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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
February 3, 1997 (January 17, 1997)
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DeVlieg-Bullard, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-18198 62-1270573
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
One Gorham Island, Westport, CT 06880
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(Address of principal executive offices) (Zip Code)
203-221-8201
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER
ACQUISITION OF ASSETS AND INCREASE IN DEBT
On January 17, 1997, DeVlieg-Bullard, Inc. (the "Company") acquired
substantially all of the assets of Mattison Technologies, Inc., a Rockford,
Illinois-based machine tool company ("Mattison"), including intellectual
property, parts inventory, accounts receivable and customer lists. The purchase
price was $6.8 million, which consisted of $4.2 million in cash and a $2.6
million note, $1.6 million of which is secured by Mattison's accounts
receivable. As the Mattison accounts receivable are collected, the Company is
required to pay down the principal on the note. The remaining balance under the
note is due January 7, 1998. The Mattison operations will be consolidated with
the Services Group at the Company's Rockford, Illinois, facility.
In connection with this acquisition, the Company amended its senior credit
facility to increase it to $40.0 million from the current $32.0 million. This
facility now consists of a $30.0 million revolving credit agreement (up from
$25.0 million) and $10.0 million in term loans (up from $8.0 million).
Borrowings from the senior credit facility were used to finance the acquisition.
The funding occurred on January 17, 1997, contemporaneously with the Company's
completion of the acquisition of Mattison's assets.
The senior credit facility is secured by all of the Company's assets. Under the
terms of the facility, the Company is required to comply with various
operational and financial covenants, as defined, including (i) minimum net
worth, (ii) interest coverage ratio, (iii) liabilities to net worth ratio, (iv)
current ratio, (v) fixed charge coverage ratio and (vi) minimum earnings levels,
as defined. In addition, the facility places limitations on the Company's
ability to make capital expenditures and to pay dividends.
The maturity date for the senior credit facility has been extended to October
31, 2000. Amounts available under the revolving credit agreement are based upon
a formula related to the Company's eligible accounts receivable and inventories.
Interest on outstanding balances is payable monthly in arrears. Interest rates
are based on the prime rate or alternative rates based on LIBOR.
In connection with the acquisition, two new term loans were provided and the
maturity on the existing loans was extended. The $5 million term loan is now
payable in 58 equal installments of $85,714 with the balance due August 31,
2000. The $3 million term loan is now payable in 36 equal installments of
$83,333 through May 31, 1999. The third term loan of $2.0 million is due and
payable on June 30, 1997. The fourth term loan of $1.5 million is payable in 45
equal installments of $33,333 commencing January 31, 1997 through October 31,
2000. Interest on the term loans is payable monthly. Interest rates are based on
the prime rate or alternative rates based on LIBOR.
LITIGATION
The Company has settled the breach of contract suit against it (styled Watson
Bowman Acme Corp. v. DeVlieg-Bullard Inc.) for $1.5 million, which represents a
$700,000 reduction from the amount that was accrued in the first quarter of
fiscal 1996. The Company had appealed the decision and was awaiting a trial
date.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
2.1 Asset Purchase Agreement between Mattison Technologies, Inc. and
DeVlieg-Bullard, Inc. dated December 18, 1996 (Pursuant to Item
601(b)(2) of Regulation S-K, the schedules to this agreement are
omitted, but will be provided supplementally to the Commission upon
request).
2.2 Secured Promissory Note dated January 16, 1997 in the principal amount
of $2,600,000 between Mattison Technologies, Inc., and DeVlieg-Bullard,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DeVlieg-Bullard, Inc.
(Registrant)
Date: February 3, 1997 By: /s/ Lawrence M. Murray
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Vice President and Chief
Financial Officer
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("the Agreement") is made and entered
into this 18th day of December, 1996, by and between MATTISON TECHNOLOGIES,
INC., an Illinois Corporation, (the "Seller"), and DEVLIEG-BULLARD, INC. a
Delaware corporation (the "Buyer")
WITNESSETH
WHEREAS, Seller is currently engaged in the business of a manufacturing
machine tools, and woodworking, grinding and work holding machinery at
facilities which its owns and are located at 545 Blackhawk Park Avenue,
Rockford, Illinois 61104 (the "Property"); and
WHEREAS, Seller is debtor and debtor in possession in that certain case
pending under Chapter 11 of Title 11, United States Code (11 U.S.C. Sections 101
et seg.) (the "Bankruptcy Code"), in the U.S. Bankruptcy Court for the Northern
District of Illinois, Western Division, as Case No. 96 B 51545 (the "Bankruptcy
Court" or the "Bankruptcy Case");
WHEREAS, pursuant to Section 363(b) of the Bankruptcy Code, Seller
desires to sell to buyer, and Buyer desires to purchase from Seller, certain of
Seller's assets upon the terms and conditions hereinafter set forth;
WHEREAS, Buyer has deposited $100,000 with Equity Partners, Inc.,
Seller's court approved business broker ("EPI"), as an earnest money deposit
which sums shall be held pending the Closing, as hereinafter defined.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
parties do hereby agree as follows:
1. Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, and to the requisite approval of the Bankruptcy Court as
provided herein, Seller shall sell to Buyer and Buyer shall purchase from Seller
at the Closing, as hereinafter defined, the following assets owned by Seller
wherever located and whenever acquired, but specifically excluding the assets
described in paragraph (2) below (collectively, the "Assets");
(a) All machinery, equipment, furniture, fixtures,
tooling, jigs, dies, computers, vehicles, displays,
and tangible personal property (collectively, the
"Equipment");
(b) All inventory including, but not limited to, raw
materials, goods in process, finished goods,
supplies, promotional materials, inventory in transit
to Seller, prepaid inventory or inventory held on
consignment, which
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consigned inventory is set forth on Schedule 1(b)
(collectively the "Inventory");
(c) All trade and other accounts receivable (collectively
the "Accounts Receivable");
(d) All intangible assets or intellectual property including
patents, trademarks, trade names, service marks,
service names, brand names, logos, designs, drawings,
formulas, copyrights, all of Seller's right, title and
interest in and to the names "Mattison", "Mattison
Technologies Inc.", "Mattison Machine Works",
Mattison Woodworking Machinery Co.", "Mattison Grinders,
"Magnalock", and any variants or usage thereof, the
telephone number." 815-962-5521 and facsimile number:
815-962-5568, the goodwill associates with Seller's
business and any and all other intangible or intellectual
property belonging to or registered in the name of Seller
(collectively, the "Intangible Property")';
(e) All customer files and lists, customer, manufacturer's
representatives and supplier information for Seller's
products and product literature and all books, records and
documents of Seller pertaining to the operation of its
business (collectively, the "Books and Records");
(f) (If applicable) Seller's interests in and to various
other leases, contracts and agreements set forth on
Schedule 1(g) hereto, including but not limited to, any
purchase orders to Seller from its customers which are
outstanding as of the Closing (collectively, the
"Executory Contracts"); and
2. Excluded Assets. Anything herein to the contrary notwithstanding,
Seller shall retain and shall not sell, convey, transfer, assign or deliver to
Buyer any interest in the following assets and properties of Seller and Buyer
hereby acknowledges that it does not have nor will it acquire at Closing or
thereafter an interest of any kind whatsoever in the following assets and
properties of Seller:
(a) Any cash or cash equivalents whatsoever, whether on hand,
in banks or elsewhere;
(b) Seller's corporate minute books and stock record books;
(c) Causes of action and litigation rights existing as of
the Closing in favor of Seller including any and all
causes of action arising under Sections 510, 544-553 of
the Bankruptcy Code; and
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(d) Rights or other tax benefits arising from Seller's net
operating losses arising proper to the Closing.
3. Purchase Price and Lease of Property
(a) The purchase price for the Assets shall be $7,500,000
(the "Purchase Price") and be payable as follows:
(i) The sum of $4,500,000 in full at Closing by
cashier's or certified check, or wire transfer,
less only the Earnest Money Deposit; and
(ii) A Promissory Note (the "Promissory Note") in
the principal amount of $3 mil. secured by the
Accounts Receivable and payable as the Accounts
Receivable are collected, with any and all unpaid
portion thereof due in full 12 months following
Closing. Note int 10% per mo. $2 mil pd w/in 120
days subj. to adjust per 3(b). $1 mil. pd 12 mos.
(b) Amounts due under the Promissory Note shall be reduced on
a dollar for dollar basis to the extent Accounts
Receivable are not good & collectible acts rec. as of
closing.
4. Earnest Money. Buyer has deposited the sum of $100,000 with EPI
representing an earnest money deposit to be applied to the Purchase Price in
accordance with paragraph with paragraph 3 above (the "Earnest Money Deposit").
5. Closing. The consummation of the transactions contemplated herein
(the "Closing"), shall take place at Seller's offices at 10:00a.m. on (no sooner
than 3 business days and no later than 15 calendar days following the entry of
the Sale Order defined below), or such other location, time and date as shall be
mutually agreed upon by the parties. The time of the Closing shall be deemed to
be effective as of 12:01a.m., CST on the date of the Closing.
6. Seller's Representations and Warranties. Seller, as a material
inducement to the execution of this Agreement by Buyer, represents and warrants
to Buyer;
(a) Seller is a debtor in possession in the Bankruptcy Case
with all of the rights and powers of a trustee in
bankruptcy, including, without limitation, the right and
power to sell the Assets pursuant to Section 363 of the
Bankruptcy Case, subject only to the approval of the
Bankruptcy Court.
(b) Seller has good and marketable title to the Assets being
sold to Buyer. At Closing, Seller will transfer the Assets
to Buyer free and clear of any
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interest, claim, lien or encumbrances of any kind
owned or held by any person or entity other than
Buyer, except only a security interest in favor of
Seller in the Accounts Receivable and those
liabilities or obligations of Seller, if any,
expressly assumed by Buyer.
(c) Seller is not a party to any collective bargaining
contract, pension, profit sharing, or other
retirement plan or bonus or vacation plan, or any
other similar contract which might become binding
upon or in any way adversely affect Buyer as
purchaser of the Assets.
(d) Subject only to the prior approval of the Bankruptcy
Court, Seller has full power and authority to execute
and perform this Agreement and all documents and
instruments to be executed by Seller pursuant to this
Agreement (collectively, "Seller's Ancillary
Documents"). This Agreement has been, and Seller's
Ancillary Documents will be duly executed and
delivered by duly authorized officers of Seller. Upon
the approval of the Bankruptcy Court, this Agreement
shall constitute a leal, valid and binding obligation
of Seller enforceable against Seller in accordance
with its terms.
(e) Except for the approval of the Bankruptcy Court, no
consent, authorization, order or approval of, or
filing or registration with, any governmental
commission, board or other regulatory body of the
United States or any state or political subdivision
thereof is required for or in connection with the
consummation by Seller of the transaction
contemplated by this Agreement or by Seller's
Ancillary Documents.
(f) Neither the execution and delivery of this Agreement
by Seller, nor the consummation by Seller of the
transaction contemplated hereby, will conflict with
or result in a breach of any of the terms, conditions
or provisions of Seller's Certificate of
Incorporation or by-laws, or of any statute or
administrative regulation, or of any order, writ,
injunction, judgement or decree of any court or
governmental authority or of any arbitration award to
which Seller is a party or by which Seller is bound.
BUYER HAS INSPECTED THE ASSETS TO THE EXTENT BUYER DEEMS NECESSARY IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND IS BUYING
THE ASSETS AS IS, WHERE IS, EXCEPT AS EXPRESSLY SET FORTH HEREIN, BUYER
ACKNOWLEDGES THAT SELLER HAS NOT MADE, DOES NOT INTEND TO MAKE, AND HEREBY
EXPRESSLY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES,
STATEMENTS OR CONDITIONS OR ANY KIND OR NATURE WHATSOEVER AS TO THE PRESENT,
PAST OR FUTURE PHYSICAL CONDITION OR QUALITY OF THE ASSETS, INCOME, EXPENSES,
OPERATION, MERCHANTABILITY, FITNESS FOR A PARTICULAR
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PURPOSE, OR ANY OTHER MATTER AFFECTING OR RELATING TO SELLER'S BUSINESS OR THE
ASSETS.
7. Buyer's Representations and Warranties. Buyer, as a material
inducement to the execution of this Agreement by Seller, represents and warrants
to Seller:
(a) Buyer is a corporation duly organized and validly existing
under the laws of the State of Delaware
(b) Subject only to the proper approval of the Bankruptcy
Court, Buyer has full power and authority to execute and
perform this Agreement and all documents and instrument
to be executed by Buyer pursuant to this Agreement
(collectively, "Buyer Ancillary Documents"). This
Agreement has been, and Buyer's Ancillary Documents will
be duly executed and delivered by duly authorized officers
of Buyer. Upon the approval of the Bankruptcy Court, this
Agreement shall constitute a legal, valid and binding
obligation of Buyer enforceable against Buyer in
accordance with its terms.
(c) Except for the approval of the Bankruptcy Court, no
consent, authorization, order or approval of, or filing
or registration with, any governmental commission, board
or other regulatory body of the United States or any state
or political subdivision thereof is required for or in
connection with the consummation by Buyer of the
transaction contemplated by this Agreement or by Buyer's
Ancillary Documents.
(d) Neither the execution and delivery of this Agreement
by Buyer, nor the consummation by Buyer of the
transaction contemplated hereby, will conflict with or
result in a breach of any of the terms, conditions or
provisions of Buyer's Certificate of Incorporation or
by-laws, or of any statute or administrative regulation,
or of any order, writ, injunction, judgement or decree of
any court or governmental authority or of any arbitration
award to which Buyer is a party or by which Buyer is
bound.
8. Covenants. Between the date hereof and the Closing, Seller and Buyer
hereby covenant and agree, as the case may be, as follows:
(a) Seller shall not sell, lease, transfer, convey, assign or
dispose of in any manner whatsoever, any of the Assets
except in the ordinary course of Seller's business
consistent with past practices.
(b) Seller agrees to maintain and preserve the Assets prior
to the Closing in their present state and condition in
all material respects, subject only to use in the ordinary
course of business and ordinary wear and tear.
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(c) Seller agrees to maintain the Books and Records in a
complete and accurate manner on a basis consistent with
past bookkeeping and accounting practices of Seller.
(d) Seller agrees to pay all taxes, of any kind and nature
incurred or arising prior to Closing, as and when due,
which may in any way affect or relate to the Assets.
(e) Seller agrees to operate its business in the ordinary
course between the date hereof and Closing consistent
with past practices.
(f) Each party agrees not to knowingly take, or fail to take,
any action which by reason of taking or such failure to
take would make any representations or warranties of each
party herein materially untrue, inaccurate or otherwise
misleading.
(g) Each party agrees to take all corporate and other action
necessary to consummate and carry out the transactions
contemplated herein.
9. Due Diligence. Buyer agrees that is has or shall be deemed to have
completed all of its due diligence efforts regarding Seller's business and the
Assets and/or have waived further due diligence requirements at or prior to the
Sale Hearing.
10. Conditions Precedent to the Obligations of Buyer. All obligations
of Buyer hereunder are subject to the fulfillment, at or prior to the Closing,
of each of the conditions precedent set forth below or otherwise contained
herein.
(a) The representations and warranties of Seller contained
herein shall be true and correct on and as of the Closing,
with the same force and effect as though made on and as
of said date, except as effected by the transactions
contemplated hereby.
(b) Seller shall have performed all of its obligations and
agreements, and complied with all of its covenants herein,
to be performed and complied with by Seller, prior to
closing or such earlier date as herein specified. At the
Closing, Seller shall deliver possession of the Assets to
Buyer as contemplated herein.
(c) The Bankruptcy Court shall have entered an order: (i)
approving the sale, transfer, assignment and assumption,
as appropriate, of the Assets to Buyer upon the terms and
conditions set forth herein, free and clear of any and all
liens, claims and encumbrances of any kind or nature
whatsoever,
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excluding only the security interest in favor of the
Seller in and to the Accounts Receivable and those
liabilities or obligations of Seller, if any,
expressly assumed by Buyer; (ii) , (iii) providing
that any and all valid liens, claims and encumbrances
shall attach to the Purchase Price at Closing; and
(iv) contained a finding that the Buyer is a good
faith purchaser pursuant to Section 363 (m) of the
Bankruptcy Code (the "Sale Order").
(d) Subject to paragraph 17 below, unless individually or
collectively waived by Buyer in writing proper to the
entry of the Sale Order, the Bankruptcy Court shall
have entered an order(s) approving Seller's
assumption of the Assumed Contracts in accordance
with Section 365(b) of the Bankruptcy Case and
assignment to Buyer as of Closing. If the Sale Order
shall not have become final and beyond further appeal
or reconsideration by any court (thereby becoming a
"Final Order"). Buyer shall have the right solely in
the discretion of Buyer, to delay the Closing until a
date not later than fifteen (15) days after the Sale
Order shall become a Final Order.
(e) At the Closing, Seller shall deliver to Buyer the
following documents (executed by Seller's authorized
representatives, as appropriate), in a form
satisfactory to Buyer, and other items:
(i) Bill of Sale;
(ii) Absolute Assignment of the Assumed
Contracts and Intangible Property;
(iii) Original certificates of title for
the vehicles or other assets,
assigned by Seller to Buyer;
(iv) Copies or originals of all the
Books and Records;
(v) A certified copy of the Sale Order;
(vi) Originals of the Assumed Contracts;
(vii) A certified resolution of Seller's
Board of Directors authorizing the
execution, delivery and performance
of this Agreement;
(viii) Notices in a form reasonably
satisfactory to Buyer executed by
Seller's president to each customer
or account debtor of Seller, as the
case may be, of the sale of the
Assets and/or Buyer's right to
collect the Accounts Receivable,
such
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notices to be delivered to such parties by
Buyer immediately after the Closing; and
(f) There shall have been no material and adverse change
in the Assets from the date hereof until the Closing
except as disclosed, and reasonably acceptable to,
Buyer
11. Conditions Precedent to the Obligations of Seller. All
obligations of Seller hereunder are subject to the fulfillment, at or prior to
the Closing, of each of the conditions set forth below or otherwise contained
herein.
(a) The representations and warranties of Buyer herein
contained shall be true on and as the Closing, with
the same force and effect as though made on and as of
said date, except as affected by the transactions
contemplated hereby.
(b) Buyer shall have performed all of its obligations and
agreements, and compiled with all of its covenants
herein to be performed and complied with by Buyer,
prior to the Closing or such earlier date as may be
specified herein. At the Closing, Buyer shall take
possession of the Assets as contemplated herein.
(c) The Court shall have entered the Sale Order.
(d) Seller shall have received a certified resolution of
Buyer's Board of Directors authorizing the execution,
delivery and performance of this Agreement.
(e) A fully executed Note per P. 3 (a)(ii), security
agreement and UCC-1 financing statement conveying to
Seller a valid and perfected lien and security
interest in and to the Accounts Receivable in a form
reasonably satisfactory to counsel for Seller and
Buyer (the UCC-1 may be prerecorded).
(f) If Buyer has reached an employment or consulting
agreement with any former or current officer of
Seller, Buyer shall have fully disclosed the terms
and conditions of any and all such employment and/or
consulting agreements to the Bankruptcy Court prior
to the entry of the Sale Order.
(g) If the Buyer in its sole discretion elects to waive
the condition precedent regarding Seller's assumption
of any or all of the Assumed Contracts of the Lease,
Buyer must have confirmed such waiver(s) in writing
prior to the entry of the Sale Order.
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12. Survival of Warranties and Representations; Indemnification. The
warranties and representations of the parties hereto as expressed herein shall
survive the Closing for a period of one (1) year from the Closing. Buyer shall
have the right to setoff against the unpaid amounts payable under the Promissory
Note any claim, loss, liability, cost and expense (including attorneys fees)
incurred by Buyer directly or indirectly relating to, resulting from or arising
out of;
(a) Any untrue representation, misrepresentation, breach
of warranty or nonfulfillment of any covenant or
agreement of Seller contained herein;
(b) Any tax liability of the Seller not previously paid;
(c) Any cost, expense or liability incurred by Buyer in
connection with any pollution of the soil or ground water
of, or originating from, any parcel of real property
owned, leased or used by Seller which exists on the date
of the Closing;
(d) Any cost, expense or liability resulting from any and
all products, liability actions, suits, proceedings,
assessments, judgements, claims, costs and expenses
including, without limitation, legal fees and expenses
incidental to any of the foregoing which arise out of or
are based on facts in existence prior to the Closing. The
phrase "products liability" shall include any and all
claims, whether based on strict liability, negligence or
warranty, by any party alleging the sale, transfer or
delivery by the Seller of any product in a defective or
dangerous condition which results in harm or injury to
any user, any person with whom the Seller has dealt or
others, whether such harm or injury is personal injury,
property damage or economic loss;
(e) Any liability or cost incurred by Buyer for refunds to
customers because of returned goods or warranty claims in
connection with goods sold by Seller; and
(f) Any other obligation or liability of Seller, whether
arising before or after the Closing.
This paragraph shall not be deemed to exclude or limit any appropriate
remedy that may otherwise be available to Buyer against parties other
than the Seller.
13. Risk of Loss. If a material portion of the Assets (ten percent
(10%) or more of the aggregate replacement cost thereof) or of Seller's
facilities (if to be leased by Buyer ten Percent (10%) or more of the usable
leased floor area) shall be damaged by fire or elements or other cause prior to
the Closing, Buyer may (i) terminate this Agreement at is election, in which
case, Buyer shall receive back the Earnest Money Deposit with all interest
earned thereon as its sole remedy, or (ii) elect to retain the insurance
proceeds relating thereto as its sole remedy, and shall be required to close the
transactions as otherwise herein contemplated.
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14. Termination of the Agreement. Anything to the contrary herein
notwithstanding, this Agreement and the transaction contemplated hereby may be
terminated at any time prior to the Closing by prompt notice given in accordance
with Section 24:
(a) By the mutual written consent of Buyer and Seller; or
(b) By either such parties if the Closing shall not have
occurred at or before 1:59p.m. on January 31, 1997;
provided, however, that the right to terminate this
Agreement under this Section 14(a) shall not be available
to any party whose failure to fulfill any of its
obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or
prior to the aforesaid date.
15. Remedies. In the event of a breach of this Agreement, the
non-breaching party shall not be limited to the remedy of termination of this
Agreement, but shall be entitled to pursue all available legal and equitable
rights and remedies, and shall be entitled to recover all of its reasonable
costs and expenses incurred in pursuing them (including, without limitation,
reasonable attorney's fees). In the event that Buyer breaches its obligations
hereunder and Seller elects to terminate this Agreement pursuant to Section 14
hereof, Seller shall be entitled to retain, as liquidated damages, the Earnest
Money Deposit, together with all interest earned thereon. In the event that
Seller breaches its obligations hereunder and Buyer elects to terminate by the
mutual agreement pursuant to Section14 hereof or this Agreement is terminated by
the mutual agreement of the parties hereto, Buyer shall be entitled to a refund
of the Earnest Money Deposit, together with all interest earned thereon. Buyer
hereby acknowledges that upon termination of the Agreement, is shall not be
entitled to any liquidated damages.
16. Prorations. Seller shall be responsible for, and pay, all expenses
with respect to the Assets accruing up to 11:59p.m. on the day prior to the
Closing (the "Proration Date"). At Closing, the Purchase Price shall be
increased by the amount of any prepaid expenses attributable to the period from
and after the Closing, to the extent such prepaid expenses relate to an Assumed
Contract or any sales orders to suppliers being assumed by Buyer. All prorations
shall be made on the basis of thirty (30) day month, and to the extent
reasonably practicable. If the exact amount of the prorations cannot be
determined at the Closing, the same shall be adjusted at the Closing based on
the parties' good faith estimate and finally adjusted after the Closing as and
when the requisite information becomes available. Seller and Buyer agrees to
cooperate and use their best efforts to complete the such prorations no later
than thirty (30) days after the Closing.
17. No Assumption of Liabilities.
(a) Excluding only the Assumed Contracts defined below and
other liabilities expressly assumed by Buyer, Buyer is
not assuming and shall not be responsible for any
liabilities or obligations of Seller, current or accrued,
contingent or absolute, liquidated or unliquidated, of
any kind or nature no
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matter whether arising before of after the Closing. In
connection therewith, Buyer shall not have any obligation
or liability to the Seller's employees for any reason or
matter whatsoever, including, but not limited to, pension
plan obligations, medical and health and welfare
benefits, life insurance and disability benefits,
workers' compensation claims, wage, vacation and/or
severance claims. Buyer shall have the right, in its sole
and exclusive discretion, but shall not be obligated, to
make offers of employees upon such terms as Buyer deemed
fit.
(b) For assumption of Executory Contracts requiring approval
under Section 365 of the Bankruptcy Case, Seller agrees
to use its best efforts to obtain the entry of any
order(s) of this Court authorizing same as soon after the
Sale Hearing as is practicable, provided however that
Buyer shall be responsible for all costs associated with
curing any and all defaults under such Executory Contracts
or unexpired leases as a condition of Buyer's assumption
and assignment thereof, and Seller's inability to obtain
the aforementioned court order(s) for any reasons
whatsoever shall not affect or relieve the Buyer from
its obligations under the Sale Order and this Agreement
to consummate the transaction contemplated herein.
18. Bankruptcy Court Approval. Buyer acknowledges that in connection
with the sale of the Assets, Seller shall have advertised or caused to be
advertised to the public up until the hearing defined below in such manner as
Seller in its sole discretion deemed appropriate, that the Assets are for sale
and will be sold to the highest and best bidder at a hearing to be conducted in
the Bankruptcy Case on or before December 18, 1996 (the "Sale Hearing"), whether
through merger, sale of the Assets, sale of Seller's common stock or other form
of transaction involving the Assets. Buyer shall be entitled to submit further
bids at the Sale Hearing in the event that a higher and better offer than that
reflected herein is received by Seller. In the event that the highest and best
offer, as determined by the Bankruptcy Court, is submitted at the Sale Hearing
by a purchaser other than Buyer, then Seller shall be entitled to accept such
other offer and this Agreement shall be considered null and void with no legal
effect upon Seller's return of the Earnest Money Deposit with all interest
earned thereon to Buyer and each party hereto shall suffer their own losses,
costs, expenses, or damages arising out of, under, or related to this Agreement.
19. Post-Closing Obligations.
(a) Seller and Buyer shall each make their respective
books and records (including work papers in the
possession of their respective accountants) with respect
to the Assets available for inspection by the other
party, or by its duly accredited representatives, for
reasonable business purposes at all reasonable business
purposes at all reasonable times during normal business
hours, for a seven (7) year period after the Closing,
with respect to all
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transactions of Seller occurring prior to and
relating to the Closing, and the historical financial
condition, assets, liabilities, operations, and cash
flows of Seller. As used in this section, the right
of inspection includes the right to make extracts or
copies. The representatives of a party inspecting the
records of the other party shall be reasonably
satisfactory to the other party.
(b) For a period of ninety (90) days after the closing,
Buyer shall make the employees of Seller that it
hires reasonably available to Seller, at no cost to
Seller, to assist Seller in completing the
administration of Seller's estate in the Bankruptcy
Case.
(c) The parties shall execute such further documents, and
perform such further acts, as may be necessary to
transfer and convey the Assets to Buyer on the terms
herein contained and to otherwise comply with the
terms of this Agreement and consummate the
transaction contemplated hereby.
20. Brokers. EPI has served as a broker herein pursuant to an Order
entered in the Bankruptcy Case on October 30, 1996 and is entitled to be paid a
brokers' commission in connection with the Closing in accordance with the terms
and conditions of that Order. Buyer shall have no liability for any brokers'
commission payable to EPI. Excluding only EPI, the parties warrant and represent
to each other that this Agreement was the result of direct negotiations between
them and EPI, and that neither Seller not Buyer have engaged the services of any
other broker and neither is aware of any other person or entity claiming or
otherwise entitled to a brokers' commission in connection with the transactions
contemplated therein.
21. Entire Agreement. This Agreement, including those documents
identified herein or appended hereto as Exhibits constitutes the entire contract
between the parties relating to the subject matter hereof and is the final and
complete expression of their intent. No prior or contemporaneous negations,
promises, agreements, covenants, or representations of any kind or nature,
whether made orally or in writing, have been made by the parties, or any of
them, in negations leading to this Agreement or relating to the subject matter
hereof, which are not expressly contained herein, or which have not become
merged and finally integrated into this Agreement; it being the intention of the
parties hereto that in the event of any subsequent litigation, controversy, or
dispute concerning the terms and provisions of this Agreement, no party shall be
permitted to offer to introduce oral or extrinsic evidence concerning the terms
and conditions hereof that are not included or referred to herein and not
reflected in writing. This Agreement can be changed, modified or amended only by
a writing executed by the parties. No conditions of any kind or nature exist to
the legal effectiveness of this Agreement which shall be in full force and
effect immediately upon execution and delivery by the parties hereto.
22. Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United
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States mail. Notices delivered by mail shall be deemed given five (5) business
days after being deposited in the United States mail, postage prepaid,
registered or certified mail. Notices delivered by hand, by facsimile, or by
nationally recognized private courier shall be deemed given on the first
business day following receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also delivered be hand, or
deposited in the United States mail, postage prepaid, registered or certified
mail, on or before two (2) business days after its delivery by facsimile. All
notices shall be addressed as follows (or to such other address as any party
shall have advised the other in writing);
If to Seller addressed to:
Mattison Technologies, Inc.
545 Blackhawk Park Ave.
Rockford, IL 61 104
Attn: William P. Farris, Pres.
With copies to:
Chad H. Gettleman, Esq.
Mark A. Carter, Esq.
Adelman, Gettleman, Merens, Berish & Carter, Ltd.
53 W. Jackson Blvd., Suite 1050
Chicago, IL 60604
Robert J. Oliver, Esq.
Oliver, Close, Worden, Winkler, Greenwald & Maier
124 North Water Street, Suite 300
Rockford, IL 61110
Equity Partners, Inc.
9302 Raven Ridge Road
Baltimore, MD 21234
Attn. John Herman, Pres.
If to Buyer addressed to:
DeVlieg-Bullard, Inc.
One Gorham Island
Westport, CT 06880
Attn: President
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<PAGE> 14
With a copy to:
Bass, Berry & Sims PLC
2700 First American Center
Nashville, TN 37238
Attn: J. Page Davidson
and/or to such other respective addresses and/or addresses as may be designated
by notice given in accordance with the provisions of this paragraph.
23. No Contract until Execution. This Agreement shall become valid and
binding only after is executed and delivered by the parties. Until execution
hereof, it is the intention of the parties that (a) no agreement, contract,
offer of agreement or proposal arises and (b) no estoppel is created by the
submission of any draft hereof or any other conduct of the parties.
24. Expenses. Each party hereto shall bear all fees and expenses
incurred by such party in connection with, relating to or arising out of the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including, without limitation, attorneys',
accountants' end other professional fees and expenses.
25. Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right to privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
has occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
26. Binding-Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, and their successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to convey on any
person other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, including, without limitation, third party beneficiary
rights.
27. Amendments. This Agreement and all of the terms and conditions
herein shall in no way be altered, amended or modified by (a) the dismissal of
the Bankruptcy Case; (b) the conversion of the Bankruptcy Case to Chapter 7 of
the Bankruptcy Code after Closing; (c) the confirmation of any plan of
reorganization or liquidation in the Bankruptcy Case; or (d) the dissolution of
Seller; except pursuant to written agreement of Buyer and Seller.
28. Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party, which consent shall
not be unreasonably withheld.
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<PAGE> 15
29. Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be reasonably necessary to
transfer and convey the Assets to Buyer, on the terms herein contained, and to
otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.
30. Jurisdiction. The parties acknowledge and agree that the Bankruptcy
Court shall have exclusive jurisdiction to enforce each and every term and
condition of this Agreement, including but not limited to hearing and
determining claims or disputes among the parties hereto arising as a result of
this Agreement or arising as a result of any claimed breach of this Agreement.
31. Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of Illinois applicable to contract
made in that State.
32. Severability. If any provision of this Agreement shall be
judicially determined to be unenforceable or invalid, the remainder of this
Agreement shall be unaffected to the greatest extent possible.
33. Reservation of Rights. Nothing herein contained shall be construed
or deemed to be a release or waiver by AMCORE Bank, N.A. Rockford of its rights
pursuant to Section 363(k) of the Bankruptcy Code exercisable at the Sale
Hearing.
34. Headings. The headings contained in this Agreement are for
convenience or reference only and shall not affect the meaning or interpretation
of this Agreement.
35. Time of Essence. Time is of the essence to this Agreement.
36. Counterparts. This Agreement, and any document or instrument
executed pursuant hereto, may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
37. Construction of Terms. This Agreement has been drafted jointly by
the parties in full consultation with their respective attorneys, and no
ambiguity in this Agreement shall be interpreted or construed against any of the
parties.
38. Subject to modifications made in open court on 12/18/96.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
MATTISON TECHNOLOGIES, INC. DEVLIEG-BULLARD, INC.
By /s/ William P. Farris By /s/ John G. Poole
-------------------------- -------------------------------
Its President Its: Director
Duly Authorized
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<PAGE> 1
EXHIBIT 2.2
SECURED PROMISSORY NOTE
$2,600,000.00 January 16, 1997
FOR VALUE RECEIVED, the undersigned ("BORROWER"), promises to pay to
the order of MATTISON TECHNOLOGIES, INC. (a/k/a Mattison Machine Works, Inc.),
an Illinois corporation at its offices located at 545 Blackhawk Park Avenue,
Rockford, Illinois 61110 (the "LENDER"), or at such other place as the holder
hereof may from time to time designate in writing (the "PAYMENT ADDRESS"), the
principal sum of TWO MILLION SIX HUNDRED THOUSAND AND 00/100 DOLLARS
($2,600,000) (the "PRINCIPAL BALANCE"), with interest as set forth herein at the
rate of Ten and 00/100 percent (10.00%) per annum until this Secured Promissory
Note (the "NOTE") is fully paid. The interest rate shall be computed on the
basis of a three hundred sixty (360) day year for the actual number of days in
each period for which interest is charged.
This Note is secured by that certain Security Agreement dated of even
date herewith (the "SECURITY AGREEMENT").
Reference is made to that certain Asset Purchase Agreement dated
December 18, 1996, between Borrower and Lender (the "PURCHASE AGREEMENT"). This
Note is the Promissory Note delivered pursuant to paragraph 3(a)(ii) of the
Purchase Agreement. The Principal Balance and interest hereunder shall be due
and payable as follows:
(1) The Principal Balance includes the sum of ONE MILLION SIX
HUNDRED THOUSAND and 00/100 DOLLARS ($1,600,000.00) which
represents that portion of the purchase price paid by the
Borrower under the Purchase Agreement attributable to the
Accounts Receivable purchased by Borrower thereunder on the
date hereof (the "PURCHASED RECEIVABLES") after deduction for
the credit given pursuant to paragraph 3(b) of the Purchase
Agreement (the "ACCOUNTS RECEIVABLE BALANCE");
(2) Interest on the Principal Balance from the date of this Note
through January 31, 1997, shall be due and payable on March 1,
1997;
(3) Thereafter, interest on the Principal Balance shall be due and
payable on April 1, 1997, and on the first day of each month
thereafter until the entire outstanding Principal Balance of
the Note is paid in full;
(4) Principal payments on the Accounts Receivable Balance (the
"RECEIVABLE COLLECTION PAYMENTS") in an amount equal to the
dollar amount of payments actually received by Borrower in
good funds during the preceding calendar month in payment or
satisfaction of the Purchased Receivables shall be due and
payable commencing on the 15th day of February, 1997, and on
the 15th day of each month thereafter;
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<PAGE> 2
(5) The Account Receivable Balance after deduction for the
aggregate amount of all Receivable Collection Payments
previously made by Borrower shall be due and payable in full
on May 7, 1997; and
(6) The remaining outstanding Principal Balance, together with
interest thereon, shall be due and payable in full on January
7, 1998 (the "ANNIVERSARY DATE");
provided, however, that if not sooner paid, the entire amount of unpaid interest
and principal and any other sums payable hereunder shall be due and payable in
full on the Anniversary Date.
The Borrower promises to pay the Principal Balance and interest and all
reasonable costs of collection (collectively the "LOAN INDEBTEDNESS") including
reasonable attorneys' fees and costs incurred by the Lender to (1) collect the
Loan Indebtedness due hereunder from any party liable for the payment of the
Loan Indebtedness whether as maker, endorser, guarantor, surety or otherwise
(the "PARTIES"), (2) enforce, foreclose and realize its rights under this Note
or any other documents now or hereafter evidencing or securing the Loan
Indebtedness (collectively referred to herein as the "LOAN DOCUMENTS"), and (3)
defend and protect the validity of the Loan Documents in connection with any
litigation or controversy arising from the Loan Documents. Said costs, expenses
and attorneys' fees enumerated above shall expressly include those as may be
reasonably incurred by the Lender to collect the Loan indebtedness due hereunder
from any of the Parties after judgment in favor of the Lender by any court of
competent jurisdiction including those incurred by the Lender to foreclose any
judgment lien, or to realize upon any collateral or to otherwise obtain payment
and satisfaction of any such judgment from any of the Parties.
The Loan indebtedness may be prepaid in full or in part without premium
at any time. Any partial prepayments shall be accompanied by payment of all
accrued interest, if any, thereon. Excluding only the Receivable Collection
Payments made on a timely basis hereunder, any payment hereunder, including any
prepayment, shall be applied first to any and all costs, expenses and attorneys'
fees enumerated above, then to the payment of accrued and unpaid interest and
the balance on account of the unpaid Principal Balance of this Note.
Notwithstanding any other provision of this Note, Borrower shall have
the right to set off (the "SET-OFf") against any payment due or to become due
under this Note (other than payments due against the Accounts Receivable
Balance, for which there shall be no rights of Set-off) the amount (the "SET-OFF
AMOUNT") of any claim, loss, liability, cost and expense (including attorneys'
fees) incurred by Borrower directly or indirectly (collectively, the "SET-OFF
CLAIM") relating to, resulting from, or arising out of:
(1) Any material untrue representation, misrepresentation, breach
of warranty or nonfulfillment of any covenant or agreement of
Lender contained in the Purchase Agreement, the Seller's
Closing Certificate of even date herewith and the Accounts
Receivable Certificate and Agreement of even date herewith;
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<PAGE> 3
(2) Any tax liability of the Lender not previously paid;
(3) Any cost, expense or liability incurred by Borrower in
connection with any pollution of the solid or ground water of,
or originating from, any parcel of real property owned, leased
or used by Lender which exists on the date of this Note;
(4) Any cost, expense or liability resulting from any and all
products liability actions, suits, proceedings assessments,
judgments, claims, costs and expenses, including, without
limitation, legal fees and expenses incidental to any of the
foregoing which arise out of or are based on facts in
existence prior to the consummation of the transfer of the
Assets (as defined in the Purchase Agreement) from the Lender
to the Borrower pursuant to the Purchase Agreement (the
"CLOSING"). The phrase "products liability" shall include any
and all claims, whether based on strict liability, negligence
or warranty, by any party alleging the sale, transfer or
delivery by the Lender of any product in a defective or
dangerous condition which results in harm or injury to any
user, any person with whom the Lender has dealt or others,
whether such harm or injury is personal injury, property
damage or economic loss;
(5) any liability or cost incurred by Borrower for refunds to
customers because or returned goods or warranty claims in
connection with goods sold by Lender; and
(6) Any other obligation or liability of Lender, whether arising
before or after the Closing.
At the time of the payment due or to become due under this Note against which
any Set-off is claimed to apply, Borrower shall give written notices to Lender
at the Payment Address setting forth (1) the Set-off Amount, and (2) a brief
description of the Set-off Claim giving rise to the Set-off.
The happening of any of the following events or conditions shall be an
event of default (the "EVENT OF DEFAULT") under this Note;
(1) Failure to make when due any payment of principal or interest
or any sum due hereunder when the same shall be due and
payable (including any failure as a result of a set-off
against payments due hereunder which is not in accordance,
whether in nature or amount, with the Set-off rights expressly
provided for above) and the expiration of ten (10) days
thereafter;
(2) Dissolution of, termination of existence or insolvency of,
appointment of a receiver of any part of the property of,
assignment for the benefit of creditors by, or the
commencement of any proceeding under any bankruptcy or
insolvency laws by or against, the Borrower;
(3) The occurrence of any of the Events of Default as defined in
the Security Agreement; or
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(4) If any representation or warranty of Borrower contained in the
Purchase Agreement or Buyer's Closing Certificate of even date
herewith was untrue as of the date hereof in any material
respect.
Upon the happening of any Event of Default specified above, the whole of Loan
Indebtedness, shall, at the option of the holder of this Note, immediately
become due and payable automatically, and without presentment, demand, protest,
notice of protest, or other notice or notice of dishonor of any kind, all of
which are hereby expressly waived by the Borrower.
Any check, draft or money order remitted in settlement of this Note may
be handled for collection in accordance with the practice of the collecting bank
or banks, and shall not be deemed payment until and unless good funds are
actually received by or credited to the Lender.
This Note shall be governed by and construed in accordance with the
laws of the State of Illinois without giving affect to its conflicts of laws
principles. Borrower and Lender acknowledge and agree that the Bankruptcy Court
as defined in the Purchase Agreement shall have exclusive jurisdiction to
enforce each and every term of this Note, including but not limited to hearing
and determining any and all Set-off Claims or any or all other claims or
disputes among the parties hereto arising hereunder or arising as a result of
any claimed breach of the Purchase Agreement. All references to the "Lender,"
the "Borrower" or the "Parties" shall apply to their respective heirs,
successors and assigns.
The Borrower waives presentment, demand, notice, protest and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
If any term, clause or provision hereof shall be adjudged to be
invalid, the validity of the remainder shall not be affected thereby and each
such term, clause and provision shall be valid and enforceable to the fullest
extent permitted by law.
DeVLIEG-BULLARD, INC.
By: /s/ L. M. Murray
-------------------------------------------
Lawrence M. Murray
Vice President and Chief Financial Officer
Duly Authorized
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