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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): August 26, 1999
(August 20, 1999)
DeVlieg-Bullard, Inc.
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(Exact Name of Registrant as Specified in its Charter)
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Delaware 0-18198 62-1270573
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(State or Other Jurisdiction of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
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1900 Case Parkway South, Twinsburg, Ohio 44807
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (330) 963-0699
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On August 20, 1999, DeVlieg-Bullard, Inc. (the "Company") entered into
a definitive Asset Purchase Agreement, by and between the Company and
Sunhill NIC Company, Inc. (the "Agreement"), pursuant to which Sunhill
NIC Company, Inc. will purchase all of the assets of the Company's
Powermatic division. The purchase price for the assets is $5,800,000,
subject to adjustment based on the value of certain assets as of the
closing, payable in cash. Consummation of the acquisition is subject
to a number of conditions, including the approval of the Bankruptcy
Court for the Northern District of Ohio. A copy of the Agreement is
attached hereto as Exhibit 2.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
2 Asset Purchase Agreement dated August 20, 1999 between
DeVlieg-Bullard, Inc. and Sunhill NIC Company, 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 hereunto duly authorized.
DEVLIEG-BULLARD, INC.
Date: August 26, 1999 By: /s/ John Haggerty
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John Haggerty
Chief Executive Officer
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EXHIBIT INDEX
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NO. EXHIBIT
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2 Asset Purchase Agreement dated August 20, 1999 between DeVlieg-Bullard,
Inc. and Sunhill NIC Company, Inc.
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
DEVLIEG-BULLARD, INC. ("SELLER")
AND
SUNHILL NIC COMPANY, INC. ("BUYER")
DATED AUGUST 20, 1999
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TABLE OF CONTENTS
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1. TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES...........................1
1.1 Purchase of Assets from Seller....................................1
1.2 Contract Rejection and Assumption; Cure Cost......................2
1.3 Excluded Assets...................................................3
1.4 Assumption of Liabilities.........................................3
1.5 Retained Liabilities..............................................4
1.6 Sales and Use Taxes...............................................4
1.7 Condition of Purchased Assets.....................................4
2. PURCHASE PRICE AND PAYMENT..............................................4
2.1 Purchase Price....................................................4
2.2 Closing Date Statement............................................5
2.3 Payment of Purchase Price.........................................5
2.4 Good Faith Deposit................................................5
2.5 Pension Plan......................................................6
2.6 Deliveries at Closing.............................................7
3. CLOSING.................................................................7
4. REPRESENTATIONS AND WARRANTIES OF SELLER................................7
4.1 Organization......................................................7
4.2 Authorization.....................................................7
4.3 Title to Property.................................................8
4.4 Consents and Approvals............................................8
4.5 Brokers...........................................................8
5. REPRESENTATIONS AND WARRANTIES OF BUYER.................................8
5.1 Organization......................................................8
5.2 No Violation......................................................8
5.3 Corporate Action..................................................8
5.4 Financing.........................................................9
5.5 Brokers...........................................................9
6. COVENANTS OF SELLER.....................................................9
6.1 Conduct of Business...............................................9
6.2 Access to Facilities, Files and Records..........................10
6.3 Consummation of Agreement........................................10
6.4 Consents.........................................................10
6.5 Filing and Notice of the Motion and Order........................10
7. COVENANTS OF BUYER.....................................................11
7.1 Corporate Action.................................................11
7.2 Consummation of Agreement........................................11
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7.3 Collection of Accounts Receivable................................11
8. CONDITIONS TO THE OBLIGATIONS OF BUYER.................................11
8.1 Bankruptcy Court Order...........................................11
8.2 Representations and Warranties; Covenants........................11
8.3 Condition of Purchased Assets....................................11
8.4 Sublease.........................................................11
9. CONDITIONS TO THE OBLIGATIONS OF SELLER................................12
9.1 Bankruptcy Court Orders..........................................12
9.2 Representations and Warranties; Covenants........................12
9.3 Sublease.........................................................12
10. TERMINATION OF AGREEMENT...............................................12
10.1 Right of Termination Without Breach..............................12
10.2 Termination Because of Higher Offer..............................12
10.3 Termination Because of Breach....................................12
10.4 Effect of Termination............................................12
11. MISCELLANEOUS..........................................................13
11.1 Expenses.........................................................13
11.2 Notices..........................................................13
11.3 Captions.........................................................13
11.4 Law Governing....................................................14
11.5 Waiver of Provisions.............................................14
11.6 Counterparts.....................................................14
11.7 Entire Agreement.................................................14
11.8 Severability.....................................................14
11.9 Binding Effect...................................................14
11.10 Definition of "Knowledge"........................................14
11.11 Survival of Representations and Warranties.......................15
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SCHEDULES
Schedule 1.1
Schedule 1.1(d)
Schedule 1.2(a)
Schedule 1.3
Schedule 1.4(b)
Schedule 2.1(b)
Schedule 2.1(c)
Schedule 4.4
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into August 20, 1999, by and between DeVlieg-Bullard, Inc., a Delaware
corporation ("Seller"), and Sunhill NIC Company, Inc., a Washington corporation
("Buyer");
WITNESSETH:
WHEREAS, Seller is a debtor-in-possession in proceedings for
reorganization under Chapter 11 of the Bankruptcy Code, 11 U.S.C. ss.ss. 101 et.
seq. (the "Bankruptcy Code") currently pending in the United States Bankruptcy
Court for the Northern District of Ohio (the "Bankruptcy Court"); and
WHEREAS, Seller operates the Powermatic Division which is engaged in
the business of designing, manufacturing, sourcing, marketing, selling and
servicing power tools and manufacturing castings for the Powermatic Division and
third-parties under the name "Powermatic(R)" (herein, the "Business"); and
WHEREAS, Seller desires to sell and transfer all or substantially all
of the operating assets and intangible assets of the Business to Buyer and Buyer
desires to purchase and acquire such assets in accordance with the terms set
forth herein. It is intended that Buyer shall purchase the assets of the
Business from the Seller free and clear of all liens, encumbrances and interests
pursuant to 11 U.S.C. ss.ss. 363(b) and (f), that Buyer's execution and delivery
of this Agreement and the purchase of the assets pursuant to this Agreement
shall be deemed in good faith for the purposes of 11 U.S.C. ss. 363(m) and that
the assumption and assignment of certain designated executory contracts and
leases shall be pursuant to 11 U.S.C. ss.365.
NOW, THEREFORE, in consideration of the foregoing recitals, the
covenants and agreements contained herein, including but not limited to the
payments herein described, and other good and valuable consideration, the
parties agree as follows:
1. TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 PURCHASE OF ASSETS FROM SELLER. Subject to the terms and conditions
stated in this Agreement, on the Closing Date (as defined in Section 3), Seller
shall convey, transfer and deliver to Buyer and Buyer shall purchase and acquire
from Seller all of the assets and properties of Seller, tangible and intangible,
owned by Seller and used solely in connection with the Business as a going
concern, as the same may exist on the Closing Date (the "Purchased Assets") as
follows:
(a) Tangible Personal Property. All machinery, tooling, patterns,
equipment, vehicles, furniture and fixtures utilized by the Seller in
the Business, including but not limited to the items listed on Schedule
1.1 attached hereto.
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(b) Materials and Supplies. All office and other miscellaneous
supplies, spare parts, tools, art work, advertising and promotional
materials and other tangible personal property used in the Business,
including but not limited to the items listed on Schedule 1.1 attached
hereto.
(c) Inventories. All inventories, including raw materials, supplies,
work in process and finished goods of the Business as of the Closing
Date.
(d) Contracts. Subject to Section 1.2 below, those contract rights of
Seller existing under contracts, leases, agreements and arrangements
related to the Business listed on Schedule 1.1(d) attached hereto,
provided that (i) any and all defaults under the Designated Contracts
(as defined herein) have been cured as of the Closing Date and (ii) the
assumption and assignment to Buyer is approved by the Bankruptcy Court.
(e) Prepaid Items. All prepayments, prepaid expenses, and deferred
charges of the Business to which the Buyer shall obtain the benefit,
listed on Schedule 1.1 attached hereto.
(f) Intellectual Property. All patents, inventions and shop rights, if
any, know-how, trade secrets and confidential information; those
registered and unregistered trademarks, service marks, trade names,
trade dress and other trademark rights of the Business, including,
specifically, all rights to the name "Powermatic(R)"; those registered
and unregistered copyrights and the copyrightable works of the
Business; and the registrations for, and applications for registration
of, and the licenses relating to, any of the foregoing, together with
all of Seller's rights to use all of the foregoing forever and all
rights in, to and under the foregoing in all countries, all as listed
on Schedule 1.1 attached hereto.
(g) Files and Records. All files, invoices, customer lists, records
pertaining to customers (present, past and potential) and accounts,
supplier lists, the records pertaining to suppliers, books of account,
files and ledgers, and other records relating to the Business.
(h) Permits. To the extent transferable, all permits and licenses with
respect to the Business.
(i) Goodwill. All goodwill of the Business and other intangible
property.
(j) Other Fixed Assets. Those other fixed assets that are listed on
Schedule 1.1 attached hereto.
1.2 CONTRACT REJECTION AND ASSUMPTION; CURE COST.
(a) Attached hereto as Schedule 1.2(a) is a list provided by Buyer (the
"Designated Contract List") of executory contracts and unexpired leases
(each a "Designated Contract" and collectively, the "Designated
Contracts") that it wishes the Seller to assume and assign
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to it. Buyer and Seller will use commercially reasonable efforts to
obtain consent to the assignment and assumption of the Designated
Contracts, provided that the failure to obtain such consent shall not
prevent Closing hereunder. Also set forth in Schedule 1.2(a) is a list
of executory contracts and unexpired leases relating to the Business
that Buyer wishes Seller to reject. Seller hereby agrees to reject such
contracts and reserves the right to reject any other contracts
(excluding therefrom the Designated Contracts) it desires in its sole
discretion.
(b) At Closing, Seller shall pay any and all cure and reinstatement
costs and expenses of or relating to the assumption and assignment of
the Designated Contracts.
(c) Buyer shall be obligated to pay amounts becoming due for the period
from and after the Closing Date in accordance with the terms of the
Designated Contracts.
1.3 EXCLUDED ASSETS. The assets listed on Schedule 1.3 shall be
retained by Seller (the "Excluded Assets").
1.4 ASSUMPTION OF LIABILITIES. Subject to the conditions specified in
this Agreement, Buyer hereby agrees to assume at the Closing and discharge when
due and payable the following liabilities of Seller related to the Business (the
"Assumed Liabilities"):
(a) Contracts and Licenses. All liabilities and obligations of Seller
under purchase orders, contracts and licenses including those acquired
by Buyer pursuant to Section 1.1 (d) and (h) which occur, arise or are
to be performed, in whole or in part, on or after the Closing Date;
(b) Employee Matters. Liabilities of Seller for accrued but unused
vacation and sick days, vacation pay, sick pay and severance pay
pursuant to employee benefit plans disclosed to Buyer in Schedule
1.4(b);
(c) Warranty Claims. All liabilities for warranty claims with respect
to products of the Business, regardless of whether such claim occurred
before, on or after the Closing Date;
(d) Product Liability Claims. All liabilities for product liability
claims with respect to products of the Business sold on or after the
Closing Date;
(e) Cooperative Advertising. All liabilities for reimbursement of
cooperative advertising expenditures made by eligible participants in
Seller's cooperative advertising programs for the Business;
(f) Liabilities. All liabilities of the Business occurring or arising
after the Closing Date, including contributions required to be made to
employee pension benefit plans for benefits
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earned in the period during which the Business is operated by Buyer on
behalf of former employees of the Business;
(g) Pension Plan. On and after the Closing Date, the Powermatic
Division of DeVlieg-Bullard, Inc. Pension Plan for Hourly Rated
Employees and all liabilities and obligations thereunder with respect
to employees of the Seller.
1.5 RETAINED LIABILITIES. All liabilities not expressly assumed by
Buyer herein shall be retained by Seller.
1.6 SALES AND USE TAXES. Seller shall be responsible for payment of any
sales or use taxes or related transfer taxes or fees or filing fees assessable
with respect to the transfer of the Purchased Assets contemplated herein and
shall duly and promptly pay such taxes when due; provided that Buyer shall be
responsible for any sales or transfer taxes on the sale of motor vehicles.
1.7 CONDITION OF PURCHASED ASSETS. Buyer shall take the Purchased
Assets and Assumed Liabilities on an "as is, where is" basis.
2. PURCHASE PRICE AND PAYMENT
2.1 PURCHASE PRICE. The total purchase price to be paid by Buyer to
Seller for the Purchased Assets shall be $5,800,000, less the following amounts
determined as of the Closing Date (the "Purchase Price"):
(a) liability of Seller for vacation and sick pay of hourly employees
of the Business accrued but not paid as of the Closing Date as set
forth on Schedule 1.4(b);
(b) subject to Section 2.5 below, payments due under the Powermatic
Division of DeVlieg-Bullard, Inc. Pension Plan for Hourly Rated
Employees (the "Pension Plan") and payments for the Seller's 401(k)
Plan for Powermatic employees' unfunded matching contributions as set
forth on Schedule 2.1(b);
(c) commissions due to sales agents accrued but not paid as of the
Closing Date as set forth on Schedule 2.1(c); and
(d) funds in the custody of the Seller held for employees' flexible
spending accounts.
Subject to Section 2.5 hereof, amounts due or past due at Closing under
subsections (a), (b) and (c) above shall be paid at Closing. The Purchase Price
shall also be adjusted on a dollar-for-dollar basis if the value of the
inventory (determined in accordance with Section 2.2(b) below) at Closing is
less than or greater than $3,050,000 and the value of prepaid deposits at
Closing is less than or greater than $50,000 (the "Adjusted Purchase Price").
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2.2 CLOSING DATE STATEMENT.
(a) Seller shall conduct a physical inventory of the Business as soon
as practicable using methodologies consistent with Seller's historical
practices including those set forth in this Section 2.2(a). For
purposes of the physical inventory, obsolete inventory, defined as
inventory no longer used in production, shall be given no value. In
addition, excess and slow-moving inventory, defined as inventory not
used in production of a product at least once within a two-year period
prior to Closing, shall be valued at 30% of cost. For example, if
during such two-year period, 20 units have been used in production and
there are 100 units of such item in inventory, 20 units will be valued
at cost and 80 units will be valued at 30% of cost. Work in process
shall be valued in accordance with Seller's historical practices with
respect to Powermatic. Seller shall track the inventory until Closing,
which will be used to prepare the Closing Date Statement (as defined
below). If Buyer desires, it may conduct a physical inventory, at its
sole cost and expense, on the day following the Order (as defined
below), provided that Buyer uses valuation methodologies consistent
with Seller's historical practices.
(b) Seller shall prepare a statement of the Business' inventory and
prepaid deposits immediately prior to the Closing Date (the "Closing
Date Statement").
(c) Within three days after receipt of the Closing Date Statement,
Buyer shall either inform Seller in writing that the Closing Date
Statement is acceptable or object thereto in writing, setting forth a
specific description of each objection. If the Buyer so objects, any
objection that cannot be resolved within two business days from the
date Buyer notifies Seller of any such objection shall be deemed a
"Closing Statement Issue," and, if the amount of such disputed Closing
Statement Issue is less than $100,000 the amount of such Closing
Statement Issue shall be deducted from the Adjusted Purchase Price and
placed in escrow with Seller's bankruptcy counsel at Closing. The
balance of the Adjusted Purchase Price shall be paid to Seller at
Closing, which shall not be delayed due to any Closing Statement Issues
having a value of less than $100,000. Unless otherwise agreed by Buyer
and Seller, one or more Closing Statement Issues having a value in
excess of $100,000 shall postpone Closing until the Buyer and Seller
can resolve such Closing Statement Issues. Buyer and Seller shall use
their best efforts to resolve any Closing Statement Issues. If Buyer
and Seller cannot resolve such dispute, either party may submit such
Closing Statement Issues to the Bankruptcy Court for resolution.
2.3 PAYMENT OF PURCHASE PRICE. At Closing, Buyer will pay Seller the
Adjusted Purchase Price by wire transfer of immediately available funds to an
account designated by Seller.
2.4 GOOD FAITH DEPOSIT.
(a) Upon the execution and filing with the Bankruptcy Court of the
Agreement, Buyer shall deliver to Seller's bankruptcy counsel (the
"Escrow Agent") a certified check in
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the amount of $200,000 payable to the order of Seller (the "Good Faith
Deposit"), to be deposited into an interest-bearing escrow account (and
Buyer shall be credited with all interest earned). The Good Faith
Deposit shall only be released in accordance with Article 10 hereof or
upon entry and receipt of a final and non-appealable order of the
Bankruptcy Court.
(b) In the event any dispute should arise with regard to the Good Faith
Deposit tendered to the Escrow Agent as provided in this Section 2.4,
the Escrow Agent shall be entitled to deposit the same with the
Bankruptcy Court, and thereafter be relieved of all obligations under
this Agreement. In performing any of its duties hereunder, the Escrow
Agent shall not incur any liability to any party for any damage, loss
or expense, unless caused by or resulting from the gross negligence,
willful default or breach of trust of the Escrow Agent. Buyer and
Seller jointly and severally agree to indemnify and hold the Escrow
Agent harmless against any and all other losses, claims, damages,
liabilities and expenses including without limitation, reasonable
attorneys' fees, which may be imposed upon the Escrow Agent in
connection with the performance of its duties hereunder, unless caused
by or resulting from the gross negligence, willful default or breach of
trust of the Escrow Agent.
The parties acknowledge that the Escrow Agent, McDonald, Hopkins, Burke
& Harber Co., L.P.A., an Ohio law firm, is representing the Seller in
connection with this transaction and its reorganization under the
Bankruptcy Code, and in the event of dispute with regard to the Good
Faith Deposit, shall upon deposit of the Good Faith Deposit with the
Bankruptcy Court, be entitled to represent the Seller in connection
with such dispute.
(c) The Good Faith Deposit shall be applied toward the Adjusted
Purchase Price at Closing or paid to the party entitled to same
pursuant to Article 10 hereof.
2.5 PENSION PLAN. Seller has petitioned the Internal Revenue Service
(the "IRS") to adjust the methodology used to value the assets in Seller's
Pension Plan. As currently valued, Seller's Pension Plan is underfunded in the
amount set forth on Schedule 2.1(b). At Closing, in partial payment of the
Adjusted Purchase Price, Buyer will deliver to the Escrow Agent the amount set
forth on Schedule 2.1(b) with respect to the Pension Plan (the "Escrowed
Amount"). The Escrowed Amount shall be released to Buyer in the event that the
IRS denies Seller's petition for a new valuation methodology for the Pension
Plan's assets and all appeals legally afforded to Seller have been exhausted. In
the event that the IRS approves a new valuation methodology for the Pension
Plan's assets, Seller's actuary will conduct a new valuation using such approved
valuation methodology, and to the extent that the Pension Plan remains
underfunded, that portion of the Escrowed Amount shall be released to Buyer and
the balance of the Escrowed Amount, if any, shall be released to Seller.
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2.6 DELIVERIES AT CLOSING.
(a) At the Closing, the Seller shall deliver to Buyer (i) such bills of
sale, assignments of leases and contracts, and any other instruments of
conveyance which are reasonably deemed necessary or desirable by Buyer
or its counsel to effectuate the transfer of the Purchased Assets to
Buyer (which may be limited to the Order and/or other orders of the
Bankruptcy Court relative to the assignment of leases and contracts)
and (ii) such other documents, instruments or certificates required to
be delivered as a condition precedent to the Buyer's obligations under
this Agreement.
(b) At the Closing, Buyer shall deliver (i) such duly executed
instruments as are reasonably deemed necessary or desirable by Seller
or its counsel to effectuate the assumption of the Assumed Liabilities
by Buyer in form and substance reasonably acceptable to Buyer and its
counsel, (ii) such other documents, instruments or certificates
required to be delivered as a condition precedent to the Seller's
obligations under this Agreement and (iii) the cash portion of the
Adjusted Purchase Price, less the Good Faith Deposit.
3. CLOSING
The closing of the transactions contemplated by this Agreement (the
"Closing") shall be held in the offices of Bass, Berry & Sims PLC, 2700 First
American Center, Nashville, Tennessee at 10:00 a.m. local time as soon as
practicable but not more than seven (7) days after the Order (as defined below)
shall have been entered by the Bankruptcy Court and such order shall not have
been stayed, modified, reversed or amended (provided that all other conditions
specified herein have been fulfilled or waived), or at such other time and place
as shall be mutually agreed upon by the parties (the "Closing Date").
For purposes of this Agreement, the "Order" shall mean an order or
orders of the Bankruptcy Court approving this Agreement, authorizing, pursuant
to Section 363 of the Bankruptcy Code, all of the transactions and agreements
contemplated hereby, and determining that the Agreement is in good faith.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants as follows:
4.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Seller
has the corporate power to carry on the Business as it is now being conducted
and to own and operate the Purchased Assets, and to enter into and complete the
transactions contemplated by this Agreement.
4.2 AUTHORIZATION. Upon entry of the Order by the Bankruptcy Court,
Seller shall be authorized to carry out the transactions contemplated by this
Agreement. Subject to the entry of the Order, this Agreement constitutes a valid
and binding agreement, enforceable against Seller in accordance with and subject
to its terms, except as limited by (a) bankruptcy, reorganization,
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insolvency and other laws affecting the enforcement of creditors' rights or
contractual obligations generally and (b) general principles of equity (whether
the enforceability of this Agreement is considered in a proceeding in equity or
at law).
4.3 TITLE TO PROPERTY. Upon entry of the Order, Seller has the power
and right to sell, or assign and transfer and deliver, as the case may be, to
the Buyer the Purchased Assets and on the Closing Date will sell, assign,
transfer and deliver the Purchased Assets free and clear of all liens, claims,
encumbrances and security interests.
4.4 CONSENTS AND APPROVALS. Upon entry of the Order, no consent,
approval or authorization of, or declaration, filing or registration with any
United States federal or state governmental or regulatory authority is required
to be made or obtained by the Seller in connection with the execution, delivery
and performance of the Agreement and the consummation of the transactions
contemplated hereby.
4.5 BROKERS. No person is entitled to any brokerage, financial
advisory, finder's or similar commission payable by the Seller in connection
with the transaction contemplated by this Agreement based upon arrangements made
by or on behalf of the Seller.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants as follows:
5.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Washington. Buyer
has full corporate power to enter into and complete the transactions
contemplated by this Agreement.
5.2 NO VIOLATION. Neither the execution and delivery by Buyer of this
Agreement or of any agreement executed in connection with this Agreement or of
any agreement or instrument executed in connection with this Agreement, nor the
consummation by Buyer of the transactions contemplated hereby or thereby will,
with the giving of notice or the passage of time or both, constitute a violation
of or conflict with or result in any material breach of or default under, the
terms, conditions or provisions of, any judgment, law or regulation to which
Buyer is subject, or of Buyer's articles of incorporation or bylaws, or of any
agreement or instrument to which Buyer is a party or by which it is bound.
5.3 CORPORATE ACTION. All corporate actions and proceedings necessary
to be taken by or on the part of Buyer in connection with this Agreement and
with the transactions contemplated by this Agreement and necessary to make the
same effective have been duly and validly taken, and this Agreement has been
duly and validly authorized, executed and delivered by Buyer. This Agreement
constitutes a valid and binding agreement, enforceable in accordance with and
subject to its terms, except as limited by (a) bankruptcy, reorganization,
insolvency and other laws affecting the enforcement of creditors' rights or
contractual obligations generally and (b) general principles
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of equity (whether the enforceability of this Agreement is considered in a
proceeding in equity or at law).
5.4 FINANCING. On the Closing Date, Buyer will have cash on hand or
commitments for financing sufficient to deliver the cash portion of the Adjusted
Purchase Price to Seller.
5.5 BROKERS. No person is entitled to any brokerage, financial
advisory, finder's or similar fee or commission payable by the Buyer in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Buyer.
6. COVENANTS OF SELLER
Seller covenants and agrees that, between the date hereof and the
Closing Date:
6.1 CONDUCT OF BUSINESS. The Business shall be conducted in the
ordinary course pending Closing. Seller shall take all such actions as may
reasonably be required to satisfy the conditions specified in Article 8 and,
except as otherwise disclosed or agreed herein or unless Buyer shall otherwise
agree in writing, Seller shall in respect to the Business:
(a) to the extent consistent with such operation, use all reasonable
efforts (but without making any commitment on behalf of Buyer) to
preserve intact its business organization, keep available the services
of employees, maintain inventories at normal levels and quality, and
preserve its relationships with customers and suppliers;
(b) Maintain its books, accounts and records in the usual, regular and
ordinary manner, on a basis consistent with prior periods;
(c) Comply with all laws, orders, judgments, licenses and permits
applicable to it and the conduct of the Business, the noncompliance
with which could reasonably be expected to have a material adverse
effect on the Business or the ability of the parties to consummate the
transactions contemplated hereby;
(d) Sell or dispose of any properties or assets only in the usual,
regular or ordinary course of business or as expressly permitted
herein;
(e) Obtain the consent of Buyer prior to any management personnel
changes or any other material change with respect to the Business or
the Purchased Assets;
(f) Preserve its rights in and to the Intellectual Property and other
intangible assets; and
(g) Promptly notify Buyer in writing of any material adverse change in
the working order and repair of the Purchased Assets, considered as a
whole.
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6.2 ACCESS TO FACILITIES, FILES AND RECORDS. At the reasonable request
of Buyer, Seller shall from time to time give or cause to be given to the
authorized representatives of Buyer full access during normal business hours,
for purposes of inspection, to the Seller's Business facility, and the books,
records, documents and files of every character relating to the Business. Seller
shall cooperate with Buyer in conducting such inspection. The information
obtained by Buyer shall be kept confidential by Buyer, except that such
information may be distributed to those of Buyer's directors, officers,
employees, agents or representatives who need to know for the purposes of
evaluating and consummating the transactions contemplated herein, and to others
if Buyer, in its judgment and based upon the written advice of its counsel,
determines that disclosure is required by law.
6.3 CONSUMMATION OF AGREEMENT. Seller shall use its reasonable best
efforts to fulfill and timely perform all conditions and obligations on its part
to be fulfilled and performed under this Agreement and to cause the transactions
contemplated by this Agreement to be fully carried out.
6.4 CONSENTS. Seller shall use commercially reasonable efforts to
obtain or cause to be obtained consents to the assignment to or assumption by
Buyer of all licenses, permits, leases, and other contracts and instruments and
rights of Seller included in the Purchased Assets that require the consent of
any third party by reason of the transactions provided for in this Agreement
including, without limitation, those with respect to the contracts listed on
Schedule 1.2(a); provided that obtaining such consents shall not be a condition
to Closing hereunder. Notwithstanding anything herein to the contrary, other
than curing defaults under Designated Contracts, in no event shall Buyer or
Seller be required to make any payment for the purpose of securing such consent.
6.5 FILING AND NOTICE OF THE MOTION AND ORDER.
(a) The Seller shall (i) file with the Bankruptcy Court the Motion (as
defined below), (ii) notify, as is required by applicable bankruptcy
law, all parties entitled to notice of the motion filed by Seller with
the Bankruptcy Court seeking entry of the Order (the "Motion") and
Order as modified by orders in respect of notice which may be issued at
any time and from time to time by the Bankruptcy Court and (ii) use its
best efforts to obtain Bankruptcy Court approval of the Motion.
(b) Subject to the second sentence of this Section 6.5(b), the Seller
shall also file with the Bankruptcy Court a motion (the "Lease Motion")
to extend the time under Section 365(d) of the Bankruptcy Code to
assume or reject unexpired real property leases to a date which is at
least 90 days after the Closing and use it best efforts to obtain
Bankruptcy Court approval of the Lease Motion with respect to the Lease
(as defined herein). In the event Buyer notifies Seller in writing that
it has reached agreement with Corporate Property Associates 5 on the
terms of a new lease for the McMinnville, Tennessee facilities, Seller
shall immediately seek approval of the Bankruptcy Court to reject the
Lease and the Sublease (as defined in Section 8.4) shall terminate upon
the entry of such order.
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7. COVENANTS OF BUYER
Buyer covenants and agrees that:
7.1 CORPORATE ACTION. Subject to the provisions of this Agreement,
Buyer shall take all necessary corporate and other action required of it to
carry out the transactions contemplated by this Agreement and any agreement
executed in connection herewith.
7.2 CONSUMMATION OF AGREEMENT. Buyer shall fulfill and timely perform
all conditions and obligations on its part to be fulfilled and performed under
this Agreement and to cause the transactions contemplated by this Agreement to
be fully carried out.
7.3 COLLECTION OF ACCOUNTS RECEIVABLE. Seller may collect receivables
of the Business arising prior to Closing. In addition, following Closing, Buyer
may also collect accounts receivable of the Business arising prior to Closing.
Buyer will apply amounts from parties who have receivables in accordance with
their instructions and, in the event no instructions are given, against oldest
accounts first. For a period of twelve (12) months following Closing, within
five (5) business days after the end of each month, Buyer shall send to Seller a
summary for that month of payments received against Seller's receivables and a
check for the amount of such receivables.
8. CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
fulfillment by Seller or waiver by Buyer of the following conditions.
8.1 BANKRUPTCY COURT ORDER. The Order shall have been entered by the
Bankruptcy Court and such Order shall not have been stayed, modified, reversed
or amended. In addition, an order shall have been entered by the Bankruptcy
Court approving the Lease Motion with respect to the Lease, and such order shall
not have been stayed, modified, reversed or amended.
8.2 REPRESENTATIONS AND WARRANTIES; COVENANTS. The Seller shall have
performed in all material respects its obligations under this Agreement required
to be performed by the Seller at or prior to the Closing Date, and the
representations and warranties of the Seller contained in this Agreement shall
be true and correct in all material respects as of the Closing Date as if made
at and as of such date, except as otherwise contemplated by this Agreement.
8.3 CONDITION OF PURCHASED ASSETS. There shall have been no material
adverse change in the working order and repair of the Purchased Assets,
considered as a whole.
8.4 SUBLEASE. Seller shall have executed and delivered a Sublease, in
the form attached hereto as Exhibit A, whereby Seller will sublease its
McMinnville, Tennessee facilities to Buyer for the shorter of (i) 90 days from
the Closing Date or (ii) the date of entry of an order by the Bankruptcy
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Court approving Seller's rejection of its Amended and Restated Lease Agreement,
dated as of November 24, 1992, as amended, with Corporate Property Associates 5
(the "Lease").
9. CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
fulfillment by Buyer or waiver by Seller of the following conditions.
9.1 BANKRUPTCY COURT ORDERS. The Order shall have been entered by the
Bankruptcy Court and such Order shall not have been stayed, modified, reversed
or amended.
9.2 REPRESENTATIONS AND WARRANTIES; COVENANTS. The Buyer shall have
performed in all material respects its obligations under this Agreement required
to be performed by the Buyer at or prior to the Closing Date, and the
representations and warranties of the Buyer contained in this Agreement shall be
true and correct in all material respects as of the Closing Date as if made at
and as of such date, except as otherwise contemplated by this Agreement.
9.3 SUBLEASE. Buyer shall have executed and delivered a Sublease, in
the form attached hereto as Exhibit A, whereby Seller will sublease its
McMinnville, Tennessee facilities to Buyer for the shorter of (i) 90 days from
the Closing Date or (ii) the date of entry of an order by the Bankruptcy Court
approving Seller's rejection of the Lease.
10. TERMINATION OF AGREEMENT
10.1 RIGHT OF TERMINATION WITHOUT BREACH. This Agreement may be
terminated without further liability of any party (except that Buyer may be
entitled to return of the Good Faith Deposit) at any time prior to the Closing
(i) by mutual written agreement of Buyer and Seller, or (ii) by either Buyer or
Seller if the Closing shall not have occurred on or before September 30, 1999
(provided that such date shall be extended by the number of days that any
Closing Statement Issue is pending in the Bankruptcy Court); provided the
terminating party has not, through breach of a representation, warranty or
covenant or through the failure to deliver closing documents required as a
condition to the other parties' obligation to close, prevented the Closing from
occurring on or before such date.
10.2 TERMINATION BECAUSE OF HIGHER OFFER. This Agreement may be
terminated if the Bankruptcy Court approves a higher or better offer.
10.3 TERMINATION BECAUSE OF BREACH. This Agreement may be terminated by
Buyer or Seller if there has been a material violation or breach by the other
party of any of the agreements, representations, or warranties contained in this
Agreement which has not been waived in writing.
10.4 EFFECT OF TERMINATION. In the event of termination under Section
10.2, the Buyer shall have, as its sole remedy, the return of its Good Faith
Deposit upon entry of the Bankruptcy Court's Order approving a higher and better
offer and $50,000 as reimbursement of its expenses.
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If the Agreement is terminated by Buyer pursuant to Section 10.3 or pursuant to
subsection (i) of Section 10.1, then Buyer shall have, as its sole remedy, the
return of the Good Faith Deposit within five business days of such termination.
If this Agreement is terminated pursuant to subsection (ii) of Section 10.1 or
by Seller pursuant to Section 10.3, Buyer shall not be entitled to the return of
its Good Faith Deposit.
11. MISCELLANEOUS
11.1 EXPENSES. Except as otherwise specifically set forth herein, each
party hereto shall bear all of its expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation,
accounting and legal fees incurred in connection therewith.
11.2 NOTICES. All notices, demands and other communications that are
required or permitted to be given hereunder or with respect hereto shall be in
writing, shall be given either by personal delivery, by nationally recognized
overnight courier or by telecopy, and shall be deemed to have been given or made
when personally delivered, when deposited with charges prepaid with the
nationally recognized overnight courier, addressed to the respective parties as
follows:
If to Buyer: with a copy to
Sunhill NIC Company, Inc. Reminger & Reminger Co., LPA
500 Andover Park East The 113 St. Clair Bldg.
Seattle, Washington 98188 Cleveland, Ohio 44114
Attn: Chen C. Sun Attn: T. David Mitchell
If to Seller: with a copy to
DeVlieg-Bullard, Inc. Bass, Berry & Sims PLC
1900 Case Parkway South 2700 First American Center
Twinsburg, Ohio 44087 Nashville, Tennessee 37238
Attn: Richard W. Sappenfield Attn: J. Page Davidson
Any party may by notice change the address to which notice or other
communications to it are delivered or mailed.
11.3 CAPTIONS. The captions of Articles and sections of this Agreement
are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
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11.4 LAW GOVERNING. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Ohio. Each of the parties
hereto irrevocably and unconditionally submits to jurisdiction of the Bankruptcy
Court for litigation arising out of or relating to this Agreement and the
transactions contemplated hereby, waives any objection to the laying of venue of
any such litigation in the Bankruptcy Court and agrees not to plead or claim
that such litigation brought in the Bankruptcy Court has been brought in an
inconvenient forum.
11.5 WAIVER OF PROVISIONS. The terms, covenants, representations,
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same or to
enforce any future compliance with or performance of any of the provisions
hereof. No waiver by any party of any condition or the breach of any provision,
term, covenant, representation or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation or warranty of
this Agreement.
11.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that all the parties are not
signatory to the original or the same counterpart.
11.7 ENTIRE AGREEMENT. This Agreement, together with the schedules,
exhibits and agreements executed in connection herewith, constitutes the entire
agreement between the parties and supersedes and cancels any and all prior
agreements between them relating to the subject matter hereof, and may not be
amended except in a writing signed by all of the parties hereto.
11.8 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provisions shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof, and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
11.9 BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns.
11.10 DEFINITION OF "KNOWLEDGE". As used in this Agreement, the term
"to the knowledge" of a party shall mean the actual knowledge of any one or more
of the officers of such party after conducting an appropriate investigation of
the subject matter at issue including reviews of relevant files and inquiry of
persons who could reasonably be expected to have some knowledge of the subject.
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11.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
or warranties in this Agreement shall survive beyond the Closing Date.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers, respectively, all as of the day and
year first above written.
SELLER: BUYER:
DEVLIEG-BULLARD, INC. SUNHILL NIC COMPANY, INC.
By: /s/ John Haggerty By: /s/ Chen C. Sun
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Its: Chief Executive Officer Its: President
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