Time. Upon the surrender of each
Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor an amount
equal to the applicable Merger Consideration multiplied by the number of
shares of Company Common Stock represented by such Certificate, and such
Certificate shall be canceled. Until so surrendered and exchanged, each
such Certificate shall represent solely the right to receive an amount
equal to the Merger Consideration multiplied by the number of shares of
Company Common Stock represented by such Certificate. No interest shall be
paid or accrued on the Merger Consideration upon the surrender of the
Certificates.
If any Merger Consideration is to be paid to a person other than the
person in whose name the Certificate surrendered in exchange therefor is
registered, it shall be a condition to such exchange that the person
requesting such exchange shall pay to the Exchange Agent any transfer or
other similar taxes required by reason of the payment of such Merger
Consideration to a person other than the registered holder of the
Certificate surrendered, or such person shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of shares of Company Common Stock for
any Merger Consideration delivered to a public official pursuant to
applicable abandoned property, escheat and similar laws.
(c) Promptly following the date which is 180 days after the Effective
Time, the Exchange Agent's duties shall terminate and any portion of the
fund not disbursed pursuant to section 2.01(b) shall be released to the
Surviving Corporation. Thereafter, each holder of a Certificate may
surrender Certificates to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor an amount equal to the Merger Consideration multiplied by
the number of shares of Company Common Stock represented by such
Certificate, without any interest thereon, but shall have no greater rights
against the Surviving Corporation than may be accorded to general creditors
of the Surviving Corporation.
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(d) After the Effective Time there shall be no transfers on the stock
transfer books of the Surviving Corporation of any shares of Company Common
Stock. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for the Merger Consideration, as provided in this Article II,
subject to applicable law in the case of Dissenting Shares.
2.04 Stock Options. At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (a "Company Stock Option") issued
pursuant to the Company's stock option plans described on Schedule 3.11(a)
(together, the "Company Stock Plans") shall be exercised by the holder or
canceled and extinguished in a manner to be agreed upon by Acquiror and the
Company, which shall not increase Acquiror's aggregate Purchase Price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The term "Company Material Adverse Effect" as used in this Agreement shall
mean any change or effect that, individually or when taken together with all
other similar changes or effects, is materially adverse to the condition
(financial or otherwise), results of operations, businesses, properties, assets,
or liabilities of the Company and its Subsidiaries, taken as a whole; provided,
however, that the occurrence of any or all of the changes or events described on
Schedule 3.00(a) shall not, individually or in the aggregate, constitute a
"Company Material Adverse Effect."
The term "Person" as used in this Agreement shall mean an individual,
corporation, partnership, association, trust, unincorporated organization, other
entity or group (as defined in section 13(d) of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act")).
The term "Affiliate" as used in this Agreement shall mean, with respect to
any Person, a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
first mentioned Person. The term "control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
The term "Subsidiary" (or its plural) as used in this Agreement with
respect to the Company, Acquiror, the Surviving Corporation or any other person
shall mean any corporation, partnership, joint venture or other legal entity of
which the Company, Acquiror, the Surviving Corporation or such other Person, as
the case may be (either alone or through or together with any other Subsidiary),
owns, directly or indirectly, greater than 50% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such corporation or other
legal entity.
With respect to any representation, warranty or statement of the Company in
this Agreement that is qualified by or to the Company's knowledge, such
knowledge shall be deemed to exist only if, at the time as of which such
representation, warranty or statement was made, any of the individuals listed on
Schedule 3.00(b) had actual knowledge of the matter to which such qualification
applies.
Except as set forth in the disclosure schedules delivered by the Company to
Acquiror and Acquiror Sub prior to the execution of this Agreement, the Company
makes the following representations and warranties to Acquiror and Acquiror Sub.
Notwithstanding anything in this Agreement to the contrary, any matter disclosed
in any part of the disclosure schedules shall be deemed to be disclosed in all
parts of the disclosure schedules where such matter is required to be disclosed,
regardless of whether such matter is specifically cross-referenced. The
disclosure of any matter in the disclosure schedules shall not necessarily be
deemed an indication that such matter is material or is required to be
disclosed.
3.01 Organization and Qualification; Subsidiaries. Except as set forth on
Schedule 3.01(a), each of the Company and its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under
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the laws of the jurisdiction of its incorporation, has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is duly qualified and in good standing
to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, except such jurisdictions if any, where the failure to
be so qualified would not have a Company Material Adverse Effect. A true and
complete list of all the Company's directly or indirectly owned Subsidiaries
together with the jurisdiction of incorporation or organization of each
Subsidiary and the percentage of each Subsidiary's outstanding capital stock or
other equity interest owned by the Company or another Subsidiary of the Company,
is set forth on Schedule 3.01(b).
3.02 Certificate of Incorporation; By-Laws. The Company has furnished to
Acquiror complete and correct copies of the Certificate of Incorporation and the
By-Laws, as amended or restated, of the Company and each of its Subsidiaries.
Neither the Company nor any Subsidiary is in violation of any of the provisions
of its Certificate of Incorporation or By-Laws, as amended or restated.
3.03 Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of
the Company consists of 4,300,000 shares of Company Common Stock, of which
1,896,668 shares are issued and outstanding, 248,413 shares reserved for
issuance pursuant to the Company Stock Plans and 248,413 Company Stock
Options are outstanding.
(b) Information as of the date of this Agreement relating to the
amounts of the authorized and issued and outstanding capital stock of each
Subsidiary is listed on Schedule 3.03(b).
(c) No shares of Company Common Stock are reserved for any purpose
other than as described in this section 3.03. Since December 31, 1996, no
shares of Company Common Stock have been issued by the Company, except
pursuant to the exercise of outstanding Company Stock Options in accordance
with their terms. Except as contemplated by this Agreement or as described
on Schedule 3.03(c), there have been no changes in the terms of any
outstanding Company Stock Options or the grant of any additional Company
Stock Options since December 31, 1996. All outstanding shares of Company
Common Stock have been duly authorized and are validly issued, fully paid
and nonassessable and are not subject to preemptive rights under the
Delaware Law, the Company's Certificate of Incorporation or By-Laws or any
agreement to which the Company is a party. Each of the outstanding shares
of capital stock of, or other equity interests in, each of the Company's
Subsidiaries has been duly authorized and is validly issued, fully paid and
nonassessable, and such shares or other equity interests are owned by the
Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations on the Company's voting rights, charges or other
encumbrances of any nature whatsoever, subject to federal and state
securities laws. Except as contemplated by this Agreement or described in
section 3.03(a) there are no options, warrants or other rights, agreements,
arrangements or commitments to which the Company or any of its Subsidiaries
is a party of any character relating to the issued or unissued capital
stock of, or other equity interests in, the Company or any of the
Subsidiaries or obligating the Company or any of the Subsidiaries to grant,
issue, sell or register for sale any shares of the capital stock of, or
other equity interests in, the Company or any of the Subsidiaries. Except
as set forth on Schedule 3.03(c), as of the date of this Agreement, there
are no obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to (i) repurchase, redeem or otherwise acquire any shares of
Company Common Stock, or the capital stock of, or other equity interests
in, any Subsidiary of the Company, or (ii) provide funds to, or make any
investment in (in the form of a loan, capital contribution or otherwise),
or provide any guarantee with respect to the obligations of, any Subsidiary
of the Company, except for the provision of funds to, making an investment
in (in the form of a loan, capital contribution or otherwise) or provision
of any guarantees of obligations of Subsidiaries in the ordinary course of
business.
3.04 Authority; Vote Required.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations under this
Agreement and to consummate the transactions
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contemplated by this Agreement, subject to required shareholder approval.
The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action,
including such corporate action as may be required by section 251 of the
Delaware Law, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement (other than with respect to the approval of
this Agreement by the holders of Company Common Stock in accordance with
the Delaware Law and the Company's Certificate of Incorporation and
By-Laws). This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
relating to or affecting the rights and remedies of creditors generally and
by general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance, injunctive relief or other
equitable remedies, regardless of whether enforceability is considered in a
proceeding in equity or at law.
(b) The affirmative vote of the holders of at least a majority of the
outstanding shares of Company Common Stock is the only vote of the holders
of any class or series of capital stock of the Company necessary to approve
the Merger.
3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not: (i)
violate the Certificate of Incorporation or By-Laws of the Company or any
of its Subsidiaries; (ii) subject to [a] obtaining the requisite approval
of this Agreement by the holders of at least a majority of the outstanding
shares of Company Common Stock in accordance with the Delaware Law and the
Company's Certificate of Incorporation and By-Laws, [b] obtaining the
consents, approvals, authorizations and permits of, and making filings with
or notifications to, any governmental or regulatory authority, domestic or
foreign ("Governmental Entities"), pursuant to the applicable requirements,
if any, of the Securities Act of 1933 (the "Securities Act"), the Exchange
Act, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder (the "HSR Act"), the applicable
provisions of Delaware law and the rules and regulations thereunder, the
requirements of the National Association of Securities Dealers, Inc.
("NASD") or the NASDAQ National Market System, and the filing and
recordation of appropriate merger documents as required by the Delaware
Law, and [c] giving the notices and obtaining the consents, approvals,
authorizations or permits described on Schedule 3.05(a), violate any laws
applicable to the Company or any of its Subsidiaries or by which any of
their respective properties is bound, other than a potential violation
under any federal or state antitrust or similar laws, rules or regulations;
or (iii) except as set forth on Schedule 3.05(a), result in any breach of
or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any of their
respective properties is bound, except for such violations, breaches or
defaults as would not have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company shall not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entities, except for applicable
requirements, if any, of (i) the Securities Act, the Exchange Act, the HSR
Act, and the requirements of the NASD and the NASDAQ National Market
System, (ii) the consents, approvals, authorizations or permits described
on Schedule 3.05(a), and (iii) the filing and recordation of appropriate
merger documents as required by the Delaware Law, except for any consent,
approvals, authorizations, permits, filings or notifications that, if not
obtained, would not have a Company Material Averse Effect.
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3.06 Permits; Compliance. Except as set forth on Schedule 3.06, each of the
Company and its Subsidiaries is in possession of all franchises, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary for the Company or any of its Subsidiaries to
own, lease and operate its properties or to carry on its business as it is now
being conducted (the "Company Permits"), except for any Company Permits the
absence of which would not have a Company Material Adverse Effect. To the
knowledge of the Company, no suspension, revocation or cancellation of any of
the Company Permits is pending or threatened. Neither the Company nor any of its
Subsidiaries is operating in default under or violation of (i) any law
applicable to the Company or any of its Subsidiaries or by which any of their
respective properties is bound or (ii) any of the Company Permits, except for
any such defaults or violations which would not have a Company Material Adverse
Effect.
3.07 Reports; Financial Statements.
(a) Since December 31, 1996, (i) the Company has filed all forms,
reports, statements and other documents required to be filed with [a] the
Securities and Exchange Commission (the "SEC") including, without
limitation, [i] all Annual Reports on Form 10-K, [ii] all Quarterly Reports
on Form 10-Q, [iii] all proxy statements relating to meetings of
shareholders (whether annual or special), [iv] all required Current Reports
on Form 8-K, [v] all other reports or registration statements and [vi] all
amendments and supplements to all such reports and registration statements,
which amendments and supplements have been, to the knowledge of the
Company, required to be filed (collectively, as amended or supplemented,
the "Company SEC Reports"), and [b] any applicable state securities
authorities; and (ii) the Company and each of its Subsidiaries have filed
all forms, reports, statements and other documents required to be filed
with any other applicable federal or state regulatory authorities, except
as set forth on Schedule 3.07(a) or where the failure to file such forms,
reports or statements would not have a Company Material Adverse Effect (all
such forms, reports, statements and other documents in clauses (i) and (ii)
of this section 3.07(a) being collectively referred to as the "Company
Reports"). Such Company SEC Reports and Company Reports do not contain any
untrue statement of a material fact or omit any material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes to such statements) contained in the Company SEC
Reports (i) have been prepared in all material respects in accordance with
the published rules and regulations of the SEC and generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods involved (except to the extent required by changes in GAAP and as
may be indicated in the notes thereto) and (ii) fairly represent the
consolidated financial position of the Company and its Subsidiaries as of
the respective dates thereof and the consolidated results of operations and
cash flows for the periods indicated (subject to normal year-end
adjustments in the case of any unaudited interim financial statements).
(c) Except as and to the extent reflected on, or reserved against in,
the consolidated balance sheet of the Company and its Subsidiaries at
December 31, 1996, including all notes thereto (the "Company Balance
Sheet"), or as set forth on Schedule 3.07(c), neither the Company nor any
of its Subsidiaries has any liabilities or obligations (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected
on, or reserved against in, a balance sheet of the Company or in the notes
thereto, prepared in accordance with the published rules and regulations of
the SEC and GAAP, except for liabilities or obligations incurred in the
ordinary course of business since December 31, 1996 that, individually or
in the aggregate, would not have a Company Material Adverse Effect.
3.08 Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Reports (or the notes thereto) or as contemplated by this Agreement,
since December 31, 1996:
(a) each of the Company and its Subsidiaries has conducted its
business in the ordinary course and consistent with the Company's past
practice;
(b) there has not been any Company Material Adverse Effect;
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(c) except as set forth on Schedule 3.08, neither the Company nor any
Subsidiary has made any material increase in compensation to officers or
key employees or any material increase in any or created any new bonus,
insurance, pension or other employee benefit plan, payment or arrangement
(including, but not limited to, the granting of stock options) other than
in the ordinary course of business and consistent with the Company's past
practice;
(d) neither the Company nor any Subsidiary has made any loans or
advances to any officer, director, shareholder or Affiliate of the Company
or of any Subsidiary (except for travel and business expense payments);
(e) there has not been any change in the accounting methods or
practices followed by the Company or any Subsidiary, except as required by
GAAP;
(f) the Company has not sold or disposed of material assets outside of
the ordinary course of business, other than the sale of assets pertaining
solely to the grinder and compactor divisions of the Company and those
assets listed on Schedule 5.05(a); and
(g) neither the Company nor any Subsidiary has entered into any
commitment or other agreement to do any of the foregoing.
3.09 Absence of Litigation.
(a) Schedule 3.09(a) lists all claims, actions, suits, litigation, or
arbitrations or, to the knowledge of the Company, investigations or
proceedings affecting the Company or any of its Subsidiaries, at law or in
equity, which are pending or, to the knowledge of the Company, threatened,
and which has had or would reasonably be expected to have a Company
Material Adverse Effect. There is no action pending seeking to enjoin or
restrain the Merger.
(b) Except as set forth on Schedule 3.09(b), neither the Company nor
any of its Subsidiaries is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with or, to
the knowledge of the Company, continuing investigation by, any Governmental
Entity.
3.10 Contracts; No Default. Schedule 3.10 lists each contract or agreement
to which the Company or any of its Subsidiaries is a party concerning a
partnership or joint venture with another Person or materially limiting the
right of the Company or any of its Subsidiaries prior to the Effective Time, or
Acquiror or any of its Subsidiaries at or after the Effective Time, to engage
in, or to compete with any Person in, any business including each contract or
agreement containing exclusivity provisions restricting the geographical area in
which, or the method by which, any business may be conducted by the Company or
any of its Subsidiaries prior to the Effective Time, or by the Acquiror or any
of its Subsidiaries after the Effective Time.
3.11 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.11(a) lists or describes any pension, retirement,
savings, disability, medical, dental, health, life (including any
individual life insurance policy as to which the Company is the owner,
beneficiary or both), death benefit, group insurance, profit sharing,
deferred compensation, stock option, bonus incentive, vacation pay,
severance pay, "cafeteria" or "flexible benefit" plan under section 125 of
the Internal Revenue Code of 1986 as amended (the "Code"), or other
employee benefit plan, trust, arrangement, contract, agreement, policy or
commitment, under which employees of the Company or its Subsidiaries are
entitled to participate by reason of their employment with the Company or
its Subsidiaries, (i) to which the Company or a Subsidiary is a party or a
sponsor or a fiduciary thereof or (ii) with respect to which the Company or
a Subsidiary has made payments, contributions or commitments, or has any
liability (collectively, the "Employee Benefit Plans").
(b) The Employee Benefit Plans have been operated and administered by
the Company in compliance in all material respects with all applicable laws
relating to employment or labor matters, including without limitation, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
the Code.
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(c) Each Employee Benefit Plan that is intended to be tax qualified
under section 401(a) of the Code has received, or the Company has applied
for or will in a timely manner apply for, a favorable determination letter
from the Internal Revenue Service (the "IRS") stating that the Plan meets
the requirements of the Code and that any trust or trusts associated with
the plan are tax exempt under section 501(a) of the Code.
(d) The Company does not maintain any defined benefit plan covering
employees of the Company or its Subsidiaries within the meaning of section
3(35) of ERISA.
(e) Schedule 3.11(e) sets forth a list of all written employment
agreements, employment contracts or understandings relating to employment
(other than relating to "at-will" employment) to which the Company or any
of its Subsidiaries is a party.
3.12 Taxes. The Company has filed or caused to be filed with the
appropriate Governmental Entities, all federal, state, municipal, and local
income, franchise, excise, real and personal property, and other tax returns and
reports that are required to be filed, and the Company is not delinquent in the
payment of any material taxes shown on such returns or reports or on any
material assessments for any such taxes received by it and has otherwise
complied in all material respects with all legal requirements applicable to the
Company with respect to all income, sales, use, real or personal property,
excise or other taxes. The Company Balance Sheet includes adequate reserves for
the payment of all accrued but unpaid federal, state, municipal and local taxes
of the Company, including, without limitation, interest and penalties, whether
or not disputed, for the year ended December 31, 1996 and for all fiscal years
prior thereto. Except as set forth on Schedule 3.12, the Company has not
executed or filed with the Internal Revenue Service any agreement extending the
period for assessment and collection of any federal tax. The Company is not a
party to any pending action or proceeding, nor, to the knowledge of the Company,
has any action or proceeding been threatened, by any Governmental Entity for
assessment or collection of taxes, and no claim for assessment or collection of
taxes has been asserted against the Company.
3.13 Intellectual Property Rights. To the knowledge of the Company, the
Company and each of the Subsidiaries owns or possesses the right to use (in the
manner and the geographic areas in which they are currently used) all patents,
patents pending, trademarks, service marks, trade names, service names, slogans,
registered copyrights, trade secrets and other intellectual property rights it
currently uses, without any conflict or alleged conflict with the rights of
others, except where any such conflict would not have a Company Material Adverse
Effect.
3.14 Insurance. All policies and binders of insurance for professional
liability, directors and officers, property and casualty, fire, liability,
worker's compensation and other customary matters held by or on behalf of the
Company or its Subsidiaries ("Insurance Policies") have been made available to
Acquiror. The Insurance Policies are in full force and effect. To the knowledge
of the Company, the Company or its Subsidiaries have not failed to give any
notice of any claim under any Insurance Policy in due and timely fashion, nor to
the knowledge of the Company, has any coverage for claims been denied, which
failure or denial has had or would have a Company Material Adverse Effect.
3.15 Brokers. No broker, finder or investment banker other than The Chicago
Corporation is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon any
arrangements made by or on behalf of the Company.
3.16 Title to Properties.
(a) Schedule 3.16(a) lists all real property owned and leased by the
Company and its Subsidiaries. The Company and its Subsidiaries have good
title to all of their tangible properties and tangible assets, real and
personal, free and clear of all mortgage liens and free and clear of all
other liens, charges and encumbrances except liens for taxes not yet due
and payable, and such other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of
the property effected thereby or which, individually or in the aggregate,
would not have a Company Material Adverse Effect.
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(b) To the knowledge of the Company, the leases for the real property
described on Schedule 3.16(a) are in full force and effect and the Company
holds a valid and existing leasehold interest under each of the leases. The
Company has delivered to Acquiror complete and accurate copies of each of
the leases described on Schedule 3.16.
(c) Neither the Company nor any Subsidiary is in violation of any
applicable material zoning ordinance or other law, regulation or
requirement relating to the operation of any properties used in the
operation of its business, which violation has had or would have a Company
Material Adverse Effect, and neither the Company nor any Subsidiary has
received any notice of any such violation, or the existence of any
condemnation proceeding with respect to any of its real property.
3.17 Labor Matters. Except for matters which will not cause a Company
Material Adverse Effect (a) the Company and its Subsidiaries are in compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and are not engaged in any
unfair labor practice; (b) there is no unfair labor practice complaint against
the Company or its Subsidiaries pending before the National Labor Relations
Board; (c) there is no labor strike, dispute, slow down, representation campaign
or work stoppage actually pending or threatened against or effecting the Company
or its Subsidiaries; (d) no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending and no claim therefore has
been asserted against the Company or its Subsidiaries; and (e) neither the
Company nor its Subsidiaries are experiencing any material work stoppage.
3.18 Proxy Statement. The definitive Proxy Statement and related materials
will comply with the Exchange Act in all material respects. The definitive proxy
materials will not contain a untrue statement of material fact or omit a
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they will be made, not misleading; provided,
however, that the Company makes no representation or warranty with respect to
any information that the Acquiror will supply for use in connection with such
proxy materials.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF ACQUIROR AND ACQUIROR SUB
The term "Acquiror Material Adverse Effect" as used in this Agreement shall
mean any change or effect that, individually or when taken together with all
such other changes or effects, is materially adverse to the condition (financial
or otherwise), results of operations business, properties, assets or liabilities
of Acquiror and its Subsidiaries, taken as a whole.
Acquiror and Acquiror Sub jointly and severally represent and warrant to
the Company that:
4.01 Organization and Qualification; Subsidiaries. Each of Acquiror and
Acquiror Sub is a corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted.
4.02 Authority. Each of Acquiror and Acquiror Sub has the requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder, and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by Acquiror and Acquiror
Sub, and the consummation by Acquiror and Acquiror Sub of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
and no other corporate proceedings on the part of Acquiror or Acquiror Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated by this Agreement. This Agreement has been duly executed and
delivered by Acquiror and Acquiror Sub and constitutes a legal, valid and
binding obligation of Acquiror and Acquiror Sub enforceable against Acquiror and
Acquiror Sub in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws relating to or
affecting the rights and remedies of creditors generally and by general
principles of equity including, without
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limitation, concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance, injunctive relief or
other equitable remedies, regardless of whether enforceability is considered in
a proceeding in equity or at law.
4.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror will not, (i) violate the Certificate of Incorporation or By-Laws
or equivalent organizational documents of Acquiror or Acquiror Sub, (ii)
subject to obtaining the consents, approvals, authorizations and permits
of, and making filings with or notifications to, any Governmental Entities
pursuant to the applicable requirements, if any, of the Securities Act, any
stock exchange or quotation service on which Acquiror's securities are
listed or quoted, the HSR Act and the filing and recordation of appropriate
merger documents as required by the Delaware Law, conflict with or violate
any laws applicable to Acquiror or Acquiror Sub or by which any of their
respective properties is bound or affected, except such as would not have
an Acquiror Material Adverse Effect.
(b) The execution and delivery of this Agreement by Acquiror and
Acquiror Sub do not, and the performance of this Agreement by Acquiror and
Acquiror Sub shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Entities,
except as described in section 4.03(a) above.
4.04 Ownership of Acquiror Sub; No Prior Activities.
(a) Acquiror Sub was formed for the purpose of engaging in the
transactions contemplated by this Agreement. As of the Effective Time, all
of the outstanding capital stock of Acquiror Sub will be owned directly by
Acquiror. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Acquiror
Sub has not and will not have incurred, directly or indirectly, through any
Subsidiary or Affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreement or arrangements with any Person.
4.05 Financing. Acquiror has the ability to and intends to finance the
aggregate of the amounts payable pursuant to Article II with cash on hand and
utilization of existing credit facilities. Acquiror will use its best efforts to
ensure the continued availability of such financing and pay such amounts in
accordance with the terms of this Agreement and will not take any action between
the date hereof and the Effective Time which would impair its ability to obtain
such financing.
ARTICLE V
COVENANTS
5.01 Affirmative Covenants of the Company. With respect to the mixer
division assets, operations, business and employees, the Company covenants and
agrees that prior to the Effective Time, unless otherwise contemplated by this
Agreement or consented to in writing by Acquiror, the Company will and will
cause each of its Subsidiaries to:
(a) operate its business in the ordinary course of business and
consistent with its past practice;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the
services of its respective officers and key employees and maintain the
relationships with its respective key customers and suppliers;
(c) subject to the provisions of the Acquiror Confidentiality
Agreement (as hereinafter defined), confer with Acquiror at its reasonable
request to report operational matters of a material nature and to report
the general status of the ongoing operations of the business of the Company
and its Subsidiaries;
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(d) Subject to the provisions of the Acquiror Confidentiality
Agreement, from the date hereof until the Closing Date, the Company (i)
will give, and will cause each of its Subsidiaries to give, Acquiror, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the offices, properties, books and records of the
Company and its Subsidiaries, (ii) will furnish, and will cause each
Subsidiary to furnish, to Acquiror, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating
data and other information relating to the Company and the Subsidiaries as
such persons may reasonably request, and (iii) will instruct the employees,
counsel and financial advisors of the Company and the Subsidiaries to
cooperate in all reasonable respects with Acquiror in its investigation of
the Company and the Subsidiaries. From the date of this Agreement until the
Effective Time, upon reasonable request, Acquiror shall be permitted to
have one or more of its personnel at the Company's premises for purposes of
due diligence and review of the business of the Mixer Division.
Notwithstanding the foregoing, Acquiror shall not have access to
information, analyses and materials prepared for the Company by ABN AMRO
Chicago Corporation, personnel records, medical histories or other
information which in the Company's good faith opinion is sensitive or the
disclosure of which could subject the Company to risk of liability.
5.02 Negative Covenants of the Company. Except as contemplated by this
Agreement or consented to in writing by Acquiror, from the date of this
Agreement until the Effective Time, the Company shall not do, and shall not
permit any of its Subsidiaries to do, any of the following:
(a) except as set forth on Schedule 5.02(a): (i) increase the
compensation payable to any director, officer or employee of the Company or
any of its Subsidiaries, except for increases in salary or wages payable or
to become payable in the ordinary course of business and consistent with
the policies currently in effect; (ii) grant any severance or termination
pay (other than pursuant to the severance policy and agreements of the
Company or its Subsidiaries currently in effect) to, or enter into any
severance agreement with, any director or officer; (iii) subject to clause
(i), enter into or amend any employment agreement with any director or
officer that would extend beyond the Effective Time except on an at-will
basis; or (iv) establish, adopt, enter into or amend any Employee Benefit
Plan, except as may be required to comply with applicable law;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its or any
of its Subsidiaries' capital stock or any securities or obligations
convertible into or exchangeable for any shares of its or its Subsidiaries'
capital stock, or any options, warrants or conversion or other rights to
acquire any shares of its or its Subsidiaries capital stock; (ii) effect
any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its or its Subsidiaries' capital stock (except for the
issuance of shares upon the exercise of options or warrants in accordance
with their terms);
(d) issue, deliver, award, grant or sell, or authorize the issuance,
delivery, award, grant or sale (including the grant of any security
interests, liens, claims, pledges, limitations on voting rights, charges or
other encumbrances) of, any shares of any class of its or its Subsidiaries'
capital stock, any securities convertible into or exercisable or
exchangeable for any such shares, or any rights, warrants or options to
acquire any such shares (except for the issuance of shares upon the
exercise of options or warrants in accordance with their terms), or amend
or otherwise modify the terms of any such rights, warrants or options the
effect of which shall be to make such terms more favorable to the holders
thereof, except as contemplated by this Agreement;
(e) to the extent material, acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any other
Person (other than the purchase of assets from suppliers or vendors in the
ordinary course of business and consistent with the Company's past
practice);
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(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any material amount of any of its or its
Subsidiaries' assets (other than assets pertaining solely to the grinder
and compactor divisions and the assets listed on Schedule 5.05(a)), except
for dispositions in the ordinary course of business and consistent with the
Company's past practice;
(g) adopt any amendments to its Certificate of Incorporation or
By-Laws;
(h) except as set forth in Schedule 5.02(h); (i) change any of its
methods of accounting in effect at December 31, 1996 or (ii) make or
rescind any express or deemed election relating to taxes, settle or
compromise any claim, action, suit, litigation, proceeding, arbitration,
investigation, audit or controversy relating to taxes, or change any of its
methods of reporting income or deductions for federal income tax purposes
from those employed in the preparation of the federal income tax returns
for the taxable year ending December 31, 1996, except in either case as may
be required by law, the IRS, or GAAP or in the ordinary course of business
consistent with past practice;
(i) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except as approved by Acquiror in advance; or
(j) agree in writing or otherwise to do any of the foregoing.
5.03 Confidentiality Agreement. The parties will, and will cause their
respective officers, employees, accountants, consultants, legal counsel and
other representatives to, comply with all of their respective obligations under
the Confidentiality Agreement entered into by the Company and Acquiror on
February 11, 1997 concerning the Company's confidential information (the
"Acquiror Confidentiality Agreement").
5.04 Acquisition Proposals. Upon execution of this Agreement, the Company
and its Subsidiaries and their respective officers, directors, employees, agents
and advisors will immediately cease any existing discussions or negotiations
with any parties conducted heretofore with respect to any Acquisition Proposal
(as hereinafter defined). The Company may, directly or indirectly, furnish
information and access, in each case only in response to requests that were not
solicited by the Company (or any officer, director, employee, agent or advisor
on its behalf) after the date of this Agreement, to any corporation,
partnership, person or other entity or group (each, a "Potential Acquiror")
pursuant to confidentiality agreements, and may participate in discussions and
negotiate with a Potential Acquiror concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
Subsidiary or division of the Company, if such Potential Acquiror has submitted
a written proposal to the Board of Directors relating to any such transaction,
and the Board of Directors determines in good faith after consultation with
independent legal counsel that the failure to provide such information or access
or to engage in such discussions or negotiations would be inconsistent with
their fiduciary duties to the Company's shareholders under applicable law. The
Company shall notify Acquiror immediately if any such request or proposal, or
any inquiry or contact with any Person with respect thereto, is made and shall
keep Acquiror apprised of all developments that could reasonably be expected to
culminate in the Board withdrawing, modifying or amending its recommendation of
the Merger and the other transactions contemplated by this Agreement. The
Company has entered into confidentiality agreements with other third parties
substantially in the form of the Acquiror Confidentiality Agreement. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party unless,
in the opinion of the Board of Directors after consultation with independent
legal counsel, the failure to provide such release or waiver would be
inconsistent with its fiduciary duties to the Company's shareholders under
applicable law. For purposes of this section 5.04, the term "Acquisition
Proposal" means any proposal or offer for a merger, consolidation or similar
combination (other than the Merger contemplated by this Agreement) involving the
Company or any Subsidiary and any Potential Acquiror, or any proposal or offer
to acquire a significant equity interest in the Company, or a significant
portion of the real estate or mixer division assets of the Company by a
Potential Acquiror.
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5.05 Sale of Divisions.
(a) Notwithstanding anything else in this Agreement to the contrary,
the parties agree that prior to the Effective Time the Company may enter
into an agreement (the "Purchase Agreement") with CMI Corporation
("Purchaser") for the sale of assets pertaining solely to the grinder and
compactor divisions of the Company, together with the assets listed on
Schedule 5.05(a) (collectively, the "Divisional Assets"). Such agreement
shall be substantially consistent with the terms of the Company's Letter of
Intent with Purchaser as reviewed by Acquiror. At or prior to Closing, the
Company shall distribute to its shareholders all of the proceeds of the
sale of the Divisional Assets, less the amount of all tax liabilities and
unpaid transaction expenses pertaining to such sales.
(b) If the Purchase Agreement is terminated prior to Closing or the
Company gives written notice to Acquiror that the Company does not
reasonably expect the sale of the Divisional Assets to Purchaser to be
consummated, then Acquiror, Acquiror Sub and the Company will execute, upon
request of the Company or Acquiror, an amendment to this Agreement (the
"Amendment") providing, in lieu of the Merger contemplated by this
Agreement, for the formation of a holding company as the sole shareholder
of the Company ("Holdco"), the transfer of the Divisional Assets to Holdco
and the sale of all of the outstanding shares of capital stock of the
Company by Holdco to Acquiror.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
the Company shall prepare and file with the SEC a proxy statement and a
form of proxy to be sent to the shareholders of the Company in connection
with the meeting of the Company's shareholders to consider the Merger (the
"Shareholders' Meeting") (such proxy statement, together with any
amendments thereof or supplements thereto, in each case in the form or
forms mailed to the Company's shareholders, being the "Proxy Statement").
The Proxy Statement shall include the recommendation of the Company's Board
of Directors in favor of the Merger and approval of this Agreement, unless
outside legal counsel to the Company advise the Company's Board of
Directors that the directors' fiduciary duties under applicable law make
such recommendation inappropriate.
(b) The information included in the Proxy Statement shall not, at the
date the Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to shareholders or at the time of the Shareholders'
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. If at any time prior to the Shareholders'
Meeting, any event or circumstance relating to the Company or any of its
Subsidiaries, or its or their respective officers or directors, is
discovered by the Company which should be set forth in a supplement to the
Proxy Statement, the Company shall promptly inform Acquiror. All documents
that the Company is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance
in all material respects with the applicable requirements of the Exchange
Act.
(c) The Acquiror will provide the Company with whatever information
and assistance in connection with the foregoing filings that the Company
reasonably may request.
(d) The Acquiror agrees as the sole shareholder of the Acquiror Sub to
vote in favor of the Merger and to take all actions that may be required to
approve the Merger and to effect the transactions contemplated by this
Merger Agreement on behalf of the Acquiror Sub.
(e) Each of the Parties will file (and the Company will cause each of
its Subsidiaries to file) any Notification and Report Forms and related
material that it may be required to file with the Federal Trade Commission
and the Antitrust Division of the United States Department of Justice under
the HSR Act, will use its reasonable best efforts to obtain (and the
Company will cause each of its Subsidiaries to use
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its reasonable best efforts to obtain) an early termination of the
applicable waiting period, and will make (and the Company will cause each
of its Subsidiaries to make) any further filings pursuant thereto that may
be necessary, proper, or advisable.
6.02 Meeting of Shareholders. The Company shall take all action necessary
in accordance with the Delaware Law and its Certificate of Incorporation and
By-Laws to convene the Shareholders' Meeting, and the Company shall consult with
Acquiror in connection therewith. The Company shall use reasonable efforts to
solicit from the shareholders of the Company proxies in favor of the Merger and
shall take all other actions necessary or advisable to secure the vote or
consent of shareholders required by the Delaware Law to approve this Agreement,
including the retention of proxy solicitation agents if requested by Acquiror,
unless otherwise required by the applicable fiduciary duties of directors or
officers of the Company.
6.03 Appropriate Action; Consents; Filings.
(a) Subject to the terms and conditions herein provided, the Company,
Acquiror and Acquiror Sub shall use all reasonable efforts to (i) take, or
cause to be taken, all appropriate action, and do or cause to be done, all
things necessary, proper or advisable under applicable law or otherwise to
consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, (ii) obtain from any Governmental
Entities any consents, licenses or orders required to be obtained by
Acquiror or the Company or any of their respective Subsidiaries in
connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated by this Agreement,
including, without limitation, the Merger, and (iii) make all necessary
notifications and filings and thereafter make any other required
submissions with respect to this Agreement and the Merger required under
[a] the Securities Act, the Exchange Act and any other applicable federal
or state securities laws, [b] the HSR Act, and [c] any other applicable
law; provided that Acquiror and the Company shall cooperate with each other
in connection with the making of all such filings. The Company and Acquiror
shall furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any
applicable law (including all information required to be included in the
Proxy Statement and Registration Statement) in connection with the
transactions contemplated by this Agreement.
(b) (i) The Company and Acquiror shall give (or cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause
their respective Subsidiaries to use, all reasonable efforts to obtain any
third-party consents, [a] necessary to consummate the transactions
contemplated in this Agreement, [b] disclosed or required to be disclosed
in the disclosure schedules to this Agreement, or [c] required to prevent a
Company Material Adverse Effect from occurring prior to the Effective Time.
(ii) In the event that any party shall fail to obtain any third-party
consent described in subsection (b)(i) above, such party shall use
reasonable efforts, and shall take any such actions reasonably requested by
the Company and Acquiror to minimize any adverse effect upon the Company,
its Subsidiaries and its businesses resulting, or which could reasonably be
expected to result after the Effective Time, from the failure to obtain
such consent.
(c) From the date of this Agreement until the Effective Time, the
Company shall promptly notify Acquiror in writing of any pending or, to the
knowledge of the Company, threatened action, proceeding or investigation by
any Governmental Entity or any other Person (i) challenging or seeking
material damages in connection with the Merger, (ii) alleging that the
consent of such Governmental Entity or Person may be required in connection
with the Merger or this Agreement, or (iii) seeking to restrain or prohibit
the consummation of the Merger or otherwise limit the right of Acquiror or,
to the knowledge of the Company, its Subsidiaries, to own or operate all or
any portion of the businesses or assets of the Company or its Subsidiaries.
(d) From the date of this Agreement until the Effective Time, Acquiror
shall promptly notify the Company in writing of any pending or, to the
knowledge of Acquiror, threatened action, proceeding or investigation by
any Governmental Entity or any other Person (i) challenging or seeking
material damages in connection with the Merger or (ii) seeking to restrain
or prohibit the consummation of the
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Merger or otherwise limit the right of Acquiror or its Subsidiaries to own
or operate all or any portion of the business or assets of the Company or
its Subsidiaries.
6.04 Update Disclosure; Breaches. From and after the date of this Agreement
until the Effective Time, each party shall promptly notify the other parties
hereto by written update to its disclosure schedules ("Update Schedule") of (a)
the occurrence or non-occurrence of any event the occurrence or non-occurrence
of which would be reasonably likely to cause any condition to the obligations of
any party to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied, (b) the failure of the Company or Acquiror, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it pursuant to this Agreement which would be
reasonably likely to result in any condition to the obligations of any party to
effect the Merger and the other transactions contemplated by this Agreement not
to be satisfied, or (c) of any changes to the information contained in its
disclosure schedule (including any change to any representations or warranties
herein as to which no schedule has been created as of the date hereof but as to
which a schedule would have been required hereunder to have been created on or
before the date hereof if such change had existed on the date hereof).
6.05 Public Announcements. The parties to this Agreement shall consult in
good faith with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement without the prior written
agreement of the other party, except as may be required by law or the
requirements of the New York Stock Exchange or the NASDAQ National Market.
6.06 Indemnification.
(a) From and after the Effective Time, Acquiror shall, and shall cause
the Surviving Corporation to, indemnify, defend and hold harmless the
present and former officers, directors, employees, agents and
representatives of the Company and its Subsidiaries (collectively, the
"Indemnified Parties") against all losses, expenses, claims, damages or
liabilities arising out of actions or omissions occurring at or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the fullest extent permitted or required
under the Delaware Law or other applicable state law (and shall also
advance reasonable expenses as incurred to the fullest extent permitted
under the Delaware Law or other applicable state law, provided that the
persons to whom expenses are advanced provides an undertaking to repay such
advances contemplated by the Delaware Law). Acquiror and Acquiror Sub agree
that all rights to indemnification, including provisions relating to
advances of expenses incurred in defense of any claim, action, suit,
proceeding or investigation (a "Claim") existing in favor of the
Indemnified Parties as provided in the Company's Certificate of
Incorporation or By-Laws or other agreement or provisions, as in effect as
of the date hereof, with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect.
(b) Without limiting the foregoing, in the event any Claim is brought
against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) the Indemnified Parties may
retain counsel satisfactory to them (subject to approval by Acquiror and
the Surviving Corporation, which approval will not be unreasonably withheld
or delayed), (ii) Acquiror and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received subject to the ability of
Acquiror and the Surviving Corporation to receive such information relative
to the legal services provided as is customarily provided and reasonably
requested by Acquiror and the Surviving Corporation, and (iii) Acquiror and
the Surviving Corporation will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that neither Acquiror nor the
Surviving Corporation shall be liable for any settlement of any Claim
effected without its written consent, which consent, however, shall not be
unreasonably withheld or delayed. Any Indemnified Party wishing to claim
indemnification under this section 6.06, upon learning of any such Claim,
shall notify Acquiror (but the failure so to notify Acquiror shall not
relieve it from any liability which it may have under this section 6.06
except to the extent such failure materially prejudices Acquiror). The
Indemnified Parties as a group may retain only one law firm to represent
them with respect to each such matter unless there is, as evidenced by the
written opinion of counsel reasonably
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acceptable to Acquiror and the Surviving Corporation, under applicable
standards of professional conduct, a conflict on any significant issue
between the positions of any two or more Indemnified Parties.
(c) The Surviving Corporation shall use reasonable efforts to obtain
extended reporting endorsements on the fiduciary liability, professional
liability and directors and officers liability policies currently covering
the Company or any of its Subsidiaries or any of the Indemnified Parties,
and will submit to the applicable insurer a full and complete list of any
potential claims under the policy issued by such insurer. In the event the
Surviving Corporation is unable to obtain extended coverage under its
existing directors and officers liability insurance policies, Acquiror
shall use reasonable efforts to provide similar coverage for the
Indemnified Parties under policies then maintained by Acquiror; provided
that such similar coverage is available to Acquiror at a cost not
substantially higher than the Company's present coverage.
(d) This section 6.06 is intended to benefit the Indemnified Parties
and shall be binding on all successors and assigns of Acquiror, Acquiror
Sub, the Company and the Surviving Corporation.
6.07 Obligations of Acquiror Sub. Acquiror shall take all action necessary
to cause Acquiror Sub to perform its obligations under this Agreement and to
consummate the Merger on the terms and conditions set forth in this Agreement.
6.08 Employee Benefits and Compensation. After the Effective Time, the
employee benefit plans of the Surviving Corporation shall recognize for
eligibility, vesting, accrual and all other purposes the credited service of
employees of the Company and its Subsidiaries credited as of the Effective Time
under the Company's Employee Benefit Plans on a basis that is consistent with
the manner in which the Employee Benefit Plans of the Company recognized such
employment for similar purposes.
ARTICLE VII
CLOSING CONDITIONS
7.01 Conditions to Obligations of Each Party Under This Agreement. The
respective obligations of each party to effect the Merger and the other
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived, in whole or in part, to the extent permitted by applicable
law:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved by the requisite vote of the shareholders of the Company.
(b) No Action or Proceeding. There shall not have been instituted and
there shall not be pending any action or proceeding by a Governmental
Entity, and no such action or proceeding shall have been approved by a
Governmental Entity with authority to institute such an action or
proceeding, before any court of competent jurisdiction or governmental
agency or regulatory or administrative body, and no order or decree shall
have been entered in any action or proceeding before such court, agency or
body of competent jurisdiction: (i) imposing or seeking to impose
limitations on the ability of Acquiror to acquire or hold or to exercise
full rights of ownership of any securities of the Company or any of its
Subsidiaries; (ii) imposing or seeking to impose limitations on the ability
of Acquiror to combine and operate the business and assets of the Company
with any of Acquiror's Subsidiaries or other operations; (iii) imposing or
seeking to impose other sanctions, damages or liabilities arising out of
the Merger on Acquiror, Acquiror Sub, the Company or any of their officers
or directors; (iv) requiring or seeking to require divestiture by Acquiror
of all or any material portion of the business, assets or property of the
Company and its Subsidiaries; or (v) restraining, enjoining or prohibiting
or seeking to restrain, enjoin or prohibit the consummation of the Merger,
in each case, with respect to clauses (i) through (iv) above, which would
or is reasonably likely to result in a Company Material Adverse Effect at
or prior to or after the Effective Time or, with respect to clauses (i)
through (v) above, which would or is reasonably likely to subject any of
their respective officers or directors to any penalty or criminal
liability. Notwithstanding the foregoing, prior to invoking the condition
set forth in this section 7.01(b), the party seeking to invoke
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it shall have used its reasonable efforts to have any such pending or
approved action or proceeding withdrawn or dismissed or such order or
decree vacated.
(c) HSR Act. The applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been
terminated.
(d) Other Approvals or Notices. All other consents, waivers, approvals
and authorizations required to be obtained from, and all filings or notices
required to be made with, any Governmental Entity by Acquiror or the
Company or any Subsidiary prior to consummation of the transactions
contemplated in this Agreement (other than the filing and recordation of
Merger documents in accordance with the Delaware Law) shall have been
obtained from and made with all required Governmental Entities, except for
such consents, waivers, approvals or authorizations which the failure to
obtain, or such filings or notices which the failure to make, would not
have a Company Material Adverse Effect prior to or after the Effective Time
or an Acquiror Material Adverse Effect before or after the Effective Time
or be reasonably likely to subject the Company, Acquiror, Acquiror Sub or
any of their respective Subsidiaries or any of their respective officers,
directors, employees, agents or representatives to substantial penalty or
criminal liability.
(e) Transfer of Divisional Assets. The sale of the Divisional Assets
to the Purchaser shall have been consummated on terms and conditions
reasonably satisfactory to the Company and Acquiror.
(f) Transfer of Real Property. The Company shall have completed the
transfer of the real property owned by the Company located at 445 West
Oklahoma Avenue, Milwaukee, Wisconsin and at 550 West Oklahoma Avenue,
Milwaukee, Wisconsin, to Acquiror, on terms and conditions reasonably
satisfactory to Company and the Acquiror, in exchange for the receipt by
the Company from Acquiror of immediately available funds in the amount of
$1,756,000.
(g) Fairness Opinion. The Company shall have received from ABN AMRO
Chicago Corporation an opinion, dated as of the date of the Proxy
Statement, to the effect that the consideration which the Company's
shareholders will receive pursuant to the Merger is fair to the Company's
shareholders from a financial point of view.
7.02 Additional Conditions to Obligations of Acquiror and Acquiror Sub. The
obligations of Acquiror and Acquiror Sub to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived, in whole or in part:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall have been true
and correct in all material respects when made and the information
contained therein, as updated by any Update Schedule, taken as a whole,
shall not have materially adversely changed; and each of the
representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects as of the Effective
Time. Acquiror shall have received a certificate of the Chief Executive
Officer and Chief Financial Officer of the Company to that effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, except to the extent failure to perform is
caused by or is consented to by Acquiror or Acquiror Sub. Acquiror shall
have received a certificate of the Chief Executive Officer and Chief
Financial Officer of the Company to that effect.
(c) Consents Under Agreements. The Company shall have obtained the
third-party consents described in subsection 6.03(b)(i), except those for
which the failure to obtain such consents and approvals would not have a
Company Material Adverse Effect prior to or after the Effective Time or an
Acquiror Material Adverse Effect before or after the Effective Time, other
than as contemplated by subsection 6.03(b)(ii).
18
<PAGE> 22
(d) Opinion of Counsel. The Acquiror and the Acquiror Sub shall have
received an opinion of Reinhart, Boerner, Van Deuren, Norris & Rieselbach,
s.c. counsel to the Company, addressed to Acquiror and Acquiror Sub, dated
as of the Effective Time, and reasonably satisfactory in form and substance
to Acquiror, Acquiror Sub and its counsel, to the following effect:
(i) The Company and each Subsidiary is a corporation existing under
the laws of the State of Delaware and, based solely on a certificate of
the Secretary of State of Delaware, [a] has filed with the Secretary of
State during its most recently completed report year the required annual
report; [b] is not the subject of a proceeding under the Delaware Law,
to cause its administrative dissolution; [c] no determination has been
made by the Secretary of State that grounds exist for such action with
respect to the Company or any Subsidiary; [d] no filing has been made
with the Secretary of State of a decree of dissolution with respect to
the Company or any Subsidiary; and [e] Certificate of Dissolution of the
Company or any Subsidiary have not been filed with the Secretary of
State. Immediately prior to the Effective Time, the Company was the sole
registered holder of record of the number of shares of stock or equity
interests in its Subsidiaries as is set forth in the Agreement and the
Company Disclosure Schedule with respect to section 3.03(b). The Company
and its Subsidiaries have the corporate power to carry on their
respective businesses as currently being conducted.
(ii) The Agreement and Plan of Merger (the "Agreement") is a legal,
valid and binding obligation of the Company [a] except as the Agreement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally; and [b] subject to general principles of equity
including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of specific
performance, injunctive relief or other equitable remedies, regardless
of whether considered in a proceeding in equity or at law. Counsel
expresses no opinion with respect to section 8.03(e) of the Agreement.
The execution, delivery and performance by the Company of the Agreement
have been duly authorized by all necessary corporation action, including
the requisite approval of the shareholders of the Company. Under the
Delaware Law and the Company's Certificate of Incorporation and By-Laws,
the Company's shareholders and Board of Directors properly approved the
Merger in accordance with the terms of the Agreement. Upon filing the
Certificate of Merger as contemplated by the Agreement, the Merger shall
be effective under Delaware law.
(iii) The execution and delivery of the Agreement and the
performance by the Company of its terms do not [a] contravene or
conflict with any provision of the Certificate of Incorporation or By-
Laws of the Company; or [b] violate any order, judgment or decree of any
Delaware or federal court or governmental instrumentality to which the
Company is subject and of which such counsel has knowledge.
(iv) The authorized capital stock of the Company consists of
4,300,000 authorized shares of Company Common Stock, par value $.12 per
share, of which, to the knowledge of such counsel, 1,896,668 shares are
issued and outstanding, fully paid and nonassessable. To the knowledge
of such counsel, the Company does not have outstanding any stock or
securities convertible into or exchangeable for any shares of capital
stock or any preemptive rights or other rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments, rights or claims of any other character relating to the
issuance of, any capital stock or any stock or securities convertible
into or exchangeable for any capital stock other than as set forth in
[a] the Certificate of Incorporation and [b] the Agreement or the
Disclosure Schedules. To the knowledge of such counsel, except as set
forth in the Certificate of Incorporation and as set forth in the
Agreement or the Disclosure Schedules, the Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of capital stock of the Company.
19
<PAGE> 23
(v) There are no preemptive rights of stockholders under the
Certificate of Incorporation of the Company or as a matter of law under
the Delaware Law with respect to the Agreement or the Merger.
(vi) To the knowledge of such counsel, there is no action, suit,
investigation or proceeding pending or threatened against the Company or
any properties or rights of the Company by or before any court,
arbitrator or administrative or governmental body which questions the
validity of the Agreement or any action which has been or is to be taken
by the Company thereunder.
(e) Long-Term Debt. The Company's long-term debt, including any
current portions thereof, shall have been paid in full prior to the
Closing.
(f) Purchase Price. The aggregate Purchase Price payable pursuant to
Article II shall not be more than $200,000 higher than what the aggregate
Purchase Price would be if calculated as of the Closing Date in accordance
with the formula attached hereto as Exhibit B (the "Closing Date
Calculation"), provided that (i) the Closing Date Calculation will give
effect to any severance payments made by the Company on a net after-tax
basis by including the expected tax deduction that will accrue to the
Company as a result of such severance payments, and (ii) the value of any
inventory approved by Acquiror for inclusion in the calculation of the
Purchase Price as of the date of this Agreement will be the value of such
inventory for the Closing Date Calculation to the extent that the Company
retains such inventory on the Closing Date. Acquiror, however, may examine
the value of any inventory acquired by the Company after the date of this
Agreement. Prior to Closing, the parties will cooperate in preparing the
Closing Date Calculation to verify satisfaction of the foregoing condition.
Acquiror and the Company will endeavor in good faith to resolve any
disputes in the determination of the Closing Date Calculation. In the
absence of a resolution of the disputed items on the Closing Date, Acquiror
and the Company will promptly select an independent certified public
accountant (the "Independent Accountant") from a nationally recognized
public accounting firm to act as arbitrator to decide the disputed items
and to prepare the Closing Date Calculation. The Closing Date Calculation
as determined by the Independent Accountant will be conclusive and binding
on Acquiror and the Company. The fees and expenses of the Independent
Accountant will be divided equally between Acquiror and the Company.
7.03 Additional Conditions to Obligations of the Company. The obligation of
the Company to effect the Merger and the other transactions contemplated in this
Agreement is also subject to the satisfaction at or prior to the Effective Time
of the following conditions, any or all of which may be waived, in whole or in
part;
(a) Representations and Warranties. Each of the representations and
warranties of Acquiror contained in this Agreement shall have been true and
correct in all material respects when made and the information contained
therein, as updated by any Update Schedule, taken as a whole, shall not
have materially adversely changed; and each other representations and
warranties of the Acquiror contained in this Agreement shall be true and
correct in all material respects as of the Effective Time. The Company
shall have received a certificate of the Chief Executive Officer and Chief
Financial Officer of Acquiror to that effect.
(b) Agreements and Covenants. Acquiror and Acquiror Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
each of them on or prior to the Effective Time. The Company shall have
received a certificate of the Chief Executive Officer and Chief Financial
Officer of Acquiror to that effect.
(c) Opinion of Counsel. The Company shall have received an opinion of
Kranitz & Philipp, counsel to Acquiror and Acquiror Sub, addressed to the
Company, dated as of the Effective Time, and reasonably satisfactory in
form and substance to the Company and its counsel, to the following effect:
(i) Acquiror is a corporation existing in good standing under the
laws of the State of Delaware, based solely on a certificate of the
Delaware Secretary of State. Acquiror Sub is a corporation existing in
good standing under the laws of the state of Delaware, based solely on a
certificate of the Delaware Secretary of State. Acquiror owns, directly
or indirectly, all of the capital stock of Acquiror Sub.
20
<PAGE> 24
(ii) The execution, delivery and performance of the Agreement and
Plan of Merger (the "Agreement") has been duly authorized by all
requisite corporate action on the part of Acquiror and Acquiror Sub. The
Agreement constitutes the legally valid and binding obligations of
Acquiror and Acquiror Sub, enforceable in accordance with its terms,
subject to the following qualifications: [a] the enforceability against
Acquiror or Acquiror Sub of the Agreement in accordance with its terms
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally; [b] the
enforceability of the Agreement is subject to the effect of general
principles of equity and the possible unavailability of specific
performance or injunctive relief regardless of whether considered in a
proceeding in equity or at law; and [c] no opinion is expressed as to
any provision of the Agreement providing for the indemnification of
persons for liability under federal or other securities laws.
(iii) Exclusion and delivery of the Agreement and the performance
of the Acquiror of its terms do not [a] contravene or conflict with any
provision of the Certificate of Incorporation or By Laws of the
Acquiror; or [b] violate any order, judgment or decree of any Delaware
or federal court or governmental instrumentality to which the Company is
subject and of which such counsel has knowledge.
(iv) To the knowledge of such counsel, there is no action, suit,
investigation or proceeding pending or threatened against the Acquiror
or any properties or rights of Acquiror by or before any court,
arbitrator or administrative or governmental body which questions
suability of the Agreement or any action which has been or is to be
taken by the Acquiror thereunder.
(d) Toll Manufacturing Agreement. The Company, Acquiror, Acquiror Sub
and Purchaser shall have entered into a Toll Manufacturing Agreement in a
form reasonably satisfactory to the Company, Acquiror and Purchaser.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of this Agreement and the
Merger by the shareholders of the Company:
(a) by mutual written consent of Acquiror and the Company;
(b) by either Acquiror or the Company in the event the conditions to
such party's (the "Nonfailing Party") obligations under Article VII shall
not have been met or waived by the Nonfailing Party on or prior to December
31, 1997, but only if the party terminating has not caused the condition
giving rise to termination to be not satisfied through its own action or
inaction;
(c) by either Acquiror or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting
consummation of the Merger shall have become final and nonappealable;
(d) by Acquiror, if (i) the Board of Directors of the Company
withdraws, modifies or changes in a manner materially adverse to Acquiror
its recommendation of this Agreement or Merger or shall have resolved to do
any of the foregoing, or (ii) the Board of Directors of the Company shall
have recommended to the shareholders of the Company any proposed
acquisition of the Company by any Person or any "group" (as such term is
defined under section 13(d) of the Exchange Act) other than Acquiror and
its Affiliates by [a] merger, consolidation, share exchange, business
combination or other similar transaction, [b] purchase of all or a
substantial part of the assets of the Company and its Subsidiaries, taken
as a whole, or [c] the acquisition of more than 50% of the Company's
outstanding equity securities (a "Competing Transaction") or resolved to do
so, or (iii) a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of the Company is commenced, the Board
of Directors of the Company, within 10 business days after such tender
offer or exchange offer is so commenced, either fails to recommend against
acceptance of such tender offer or exchange offer by its
21
<PAGE> 25
shareholders or takes no position with respect to the acceptance of such
tender offer or exchange offer by its shareholders;
(e) by the Company if, in the exercise of its judgment as to its
fiduciary duties to its shareholders as imposed by applicable law and,
after consultation with and receipt of advice from outside legal counsel,
the Company's Board of Directors determines that such termination is
required by reasons of any Competing Transaction being made or proposed; or
(f) by either Acquiror or the Company, if any Update Schedule of the
other party contains disclosures of any fact or condition which makes
untrue, or shows to have been untrue, any representation or warranty by the
other party in this Agreement, unless concurrently with the delivery of the
Update Schedule, the other party represents and warrants that the disclosed
fact or condition can and will be corrected at the other party's expense
prior to the Effective Time; provided that the effect of the fact or
condition so disclosed upon the representation or warranty so affected
constitutes a Company Material Adverse Effect or Acquiror Material Adverse
Effect, as applicable.
8.02 Effect of Termination. Subject to the remedies of the parties set
forth in section 8.03(c), in the event of the termination of this Agreement
pursuant to section 8.01, this Agreement shall forthwith become void, and,
subject to sections 8.03(c) and (d) there shall be no liability under this
Agreement on the part of Acquiror, Acquiror Sub or the Company or any of their
respective officers or directors and all rights and obligations of each party
hereto shall cease. The Acquiror's Confidentiality Agreement shall survive any
termination of this Agreement.
8.03 Expenses.
(a) Except as provided in section 8.03(c), all Expenses incurred by
the parties shall be borne solely and entirely by the party which has
incurred the same. The Company shall pay for all Expenses related to
printing, filing and mailing the Proxy Statement and all SEC and other
regulatory filing fees incurred in connection with the Proxy Statement.
(b) "Expenses" as used in this Agreement shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and
consultants to a party and its Affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Proxy Statement, the solicitation of
shareholder approvals and all other matters related to the closing of the
transactions contemplated by this Agreement.
(c) The Company and Acquiror each agree that with respect to any
termination of this Agreement pursuant to section 8.01(b) as a direct
result of a material intentional breach by a party of any of its covenants
or agreements contained in this Agreement, all remedies available to the
other party either in law or equity shall be preserved and survive the
termination of this Agreement.
(d) If all conditions to the obligations of a party at Closing
contained in Article VII of this Agreement have been satisfied (or waived
by the party entitled to waive such conditions), and the other party does
not proceed with the Closing, all remedies available to the other parties,
either at law or in equity, on account of such failure to close, including,
without limitation, the right to seek specific performance of this
Agreement as well as the right to pursue a claim for damages on account of
a breach of this Agreement, shall be preserved and shall survive any
termination of this Agreement.
(e) The Company agrees that if this Agreement is terminated pursuant
to section 8.01(d) or section 8.01(e), Company shall pay to Acquiror the
sum of $400,000. Such payment shall be made as promptly as practicable but
in no event later than the third business day following termination of this
Agreement and shall be made by wire transfer of immediately available funds
to an account designated by Acquiror. The Company and Acquiror each agree
that the payment provided for in section 8.03(e) shall be the sole and
exclusive remedy of Acquiror upon any termination of this Agreement as
described in section 8.03(e) and such remedies shall be limited to the sum
stipulated in section 8.03(e) regardless of the circumstances (including
willful or deliberate conduct) giving rise to such termination.
22
<PAGE> 26
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations and Warranties. The respective
representations and warranties of the parties in this Agreement shall expire
with, and be terminated and extinguished upon, consummation of the Merger or
termination of this Agreement, and thereafter neither the Company, Acquiror nor
any of their respective officers, directors or employees shall have any
liability whatsoever with respect to any such representation or warranty. This
section 9.01 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after consummation of the Merger.
9.02 Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed to have been duly
given or made upon receipt, if delivered personally, on the third business day
following deposit in the U.S. mail if mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or when sent by electronic transmission to the telecopier
number specified below with receipt acknowledged:
(a) If to Acquiror or Acquiror Sub:
Giuffre Bros. Cranes, Inc.
6635 South 13th Street
Milwaukee, WI 53221
Telecopier No. 414-764-8180
Attention: Mr. Frank Giuffre, President
With a copy to:
Gordon F. Barrington, Esq.
224 North 76th Street
Suite 100
Wauwatosa, WI 53213
Telecopier No. 414-771-8030
(b) If to the Company:
Rexworks Inc.
445 West Oklahoma Avenue
Milwaukee, WI 53207
Facsimile: 414-747-7345
Attention: Mr. Laurance R. Newman, President and Chief Executive
Officer
With a copy to:
Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, s.c.
1000 North Water Street, Suite 2100
Milwaukee, WI 53202
Telecopier No: 414-298-8097
Attention: James M. Bedore, Esq.
9.03 Amendment. This Agreement may be amended by the parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that after approval of this Agreement
by the shareholders of the Company, no amendment may be made without further
approval of such shareholders, which amendment would reduce the amount or change
the type of consideration into which each share of Company Common Stock shall be
converted pursuant to this Agreement upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by each
of the parties hereto.
23
<PAGE> 27
9.04 Waiver. At any time prior to the Effective Time, any party may (a)
extend the time for the performance of any of the obligations or other acts of
any other party, (b) waive any inaccuracies in the representations and
warranties of any other party contained in this Agreement or in any document
delivered pursuant to this Agreement, and (c) waive compliance by any other
party with any of the agreements or conditions contained in this Agreement.
Notwithstanding the foregoing, no failure or delay by either party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by a party or parties to be bound thereby.
9.05 Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.06 Severability. If any term or other provision of this Agreement is
finally adjudicated by a court of competent jurisdiction to be invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
9.07 Entire Agreement. This Agreement (together with the Acquiror's
Confidentiality Agreement, the Exhibits, the disclosure schedules to this
Agreement and the other documents delivered pursuant hereto), constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of them, with
respect to the subject matter hereof. The parties hereby acknowledge that, no
party shall have the right to acquire or shall be deemed to have acquired shares
of common stock of the other party pursuant to the Merger until the consummation
thereof.
9.08 Assignment. This Agreement shall not be assigned, whether by operation
of law or otherwise.
9.09 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of and be enforceable by each party and its respective
successors, and nothing in this Agreement, express or implied, other than
pursuant to section 2.04 and sections 6.06 and 6.08 or the right to receive the
consideration payable in the Merger pursuant to Article II, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
9.10 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law.
9.11 Counterparts. This Agreement may be executed by facsimile and in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
9.12 Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its
reasonable best efforts to advise the other Party prior to making the
disclosure).
9.13 Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to
24
<PAGE> 28
any federal, state, local, or foreign statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context
otherwise requires. The word "including" shall mean including without
limitation.
REXWORKS INC.
By /s/ LAURANCE R. NEWMAN
-------------------------------------
Laurance R. Newman, President and
Chief Executive Officer
GIUFFRE BROS. CRANES, INC.
By /s/ FRANK GIUFFRE
-------------------------------------
Frank Giuffre, President
13TH STREET ACQUISITION CORPORATION
By /s/ FRANK GIUFFRE
-------------------------------------
Frank Giuffre, President
25
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
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<RECEIVABLES> 11,149,000
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0
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