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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 Act of 1934
DATE OF REPORT:
May 24, 1995
SL INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 1-4987 21-0682685
(State or other (Commission File (I.R.S. Employer
jurisdiction or Number) Identification
incorporation) No.)
SUITE 306 C
520 FELLOWSHIP ROAD
MT. LAUREL, NEW JERSEY 08054
(Address of principal Executive offices) (Zip Code)
Registrant's telephone number, including area code (609) 727-1500
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ITEM 2. DISPOSITION OF ASSETS
On May 24, 1995, SL Industries, Inc. ("Registrant"), distrubuted all
of the shares of its wholly-owned subsidiary, SL LUBE\systems, Inc. ("SL
LUBE"), a New Jersey corporation, to Vesper Corporation ("Vesper"), a
Pennsylvania corporation, in exchange for four hundred thousand (400,000)
shares of common stock of the Registrant owned by Vesper. SL LUBE is engaged
in the design, assembly and sale of lubrication devices for industrial
equipment. The assets of SL LUBE include without limitation accounts
receivable, tooling, equipment, work-in-process, finished goods, raw materials
and supplies, contracts, goodwill, know-how, and books and records.
The consideration received by the Registrant was arrived at by
arms-length negotiation between the parties, and is intended to qualify as a
tax-free distribution by the Registrant.
James Benenson, a former director of the Registrant until October 12,
1992, beneficially owns all of the capital stock of Arrowhead Holdings, which
in turns owns all or substantially all of the capital stock of Vesper. Except
for the foregoing, there is no prior material relationship between Vesper and
the Registrant, or any of Registrant's affiliates, directors or officers, or
any associate of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable.
(b) Pro Forma Financial Information.
The Pro Forma Financial Information required by Article 11 of
Regulation S-X cannot practicably be provided at the time this Report on Form
8-K is filed. The Pro Forma Financial Information will be filed with the
Securities and Exchange Commission under cover of Form 8-K/A as soon as
practicable, but in no event later than 60 days following the date of filing of
this Report.
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(c) Exhibits.
Exhibit 2.1. Agreement to Exchange Shares dated
May 24, 1995, by and between SL Industries, Inc., and
Vesper Corporation.
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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.
SL INDUSTRIES, INC.
---------------------------------
[Registrant]
Dated: June 6, 1995 By: /s/ OWEN FARREN
---------------------------------
[Signature]
Owen Farren,
President and Chief Executive Officer
-------------------------------------
[Name and Title]
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INDEX TO EXHIBITS
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EXHIBIT PAGE
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<S> <C>
Exhibit 2.1. Agreement to Exchange Shares dated 5
May 24, 1995, by and between SL Industries, Inc.,
and Vesper Corporation.
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EXHIBIT 2.1
AGREEMENT TO EXCHANGE SHARES
THIS IS AN AGREEMENT dated as of May 24, 1995, between VESPER
CORPORATION, a Pennsylvania corporation ("Vesper"), and SL INDUSTRIES, INC., a
New Jersey corporation ("SL").
Background
1. SL's wholly-owned subsidiary, SL Delaware, Inc., a Delaware
corporation ("SL Delaware), owns all of the outstanding shares of capital stock
(the "Shares") of SL LUBE/systems, Inc., a New Jersey corporation ("SL-Lube").
SL-Lube operates a business in Elmwood Park, New Jersey, which is engaged in
the design, assembly, and sale of lubrication devices for industrial equipment
(the "Business"). The Business does not fit into the strategic plan adopted by
SL's Board of Directors in 1994.
2. Vesper is interested in acquiring the Shares, because it
perceives the Business as complementing its existing business. Vesper believes
that the Business would be enhanced if owned by Vesper.
3. Vesper and its affiliates hold a large number of shares of SL,
constituting more than seven percent of the shares issued and outstanding.
4. SL has determined that if it divests itself of the Shares in
accordance with this Agreement, and thereby acquires 400,000 of the shares of
SL which are held by Vesper and its affiliates, the combination of these
transactions will provide SL a greater ability to focus its resources and
attention toward the strategic plan which it has adopted.
Agreements
In consideration of the premises and the respective representations,
warranties, and agreements set forth below, and intending to be legally bound,
SL and Vesper agree as follows:
I. EXCHANGE OF SHARES. Subject to the terms and conditions of this
Agreement, at the Closing (as defined below), SL shall obtain from SL Delaware
and assign and deliver the Shares to Vesper and Vesper shall assign and deliver
to SL FOUR HUNDRED THOUSAND (400,000) shares of common stock of SL (the "SL
Shares") which are now owned by Vesper.
II. CLOSING - ANTICIPATED TIME OF CLOSING. The closing of the
exchange of the Shares and the SL Shares (the "Closing") shall take place at
2:00 p.m. on May 24, 1995, at the offices of Earp, Cohn, Leone & Pendery, A
Professional Corporation,
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located at The Rohrer Building, 222 Haddon Avenue, Westmont, New Jersey. Such
time is of the essence of this Agreement. Upon completion of the Closing, the
transfer of the Shares and the SL-Shares shall be deemed to be effective, for
purposes of financial and tax reporting, immediately upon the close of business
on the date of Closing.
III. REPRESENTATIONS AND WARRANTIES BY SL. SL represents and
warrants to Vesper (all such warranties and representations being as of the
date of this Agreement and as of the date of Closing unless the context clearly
specifies otherwise) as follows:
A. OWNERSHIP OF SHARES. At the time of Closing, SL shall own
the Shares free and clear of any claim, lien, option, charge, or encumbrance of
any nature whatsoever. The Shares have been properly issued to SL Delaware by
SL-Lube and are fully paid and non-assessable. The Shares, at the time of
Closing, shall be properly issued to SL and shall be fully paid and
non-assessable. The Shares constitute all of the issued and outstanding shares
of capital stock of SL-Lube. No options, warrants, or other instruments or
agreements exist which would give any other party any right to acquire the
Shares from SL or SL Delaware or to acquire any other shares of SL-Lube or any
other equity interest in SL-Lube.
B. AUTHORITY. SL has full power and authority to convey the
Shares to Vesper in accordance with this Agreement, so as to vest in Vesper,
upon completion of the Closing, good and marketable title to the Shares, free
and clear of any claim, lien, option, charge, or encumbrance. SL has taken all
requisite action to authorize the execution, delivery, and performance of this
Agreement by SL including, but not limited to, any and all action required
pursuant to the New Jersey Business Corporation Act ("NJBCA") or under the
rules and regulations of the New York Stock Exchange ("NYSE"). This Agreement
has been duly executed and delivered by SL. This Agreement constitutes and,
when executed and delivered, each of the other agreements, documents, and
instruments to be executed and delivered by SL will constitute, valid and
binding obligations of SL, enforceable against it in accordance with their
respective terms.
C. CORPORATE ORGANIZATION, ETC. SL and SL-Lube are
corporations duly organized, validly existing, and in good standing under the
laws of the State of New Jersey. SL-Lube has the corporate power to operate
the Business as and where the Business is situated and is qualified to do
business in all jurisdictions where the failure to so qualify could have a
material adverse effect on SL-Lube and/or the Business.
D. APPROVALS. No approval of any third party or governmental
agency is required for the effective transfer of the Shares from SL to Vesper
in accordance with all applicable laws.
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E. FINANCIAL STATEMENTS. SL-Lube's balance sheet and
statements of income and cash flows as of July 31, 1994, and its balance sheet
and statements of income and cash flows as of April 30, 1995, which have been
provided to Vesper by SL and which have been used by the parties in negotiating
and entering into this Agreement, copies of which are attached hereto as
Exhibit III, E, are accurate and complete in all material respects. Such
financial statements have been prepared in accordance with generally-accepted
accounting principles consistently applied throughout the periods presented.
There has been no material adverse change in the Business or in the financial
condition of SL-Lube since April 30, 1995. Since April 30, 1995, receivables
of the Business have been collected, and inventory levels of the Business have
been maintained, in accordance with the customary and ordinary business
practices of SL-Lube. Prior to the Closing SL and SL-Lube will take
appropriate action to cancel (not satisfy) all receivables and other
obligations payable or otherwise owed by (i) SL-Lube to SL or any of its
affiliates or (ii) by SL to SL-Lube.
F. LIABILITIES, LITIGATION, ETC. Except as set forth in
Exhibit III, F, no litigation, proceeding, claim, or governmental investigation
is pending or, to SL's knowledge, threatened against or relating to SL-Lube, SL
Delaware, the Business, or the transactions contemplated by this Agreement.
Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated by this Agreement will conflict with or result in
a breach of any of the terms or conditions of, or constitute a default under,
or result in the creation of any encumbrance under, any agreement, instrument,
or obligation to which SL, SL Delaware, or SL-Lube is a party or any judgment,
order, license, law (including, but not limited to, Chapter 10A of the NJBCA),
rule, or regulation of any court, self-regulatory body or governmental agency.
G. DISCLOSURE. No representation or warranty made by SL in
this Agreement or as provided hereunder contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not materially misleading. To the best
of SL's knowledge after due inquiry, there are no material adverse facts
relating to SL-Lube or the Business that are not disclosed herein or in the
Public Documents (as defined herein).
H. ASSETS. SL-Lube owns good and marketable title to or
leases in its name all assets (i) used in the Business which are located at
SL-Lube's Elmwood Park operating site or (ii) included in the April 30, 1995
balance sheet referred to in subparagraph E above, and all such assets are in
good operating condition, normal wear and tear excepted.
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I. TAXES.
(1) Except as set forth in Exhibit III, I hereof,
SL-Lube, or the affiliated, combined or unitary group of which SL-Lube is or
was a member, as the case may be (any entity which is or was a member of such
group being collectively SL-Lube's "Tax Affiliates"), has timely filed all
material tax reports and returns required to be filed in respect of the
Business, operations and assets of SL-Lube. All such tax reports and returns
are complete, accurate and in compliance with all relevant laws and regulations
in all material respects, and none has been audited or otherwise examined by
any governmental authority. SL Lube and its Tax Affiliates have paid and
discharged all federal, state, local and foreign taxes, interest, penalties or
other payments that are due and payable with respect to the assets of SL-Lube
and the Business, operations and employees of SL-Lube.
(2) Except as set forth on Exhibit III, I hereof,
neither SL-Lube nor its Tax Affiliates have received notice of any tax
deficiency outstanding, proposed or assessed against SL-Lube (or in respect of
any taxes for which SL-Lube would be liable), nor does SL-Lube or its Tax
Affiliates have any knowledge of any basis for any tax deficiency or
assessment, nor has SL-Lube or its Tax Affiliates executed any waiver of any
statute of limitations on the assessment or collection of any tax. There are
no tax liens upon, pending against or, to the best knowledge of SL-Lube or its
Tax Affiliates, threatened against any of the assets of SL-Lube. SL-Lube (or
its Tax Affiliates on behalf of SL-Lube) (i) has not agreed to or is required
to make any adjustment pursuant to section 481(a) of the Internal Revenue Code
of 1986, as amended (the "Code") or any similar provisions of state, local or
foreign law by reason of a change in accounting method initiated by SL-Lube;
(ii) has no knowledge that the Internal Revenue Service or any taxing authority
has proposed any such adjustment or change in accounting method; or (iii) does
not have any application pending with any taxing authority requesting
permission for any change in accounting method that relates to the Business and
operations of SL-Lube.
J. ERISA; OTHER EMPLOYEE MATTERS.
(1) Exhibit III, J lists each employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ["ERISA"] ("Employee Benefit Plan"), that SL-Lube
maintains or to which SL-Lube contributes;
(2) Except as set forth on Exhibit III, J, each Employee
Benefit Plan complies in form and in operation in all material respects with
the applicable requirements of ERISA, the Code and other applicable laws;
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(3) All required reports and descriptions have been
filed or distributed appropriately with respect to each Employee Benefit Plan;
(4) All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Employee Benefit Plan which is an employee pension benefit
plan (within the meaning under section 3(2) of ERISA) and all contributions for
any period ending on or before the date of Closing which are not yet due have
been paid to each such employee pension benefit plan or accrued in accordance
with past custom and practice;
(5) Except as set forth on Exhibit III, J, each Employee
Benefit Plan which is an employee pension benefit plan meets the requirements
of a "qualified plan" under section 401(a) of the Code and has received a
favorable determination letter from the Internal Revenue Service as to its
qualification; and
(6) The market value of assets under any Employee Benefit
Plan which is an employee pension benefit plan equals or exceeds the present
value of all vested and non-vested liabilities thereunder determined in
accordance with actuarial tables, factors and assumptions.
(7) Other than as referred to in Paragraph VII(D) hereof,
SL-Lube has no outstanding severance obligation to any existing employee which
would be triggered by a termination of employment.
K. LABOR RELATIONS.
(1) No employees of SL-Lube are covered by any
collective bargaining agreement.
(2) To the best of SL's knowledge after due inquiry,
SL-Lube has complied, and is currently in compliance, in all material respects
with applicable laws (including, without limitation, ERISA, as amended), rules
and regulations relating to the employment of labor, including, without
limitation, those relating to wages, hours, unfair labor practices,
discrimination and payment of social security and similar taxes with respect to
its employees.
(3) To the best of SL's knowledge after due inquiry,
SL-Lube has not engaged in and is not currently engaging in, any unfair labor
practice. Except as set forth on Exhibit III.F. hereof, no complaint against
SL-Lube is currently pending or, to the best knowledge of SL, threatened before
the National Labor Relations Board or any state or local labor agency by or on
behalf of any employee of SL-Lube; no representation
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questions, arbitration proceedings, labor strikes, slow-downs or stoppages,
material grievances or other labor troubles are currently pending or, to the
best knowledge of SL, threatened with respect to any of SL-Lube's employees.
L. COMPLIANCE WITH ENVIRONMENTAL LAWS. Neither SL, SL Delaware,
nor SL-Lube has used, treated, stored or disposed of Hazardous Materials (as
defined below) on any property now or previously owned or leased by SL-Lube
(whether owned, leased, subleased or used by SL-Lube, the "Property") in
violation of any Environmental Laws (as defined below), and, to the best of
SL's knowledge, there have been no spills or releases of Hazardous Materials on
or from the Property or any adjoining property, that, in any such case, could
subject SL-Lube to liability. Knowledge of SL Delaware, SL-Lube, or both shall
be deemed to be knowledge of SL. The Property and all operations conducted by
SL-Lube on the Property have been in compliance with all Environmental Laws,
and neither SL, SL Delaware or SL-Lube has received any notice, or is aware, of
any administrative or judicial investigations, proceedings or actions with
respect to violations, alleged or proven, of any Environmental Law in
connection with the occupancy of, or operations conducted, by SL-Lube at the
Property. SL, SL Delaware and SL-Lube (as the case may be) have fully complied
with the January 21, 1988 Administrative Consent Order (the "ACO"), have
remediated the premises concerned fully under applicable law, and Vesper will
not be subject to liability in any way arising out of or relating to the ACO or
the Current ISRA Proceeding commenced in March, 1995, under the New Jersey
Industrial Site Recovery Act, N.J.S.A. Section 13:1K-6 et seq. with respect to
this transaction, pertaining to the property at 35 Market Street, Bergen
County, New Jersey (the "Current ISRA Proceeding") or the facts or
circumstances which gave rise to the ACO or the Current ISRA Proceeding.
As used herein, "Environmental Laws" shall mean any and all statutes,
regulations, permits, orders, and common law or other legal requirements
pertaining to pollution or contamination of any type, including land, air,
water (including ground water) and noise pollution or contamination, respecting
Hazardous Materials or their emission or discharge to the land, air or water
(including ground water) or otherwise concerning human health or the
environment.
As used herein, "Hazardous Materials" is defined cumulatively to
include any and all hazardous or toxic wastes, substances or materials, of any
type as these terms are defined under any and all federal, state and local laws
and regulations.
M. NO TAKING. SL and SL-Lube have not received notice of any
pending, threatened, proposed or contemplated eminent domain or condemnation
proceedings or similar taking, with or without payment of compensation
therefor, or any pending or threatened rezoning affecting any real property
utilized by SL-Lube.
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IV. REPRESENTATIONS AND WARRANTIES BY VESPER. Vesper represents and
warrants to SL (all such warranties and representations being as of the date of
this Agreement and as of the date of Closing unless the context clearly
specifies otherwise) as follows:
A. OWNERSHIP OF SL SHARES. Vesper owns the SL Shares free
and clear of any claim, lien, option, charge, or encumbrance of any nature
whatsoever. Vesper and its affiliates acquired the SL Shares on the dates set
forth in Exhibit IV, A, of this Agreement and, other than for transfers among
affiliates of Vesper, have held the SL Shares continuously since such dates.
Vesper warrants and represents that neither Vesper nor any of its affiliates
is, and at no time during the five-year period preceding the date of this
Agreement has been, the beneficial owner (as defined in Section NJSA Section
14:10A-3(d) of the NJBCA), directly or indirectly, of ten percent (10%) or more
of the voting power of the then outstanding shares of capital stock of SL
Industries, Inc., a New Jersey corporation.
B. AUTHORITY. Vesper and its affiliates have full power and
authority to convey the SL Shares to SL, and Vesper, respectively, in
accordance with this Agreement, so as to vest in SL, upon completion of the
Closing, good and marketable title to the SL Shares, free and clear of any
claim, lien, option, charge, or encumbrance. All requisite action has been
taken to authorize the execution, delivery, and performance of this Agreement
by Vesper. This Agreement has been duly executed and delivered by Vesper.
This Agreement constitutes, and when executed and delivered each of the other
agreements, documents, and instruments to be executed and delivered by Vesper
and its affiliates will constitute, valid and binding obligations of Vesper and
its affiliates, enforceable against each of them a party thereto in accordance
with their respective terms.
C. CORPORATE ORGANIZATION. Vesper is a corporation duly
organized, validly existing, and in good standing under the laws of the
Commonwealth of Pennsylvania.
D. VESPER'S EXPERIENCE AND RESOURCES. Vesper and its
affiliates are engaged in manufacturing and selling industrial products, and
have considerable knowledge and expertise which can be utilized in analyzing
the present condition of the Business, its prospects for the future, and the
risks associated with an investment in the Business. Vesper and its executive
management have acquired companies in the past and are familiar with the risks
involved in business acquisitions. Vesper has resources, both within and
outside its staff of executive and non-executive personnel, to conduct an
appropriate investigation of SL-Lube and the Business. In addition to its
review of the Public Documents (as defined below), and the financial statements
listed in Exhibit III,
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E, Vesper and its authorized representatives have been given the opportunity to
visit SL-Lube's facility and to ask questions of, and receive answers from, the
corporate controller and executive vice president of SL, and the president of
SL-Lube, to the extent that such persons possess such information, and Vesper
and its authorized representatives have availed themselves of the opportunity
to the fullest extent desired and have received answers to such questions.
E. VESPER'S INFORMATION REGARDING SL. Vesper acknowledges
its awareness that SL is a public company, that its shares are traded on the
NYSE and other public markets, that it files regular reports with the
Securities and Exchange Commission ("SEC"), and that it issues occasional press
releases to report events concerning its business, and that it has under
consideration, from time to time, other acquisitions and divestitures, such as
Teal Electronics Corporation. Vesper has reviewed SL's Annual Report to
Shareholders for its fiscal year ended July 31, 1994, its most recent proxy
statement, its Form 10-K filed with the SEC for such fiscal year, its
subsequent Forms 10-Q and other reports filed with the SEC, and its press
releases issued since January 1, 1994 (the "Public Documents").
F. NO RELIANCE BY VESPER. In entering into this Agreement,
Vesper has not relied upon any representation, warranty, covenant, statement,
or disclosure of any nature whatsoever, made by SL, SL-Lube, any employee or
agent of SL or SL-Lube, or anyone else acting or purporting to act on behalf of
SL or SL-Lube, except as is expressly set forth in this Agreement and its
Exhibits, including without limitation paragraph IV (E) above, and in the
financial statements, reports filed with the SEC, press releases, and other
documents which are specifically referred to in this Agreement.
G. INVESTMENT INTENT. With the exception of a disposition
which is intended to qualify as a tax-free transaction to, or a tax-free
combination with, a direct or indirect subsidiary of Vesper, which is also a
member of the affiliated group of corporations (within the meaning of Section
1504(a) of the Internal Revenue Code of 1986, as amended) of which Vesper is a
member, there is no present plan or intention on the part of Vesper to : (1)
sell, exchange, transfer by gift, or otherwise dispose of any of the SL-Lube
stock to be received in the Exchange; or to sell or otherwise dispose of any
of the SL-Lube assets, except for dispositions made in the ordinary course of
its business. Following the Exchange, Vesper presently intends to cause
SL-Lube to continue to undertake to do business in its present industry.
H. DISCLOSURE. No representation or warranty made by Vesper
in this Agreement or as provided hereunder contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements contained herein or therein not materially misleading.
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V. CONDITIONS PRECEDENT TO SL'S OBLIGATIONS. The obligations of SL
at the Closing shall be subject to the satisfaction of the following conditions
precedent at Closing (each of which may be waived by SL):
A. ASSIGNMENT OF SL SHARES. Vesper shall issue irrevocable
instructions to SL's transfer agent in form acceptable to SL instructing the
transfer agent to transfer the SL Shares to SL, together with such other
instruments as may be necessary and appropriate to transfer good title to the
SL Shares to SL.
B. NO ACTION. No action by any third party shall be pending
or threatened which might delay or prevent the Closing.
C. PERFORMANCE BY VESPER. Vesper shall have performed all of
Vesper's obligations hereunder and there shall not have occurred any breach of
any obligation, warranty, or representation of Vesper set forth in this
Agreement. All representations and warranties of Vesper shall be true and
correct as of Closing and SL shall have received a certificate of an authorized
executive officer of Vesper to such effect.
D. OPINION OF VESPER'S COUNSEL. SL shall have received from
Vesper's outside counsel an opinion pertaining to such matters as SL shall
reasonably request.
VI. CONDITIONS PRECEDENT TO VESPER'S OBLIGATIONS. The obligations
of Vesper at the Closing shall be subject to the satisfaction of the following
conditions precedent at Closing (each of which may be waived by Vesper):
A. INSTRUMENTS OF CONVEYANCE AND TRANSFER. Vesper shall
receive from SL one or more certificates representing the Shares, together with
such stock powers, signature guarantees, and other instruments as may be
necessary and appropriate to transfer good title to the Shares to Vesper.
B. NO ACTION. No action by any third party shall be pending
or threatened which might delay or prevent the Closing.
C. PERFORMANCE BY SL. SL shall have performed all of its
obligations hereunder and there shall not have occurred any breach of any
obligation, warranty, or representation of SL set forth in this Agreement. All
representations and warranties of SL shall be true and correct as of Closing,
and Vesper shall have received a certificate of an authorized executive officer
of SL to such effect.
D. ADVERSE CHANGE. Since April 30, 1995, there shall not
have occurred any material adverse change in the condition of SL-Lube, the
Business, or the tangible
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assets used in the operation of the Business, including, but not limited to,
any material decrease in the receivables or inventory, or any material increase
in the payables or inventory, of the Business other than in accordance with the
ordinary course of SL-Lube's business. If any material adverse change,
including, but not limited to, damage, loss, or destruction to any such assets
occurs between the date of this Agreement and the Closing, Vesper shall have
the right to terminate this Agreement by giving written notice to SL. If
Vesper elects not to terminate this Agreement, or if damage, loss, or
destruction occurs which is not material, the parties shall proceed to Closing
pursuant to the terms of this Agreement except that at the Closing, SL shall
pay over or assign to Vesper the proceeds of all fire and casualty insurance
maintained by SL respecting such damage.
E. OPINION OF SL'S COUNSEL. Vesper shall have received from
SL's outside counsel an opinion pertaining to such matters as Vesper shall
reasonably request.
VII. FURTHER AGREEMENTS. The parties further agree as follows:
A. INVESTIGATION. After the execution of this Agreement and
until the Closing occurs, SL shall allow Vesper and its agents, accountants,
and attorneys, promptly upon request but during reasonable business hours, full
access to the books and records of SL-Lube so that Vesper may investigate
SL-Lube and the Business. Vesper shall hold confidential all information which
Vesper may discover or to which it may be given access during such
investigation. If this Agreement should terminate prior to Closing, Vesper
shall continue to comply with the confidentiality agreement set forth in the
preceding sentence; shall return to SL all books, records, and other
information provided to it by SL or SL-Lube in connection with such
investigation; and shall destroy all copies, summaries, analyses, and other
work product (including information saved or stored in computers or electronic
media) which have been compiled or produced on the basis of such information
provided by SL or SL-Lube.
B. CONDUCT OF BUSINESS PRIOR TO CLOSING. Between March 6,
1995 and until Friday, May 19, 1995, with the exception of the actions
described in Paragraphs III(E) above and VII(D) below SL caused SL-Lube to
conduct its business only in the ordinary course and to use its best efforts to
preserve its organization intact, to keep available the services of SL-Lube's
employees, and to preserve the goodwill of SL-Lube's suppliers, customers, and
others having business relations with SL-Lube.
C. TAX MATTERS. The tax treatment of the exchange described
herein shall not be a condition to Closing, and each party shall bear its own
taxes , if any, in respect thereof. SL represents that it and SL-Lube have
filed consolidated federal income tax returns. SL shall prepare and file, at
appropriate times after the Closing, tax returns of SL-Lube for periods ending
on or prior to the Closing. SL shall pay and shall indemnify
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and hold harmless Vesper and its affiliates from and against any and all taxes
(including interest and penalties thereof, if any) that may be imposed on or
assessed against or otherwise claimed to be due from SL, SL-Lube or Vesper with
respect to SL-Lube (i) for all periods up to and including the date of Closing
and (ii) arising out of the inclusion of SL-Lube in any consolidated, combined
or unitary group of which SL-Lube is or was a member on or prior to the date of
Closing. Vesper shall prepare and file, or shall cause SL-Lube to prepare and
file, at appropriate times after Closing, tax returns of SL-Lube for all
periods ending after Closing. Vesper shall pay or cause SL-Lube to pay and
shall indemnify and hold harmless SL and SL Delaware from and against any and
all taxes (including interest and penalties thereon, if any) (a) that may be
imposed on or assessed against either of them in connection with the Business
or operations or assets of SL-Lube with respect to periods ending after the
date of Closing (except for periods beginning before the date of Closing and
ending after the date of Closing to the extent such taxes are attributable to
SL-Lube, SL or SL Delaware pursuant to clause (i) of this Paragraph C) and (b)
arising from any taxable income of SL-Lube after the date of Closing by reason
of any election under section 338 of the Code, or under any similar tax
provision which exists or which may come to exist under any federal or state
tax law.
D. EMPLOYEE SEVERANCE. Unless Vesper shall request
otherwise, effective just prior to Closing on the Closing Date, SL shall cause
SL-Lube to terminate the employment of Dorothy C. Stock, Peter D. Gans and John
DeBlock. All employee severance, bonuses and vacation pay provided for in the
latest financial statements, as well as any additional amounts accrued between
the date thereof and Closing, of SL-Lube for those three (3) employees shall be
paid by SL. Unless otherwise directed by Vesper, SL shall cause all officers
of SL-Lube to resign effective immediately upon Closing.
E. FURTHER ASSURANCES. Each party to this Agreement shall,
upon request of any other party at any time after the Closing and without
further consideration, execute and deliver such other documents and instruments
and take such other action as may reasonably be requested to carry out more
effectively the purpose and intent of this Agreement.
F. CHANGE OF NAME. At the Closing, Vesper shall execute such
documents as SL shall request to change the name of SL-Lube so that it does not
contain the term "SL" or any other name or combination of letters which implies
an affiliation with SL. As quickly as will be reasonably possible after the
Closing, Vesper shall cause SL-Lube to discontinue the use of product
literature, stationery, and similar information containing the term "SL."
G. INSURANCE. After the Closing, Vesper shall cause SL-Lube
to maintain product liability insurance policies covering the periods
subsequent to Closing with
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<PAGE> 12
primary limits which are at least as great as those reflected in insurance
policies presently covering Vesper, and shall name SL as an additional insured
on all such policies, with respect to products sold after Closing, for a period
of ten (10) years following the Closing. Vesper shall provide proof of such
insurance to SL annually. All such insurance policies shall provide that
notice of cancellation shall be given to SL at least thirty (30) days prior to
the cancellation of any such policy. After the Closing, SL shall maintain
product liability insurance policies covering the periods subsequent to Closing
with primary limits which are at least as great as those reflected in insurance
policies presently covering SL-Lube, and shall name Vesper as an additional
insured on all such policies, covering SL's obligations under Section
VIII(B)(3), below, for a period of five (5) years following the Closing. SL
shall provide proof of such insurance to Vesper annually. All such insurance
policies shall provide that notice of cancellation shall be given to Vesper at
least thirty (30) days prior to the cancellation of any such policy.
H. NON-COMPETE. SL shall not, for a period of five (5) years
from the date of Closing, use the name SL-Lube commercially or directly or
indirectly compete with the Business anywhere in the world.
I. REPURCHASE OF RECEIVABLES. SL shall purchase at book
value from SL-Lube any receivable of SL-Lube included in the April 30, 1995
balance sheet or on the books of SL-Lube at Closing (in excess of reserves for
uncollectibility as reflected on the April 30, 1995 balance sheet, with respect
to receivables included in the balance sheet, and calculated in accordance with
past practices of SL-Lube with respect to all other receivables listed on the
books at Closing) which remains unpaid six (6) months following the date of
Closing, provided that (1) all payments received following Closing are applied
first to the oldest existing receivable (unless payment of a pre-Closing
receivable is withheld as a result of a bona fide dispute arising out of events
occurring prior to Closing); (2) SL-Lube continues to collect all receivables
in the ordinary course of the Business following Closing; and (3) the failure
to pay any such receivable does not arise out of a dispute which arises after
the date of Closing related to any act or omission occurring after the date of
Closing.
VIII. INDEMNIFICATION. A. Vesper shall indemnify and defend SL and hold
it harmless from and against any liability, obligation, loss, cost, damage, or
expense (including reasonable attorneys' fees) (each hereinafter referred to as
a "Loss" and collectively as "Losses") arising from or relating to (1) any
misrepresentation or breach of covenant, warranty, or agreement made by Vesper
herein or in any document delivered hereunder for a period of eighteen (18)
months following Closing; or (2) post-Closing operations or activities of
SL-Lube or the Business or the Property, whether or not arising as a result of
the actions of Vesper or SL-Lube, including but not limited to
- 12 -
<PAGE> 13
a relocation of the Business, but only to the extent that any particular Loss
exceeds One Thousand Dollars ($1,000.00).
B. SL shall indemnify and defend Vesper and hold it harmless
from and against any Loss, arising from or relating to:
(1) any misrepresentation or breach of covenant, warranty, or
agreement made by SL herein or in any document delivered hereunder for
a period of eighteen (18) months following Closing; but only to the
extent that any particular Loss exceeds One Thousand Dollars
($1,000.00); provided, however, that any Loss resulting from a
misrepresentation or breach of any representation, warranty, covenant
or agreement contained in Sections III (I), III (L), or VII(C) hereof
shall not be subject to such eighteen (18) month limitation; or
(2) operations or activities of SL or SL-Lube or the Business or
the Property at any time prior to Closing, whether or not arising as
a result of the actions of SL or SL-Lube, including without limitation
any Loss relating to Environmental Matters (as defined below) or tax
matters (except for any liability provided for in the April 30, 1995
balance sheet of SL- Lube attached hereto or any liability incurred in
the ordinary course of operation of the Business between such date and
Closing (other than employee claims for injury relating to events
prior to Closing to the extent not covered by any insurance)), whether
or not such liability or obligation is asserted prior to Closing, for
a period of eighteen (18) months following Closing, but only to the
extent that any particular Loss exceeds One Thousand Dollars
($1,000.00), provided, however, that any such Loss relating to
Environmental Matters or tax matters shall not be subject to such
eighteen (18) month limitation; or
(3) any product liability claims relating to products sold by
SL-Lube prior to Closing, for a period of five (5) years following
Closing, but only to the extent that any particular Loss exceeds One
Thousand Dollars ($1,000.00).
As used in this Section VIII(B), a Loss relating to Environmental
Matters shall be defined to include, without limitation, any liability,
obligation, loss, cost, damage, or expense (including reasonable attorneys',
consultant and engineering fees) assessed against, directed to be incurred by
or otherwise incurred by Vesper related to (i) investigation, study or
remediation or other response to (a) any violation of or non-compliance with
any Environmental Law, or (b) to settle any claim against it made under any
Environmental Law; and (ii) any claim or allegation, by whomever made,
including by employees or former employees of SL, SL-Lube and SL Delaware,
based upon, relating to or arising out of the generation, transportation,
treatment, storage, disposal,
- 13 -
<PAGE> 14
purchasing, handling, discharge, release, use, presence of or exposure to any
Hazardous Materials, including, without limitation, claims of personal injury,
property damage, workers compensation, or non-compliance with any law,
regulation, permit, order, common law or other legal requirement or otherwise.
C. Except as otherwise set forth above or in Paragraph VIII(E),
below, any provision herein to the contrary notwithstanding, an indemnifying
party shall only be obligated to indemnify the indemnified party hereunder for
Losses in excess of Ten Thousand Dollars ($10,000.00).
D. No Loss shall be indemnifiable hereunder unless notice, as
hereinafter provided, is made within the indemnification period expressly set
forth in Paragraph VIII(A) or (B), as applicable. Within no more than ten (10)
business days after an indemnified party (the "indemnified party") receives
notice with respect to, or learns of, a Loss which the indemnified party
believes is covered by this Paragraph VIII, the indemnified party shall notify
the indemnifying party thereof; but the omission so to notify the indemnifying
party will not relieve the indemnifying party from any liability which it may
have to the indemnified party otherwise than as to the particular Loss as to
which indemnification is then being sought. In case any action is brought
against the indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, reasonably assume the defense thereof,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the actual active assumption of
such defense, the indemnifying party will not be liable to such indemnified
party under this Paragraph VIII for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
other than reasonable costs of investigation, unless the indemnifying party
shall not pursue the action to its final conclusion. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party. The indemnifying party shall have the right to settle
any action against an indemnified party for which the indemnifying party is
liable.
E. Notwithstanding anything herein to the contrary, SL shall
indemnify and hold Vesper harmless from and against any loss, cost, damage, or
expense (including reasonable attorneys' fees) arising from or relating to the
matter disclosed in Exhibit III, F.
IX. MISCELLANEOUS. A. SURVIVAL. Notwithstanding any presumption
to the contrary, all representations, covenants, warranties and agreements
contained in this
- 14 -
<PAGE> 15
Agreement shall survive the Closing, regardless of what investigation, if any,
has been made by the party asserting a breach of any such representation,
covenant, warranty or agreement, for the periods specified in Paragraph VIII,
hereof.
B. LAW; BENEFIT. The provisions of this Agreement shall be
construed in accordance with the laws of the State of New Jersey. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors, and
assigns.
C. ENTIRE AGREEMENT. This Agreement sets forth all of the
promises, agreements, conditions, and understandings between the parties
relative to the exchange of shares contemplated by this Agreement.
D. CAPTIONS. The captions contained in this Agreement are
intended to be used by the parties only for convenience. Such captions shall
not be construed to affect the interpretation or meaning of this Agreement in
any way.
E. ASSIGNMENT. This Agreement may not be assigned by any
party without the consent of the other.
F. BROKERS AND FINDERS. Each party to this Agreement
represents and warrants to the other that no broker or finder has acted for it
in connection with this Agreement or the transactions contemplated hereby and
that no broker or finder is entitled to any brokerage or finder's fee or other
commission in respect thereof based in any way on agreements, arrangements, or
understandings made by it.
G. NOTICES. All notices or other communications to be given
under this Agreement shall be in writing and shall be deemed given when
personally delivered, or THREE (3) business days after mailing with adequate
postage by certified mail, return receipt requested, to the following
addresses:
If to Vesper: If to SL:
Mr. Clifford J. Demarest Mr. Ted D. Taubeneck
Vesper Corporation SL Industries, Inc.
11 Bala Avenue 520 Fellowship Road, Suite 306
Bala Cynwyd, Pennsylvania 19004 Mt. Laurel, New Jersey 08054
- 15 -
<PAGE> 16
<TABLE>
<S> <C>
With a copy to: With a copy to:
Brian J. Sisko, Esquire Susan E. Pendery, Esquire
Klehr, Harrison, Harvey, Earp, Cohn, Leone & Pendery
Branzburg & Ellers A Professional Corporation
1401 Walnut Street 222 Haddon Avenue
Philadelphia, PA 19102 Westmont, New Jersey 08108
</TABLE>
or to such other address as the party to be notified shall have specified to
the other parties by a notice given in accordance with the provisions of this
paragraph.
H. EXPENSES. Each party to this Agreement shall pay its own
costs and expenses in connection with the transactions contemplated by this
Agreement, including (without limiting the generality of the foregoing) all
legal and accounting fees and expenses.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
SL INDUSTRIES, INC. VESPER CORPORATION
By: /s/ TED D. TAUBENECK By: /s/ CLIFFORD J. DEMAREST
---------------------------- -------------------------------
TED D. TAUBENECK, CLIFFORD J. DEMAREST,
Executive Vice President President, Industrial Products
Attest: /s/ JACQUELINE T. FARINO Attest: /s/ DOROTHY H. COLLINS
------------------------- ---------------------------
JACQUELINE T. FARINO DOROTHY H. COLLINS,
Assistant Treasurer Assistant Secretary
- 16 -
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Item Exhibited
------- --------------
<S> <C>
III, E. Financial Statements
III, F. Litigation
III, I. Taxes
III, J. ERISA Plans
IV, A. Dates of Acquisition of SL Shares Owned by Vesper
</TABLE>
- 17 -
<PAGE> 18
EXHIBIT III, E
Financial Statements
<PAGE> 19
EXHIBIT III, E
SL LUBE/systems, INC.
SL INDUSTRIES, INC.
Month Of April 1995
<TABLE>
<CAPTION>
MONTH OF PERIOD ENDING
APRIL 1995 4-30-95
INCOME STATEMENT
<S> <C> <C> <C> <C>
Sales:
Domestic - Gross $111,031 80.69 $955,485 72.50
International - Gross 28,235 20.52 378,730 28.74
Intercompany - Gross 0 0
Total 139,266 101.20 1,334,215 101.24
Returns 301 0.22 5,721 0.43
Allowances 1,357 0.99 10,600 0.80
Total Net Sales 137,608 100.00 1,317,894 100.00
Cost of Sales:
Standard Cost of Goods Sold 46,774 33.99 457,369 34.70
Manufacturing Variances (1,463) 1.06 (8,475) 0.64
Other Adjustments (319) 0.23 (12,723) 0.97
Total Cost of Goods Sold 44,992 32.70 436,171 33.10
Gross Margin 92,616 67.30 881,723 66.90
Operating Expenses:
Engineering 0 0.00 0 0.00
Research & Development 0 0.00 4,062 0.31
Administrative & General 43,923 31.92 331,405 25.15
Selling 23,548 17.11 234,378 17.78
Delivery 749 0.54 6,233 0.47
Total Operating Expenses 68,220 49.58 576,078 43.71
Operating Profit 24,396 17.73 305,645 23.19
Other Income (Expense), Net 0 0.00 8,664 0.66
Pre-Tax Profit 24,396 17.73 314,309 23.85
Provision for Income Tax 9,838 7.15 126,307 9.58
Income before Corp Allocation 14,558 10.58 188,002 14.27
Corporate Allocation, Net (4,159) 3.02 (7,109) 0.54
Net Income (Loss) $10,399 7.56 $180,893 13.73
</TABLE>
<PAGE> 20
EXHIBIT III, E
SL LUBE/systems, INC.
SL INDUSTRIES, INC.
MONTH OF APRIL 1995
<TABLE>
<CAPTION>
PERIOD ENDING
BALANCE SHEET 04-30-95
<S> <C>
ASSETS
Cash $450
(Drafts Payable) (13,655)
Marketable Securities 0
Total Cash (13,205)
Accounts Receivable 205,614
(Allowance) (54)
Intercompany Receivables 0
Net Receivables 205,560
Recoverable Income Taxes 0
Inventories 159,164
Prepaid Expenses 3,772
Deferred Income Taxes 0
Current Assets 355,291
Gross Fixed Assets 375,419
(Acc. Depreciation) (267,557)
Net Fixed Assets 107,862
Investment in Subs. 0
Long-Term Notes Rec. 0
Deferred Income Taxes 0
Other Assets & Def. Charges 0
Intangible Assets, Net 0
Total Assets $463,153
LIABILITIES
Short-term Bank Debt $0
Current Portion L/T Debt 0
Accounts Payable 37,253
Dividends Payable 0
Intercompany Payables 3,540
Accrued Liabilities 122,647
Accrued Income Taxes (32,847)
Current Liabilities 130,593
Long-Term Debt 0
Long-Term Liabilities 0
Deferred Income Taxes (25,281)
Deferred Compensation 0
Total Liabilities 105,312
NET WORTH
Inter-co Cash (Adv) Pay (1,586,311)
Corporate Alloc Payable 285,496
Common Stock 100
Capital in Excess 483,834
(Treasury Stock) 0
Retained Earnings-Beg. 993,829
Profit or (Loss) 180,893
(Dividends Declared) 0
Retained Earnings - End. 1,174,722
Total Net Worth 357,841
Total Liab and N.W. $463,153
</TABLE>
<PAGE> 21
EXHIBIT III, E
SL LUBE/systems, INC.
MONTH OF APRIL 1995
STATEMENT OF CASH FLOWS
(000)
<TABLE>
<CAPTION>
CURR. YTD
OPERATING ACTIVITIES: MONTH ACT
<S> <C> <C>
NET INCOME (LOSS) 10 181
ADJUSTMENTS TO RECONCILE NET
INCOME(LOSS) TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION 2 16
AMORITIZATION 0 9
PROV FOR LOSSES ON A/R 0 (9)
CHANGES IN OPERATING ASSETS
AND LIABILITIES INCR(DECR):
CASH (6) (2)
CORPORATE ALLOCATION 7 68
ACCOUNTS RECEIVABLE 1 (47)
INVENTORIES (3) (4)
PREPAID EXPENSES (1) (2)
ACCOUNTS PAYABLE (12) 19
OTHER ACCRUED LIABILITIES 6 22
ACCRUED INCOME TAXES (20) (27)
INCR(DECR) IN DEFFERRED INC TAXES 0 (3)
LOSS(GAIN) ON SALES OF EQUIPMENT 0 0
NET CASH PROVIDED(USED) BY OPERATION (16) 221
INVESTING ACTIVITIES:
PROCEEDS FROM SALE OF EQUIPMENT -3 -40
PURC OF PROP PLANT & EQUIPMENT 0 0
NET CASH PROV(USED) BY INVEST ACT (3) (40)
FINANCING ACTIVITIES:
PAYMENTS ON SHORT & LONG TERM DEBT 0 0
NET CASH PROVIDED(USED) BY FINANCING
ACTIVITIES 0 0
NET INCREASE(DECREASE) IN CASH ADVANCES (19) 181
INTERCOMPANY RECV-BEGIN OF PERIOD 1,605 1,405
INTERCOMPANY RECV-END OF PERIOD 1,586 1,586
</TABLE>
<PAGE> 22
List of Exhibits
Omitted From Agreement to Exchange Shares
Upon request, the Registrant shall furnish supplementally a copy of
any omitted Exhibit to the Commission.
<TABLE>
<S> <C>
Exhibit III, F Description of Exceptions to Litigation Representation
--------------
Exhibit III, I Description of Exceptions to Tax Representation
--------------
Exhibit III, J Description of Exceptions to ERISA Plan Representation
--------------
Exhibit IV, A Dates of Acquisition of Shares of Registrant Owned by Vesper Corporation
-------------
</TABLE>
