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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 3, 1995
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CHEMPOWER, INC.
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(Exact name of registrant as specified in its charter)
OHIO
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(State of Incorporation)
0-17575 34-1481970
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(Commission File Number) (I.R.S. Employer
Identification No.)
807 EAST TURKEYFOOT LAKE ROAD, AKRON, OHIO 44319
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (216) 896-4202
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ITEM 2. ACQUISITION OF ASSETS.
On May 3, 1995, Chempower, Inc., an Ohio corporation (the "Registrant")
through its wholly-owned subsidiaries, Southwick Corp., an Ohio
Corporation, and Brookfield Corp., an Ohio corporation (collectively,
"Buyers"), purchased all of the issued and outstanding partnership
units ("Units"), representing all of the partnership interests of
Controlled Power Limited Partnship, an Illinois limited partnership
("CPC"). CPC is in the business of designing, manufacturing and selling
electrical metalclad switchgear, power distribution systems, bus duct
systems and replacement parts for mass transit authorities, utilities,
and chemical and other industrial facilities throughout the country.
The purchase was effected pursuant to a Partnership Unit Purchase and
Sale Agreement (the "Purchase Agreement"), dated as of April 13, 1995.
All of the outstanding Units were sold by Canton Power Corporation, an
Illinois corporation, Henry Crown and Company (Not Incorporated), an
Illinois limited partnership, and The Second Venture, an Illinois
general partnership (collectively, "Sellers"). Through the purchase of
the Units, the Buyers took control of CPC's inventory, accounts
receivable, patents, real estate, plant and equipment. Pursuant to the
terms of the Purchase Agreement, the Buyers made a cash payment of
$4,900,000 to the Sellers at closing. The purchase price was paid from
the cash reserves of the Buyers. The consideration paid by the Buyers
in connection with the purchase was determined on the basis of (i)
discussions between the management of the Registrant and
representatives of the Sellers regarding the business and prospects of
CPC. Contemporaneous with the closing of the purchase, the Buyers
offered employment to all remaining employees of CPC as of the closing
date. At the present time, it is the intention of the Buyers to
continue the current business of CPC and to expand the business to
offer sheet metal fabrication services.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses acquired:
It is impracticable at this time to provide the required financial
statements. Registrant will file financial statements, as soon as
practicable after they become available, but in no event later than 60
days from the date of this report.
(b) Pro Forma financial information:
It is impracticable at this time to provide the pro forma financial
statements to reflect the purchase transactions reflected in Item 2.
Registrant will file the pro forma financial statements as soon as
practicable after they become available, but in no event later than 60
days from the date of this report.
(c) Exhibits
Number
2.1 Partnership Unit Purchase and Sale Agreement by and among
Canton Power Company, Henry Crown and Company (Not
Incorporated), The Second Venture, Southwick Corp. and
Brookfield Corp. dated as of April 13, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHEMPOWER, INC.
(Registrant)
Date May 4, 1995 /s/ Robert E. Rohr
--------------------------------
Robert E. Rohr
Vice President of Finance and
Treasurer
(on behalf of the Registrant and
as Principal Financial Officer)
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EXHIBIT INDEX
<TABLE>
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Pagination By
Sequential
Exhibit Exhibit Numbering
Number Description System
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2.1 Partnership Unit Purchase and Sale Agreement by
and among Canton Power Corporation and Henry
Crown and Company (Not Incorporated) and The
Second Venture ("Sellers") and Southwick Corp.
and Brookfield Corp. ("Buyers") Dated as of
April 13, 1995.
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EXHIBIT 2.1
PARTNERSHIP UNIT PURCHASE AND SALE AGREEMENT
BY AND AMONG
CANTON POWER CORPORATION
AND
HENRY CROWN AND COMPANY
(NOT INCORPORATED)
AND
THE SECOND VENTURE
("SELLERS")
AND
SOUTHWICK CORP.
AND
BROOKFIELD CORP.
("BUYERS")
DATED AS OF APRIL 13, 1995
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TABLE OF CONTENTS
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PREAMBLE
ARTICLE I - PURCHASE AND SALE OF THE UNITS
1.1 Purchase and Sale ............................... 2
ARTICLE II - PURCHASE PRICE
2.1 Consideration ................................... 2
2.2 Closing Adjustment.............................. 3
2.3 Method of Payment ............................... 6
ARTICLE III - NON-ASSUMED LIABILITIES
3.1 Non-Assumption of Certain Liabilities ........... 6
ARTICLE IV - EMPLOYEES
4.1 Employment to Employees ......................... 7
4.2 Non-Employment.................................. 7
4.3 Termination of Employment Obligations ........... 7
ARTICLE V - CLOSING
5.1 Closing Date .................................... 8
5.2 Transfer of Units ............................... 8
ARTICLE VI - REPRESENTATIONS AND WARRANTIES OF SELLER
6.1 Organization .................................... 9
6.2 Power and Authority ............................. 9
6.3 No Violations................................... 10
6.4 Partnership Interest ............................ 10
6.5 Title to Properties and Encumbrances ............ 11
6.6 Real Property, Plants and Equipment ............. 12
6.7 Undisclosed Liabilities ......................... 13
6.8 Patent Infringement ............................. 13
6.9 Continuation of Business........................ 13
6.10 Permits and Notice of Government Proceedings .... 14
6.11 Pending Claims .................................. 15
6.12 Material Agreements............................. 15
6.13 Lease Agreements, No Defaults ................... 17
6.14 Full Disclosure ................................. 17
6.15 No Restriction on Sale of Product ............... 17
6.16 Litigation History .............................. 17
6.17 No Defaults ..................................... 18
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6.18 Employee Benefit Plans .......................... 19
6.19 Intellectual Property ........................... 20
6.20 Taxes ........................................... 21
6.21 Financial Statements ............................ 21
6.22 Receivables ..................................... 22
6.23 {Intentionally Left Blank} ...................... 22
6.24 Product Representation .......................... 22
6.25 Books and Records ............................... 22
6.26 Foreign Assets .................................. 22
6.27 Guarantees ...................................... 23
6.28 Operation of Business ........................... 23
6.29 Environmental ................................... 23
6.30 Indebtedness to and from Officers, Partners and
Others .......................................... 25
6.31 Labor Disputes; Unfair Labor Practices .......... 25
6.32 Consents and Approvals .......................... 25
6.33 Limitations .................................... 26
ARTICLE VII - REPRESENTATIONS AND WARRANTIES OF BUYERS
7.1 Organization .................................... 26
7.2 Power and Authority ............................. 26
7.3 No Violations ................................... 27
ARTICLE VIII - COVENANTS OF SELLERS
8.1 Conduct of Business ............................. 28
8.2 Non-Competition ................................. 29
8.3 Further Assurances .............................. 30
8.4 Certifications .................................. 30
8.5 Inspections ..................................... 30
8.6 April 28, 1995 Fire ............................. 31
ARTICLE IX - COVENANTS OF BUYERS
9.1 Product Warranty Service ........................ 31
9.2 Access to Records ............................... 32
9.3 Completion of Contracts ......................... 32
9.4 1989 Acquisition Agreement ...................... 33
ARTICLE X - CONDITIONS PRECEDENT TO THE PERFORMANCE BY
SELLERS OF THEIR OBLIGATIONS HEREUNDER
10.1 Representations and Warranties .................. 33
10.2 Other Conditions ................................ 33
10.3 Approvals and Consents .......................... 34
10.4 Legal Opinion ................................... 34
10.5 Resolutions ..................................... 34
10.6 Officer's Certificate ........................... 34
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ARTICLE XI - CONDITIONS PRECEDENT TO THE PERFORMANCE BY
BUYERS OF THEIR OBLIGATIONS HEREUNDER
11.1 Representations and Warranties .................. 35
11.2 Other Conditions ................................ 35
11.3 Approvals and Consents .......................... 35
11.4 Release of Employment Agreements ................ 36
11.5 Release of Non-Assumed Debt ..................... 36
11.6 Legal Opinion ................................... 36
11.7 No Material Change .............................. 36
11.8 Resolutions ..................................... 36
11.9 Sellers' Certificates ........................... 36
11.10 Other Documents ................................. 37
ARTICLE XII - TAXES
12.1 Taxes on Transfer ............................... 37
12.2 Tax Returns ..................................... 37
ARTICLE XIII - INDEMNIFICATION; LIMITATIONS
13.1 Sellers' Hold Harmless .......................... 39
13.2 Buyers' Hold Harmless ........................... 40
13.3 Indemnification Procedure ....................... 41
13.4 Limitation of Certain Claims; Baskets ........... 42
13.5 Maximum Exposure; Ceiling ....................... 43
ARTICLE XIV - MISCELLANEOUS
14.1 Survival of Representations and Warranties ...... 43
14.2 Notices ......................................... 44
14.3 Schedules ....................................... 44
14.4 Assignment ...................................... 44
14.5 Amendment ....................................... 45
14.6 Waiver .......................................... 45
14.7 Fees and Expenses................................ 45
14.8 Choice of Law ................................... 45
14.9 Remedies ........................................ 46
14.10 Severability .................................... 46
14.11 Counterparts .................................... 46
14.12 Section Headings ................................ 46
14.13 Definitions ..................................... 46
14.14 Entire Agreement ................................ 47
SIGNATURES .................................................... 48
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<TABLE>
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LIST OF SCHEDULES
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Schedule 1.1 Units of CPC owned by Sellers.
Schedule 2.1 Form of Escrow Agreement.
Schedule 2.2 Closing Adjustment Ledger Accounts.
Schedule 3.1 Non-Assumed Liabilities.
Schedule 4.3 List of Employment Agreements, Consulting
Agreements, Representative Agreements,
Severance Agreements, Separation Agreements,
Retention Agreements, or other compensation
agreements.
Schedule 6.5A Encumbrances.
Schedule 6.5B Preliminary Title Report.
Schedule 6.6A Description of Real Property, Improvements and
Structures.
Schedule 6.6B List of Tangible Personal Property.
Schedule 6.6C Compliance with Law.
Schedule 6.7 Undisclosed Liabilities.
Schedule 6.9 Material Changes in the Business.
Schedule 6.10 Listing of Permits and Licenses.
Schedule 6.11 Pending Claims.
Schedule 6.12 List of Material Oral and Written Agreements
and all Amendments.
Schedule 6.13 Description of Lease Agreements.
Schedule 6.16 Litigation History previous three years.
Schedule 6.17 Defaults.
Schedule 6.18 Employee Plans and Qualified Plans.
Schedule 6.19 List of Intellectual Property.
Schedule 6.21 Financial Statements.
Schedule 6.26 Foreign Assets.
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Schedule 6.29 Environmental Notices.
Schedule 6.30 Indebtedness to and from Officers, Partners
and Others.
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PARTNERSHIP UNIT PURCHASE AND SALE AGREEMENT
THIS AGREEMENT, dated as of April 13, 1995, by and among Canton Power
Corporation, an Illinois corporation, Henry Crown and Company (Not
Incorporated), an Illinois limited partnership, and The Second Venture, an
Illinois general partnership (collectively, "Sellers"), and Southwick Corp., an
Ohio corporation, and Brookfield Corp., an Ohio corporation (collectively,
"Buyers").
W I T N E S S E T H :
WHEREAS, Canton Power Corporation ("Canton Power") is the sole general
partner of Controlled Power Limited Partnership, an Illinois limited partnership
("CPC"); and
WHEREAS, Henry Crown and Company (Not Incorporated) ("HCC") is a
limited partner of CPC; and
WHEREAS, The Second Venture ("SV") is a limited partner of CPC; and
WHEREAS, CPC is engaged in the business of designing, manufacturing,
assembling and selling switchgear, power distribution systems, and bus duct
systems and replacement parts therefor (collectively, the "Business"); and
WHEREAS, Sellers desire to sell to Buyers and Buyers desire to purchase
from Sellers all of the issued and outstanding partnership units, representing
all of partnership interests of CPC (the "Units"), on the terms and subject to
the conditions hereinafter set forth.
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NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises, covenants and representations set forth herein, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE UNITS
1.1 PURCHASE AND SALE. Subject to and upon the terms and conditions set
forth in this Agreement, Sellers hereby agree to sell, transfer, or otherwise
assign to Buyers, and Buyers agree to accept and to pay therefor, on the
"Closing Date" referred to in Section 5.1, all of Sellers' interest in and to
the Units of CPC owned of record by Sellers as set forth on Schedule 1.1 hereto,
free and clear of all liens, charges or encumbrances of whatsoever nature. Each
of Buyers shall take title and ownership of the number of Units set forth
opposite its name on Schedule 1.1 hereto.
ARTICLE II
PURCHASE PRICE
2.1 CONSIDERATION. Subject to the adjustments contemplated in Section
2.2 hereof, the purchase price payable to Sellers hereunder in consideration of
the sale, transfer, assignment, and delivery of the Units by Sellers to Buyers,
shall be Four Million Nine Hundred Thousand Dollars ($4,900,000.00), payable in
cash on the Closing Date (the "Purchase Price"), to the Escrow Agent under an
Escrow Agreement in the form and substance annexed hereto as Schedule 2.1;
provided, to the extent Non-Assumed Liabilities listed on Schedule 3.1 are not
paid prior to Closing, the Purchase Price shall be reduced by the amount of such
Non-Assumed
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Liabilities remaining unpaid and such amount shall be deposited by Buyers with
the Escrow Agent under the Escrow Agreement and used to pay off such Non-Assumed
Liabilities remaining unpaid.
2.2 CLOSING ADJUSTMENT.
(a) Determination of Change in Net Assets. As soon as
practicable but in no event later than thirty (30) days after the Closing Date,
a statement prepared by CPC ("the Closing Statement") setting forth the amount
of Net Assets as defined in Section 2.2(b) as of the Closing Date (the "Closing
Net Assets") shall be delivered to both Buyers and Sellers. The Closing Net
Assets shall become final and binding on Sellers and Buyers unless Sellers or
Buyers give written notice of their disagreement (a "Notice of Disagreement") to
the other within thirty (30) days following the receipt by Sellers and Buyers of
the Closing Statement setting forth the Closing Net Assets. Any such Notice of
Disagreement shall specify in all reasonable detail the nature of any
disagreements so asserted. During a period of thirty (30) days following the
aforesaid thirty (30) day period, Buyers and Sellers shall attempt to resolve in
writing any differences that they may have with respect to any matter specified
in any Notice of Disagreement. If at the end of such thirty (30) day period,
Buyers and Sellers have failed to reach written agreement with respect to all of
such matters, then all such matters as specified in any Notice of Disagreement
as to which such written agreement has not been reached (the "Disputed Matters")
shall be submitted to a nationally recognized independent public accounting firm
selected
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by Buyers and Sellers (the "Arbitrator") for resolution by the Arbitrator
provided the Arbitrator shall not resolve any issue such that the result is
greater than the largest number or less than the smallest number for such item
proposed by the parties. If a Notice of Disagreement is delivered in a timely
manner, the Closing Net Assets, as modified to reflect the resolution of
Disputed Matters in accordance with this Section 2.2(a), shall become final and
binding on Buyers and Sellers upon the earlier of (i) the date Sellers and
Buyers resolve in writing all Disputed Matters, or (ii) the date the Arbitrator
resolves in writing all Disputed Matters. The amount of the Closing Net Assets
that becomes final and binding on Buyers and Sellers under this Section 2.2(a)
is hereinafter referred to as (the "Final Net Assets").
(b) Definition of Net Assets. For purposes of this Agreement, "Net
Assets" shall mean the net amount represented by CPC's general ledger accounts
listed on Schedule 2.2 (attached hereto) as of December 31, 1994, March 31,
1995, or the Closing Date, as the case may be, computed in a manner consistent
with the accounting principles and methods used in the preparation of the
adjusted trial balance as of December 31, 1994, set forth on Schedule 2.2, and
the audited financial statements set forth in Schedule 6.21 hereto.
(c) Purchase Price Adjustment. An adjustment to the Purchase
Price pursuant to this Section 2.2 shall be paid (i) by Sellers to Buyers (in
equal proportions), in a total amount equal to the amount by which the Final Net
Assets is less than
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$22,594,846.00, provided, however that no such amount under this Section 2.2
shall be paid by Sellers to Buyers until such amount is in excess of
$266,000.00, after which Buyers shall be entitled to one-half of any such amount
between $266,001.00 and $750,000.00 and all of such amount in excess of
$750,000.00, or (ii) by Buyers to Sellers (in the same proportions as the
payment of the Purchase Price pursuant to Section 2.1), in a total amount equal
to the amount by which the Final Net Assets is greater than $22,594,846.00,
provided, however, that Buyers shall be obligated to pay Sellers only one-half
of any such amount up to $750,000.00 and all of such amounts in excess of
$750,000.00.
(d) Payment of Purchase Price Adjustment. Payments required to
be paid pursuant to this Section 2.2 shall be made within five (5) business days
following the date upon which the determination of Final Net Assets is made, and
paid by wire transfer of immediately available federal funds to one account
designated by and for each party entitled to receive such payment.
(e) Expenses of Closing Adjustments. The fees and expenses, if
any, of the Arbitrator incurred in connection with the review and determination
of any Disputed Matters shall be borne one-half by Buyers and one-half by
Sellers.
(f) Audit. For a period of thirty (30) days after Buyers' and
Sellers' receipt of the Closing Statement, at each party's own expense, Buyers
and/or their accountants and Sellers and/or their accountants shall have the
opportunity to review the
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Closing Statement and the calculations, books, records, documentation and work
papers underlying the Closing Statement.
2.3 METHOD OF PAYMENT. All cash escrowed by Buyers shall be made by
delivery in immediately available funds by wire transfer pursuant to the Escrow
Agent's written instructions submitted one (1) business day prior to the Closing
Date.
ARTICLE III
NON-ASSUMED LIABILITIES
3.1 NON-ASSUMPTION OF CERTAIN LIABILITIES. Buyers will
purchase CPC free and clear of those certain liabilities of CPC shown on the
December 31, 1994 balance sheet and listed on Schedule 3.1 hereto. The
liabilities not being assumed by Buyers as aforesaid are somtimes collectively
called "Non-Assumed Liabilities". The Non-Assumed Liabilities shall either be
paid-off by Sellers prior to the Date of Closing, or the Escrow Agent shall pay
the Non-Assumed Liabilities in accordance with the Escrow Agreement. Sellers
shall deliver releases and/or pay-off letters to the Escrow Agent as described
in Section 11.5 hereof prior to the Closing Date. Notwithstanding the foregoing,
this Section does not limit Sellers' liabilities for any other obligation,
liability, indebtedness, fixed or contingent, of Sellers, which may arise in
connection with representations, warranties, covenants or other provisions in
this Agreement including, without limitation, Sellers' obligations as set forth
herein related to violations of
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law, injury or destruction of property or loss or damage suffered by any third
party.
ARTICLE IV
EMPLOYEES
4.1 EMPLOYMENT TO EMPLOYEES. Sellers agree that the number of employees
employed by CPC shall be reduced to a number not to exceed 150 as of the Closing
Date. As of the date hereof through the Closing Date, Sellers shall obtain the
consent of Buyers prior to terminating any employee.
4.2 NON-EMPLOYMENT. For five (5) years from the Closing Date, Sellers
shall not directly or indirectly solicit or offer employment to any person who,
after the Closing Date, is then an employee of CPC or who has terminated such
employment without the consent of CPC within 180 days of such solicitation or
offer.
4.3 TERMINATION OF EMPLOYMENT OBLIGATIONS. Schedule 4.3 hereto
constitutes a correct and complete list of all employment agreements, consulting
agreements, separation agreements, retention agreements, representative
agreements, severance agreements or any other compensation agreements entered
into by CPC. Sellers shall terminate, effective as of the Closing Date, all
agreements marked "Terminate" on Schedule 4.3. The agreements on Schedule 4.3
not marked "Terminate" shall remain in effect after the Date of Closing and CPC
shall continue to disburse such compensation pursuant to the terms of the
agreements. Buyers shall be reimbursed pursuant to the terms of the Escrow
Agreement for all payments made by CPC after the Closing Date in connection with
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those certain retention agreements listed on Schedule 4.3. Should any
termination, severance, profit sharing, retirement, early retirement or other
employee obligations accrue as a direct result of the transfer of the Units
hereunder, Sellers shall reimburse Buyers by the amount of any such obligations
paid by Buyers. Buyers will provide timely notice to Sellers of any claimed
obligations referred to in this Section and will permit Sellers the reasonable
opportunity to contest such claimed obligations.
ARTICLE V
CLOSING
5.1 CLOSING DATE. The Closing shall take place at 10:00 a.m., local
time, on May 3, 1995, at the offices of CPC, 1501 Raff Road, S.W., Canton, Ohio
44710, or such other time and place as the parties may agree upon. The day on
which the Closing actually takes place is herein referred to as the "Closing
Date".
5.2 TRANSFER OF UNITS. At the Closing, each of Sellers shall deliver to
Buyers the Units being purchased from each of Sellers, together with an
assignment duly executed by each of Sellers for transfer of the Units to each of
the respective Buyers. Also at Closing, Sellers shall deliver all the CPC
partnership records as may be in the possession of Sellers. Any transaction,
stamp, transfer or similar tax payable with respect to the transfer of the Units
shall be paid by Sellers.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby, jointly and severally, represent and warrant to each of
Buyers as follows:
6.1 ORGANIZATION. CPC is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of Illinois and is
qualified to do business in and is in good standing in all states and other
jurisdictions where required by law to carry on the Business as presently
conducted, having all requisite power and authority to carry on the Business as
now being conducted and to own, lease or operate the properties used in the
Business. With regard to any Business conducted after the Date of Closing which
is not in production at the Date of Closing, Buyers may not reasonably rely on
this representation as to where CPC is qualified to do business.
6.2 POWER AND AUTHORITY. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein have
been duly and validly authorized and approved by each of Sellers. This Agreement
constitutes, and each of any other agreement contemplated hereby to be executed
by Sellers will constitute, when executed and delivered, a valid and legally
binding obligation of each of Sellers enforceable against each of them in
accordance with its terms, except as enforceability may be limited by
bankruptcy, reorganization, insolvency, moratorium, or other laws affecting
creditors rights.
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6.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Sellers and the consummation of the transactions contemplated hereby in
accordance with the terms hereof will not violate any existing provision of any
law or violate any existing term or provision of any order, writ, judgment,
injunction or decree of any court, governmental department, commission, board,
agency or instrumentality applicable to any of Sellers or CPC; or conflict with
or violate any of the terms, conditions or provisions of the Articles of
Incorporation, bylaws, partnership agreements or any other organizational
documents of either CPC or any of Sellers; or violate, result in any breach of,
or constitute a default (or give rise to any right of termination, cancellation
or acceleration) under any contract, agreement, indenture, mortgage or deed of
trust, security agreement, license, instrument or obligation to which any of
Sellers or CPC is a party or by which any are bound.
6.4 PARTNERSHIP INTEREST. The outstanding partnership units of CPC
consists of 68.5 units which are validly issued and outstanding, fully paid and
nonassessable. Sellers own all the Units free and clear of any liens, warrants,
rights, debentures, claims, options, charges, or encumbrances of whatsoever
nature. Sellers have the unqualified right to sell, assign and deliver the Units
and, upon consummation of the transactions contemplated by this Agreement,
Buyers will acquire good and valid title to the Units, free and clear of all
liens, warrants, rights, debentures, claims, options, charges, encumbrances of
whatsoever nature. There
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are no outstanding options or other agreements of any nature whatsoever relating
to the issuance by CPC of any additional Units.
6.5 TITLE TO PROPERTIES AND ENCUMBRANCES. Except as listed on Schedule
6.5A or any other Schedule hereto, CPC has good and valid title to all
properties and assets, real and personal, tangible and intangible, wherever
located and however owned, pertaining to or used in connection with the
Business, including, without limitation, the properties and assets reflected in
the December 31, 1994 balance sheet referred to in Section 6.21 hereof (except
for inventory and other properties and assets that have been sold or otherwise
disposed of in the ordinary course of business since December 31, 1994). All
such properties and assets are subject to no mortgage, pledge, lien, conditional
sale agreement, encumbrance or charge of whatsoever nature, except for liens
shown on Schedule 6.5A, 6.5B or the balance sheet as securing specified
liabilities (with respect to which no default exists), liens for current taxes
not yet due, and minor imperfections of title and encumbrances, if any, which
are not in the aggregate substantial in amount, and do not materially detract
from the value of the property subject thereto or materially impair the
operations of CPC, and have arisen only in the ordinary course of business and
consistent with past practice. With respect to the facility more particularly
described on Schedule 6.6A hereto, CPC has good and valid title, and such
property is free and clear of any mortgage, pledge, lien, charge, security
interest, encumbrance, restriction, license, easement or adverse claim, except
for those specifically
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listed on that certain preliminary title report No. 53892, issued by First
American Title Insurance Corporation, dated March 12, 1995 and attached hereto
as Schedule 6.5B, or disclosed on the survey referred on Schedule 6.6A.
6.6 REAL PROPERTY, PLANTS AND EQUIPMENT. All of CPC's interest in any
real property, whether fee simple or leasehold, together with all improvements
and structures thereon are described on Schedule 6.6A hereto. All of CPC's
machinery, equipment, test equipment, vehicles, tooling, dies, computer
software, computers, office furniture, office equipment, office supplies,
production tooling, spare equipment parts, leased equipment, and all other
tangible personal property of CPC relating to the Business and having a December
31, 1994 book value of at least $25,000.00 individually, are described on
Schedule 6.6B hereto. To the best of Sellers' and CPC's knowledge, all plants,
structures, and equipment used by CPC in its Business are structurally sound
with no known defects. Except as disclosed on Schedule 6.6C, all plants,
structures and equipment used by CPC in its Business are in operating condition,
and to the best Sellers' or CPC's knowledge conform to all applicable ordinances
and regulations and building, zoning and other laws; CPC has received no written
notification that it is in violation of any applicable ordinance or regulation
or building, zoning or other law, in respect of its plants, structures,
properties, or operations, and no such violation exists.
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6.7 UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved
against in the December 31, 1994 balance sheet referred to in Section 6.21
hereof or on Schedule 6.7 hereto, CPC has no liabilities or obligations of any
nature, whether absolute, accrued, contingent or otherwise, whether due or to
become due. Further, Sellers do not know or have any reasonable ground to know
of any basis for the assertion against CPC of any liability or obligation of any
nature or in any amount not fully reflected or reserved against in the December
31, 1994 balance sheet or on Schedule 6.7 hereto.
6.8 PATENT INFRINGEMENT. To the best of Sellers' and CPC's knowledge,
CPC is neither presently infringing any letters of patent of any other person or
entity in the operation of the Business, nor are there any patent infringement
claims or suits that are pending or to the best of Sellers' or CPC's knowledge,
have been threatened, against CPC pertaining to the operation of the Business.
6.9 CONTINUATION OF BUSINESS. Except as disclosed on Schedule 6.9
hereto, since December 31, 1994, and until the Closing Date, (i) there has been
no substantial, material, adverse change (financial, casualty, or otherwise) in
the condition, business, assets or properties of CPC; (ii) CPC has not leased,
mortgaged, pledged, hypothecated, subjected to lien or security interest or
other encumbrance, or sold, removed or otherwise disposed of any of its assets,
except for the normal turnover of inventory or the ordinary course of business;
(iii) CPC has not made or committed
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itself to make any transfer to its partners, except for transfers in the
ordinary course of business and as permitted herein at the Closing; (iv) CPC has
not entered into any transactions outside the ordinary and normal course that
would materially and adversely affect its assets; and (v) no employment bonus,
loan or deferred compensation arrangement or any increase in compensation has
been entered into between CPC and any employees of the Business.
6.10 PERMITS AND NOTICE OF GOVERNMENT PROCEEDINGS. CPC's permits and
licenses to conduct the Business are all in full force and effect. CPC is not in
violation of any such permits or licenses, and no additional permits and
licenses are required. CPC's products, properties and operations (other than
real estate and improvements which are represented and warranted under Section
6.6 hereof) are not in violation or to the best of Sellers' or CPC's knowledge
under investigation concerning possible violation, of any applicable laws,
ordinances, regulations, rules, decrees, awards or orders enacted or entered by
any foreign, federal, state or local governmental authority or court where CPC
is conducting or has conducted business or activities including, without
limitation, any thereof relating to wages, hours, hiring, promotions,
retirement; working conditions (with respect to the Occupational Health and
Safety Act); emissions to the atmosphere or the impact of such emissions on
ambient air quality, discharges to surface waters or ground water or the impact
of such discharges on the quality of either; the generation, treatment, storage
or disposal of solid or liquid waste materials or the consequences of such
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activities except as disclosed in the March, 1995 Woodward-Clyde Phase I
Environmental Report; discrimination in employment; health, safety; the
production, processing, advertising and sale of CPC's products; trade
regulation; antitrust; warranties, facilities, manufacturing or product
approvals or licenses; control of foreign exchange; and neither Sellers nor CPC
has received notice of any violation of any of the foregoing not resolved as of
the Closing Date all as pertaining to the Business. Attached as Schedule 6.10
hereto is a listing of all current permits and licenses of CPC.
6.11 PENDING CLAIMS. Except as listed on Schedule 6.11 hereto, there
are no actions, suits, claims, proceedings, labor disputes or grievances, or
investigations pending, nor to the best of Sellers' or CPC's knowledge are any
of the same threatened by or against CPC with respect to the Business or CPC's
assets, at law or in equity or before or by any federal, state, municipal or
other government department, commission, board, agency or instrumentality. CPC
is not party to or subject to any judgment, order or decree entered in any
action or proceeding affecting the conduct of the Business, CPC's assets or the
disposition thereof.
6.12 MATERIAL AGREEMENTS. Set forth on Schedule 6.12 hereto is a
complete and correct list as of the date hereof (or incorporates by specific
reference to a listing set forth on any other Schedule attached hereto) of all
material oral or written agreements, contracts, commitments and understandings,
together with all amendments thereto, to which CPC is a party of by which it or
its assets are affected or bound, including, but not limited to:
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(a) mortgages, indentures, security agreements, loan and credit agreements and
any other agreements and instruments relating to the borrowing of money or
evidence of credit; (b) contracts or options to purchase or sell real property;
(c) material contracts for the purchase of supplies, equipment, fuels,
commodities, merchandise or other materials; (d) agreements and instruments
representing loans or commitments to loan to officers, directors, employees or
agents; (e) partnership or joint venture agreements of any kind; (f) agreements
containing non-competition covenants; (g) agreements containing indemnification
provisions; (h) guaranties, subordination agreements or similar type
arrangements affecting indebtedness or obligations; (i) agreements regulating or
affecting the business, properties, assets, operations or methods; (j) license
agreements, service or maintenance contracts, distributor, sales promotion,
marketing, or advertising contracts; and (k) other material agreements,
contracts and commitments (other than those set forth on other Schedules
attached hereto). Solely for the purpose of this Section, the term "material"
contract or agreement shall mean any single agreement pursuant to which any
party thereto is obligated to make payments aggregating more than $100,000.00.
Except as disclosed on Schedule 6.12 hereto, all such agreements, contracts and
commitments referred to in this Section are in full force and effect, and all of
the parties thereto have performed in all material respects all of the
obligations required to be performed by them to date and are not in default
thereunder in any material respect other than customers failing to pay invoices
on a
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timely basis. Accurate and complete copies of all such agreements, contracts,
commitments and understandings that are written, and all amendments thereto,
have been delivered or made available to Buyers.
6.13 LEASE AGREEMENTS, NO DEFAULTS. All lease agreements in respect of
CPC's operations are described on Schedule 6.13 hereto and are valid and binding
agreements enforceable against the respective lessors in accordance with their
terms and are in full force and effect, and, neither CPC nor any other party to
such lease agreements has breached any provision of, or is in default in any
respect under, the terms of such lease agreements.
6.14 FULL DISCLOSURE. Neither this Agreement nor any Schedule hereto
contains any untrue statements by Sellers of a material fact or omits a material
fact necessary to make the statements of Sellers not materially misleading,
taking into consideration that some representations and warranties are made to
the "best of Sellers' or CPC's knowledge" under this Section.
6.15 NO RESTRICTION ON SALE OF PRODUCT. CPC has not entered into
any agreements or licenses which would restrict it from making, using or
selling products in the Business anywhere in the world.
6.16 LITIGATION HISTORY. Attached as Schedule 6.16 hereto is a complete
and accurate list of all material actions, suits, litigation, insurance claims,
administrative arbitrations, proceedings or governmental investigations pursuant
to which claims or allegations (including, but not limited to, the filing of
suit
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or similar initiation of formal proceeding or the informal presentation to CPC
of any threatened or contemplated claim or allegation) were made or threatened,
but are no longer pending, at any time within the previous three (3) years
against CPC with respect to the Business and arising out of or in any way
related to: (i) product liability (including any manufacturing defect or design
defect); (ii) OSHA; (iii) CERCLA, RCRA, ECRA or any other environmental laws; or
(iv) employment related claims.
6.17 NO DEFAULTS. Except as disclosed on Schedule 6.17, neither the
execution nor the delivery of this Agreement, nor the consummation of the sale
and transfer of the Units on the Closing Date, nor the consummation and
performance by Sellers of any of the other transactions, covenants or agreements
herein contemplated: (i) will conflict with CPC's or any of Sellers' Partnership
Agreements, Articles of Incorporation or By-laws; or (ii) will require the
notice or consent of any third party under, or violate or result in a breach of,
any of the terms of any agreement or instrument, judgment, decree, order, law or
regulation to or which any Sellers or CPC, or any property of either is a party
to or is bound, or constitute a default (after the passage of time or giving of
notice, or both, if necessary), thereunder. CPC is not in default in the
performance, observance or fulfillment of any of the terms, obligations,
covenants, conditions or provisions contained in any contract for the supply of
goods or any indenture or other agreement creating, evidencing or securing
indebtedness or pursuant to which any such indebtedness is issued, or other
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agreement to which CPC is a party or by which CPC or its properties may be bound
or affected, subject to the product warranty claims described in Section 9.1
hereto.
6.18 EMPLOYEE BENEFIT PLANS. Except for the plans disclosed in Schedule
6.18 hereto, CPC neither maintains nor contributes to any employee pension,
benefit or welfare plan, as defined in the Employee Retirement Income Security
Act of 1974 ("ERISA"), or any other severance, bonus, stock option, stock
appreciation, stock purchase, retirement, insurance, pension, profit-sharing or
deferred compensation plan, agreements or arrangements (collectively, "Employee
Plans"), nor has CPC, or any of CPC's officers or Sellers' officers or partners,
taken any action directly or indirectly to obligate CPC to institute any such
Employee Plan. To the best of Sellers' and CPC's knowledge, the plans identified
as qualified plans on Schedule 6.18 (the "Qualified Plans") constitute
"qualified" plans within the meaning of Sections 401(a), et seq. and 501(a), et
seq. of the Internal Revenue Code of 1986, as amended (the "Code"). To the best
of Sellers' and CPC's knowledge, there is no fact or circumstance which would
adversely affect the Qualified Plans qualified status and no unreported
"reportable event" (as such term is defined in Section 4043(d) of ERISA) or
"prohibited transaction" (as such term is defined in Section 406 of ERISA and
Section 4975(c) of the Code) has occurred since the date on which said sections
first became applicable to the Qualified Plans. Except as set forth in Schedule
6.18, the Qualified Plans satisfy the minimum funding standards set
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forth in the Code and ERISA, and as of March 31, 1995, there was no unfunded
vested liability under the Qualified Plans, on an ongoing basis, based upon
appropriate actuarial analysis consistent with prior actuarial analysis. To the
best of Sellers' and CPC's knowledge, CPC has complied with all terms and
conditions of, and has no liabilities or obligations except for the normal
funding and administrative obligations under the Employee Plans. All the
Employee Plans have been maintained in compliance with all laws, regulations and
orders, including, without limitation, ERISA and PBGC, and all governmental
authorities, and all notices, reports and other filings required to be delivered
or filed under applicable law with respect to the Employee Plans have been duly
delivered or filed.
6.19 INTELLECTUAL PROPERTY. Schedule 6.19 hereto constitutes a correct
and complete list of all registered trademarks, trademark registration
applications, statutory copyrights, trade names, service marks, trade
designations, patents, patent applications and patent, and trademark licenses
constituting part of the intellectual property. Except as indicated on said
Schedule, CPC owns the entire right, title and incidents of interest in each
item of intellectual property within the territory where each item has been
filed, and such rights, title and incidents of interest are sufficient to give
CPC the right to produce or employ the product or process to which such item
relates and as of the date hereof and on the Closing Date. CPC owns and will own
on the Closing Date adequate rights to use each such item of intellectual
property.
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Such rights in the intellectual property on the Closing Date will be sufficient
to conduct and operate the Business as presently conducted and operated.
6.20 TAXES. CPC has duly filed all required tax returns and reports,
both foreign and domestic, state, local and federal, and has paid, or made
adequate provision for the payment of, all taxes of any kind or nature
whatsoever and other governmental charges upon it or its properties, assets,
income, franchises, licenses, or sales, which have become due pursuant to said
returns or reports or pursuant to any assessment received by it, except such
taxes, if any, as are being contested in good faith by appropriate procedures
and as to which adequate reserves have been provided and which shall be paid by
CPC in all events. There are no tax liens upon CPC's assets, except liens for
current taxes not yet due. All monies required to be withheld by CPC from
employees for income taxes, social security and unemployment insurance taxes and
all other payroll deductions customarily made in all applicable jurisdictions,
whether foreign or domestic, have been collected or withheld.
6.21 FINANCIAL STATEMENTS. The audited balance sheet as of December 31,
1994 and the related statements of operations and cash flow for the year then
ended, all of which are attached hereto as Schedule 6.21, present fairly, in all
material respects, the financial position as of December 31, 1994, and the
results of operations and cash flow for the year then ended in conformity with
generally accepted accounting principles.
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6.22 RECEIVABLES. All of CPC's accounts receivable on the Closing Date
will be valid, legally enforceable obligations of the account debtor and will
have been created in the ordinary course of business and will represent goods
actually sold or delivered.
6.23 {Intentionally Left Blank}
6.24 PRODUCT REPRESENTATION. To the best of Sellers' and CPC's
knowledge, none of CPC's products or product designs contain any manufacturing
defect, design defect or other defect as to those products which are in
production or have been introduced into production as of the Closing Date which
renders CPC's products or product designs or any component thereof unreasonably
dangerous or unsuitable for their intended use.
6.25 BOOKS AND RECORDS. The books of account, minute books and
partnership records of CPC are in all material respects complete and correct,
have been maintained in accordance with good business practices and the matters
contained therein are accurately reflected, to the extent appropriate, on the
balance sheet referred to in Section 6.21. Copies of the Partnership Agreement
and all amendments thereto of CPC have been delivered to Buyers and are correct
and complete to the date hereof.
6.26 FOREIGN ASSETS. Except as disclosed on Schedule 6.26, CPC does not
have any interest in any real property or tangible or intangible personal
property located outside the continental limits of the United States, including
stock, securities or investments in, claims against, or non-trade receivables
from any entities or
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persons with substantially all their property or business so located.
6.27 GUARANTEES. CPC is not a guarantor, or otherwise liable for any
borrowings of any other person, firm or corporation except as endorser of checks
received by CPC and deposited in the ordinary course of business.
6.28 OPERATION OF BUSINESS. As of the Closing Date, CPC shall have all
rights as identified herein required to conduct and operate the Business,
substantially as currently conducted and operated. Pursuant to the terms of this
Agreement and without taking any other action, CPC will own, or have the right
to use, all technology, properties (tangible and intangible, real and personal),
licenses, governmental licenses, product approvals, permits and similar
arrangements, intellectual property rights, sources and supplies necessary to
conduct and operate the Business substantially as it is currently conducted and
operated.
6.29 ENVIRONMENTAL. Except as disclosed on Schedule 6.29 hereto,
neither the operation of the Business nor the processes, results or products of
CPC violate any applicable law or regulation currently in force and effect
relating to air, water, or noise pollution or employee health and safety or the
production, storage, labeling, transportation or disposition of waste or
hazardous or toxic substances. CPC has timely obtained all licenses and permits
and has timely filed all reports and other documents required to be filed under
any such applicable laws or regulations. To the best of CPC's knowledge, during
the operation of the Business no person
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has stored any chemical substances, including any "Hazardous Substances",
"Pollutants" or "Contaminants" (as such terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")) on, beneath or about any of the properties of CPC (whether leased or
owned), except for inventories of such chemical substances to be used by CPC,
and wastes generated by CPC therefrom, in the ordinary course of the Business
(which inventories and wastes, if any, were stored so that there was no release
of any such chemical substances and wastes to the environment). Except as set
forth in Schedule 6.29, CPC has not received any written notice from any
Governmental Authority or private or public entity advising CPC that it is
potentially responsible for response costs with respect to a release or
threatened release of Hazardous Substances, Pollutants or Contaminants, and CPC
has not, and, to the best of CPC's knowledge, no other person has, buried,
dumped or otherwise disposed of any chemical substances, including any Hazardous
Substances, Pollutants or Contaminants on, beneath or about any of the
properties of CPC (whether leased or owned) or on, beneath or about any other
property. Except as disclosed on Schedule 6.29, CPC has not received written
notice that the operation of the Business or any of the processes followed,
results obtained or products made by CPC violates any environmental, zoning or
land use ordinance, law or regulation, including, but not limited to, CERCLA,
the Toxic Substances Control Act of 1976, as amended, the Resource Conservation
Recovery Act of 1976, as amended, the Clean
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Air Act, as amended, the Federal Water Pollution Control Act, as amended, or the
Occupational Safety and Health Act of 1970, as amended, nor are there any
existing facts or conditions which could give rise to any such violation.
6.30 INDEBTEDNESS TO AND FROM OFFICERS, PARTNERS AND OTHERS. Except as
set forth on Schedule 6.30 hereto, CPC is not indebted to any partner, officer,
employee or agent of CPC except for amounts due as normal salaries, wages,
bonuses and in reimbursement of ordinary expenses on a current basis. No
partner, officer, employee or agent of CPC is indebted to CPC except for
advancements for ordinary business expenses in a normal amount.
6.31 LABOR DISPUTES; UNFAIR LABOR PRACTICES. There is neither pending,
nor to the best of Sellers' or CPC's knowledge, threatened, any labor dispute,
strike or work stoppage which affects or which may affect the Business or which
may interfere with the continued operation of CPC. To the best of Sellers' or
CPC's knowledge, neither CPC nor any agent, representative or employee of CPC
has committed any unfair labor practice as defined in the National Labor
Relations Act, as amended, nor do Sellers or CPC know of any basis for the same.
There is not now pending or to the best of Sellers' or CPC's knowledge,
threatened, any charge or complaint against CPC by the National Labor Relations
Board or any representative thereof.
6.32 CONSENTS AND APPROVALS. No consent, approval, order or
authorization of, declaration or filing with any governmental authority, agency,
bureau or commission, or any third party, is
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required to be obtained or made by any of Sellers or CPC in connection with the
execution, delivery, performance and enforceability of this Agreement and the
consummation of the transactions contemplated hereby in accordance with the
terms hereof.
6.33 LIMITATIONS. Except as expressly set forth in this Article VI,
Sellers make no representation or warranty, express or implied, as to the
Business, assets or liabilities of CPC including any representation or warranty
as to the physical condition or value of any of the assets or the future
revenues or profitability of CPC, and Buyers shall purchase the Units without
any warranty as to the condition of such assets or value or such Units except as
expressly set forth in this Article VI.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby, jointly and severally, represent and warrant to Sellers
as follows:
7.1 ORGANIZATION. Buyers warrant that each is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Ohio, and have full power, right, and authority to enter into this Agreement and
to execute, deliver and perform its obligations hereunder.
7.2 POWER AND AUTHORITY. The Board of Directors of each of Buyers have
duly and effectively authorized this Agreement and the transactions contemplated
herein and has duly authorized the execution and delivery of this Agreement and
all documents
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necessary or appropriate to the performance hereof by Buyers; and the
consummation by Buyers of all of the transactions contemplated hereunder does
not and will not violate the provisions of Buyers' Articles of Incorporation or
Code of Regulations, and will not violate or result in any breach of, or
constitute a default under, any agreement, contract, indenture, loan agreement,
instrument, or obligation to which Buyers are a party or by which Buyers are
bound.
7.3 NO VIOLATIONS. The execution and delivery of this Agreement by
Buyers and the consummation of the transactions contemplated hereby in
accordance with the terms hereof will not violate any existing provision of any
law or violate any existing term or provision of any order, writ, judgment,
injunction or decree of any court or any other governmental department,
commission, board, agency or instrumentality applicable to Buyers; or conflict
with or violate any of the terms, conditions or provisions of the Articles of
Incorporation, Code of Regulations or any other organizational documents of any
of Buyers; or violate, result in any breach of, or constitute a default (or give
rise to any right of termination, cancellation or acceleration) under any
contract, agreement, indenture, mortgage or deed of trust, security agreement,
license, instrument or obligation to which any of Buyers are a party or by which
it is bound.
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ARTICLE VIII
COVENANTS OF SELLERS
Sellers hereby, jointly and severally, covenant and agree as follows:
8.1 CONDUCT OF BUSINESS. During the period from the date hereof to the
Closing Date:
(a) Sellers will cause CPC to (i) conduct the Business only in the
ordinary and usual course; (ii) maintain in full force and effect such policies
of insurance against fire, theft and usual extended coverage risks and public
liability insurance and product liability insurance against claims for bodily
injury or death and property damage in connection with the Business as are
usually carried by companies engaged in the same or similar business and
similarly situated: (iii) continue its normal policies and practices regarding
suppliers of goods and services to the Business; (iv) maintain CPC's assets and
the Business in operating condition and perform its obligations under all
contracts; (v) exert reasonable efforts to preserve the Business, and preserve
for Buyers the business relationships of CPC relating to the Business with
suppliers, customers and others pertaining thereto; (vi) cooperate with Buyers
in their efforts to secure the services of the employees of the Business
currently employed at CPC's facility; and (vii) do all things necessary to
comply or cause compliance with the conditions precedent set forth in Article XI
hereof.
(b) Sellers will cause CPC not to, without the prior written consent of
Buyers, (i) dispose of any real property,
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whether by lease, sub-lease or conveyance; (ii) enter into a lease or leases for
personal property or any renewals thereof; (iii) incur or permit to be incurred
any encroachment, mortgage, pledge, lien, security interest, equity,
restrictions, reversions, remainder, charge, liability, encumbrance or
conditional sale or similar title retention agreement with respect to any of its
assets; (iv) acquire or dispose of any inventories except in the ordinary course
of business in transactions not in violation of the terms of this Agreement; (v)
dispose of or acquire or commit to acquire any rights, assets or properties in
any way pertaining or allocated to the Business, other than inventories in the
ordinary course of business in transactions not in violation of the terms of
this Agreement; and (vi) except as required by law, disclose to any other person
or entity, any confidential information relating to the Business, including
without limitation, information relating to customers, suppliers, know-how, or
its assets, financial condition or results of operations of the Business.
8.2 NON-COMPETITION. From the date hereof until the fifth anniversary
of the Closing Date, Sellers agree that it will not make, distribute or sell
products or offer services pertaining in whole or significant part to the
Business, nor will Sellers become involved in any business capacity in any
business which competes directly or indirectly in the manufacture, distribution
or sale of products or offering of services relating in whole or significant
part to the Business so long as CPC, or any other entity deriving title to the
goodwill incident to the Business from Buyers or CPC,
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engages in the business of making, distributing or selling products, derivatives
or developments of the products or offering services associated in whole or
significant part with the Business. Should this covenant be adjudicated too
broad, in duration or geographic scope or otherwise, the parties hereto intend
that it be reduced to the maximum permitted in scope rather than declared
invalid or unenforceable. Notwithstanding the foregoing, Sellers shall not be in
violation of this Section in the event, from time to time, they hold 10% or less
of the publicly traded stock of any business which competes with the Business.
8.3 FURTHER ASSURANCES. From and after the Closing Date, at Buyers'
request and without further consideration, Sellers shall execute and deliver to
Buyers such instruments and documents, and do such further acts as Buyers may
reasonably deem necessary or desirable in order to effectively transfer, convey
and assign to Buyers, and to confirm Buyers' title to, all of the Units, and to
assist Buyers in exercising all rights with respect thereto.
8.4 CERTIFICATIONS. During the period from the date hereof to the
Closing Date, Sellers shall assist Buyers in all reasonable manner in obtaining
any certifications, approvals and the like, of whatever nature, necessary to the
operation of the Business by Buyers.
8.5 INSPECTIONS. During the period from the date hereof to the Closing
Date, Buyers shall have a right during business hours to make reasonable
examinations and inspections, including the conduct of interviews and meetings
with employees, at CPC's place
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of business upon prior notice to Sellers and Sellers shall have the right to
have a representative at any such meetings if they so desire.
8.6 APRIL 28, 1995 FIRE. Prior to and after the Closing Date, Sellers
hereby agree to pay the insurance deductible in the amount of Twenty-Five
Thousand Dollars ($25,000.00), and assign the rights under the insurance policy
to CPC and pay all remaining reasonable costs and expenses associated with the
fire which took place at CPC on April 28, 1995.
ARTICLE IX
COVENANTS OF BUYERS
Buyers hereby, jointly and severally, covenant and agree as follows:
9.1 PRODUCT WARRANTY SERVICE. After the Closing Date, CPC shall service
all product warranties pursuant to the terms thereof, with respect to any
products sold by CPC in operating the Business or products which are in
production or have been introduced into production prior to the Closing Date.
Sellers, upon receiving a description and cost break-down of all product
warranty work performed by CPC during the previous month, shall reimburse CPC on
a monthly basis for all costs incurred by CPC in excess of $750,000.00 in the
aggregate. For purposes of this Section, the term "cost" shall mean direct labor
cost, direct material cost and SG&A cost (ten percent (10%) of direct material
cost). Direct labor cost shall be calculated using a Thirty Dollar ($30.00) per
hour labor rate. For purposes of this Section, "warranty" shall
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be limited to customer claims under the warranty terms of each contract or
purchase order as in effect as of the Closing Date and shall not include any (i)
costs incurred prior to customer acceptance or product operation, or (ii)
customer accommodations after expiration of a warranty by its terms.
Notwithstanding the foregoing, Sellers shall not be required to reimburse CPC
for product warranty service resulting from work performed in a negligent manner
by CPC after the Date of Closing.
9.2 ACCESS TO RECORDS. With respect to any of the documents and records
transferred to Buyers under this Agreement, Buyers shall preserve such records
for the period of seven (7) years from the end of the calendar year in which the
Closing occurs. Sellers or their duly authorized independent auditors,
accountants, or other representatives shall have the right at reasonable times
during business hours, on due notice to Buyers to review and inspect such
records, and to make copies of them at Sellers' expense. To the extent Sellers
may require the cooperation of CPC or its employees after the Closing Date in
connection with any outstanding claims related to the Business, Buyers agree to
cooperate and give Sellers reasonable access to CPC employees, including
allowing such employees to provide information, testify in depositions or serve
as a witness in a legal proceeding.
9.3 COMPLETION OF CONTRACTS. After the Closing Date, Buyers shall use
their best efforts to cause CPC to fulfill its obligations under the outstanding
contracts listed on Schedule 6.12.
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9.4 1989 ACQUISITION AGREEMENT. After the Closing Date, Buyers agree,
at Sellers' written request, to cause CPC to seek to enforce its rights under
that certain Acquisition Agreement dated as of March 8, 1989 among Controlled
Power Limited Partnership, Controlled Power Corporation, Norman E. Jackson, Carl
S. Sorenson and James E. Owens (the "1989 Acquisition Agreement"). Any amounts
recovered by CPC under the 1989 Acquisition Agreement shall be forwarded to
Sellers to the extent Sellers have paid Buyers or CPC with respect to such items
under Section 13.1 below. Sellers shall hold harmless and indemnify Buyers and
CPC against any costs and expenses incurred in enforcing CPC's rights under the
1989 Acquisition Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO THE PERFORMANCE BY
SELLERS OF THEIR OBLIGATIONS HEREUNDER
The obligation of Sellers to perform their obligations here-
under due to be performed by them on or prior to the Closing Date shall be
subject to the fulfillment of the following conditions on or prior to the
Closing Date, any of which conditions being unfulfilled may be waived by
Sellers.
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Buyers herein shall be complete, true, and correct in all material
respects as of the Closing Date as if newly made at that time and the Buyers'
Boards of Directors shall have approved the transaction set forth in this
Agreement.
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10.2 OTHER CONDITIONS. Buyers shall have performed and complied with
all agreements, covenants, obligations and conditions required hereunder to be
performed or complied with by Buyers on or before the Closing Date.
10.3 APPROVALS AND CONSENTS. All statutory requirements for the valid
consummation of the transactions contemplated by this Agreement shall have been
fulfilled and all appropriate orders, consents and approvals from all regulatory
agencies and other governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions contemplated by this
Agreement shall have been received.
10.4 LEGAL OPINION. Sellers shall have received the opinion of counsel
to Buyers, dated the Closing Date (which may at Buyers' option be an employee of
Buyers) in form and substance satisfactory to Sellers' counsel.
10.5 RESOLUTIONS. Sellers shall have received copies of resolutions or
consents of the Board of Directors of each of Buyers, appropriately certified by
an officer, authorizing and approving the transactions contemplated under this
Agreement.
10.6 OFFICER'S CERTIFICATE. Sellers shall have received a certificate
from each of Buyers, appropriately certified by an officer, certifying that
Buyers' representations and warranties are true in all material respects at the
time of Closing, and that Buyers have performed and complied with all covenants,
agreements and conditions of the Agreement.
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ARTICLE XI
CONDITIONS PRECEDENT TO THE PERFORMANCE BY
BUYERS OF THEIR OBLIGATIONS HEREUNDER
The obligation of Buyers to perform their obligations hereunder due to
be performed by them on or prior to the Closing Date shall be subject to the
fulfillment of the following conditions on or prior to the Closing Date, any of
which conditions being unfulfilled may be waived by Buyers.
11.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Sellers herein will be complete, true, and correct in all material
respects as of the Closing Date as if newly made at that time and Canton Power's
Board of Directors and HCC's and SV's General Partners shall have approved the
transaction set forth in this Agreement.
11.2 OTHER CONDITIONS. Sellers will have performed and complied with
all agreements, covenants, obligations and conditions required hereunder to be
performed or complied with by Sellers on or before the Closing Date.
11.3 APPROVALS AND CONSENTS. All statutory requirements for the valid
consummation of the transactions contemplated by this Agreement shall have been
fulfilled and all appropriate orders, consents and approvals from all regulatory
agencies and other governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions contemplated by this
Agreement shall have been received.
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11.4 RELEASE OF EMPLOYMENT AGREEMENTS. Buyers shall have received
executed release agreements from Sellers, dated the Closing Date, whereby each
employment agreement of CPC, listed on Schedule 4.3 and marked "Terminate", has
been terminated and CPC has been released from all liability associated
therewith.
11.5 RELEASE OF NON-ASSUMED DEBT. Escrow Agent shall have received
executed satisfactions, release agreements and pay-off letters, in form
reasonably satisfactory to Buyers' counsel, pursuant to which that certain
indebtedness of CPC not being assumed by Buyers, as set forth in Schedule 3.1
hereto, shall be satisfied and paid in full.
11.6 LEGAL OPINION. Buyers shall have received the opinion of counsel
to Sellers, dated the Closing Date, in form and substance satisfactory to
Buyers' counsel.
11.7 NO MATERIAL CHANGE. There shall have occurred no material adverse
change in the business, assets or financial condition of CPC.
11.8 RESOLUTIONS. Buyers shall have received copies of resolutions or
consents of the Board of Directors of Canton Power, certified by an officer, and
the general partners of HCC and SV, appropriately certified, authorizing and
approving the transactions contemplated under this Agreement.
11.9 SELLERS' CERTIFICATE. Buyers shall have received a certificate
from each of the Sellers, appropriately certified by an officer or general
partner, certifying that Sellers' representations and warranties are true in
all material respects at
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the time of Closing, and that Sellers have performed and complied with all
covenants, agreements and conditions of the Agreement.
11.10 OTHER DOCUMENTS. Buyers shall have received all other documents
required to be delivered by Sellers on the Closing Date under the provisions of
this Agreement.
ARTICLE XII
TAXES
12.1 TAXES ON TRANSFER. Sellers shall pay any state and local sales,
use, franchise, property or transfer taxes or increases hereof occasioned by the
sale, use or transfer of the Units hereunder; Sellers will reimburse Buyers for
any such taxes paid by Buyers. Under no circumstances will Buyers be liable for
any income, gross receipts or other similar tax measured or computed in
reference to gross or net income or other tax which may be incurred by Sellers
in any manner connected with this transaction or the Business acquired
hereunder. Buyers will provide timely notice to Sellers of any imposition of
taxes covered by this Section, and Buyers will cooperate fully and permit
Sellers to contest the imposition of such taxes.
12.2 TAX RETURNS. Sellers and Buyers shall cooperate fully with each
other and make available or cause to be made available to each other in a timely
fashion such tax data, prior tax returns and filings and other information as
may be reasonably required for the preparation by Buyers or Sellers of any tax
returns, elections, consents or certificates required to be prepared and filed
by CPC, Buyers or Sellers and any audit or other examination by any taxing
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authority, or judicial or administrative proceeding relating to liability for
taxes. Buyers and Sellers will each retain and provide to the other party all
records and other information which may be relevant to any such tax return,
audit or examination, proceeding or determination, and will each provide the
other party with any final determination of any such audit or examination,
proceeding or determination that affects any amounts required to be shown on any
tax return of the other party for any period. Without limiting the generality of
the foregoing, each of Buyers and Sellers will retain copies of all tax returns,
supporting work schedules and their records relating to tax periods or portions
thereof ending prior to or on the Closing Date. Buyers will cause appropriate
personnel to prepare the required federal and state income tax returns for the
tax period beginning January 1, 1995, and ending May 1, 1995 (the date of
closing). Such tax returns will be delivered to Sellers as a draft not later
than August 20, 1995, provided, however, that to the extent that Buyers incur
additional out-of-pocket expenses to outside accountants in order to deliver
such tax returns, Sellers shall reimburse Buyers for the amount of all such
additional expenses. Buyers will provide Sellers with any necessary payroll
records attributable to the period prior to the Closing Date. Buyers shall
cooperate with Sellers to the extent reasonably necessary for Sellers completion
of these tax returns and in the sharing of financial and accounting information
with respect thereto or with respect to any audit examination or other
proceeding with respect thereto.
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ARTICLE XIII
INDEMNIFICATION; LIMITATIONS
13.1 SELLERS' HOLD HARMLESS. On and after the Closing Date, Sellers
shall, jointly and severally, pay, perform, discharge, indemnify and hold Buyers
harmless from all losses, costs, damages and expenses (including reasonable
attorneys' fees and expenses) incurred by Buyers or CPC resulting from or
arising or allegedly arising out of (i) any failure by Sellers to perform or
observe their obligations under this Agreement or any agreement, document,
schedule or instrument to be executed under this Agreement; (ii) any incorrect
representation by Sellers to Buyers or the non-performance of any covenant or
obligation to be performed or payment to be made pursuant to this Agreement;
(iii) defects or alleged defects of the products of the Business which were
developed by or the product of CPC with respect to those products which are in
production or have been introduced into production as of the Closing Date,
excluding those defects which were the direct result of Buyers' negligence and
subject to the terms of Section 9.1 hereto, if applicable; (iv) infringement or
claimed infringement of any patent, trademark, copyright or other similar
intangible right prior to the Closing Date; (v) any legal, governmental action,
suit or proceeding against CPC, including all those required to be included on
Schedule 6.11 hereto, which arise from the operation of the Business or the
ownership or condition of the properties prior to the Closing Date, except
pending workers' compensation claims,
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claims arising from a violation of the American Disability Act or applicable
building codes governing the property, or any claims arising from the recognized
environmental conditions described in the Woodward-Clyde March, 1995 Phase I
Environmental Report; and (vi) any of the employee benefit plans described in
Section 6.18 deemed to be non-qualified at any time prior to the Closing Date,
any failure to provide appropriate notices, omission of a participant or
miscalculation as to any or otherwise eligible participant's account balance or
accrued benefit in the plans or any failure by Sellers to make timely filings
for or amendments to such employee benefit plans. This Section applies to all
claims arising out of, including, without limitation, negligence, strict
liability, failure to warn, breach of express or implied warranty, or violation
of law. Sellers shall not be obligated to indemnify Buyers for any claimed
consequential damages resulting from this Section which claims are originated by
Buyers for Buyers' direct benefit.
13.2 BUYERS' HOLD HARMLESS. On and after the Closing Date, Buyers
shall, jointly and severally, pay, perform, discharge, indemnify and hold
harmless Sellers from all losses, costs, damages and expenses (including
reasonable attorneys' fees and expenses) incurred by Sellers resulting from or
arising or allegedly arising out of (i) any failure by Buyers to perform or
observe their obligations under this Agreement or any agreement, document,
schedule or instrument to be executed under this Agreement; (ii) any incorrect
representation by Buyers to Sellers or the non-
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performance of any obligations to be performed pursuant to this Agreement; and
(iii) defects or alledged defects of the products of the Business which were
developed by or the product of CPC with respect to those products which were
introduced into production after the Closing Date. Notwithstanding anything in
this Section to the contrary, Buyers shall not be required to indemnify and hold
harmless Sellers from any losses, costs, damages and expenses incurred by
Sellers resulting from liabilities arising or allegedly arising out of any
claims described in Sections 13.1(iii) or 13.1(iv). Buyers shall not be
obligated to indemnify Sellers for any claimed consequential damages resulting
from this Section which claims are originated by Sellers for Sellers' direct
benefit.
13.3 INDEMNIFICATION PROCEDURE. With respect to any matter covered by
the above indemnifications, the party to be indemnified will give prompt written
notice of the claim or demand indemnified against and will thereafter cooperate
fully with the indemnifying party in the defense of the claim or demand, and the
indemnifying party through counsel reasonably satisfactory to the indemnified
party may assume the defense thereof; provided, however, that any indemnified
party shall be entitled to participate in any such action, suit or proceeding
with counsel of its own choice but at its own expense. If the indemnifying party
does not assume the defense within a reasonable time, the indemnified party,
upon notice to the indemnifying party, may assume such defense and the
reasonable fees and expenses of its attorneys will be covered by the indemnity
provided for in this Article XIII. Notwithstanding
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anything in this Section to the contrary, the indemnifying party shall not,
without the written consent of the indemnified party, which shall not be
unreasonably withheld, (i) settle or compromise any action, suit or proceeding
or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
indemnified party of a written release from all liability in respect of such
action, suit or proceeding, or (ii) settle or compromise any action, suit or
proceeding in any manner that may materially and adversely affect the
indemnified party other than as a result of money damages or other money
payments.
13.4 LIMITATION OF CERTAIN CLAIMS; BASKETS. No claim for
indemnification shall be made by Buyers pursuant to:
(a) Section 13.1(iii) hereof until such claims aggregate in
excess of $250,000.00 ("Basket"); after which event Buyers making such claims
shall be entitled to make any such claims and to be indemnified in full
(including reasonable attorneys' fees and expenses) for all such claims, which,
in the aggregate, are over and above the foregoing respective amount;
(b) Section 9.1 hereof until such claims aggregate in excess
of $750,000.00 ("Basket"); after which event Buyers making such claims shall be
entitled to make any such claims and to be indemnified in full (including
reasonable attorneys' fees and expenses) for all such claims, which, in the
aggregate, are over and above the foregoing respective amount; or
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(c) Sections 6.6, 6.7, 6.8, 6.9, 6.10, 6.12, 6.13, 6.14, 6.15,
6.16, 6.17, 6.19, 6.22, 6.24, 6.25, 6.26, 6.28, 6.29, 6.31 and 6.32 hereof until
such claims aggregate in excess of $50,000.00 ("Basket"); after which event
Buyers making such claims shall be entitled to make any such claims and to be
indemnified in full (including reasonable attorneys' fees and expenses) for all
such claims, which, in the aggregate, are over and above the foregoing
respective amount.
13.5 MAXIMUM EXPOSURE; CEILING. The aggregate amount of all claims
subject to indemnification by Sellers under this Agreement shall not exceed Ten
Million Dollars ($10,000,000.00).
ARTICLE XIV
MISCELLANEOUS
14.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Sellers and Buyers contained in this Agreement shall survive
the Closing until the expiration of twenty-four (24) months after the Closing
Date; provided, however, that the representations and warranties of Sellers
contained in (i) Section 6.20 shall be deemed to survive for so long as any
applicable statute of limitations with respect to tax claims shall have not
expired; and (ii) Sections 6.18, 6.24 and 6.29 shall survive the Closing until
the expiration of forty-eight (48) months after the Closing Date; and (iii)
Sections 6.2, 6.4, 6.5, and 6.11 shall survive the Closing for an indefinitive
period of time.
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14.2 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by a recognized overnight courier, if to Buyers at:
CHEMPOWER, INC.
807 E. Turkeyfoot Lake Road
Akron, Ohio 44319
Attention: Scott R. Lowrie, General Counsel
if to Sellers, at:
HENRY CROWN AND COMPANY
222 N. LaSalle Street, Suite 2000
Chicago, Illinois 60601
Copy to:
GOULD & RATNER
222 N. LaSalle Street, Suite 800
Chicago, Illinois 60601
Attention: John Washburn, Esq.
14.3 SCHEDULES. All Schedules referred to in this Agreement are
attached hereto and are hereby made a part hereof by reference, as if fully
rewritten herein.
14.4 ASSIGNMENT. Neither party may assign this Agreement in whole or in
part without the prior written consent of the other party. Any purported
assignment in violation of this paragraph shall be null and void. Nothing in
this Agreement, expressed or implied, is intended to confer upon any person or
entity not a party hereto any rights or remedies under or by reason of this
Agreement except as otherwise specifically stated herein.
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14.5 AMENDMENT. This Agreement may be modified or amended only by a
written instrument signed by duly authorized representatives of both parties. No
modification or amendment hereto shall be effected by the acknowledgement or
acceptance by any party of any purchase order, sales acknowledgement, or other
similar form from any other party.
14.6 WAIVER. No waiver by any party of any breach of any of the
covenants or conditions herein contained to be performed by the other party
shall be construed as a waiver of any succeeding breach of the same of any other
covenant or condition or affect any party's right to require the strict
performance thereof on a subsequent occasion. No waiver, consent, extension,
indulgence or similar action with respect to any covenant or condition hereof
shall be effective unless embodied in writing specifically stating that it is
such a waiver, consent, extension, indulgence or similar action and signed by
the party to be bound thereby.
14.7 FEES AND EXPENSES. Each of the parties hereto shall bear its own
fees and expenses including, without limitation, broker fees in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement.
14.8 CHOICE OF LAW. This Agreement shall be in all respects governed
by, and construed and enforced in accordance with, the laws of the State of
Ohio, including all matters of construction,
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validity, and performance, except to the extent otherwise specified herein.
14.9 REMEDIES. No remedy conferred by any provision of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by Sellers or Buyers shall not constitute a
waiver of the right to pursue other available remedies.
14.10 SEVERABILITY. If any provision of this Agreement or its
application shall be held invalid, illegal, or unenforceable in any respect by a
court of competent jurisdiction, the validity, legality, and enforceability of
all other provisions and applications hereof shall not in any way be affected or
impaired.
14.11 COUNTERPARTS. This Agreement may be executed in person or by
facsimile in several counterparts, each of which shall constitute an original,
but all of which together shall constitute one and the same instrument.
14.12 SECTION HEADINGS. The Section headings herein and the headings
appearing in any Schedule hereto have been inserted for convenience or reference
only, and shall not modify, define, expand, or limit any of the provisions
hereof.
14.13 DEFINITIONS. Unless the context otherwise required, the terms
defined herein shall have the meanings as specified herein for all purposes of
this Agreement and of the attached Schedules to
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this Agreement, and such meanings shall be equally applicable to both the
singular and plural forms of the terms herein defined.
14.14 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof, and there are no
representations, warranties or commitments by the parties except as set forth
herein or otherwise set forth in writing. This Agreement supersedes all prior
and contemporaneous oral agreements, understandings, negotiations and
discussions of the parties hereto relating to the transactions contemplated by
this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date and year first above written.
"BUYERS"
SOUTHWICK CORP.,
AN OHIO CORPORATION
/s/ James G. Owens
By : ____________________________________
James G. Owens, President
BROOKFIELD CORP.,
AN OHIO CORPORATION
/s/ Robert E. Rohr
By : ____________________________________
Robert E. Rohr, President
"SELLERS"
CANTON POWER CORPORATION,
AN ILLINOIS CORPORATION
/s/ A. Steven Crown
By : ____________________________________
A. Steven Crown, President
HENRY CROWN AND COMPANY (NOT INCORPORATED),
AN ILLINOIS LIMITED PARTNERSHIP
/s/ A. Steven Crown
By : ____________________________________
A. Steven Crown, General Partner
THE SECOND VENTURE,
AN ILLINOIS GENERAL PARTNERSHIP
/s/ Lester Crown
By : ____________________________________
Lester Crown, General Partner
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