<PAGE>
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): December 31, 1996
THE EASTWIND GROUP, INC.
------------------------
(Exact name of issuer as specified in charter)
Delaware 0-27638 23-2732753
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
100 Four Falls Corporate Center
Suite 305
West Conshohocken, Pennsylvania 19428
(Address of principal executive offices)
(610) 828-6860
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On December 31, 1996, Ivy-Tygart Acquisition Corp., a Delaware
corporation ("Ivy-Tygart") and majority-owned subsidiary of The Eastwind Group,
Inc. (the "Company"), purchased substantially all of the assets and owned real
property and assumed certain obligations of Tygart Moulding Corporation, a West
Virginia corporation (the "Seller") and Seller's Ivy Industries division located
in Charlottesville, Virginia, in an asset purchase transaction (the "Purchase")
pursuant to an Asset Purchase Agreement dated as of November 12, 1996 (the
"Agreement"). The Company owns ninety-two and one-half percent (92.5%)of Ivy-
Tygart's issued and outstanding common stock, $.01 par value per share, and John
C. Reid, the President and Assistant Secretary of Ivy-Tygart, owns the remaining
seven and one-half percent (7.5%) of Ivy-Tygart's issued and outstanding common
stock. The total consideration paid pursuant to the Agreement was negotiated at
arms-length and valued at $3,550,000 in addition to the assumption by the
Company of certain liabilities of the Seller (the "Purchase Price"). The Company
used internal funds to pay a portion of the Purchase Price and expenses related
to the Purchase. The sources of the remaining Purchase Price were Jefferson
National Bank of Charlottesville, Virginia (which loan was facilitated by a
commitment from the Small Business Administration to grant a Section 504 Loan to
Ivy-Tygart); Mountain Valley Bank of West Virginia; and Fidelity Funding, Inc.
of Dallas, Texas.
The Company asked John C. Reid to manage the purchased business, in
exchange for which Mr. Reid received a minority shareholder interest in Ivy-
Tygart; stock options to purchase an additional ten percent (10%) ownership
position in Ivy-Tygart; a management and consulting fee prior to the
consummation of the Purchase; and a salary and bonus agreement. In addition, on
October 29, 1996, Seller retained Ivy-Tygart to provide certain management
services to Seller until the date of the Purchase in exchange for the payment of
a $125,000 management fee (the "Management Services Contract"). This Management
Services Contract was subsequently assigned to the Company as of November 12,
1996.
Seller was engaged in the business of manufacturing moulding, flooring
and paneling from lumber at its plant in Beverly, West Virginia, which products
were sold through a distribution network in West Virginia and the contiguous
states. Seller also manufactured finished picture mouldings and frames and
finished architectural moldings and doors at its Ivy Industries plant in
Charlottesville, Virginia, which products
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were sold wholesale throughout the United States, as well as through retail
stores leased by Seller at various locations in Virginia under the trade name
Picture Parts. In addition to assuming certain liabilities of the Purchaser,
the assets acquired by Ivy-Tygart included two manufacturing facilities,
equipment, inventory, tangible personal property, accounts receivables and other
intangibles. It is the Company's intent for Ivy-Tygart to employ these assets in
order to continue the foregoing described businesses.
Item 7. Financial Statements; Pro Forma
Financial Information and Exhibits
----------------------------------
(a)(1) Financial statements of businesses acquired (provided in accordance
with Item 310(c) of Regulation S-B).
It is impracticable to provide the audited financial statements
required relative to the acquired business described in Item 2 at the
time this Report on Form 8-K is filed. The Registrant will file the
required financial statements as soon as practicable, but in no event
later than March 14, 1997.
(b) Pro forma financial information (provided in accordance with Item
310(d) of Regulation S-B).
It is impracticable to provide the pro forma information required
relative to the acquired business described in Item 2 at the time this
Report on Form 8-K is filed. The Registrant will file pro forma
financial information as soon as practicable, but in no event later
than March 14, 1997.
(c) Exhibits
2.1 Asset Purchase Agreement by and between Tygart Moulding Corporation
and Ivy-Tygart Acquisition Corp., dated as of November 12, 1996.
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<PAGE>
SIGNATURE
---------
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.
THE EASTWIND GROUP, INC.
Date: January 14, 1997 By: /s/ Paul A. DeJuliis
----------------------------
Chairman and Chief Executive
Officer
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<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page Number
- ------- ----------- -----------
2.1 Asset Purchase Agreement by and between Tygart
Moulding Corporation and Ivy-Tygart Acquisition
Corp., dated as of November 12, 1996.(Certain
exhibits and schedules have been omitted in
accordance with Item 610(b)(2) of Regulation S-B.
A copy of such exhibits and schedules shall be
furnished supplementally to the Securities and
Exchange Commission upon request.)
<PAGE>
EXHIBIT 2.1
-----------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
TYGART MOULDING CORPORATION
AND
IVY-TYGART ACQUISITION CORP.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I - PURCHASE AND SALE OF ASSETS..................................... 1
1.1. Purchase and Sale of Assets...................................... 1
1.2. Retained Assets.................................................. 4
ARTICLE II - LIABILITIES.................................................... 4
2.1. Assumed Liabilities.............................................. 4
2.2. Retained Liabilities............................................. 4
2.3. Prorations....................................................... 6
ARTICLE III - PURCHASE PRICE AND OTHER CLOSING PAYMENTS..................... 6
3.1. Payment.......................................................... 6
3.2. Allocation of Purchase Price..................................... 6
3.3. Adjustment of Purchase Price..................................... 7
ARTICLE IV - CLOSING........................................................ 7
4.1. General.......................................................... 7
4.2. Deliveries by Seller............................................. 7
4.3. Documents Delivered by Buyer..................................... 8
ARTICLE V - CONDITIONS TO CLOSING........................................... 8
5.1. Conditions to Buyer's Obligations................................ 8
5.2. Conditions to Seller's Obligations............................... 9
ARTICLE VI - REPRESENTATIONS AND WARRANTIES................................. 10
6.1. Representations and Warranties of Seller........................ 10
6.2. Representations and Warranties of Buyer......................... 16
ARTICLE VII - COVENANTS OF SELLER........................................... 17
7.1. Maintenance of Business.......................................... 17
7.2. Maintenance of, and Access to, Records........................... 19
7.3. Covenant Not to Compete.......................................... 20
7.4. Further Assurances............................................... 20
7.5. Disposition of Retained Liabilities.............................. 20
7.6. No Solicitation.................................................. 21
7.7. Change of Corporate Names........................................ 22
ARTICLE VIII -COVENANTS OF BUYER............................................ 22
8.1. Maintenance of, and Access to, Records........................... 22
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
8.2. Regulatory Authorizations........................................ 22
8.3. Further Assurances............................................... 22
ARTICLE IX - CERTAIN ADDITIONAL COVENANTS................................... 23
9.1. Press Releases................................................... 23
9.2. Bulk Transfer Laws............................................... 23
ARTICLE X - INDEMNIFICATION................................................. 23
10.1. Indemnification by Buyer........................................ 23
10.2. Indemnification by Seller....................................... 24
10.3. Notice of Claim and Right to Participate In and
Defend Third Party Claim........................................ 25
ARTICLE XI - MISCELLANEOUS.................................................. 26
11.1. Certain Definitions............................................. 26
11.2. Termination..................................................... 29
11.3. Amendments...................................................... 30
11.4. Entire Agreement................................................ 30
11.5. Governing Law................................................... 30
11.6. Notices......................................................... 30
11.7. Counterparts.................................................... 31
11.8. Assignment...................................................... 31
11.9. Waivers......................................................... 31
11.10. Third Parties................................................... 31
11.11. Construction.................................................... 31
11.12. Headings........................................................ 32
</TABLE>
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of the
12th day of November, 1996, by and between Tygart Moulding Corporation, a West
Virginia corporation, (the "Seller"), and Ivy-Tygart Acquisition Corp., a
Delaware corporation ("Buyer").
WITNESSETH:
----------
WHEREAS, following the acquisition of Ivy Industries Inc. by Seller,
using a merger effective on April 30, 1993, the Seller is engaged in three
businesses, one of which is its traditional business of manufacturing moulding,
flooring and paneling from lumber and wood products at its plant in Beverly,
West Virginia, which products are sold through a distribution network in West
Virginia and contiguous states, and its other businesses are operated by the Ivy
Industries division which manufactures finished picture mouldings and frames and
finishes architectural mouldings and doors in Charlottesville, Virginia and
wholesales these products throughout the United States as well as operating
retail stores in Charlottesville, Richmond, Hampton, and Virginia Beach,
Virginia under the trade name of Picture Parts (all of such businesses of
Seller, including of its Ivy Industries division, hereinafter collectively the
"Business");
WHEREAS, Seller desires to sell all of the assets of the Business to
Buyer; and
WHEREAS, Buyer desires to purchase and acquire from Seller, upon the
terms and subject to the conditions hereinafter set forth, all of the assets of
the Business as herein detailed, in consideration of certain payments by Buyer
and the assumption by Buyer of certain obligations of Seller specifically
disclosed in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, Buyer and Seller, on the basis of, and in
reliance upon, the representations, warranties, covenants, obligations and
agreements set forth in this Agreement, and upon the terms and subject to the
conditions contained herein, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
---------------------------
1.1. Purchase and Sale of Assets. Seller shall sell, assign,
---------------------------
transfer and deliver to Buyer, and Buyer shall purchase and acquire from Seller,
all of the assets, rights and interests owned or used by Seller, wherever
situated, as the same shall exist as of the Closing Date (as hereinafter
defined), free and
<PAGE>
clear of any liability, obligation, undertaking, claim, suit, security interest,
pledge, lien or encumbrance of any kind whatsoever, except for Permitted Liens
(as hereinafter defined or as otherwise disclosed on the Schedules attached
hereto (such assets, rights and interests being hereinafter collectively called
the "Acquired Assets"), and including without limitation the following
categories:
(a) Cash and Securities. All of Seller's cash on hand or deposit,
-------------------
checks in process of collection, certificates of deposit, time deposits,
deposits and advances from third parties, securities and similar items;
(b) Inventory. All of Seller's inventories which constitute part of
---------
the Business, including, without limitation, all inventories of products, work-
in-process, finished goods, raw materials, supplies, parts, labels and packaging
(collectively, "Inventories");
(c) Accounts Receivable. All of Seller's accounts and notes
-------------------
receivable for the sale of products by the Business, any payments received by
Seller with respect thereto after the Closing Date, unpaid interest accrued on
any accounts receivable and any security or collateral relating thereto
(collectively, "Accounts Receivable");
(d) Notes Receivables and Advances. All corporate advances and loans
------------------------------
to officers or affiliates of the Seller or to third parties and other notes
receivable;
(e) Tangible Personal Property. All of the machinery, equipment,
--------------------------
furniture, tools, dies, molds, tooling, fixtures, spare parts, leasehold and
other improvements and other tangible personal property which constitute part of
the Business;
(f) Real Estate. All land, buildings, structures and improvements
------------
which constitute part of the Business.
(g) Books and Records. All of Seller's business records which
-----------------
constitute part of the Business, including, without limitation, all financial
and accounting books and records, all customer lists, all personnel files, and
all computer software related thereto;
(h) Catalogs and Advertising Materials. All of Seller's promotional
----------------------------------
and advertising materials which constitute part of the Business, including,
without limitation, all catalogs, brochures, plans, customer and supplier lists,
manuals, handbooks, products and parts lists, and dealer and distributor lists;
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(i) Intellectual Property Rights. All of Seller's knowhow,
----------------------------
trademarks, service marks, trade names (including specifically, without
limitation, the Ivy, Tygart and Picture Parts names),copyrights, patents,
licenses, shop rights, developments, research data, designs,, technology, test
procedures, processes, formulas, confidential information (and applications for
any of the foregoing and rights therein) ; all other intellectual and intangible
property rights, inventions (whether or not patentable),discoveries, business
methods and trade secrets which constitute part of the Business; and all prints
and drawings, models, or other graphic displays of any of the foregoing or of
any tangible personal property sold hereunder;
(j) Contracts. All rights and benefits of Seller in, to or under all
---------
the licenses, contracts, agreements, commitments and undertakings, whether oral
or written, which constitute part of the Business (collectively, the
"Contracts") but unless Buyer affirmatively elects to assume them, no
liabilities, undertakings or obligations thereunder;
(k) Claims. All rights to Seller's claims, assessments, judgments or
------
recoveries against third parties arising from the Business, whether or not yet
liquidated in amount;
(l) Permits and Approvals. All licenses, permits, approvals,
---------------------
variances, waivers or consents which constitute part of the Business and any
pending applications therefor (collectively, "Permits") issued by any
Governmental Authority (as defined below), to the extent transferable to Buyer;
(m) Leases. All of Seller's right, title and interest (including
------
rights to security deposits, if any), as tenant or lessor, under the real or
personal property leases identified on Schedule 1.1(m) (collectively, the
"Leases") but unless Buyer affirmatively elects to assume them, no liabilities,
undertakings or obligations thereunder;
(n) Insurance. All policies of insurance owned or maintained by
---------
Seller which relate to the Business, and any and all prepaid premiums or
proceeds thereof;
(o) Tax Refunds. Any and all right, title and interest Seller has in
-----------
or to any and all refunds of, or credits for, any and all foreign, federal,
state or local tax in any way arising out of or relating to the conduct of the
Business prior to Closing to the extent paid by Seller;
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(p) Computer Hardware and Software. The computer hardware and
------------------------------
software (and any leases in respect thereof) identified on Schedule 1.2(e).
(q) Prepaid Expenses. All rights in connection with prepaid
----------------
expenses; and
(r) Goodwill. The assembled work force and goodwill of the
--------
Business as a going concern.
1.2. Retained Assets. Notwithstanding any other provision of this
---------------
Agreement, there shall be excluded from the assets to be sold to Buyer those
assets set forth below:
(a) Employee Benefit Plans. The sponsorship of, and any and all
----------------------
assets associated with, any and all plans or arrangements sponsored by Seller
for the benefit of its employees, including without limitation, any and all
pension plans, compensation plans and welfare benefit plans maintained by Seller
unless Buyer has expressly in writing agreed to assume and continue any such
plan.
ARTICLE II
LIABILITIES
-----------
2.1. Assumed Liabilities. On the terms and subject to the conditions
-------------------
set forth in this Agreement, on the Closing Date, Buyer shall assume and pay,
perform and discharge, when due, the following liabilities and obligations of
Seller, and only those obligations (collectively referred to hereinafter as the
"Assumed Liabilities"):
(a) Trade Accounts Payable. Trade accounts payable not to exceed
----------------------
an amount of $150,000 arising solely from the Business;
(b) Accruals. Accrued salaries, commissions, payroll taxes,
--------
payroll withholdings, sales taxes payable and customer deposits arising solely
from the Business, but in no event to exceed in the aggregate $150,000 and only
to the extent such accruals have been recorded in the historical accounting
records pertaining to the Business in accordance with generally accepted
accounting principles applied on a consistent and historical basis; and
(c) Management Fees. Accrued management fees payable to Buyer or
---------------
its designee incurred since October 1, 1996, but not to exceed in the aggregate
$125,000.
2.2. Retained Liabilities. Except as specifically provided in
--------------------
Section 2.1, Seller shall retain, and Buyer shall not
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assume, or be responsible or liable with respect to, any liabilities or
obligations of Seller, whether or not relating to the Business, whether fixed,
contingent or otherwise, and whether known or unknown (collectively referred to
hereinafter as the "Retained Liabilities"). The Retained Liabilities shall also
specifically include, solely for purposes of further specificity and not in
limitation thereof, the following:
(a) any claim relating to products warranty or liability with respect
to any product of the Business manufactured, or any service performed by Seller,
before the Closing Date;
(b) (i) any liability arising from Seller's actions or conduct prior
to the Closing Date relating to the terms and conditions of employment of any
employee, and (ii) any violations of federal, state or local laws or regulations
relating to employment or labor relations;
(c) any income, franchise or similar tax due with respect to the
Seller;
(d) any liabilities or claims with respect to the Business related to
injuries to, or the death of, persons, or damage to or destruction of property
occurring before the Closing Date;
(e) (i) claims, suits or proceedings arising prior to the Closing
Date under the Occupational Safety and Health Act of 1970 or any similar state
or local laws, or amendments thereto, and any regulations promulgated thereunder
(collectively, "OSHA laws and regulations"), and (ii) any conditions existing
prior to the Closing Date which result in any material claims, suits or
proceedings under OSHA laws and regulations;
(f) medical, dental, disability income, life insurance, accidental
death benefits and similar coverages for claims incurred prior to the Closing
Date, which liabilities arise by virtue of any employment relationship with
Seller prior to the Closing Date;
(g) claims for commissions or incentive bonuses to the extent asserted
to have been earned or accrued prior to the Closing Date, which liabilities
arise by virtue of any employment or consulting relationship with Seller prior
to the Closing Date;
(h) Seller's performance under or compliance with any permits relating
to the Business to which Seller was a party prior to the Closing Date;
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(i) Any liability or obligation arising from Seller's breach of, or
default under, the Contracts occurring prior to the Closing Date; and
(j) all liabilities, obligations, covenants and performance under
contracts and leases, whether or not included as Acquired Assets, unless Buyer
has specifically agreed in writing to assume such obligations.
2.3. Prorations. Unless needed for the Business, or specifically
----------
assumed under Section 2.1(b), utility charges, taxes, and similar proratable
items which are attributable to the Acquired Assets, shall be apportioned
between Buyer and Seller. Any item which relates to the period prior to the
Closing Date shall be apportioned to Seller, and any such item which relates to
the period on or after the Closing Date shall be apportioned to Buyer. The
parties shall make every effort to cooperate fully to avoid, to the extent
legally possible, the payment of duplicate charges or taxes.
ARTICLE III
PURCHASE PRICE AND OTHER CLOSING PAYMENTS
3.1. Payment. At or before the Closing, Buyer shall deliver and/or
-------
pay to Seller, or at its direction, directly to NationsBank, a total cash
purchase price of Three Million Five Hundred Fifty Thousand Dollars ($3,550,000)
(the "Purchase Price"). The Buyer has paid One Hundred Thousand Dollars
($100,000), of the Purchase Price on October 24, 1996 and the balance of the
Purchase Price (the "Closing Payment") shall be paid at the Closing by wire
transfer of immediately available same-day funds to NationsBank or to such bank
account as Seller shall designate in writing prior to the Closing.
3.2. Allocation of Purchase Price. The Purchase Price and the
----------------------------
Assumed Liabilities represent the amount agreed upon by the parties to be the
value of the Acquired Assets, and such value shall be allocated among the
Acquired Assets in the manner required by Section 1060 of the Internal Revenue
Code of 1986. Buyer shall, no later than sixty (60) days after the Closing,
prepare and deliver to Seller a schedule (the "Allocation Schedule") showing
such allocation of the Purchase Price and Assumed Liabilities, together with any
appraisals of Assets prepared in connection therewith. The Allocation Schedule
shall be subject to the Seller's approval, which approval shall not be
unreasonably withheld. Each of the parties shall report the purchase and sale
of the Acquired Assets in accordance with the Allocation Schedule for all
Federal, state and local tax purposes.
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<PAGE>
3.3. Adjustment of Purchase Price. If NationsBank adjusts or claims
----------------------------
that the amount owed to it by Seller as a consequence of this Agreement or
otherwise is more than Three Million Five Hundred Fifty Thousand Dollars
($3,550,000), or if NationsBank takes action reasonably believed to jeopardize
the Business or if Seller seeks the protection of the Federal Bankruptcy Code
under Chapter 11 thereof, the Buyer will have the option, solely in its
judgment, whether or not to proceed with the transactions evidenced by this
Agreement, but if it elects to proceed, the Buyer will have the right to change
any terms of this Agreement it wishes as a condition of proceeding with such
transaction, and in any event, the Purchase Price will immediately be reduced to
Three Million Dollars ($3,000,000) and the Closing Payment to Two Million Nine
Hundred Thousand Dollars ($2,900,000).
ARTICLE IV
CLOSING
-------
4.1. General. As used in this Agreement, the "Closing" shall mean
-------
the time at which Seller consummates the sale, assignment, transfer and delivery
of the Acquired Assets to Buyer as provided herein against payment by Buyer of
the Closing Payment and the assumption by Buyer of the Assumed Liabilities. The
Closing shall occur on or about December 10, 1996, at the offices of Buyer in
West Conshohocken, Pennsylvania or at such other time and place as may be agreed
by the parties hereto (the "Closing Date"). The Closing shall be effective at
11:59 P.M. (Eastern Time) on the Closing Date.
4.2. Deliveries by Seller. At the Closing, Seller shall deliver to
--------------------
Buyer:
(a) Certified copies of the resolutions of the Directors and
Stockholders of Seller authorizing and approving this Agreement and all other
transactions and agreements contemplated hereby;
(b) A bill of sale, in the form attached hereto as Exhibit
4.2(b);
(c) An opinion, dated as of the Closing Date, of O'Keeffe &
Spies, of Lynchburg, Virginia, counsel to Seller in substantially the form
attached as Exhibit 4.2(c),
(d) All consents identified on Schedule 4.2(d);
(e) The certificates described in Sections 5.1(a) and 5.1(b)
hereof;
(f) Good standing certificates of the Seller from the Secretary
of the State of its state of organization and of
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each jurisdiction in which it is presently qualified to do business;
(g) Possession of the Acquired Assets;
(h) Updates to all of the Schedules attached hereto to a date as
late as practicable;
(i) A Certification of the three Trustees of the Employees
Savings and Stock Ownership Plan (ESSOP) in the form of Exhibit 4.2(i) attached
hereto and made a part hereof; and
(j) Such other deeds, bills of sale, endorsements, assignments,
affidavits, and other good and sufficient instruments of sale, assignment,
conveyance and transfer, in form and substance reasonably satisfactory to Buyer
and its counsel, as are required to vest in Buyer all of Seller's right, title
and interest in and to all of the Acquired Assets and necessary for Buyer to
assume the Assumed Liabilities.
4.3. Documents Delivered by Buyer. At the Closing, Buyer shall
----------------------------
deliver to Seller:
(a) Evidence of the payment of the Closing Payment in the manner
and the amount set forth in Section 3.1;
(b) Certified copies of the resolutions of the Directors of
Buyer authorizing and approving this Agreement and all other transactions and
agreements contemplated hereby;
(c) An opinion, dated as of the Closing Date, of Clark, Ladner,
Fortenbaugh & Young, of Philadelphia, Pennsylvania, counsel to Buyer in
substantially the form attached as Exhibit 4.3(c);
(d) The certificates described in Sections 5.2(a) and 5.2(b)
hereof; and
(e) An assumption agreement substantially in the form attached
as Exhibit 4.3(e).
ARTICLE V
CONDITIONS TO CLOSING
---------------------
5.1. Conditions to Buyer's Obligations. The obligations of Buyer to
---------------------------------
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Buyer:
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(a) Representations and Warranties. Each of the representations
------------------------------
and warranties of Seller made in this Agreement shall be true and correct in all
material respects on the date hereof and as of the Closing Date as though made
at such time, and there shall have been delivered to Buyer a certificate of
Seller to that effect, dated the Closing Date, signed by authorized officers of
Seller.
(b) Covenants. Seller shall have performed and complied with all
---------
covenants and agreements required by this Agreement to be performed or complied
with by it at or prior to the Closing Date, and there shall have been delivered
to Buyer a certificate of Seller to that effect, dated the Closing Date, signed
by an authorized officer of Seller.
(c) Material Adverse Change. Since the date hereof, there shall
-----------------------
have been no material adverse change, or discovery of a condition or occurrence
of any event which likely will result in any such change, in the condition
(financial or otherwise), results of operations, properties, assets or
liabilities of the Business.
(d) Legal Proceedings and No Injunction. Seller shall have delivered
-----------------------------------
to Buyer all documents and other papers related to actions and legal proceedings
that are required to be delivered hereunder, and no judgment, order or decree
shall have been rendered by any Governmental Authority which has the effect of
enjoining the consummation of the transactions contemplated by this Agreement.
(e) Certification of ESSOP Trustees. Seller shall have delivered the
-------------------------------
Certification of the ESSOP Trustees in the form of Exhibit 4.2(i).
(f) Financing Availability. The Buyer shall have satisfied all
----------------------
requirements for obtaining financing from its lenders in order to consummate the
transactions contemplated hereby and such lenders shall have advanced the
necessary financing to the Buyer.
(g) Good Title. Good Title to all of the Acquired Assets owned by
----------
Seller shall have been provided, free and clear of any security interests, liens
and encumbrances, other than Permitted Liens.
(h) Certificates; Documents. Seller shall have delivered the
-----------------------
agreements, certificates, and other documents required by Section 4.2 and all
releases of security interests, liens and encumbrances of the Acquired Assets.
5.2. Conditions to Seller's Obligations. The obligations of Seller
----------------------------------
to consummate the transactions provided for
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<PAGE>
by this Agreement are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by Seller
in their sole discretion:
(a) Representations and Warranties. Each of the
------------------------------
representations and warranties of Buyer made in this Agreement shall be true and
correct in all material respects both on the date hereof and as of the Closing
Date as though made at such time, and there shall have been delivered to Seller
a certificate of Buyer to that effect, dated the Closing Date, signed by an
authorized officer of Buyer.
(b) Covenants. Buyer shall have performed and complied with
---------
all covenants and agreements required to be performed or complied with by it at
or prior to the Closing Date, and there shall have been delivered to Seller a
certificate of Buyer to that effect, dated the Closing Date, signed by an
authorized officer of Buyer.
(c) No Injunction. No judgment, order or decree shall have
-------------
been rendered by any Governmental Authority which has the effect of enjoining
the consummation of the transactions contemplated by this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
------------------------------
6.1. Representations and Warranties of Seller. Seller represents and
----------------------------------------
warrants to Buyer that:
(a) Organization, Power and Authority. Seller is a
---------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of West Virginia, and has full corporate power and authority, to
own the Acquired Assets, to carry on the Business as now being conducted, and to
make and perform this Agreement, and the transactions and other agreements and
instruments contemplated by this Agreement. This Agreement and all other
agreements and instruments executed or to be executed by Seller in connection
herewith have been (or upon execution will have been) duly executed by Seller.
This Agreement and the transactions and other agreements and instruments
contemplated hereby have been duly approved by the Directors and Stockholders of
Seller, and constitute the valid and binding obligations of Seller, enforceable
in accordance with their respective terms. All other necessary corporate actions
have been taken to fully vest all participants in the Seller's Employee Savings
and Stock Ownership Plan (ESSOP), to terminate such plan and to distribute all
account balances to all participants thereof in cash, and as a consequence
thereof no consents, approvals or voting by such participants or by the Trustees
of the ESSOP is necessary for the approval of this
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<PAGE>
Agreement or to render it the valid and binding obligation of Seller,
enforceable in accordance with its terms. No other shareholders of Seller or
holders of any options, warrants, stock equivalent rights, phantom stock units
or put options have any rights under prevailing law which would adversely affect
the transactions contemplated by this Agreement, nor has any shareholder of
Seller perfected any statutory dissenters or appraisal rights with respect to
the Stockholder approval of this Agreement.
(b) Conflicts: Defaults. Except as set forth on Schedule 6.1(b),
-------------------
neither the execution and delivery of this Agreement and the other agreements
and instruments executed in connection herewith by Seller, nor the performance
by Seller of the transactions contemplated hereby or thereby, will violate,
conflict with, or constitute a material default under, any of the terms of
Seller's Certificates or Articles of Incorporation or By-Laws, or any provisions
of, or result in the acceleration of any obligation under, any contract, sales
commitment, license, purchase order, security agreement, mortgage, note, deed,
lien, lease, agreement, instrument, order, judgment or decree relating to the
Business or the Acquired Assets, or by which the Seller or Acquired Assets is
bound. Except as set forth in Schedule 6.1(b), Seller is not, as of the date of
this Agreement, in material violation of or in default under any provision of
any contract, sales commitment, license, purchase order, security agreement,
mortgage, note, deed, lien, lease, agreement, instrument, order, judgment or
decree relating to the Business or the Acquired Assets, or by which the Acquired
Assets are bound, including, without limitation, the Contracts and the Leases,
and, to the best of Seller's knowledge, there exists no condition or event
which, after notice or lapse of time or both, would result in any such violation
or default.
(c) Consents. To the best knowledge of Seller, Schedule 6.1(c) lists
--------
all consents, approvals, authority and other requirements prescribed by any law,
rule or regulation, or any contract, agreement, commitment or undertaking, which
must be obtained or satisfied by Seller for the consummation of the transactions
contemplated by this Agreement (the "Consents").
(d) Assets of Seller, Good Title. Except as set forth on Schedule
----------------------------
6.1(d), Seller has good and marketable title to, and the right to use and
transfer to Buyer, each of the Acquired Assets which it owns. The Acquired
Assets are free and clear of all Liens except as set forth on Schedule 6.1(d)
and Permitted Liens.
(e) Real Property. Schedule 6.1(e) sets forth a true, correct and
-------------
complete list of all real property owned or leased by Seller in connection with
the operation of the Business. The real estate leases for each leased property
-11-
<PAGE>
identified on Schedule 6.1(e) are, unless otherwise described on Schedule
6.1(e), in full force and effect, enforceable in accordance with their
respective terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting the
enforcement of creditors' rights generally. Neither the Seller nor any other
party to any such real estate lease has materially breached or improperly
terminated such lease, or is in default under any such lease, and to Seller's
knowledge there exists no condition or event which after notice or lapse of time
or both, would constitute any such breach, termination or default. To Seller's
knowledge, there are no actions, suits, proceedings or investigations pending or
threatened to take or condemn all or any portion of the owned or leased real
properties pursuant to a power of eminent domain or similar authority, and
except as disclosed on Schedule 6.1(e) hereof, no laws, statues, or ordinances
or building or use restrictions or zoning laws prohibit the uses presently being
made of the owned or leased real properties except where such non-compliance
would not materially impair or interfere with the use of such properties. Seller
has received no written notice that any assessment for public improvements, such
as sewer and water lines and mains, streets, sidewalks and curbs, has been made
against any of the owned or leased real properties which remains unpaid or that
any public improvement with respect to such properties has been ordered to be
made which has not been heretofore completed, and the cost therefor assessed and
paid.
(f) Contracts. Schedule 6.1(f) sets forth a complete list of (i) each
---------
license, contract, agreement, commitment or undertaking (whether oral or
written) relating to the Business which involves an amount in excess of $50,000
or extends for a period of twelve months or more, (ii) each loan or credit
agreement, security agreement, guaranty, indenture, mortgage, pledge,
conditional sale or title retention agreement, equipment obligation, lease
purchase agreement or other instrument evidencing indebtedness relating to the
Business, (iii) each contract or agreement between Seller and an employee
engaged in the Business, and (iv) each distributor agreement, sales
representative agreement or other agreement pursuant to which Seller sells or
distributes products in respect of the Business. All such Contracts are, unless
otherwise described on Schedule 6.1(f), in full force and effect, enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting the enforcement of creditors rights generally. The Seller is not
aware of any breach or improper termination of any such Contract, nor is in
default under any Contract by which it is bound, and there exists no condition
or event which, after notice or lapse of time or both, would constitute any such
breach, termination or default.
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<PAGE>
(g) Financial Statements. Attached as Schedule 6.1(g) are the audited
--------------------
financial statements (collectively, the "Financial Statements") of Seller for
the year ended December 31, 1995.
(i) Except as set forth on Schedule 6.1(g), the Financial
---------------
Statements were prepared from the books and records kept by Seller and fairly
present the financial position of the Seller as of the dates of such statements,
the results of the operations of Seller for the periods ended as of such dates,
and the results and financial position of the Business, all in accordance with
GAAP consistently applied.
(ii) Seller is not aware of any liabilities relating to or
affecting the Business or any of the Acquired Assets not reflected on the
balance sheets furnished under (i) above, other than liabilities incurred in the
ordinary course of the Business consistent with past practice or in accord with
the provisions of this Agreement or which in the aggregate are not material to
the Business.
(iii) The inventories shown on the balance sheet furnished under (i)
above, and those acquired by the Business since the dates thereof, to the extent
not yet sold, consist of items of a quality and quantity usable and salable in
the ordinary course of business, except for those inventories which have been
written down to net realizable market value.
(h) Litigation. Except as set forth in Schedule 6.1(h), and to
----------
Seller's best knowledge, there exists no litigation, action, suit, or proceeding
pending or any litigation, action, suit, investigation, claim or proceeding
threatened, nor any circumstances likely to give rise to any litigation, action,
suit, investigation, claim or proceeding, against or affecting the Business or
the Acquired Assets, or which would affect the transactions contemplated by this
Agreement, at law or in equity or before any Governmental Authority.
(i) Regulatory Compliance. The Business is conducted, and the
---------------------
Acquired Assets are maintained, in substantial compliance with all applicable
laws, regulations and other requirements of any Governmental Authority.
(j) Intellectual Property. Schedule 6.1(j) sets forth a complete
---------------------
list of all patents, trademarks, service marks, trade names and copyrights (and
all applications f or the foregoing) which are used in the conduct of, or which
relate to, the Business. Seller solely owns or has the exclusive right to use
all patents, trademarks, service marks, trade names and copyrights used in the
conduct of the Business.
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<PAGE>
(k) Permits. Schedule 6.1(k) contains a complete list of all the
-------
permits issued to Seller which are currently used by Seller in the operation of
the Business (the "Licenses"). Such permits are all the permits necessary or
required for the operation of the Business as it is currently being operated.
(l) Collective Bargaining Agreements. Except as set forth in Schedule
--------------------------------
6.1(1), Seller is not a party to any collective bargaining or union contract in
respect of the Business, nor is Seller under any current obligation to bargain
with any bargaining agent on behalf of any of the employees working in or for
the Business, nor has there been any attempt to organize such employees.
(m) Employee Plans. Schedule 6.1(m) lists all employee pension
--------------
benefit or welfare plans, as defined in the Employee Retirement Income Security
Act of 1974 ("ERISA"), Seller either maintains or contributes to the benefit of
Seller's employees engaged in the Business.
(n) Customers and Suppliers. Schedule 6.1(n) contains a list of the
-----------------------
20 largest customers and suppliers of the Business.
(o) Taxes. Seller has prepared in good faith and filed or caused to
-----
be filed all tax returns and reports relating to the Business and required to be
filed by it with any Governmental Authority prior to the date of this Agreement.
All taxes owed to any Governmental Authority by Seller for a period covered by
such returns and reports, and all claims, demands, assessments, judgments, costs
and expenses therewith, have been paid in full.
(p) Brokers, Finders and Agents. Except as set forth in Schedule
--------------------------- --------
6.1(p), Seller is not directly or indirectly obligated to anyone acting as a
- ------
broker, finder or in any other similar capacity in connection with this
Agreement or the transactions contemplated hereby.
(q) Environmental Matters. Except as set forth on Schedule 6.2(g),
--------------------- ---------------
and to the best knowledge of Seller, with respect all the real properties owned
by it in West Virginia, and with respect to its relationship to the operation of
the Business:
(a) Seller has obtained all permits, licenses and other
authorizations which are currently required under any
applicable Environmental Laws;
(b) Seller is currently operating the Business and is otherwise
in material
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<PAGE>
compliance with all terms, conditions and provisions of all
of the permits, licenses and other authorizations set forth
above, and all applicable Environmental Laws;
(c) There are no pending or threatened Environmental Claims
against the Seller with respect to the ownership of that Real
Property or the operation of the Business, nor are there any
facts or circumstances which could reasonably be expected to
form the basis for any Environmental Claim;
(d) No Releases of Hazardous Materials or other emissions or
discharges into the environment of any hazardous substance,
except as permitted by law, have occurred, or are currently
occurring, in, to, on, or under that real property or in
connection with the conduct of the Business, and no Hazardous
Materials are present in, on, about or migrating to or from
that Real Property that could give rise to an Environmental
Claim, except as permitted by law;
(e) Except for finished goods and raw materials handled in the
ordinary course of business (except for disposal), neither
the Seller nor any person previously owned directly or
indirectly by the Seller has transported or arranged for the
treatment, storage, waste handling, disposal, or
transportation for treatment, storage, waste handling or
disposal of any Hazardous Material generated by the Business
or relating to that real property to any location other than
an Environmental Clean-Up site;
(f) There are no (A) underground storage tanks (active or
abandoned), (B) polychlorinated biphenyl containing
equipment, or (C) asbestos containing material at or on that
Real Property;
(g) All environmental investigations, studies, audits, tests,
reviews or other analyses conducted by, on behalf of, or
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<PAGE>
which are in the possession of Seller with respect to the
operation of the Business or to that Real Property has been
delivered to Buyer; and
(h) Seller has received no written notices of any violation of
any Environmental Law.
(r) Disclosure. No representation or warranty contained in this
----------
Agreement, and no statement contained in any Schedule hereto or in the
certificates furnished to Buyer hereunder, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which
they were made, not misleading.
6.2. Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to Seller that:
(a) Organization, Power and Authority. Buyer is a corporation
---------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to make and
perform this Agreement, and to perform the transactions contemplated by this
Agreement, subject only to approval of its Board of Directors. This Agreement
and all other agreements and instruments executed or to be executed by Buyer in
connection herewith have been (or on the Closing Date will have been) duly
executed by Buyer. This Agreement and the transactions and other agreements and
instruments contemplated by this Agreement are expected to be duly approved by
the Directors of Buyer, and following such approval will constitute the valid
and binding obligations of Buyer, enforceable in accordance with their
respective terms.
(b) Conflicts: Defaults. Subject to the consents required as
-------------------
listed on Schedule 6.2(b) hereof, neither the execution and delivery of this
Agreement and the other agreements and instruments executed in connection
herewith by Buyer, nor the performance by Buyer of the transactions contemplated
hereby or thereby, will violate, conflict with, or constitute a default under,
any of the terms of Buyer's Certificate of Incorporation or By-Laws, or any
provisions of, or result in the acceleration of any obligation under, any
contract or agreement to which Buyer is a party or by which its assets are
bound.
(c) Brokers, Finders and Agents. Except as set forth in
---------------------------
Schedule 6.2(c), Buyer is not directly or indirectly obligated to anyone as a
broker, finder or in any other similar capacity in connection with this
Agreement or the transactions contemplated hereby.
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<PAGE>
(d) Litigation. There exists no litigation, action, suit or
----------
proceeding pending, or to the best of Buyer's knowledge, any litigation, action,
suit, investigation, claim or proceeding threatened, which would affect the
transactions contemplated by this Agreement, at law or in equity, before any
Governmental Authority.
(e) Regulatory Compliance. No authorization or approval of any
---------------------
governmental unit or regulatory agency is required to approve the transactions
contemplated by this Agreement.
ARTICLE VII
COVENANTS OF SELLER
-------------------
7.1. Maintenance of Business. Subject to the delegation to Buyer
-----------------------
by Seller of operating management of the Business as evidenced by Exhibit 7.1
attached hereto and made a part hereof, and except as required by this
Agreement, for the period from the date hereof through the Closing Date, Seller
shall carry on the Business in the ordinary course substantially in the manner
heretofore conducted and use its reasonable efforts to maintain or improve its
existing relationships with employees, suppliers, customers and others having
business relations with it in connection with the Business, and without limiting
the generality of the foregoing, Seller will also:
(a) Use its reasonable efforts to (i) preserve intact the
present business organization and reputation of the Business, (ii) keep
available (subject to dismissals and retirements in the ordinary course of
business consistent with past practice) the services of the present officers,
employees and consultants of the Business, (iii) maintain the Acquired Assets in
their current condition, ordinary wear and tear excepted, and (iv) continue all
current sales, marketing and promotional activities relating to the Business;
(b) Cause the books and records of the Business to be
maintained in the usual, regular and ordinary manner;
(c) Comply in all material respects with all laws and orders
applicable to the Business, and promptly following receipt thereof give Buyer
copies of any notice received from any governmental or regulatory authority or
any other person alleging any violation of any such law or order;
(d) Administer each employee benefit plan, or cause the same
to be so administered, in all material respects in accordance with the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), ERISA and all other applicable laws;
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<PAGE>
(e) Promptly notify Buyer in writing of each receipt by the
Seller (and furnish copies to Buyer) of any notice of investigation or
administrative proceeding by the Internal Revenue Service, the Department of
Labor, the PBGC or any other person involving any employment benefit plan;
(f) Not amend its Certificate or Articles of Incorporation or
Bylaws or take any action with respect to any such Amendment or any
reorganization, liquidation or dissolution of the Seller;
(g) Not take any of the following actions: (i) sell, transfer
or otherwise dispose of any properties or assets used in connection with the
Business (including the Acquired Assets) outside the ordinary and normal course
of business for less than fair market value, (ii) mortgage, pledge or subject to
any Lien, any of the Acquired Assets, (iii) acquire any property or assets used
in connection with the Business (including the Acquired Assets) outside the
ordinary and normal course of business for more than fair market value, or
acquire the stock, assets or properties of any other person, (iv) sustain any
material damage, loss or destruction of or to the Acquired Assets (whether or
not covered by insurance), (v) enter into any transaction or otherwise conduct
the Business other than in the ordinary and normal course of business, (vi)
except for actions in the ordinary and normal course of business, grant any
salary increase or bonus or permit any advance to any employee, or enter into
any new, or, alter or amend any existing employee plan or any employment or
consulting agreement, (vii) make any borrowing, whether or not in the ordinary
and normal course of business, issue any checks, commercial paper or refinance
any existing borrowings in connection with the Business, (viii) in connection
with the Business, pay any obligation or liability (fixed or contingent), other
than in the ordinary and normal course of business, repay any indebtedness in
absence of a scheduled repayment date, discharge or satisfy any Lien, or settle
any claim, liability or suit pending or threatened against the Business or any
of the Acquired Assets, (ix) enter into any license or lease in connection with
the Business, (x) make any loan or gift in connection with the Business, (xi)
modify, amend, cancel or terminate any contracts or commitments under
circumstances which would materially and adversely affect the condition
(financial or otherwise), results of operations, business, properties, assets,
liabilities or prospects of the Business, (xii) declare or pay, or become
obligated to declare or pay, any dividend or other distribution, redemption or
other purchase of stock, (xiii) make or incur any obligations for capital
expenditures or commitments in an aggregate amount in excess of $20,000, (xiv)
commence, terminate or change any line of business, or (xv) agree to, or
obligate itself to, do anything identified in (i) through (xiv) above.
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<PAGE>
(h) Not violate, breach or default under, in any material
respect, or take or fail to take any action that, with or without notice or
lapse of time or both, would constitute a material violation or breach of, or
default under, any term or provision of any license held or used in the Business
or any Contract to which the Seller is a party or by which any of the Acquired
Assets or the Business is bound;
(i) Not (i) take or agree or commit to take or omit or agree
or commit to omit any action that would make any representation or warranty of
Seller hereunder inaccurate in any material respect, or (ii) take any action or
course of action inconsistent with compliance with the covenants and agreements
of Seller herein; and
(j) Not enter into any agreement to do or engage in any of
the foregoing.
If Buyer, as part of its ongoing management of the Business, authorizes any of
the above actions, in writing, or takes such actions, such shall not be a breach
of such covenant by Seller.
7.2. Maintenance of, and Access to, Records. From the date of this
--------------------------------------
Agreement until the Closing Date for due diligence purposes, and for six (6)
years following the Closing Date for reasons relating to the Business, Seller
shall provide Buyer with access (with an opportunity to make copies), during
normal business hours, and upon reasonable notice, to all Seller's books and
records which relate to the Business, including those which have not been
transferred to Buyer. Seller shall preserve and maintain such records for at
least six (6) years after the Closing Date. For purposes of such due diligence
until the Closing Date, Seller will, and will instruct its agents and
representatives, to provide Buyer and its officers, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives (together
"Representatives") with reasonable access, upon reasonable prior notice and
during normal business hours, to all officers, employees, agents and accountants
of the Seller and the Acquired Assets and books and records pertaining thereto,
and shall furnish Buyer and such Representatives with all such information and
data (including without limitation copies of agreements, books and records,
etc.) concerning the Business as Buyer or any of such other Representatives
reasonably may request in connection with such investigation. Nothing contained
in this Section 7.2 or other investigation by or disclosure to Buyer or
Representatives shall affect the survival of or modify, limit or create any
exception to the representations, warranties, covenants, agreements and
indemnities of Seller hereunder, or of the conditions to the obligations of
Buyer to close as set forth in this Agreement.
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<PAGE>
7.3. Covenant Not to Compete.
-----------------------
(a) Seller agrees that it shall not, directly or indirectly,
alone or in association with any other person or entity, carry on, be engaged in
or take part in, in any capacity whatsoever, or own or share in the earnings of,
any person or entity that is actively engaged in a business of manufacturing,
marketing or selling materials or products of the type presently manufactured
and sold by the Business (a "Competitive Business"). The restrictions contained
in this Section 7.3(a) shall be applicable for a period of five years in those
geographic regions in which the Business and other similar businesses of Buyer
or its corporate affiliates, if any, are currently engaged.
(b) Without limiting the generality of this Section 7.3, and
although the restrictions contained in this Section 7.3 are considered by the
parties hereto to be fair and reasonable in the circumstances, if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted or modified, or
the period thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in this Section 7.3 shall apply, with such deletions,
modifications or reductions in geographic or temporal scope or otherwise as may
be necessary to make them valid, effective and enforceable in the particular
jurisdiction in which the restrictions are adjudged to be void or unenforceable.
It is agreed that any breach or threatened breach by Seller of any provision of
this Section 7.3 cannot be remedied solely by monetary damages. Accordingly, in
the event of a breach or threatened breach by Seller of any of the provisions of
this Section 7.3, Buyer shall be entitled to injunctive relief restraining the
Seller from participating in such breach or attempted breach without proof of
actual damages. Nothing contained herein, however, shall be construed as
prohibiting Buyer from pursuing any other remedies available at law or in equity
for such breach or threatened breach, including, without limitation, the
recovery of monetary damages.
7.4. Further Assurances. From time to time after the Closing Date,
------------------
upon request of Buyer and without further consideration, Seller shall execute,
acknowledge and deliver all such other instruments of sale, assignment,
conveyance and transfer and shall take all such other action required to
transfer to and vest in Buyer, and to put Buyer in possession of, all of the
Acquired Assets, in accordance with the terms of this Agreement.
7.5. Disposition of Retained Liabilities. Seller agrees it will do
-----------------------------------
whatever reasonably possible to minimize the risk that the Buyer, the Acquired
Assets or the Business will be
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<PAGE>
exposed to any claim, suit, action or litigation from any existing or future
creditors, employees or shareholders (including participants in the ESSOP) of
Seller or by any parties to Contracts to which Seller is currently or in the
future a party or arising from any claim related to employment or non-employment
of any person by Seller, as they relate to liabilities not assumed by the Buyer
hereunder.
7.6. No Solicitation.
---------------
(a) From and after the date hereof until the Closing or earlier
termination of this Agreement, the Seller shall not, and shall cause each of its
officers, directors, employees, representatives, agents and affiliates,
including, without limitation, any investment banker or advisor, attorney,
accountant or broker retained by Seller, not to (i) disclose to any third party
any of the terms of this Agreement or the fact that this Agreement exists or
(ii) directly or indirectly, invite, initiate, solicit or knowingly encourage
(including by way of furnishing non-public information or assistance), any
inquiries with respect to or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or (iii) enter into or maintain or continue discussions or negotiations with any
person or entity in furtherance of such inquiries or to obtain an Acquisition
Proposal or (iv) agree to endorse any Acquisition Proposal. For purposes of
this Section, the term "Acquisition Proposal" shall mean any of the following
(other than the transactions with the Buyer contemplated by this Agreement): (i)
any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction involving the Seller; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more
of the assets of the Seller in a single transaction or series of transactions;
(iii) any offer or proposal for 5% or more of the outstanding shares of capital
stock of the Seller or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Seller represents that it is not, nor are any of its
stockholders, currently a party to or bound by any agreement with respect to an
Acquisition Proposal. In the event that the Seller receives or becomes aware of
any Acquisition Proposal, the Seller will promptly notify Buyer in writing of
such communication, of the identity of the person or entity making such
Acquisition Proposal and of the terms and conditions of such Acquisition
Proposal.
(b) If the Seller, or any of the other persons listed in
subsection (a) above breaches or violates any of its covenants in subsection (a)
above, or if within nine (9) months following termination of this Agreement, the
Seller or its stockholders shall have entered into an Acquisition Proposal,
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<PAGE>
then the Seller shall immediately reimburse Buyer for all of Buyer's costs and
expenses related to the transactions contemplated under this Agreement incurred
through such date and in addition shall pay to Buyer a Termination Fee of
$125,000.
The Seller acknowledges that the agreements and covenants contained in
this Section 7.6 are an integral part of the transactions contemplated by this
Agreement.
7.7. Change of Corporate Names. Promptly after sixty (60) days
-------------------------
following the Closing, Seller shall change its corporate name to a name which is
different from and not confusingly similar to the Tygart Moulding, Ivy
Industries and Picture Parts corporate or trade names, unless within such period
of time Seller has commenced dissolution proceedings.
ARTICLE VIII
COVENANTS OF BUYER
------------------
8.1. Maintenance of, and Access to, Records. From and after the
--------------------------------------
Closing, Buyer shall, whenever reasonably requested by Seller, permit Seller to
have reasonable access to all business records turned over to and maintained by
Buyer pursuant to this Agreement for the purpose of complying with the
requirements of any Governmental Authority tax audit or other reasonable
business purpose consistent with the terms of this Agreement. Buyer shall
preserve and maintain such records for at least six years after the Closing
Date.
8.2. Regulatory Authorizations. Buyer agrees to use its best
-------------------------
efforts to obtain, and to cooperate with Seller in obtaining, all
authorizations, consents, orders and approvals of Governmental Authorities that
may be or become necessary in connection with the transactions contemplated by
this Agreement, and to take all reasonable actions to avoid the entry of any
order or decree by any Governmental Authorities prohibiting the consummation of
the transactions contemplated hereby.
8.3. Further Assurances. From time to time after the Closing Date
------------------
upon request of Seller and without further consideration, Buyer shall execute,
acknowledge and deliver all such other instruments and shall take all such other
action required effectively to consummate the transactions contemplated by this
Agreement.
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ARTICLE IX
CERTAIN ADDITIONAL COVENANTS
----------------------------
9.1. Press Releases. To the extent required to be made pursuant to
--------------
any applicable law, regulation or other requirement of any Governmental
Authority in the reasonable opinion of its legal counsel, Buyer or its ultimate
public parent company may make any public announcement or issue any press
release regarding this Agreement or the consummation of the transactions
contemplated hereby without the prior consent of Seller to such announcement or
press release, but Seller will not make any such announcement without Buyer's
prior written consent, and upon its initial announcement of the transactions
contemplated hereunder will notify the Seller's employees in a manner mutually
agreed between Seller and Buyer.
9.2. Bulk Transfer Laws. Unless Buyer notifies Seller in writing, at
------------------
least twenty (20) days prior to Closing that it requires compliance (in which
case it will cooperate fully with Seller with respect to notices and other
statutory requirements), Buyer hereby waives compliance by Seller with the laws
of each and every jurisdiction relating to bulk transfers which may be
applicable to the transfer of the Acquired Assets to Buyer, and Seller hereby
agrees to defend, indemnify and hold harmless Buyer from and against any and all
Liabilities (as hereinafter defined) resulting from noncompliance with such
laws.
ARTICLE X
INDEMNIFICATION
---------------
10.1. Indemnification by Buyer. From and after the Closing Date,
------------------------
Buyer shall indemnify, defend and hold Seller harmless from and against any and
all claims, actions, suits, demands, assessments, judgments, losses,
liabilities, damages, costs and expenses (including, without limitation,
reasonable attorney's fees) that may be incurred by Seller arising from: (a) the
failure of Buyer to assume, pay, perform and discharge the Assumed Liabilities
and (b) any breach of any representation, warranty, covenant, obligation or
agreement of Buyer contained herein. The right of Seller to indemnification
under Section 10.1 shall only apply to those claims for indemnification, notice
of which is given to Buyer on or before the expiration of two (2) years from the
Closing Date. Buyer shall not be required to indemnify, defend or hold Seller
harmless from or against any Liabilities or Losses hereunder unless and until
the amount of such Liabilities and Losses incurred by Seller in the aggregate
exceeds $25,000, and Buyer shall then be obligated to indemnify only with
respect to amounts which exceed $25,000. The maximum
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<PAGE>
amount of indemnification by Buyer hereunder shall not exceed $200,000.
10.2. Indemnification by Seller.
-------------------------
(a) General. From and after the Closing Date, Seller shall
-------
defend and hold Buyer, and its stockholders and directors, and each of them,
harmless from and against any and all Liabilities that may be incurred by Buyer,
and any and all Losses suffered, or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to (i) the
failure of Seller to assume, pay, perform and discharge the Retained
Liabilities; (ii) any breach of any representation, warranty, covenant,
obligation or agreement of Seller contained herein, except as otherwise provided
in Section 10.3; (iii) any and all Liabilities, whenever asserted, of the Seller
or relating to the conduct of the Business which have not been specifically
assumed by Buyer and any other Liabilities or Losses, whenever asserted,
resulting from, arising out of or relating to events occurring or facts existing
on or prior to the Closing Date; and (iv) events occurring or facts existing
prior to the Closing Date which Liabilities or Losses are or would be, but for
retentions, deductibles, the non-payment of premiums or other defenses by
carriers relating to alleged acts or omissions of the insureds, covered by
insurance policies of Seller and for all amounts payable under such policies and
any similar prior policies relating to periods ending on or prior to the Closing
Date.
(b) De Minimis Amount. Seller shall not be required to
-----------------
indemnify, defend or hold Buyer harmless from or against any Liability for the
breach of any representation, warranty, covenant obligation or agreement
contained in this Agreement unless and until the amount of such Liabilities
incurred by Buyer in the aggregate exceeds $25,000, and Seller shall then be
obligated to indemnify only with respect to amounts which exceeds $25,000.
(c) Time Limitations. The right of Buyer to indemnification
----------------
under Section 10.2 shall only apply to those claims for indemnification, notice
of which is given to Seller on or before the expiration of the following
periods:
<TABLE>
<CAPTION>
Agreement Section Notice Expiration Date
- ----------------- ----------------------
<S> <C>
Section 7.4 Five years from the Closing
Date
Sections 6.1(a), (d), (h), (o) The applicable statute of
and (q) and 9.3 limitations
All other sections of this Two years from the Closing
Agreement
</TABLE>
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<PAGE>
(d) Maximum Amount. The maximum amount of indemnification by
--------------
Seller for Liabilities shall not exceed, in the aggregate, the Purchase Price
and the amount of the Assumed Liabilities.
10.3. Notice of Claim and Right to Participate In and Defend Third
------------------------------------------------------------
Party Claim.
- -----------
(a) In the event that any indemnified party receives notice of
the assertion of any claim, the commencement of any suit, action or proceeding,
or the imposition of any penalty or assessment by a third party in respect of
which indemnity may be sought hereunder (a "Third Party Claim"), and the
indemnified party intends to seek indemnity hereunder, then the indemnified
party shall promptly provide the indemnifying party with notice of the Third
Party Claim. The failure by an indemnified party to notify an indemnifying party
of a Third Party Claim shall not relieve the indemnifying party of any
indemnification responsibility under this Article X, unless such failure
adversely prejudices the ability of the indemnifying party to defend such Third
Party Claim. The indemnified party shall provide to the indemnifying party as
promptly as practicable all information and documentation reasonably necessary
to support and verify the claim asserted. The indemnifying party shall have the
right to direct, through counsel of its own choosing, the defense or settlement
of the Third Party claim at its own expense. If the indemnifying party elects to
assume the defense of any Third Party Claim, the indemnified party may
participate in such defense, but in such case the expenses of the indemnified
party shall be paid by the indemnified party. If the indemnifying party shall
fail to defend, or if after commencing or undertaking any such defense, fails to
prosecute or withdraws from such defense, the indemnified party shall have the
right to undertake the defense or settlement thereof, at the indemnifying
party's expense. The indemnifying party shall not be liable for any settlement
of a Third Party Claim without its prior written consent, which consent shall
not be unreasonably withheld. Whether or not the indemnifying party chooses to
assume the defense of a Third Party Claim, the parties shall cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, and attend at such conferences, discovery proceedings, hearings,
trials and appeals, as may be reasonably requested in connection therewith. The
indemnifying party shall be subrogated to all rights and remedies of the
indemnified party to the extent of any indemnification provided hereunder.
(b) Any indemnifiable claim hereunder that is not a Third
Party Claim shall be asserted by the indemnified party by promptly delivering
notice thereof to the indemnifying party. If the indemnifying party does not
respond to such notice within 90
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<PAGE>
days after its receipt, it shall have no further right to contest the validity
of such claim.
ARTICLE XI
MISCELLANEOUS
-------------
11.1. Certain Definitions.
-------------------
(a) "Affiliate" shall mean any person, firm or corporation
---------
which directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the person specified.
(b) "Environment" means all air, surface water, groundwater,
-----------
or land, including land surface or subsurface, including all fish, wildlife,
biota and all other natural resources.
(c) "Environmental Claim" means any and all administrative or
-------------------
judicial actions, suits, orders, claims, liens, notices, notices of violations,
investigations, complaints, requests for information, proceedings, or other
communication (written or oral), whether criminal or civil, pursuant to or
relating to any applicable Environmental Law by any person (including but not
limited to any Governmental Authority or regulatory agency, private person and
citizens, group) based upon, alleging, asserting, or claiming any actual or
potential (i) violation of or liability under any Environmental Law, (ii)
violation of any Environmental Permit, or (iii) liability for investigatory
costs, cleanup costs, removal costs, remedial costs, response costs, natural
resource damages, property damage, personal injury, fines, or penalties arising
out of, based on, resulting from, or related to the presence, Release, or
threatened Release into the Environment, of any Hazardous Materials at any
location, including but not limited to any off-site location to which Hazardous
Materials or materials containing Hazardous Materials were sent for handling,
storage, treatment, or disposal.
(d) "Environmental Clean-Up Site" means any location which is
---------------------------
listed or proposed for listing on the National Priorities List, the
Comprehensive Environmental Response, compensation and Liability Information
System, or on any similar state list of sites requiring investigation or
cleanup, or which is the subject of any pending or threatened action, suit,
proceeding, or investigation related to or arising from any alleged violation of
any Environmental Law, or, to the best of Seller's knowledge, at which there has
been a Release, threatened or suspected Release of a Hazardous Material.
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<PAGE>
(e) "Environmental Law" means any and all federal, state,
-----------------
local, provincial and foreign, civil and criminal laws, statutes, ordinances,
orders, codes, rules, regulations, Environmental Permits, policies, guidance
documents, judgments, decrees, injunctions, or agreements with any Governmental
Authority or regulatory agency, relating to the protection of health and the
Environment, worker health and safety, and governing the handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, or Release of Hazardous
Materials, as in effect at the Closing Date, including but not limited to: the
Clean Air Act, 42 U.S.C. (S)7401 et seq.; the Comprehensive Environmental
-- ---
Response, Compensation and Liability Act of 1980, 42 U.S.C. (S)9601 et seq.; the
-- ---
Federal Water Pollution Control Act, 33 U.S.C. (S)1251 et seq.; the Hazardous
-- ---
Material Transportation Act, 49 U.S.C. (S)1801 et seq.; the Federal Insecticide,
-- ---
Fungicide and Rodenticide Act, 7 U.S.C. (S)136 et seq.; the Resource
-- ---
Conservation and Recovery Acts of 1976 ("RCRA")1 42 U.S.C. (S)6901 et seq.; the
-- ---
Toxic Substances Control Act, 15 U.S.C. 2601 et seq.; the Occupational Safety &
-- ---
Health Act of 1970, 29 U.S.C. (S)651 et seq.; the Oil Pollution Act of 1990, 33
-- ---
U.S.C. 2701 et seq.; and the state law analogues thereto, all as in effect at
-- ---
the Closing Date; and any common law doctrine relating to the protection of
health and the Environment, worker health and safety, and governing the
handling, use, generation, treatment, storage, transportation, disposal,
manufacture, distribution, formulation, packaging, labeling, or Release of
Hazardous Materials, as in effect at the Closing Date, including but not limited
to, negligence, nuisance, trespass, personal injury, or property damage related
to or arising out of the presence, Release, or exposure to a Hazardous Material.
(f) "Environmental Permit" means any federal, state, local,
--------------------
provincial, or foreign permits, licenses, approvals, consents or authorizations
required by any Governmental Authority or regulatory agency under or in
connection with any Environmental Law and includes any and all orders, consent
orders or binding agreements issued or entered into by a Governmental Authority
or regulatory agency under any applicable Environmental Law.
(g) "ESSOP" means the Seller's Employee Savings and Stock
-----
Ownership Plan first effective on December 31, 1992.
(h) "GAAP" means generally accepted accounting principles as
----
applied in the United States.
(i) "Governmental Authority" means any foreign, federal,
----------------------
state or local governmental entity or municipality or subdivision thereof or any
authority, department, commission, board, bureau, agency, court or
instrumentality.
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<PAGE>
(j) "Hazardous Material" means petroleum, petroleum
------------------
hydrocarbons, storage tanks, asbestos or asbestos-containing materials,
gasoline, diesel fuel, pesticides, radon, urea formaldehyde, lead or lead-
containing materials, polychlorinated biphenyls, ionizing and nonionizing
radiation including radon and electromagnetic frequency radiation; and any other
chemicals, materials, substances or wastes in any amount of concentration which
are now defined as, or included in the definition of, "hazardous substances,"
----------------------
"hazardous materials," "hazardous wastes," "extremely hazardous wastes,"
- ------------------------------------------------------------------------
"restricted hazardous wastes," "toxic substances," "toxic pollutants,"
- ----------------------------------------------------------------------
"pollutants," "regulated substances," "solid wastes," or "contaminants" or words
- ------------------------------------------------------------------------
of similar import, under any Environmental Law.
(k) "Indebtedness" of any person means all obligations of
------------
such person (A) for borrowed money, (B) evidenced by notes, bonds, debentures,
or similar instruments, (C) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (D) under capital leases and (E) in the nature of guarantees of the
obligations described in clauses (A) through (D) above of any other person.
(l) "Investment Assets" means all debentures, notes and other
-----------------
evidences of Indebtedness, stocks, securities, (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Seller.
(m) "Knowledge," "To the best of the knowledge of" and
---------
similar phrases means actual knowledge of the operating managers or supervisors
of the Business and officers of Seller or Buyer, as the case may be.
(n) "Laws" means all laws, statutes, rules, regulations,
----
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental Authority or regulatory
agency.
(o) "Liabilities" means all Indebtedness, obligations and
-----------
other liabilities of a person (whether absolute, accrued, contingent, known or
unknown, fixed or otherwise, or whether due or become due).
(p) "Loss" means any and all damages, fines, fees, penalties,
----
deficiencies, losses and expenses, including
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<PAGE>
without limitation, fees and expenses of banks and other lenders, interest,
reasonable expenses of investigation, negotiation and documentation, court
costs, reasonable fees and expenses of attorneys, accountants and other experts
or other expenses of litigation or other proceedings or of any claim, default or
assessment (such fees and expenses to include, without limitation, all fees and
expenses, including, without limitation fees and expenses of attorneys, incurred
in connection with (A) the investigation or defense of any third party claim or
(B) asserting or disputing any rights under this Agreement against any party
hereto or otherwise).
(q) "Permitted Liens" means any lien for taxes not yet due or
---------------
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP; and any minor
imperfection of title or a similar lien which individually or in the aggregate
with other such liens does not impair the value or marketability of the property
subject to such lien or interfere with the use of such property in the conduct
of the Business and which do not secure obligations for money borrowed.
(r) "Release" means any spilling, leaking, pumping, pouring,
-------
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing of a Hazardous Material into the Environment.
11.2. Termination. This Agreement may be terminated and the
-----------
transactions contemplated hereby abandoned at any time on or prior to the
Closing Date as follows:
(a) Mutual Consent. Buyer and Seller may mutually consent to
--------------
the termination of this Agreement.
(b) Failure of Conditions. Buyer may terminate this Agreement
---------------------
if Seller shall breach or violate any of the provisions of this Agreement or if
any of the conditions set forth in Section 5.1 shall not have been met, and
Seller may terminate this Agreement if Buyer shall breach or violate any of the
provisions of this Agreement or if any of the conditions set forth in Section
5.2 of this Agreement shall not have been met, in each case by December 31, 1996
unless resulting from delays relating to Section 5.1(d) or 5.2(c).
(c) Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to subsection (a) or (b) of this Section 11.2, this
Agreement shall thereafter become void and have no effect, without any liability
on the part of any party hereto or their respective directors, officers or
employees in respect thereof, except that nothing herein shall relieve any party
from liability for any breach of this Agreement prior to termination.
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<PAGE>
11.3. Amendments. This Agreement may be amended only by a writing
----------
executed by all of the parties hereto.
11.4. Entire Agreement. This Agreement and the Schedules and
----------------
Exhibits hereto and the other agreements expressly provided for herein set forth
the entire understanding of the parties hereto and supersede all prior
contracts, agreements, arrangements, communications, discussions,
representations and warranties, oral or written, between the parties.
11.5. Governing Law. This Agreement shall in all respects be
-------------
governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to any choice of law or conflict of law
provision or rule (whether of the Commonwealth of Pennsylvania or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the Commonwealth of Pennsylvania.
11.6. Notices. Any notice, request or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) when received if personally delivered, (b) within five days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, (c) within 12 hours after being sent by telecopy provided confirmation
of successful transmission has been received, or (d) within one business day of
being sent by established overnight courier, to the parties (and to the persons
to whom copies shall be sent) at their respective addresses set forth below.
To Seller: Tygart Moulding Corporation
111 Monticello Avenue
P.O. Box 7747
Charlottesville, VA 22906
Attention:
-----------------
Telecopy:
------------------
With a copy to: Richard Spies, Esquire
O'Keeffe & Spies
P.O. Box 1419
Lynchburg, VA 24505
Telecopy: (804) 845-4267
To Buyer: Ivy-Tygart Acquisition Corp.
100 Four Falls Corporate Center
Suite 305
West Conshohocken, PA 19428
Attention: President
Telecopy: (610) 828-6980
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<PAGE>
With a copy to: Peter 0. Clauss, Esquire
Clark, Ladner, Fortenbaugh & Young
One Commerce Square
2005 Market Street, 22nd Floor
Philadelphia, PA 19103
Telecopy: (215) 241-1857
Any party by written notice to the other parties may change the address or the
persons to whom notices or copies thereof shall be directed.
11.7. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, and all of which
together will constitute one and the same instrument.
11.8. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of the successors and assigns of each party hereto, but no rights,
obligations or liabilities hereunder shall be assignable by either party hereto,
except to a corporate affiliate (provided the assignor remains liable for its
obligations hereunder) without the prior written consent of the other party
hereto.
11.9. Waivers. No waiver of any provision of this Agreement shall be
-------
effective unless in writing and signed by the party entitled to enforce such
provision. Any waiver by a party of any violation of, breach of or default under
any provision of this Agreement or any other agreements provided for herein, by
the other party hereto, shall not be construed as, or constitute, a continuing
waiver of such provision, or waiver of any other violation of, breach of or
default under any other provision of this Agreement or any other agreements
provided for herein.
11.10. Third Parties. Nothing expressed or implied in this Agreement
-------------
is intended, or shall be construed, to confer upon or give any person or entity
other than Buyer and Seller any rights or remedies under or by reason of this
Agreement.
11.11. Construction. The parties hereto agree that this Agreement is
------------
the product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentum.
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<PAGE>
11.12. Headings. The headings in this Agreement are solely for
--------
convenience of reference and shall not be given any effect in the construction
or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
TYGART-MOULDING CORPORATION,
SELLER
By:
-------------------------
IVY-TYGART ACQUISITION CORP.,
BUYER
By:
-------------------------
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<PAGE>
JOINDER
-------
I, William P. Gadd, II, am not a party to the attached Asset Purchase
Agreement between Tygart Moulding Corporation and Ivy-Tygart Acquisition Corp.
dated November 12, 1996, but hereby certify, for additional comfort to the
Buyer, that I am not personally aware of any adverse environmental matters
relating to the West Virginia properties of the Seller as set forth in more
detail in Section 6.1(q) of the above Agreement.
-----------------------------
William P. Gadd, II
Dated: November 26, 1996
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