<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission file number 0-21964
SHILOH INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0347683
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 350, 1013 Centre Road, Wilmington, Delaware 19805
-------------------------------------------------------
(Address of principal executive offices - zip code)
(302) 998-0592
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS:
- -------------------------------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Number of shares of Common Stock outstanding as of September 13, 1996 was
13,011,663 shares.
1
<PAGE> 2
SHILOH INDUSTRIES, INC.
-----------------------
INDEX
-----
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet 3
Consolidated Statement of Income
4
Consolidated Statement of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
--------------------------------
EXHIBIT 2.1* Stock Purchase Agreement for Shafer Valve, **
dated May 22, 1996, by and between the Company
and Bettis Corporation
EXHIBIT 2.2* Asset Purchase Agreement, dated September 6,
1996, among GDM Acquisition, Inc., Greenfield
Die & Manufacturing Corp. and 3-D Engineering
Inc. 16
EXHIBIT 27* Financial Data Schedule
*Numbered in accordance with Item 601 of Regulation S-K.
**Incorporated by reference from the Company's Current Report on Form 8-K filed
July 24, 1996.
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
SHILOH INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
-------------- --------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 955,638 $ 2,391,645
Accounts receivable 30,076,267 31,908,590
Inventory 16,597,768 21,047,110
Deferred income taxes 2,447,195 2,860,311
Prepaid expenses 2,481,149 2,469,767
-------------- --------------
Total current assets 52,558,017 60,677,423
-------------- --------------
Property, plant and equipment, net 110,682,111 97,952,032
Goodwill 620,509 11,295,553
Other long-term assets 3,249,106 3,338,583
-------------- --------------
Total assets 167,109,743 173,263,591
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts payable 9,109,370 8,559,699
Current portion of long-term debt --- 2,350,000
Accrued income taxes 2,313,848 2,927,251
Other accrued expenses 10,294,485 10,435,319
-------------- --------------
Total current liabilities 21,717,703 24,272,269
-------------- --------------
Long-term debt 17,780,786 20,956,042
Deferred income taxes 7,284,017 9,494,277
Long-term pension liability --- 61,827
-------------- --------------
Total liabilities 46,782,506 54,784,415
-------------- --------------
Stockholders' equity
Common stock 130,116 130,116
Paid-in capital 38,375,152 38,375,152
Retained earnings 81,821,969 79,973,908
-------------- --------------
Total stockholders' equity 120,327,237 118,479,176
-------------- --------------
Commitments and contingent liabilities --- ---
-------------- --------------
Total liabilities and stockholders' equity $ 167,109,743 $ 173,263,591
-------------- --------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three months ended July 31, Nine months ended July 31,
------------------------------- ------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 53,577,550 $ 47,888,004 $163,086,751 $156,340,169
Cost of sales 42,768,033 39,196,300 130,851,302 128,684,068
------------ ------------ ------------ ------------
Gross Profit 10,809,517 8,691,704 32,235,449 27,656,101
Selling, general and administrative expenses 4,271,693 3,890,965 11,958,781 11,185,302
------------ ------------ ------------ ------------
Operating income 6,537,824 4,800,739 20,276,668 16,470,799
Interest income (expense) 1,558 (36,104 (110,558) (315,357)
Other income, net 51,187 12,991 61,555 38,647
Income from continuing operations before
income taxes 6,590,569 4,777,626 20,227,665 16,194,089
Provision for income taxes 2,537,369 1,914,566 7,803,833 6,329,467
------------ ------------ ------------ ------------
Income from continuing operations 4,053,200 2,863,060 12,423,832 9,864,622
Income (loss) from discontinued operations,
net of income taxes --- 165,006 (379,311) (470,718)
Loss on sale of discontinued operations, net
of tax --- --- (10,197,972) ---
------------ ------------ ------------ ------------
Net income (loss) $ 4,053,200 $ 3,028,066 $ 1,846,549 $ 9,393,904
------------ ------------ ------------ ------------
Earnings per share:
Income per share from continuing operations $.31 $.22 $.95 $.76
Earnings(loss) per share from discontinued --- .01 (.03) (.04)
operations
Loss per share on sale of discontinued
operations --- --- (.78) ---
------------ ------------ ------------ ------------
Net income (loss) per share $.31 $.23 $.14 $.72
------------ ------------ ------------ ------------
Weighted average number of common shares: 13,011,663 13,010,181 13,011,663 12,999,754
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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SHILOH INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended July 31,
---------------------------------
1996 1995
---------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $1,846,549 $ 9,393,904
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,381,566 4,777,594
Loss on sale of discontinued operations --- ---
Deferred income taxes --- 733,292
Loss (gain) on sale of assets 10,197,972 15,004
Changes in operating assets and liabilities:
Accounts receivable (65,864) 4,603,624
Inventories (468,573) (4,841,221)
Prepaids and other assets (207,469) 3,001,146
Payables and accruals 3,554,728 2,469,262
Accrued income taxes (613,404) (1,643,308)
Discontinued operations - noncash charges and
working capital changes (1,746,245) 714,003
---------- -----------
Net cash provided by operating activities 17,879,260 19,223,300
---------- -----------
Cash Flows From Investing Activities:
Capital expenditures (26,990,011) (20,501,938)
Proceeds from sale of assets 13,200,000 10,000
---------- -----------
Net cash used in investing activities (13,790,011) (20,491,938)
---------- -----------
Cash Flows From Financing Activities:
Proceeds from short-term borrowings 11,000,000 8,550,000
Repayments of short-term borrowings (11,000,000) (7,750,000)
Proceeds from long-term borrowings 16,449,744 4,529,388
Repayments of long-term borrowings (21,975,000) (4,155,336)
Issuance of common stock --- 194,698
---------- -----------
Net cash provided by (used for) financing activities (5,525,256) 1,368,750
---------- -----------
Net (increase) decrease in cash and cash equivalents (1,436,007) 100,112
Cash and cash equivalents at beginning of period 2,391,645 946,827
---------- -----------
Cash and cash equivalents at end of period $955,638 $ 1,046,939
---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
SHILOH INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - Basis of Presentation and Business
- -------------------------------------------
The condensed consolidated financial statements have been prepared by
Shiloh Industries, Inc. (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. The information
furnished in the condensed consolidated financial statements includes normal
recurring adjustments and reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of such financial statements.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. Although
the Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these condensed consolidated
financial statements be read in conjunction with the audited financial
statements and the notes thereto included in the Company's 1995 Annual Report to
Shareholders.
Revenues and operating results for the nine months ended July 31, 1996
are not necessarily indicative of the results to be expected for the full year.
The Consolidated Statement of Income and Consolidated Statement of Cash
Flows for the period ending July 31, 1995 have been reclassified to correspond
to current presentation for discontinued operations (see Note 2).
NOTE 2 - Discontinued Operations
- --------------------------------
In May 1996, the Company entered into an agreement to sell the stock
of its Shafer Valve Company subsidiary, a segment of the Company's business, to
Bettis Corporation for $13.2 million. This operation has been accounted for as a
discontinued operation effective April 30, 1996, the measurement date. Results
of operations for 1995 have been reclassified for amounts associated with the
discontinued operation.
The sale of Shafer Valve was completed July 9, 1996. The net proceeds
from the sale were used primarily to reduce debt.
Results of the discontinued operation for the third quarter of fiscal
years 1996 and 1995, and for the first nine months of fiscal years 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
Three months ended July 31, Nine Months ended July 31,
--------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Sales $ 3,202,830 $ 3,745,014 $ 10,930,698 $ 11,882,231
Loss from operations, net of tax --- 165,006 (379,311) (470,718)
Loss on sale, net of tax --- (10,197,972) ---
----------- ----------- -------------- ------------
Total loss on discontinued operations $ --- $ 165,006 ($ 10,577,283) ($ 470,718)
----------- ----------- -------------- ------------
</TABLE>
The estimated loss on disposal of the discontinued operation is $10.2
million, net of tax, which includes a provision of $1 million for anticipated
operating losses and other disposal costs incurred until disposal.
6
<PAGE> 7
NOTE 3 - Inventories:
- ---------------------
Inventories consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
------------- -------------
<S> <C> <C>
Raw materials $ 11,442,968 $ 14,521,604
Work-in-process 2,085,874 3,400,070
Finished goods 4,968,631 4,760,141
------------- -------------
Total at average cost 18,497,473 22,681,815
LIFO reserve (1,899,705) (1,634,705)
------------- -------------
Total $ 16,597,768 $ 21,047,110
------------- -------------
</TABLE>
NOTE 4 - Property, Plant and Equipment:
- ----------------------------------------
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
-------------- --------------
<S> <C> <C>
Land $ 2,524,951 $ 3,199,675
Buildings and improvements 43,089,466 40,172,317
Machinery and equipment 85,897,996 77,314,621
Furniture and fixtures 5,227,790 5,836,662
Construction in progress 27,841,129 24,048,847
-------------- --------------
Total, at cost 164,581,332 150,572,122
Less: Accumulated depreciation (53,899,221) (52,620,090)
-------------- --------------
Net property, plant and equipment $ 110,682,111 $ 97,952,032
-------------- --------------
</TABLE>
7
<PAGE> 8
NOTE 5 - Financing Arrangements
- -------------------------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1996 1995
------------- -------------
<S> <C> <C>
Revolving credit loan extending to February 28, 2000
As amended -interest at 6.043%, at July 31, 1996 $ --- $ 13,500,000
Revolving credit loan extending to February 28, 1998-
interest at 6.043%, at July 31, 1996 12,500,000 ---
Term loan - due in twenty quarterly installments of
$300,000 plus interest which is fixed at 8.78% --- 600,000
Term loan - due in quarterly installments of
$437,500 plus interest which is fixed 7.10% --- 7,875,000
Variable rate industrial development bond, secured by
letter of credit, weighted average interest rate at 4.2%,
payable on February 1, 2010 5,280,786 1,331,042
------------- -------------
$ 17,780,786 $ 23,306,042
Less: current portion --- (2,350,000)
------------- -------------
Total $ 17,780,786 $ 20,956,042
------------- -------------
</TABLE>
Prior to April 16, 1996, the Company had a $23 million revolving credit
facility with Society National Bank (now known as KeyBank National Association)
("KeyBank"). In conjunction with the negotiation of the new credit facility
described below, this line was terminated. On April 16, 1996, the Company
signed an agreement with KeyBank for a revolving credit facility ("Shiloh
Facility") not to exceed $30 million. The term of the Shiloh Facility extends to
February 28, 2000 with an option for successive one year term extensions
available at the Company's request and KeyBank's approval, upon proper written
notification. The Company has the option to select the applicable interest rate
at KeyBank's prime rate or the LIBOR rate plus 1/2% fixed in increments of 30,
60 or 90 days. The terms of the agreement require an annual commitment fee
equal to 1/4% on the average unused amount of the facility.
On April 16, 1996, the Company's joint venture with Rouge Steel, Shiloh of
Michigan, L.L.C. ("SOM"), signed an agreement with KeyBank for a revolving
credit facility ("SOM Facility") not to exceed $23 million. The term of the
SOM Facility extends to February 28, 1998 with an option for successive one
year term extensions available at SOM's request and KeyBank's approval,
upon proper written notification. SOM has the option to select the
applicable interest rate at KeyBank's prime rate or the LIBOR rate plus 1/2%
fixed in increments of 30, 60 or 90 days. The terms of the agreement require an
annual commitment fee equal to 1/4% on the average unused amount of the
facility. The Company is an 80% guarantor of the SOM facility.
Certain of the debt agreements described above contain various restrictive
covenants which, among others, require the Company's various operating
subsidiaries to maintain minimum net worth levels and financial ratios. The
agreements also place certain restrictions on additional indebtedness and
capital expenditures.
Amounts available under the Company's revolving credit facilities, including
the SOM facililty, aggregated $43.5 million at July 31, 1996.
8
<PAGE> 9
NOTE 6 - Other Information:
- ---------------------------
During the nine months ended July 31, 1996 and 1995, cash payments for interest
amounted to $1,046,135 and $967,034, respectively, while cash payments for
income taxes amounted to $8,249,855 and $7,188,150, respectively.
In 1995, the Company issued 22,813 shares as part of its required employer
contribution to the various Company administered defined contribution plans.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
- -------
In 1995, the Company prepared a long-term business plan which included a
strategic decision to concentrate on its core steel processing segment. As a
result, the Company sought inquiries from prospective bidders for the sale of
its subsidiary, Shafer Valve Company. In May 1996, the Company entered into an
agreement to sell the stock of Shafer Valve Company to Bettis Corporation. The
sale was completed on July 9, 1996. Effective April 30, 1996, the Company
accounted for Shafer Valve as a discontinued operation and thus no longer
reports results for the valve actuator segment.
The Company's steel processing segment typically experiences decreased revenue
and operating income during the first fiscal quarter of each year, usually
resulting from generally slower overall automobile production during the winter
months. The revenues and operating income in the third fiscal quarter can also
be affected by the typically lower automobile production activities in July due
to manufacturer's changeover in production lines.
The Company provides a full range of intermediate steel processing services
through two product lines: blanking and stamping and other steel processing
services, which includes pickling hot rolled steel and slitting, edge trimming,
roller leveling and cutting to length hot and cold rolled steel. In analyzing
the financial aspects of the Company's steel processing operations, a number of
factors must be considered. First, plant utilization levels are very important
to profitability because of the capital intensive nature of these operations.
Because the Company performs a number of different processing operations,
however, it is not meaningful to analyze simply the total tons of steel
processed. For example, blanking and stamping involve more operational
processes, from the design and manufacture of tools and dies to the production
and packaging of the final product, than the Company's other steel processing
services and therefore generally have higher margins. Second, a significant
portion of the Company's steel processing products and services is provided to
the customers on a toll processing basis. Under these arrangements, the Company
charges a specified toll processing fee for the processing operations performed
without acquiring ownership of the steel and being burdened with the attendant
costs of ownership and risk of loss. The Company estimates that during the past
three years approximately 86% of total tons processed was done on a toll
processing basis. Revenues from operations involving directly owned steel
include a component of raw material cost whereas toll processing revenues do
not. As a result, the proportion of toll processing revenues to total steel
processing revenues decreases as total revenues increase, provided the mix
between toll processing and directly owned steel processing remains relatively
constant. By product line, the Company's blanking and stamping operations use
more directly owned steel than do its other steel processing operations. Third,
because the cost of sales for toll processing revenue does not include raw
material costs, the gross profit margin for such revenue is significantly
higher. In addition, changes in the price of steel can impact the Company's
results of operations because raw material costs are by far the largest
component of cost of sales in processing directly owned steel.
The Company operates on an October 31 fiscal year end and, unless the context
requires otherwise, all references to years in this Management's Discussion and
Analysis of Financial Condition and Results of Operations are to the fiscal year
ending October 31 of the year referenced.
10
<PAGE> 11
Results of Operations
- ---------------------
THREE MONTHS ENDED JULY 31, 1996
COMPARED TO THREE MONTHS ENDED JULY 31, 1995
REVENUES. Revenues increased by $5.7 million, or 11.9%, to $53.6 million for
the third quarter of 1996 from $47.9 million for the comparable period in 1995.
The increase in revenues is due primarily to increased sales volume and
increased average selling prices. The percentage of toll processing sales as a
percentage of total sales increased to 29.4% in the third quarter of 1996 from
27.1% in the third quarter of 1995. Revenues from the blanking and stamping
product line for the third quarter of 1996 increased approximately 10.6% from
the comparable period of 1995, while revenues from the other steel processing
product line increased approximately 15.0%.
GROSS PROFIT. Gross profit increased by $2.1 million, or 24.4% to $10.8 million
for the third quarter of 1996 from $8.7 million for the comparable period in
1995. Gross margin increased to 20.2% for the third quarter of 1996 from 18.2%
for the comparable period in 1995. The increase in gross margin is principally
due to management's continued efforts to contain costs and recover historical
steel price increases through higher sale prices to its customers. Continued
improvements in gross margin will be more difficult to achieve as the impact of
these price increases lessens. In addition, the increase in toll processing
sales as a percentage of total sales contributed to gross margin improvement.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.4 million, or 9.8%, to $4.3 million for
the third quarter of 1996 from $3.9 million for the comparable period in the
prior year. As a percentage of revenues, these expenses decreased to 8.0% for
the third quarter of 1996 from 8.1% for the comparable period in 1995.
OTHER. Interest expense, net, decreased to $1,558 in the third quarter from
$.04 million in the prior year due primarily to capitalization of interest
related to expansion of several facilities. The provision for income taxes was
$2.5 million in the third quarter of 1996 compared with $1.9 million in 1995,
representing effective tax rates of 38.5% and 40.1%, respectively.
DISCONTINUED OPERATIONS. In May 1996, the Company entered into an agreement to
sell the stock of its Shafer Valve Company subsidiary and accordingly has
accounted for this operation as a discontinued operation in the accompanying
financial statements.
11
<PAGE> 12
NINE MONTHS ENDED JULY 31, 1996
COMPARED TO NINE MONTHS ENDED JULY 31, 1995
REVENUES. Revenues increased by $6.7 million, or 4.3%, to $163.1 million for
the nine months ended July 31, 1996 from $156.3 million for the comparable
period in 1995. The increase in revenues primarily reflects improvements in the
steel processing line. The increase in revenues is due primarily to increased
sales volume and increased average selling prices. Revenues from the blanking
and stamping product line and the other steel processing product lines for the
first nine months of 1996 increased approximately 2.7% and 8.3% , respectively,
from the comparable period of 1995. The percentage of toll processing sales as
a percentage of total sales increased to 28.1% in the first nine months of 1996
from 26.2 % in the first nine months of 1995.
GROSS PROFIT. Gross profit increased by $4.6 million, or 16.6% to $32.2 million
for the first nine months of 1996 from $27.6 million for the comparable period
in 1995. Gross margin increased to 19.8% for the first nine months of 1996 from
17.7% for the comparable period in 1995. The increase in gross margin is
principally due to management's continued efforts to contain costs and to
recover historical steel price increases through higher sale prices to its
customers. Continued improvements in gross margin will be more difficult to
achieve as the impact of these price increases lessens. In addition, the
increase in toll processing sales as a percentage of total sales contributed to
gross margin improvement.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $0.8 million, or 6.9% to $12.0 million for
the first nine months of 1996 from $11.2 million for the comparable period in
the prior year. As a percentage of revenues, these expenses increased to 7.3%
for the first nine months of 1996 from 7.2% for the comparable period in 1995.
This increase is primarily due to the expansion of the corporate sales staff.
OTHER. Interest expense, net, decreased 64.9% to $0.1 million in the first nine
months of 1996 from $0.3 million for the comparable period in the prior year.
The provision for income taxes was $7.8 million in the first nine months of
1996 compared with $6.3 million for the comparable period in 1995, representing
effective tax rates of 38.6% and 39.1%, respectively.
Discontinued Operations
- -----------------------
In May 1996, the Company entered into an agreement to sell the stock of its
Shafer Valve Company subsidiary and accordingly has accounted for this operation
as a discontinued operation in the accompanying financial statements. The
resulting charge to net income, net of tax, in the second quarter was $10.6
million, $10.2 million reflecting the estimated loss on sale of discontinued
operations and $0.4 million for loss from discontinued operations.
Liquidity and Capital Resources
- -------------------------------
At July 31, 1996, the Company had $30.8 million of working capital, representing
a current ratio of 2.4 to 1 and debt of only 14.8 % of total capitalization. As
a result of this strong financial condition, the Company will be able to
continue its planned investment in new equipment and facilities through the next
fiscal year.
Net cash provided by operating activities is primarily generated from net income
of the Company plus non-cash charges for depreciation and amortization, which
because of the capital intensive nature of the Company's business, are
substantial. Net cash provided by operating activities during the first nine
months of 1996 was $17.9 million as compared to $19.2 million for the comparable
period in 1995. Fluctuations in working capital, including the working capital
of discontinued operations, was the primary factor causing the decrease in net
cash provided by operations from 1995 to 1996. The provision for loss on sale of
the discontinued operations had no effect on cash flow during the period. Net
cash provided by operating activities has historically been used by the Company
to fund a portion of its capital expenditures.
12
<PAGE> 13
Capital expenditures were $ 27.0 million during the first nine months of 1996
and $20.5 million for the comparable period in 1995. The capital expenditures
during the first nine months of 1996 were primarily for the construction of a
blanking facility in Romulus, Michigan, a joint venture with Rouge Steel, as
well as a $15 million expansion of stamping operations at the Company's
Sectional Stamping facility in Wellington, Ohio. The Company's total capital
budget for 1996, including these projects, amounts to approximately $52
million. As of July 31, 1996, $12.9 million and $5.2 million had been spent on
the Company's Romulus, Michigan and Rouge Steel joint venture projects,
respectively. These additions are being made to support increased business and
anticipated new business and to enhance productivity. The Company anticipates
financing its share of the initial investment in the Shiloh of Michigan
facility, approximately $15 million, and the Sectional Stamping expansion
through cash provided from operations as well as traditional bank financing
Prior to April 16, 1996, the Company had a $23 million revolving credit
facility with Society National Bank (now known as KeyBank National Association)
("KeyBank"). In conjunction with the negotiation of the new credit facility
described below, this line was terminated. On April 16, 1996, the Company
signed an agreement with KeyBank for a new revolving credit facility
("Facility") not to exceed $30 million. The term of the Facility extends to
February 28, 2000 with an option for successive one year term extensions
available at the Company's request and KeyBank's approval, upon proper written
notification. The Company has the option to select the applicable interest rate
at KeyBank's prime rate or the LIBOR rate plus 1/2% fixed in increments of 30,
60 or 90 days. The terms of the agreement require an annual commitment fee
equal to 1/4% on the average unused amount of the facility. In addition, the
Company is acting as an 80% guarantor for a $23 million revolving credit
facility entered into by Shiloh of Michigan, L.L.C., the Company's joint
venture with Rouge Steel.
The Company believes that it currently has sufficient liquidity and available
capital resources to meet its existing needs, and the financial capability to
increase its long-term borrowing level if that becomes appropriate due to
changes in its capital requirements. Total availability under the Company's line
of credit and revolving credit facility is $56.0 million, $43.5 million of which
was unused at July 31, 1996. The $13.2 million from the sale of its Shafer Valve
Company subsidiary was used primarily to reduce debt.
In March 1995, Medina County, Ohio issued on the behalf of the Company an
aggregate of $5.4 million in principal amount of variable rate industrial
revenue bonds due 2010, which are secured by the Company with a letter of
credit. The funds from these bonds are to be used to finance a portion of the
expansion at the Company's steel pickling operations in Valley City, Ohio. The
Company had withdrawn $5.3 million of such proceeds as of July 31, 1996, with
the balance of $.1 million being held in trust for the benefit of the Company
pending use of such proceeds.
On September 6, 1996, the Company entered into an agreement to purchase
substantially all of the assets of Greenfield Die & Manufacturing Corp. The
transaction, which is subject to governmental approval, is expected to be
completed on or before October 31, 1996.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits
2.1 Stock Purchase Agreement for Shafer Valve,
dated May 22, 1996, by and between the Company and
Bettis Corporation (Incorporated by reference from
the Company's Current Report on Form 8-K filed
July 24, 1996)
2.2 Asset Purchase Agreement, dated September 6, 1996,
among GDM Acquisition, Inc., Greenfield Die &
Manufacturing Corp. and 3-D Engineering, Inc.
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
The following Current Reports on Form 8-K were filed
by the Company during the quarter ended July 31, 1996:
Financial
Form 8-K Statements
Date of Report Item No. Description Filed
-------------- -------- ----------- ----------
7/24/96 2 Disposition of *
Shafer Valve
Company
subsidiary
* Pro forma condensed consolidated balance sheet of the Company as of April 30,
1996 and unaudited proforma condensed consolidated income statements of the
Company for the fiscal years ended October 31, 1995, 1994 and 1993, giving
proforma effect to the disposition.
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 16, 1996 SHILOH INDUSTRIES, INC.
By: /s/ Robert L. Grissinger
--------------------------------
Robert L. Grissinger,
President and Chief
Executive Officer
By: /s/ G. Rodger Loesch
--------------------------------
G. Rodger Loesch,
Chief Financial Officer
14
<PAGE> 16
EXHIBIT INDEX
Sequential
Exhibit No. Description of Exhibit Page
- ----------- ---------------------- ---------
2.1 Stock Purchase Agreement for Shafer Valve, dated *
May 22, 1996, by and between the Company and
Bettis Corporation**
2.2 Asset Purchase Agreement dated September 6, 1996 by
and among GDM Acquisition, Inc., Greenfield Die &
Manufacturing Corp. and 3-D Engineering Inc.** 16
27 Financial Data Schedule
* Incorporated by Reference from the Company's Current Report on Form 8-K filed
July 24, 1996.
** The Company agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of any omitted schedule or exhibit to Exhibit 2.1 and 2.2.
<PAGE> 1
Exhibit 2.2
ASSET PURCHASE AGREEMENT
------------------------
DATED SEPTEMBER 6, 1996
BY AND AMONG GDM ACQUISITION, INC.
GREENFIELD DIE & MANUFACTURING CORP., and
3-D ENGINEERING INC.
<PAGE> 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made this 6th day of September, 1996, by and
among GDM ACQUISITION, INC., a Michigan Corporation, ("Buyer"), GREENFIELD DIE &
MANUFACTURING CORP., a Michigan Corporation, ("Greenfield"), and 3-D ENGINEERING
INC. a Michigan Corporation ("3-D") (Greenfield and 3-D are sometimes
collectively, jointly and severally, referred to herein as "Sellers").
W I T N E S S E T H:
WHEREAS, Greenfield is engaged in the business conducted by Greenfield
under the name "Greenfield Die & Manufacturing Corp.", as more specifically
identified in Exhibit A hereto (the "Greenfield Business");
WHEREAS, certain engineering and product development services related to
the Greenfield Business are provided by 3-D, as more specifically identified in
Exhibit B (the "3-D Business") (the Greenfield Business and 3-D Business are
sometimes collectively referred to as the "Businesses");
WHEREAS, Buyer desires to purchase and Sellers desire to sell to Buyer all
right, title and interest of Sellers in and to all of the assets used in the
operation of the Greenfield Business (the "Greenfield Assets") and the assets
used in the operation of the 3-D Business (the "3-D Assets") (the Greenfield
Assets and the 3-D Assets are sometimes collectively referred to as the "Assets"
provided that certain assets which will not be transferred as specifically
identified herein are referred to as the "Non-Transferred Assets").
<PAGE> 3
WHEREAS, Buyer and Sellers desire to enter into this Agreement to set forth
the terms and conditions on which the Assets will be sold to Buyer.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, the parties hereto hereby agree
as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
------------------------------------------------------
1.01 PURCHASE AND SALE OF ASSETS OF SELLERS. Subject to the terms and
conditions of this Agreement, at the Closing (as defined in Section 1.03):
(a) Sellers shall sell, transfer, convey, assign and deliver to Buyer and
Buyer shall purchase, acquire and accept from Sellers, all of Seller's right,
title and interest in the Assets, excluding the Non-Transferred Assets, which
are Assets of Sellers on the Closing Date, including the following:
(i) INVENTORY. All inventory of Sellers wherever located or held by other
persons, including, but not limited to, raw materials, work-in-process,
purchased parts, production supplies, used or designated for use by Sellers in
the Businesses and finished goods (the "Inventory").
(ii) ACCOUNTS RECEIVABLE. All of the outstanding accounts and trade
receivables of Sellers excluding any intercompany or related company reserves
("Accounts Receivable").
(iii) MACHINERY, EQUIPMENT, ETC. All office furniture, furnishings and
supplies, fixtures, machinery, computers and equipment, trade fixtures,
leasehold improvements, tooling and service parts, presses, motor vehicles, and
other operating equipment and machinery and
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<PAGE> 4
Assets used in the Businesses and those which are material to their efficient
operations, including repair and maintenance parts; such items to include the
Assets set forth on Section 1.01(a)(iii) of the Disclosure Schedule.
(iv) PREPAID EXPENSES AND DEPOSITS. All prepaid items and expenses
including deposits for security under real or personal property leases or other
deposits, for the prepayment of any insurance coverages and for advances and
employee advances and all refunds or payments thereof. ("Prepaid Expenses and
Deposits")
(v) INVESTMENTS. All investments of Sellers, if any.
(vi) TOOLING AND DIES. All tooling of every kind, wherever located and all
jigs, dies and fixtures and other assets, wherever located.
(vii) PATENTS AND TRADEMARKS. All right, title and interest of Sellers in
and to all patents, patent licenses, patent applications, trademarks, service
marks, trade names, fictitious names, licenses, copyrights, royalty rights,
design rights, and other proprietary rights (domestic or foreign) used in or
relating to the Businesses, whether owned by or licensed to Sellers for use in
the Businesses, and all common law rights, and all applications, registrations,
renewals, modifications and extensions thereof (the "Proprietary Rights"),
including, without limitation the names of Sellers and variations thereof and
such of the foregoing as are identified on the Proprietary Rights List attached
to this Agreement and set forth in Section 3.09 of the Disclosure Schedule.
-3-
<PAGE> 5
(viii) ENGINEERING INFORMATION. All shop drawings, specifications, tool
drawings, blueprints, engineering data, equipment manuals, test data,
manufacturer' s warranties and other like documents relating to the Businesses,
including past and current products and prototype development.
(ix) TRADE SECRETS. All trade secrets, good will and know how related to
the Businesses.
(x) PERMITS. Any and all governmental licenses, permits and approvals
related to the Businesses, or necessary for the conduct of the Businesses
(whether issued by any Federal, State or local governmental entity) or other
jurisdiction or instrumentality (foreign or domestic) to the extent that the
same are transferrable or assignable including, without limitation, such of the
foregoing as are identified on the Permits List attached to this Agreement in
Section 1.01(a)(x) of the Disclosure Schedule.
(xi) CONTRACTS. All rights of Sellers under outstanding oral or written
contracts with parties including leases of personal property, agreements,
licenses, sales and purchase orders, purchased product service and warranty
agreements and claims and service agreements in effect at the Closing Date but
only to the extent that such contracts: (i) are expressly assumed by Buyer at
the Closing; and (ii) are set forth in Section 1.01(a)(xi) of the Disclosure
Schedule (the "Contracts").
(xii) TANGIBLE PERSONAL PROPERTY. All of the other tangible personal
property of Sellers.
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<PAGE> 6
(xiii) DOCUMENTS AND RECORDS. All of the books and records relating to the
Assets described above, including, but not limited to, business records,
financial, tax and other books and records, manufacturing and purchase records,
customers and suppliers lists, repair and warranty records, manuals,
correspondence and literature, production and inventory records, sales records
and advertising literature, data processing equipment, programs and software
related to the Businesses, documents relating to the ownership, use,
maintenance, or repair of any of the Assets, such as specifications, blue
prints, technical drawings, maps, construction, maintenance and repair records
and files, surveys, engineering information, bills of material, production
routings, cost records, inspection records, inventory records, payroll and
personnel records, lists of customers and suppliers, labor contracts, credit
files, correspondence with customers and suppliers, and all sales
representative, agent or distribution contracts related to the Businesses.
(xiv) OTHER ASSETS. All of the other tangible and intangible property that
is owned by Sellers related to the Businesses, except as expressly excluded by
Section 1.01(a)(xvii) hereof. All Assets necessary to operate the Businesses in
a manner consistent with the way they have been operated during the immediately
preceding twenty-four (24) months, to the extent not specifically described
herein, will be included in this Section 1.01(a)(xiv) as "Other Assets."
(xv) LEASED REAL PROPERTY. All of Sellers' present, or hereafter acquired
prior to the Closing, right, title and interest in and to all leases for real
property ("Real Property Leases"), including, without limitation, the leases
described on Section 1.01(a)(xv) of the Disclosure Schedule together with the
improvements and fixtures located on any of the foregoing leased properties (the
"Improvements"), the personal property associated with the operation of any of
the foregoing leased properties, and all appurtenances, rights, easements,
rights-of-way,
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<PAGE> 7
tenements and hereditament incident thereto (the "Appurtenances") the foregoing
of which Sellers are or become lessees prior to the Closing (being sometimes
herein referred to as the "Leased Real Property"). The Leased Real Property
shall be assigned to Buyer on the same terms and conditions, including current
lease rates, square footages and renewal options, as provided in the existing
Real Property Leases. Such Real Property Leases shall have terms and conditions
acceptable to the Buyer, including equalizing the 3-D Real Estate Lease to
$7.50 per square foot or less, which 3-D Lease Agreement shall be in the form
of Exhibit 9.21.
(xvi) NONASSIGNABLE CONTRACTS. Certain contracts, agreements or purchase
orders may be nonassignable under their terms except with the consent of a party
other than Sellers, (collectively, the "Nonassignable Contracts"). Sellers agree
to use their best efforts to facilitate such assignment and assumptions and to
obtain such consents as are necessary or appropriate to afford Buyer the full
benefit of such Nonassignable Contracts. In the event that any such consent is
not received by Sellers on or before the Closing Date, Sellers shall enter into
such arrangements with Buyer as shall afford to Buyer the benefits of said
Nonassignable Contracts, conditioned upon the assumption by Buyer of any and all
liabilities thereunder, upon terms substantially similar to those existing on
the date next preceding the Closing Date (as hereinafter defined). If Sellers
are not able to obtain the consent of the other party to any Nonassignable
Contract, in its sole discretion and regardless of any arrangements proposed by
Sellers, Buyer may terminate this Agreement as set forth in Section 13.01 (b) of
this Agreement.
-6-
<PAGE> 8
(xvii) NONTRANSFERRED ASSETS. The Plymouth Development Corporation
Partnership interest, the John H. Powers claim (provided that the John H. Powers
claim shall not be excluded from the March 31, 1996 Financial Statements of the
Sellers) the corporate record books of the Sellers, cash, cash equivalents and
claims, rights and benefit, to the extent derived directly therefrom, to any tax
refunds, for periods prior to the Closing Date shall remain the property of
Sellers and shall not be transferred to Buyer pursuant hereto (the "Non-
Transferred Assets").
1.02 CONSIDERATION. Subject to the terms and conditions of this Agreement,
in reliance on the representations, warranties and agreements of the Sellers
contained herein, and in consideration of the sale, assignment, transfer and
delivery of the Assets referred to in Section 1.01 hereof:
(a) GREENFIELD LIABILITIES ASSUMED. On the Closing Date, Buyer shall assume
and agree to discharge when due, owing and lawfully payable and perform under
the following liabilities and obligations of Greenfield:
(i) All liabilities under the leases, Contracts and other contracts,
agreements and executory obligations to which Greenfield is a party as of the
Closing Date to the extent such liabilities are set forth on Section 1.02(a)(i)
of the Disclosure Schedule to be attached hereto on or before the Closing Date.
(ii) The audited balances of the following notes payable and lines of
credit of Greenfield. As of March 31, 1996 the unaudited amounts of such
liabilities are indicated below. The increase or decrease between the unaudited
amounts as of March 31, 1996 and the audited balances on the Closing Date shall
be subject to a Debt Adjustment as set forth in Article II of this
-7-
<PAGE> 9
Agreement. Buyer shall, at the Closing, pay off and satisfy in full the
long-term obligations and lines of credit identified below, provided that
Greenfield shall be responsible for all prepayment penalties and related costs
which may be associated with such early payments. Greenfield represents that it
has the right to prepay such obligations and that said long-term obligations and
lines of credit shall not increase from the amounts listed below.
A) Line of credit facility with Comerica, Inc.: $3,888,759
B) Note payable Comerica, Inc.: $1,748,831
(iii) The audited balances of the following trade payables, accounts
payable, accrued expenses and advanced billings of Greenfield. As of March 31,
1996 the unaudited amounts of such liabilities are indicated below. The
difference between the unaudited amounts as of March 31, 1996 and the audited
balances on the Closing Date shall be subject to the Working Capital Adjustment
as set forth in Article II of this Agreement.
A) Trade payables and accounts payable: $2,935,499
B) Accounts payable - other: $ 331,692
C) Accrued expenses, less all $ 488,913 less all accrued
accrued vacation: vacation amounts
D) Advanced billings: $1,999,580
(iv) At the Closing, Buyer will execute and deliver to Greenfield a
Greenfield Agreement of Assignment and Assumption in the form of Exhibit
1.02(a)(iv) hereto, whereby Buyer will assume and agree to discharge when due,
owing and lawfully payable the agreed upon liabilities and obligations of
Greenfield (the "Greenfield Assumed Liabilities").
-8-
<PAGE> 10
(b) 3-D LIABILITIES ASSUMED. On the Closing Date, Buyer shall assume and
agree to discharge when due, owing and lawfully payable and perform under the
following liabilities and obligations of 3-D:
(i) All liabilities under the leases, Contracts and other contracts,
agreements and executory obligations to which 3-D is a party as of the Closing
Date to the extent such liabilities are set forth on Section 1.02(b)(i) of the
Disclosure Schedule to be attached hereto on or before the Closing Date.
(ii) The audited balances of the following notes payable and lines of
credit of 3-D. As of March 31, 1996 the unaudited amounts of such liabilities
are indicated below. The increase or decrease between the unaudited amounts as
of March 31, 1996 and the audited balances on the Closing Date shall be subject
to a Debt Adjustment as set forth in Article II of this Agreement. Buyer, shall,
at the Closing, pay off and satisfy in full the long-term obligations and lines
of credit identified below, provided that 3-D shall be responsible for all
prepayment penalties and related costs which may be associated with such early
payments. 3-D represents that it has the right to prepay such obligations, and
that said long-term obligations and lines of credit shall not increase from the
amounts listed below.
A) Line of credit facility with Comerica, Inc.: $221,764
B) Note payable - other: $66,000
(iii) The audited balances of the following trade payables, accounts
payable, accrued expenses and advanced billings of 3-D. As of March 31, 1996 the
unaudited amounts of such liabilities are indicated below. The difference
between the unaudited amounts as of March
-9-
<PAGE> 11
31, 1996 and the audited balances on the Closing Date shall be subject to the
Working Capital Adjustment as set forth in Article II of this Agreement.
A) Accrued expenses, less all accrued vacations: $1,312 less all accrued
vacation amounts, if any.
(iv) At the Closing, Buyer will execute and deliver to 3-D a
3-D Agreement of Assignment and Assumption in the form of Exhibit 1.02(b)(iv)
hereto, whereby Buyer will assume the agreed upon liabilities and obligations of
3-D (the "3-D Assumed Liabilities") (the Greenfield Assumed Liabilities and the
3-D Assumed Liabilities are collectively referred to as the "Assumed
Liabilities").
(c) On the Closing Date, subject to withholding of funds as
set forth in Section 1.02(d) and (e), Buyer shall pay to Sellers, for the Assets
in immediately available U.S. funds, Fifteen Million Dollars ($15,000,000) less
the purchase price ("purchase price" as defined in the Plymouth Real Estate
Purchase Agreement) of the real estate being simultaneously purchased by the
Buyer from Plymouth Development Company pursuant to Section 9.11 hereof, (the
aggregate "Purchase Price") and assume the Assumed Liabilities of the Sellers
specifically assumed hereunder. The Purchase Price shall be allocated to the
Assets of both Greenfield and 3-D as determined by an independent third party
appraiser selected by the Buyer, provided however the allocable portion of the
Purchase Price attributable to the 3-D Assets shall, if reasonably practical, be
established at the net book value of said 3-D Assets. In addition for allocation
and reporting purposes under Internal Revenue Code ss.1060, the parties agree to
allocate the Purchase Price consistently and to cooperate with each other on all
reports, returns or other miscellaneous filings required therein.
-10-
<PAGE> 12
(d) As security for Sellers' potential obligations under the Working
Capital Adjustment and the Debt Adjustment set forth in Article II hereof, at
the Closing, Buyer shall withhold and pay to Lawyers Title Insurance Co., as an
independent third party escrow agent, One Million Dollars ($1,000,000) of the
Purchase Price. The funds shall be held by Lawyers Title Insurance Co., as
escrow agent, pursuant to the terms and conditions of a certain escrow agreement
in the form attached hereto as Exhibit 1.02(d) which shall be the standard
escrow agreement utilized by Lawyers Title Insurance Co., as amended by Sellers
and Buyer to the extent appropriate, (the "Working Capital Escrow Agreement"),
in a separate interest bearing escrow account until disbursement as determined
in accordance with Article II of this Agreement.
(e) As security for Sellers' potential indemnification obligations under
this Agreement, at the Closing Buyer shall withhold and pay to an independent
third party escrow agent Two Million Dollars ($2,000,000) of the Purchase Price.
The funds, which may be reduced and paid out as set forth below, shall be held
by an independent third party pursuant to the terms and conditions of a certain
escrow agreement in substantially the form attached hereto as Exhibit 1.02(e),
(The "Indemnity Escrow Agreement"), in a separate interest bearing escrow
account for thirty (30) months, after which period of time the remaining amount
of such funds so held, if any, shall be released to Sellers unless a claim of
indemnity is pending at such time as set forth in Article XII of this Agreement.
The amount held by Buyer pursuant to this Section 1.02(e) shall not limit the
indemnification obligations of Sellers.
(f) EXCLUDED LIABILITIES It is expressly understood and agreed that Buyer
is not assuming, and Sellers shall remain liable for, the following liabilities
(excluding the "Assumed Liabilities") of Greenfield and/or 3-D:
-11-
<PAGE> 13
(i) RELATED PARTY LIABILITIES Except as otherwise expressly assumed, any
liabilities of Greenfield and 3-D to any related parties including Greenfield to
3-D or 3-D to Greenfield or either party to Plymouth Development Company, Condor
Land Development, L.L.C. or Osprey Leasing L.L.C.
(ii) TAX LIABILITIES Any federal, state, local and foreign tax liabilities
of any and all kinds owed by Sellers with respect to periods prior to the
Closing Date, including any liabilities for taxes arising as a result of the
transfer of the Assets or otherwise by virtue of the consummation of the
transactions contemplated hereby.
(iii) WARRANTIES Any liabilities for any express or implied warranties for
products sold prior to the Closing Date. (Sellers shall maintain adequate "tail"
insurance coverage for warranty claims as set forth in Section 3.14 of this
Agreement.)
(iv) VIOLATIONS OF LAW Any liability with respect to any applicable
federal, state or local statute, ordinance, regulation or other regulatory
agency or commission rules and regulations with respect to (a) the use and
ownership of the Greenfield and/or 3-D Businesses by Sellers on or before the
Closing Date or (b) conduct of the Sellers for the periods on or prior to the
Closing Date, including, but not limited to, worker's compensation, unemployment
compensation and the Consumer Product Safety Act. The parties agree and
acknowledge that the Michigan Employment Security Commission Rates of the
Sellers will be assigned to the Buyer hereunder provided however such assignment
shall not limit the indemnification obligations of the Sellers for violation of
said rates or rules and regulations, if any, prior to the Closing Date.
(v) LIABILITIES AS EMPLOYER Except for COBRA continuation set forth in
Section 11.3(f), any liabilities to present or former employees with respect to
their employment by
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<PAGE> 14
Greenfield and/or 3-D on or prior to the Closing Date including payroll taxes,
employment taxes, wages, vacation benefits or pay, union contracts, agreements
or collective bargaining agreements, union dues, union contributions,
contributions to health and welfare plans, severance benefits, pension plans,
401(k) plans or any other plan providing retirement benefits, workers
compensation and medical claims, including, without limitation, any claim for
any health or medical insurance benefit, if any, payable to any and all former
or retired employees of Sellers arising as a result of their employment by
Sellers.
(vi) PRODUCT LIABILITY CLAIMS Any liability or obligation arising out of a
claim for personal injury whether founded upon negligence, breach of warranty,
strict liability in tort and/or other similar legal theory including a defective
or alleged defective product engineered, manufactured or assembled by Greenfield
and/or 3-D on or before the Closing Date wherein a claim is made seeking
compensation or recovery for or related to injury to person or damage to
property including wrongful death and family actions.
(vii) ENVIRONMENTAL LIABILITIES AND LIABILITIES FOR WASTE DISPOSAL Any
liability or obligation imposed upon Sellers based on an alleged generation,
storage, treatment, transportation, handling, discharge, disposal or release of
any Hazardous Substances, as defined in Section 3.22 of this Agreement, on or
prior to the Closing Date including any liabilities or obligations imposed upon
Sellers under any Environmental Laws, as defined in 3.22 of this Agreement, from
the generation, storage, treatment, transportation, handling, discharge,
disposal or release of Hazardous Substances by Sellers on or before the Closing
Date, including, without limitation, any liability or obligation for cleaning up
waste disposal sites.
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<PAGE> 15
(viii) REGULATORY VIOLATIONS Any liability or obligation with respect to
any violation by Greenfield and/or 3-D of any statute, ordinance, regulation or
law on or prior to the Closing Date.
(ix) INTELLECTUAL PROPERTY ISSUES Any liability or obligation with respect
to any alleged violation of a patent, trade mark, trade name, service mark or
other claim of infringement or other misappropriation of the proprietary rights
of other persons with respect to the manufacture, use, or sale of the Greenfield
and/or 3-D products on or before the Closing Date.
(x) LIABILITIES NOT RELATED TO THE BUSINESSES. Any liabilities or
obligations not arising from or relating to either the operation of the
Greenfield and/or 3-D Businesses or the Assets.
(xi) UNASSUMED CONTRACTS, LEASES, COMMITMENTS AND AGREEMENTS. Any
liabilities or obligations arising under any contracts, notes, guarantees, loan
agreements, leases, commitments or other agreements not specifically defined as
an Assumed Liability or included in the liabilities assumed pursuant to this
Agreement.
(xii) TRANSACTIONAL COSTS Any fees and expenses incurred by Sellers in
connection with negotiating, preparing, closing, and carrying out this Agreement
and the transactions contemplated by this Agreement, including but not limited
to the fees, disbursements, and expenses of Sellers' attorneys, accountants, and
consultants.
(xiii) HINKEL NON-COMPETE. Any liabilities or obligations under any
agreement and or the Covenant Not To Compete with Donald I. Hinkel.
(ix) ACCOUNTANT ENGAGEMENT LETTER. Any liabilities or obligations under the
McCulloch, Pew and Mayette & Co. P.C. engagement letter.
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<PAGE> 16
(x) DIRECTOR/SHAREHOLDER LOANS. Any liabilities or obligations under any
agreements, loans or promissory notes owed to any officers, shareholders or
directors of Sellers.
1.03 Closing. (a) The Closing ("Closing") of the transactions contemplated
by this Agreement (the "Closing") will take place at the offices of McCulloch,
Pew, Mayette & Co., P.C., 217 S. Woodward Avenue, Suite 200, Royal Oak, Michigan
48067, on or about September 19, 1996, at 9:00 A.M., (the date of the Closing is
hereinafter sometimes referred to as the "Closing Date"). Time is of the
essence.
(b) At the Closing, Sellers will deliver to Buyer (i) duly executed General
Warranty Bills of Sale in the forms annexed hereto as Exhibit 1.03(b); (ii)
assignments of all patents, trademarks, trade names, assumed names and
copyrights and all applications therefor which are related to the Businesses,
all such other deeds, endorsements, assignments and other instruments of
conveyance as, in the opinion of Buyer's counsel, are reasonably necessary to
vest in Buyer such good and marketable title to the Assets as is required to be
transferred to Buyer pursuant to this Agreement; and (iii) all other previously
undelivered documents required to be delivered by Sellers to Buyer at or prior
to the Closing in connection with the transactions contemplated by this
Agreement.
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<PAGE> 17
(c) At the Closing, there will be delivered to Sellers by Buyer, (i)
subject to the provisions of this Article I, the consideration referred to in
this Article I hereof, payable by wire transfer pursuant to written instructions
from Sellers received at least two days prior to Closing, and (ii) all
previously undelivered documents required to be delivered by Buyer to the
Sellers at or prior to the Closing.
ARTICLE II
WORKING CAPITAL AND DEBT ADJUSTMENTS
------------------------------------
2.01 WORKING CAPITAL ADJUSTMENT. In addition to the consideration set forth
in Article I of this Agreement, after the Closing there shall be a working
capital adjustment ("Working Capital Adjustment"). The Working Capital
Adjustment shall be calculated based upon the difference between the unaudited
amounts of the following items on Greenfield's and 3-D's March 31, 1996 Balance
Sheets and the audited balances of these same items on the Closing Date. The
audit and/or agreed upon procedures shall be based on the books and records of
Sellers and shall be performed by Buyer at Buyer's expense and delivered to
Sellers within forty-five (45) days after the Closing Date. The Working Capital
Adjustment shall be based on the increases or decreases of the following items
reflected on Greenfield's and 3-D's consolidated Balance Sheets as of March 31,
1996: current assets of both Greenfield and 3-D to include Accounts Receivables,
Inventory, Prepaid Expenses and Deposits (other than cash) less the current
liabilities of both Greenfield and 3-D to include Trade Accounts Payable and
other Accounts Payable, Advanced Billings and Accrued Expenses, excluding
accrued vacations. The audits and/or agreed upon procedures shall be prepared in
accordance with generally accepted accounting principles and methods applied on
a consistent basis and as soon as reasonably practical after completion of
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<PAGE> 18
the audits applicable to the Working Capital Adjustment, or forty-five (45)
days, whichever is first to occur, said audits and/or agreed upon procedures and
related information shall be made available to the Sellers. The parties further
agree that the audited and/or agreed upon procedure balance of Seller's Deposits
and Accounts Receivables on the Closing Date, shall be reduced and adjusted and
shall not include: (i) the $62,200 deposit or any other amount related to a
current IRS audit at Greenfield; (ii) all intercompany or affiliated Accounts
Receivables of the Sellers, and (iii) all Accounts Receivables of the Sellers
over 120 days. Sellers shall make available to Buyer and Buyer's accountants for
their review, work papers of Sellers and their accountants for preparation of
the audited consolidated Balance Sheets of both 3-D and Greenfield on March 31,
1996 and the Closing Date, as well for other purposes as determined by Buyer.
2.02 DEBT ADJUSTMENT. In addition to the consideration set forth in Article
I of this Agreement, after the Closing there shall be a debt adjustment in the
long-term obligations and lines of credit of both 3-D and Greenfield and the
Related Party Note and Bank Note of Plymouth Development Company ("Plymouth") as
set forth and defined in the Plymouth Real Estate Purchase Agreement attached
hereto as Exhibit 9.11 (the "Debt Adjustment"). The Debt Adjustment shall be
calculated and based upon the increase or decrease between the unaudited amounts
of such items on 3-D's, Greenfield's and Plymouth's March 31, 1996 Balance
Sheets and the audited and/or agreed upon procedure balance of the same items on
the Closing Date. The audit or agreed upon procedures shall be based on the
books and records of Sellers and Plymouth and shall be performed by Buyer, in
cooperation with the Sellers and Plymouth, at Buyer's expense and delivered to
Sellers on or about the Closing Date. The Debt Adjustment shall be based only
upon any increases or decreases in the specific long-term obligations and lines
of credit
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<PAGE> 19
set forth in Sections 1.02(a)(ii) and 1.02(b)(ii) of this Agreement and the Bank
Note and Related Party Note as set forth in the Plymouth Real Estate Purchase
Agreement. The audits or agreed upon procedures shall be prepared in accordance
with generally accepted accounting principles and methods applied on a
consistent basis and on or about the Closing Date after the completion of the
audits or agreed upon procedures applicable to the Debt Adjustment, said audits
and/or agreed upon procedures and related information shall be made available to
the Sellers.
2.03 PAYMENT OF ADJUSTMENT ESCROW FUNDS NOT SUBJECT TO POTENTIAL DISPUTE.
Upon receipt of the Working Capital Adjustment and the Debt Adjustment, (being a
date within (45) days after the Closing Date), Buyer and Sellers agree to
jointly instruct the escrow agent to disburse the amount held by the escrow
agent which is in excess of the claimed amount of payment to Buyer from the
Working Capital Adjustment and Debt Adjustment escrow fund. Escrow agent shall
also pay the pro rata portion of interest accrued on such amounts to Sellers.
Payment of the balance of the amount held by escrow agent for the Working
Capital Adjustment and Debt Adjustment shall be determined as set forth in
Section 2.05.
2.04 PAYMENT OF WORKING CAPITAL ADJUSTMENT AND DEBT ADJUSTMENT. Unless
there is a Dispute as set forth in Section 2.05, upon expiration of the fifteen
(15) day Dispute Period, the amount due from Sellers to Buyer or Buyer to
Sellers, as applicable, shall be paid by the escrow agent and/or the applicable
party to the other party within five (5) days as follows:
a) If the Working Capital Adjustment and the Debt Adjustment reflect that
amounts are due from Sellers to Buyer the escrow agent shall pay to the Buyer
the amount due, from the remaining funds withheld pursuant to Section 1.02(d)
and 2.03. If the amount withheld is greater than the amount of Working Capital
Adjustment and the Debt Adjustment, the escrow
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agent shall remit the difference to Sellers. If the amount withheld is less than
the amount of the Working Capital Adjustment and the Debt Adjustment combined,
the escrow agent shall pay to the Buyer all of the funds withheld pursuant to
Section 1.02(d) and the Sellers shall pay to Buyer the remaining balance of the
Working Capital Adjustment and the Debt Adjustment by certified check or wire
transfer, as determined by Buyer.
b) If the Working Capital Adjustment and the Debt Adjustment reflect that
amounts are due from Buyer to Sellers, the escrow agent shall disburse the
applicable amount withheld pursuant to Section 1.02(d) and Buyer shall pay the
additional amount of the Working Capital Adjustment and Debt Adjustment, if any,
by certified check or wire transfer, as determined by Sellers.
2.05 RESOLUTION OF DISPUTES REGARDING WORKING CAPITAL AND DEBT ADJUSTMENTS.
Disputes with respect to the calculation of the Working Capital or Debt
Adjustments shall be resolved as follows:
a) Sellers shall have fifteen (15) days after receipt (the "Dispute
Period") of the calculation of the Working Capital or Debt Adjustments from
Buyer to contest the Working Capital or Debt Adjustments. If Sellers do not give
written notice to Buyer of a dispute within the Dispute Period (a "Dispute
Notice"), the calculation of the Working Capital and Debt Adjustments shall be
deemed to have been accepted and agreed to by Sellers in the form in which they
were delivered by Buyer, and shall be final and binding upon the parties hereto.
If Sellers take exception within the Dispute Period and have a dispute
("Dispute"), Sellers shall deliver to Buyer a Dispute Notice within the Dispute
Period, setting forth in reasonable detail the elements and amounts with which
they disagree. Within fifteen (15) days after delivery of such Dispute
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Notice, the parties hereto shall attempt to resolve such Dispute and agree in
writing upon the final content and amounts of the calculation of the Working
Capital and Debt Adjustments.
b) If the parties are not able to resolve the Dispute within fifteen (15)
days of receipt of a Dispute Notice, the Sellers' accountants and Buyer's
accountants shall review the matters in Dispute. Within ten (10) days of
commencement of review by the accountants, Buyer and Sellers shall deliver to
the other a written statement of each matter subject to the Dispute identifying
the estimated amount of each such matter and setting forth the relevant facts
and reference to the relevant GAAP provision supporting to the position of that
party. The accountants for Sellers and Buyer shall then review the relevant
facts and GAAP provisions and attempt to resolve the Dispute and obtain the
approval of Sellers and Buyer. Unless extended by the parties, the review by the
accountants shall be completed within twenty (20) days. If approval of Sellers
and Buyer is not obtained within that time, the resolution of the Dispute shall
proceed as set forth in Section 2.05(c) hereof.
c) If the accountants for the Sellers and Buyer with approval by Sellers
and Buyer are unable to resolve the Dispute, the parties hereto agree that the
Cleveland, Ohio office of Ernst & Young shall serve as the arbitrating
accountant to settle such Dispute (the "Arbitrating Accountant"). In connection
with the resolution of the Dispute, the Arbitrating Accountant shall have access
to all documents, records, work papers, facilities and personnel necessary to
perform its function as arbitrator. The Arbitrating Accountant's function shall
be to calculate the Working Capital and Debt Adjustments based on the
requirement of this Article II. The arbitration before the Arbitrating
Accountant shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association. The Arbitrating Accountant's
award with respect to any
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Dispute shall be final and binding upon the parties hereto, and judgment may be
entered on the award. The fees and expenses of the Arbitrating Accountant with
respect to any Dispute shall be paid one-half by Sellers and one-half by Buyer.
Upon the resolution of all Disputes, the calculation of the Working Capital and
Debt Adjustments shall be revised, as appropriate, to reflect such resolution
and payment made as appropriate within ten (10) days.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
---------------------------------------------
The parties agree that the representations, warranties, agreements,
covenants and conditions stated in this Agreement shall survive the Closing. The
parties further agree that the representations and warranties set forth in this
Agreement are true as of the date of this Agreement and will be true as of the
Closing Date of this transaction. Sellers represents and warrants to Buyer that:
3.01 CORPORATE ORGANIZATION. Each Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of Michigan
and has full corporate power and authority to carry on its business as it is now
being conducted and to own the properties and assets it now owns. Sellers have
heretofore delivered to Buyer complete and correct copies of the Certificate of
Incorporation and By-Laws or Code of Regulations of Sellers, as presently in
effect.
3.02 AUTHORIZATION: ENFORCEABILITY. Each Seller has full corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors and Stockholders of each Seller have
taken all action required by law, its respective Certificate of Incorporation
and By-Laws or Code of Regulations or otherwise to be
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taken by them to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement is a
valid and binding agreement of each Seller enforceable in accordance with its
terms.
3.03 NO VIOLATION. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation and By-Laws or Code of Regulations
of any of the Sellers or, violate, or be in conflict with, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or cause the acceleration of the maturity of any debt
or obligation pursuant to, or result in the creation or imposition of any
security interest, lien, other than normal and customary statutory liens
applicable to the sale hereunder not yet due and payable (i.e., statutory liens
for sales, use, personal property, payroll and Michigan Single Business Taxes
provided however the statutory liens hereunder are the responsibility of the
Sellers and shall be released by the Sellers at their sole cost and expense as
soon as reasonably practical after the Closing) or other encumbrance upon any
property or assets of either Seller under, any agreement or commitment to which
either Seller is a party or by which either of them is bound, or to which their
property is subject.
3.04 ACCOUNTS RECEIVABLE. All accounts and trade receivables ("Accounts
Receivable") of Sellers as shown on the March 31, 1996 and Closing Date Balance
Sheets, will represent sales actually made in the ordinary course of business,
are not subject to any defenses, and will be current and collectible as shown on
the March 31, 1996 Balance Sheet. Attached hereto in Section 3.04 of the
Disclosure Schedule is a copy of the most accurate and current 1996
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aging reports of the trade and accounts receivable of Sellers
showing separately for each receivable its age denominated as "0-30 days";
"30-60 days"; "60-90 days"; and "older than 90 days". Since July 3, 1996, none
of the Accounts Receivable are or will be subject to discounts or other
reductions of the stated amounts due.
3.05 INVENTORY. Except as will be set forth in Section 3.05 of the
Disclosure Schedule: (i) except for gauges, fixtures, jigs, dies, tool and molds
which consist of a quality and quantity usable and salable within twelve (12)
months in the ordinary and usual course of business, or which have an applicable
demonstrated purchase order, all of the Inventory to be sold to Buyer pursuant
hereto consist of a quality and quantity usable and salable within four (4)
months in the ordinary and usual course of business, or have an applicable
demonstrated purchase order, except for items of obsolete materials and
materials of below-standard quality, all of which have been or will be written
off or written down to fair market value prior to Closing; (ii) all Inventory
not written off have been or will be priced at the lower of cost or market in
accordance with generally accepted accounting principles; (iii) the quantities
of each type of Inventory (whether raw materials, work-in-progress, or finished
goods) are not excessive, but are reasonable and warranted in the present
circumstances of the Businesses of Sellers; and (iv) the best of Sellers'
knowledge all work in process and finished goods inventory are free of any
defect or other deficiency and meet, in all respects, all required
specifications of the customers of Sellers and any federal, state, foreign and
local code standards, if applicable, for such Inventory, provided that
notwithstanding the above warranty of Sellers applicable to work-in-process and
finished goods, Sellers shall be responsible under the indemnification
provisions provided herein for all work-in-process or finished goods which fails
to meet the specifications set forth above.
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Buyer covenants and agrees that for a period of twelve (12) months after
the Closing Date, Buyer in cooperation with the Sellers, shall use its best
efforts to sell all inventory which has not been purchased by Buyer hereunder
and which has been classified as obsolete pursuant to the audited Closing
Balance Sheet. Upon the sale of such obsolete inventory by the Buyer, all
proceeds therefrom, less the reasonable expenses of sale if any, shall be paid
immediately and directly to the Sellers. All unsold obsolete inventory, after
the twelve (12) month period set forth above, shall be immediately transferred
and moved from the Buyer's locations, at Sellers' cost, to the Sellers, without
representation, warranty or other recourse. For a period of twelve (12) months
after the Closing Date, Buyer shall retain a right of first refusal to purchase
from Sellers the obsolete inventory as set forth or excluded pursuant to the
audited Closing Balance Sheet.
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3.06 INTERIM OPERATIONS. Since March 31, 1996, the Greenfield and 3-D
Businesses have been conducted only in the ordinary and usual course consistent
with past practice and there have not been any adverse changes in the
consolidated financial condition, assets or results of operations of Greenfield
or 3-D since that date.
3.07 TITLE TO PROPERTIES; ENCUMBRANCES. Each Seller has good and marketable
title to all the Assets it purports to own in each case free and clear of all
liens and encumbrances, except the liens and encumbrances disclosed by Sellers
in Section 3.07 of the Disclosure Schedule and expressly assumed by Buyer.
Sellers shall obtain and deliver to Buyer Uniform Commercial Code UCC-11
searches which shall be updated as of the Closing Date.
3.08 PLANT AND EQUIPMENT. (a) The owned plants, structures and equipment of
Sellers, are structurally sound and are in good operating condition and repair,
ordinary wear and tear excepted, and are adequate for the uses to which they are
being put. Except as is set forth in Section 3.08 of the Disclosure Schedule,
Sellers have not received notification that either is in violation of any
applicable building, zoning, anti-pollution, health or other law, ordinance or
regulation in respect of its plants or structures or their operations and, no
such violation exists; (b) The leased plants, structures and equipment of
Sellers are, to the best of Sellers' knowledge, structurally sound and are in
good operating condition and repair, ordinary wear and tear excepted, and are
adequate for the uses to which they are being put; (c) Except as is set forth in
Section 3.08 of the Disclosure Schedule, which sets forth plant and equipment
defects in excess of $50,000, for a period of twelve (12) months after the
Closing Date the Sellers represent and warrant that the owned plants, structures
and equipment of Sellers have no defects. Notwithstanding said representations
and warranties, the Buyer agrees to pursue at its sole cost,
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as reasonably necessary and through litigation if necessary, any and all third
parties who may be responsible for any defects in the plants, structures and
equipment being transferred hereunder, prior to making a claim against Sellers
related thereto.
3.09 PATENTS, TRADEMARKS, TRADE NAMES, ETC. Except as set forth in Section
3.09 of the Disclosure Schedule, Sellers own, or are duly licensed or otherwise
have the full and exclusive right to use, all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the Businesses as heretofore conducted. Section 3.09 of the
Disclosure Schedule contains a complete list of (i) all patents, trademarks,
trade names and copyrights used or proposed to be used by Sellers, all
applications therefor, and all licenses and other agreements relating thereto
and (ii) a complete list of all agreements relating to technology, know-how or
processes which Sellers are licensed or authorized to use by others. Except as
is set forth in Section 3.09 of the Disclosure Schedule, no claims have been
asserted by any person to the use of any of the patents, trademarks, trade
names, copyrights, technology, know-how or processes or challenging or
questioning the validity or effectiveness of any such license or agreement set
forth on Section 3.09 of the Disclosure Schedule, and Sellers do not know of any
valid basis for any such claim; and the Sellers confirm that the use of such
patents, trademarks, trade names, copyrights, technology, know-how or processes
by Sellers does not infringe on the rights of any person. The above
representations and warranties shall also apply to the making and selling of any
products by Sellers.
3.10 LEASES. Section 3.10 of the Disclosure Schedule contains an accurate
list of all leases pursuant to which Sellers lease real or personal property.
Except as is set forth in Section 3.10 of the Disclosure Schedule, all such
leases are valid, binding and enforceable in
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accordance with their terms, and are in full force and effect; there are no
existing defaults by Sellers thereunder; no event of default has occurred which
(whether with or without notice, lapse of time or the happening or occurrence of
any other event) would constitute a default by Sellers thereunder; and except
for any consents required of lessors thereunder, which are set forth on Section
3.10 of the Disclosure Schedule, no consents of lessors are necessary to the
consummation of the transactions contemplated by this Agreement.
3.11 TAXES. Each of the Sellers have duly filed all tax reports and returns
required to be filed by them and have duly paid all taxes and other charges due
or claims to be due from it by federal, state, local or foreign taxing
authorities (including, without limitation, those due in respect of the
properties, income, franchises, licenses, sales or payrolls of any of them); and
there are no tax liens upon any property or assets of the Sellers except liens
for current taxes not yet due.
3.12 CERTAIN SCHEDULES. There have been delivered to Buyer true and
complete copies of the following schedules or contracts:
(i) a schedule showing the address and approximate size of all buildings
and facilities, leased, occupied or used by the Sellers;
(ii) copies of all written contracts to perform services or for the
purchase, sale, lease, or exchange of personal property to which either Seller
is a party involving receipts by the Sellers or payments by the Sellers other
than purchase orders or sales contracts entered into in the ordinary course of
business;
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(iii) copies of all other currently effective written contracts, leases,
agreements and other instruments to which either Seller is a party or is bound
(other than insurance policies), together with a schedule listing such
agreements, and all oral agreements involving payments in excess of $5,000 per
annum to which either Seller is a party; provided, however, there shall
separately be itemized and copies provided for all indebtedness of which either
Seller is an obligor, maker or guarantor;
(iv) a schedule of (a) each automobile, truck and other piece of automotive
equipment owned or leased by the Sellers and its location, and (b) all liens,
security interests, and encumbrances, of any kind (other than statutory liens
not yet delinquent) to which the properties described in (a) of this Section
3.12 (iv) are subject (including copies of all instruments representing such
liens, security interests, and encumbrances, of any kind);
(v) a list, as of August 1, 1996, of the name, address and salary, as well
as the title or functional position, of each current director and officer of the
Sellers and each other current employee, consultant, representative, salesman or
agent employed by or under contract with the Sellers, together with copies of
all currently effective agreements or arrangements with regard to the payment of
compensation, profit-sharing, pension, vacation, retirement or other
compensation benefits to officers, directors, employees, or former directors,
officers or employees of the Sellers;
(vi) a schedule which sets forth (a) the name of each bank, trust company,
stock and other broker with which the Sellers have an account, credit line, or
safe deposit box or vault, (b) the names of all persons authorized to draw
thereon or to have access to any safe deposit box or vault, (c) the purpose of
each such account, safe deposit box or vault, and (d) the names of all
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persons authorized by proxies, powers of attorney or like instruments to act on
behalf of the Sellers in matters concerning any of their businesses or affairs;
(vii) copies of the form of all expressed or implied product warranties
with respect to goods sold or services performed by the Sellers in the two (2)
years prior to the date hereof and with respect to any claims regarding
warranties of which Sellers have received notice of a claim which has not been
resolved;
(viii) copies of all pleadings or other documents relating to pending
litigation or known claims against the Sellers;
(ix) copies of all employee benefit plans (including profit sharing,
health, life or other insurance plan, etc.) or other contractual obligation for
deferred compensation of the Sellers (including any plan described in Section
3.16);
(x) copies of all currently effective contracts containing covenants
limiting the freedom of the Sellers to compete in any line of business or with
any person in any geographical area;
(xi) copies of all currently effective contracts or options relating to the
acquisition by the Sellers of any operating business; and
(xii) copies of all currently effective contracts or arrangements requiring
the payment by the Sellers to any person of a commission or fee in excess of
$1,000 per annum.
Except as set forth in Section 3.12 of the Disclosure Schedule, the Sellers
are not in default, nor but for a requirement that notice be given or that a
period of time elapse or both, would be in default, under any contract,
agreement, lease or other instrument to which they are a party or by which they
or their properties are bound. Except as set forth in Section 3.12 of the
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Disclosure Schedule, all of the Sellers' contracts, agreements, understandings,
franchises, permissions and commitments, whether or not attached to a schedule
to this Agreement, are in good standing, valid and effective and the Sellers
have, in the ordinary course of business, paid in full all amounts due
thereunder and have satisfied in full all of the liabilities and obligations
with respect thereto and the Sellers are not in default under any of them, nor
is any other party to such contracts, agreements, understandings, franchises,
permissions or commitments in default thereunder. Except as set forth in Section
3.12 of the Disclosure Schedule, the Sellers have no reason to believe that any
of such other parties is or will be unable to comply with any of such contracts,
agreements, understandings, franchises, permissions or commitments. Except as
set forth in Section 3.12 of the Disclosure Schedule, the Sellers are not a
party to or bound by any contract, agreement, understanding, franchise,
permission or commitment which was entered into other than in the ordinary and
the usual course of its business.
3.13 CERTAIN COMMITMENTS. Except as set forth in Section 3.13 of the
Disclosure Schedule:
(a) No purchase contracts or commitments to purchase of Sellers continue
for a period of more than 12 months or are in excess of the normal, ordinary and
usual requirements of business.
(b) There are no outstanding sales contracts, commitments or proposals of
Sellers which continue for a period of more than 3 months.
(c) All contracts, agreements, or commitments for employment or personal
services are terminable, without liability or expense, by Sellers on 30 days' or
less notice.
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3.14 INSURANCE. Section 3.14 of the Disclosure Schedule contains an
accurate and complete list of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the Sellers
concerning the Businesses. All such policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
of the Closing have been paid, and no notice of cancellation, non-renewal,
termination, or disallowance has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which Sellers are a party, and are valid, outstanding and
enforceable policies. Sellers will not change or cancel any insurance policy
that would affect the nature or amount of existing insurance coverage. Sellers
shall continue to maintain in full force and effect all policies of insurance in
effect as of the date hereof up through the Closing Date. Sellers shall further
continue in effect all prepaid insurance policies referred to in Section
1.01(a)(iv) for the remaining term of any such policies. As of the Closing Date,
Sellers will obtain insurance policies which will provide adequate product
liability "tail" coverage for all potential liabilities of Sellers, which
coverage shall remain in effect for a mutually agreed upon period. Sellers shall
name Buyer as an additional insured under such policies and shall deliver
certificates for such policies to Sellers at Closing.
3.15 LABOR MATTERS. Except as set forth in Section 3.15 of the Disclosure
Schedule:
(a) Sellers are in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment, wages
and hours, and nondiscrimination in employment, and are not engaged in any
unfair labor practice;
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(b) There is no unfair labor practice complaint against Sellers pending
before the National Labor Relations Board;
(c) There is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or affecting Sellers;
(d) No representation question exists respecting the employees of Sellers;
(e) No grievance which might have an adverse effect on Sellers or the
conduct of the Businesses nor any arbitration proceeding arising out of or under
collective bargaining agreements is pending and no claim therefore exists; and
(f) There have not been at any time within the last three years any work
stoppages or strikes at the locations owned or leased by the Sellers relating to
the Businesses.
(g) Neither Seller has any collective bargaining or union contracts or
agreements; and
(h) Neither Seller is the subject of any threatened or actual union
petition activity, organizational campaign or other union organizational
activity.
(i) Prior to the Closing Date, to the best of Sellers knowledge, no
officers or senior or key employees of Sellers are planning to terminate their
relationships with Sellers other than Don B. Hinkel and Sellers further
represent and warrant that they have advised Buyer that no other such persons
intend to terminate their relationship with Sellers after the Closing Date.
3.16 EMPLOYEE BENEFITS.
(a) EMPLOYEE BENEFIT PLANS AND BENEFIT PROGRAMS OR AGREEMENTS. Section
3.16(a) of the Disclosure Schedule provides a description of each of the
following, which is sponsored, maintained, or contributed to by either Seller
for the benefit of the employees or
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former employees of such Seller or has been so sponsored, maintained, or
contributed to within six (6) years prior to the Closing Date:
(i) Each "employee benefit plan," as such term is defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, but not limited to, those employee benefit plans that may be exempt
from some or all of the provisions of ERISA ("Plan"); and
(ii) Each personnel policy, stock option plan, bonus plan or arrangement,
incentive award plan or arrangement, vacation policy, severance pay plan, policy
or agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, consulting agreement,
employment agreement, and each other employee benefit plan, agreement,
arrangement, program, practice, or understanding which is not described in this
Section 3.16(a)(i) ("Benefit Program or Agreement").
(b) COPIES OF PLANS AND BENEFIT PROGRAMS OR AGREEMENT. True, correct, and
complete copies of each of the Plans, and related trusts, if applicable,
including all amendments thereto, have been furnished to Buyer. There has also
been furnished to Buyer, with respect to each Plan required to file such report
and description, the most recent report on Form 5500 and the summary plan
description. True, correct, and complete copies or descriptions of all Benefit
Programs or Agreements have also been furnished to Buyer.
(c) EMPLOYEE BENEFIT PLAN COMPLIANCE. Except as set forth in Section
3.16(c) of the Disclosure Schedule:
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(i) Neither Seller contributes to or has an obligation to contribute to,
nor has either Seller at any time within six (6) years prior to the Closing Date
contributed to or had an obligation to contribute to, a multi-employer plan
within the meaning of Section 3(37) of ERISA;
(ii) All obligations, whether arising by operation of law or by contract,
required to be performed in connection with the Plans and Benefit Programs or
Agreements have been performed, and there have been no defaults or violations by
any party to the Plans or Benefit Programs or Agreements;
(iii) All reports and disclosures relating to the Plans and Benefit
Programs or Agreements required to be filed with or furnished to governmental
agencies, participants, or beneficiaries have been filed or furnished in
accordance with applicable law in a timely manner, and each Plan and each
Benefit Program or Agreement has been administered in compliance with its
governing documents and all applicable law;
(iv) Each Plan that is intended to be qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended, ("Code") (A) satisfies the
requirements of such Section 401(a), (B) has received a favorable determination
letter from the Internal Revenue Service ("IRS") regarding such qualified status
and governing amendments required under the Unemployment Compensation Amendments
of 1992, the Omnibus Reconciliation Act of 1993, and the final nondiscrimination
regulations under Section 401(a)(4) of the Code (or such amendments to such Plan
have been timely made and filed with the IRS for such a determination letter),
and (C) has not, since receipt of the most recent favorable determination
letter, been amended or operated in a way that would adversely affect such
qualified status;
(v) There are no actions, suits, or claims pending (other than routine
claims for benefits) or threatened against, or with respect to, any of the Plans
or Benefit Programs or Agreements or their assets;
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(vi) All contributions required to be made to the Plans and Benefit
Programs or Agreements pursuant to their terms and provisions have been made
timely;
(vii) As to any Plan subject to Title IV of ERISA, there has been no event
or condition which presents a material risk of Plan termination, no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, no reportable event within
the meaning of Section 4043 of ERISA has occurred, no notice of intent to
terminate the Plan has been given under Section 4041 of ERISA, no proceeding has
been instituted under Section 4042 of ERISA to terminate the Plan, and the
assets of the Plan equal or exceed the actuarial present value of the benefit
liabilities, within the meaning of Section 4041 of ERISA, under the Plan;
(viii) As to any Plan intended to be qualified under Section 401(a) of the
Code, there has been no termination of, partial termination of, or
discontinuance of contributions to the Plan within the meaning of Section
411(d)(3) of the Code;
(ix) No act, omission, or transaction has occurred that would result in
imposition on either Seller of (A) breach of fiduciary duty or prohibited
transaction liability under Section 409 or Section 502 of ERISA, (B) a civil
penalty assessed pursuant to subsections (c), (i), or (l) of Section 502 of
ERISA, or (C) a tax imposed pursuant to Chapter 43 of Subtitle D of the Code;
(x) There is no matter pending (other than routine qualification
determination filings) with respect to any of the Plans or Benefit Programs or
Agreements before the IRS, the Department of Labor;
(xi) Each trust, which is part of a Plan and intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code, satisfies the
requirements of such
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Section and has received a favorable determination letter from the IRS regarding
such exempt status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which would adversely
affect such exempt status; and
(xii) With respect to any employee benefit plan, within the meaning of
Section 3(3) of ERISA, which is not listed on Section 3.16(a) of the Disclosure
Schedule but which is sponsored, maintained, or contributed to, or has been
sponsored, maintained, or contributed to within six (6) years prior to the
Closing Date, by any corporation, trade, business, or entity under common
control with Sellers, within the meaning of Section 414(b), (c), (m), or (o) of
the Code or Section 4001 of ERISA ("Commonly Controlled Entity"), (A) no
withdrawal liability, within the meaning of Section 4201 of ERISA, has been
incurred, which withdrawal liability has not been satisfied, (B) no accumulated
funding deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred, and (C) all contributions
(including installments) to such plan required by Section 302 of ERISA and
Section 412 of the Code have been timely made.
(d) NO ADDITIONAL RIGHTS OR OBLIGATIONS. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
(A) require either Seller to make a larger contribution to, or pay greater
benefits under, any Plan or Benefit Program or Agreement than it otherwise would
or (B) create or give rise to any additional vested rights or service credits
under any Plan or Benefit Program or Agreement.
(e) NO ADDITIONAL SEVERANCE. Neither Seller is a party to any agreement,
nor has either established any policy or practice, requiring it to make a
payment or provide any other form of compensation or benefit to any person
performing services for either Seller upon
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termination of such services that would not be payable or provided in the
absence of the consummation of the transactions contemplated by this Agreement.
(f) NO EXCESS PARACHUTE PAYMENTS. In connection with the consummation of
the transaction contemplated by this Agreement, no payments have or will be made
under the Plans or Benefit Programs or Agreements which, in the aggregate, would
result in imposition of the sanctions imposed under Section 280G or Section 4999
of the Code.
(g) AMENDMENT OR TERMINATION OF PLANS. Each Plan and Benefit Program or
Agreement may be unilaterally amended or terminated in its entirety by the
Sellers without liability except as to benefits accrued thereunder prior to such
amendment or termination.
3.17 LITIGATION. Except as set forth in Section 3.17 of the Disclosure
Schedule, there is no action, suit, inquiry, proceeding or investigation by or
before any court or governmental or other regulatory or administrative agency or
commission pending or threatened against or involving either Seller, may have an
adverse effect on the financial condition, assets or operations of either Seller
or the ability to consummate the transactions contemplated by this Agreement.
Further, Sellers do not know of any basis for any claim to be asserted against
them or affecting the Assets.
3.18 NO CONDEMNATION OR EXPROPRIATION. (a) Neither the whole nor any
portion of the leaseholds or any other Real Property assets of Sellers is
subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor has any such condemnation, expropriation or taking
been proposed; (b) there are no pending applications, ordinances, petitions,
resolutions or other matters before any governmental agency having jurisdiction
to act
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on zoning changes which would prohibit the use of the Assets or the locations
owned, leased or used by Sellers relating to the Sellers' Businesses; and (c)
there are no improvements installed or disclosed by any public authority to any
part of the Real Property or Premises, the cost of which might be assessed
against the Assets.
3.19 CONSENTS AND APPROVALS OF GOVERNMENTAL AUTHORITIES. Except for
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and filing and recording appropriate documents as
provided by the laws of the State of Michigan relating to conveyances of
interests in real estate, if any, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required in connection with the execution, delivery and performance
of this Agreement by Sellers.
3.20 NON-GOVERNMENTAL CONSENTS. Except for and as will be set forth in
Section 3.20 of the Disclosure Schedule, no consent of any non-governmental
person will be necessary to the consummation of the transactions contemplated
hereby, including, without limitation, consents from parties to loans, and
contracts, leases or other agreements.
3.21 COMPLIANCE WITH LAW. The operations of Sellers have been conducted in
compliance with all applicable laws, regulations and other requirements of all
national governmental authorities, and of all states, municipalities and other
political subdivisions and agencies thereof, having jurisdiction over Sellers,
including, without limitation, all such laws, regulations and requirements
relating to antitrust, consumer protection, currency exchange, equal
opportunity, health, occupational safety, pension, securities and trading-with
the-enemy matters.
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Neither Seller has received any notification of any asserted present or past
failure by Sellers to comply with such laws, rules or regulations.
3.22 ENVIRONMENTAL PROTECTION. The following is accurate and there is no
information to the contrary that would make the following misleading. Except as
otherwise disclosed in Section 3.22 of the Disclosure Schedule.
(i) There is no storage, disposal, handling, generation, production,
manufacture, refinement, transportation to other sites, production or treatment
of Hazardous Substances by Sellers or any of their predecessors in interest or
any predecessor owner or operator of any of the Real Property located at 8301
Ronda Drive, Canton, Michigan, and 32952 Capital, Livonia, Michigan, and the
structures located thereon, as well as any other real estate owned, leased or
otherwise used by Sellers in connection with the Businesses ("Real Property" or
"Premises") at, upon, or away from any of the Real Property or any property
adjacent to the Real Property, (which are included in the terms "Real Property"
and "Premises" for purposes of this Section 3.22). There has been no "Release,"
nor threat of Release, as that term is defined under CERCLA, of any kind onto
any plant, or into the environment surrounding any plant or any property
adjacent to the Real Property, of any Hazardous Substances. The term "Hazardous
Substances" shall include, but not be limited to, petroleum products, radon,
flammable explosives, asbestos, polychlorinated biphenyls and/or hazardous
substances within the meanings specified by any applicable local, state or
federal statute regulation, rule, policy, procedure, decision, order and
directive promulgated thereunder now in effect with respect to environmental
protection including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 ET SEQ. ("CERCLA"), the Resource
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Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 ET SEQ.
("RCRA"), the Hazardous Materials Transportation Act, as amended; The Toxic
Control Act, as amended; The Occupational Safety and Health Administration
("OSHA"), Hazard Communication Standard, C.F.R. Section 1910.1200 ET SEQ.; the
Solid Waste Amendments of 1984; the Superfund Amendments and the
Re-authorization Act of 1986; the Clean Water Act; the Solid Waste Disposal
Act, the Clean Air Act, as amended, and other federal or applicable state and
municipal laws, policies or regulations now in effect concerning land use,
zoning, water pollution, groundwater, filled wetlands protection, asbestos,
petroleum products, air pollution, solid wastes, hazardous wastes, industrial
waste, spills or other releases of toxic or hazardous substances,
transportation of hazardous substances, materials and wastes and occupational
or employee health and safety ("Environmental Laws"). No asbestos fibers or
materials, urea-formaldehyde foam insulation, lead, radon or polychlorinated
biphenyls are on or in the Premises and no claim has been made with respect
thereto;
(ii) The Premises are not being used or have previously been used for the
treatment, collection, storage or disposal of any refuse, solid waste,
industrial waste or objectionable wastes so as to require a permit or approval
from the United States Environmental Protection Agency or the Michigan
Environmental Protection Agency;
(iii) The Premises are not contemplated to be used or have previously been
used, or is now being used, for the generation, transportation, treatment,
storage and disposal of any hazardous waste subject to regulation under RCRA or
other Environmental Laws;
(iv) No portion of any of the Premises are located on or over a "sanitary
landfill" or an "open dump" within the meaning of RCRA;
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(v) There are no underground storage tanks located at or beneath any of the
Premises and any underground storage tanks removed from the Premises as listed
on Section 3.22 of the Disclosure Schedule have been removed in accordance with
applicable Environmental Laws;
(vi) No person has pursued a claim against Sellers for impaired health due
to any violations of applicable Environmental Laws regarding the indoor air
quality of the Premises and there are no existing violations of applicable
Environmental Laws regarding the indoor air quality of the Premises;
(vii) Disclosed in Section 3.22 of the Disclosure Schedule are the past and
present disposal and reclamation sites used by Sellers to dispose of Hazardous
Substances, solid wastes and industrial wastes generated by Sellers, and a list
of any and all carriers Sellers have used in connection with the disposal of
such hazardous materials or wastes. Sellers have never sent a Hazardous
Substance to a site, which, pursuant to CERCLA or any Environmental Law, (1) has
been placed or is proposed to be placed on a "CERCLIS" list or "National
Priorities List"; or (2) is subject to a claim, an administrative order or other
request to take "removal" or "remedial" action (as defined under CERCLA) or to
pay for any costs relating to such site;
(viii) Section 3.22 of the Disclosure Schedule sets forth a list, with
expiration dates, of all written permits, licenses and consents issued by or
received from local, state, federal or foreign governmental agencies relating to
environmental matters ("Environmental Permits") which are held by Sellers or
relate to the Premises and the operation of the Businesses and such
Environmental Permits are all the permits which are necessary to conduct the
Businesses as presently conducted in compliance with all applicable
Environmental Laws. Sellers are in
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compliance with such Environmental Permits. Sellers have not received any notice
of any violations of any Environmental Laws or Environmental Permits, and there
have been no violations of said Environmental Laws, regulations or Environmental
Permits. There are no proposed or pending changes in county or local laws,
regulations, standards or in the Environmental Permits that would increase the
present costs of compliance of such laws or change any methods of operation of
the Businesses;
(ix) All written reports of environmental audits or internal audits
relating to environmental matters prepared within the last five years, and all
citations, orders and decrees issued within the last five years by, for or on
behalf of Sellers and/or concerning any of the Premises by or with any
governmental agency with the respect to the treatment, storage or disposal of
Hazardous Substances or with respect to air, water and noise pollution are
listed in Section 3.22(ix) of the Disclosure Schedule. Sellers have not received
notification pursuant to CERCLA or any other Environmental Laws of any potential
liability with respect to the clean-up of any waste disposal site or wetlands
reclamation at which they have disposed of any Hazardous Substances or fill or
with respect to any other alleged violation of any of the Environmental Laws.
There are no actions, suits, claims or proceedings pending or threatened, which
could cause the occurrence of expense or costs of any name or description or
would seek money damages, injunctive relief, remedial action or any other remedy
that arises out of, or relate to, or results from (i) violation or alleged
violation of any applicable Environmental Law or noncompliance or alleged
noncompliance of an Environmental Permit with respect to the Premises; (ii) the
presence of any Hazardous Substance or Release or the threat of a Release on, at
or from the Premises, or any property adjacent to the Premises; or (iii) human
exposure to any Hazardous Substance,
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noises, vibrations, or nuisances of whatever kind to the extent the same arise
from the condition of the Premises or the operation, sale, transfer or
conveyance thereof; and
(x) No part of the Premises lies in an area designated as wetlands as
defined under existing law and Sellers have not received any notice that the
Premises lies within a wetlands area; and
3.23 BROKERS AND FINDERS. With the exception of a fee payable by Sellers to
Houlihan, Lokey, Howard & Zukin, Inc., whose fee shall be paid by Sellers,
neither Sellers nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the transactions contemplated by
this Agreement.
3.24 DISCLOSURE. No representations or warranties by Sellers in this
Agreement and no statement contained in any document (including, without
limitation, financial statements and the Disclosure Schedule), certificate, or
other writing furnished or to be furnished by Sellers to Buyer pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of fact or omits or will omit to
state any fact necessary, in light of the circumstances under which it was made,
in order to make the statements herein or therein not misleading, and there is
no fact known to Sellers that adversely affects the Businesses or their
operations and/or properties which has not been set forth in this Agreement, the
Disclosure Schedule, or an Exhibit, list, schedule or description referred to in
this Agreement.
3.25 WORK-IN-PROCESS. Sellers' Work-in-Process is capable generally of
being processed at ordinary costs and by ordinary procedures.
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3.26 ALL ASSETS USED IN THE BUSINESSES. All assets reasonably necessary to
operate the Businesses in a manner consistent with the way they have been
operated during the immediately preceding twenty-four (24) months will be
transferred to Buyer under this Agreement, and there are no other assets
material to the continued operation of such Businesses.
3.27 NO LIABILITIES. Except for (i) liabilities or obligations which are
disclosed or reserved against in the March 31, 1996 Balance Sheet, (ii)
liabilities or obligations incurred in the ordinary course of business
subsequent to the date of the March 31, 1996 Balance Sheet, (iii) liabilities or
obligations disclosed in this Agreement, the Disclosure Schedule or in any
Exhibit hereto, or which by the terms of this Agreement are permitted to be
excluded, and (iv) liabilities or obligations not required by generally accepted
accounting principles to be disclosed or reserved against on the March 31, 1996
Balance Sheet or the Closing Balance Sheet, Sellers have no liabilities or
obligations relating directly to the Businesses.
3.28 ACCURACY OF INFORMATION FURNISHED. No representation or warranty by
Sellers contained in this Agreement or specifically required and attached hereto
or in respect of the Exhibits, and no statement contained in any certificate
furnished or to be furnished by or on behalf of Sellers pursuant to this
Agreement, contains, or will contain, as at the date said representation or
warranty is made or said certificate is or will be furnished, any untrue
statement of a fact, or omits, or will omit to state as at the date said
representation or warranty is made or said certificate is or will be furnished,
any fact which is necessary to make the statements contained herein or therein
not misleading.
3.29 FINANCIAL STATEMENTS. As set forth in Section 3.29 of the Disclosure
Schedule, the balance sheets of Sellers as of March 31, 1996, and the related
statements of
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income, changes in stockholders' equity and cash flow for the periods then
ended, have heretofore been provided to Buyer and are identified herein as the
"Financial Statements". The Financial Statements are unaudited but have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (other than changes in classifications reflected on the
unaudited March 31, 1996 financial statements) and present fairly the financial
position of Sellers as at such dates, respectively, and the results of the
operations for such periods and fairly set forth the information purported to be
shown therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.01 CORPORATE ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan. Buyer has
heretofore delivered to Sellers complete and correct copies of the Certificate
of Incorporation and By-Laws or Code of Regulations, as presently in effect.
4.02 AUTHORIZATION: ENFORCEABILITY. Buyer has full corporate power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Buyer has taken all action
required by law, its Certificate of Incorporation and By-Laws or Code of
Regulations or otherwise to authorize the execution and delivery of this
Agreement and the transactions contemplated hereby, and this Agreement is a
valid and binding agreement of Buyer enforceable in accordance with its terms.
4.03 NO VIOLATION. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will violate any
provisions of the
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Certificate of Incorporation or By-Laws or Code of Regulations of Buyer or
violate, or be in conflict with, or constitute a default under, or cause the
acceleration of the maturity of any debt or obligation pursuant to, any
agreement or commitment to which Buyer is a party or by which Buyer is bound, or
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority by which Buyer is bound.
4.04 NO CONSENTS. Except for any consent or approval required under the HSR
Act, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or any other person
(other than the consent of Buyer's Board of Directors that has already been
obtained) is required in connection with the execution, delivery and performance
of this Agreement by Buyer.
4.05 LITIGATION. There is no action, suit, inquiry, proceeding or
investigation by or before any court or governmental or other regulatory or
administrative agency or commission pending or threatened against or involving
Buyer which may have an adverse effect on the ability of Buyer to consummate the
transactions contemplated by this Agreement.
4.06 BROKERS AND FINDERS. Except for Carleton, McCreary, Holmes & Co.,
whose fee shall be paid by Buyers, neither Buyer nor any of its officers,
directors or employees have employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated by this Agreement.
ARTICLE V
PRE-CLOSING COVENANTS OF SELLERS
--------------------------------
Pending the Closing, Sellers hereby covenant and agree with Buyer as
follows:
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5.01 FULL ACCESS. Sellers shall afford to Buyer, its counsel, accountants
and other representatives full access to the plants, offices, warehouses,
properties, books and records of Sellers and to the key employees, customers,
suppliers, sales representatives, distributors and other persons involved in the
Businesses in order that Buyer may have full opportunity to make such
investigations as it shall desire to make of the affairs of Sellers; and Sellers
will cause their officers and accountants to furnish such additional financial
and operating data and other information as Buyer shall from time to time
request; PROVIDED, HOWEVER, that any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation of the
businesses of Sellers.
5.02 ANTITRUST LAWS. Within five (5) working days after the execution of
this Agreement, Sellers shall make any and all filings which are required under
the HSR Act. Sellers will furnish to Buyer such necessary information and
reasonable assistance as Buyer may request in connection with its preparation of
necessary filings or submissions to any governmental agency, including, without
limitation, any filings necessary under the provisions of the HSR Act. Sellers
will supply Buyer copies of all correspondence, filings or communications (or
memoranda setting forth the substance thereof) between Sellers or their
representatives, on the one hand, and the FTC, the Antitrust Division of the
U.S. Department by the Sellers and one half by the Buyer.
5.03 CONDUCT OF BUSINESS OF THE SELLERS PRIOR TO THE CLOSING DATE.
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In addition to the provisions of Section 13.01(b) of this Agreement, if
Sellers do not comply with the requirements of this Section 5.03, Buyer may
terminate this Agreement upon the occurrence of such noncompliance.
(a) The Businesses of the Sellers shall be operated consistent with past
practice, and, consistent with such operation, the Sellers will use their best
efforts to preserve intact the present organization of the Sellers' goodwill
associated with the Businesses of the Sellers and the relationships of the
Sellers with persons having relationships with it. Sellers will not provide
discounts or other favorable payment terms of the amounts of any Accounts
Receivable except to the extent consistently provided to existing customers.
(b) No change shall be made in the governing documents of Sellers.
(c) No change shall be made in the number of shares of the Sellers; nor
shall any option, warrant, call, right, commitment, conversion right, right of
first refusal, or agreement of any character be granted or made by the Sellers
or relating to the authorized shares thereof; nor shall the Sellers or the
Sellers' issue, grant or sell any securities or obligations convertible into
shares of the Sellers; nor shall the Sellers declare, set aside for the payment
of, or pay any dividend or distribution of assets (in cash, kind or otherwise)
in respect of their share capital, nor repurchase or agree to repurchase any
share of such share capital.
(d) Sellers shall not without the consent of the Buyer, settle any disputed
tax claims in any material amount (including interest and penalties).
(e) Sellers shall duly comply in all respects with all laws applicable to
them and all laws applicable to the transactions contemplated by this Agreement.
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(f) Except consistent with past practice, or with the prior written
approval of Buyer, Sellers shall not (i) incur any indebtedness in addition to
any indebtedness outstanding on the date hereof or any renewals or extensions
thereof; (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other individual, firm or corporation.
(g) Sellers shall not (i) increase the compensation payable or to become
payable by the Sellers to any officer or employee thereof, or increase any
bonus, insurance, pension or other employee benefit plan, or increase any
payment plan, payment or arrangement made to, for or with any employees, or (ii)
commit itself to any additional pension, profit sharing, bonus, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or to any employment or consulting agreement with or
for the benefit of any person or to amend any of such plans or any of such
agreements in existence on the date hereof.
(h) Sellers shall not sell, transfer, mortgage, or otherwise dispose of, or
encumber, or agree to sell, transfer, mortgage or otherwise dispose of or
encumber, any properties, real, personal or mixed, tangible or intangible
without the prior written approval of Buyer.
(i) Except as set forth in Schedule 5.03(i), without the prior written
approval of Buyer, Sellers shall not enter into any other agreement, commitment
or contract, except agreements, commitments or contracts for the purchase, sale
or lease of products or services consistent with past practice and not in excess
of current requirements such amount not to exceed $5,000.
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(j) Except as set forth in Schedule 5.03(j), Sellers shall not make any
single capital expenditure, capital addition or capital improvement in an amount
that shall not exceed $5,000 per annum in the aggregate without prior written
approval of Buyer.
(k) Neither the Sellers nor the officers or directors of the Sellers shall
approve, recommend or undertake, with the Sellers as the surviving, disappearing
or acquiring corporation, any merger, consolidation, acquisition of all or
substantially all of the assets, or tender offer or other takeover transaction,
or enter into any negotiations with, or furnish or cause to be furnished, any
information concerning their Businesses, properties or assets to, any person
(other than Buyer) which the Sellers or any of such officers or directors knows
to be interested in any such transaction.
(l) Sellers shall not take, or knowingly permit to be taken, any action or
do, or knowingly permit to be done, anything in the conduct of the Businesses of
the Sellers which would be contrary to or in breach of any of the terms or
provisions of this Agreement or which would cause any of the representations
contained herein to be or become untrue.
(m) Sellers shall not settle any claim, action or proceeding commenced
after the date hereof without prior written consent of Buyer.
(n) Except for wages or other employee benefits due to employees under
existing arrangements, the Sellers shall not declare or set aside payment for or
make any dividend or other distribution whether in cash, stock or property (or
any combination thereof) to the shareholders of the Sellers or any other third
parties.
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(o) Sellers shall not make any loans or advances to any officer, director,
employee, consultant, representative, salesman or agent of the Sellers involving
more than $1,000 in the aggregate or make any other loan or advance.
(p) Neither Seller shall change its accounting methods or practices, or
change the depreciation or amortization policies or rates theretofore adopted by
it.
(q) Except as set forth in Section 5.03(q) of the Disclosure Schedule,
Sellers shall not pay or commit to pay any commission or other amount to any
shareholder or any director or officer of the Sellers or any employee,
consultant, representative, salesman or agent of the Sellers or any relative or
affiliate of any of them.
(r) Sellers shall not make any unlawful payment to any governmental or
quasi-governmental officials or payments to customers or suppliers for the
sharing of fees or rebating of charges or reciprocal practices.
(s) Sellers shall keep and maintain the Assets in operable and functional
condition and repair, reasonable wear and tear excepted, and shall duly observe
and conform to all of the terms and conditions upon or under which any of the
Assets are held.
5.04 RISK OF LOSS.
To the extent that (i) any tangible property of Sellers being transferred
to Buyer hereunder or (ii) any real property of which Sellers are or become the
owner or lessee and which Sellers are selling or to which Sellers are assigning
their rights as lessees to Buyer is destroyed or damaged by fire or other
casualty or is condemned or taken by any governmental authority or otherwise
acquired pursuant to eminent domain authority during the period from the
execution of this Agreement to the Closing Date, Sellers shall bear the risk of
loss. In the event of such loss,
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Buyer shall, at its option either, (A) require Sellers to repair or restore such
property to its condition prior to damage or destruction; or (B) require Sellers
to pay to Buyer, as soon as practical after an appropriate investigation has
been made to determine the extent of the loss, the insurance or condemnation
proceeds, if any, received by Sellers, together with any additional amounts
necessary for Buyer to repair or restore such property to its condition prior to
damage or destruction if it is not repaired or restored prior to the Closing
Date; or (C) terminate this Agreement and obligations hereunder.
5.05 COVENANT TO SATISFY CONDITIONS. Sellers will use their respective best
efforts to satisfy the conditions set forth in Article VIII hereof.
5.06 SUBSEQUENT EVENTS. Sellers shall promptly notify Buyer in writing of
the existence or happening of any fact, event or occurrence which materially or
adversely alters the accuracy or completeness of any representation or warranty
set forth in this Agreement.
ARTICLE VI
PRE-CLOSING COVENANTS OF BUYER
------------------------------
6.01 ANTITRUST LAWS. Within five (5) working days after the execution of
this Agreement, Buyer shall make any and all filings which are required under
the HSR Act. Buyer will furnish to Sellers such necessary information and
reasonable assistance as Sellers may request in connection with its preparation
of necessary filings or submissions to any governmental agency, including,
without limitation, any filings necessary under the provisions of the HSR Act.
Buyer will supply Sellers copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between Buyer
or its representatives, on the one hand, and the FTC, the Antitrust Division of
the U.S. Department of Justice or any other governmental agency or
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authority or members of their respective staffs, on the other hand with respect
to this Agreement and the transactions contemplated hereby. The HSR Act filing
fee shall be paid one-half by the by Sellers and one-half by the Buyer.
6.02 COVENANT TO SATISFY CONDITIONS. Buyer will use its best efforts to
satisfy the conditions set forth in Article IX hereof.
6.03 DUE DILIGENCE. Buyer shall use its best efforts to complete its due
diligence review of the Assets by September 15, 1996, and, in that light, shall
arrange for the Phase I Environmental Audit to be completed prior to that date,
at Buyer's expense. Buyer shall contribute up to Five Thousand Dollars
($5,000.00) of the costs for the Phase II Environmental Audit and Sellers shall
be responsible for the remainder of such Phase II costs. If the Environmental
Audits disclose any violation of the Environmental Laws which is not completely
remediated by Sellers within a reasonable period of time prior to Closing, Buyer
may terminate this Agreement.
ARTICLE VII
CONFIDENTIALITY AND PUBLICITY
-----------------------------
7.01 CONFIDENTIALITY. Each party hereto will hold and will cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or, in the opinion of its
counsel, by other requirements of law, all documents and information concerning
the other party furnished it by such other party or its representatives in
connection with the transactions contemplated by this Agreement (except to the
extent that such information can be shown to have been (i) in the public domain
through no fault of such party, or (ii) later lawfully acquired from other
sources by the party to which it was furnished), and each
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party will not release or disclose such information to any other person, except
its auditors, attorneys, financial advisors, bankers and other consultants and
advisors in connection with this Agreement. If the transactions contemplated by
this Agreement are not consummated, such confidence shall be maintained except
to the extent such information comes into the public domain through no fault of
the party required to hold it in confidence, and such information shall not be
used to the detriment of, or in relation to any investment in, the other party
and all such documents (including copies thereof) shall be returned to the other
party immediately upon the written request of such other party. Sellers
acknowledge that Shiloh Industries, Inc. is the ultimate parent of Buyer and
that such corporation is a publicly traded company subject to the laws and
regulations enforced by the United States Securities and Exchange Commission.
Sellers agree that they will not take or allow any shareholder, officer,
director, agent, or representative of Sellers to take any action which is a
violation of any federal or state securities laws, including, without limitation
any improper purchase or sale of the securities issued by Shiloh Industries,
Inc. or disclosure of information hereunder
7.02 PUBLICITY. Except as required by law, the rules of any stock exchange
or any governmental authority, prior to the Closing Date no public announcement
or other publicity regarding the transactions referred to herein shall be made
by Buyer, Sellers or any of the respective affiliates, officers, directors,
employees, representatives or agents, without the prior written approval of both
Buyer and Sellers as to form, timing and manner of distribution or publication;
PROVIDED, HOWEVER, that nothing in this Section 7.02 shall prevent such parties
from disclosing this Agreement and discussing such transactions with those
persons whose approval,
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consent, agreement or opinion, as the case may be, is required for consummation
of this Agreement.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLERS
------------------------------------
Each and every obligation of Sellers under this Agreement to be performed
on or before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by
Sellers:
8.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Buyer contained herein shall be in all respects true, complete and
accurate as of the date when made and at and as of the Closing Date as though
such representations and warranties were made at and as of such date, except for
changes expressly permitted or contemplated by the terms of this Agreement.
8.02 PERFORMANCE. Buyer shall have performed and complied with all
agreements, obligations, covenants, and conditions required by this Agreement to
be performed or complied with by it on or prior to the Closing.
8.03 RECEIPT OF CONSENTS. Sellers shall have obtained all consents of
Sellers' lenders and other third parties required for Sellers to consummate the
transactions contemplated hereby which Sellers will use their respective best
efforts to obtain as set forth in Section 5.05.
8.04 NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
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8.05 NO INJUNCTION. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as provided or imposing
any conditions on the consummation of the transactions contemplated hereby which
Sellers deem unacceptable in their sole discretion.
8.06 HSR ACT WAITING PERIODS. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired without governmental objection to the transactions contemplated hereby.
8.07 OPINION OF COUNSEL. Buyer shall have delivered to Sellers an opinion
of counsel to Buyer dated as of the Closing Date, in form and substance
reasonably satisfactory to Sellers, with respect to the matters set forth in
Exhibit 8.07 hereto.
8.08 CORPORATE ACTIONS. Buyer shall have delivered to Sellers on or prior
to the Closing Date certified resolutions of the Board of Directors and
Shareholders of Buyer authorizing Buyer to consummate the transaction
anticipated hereunder.
8.09 CERTIFICATES. Buyer shall have furnished Sellers with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Sellers.
8.10 ASSUMPTION AGREEMENTS. Simultaneously with the Closing, the parties
shall execute and deliver the Greenfield and 3-D Agreements of Assignment and
Assumption as set forth in Sections 1.02(a)(iv) and 1.02(b)(iv) of this
Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
----------------------------------
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Each and every obligation of Buyer under this Agreement to be performed on
or before the Closing shall be subject to the satisfaction, on or before the
Closing, of each of the following conditions, unless waived in writing by Buyer:
9.01 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Sellers contained herein shall be in all respects true, complete
and accurate as of the date when made and at and as of the Closing Date as
though such representations and warranties were made at and as of such date,
except for changes expressly permitted or contemplated by the terms of this
Agreement.
9.02 PERFORMANCE. Each of Sellers shall have performed and complied with
all agreements, obligations, covenants and conditions required by this Agreement
to be performed or complied with by them on or prior to the Closing, including,
without limitation, assignment of all Real Property Leases as set forth in
Section 1.01(a)(xv), delivery of the insurance certificates as set forth in
Section 3.14, and compliance with all of the covenants set forth in Article V of
this Agreement.
9.03 RECEIPT OF CONSENTS. Sellers shall have received all consents of
Sellers' lenders and other third parties required for Sellers to consummate the
transactions contemplated hereby which Buyer shall use its best efforts to
obtain as set forth in Section 6.02.
9.04 NO GOVERNMENT PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
person or legal or administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the transactions
contemplated hereby.
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9.05 NO INJUNCTION. On the Closing Date there shall be no effective
injunction, writ, preliminary restraining order or any order of any nature
issued by a court of competent jurisdiction directing that the transactions
provided for herein or any of them not be consummated as so provided or imposing
any conditions on the consummation of the transactions contemplated hereby which
Buyer deems unacceptable in its sole discretion.
9.06 HSR ACT WAITING PERIODS. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR Act shall have
expired without governmental objection to the transactions contemplated hereby.
9.07 OPINION OF SELLERS' COUNSEL. Sellers shall have delivered to Buyer an
opinion of counsel to Sellers dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyer, with respect to the matters set
forth in Exhibit 9.07 hereto.
9.08 ENVIRONMENTAL ASSESSMENT. Buyer shall have received an acceptable
Phase I Environmental Audit reports and such further environmental audits,
investigations and studies as may be reasonably required or recommended by
Buyer's legal counsel with respect to the Real Property and that shall be
acceptable to the sole satisfaction of the Buyer in form and substance as
provided in Section 6.03 of this Agreement.
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9.09 CORPORATE ACTIONS. Sellers shall have delivered to Buyer on or prior
to the Closing Date certified resolutions of the Board of Directors and
Shareholders of Sellers authorizing Sellers to consummate the transactions
contemplated hereunder in the form attached hereto as Exhibit 9.09.
9.10 CERTIFICATES. Sellers shall have furnished Buyer with such
certificates of their respective officers and others to evidence compliance with
the conditions set forth in this Article IX as may be reasonably requested by
Buyer, in the form attached hereto as Exhibit 9.10.
9.11 REAL ESTATE PURCHASE AGREEMENT WITH PLYMOUTH DEVELOPMENT CORPORATION.
Simultaneously with the Closing, Plymouth Development Company, a Michigan
limited partnership, shall enter into a Real Estate Purchase Agreement with
Buyer regarding the real estate located at 8301 Ronda, Canton, Michigan, in the
form attached hereto as Exhibit 9.11.
9.12 REAL ESTATE OPTION AGREEMENT WITH CONDOR LAND DEVELOPMENT COMPANY.
Simultaneously with the Closing, Condor Land Development Company, a Michigan
limited liability company, shall enter into a Real Estate Option Agreement with
Buyer regarding the real estate located at Canton, Michigan, in the form
attached hereto as Exhibit 9.12.
9.13 ASSUMPTION AGREEMENTS. Simultaneously with the Closing, the parties
shall execute and deliver the Greenfield and 3-D Agreements of Assignment and
Assumption as set forth in Section 1.02(a)(iv) and 1.02(b)(iv) of this
Agreement.
9.14 NON-COMPETITION AGREEMENTS. Simultaneously with the Closing, the
officers and directors of Sellers shall enter into Non-competition Agreements
with Buyer in the form attached hereto as Exhibit 9.14.
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9.15 GUARANTIES. Simultaneously with the Closing, the officers and
directors of Sellers shall execute and deliver to Buyer Guaranties of the
obligations of Sellers under this Agreement in the form attached hereto as
Exhibit 9.15.
9.16 CERTAIN AGREEMENTS. Effective as of the Closing Date, Buyer shall have
entered into mutually acceptable agreements with certain key employees of
Sellers including specifically, a Stay-On Agreement with William Fuller in the
form attached hereto as Exhibit 9.16, as determined by Buyer, such agreements to
be on terms and conditions acceptable to Buyer.
9.17 ASSIGNMENT OF TAX ABATEMENTS. Effective as of the Closing, Sellers and
all pertinent related parties shall assign and/or transfer to Buyer, to the sole
satisfaction of Buyer, all tax abatements associated with the Greenfield and/or
3-D businesses including the Real Property and the Assets. Sellers shall be
responsible for obtaining all necessary consents and approvals in order to
assign and/or transfer such tax abatements and for paying all fees and expenses
related thereto.
9.18 NAME CHANGE. Evidence of an amendment to the Articles of Incorporation
of Greenfield and of 3-D to be filed upon closing on the Closing Date changing
their names from "Greenfield Die & Manufacturing Corp." and "3-D Engineering,
Inc.", respectively, so as to distinguish them from Buyer's use of the name
"Greenfield" and "3-D" after the Closing Date.
9.19 NO MATERIAL ADVERSE CHANGE. Except as set forth on the Disclosure
Schedule, since March 31, 1996, there has not been:
(a) In Buyer's sole opinion, any material adverse change in the Assets,
liabilities, or operating performance of Sellers;
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(b) Any damage or destruction, whether or not covered by insurance
adversely affecting the properties or operations of the Greenfield and/or 3-D
Businesses;
(c) Any labor dispute adversely affecting the financial position or
operations of Sellers; or
(d) In Buyer's sole opinion, any other event or condition of any character
materially adversely affecting the results of the operations or the financial
position of Sellers.
9.20 TRANSFER DOCUMENTS. Sellers shall have delivered to the Buyer on or
before the Closing Date in proper form for recording where appropriate, General
Warranty Bills of Sale, assignments and other good and sufficient instruments of
transfer conveying and transferring to Buyer the entire right, title and
interest of Sellers in and to the Assets as provided in this Agreement (the
"Transfer Documents"), in form and substance reasonably satisfactory to Buyer's
counsel; PROVIDED, HOWEVER, that to the extent that it is determined by the
parties hereto that additional Transfer Documents are required, the condition
set forth in this Section 9.20 shall be deemed satisfied if such additional
Transfer Documents are delivered by Sellers to Buyer on or prior to the Closing
Date.
9.21 3-D LEASE AGREEMENT. Simultaneously with the Closing, Osprey Leasing
L.L.C. shall enter into a Lease Agreement for the Premises utilized by 3-D as
located at 32952 Capital, Livonia, Michigan 48150 in the form attached hereto as
Exhibit 9.21.
9.22 ESCROW AGREEMENTS. Simultaneously with the Closing, the parties shall
enter into the Working Capital Escrow Agreement in the form attached hereto as
Exhibit 1.02(d) and the Indemnity Escrow Agreement in the form attached hereto
as Exhibit 1.02(e).
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9.23 WAIVERS OF CONFIDENTIALITY (STATE TAXES). Simultaneously with the
Closing, Sellers shall execute and deliver Waivers of Confidentiality as to
State Taxes, such waivers to be in the form attached hereto as Exhibit 9.23.
ARTICLE X
TAX MATTERS
-----------
10.1 PREPARATION AND FILING OF TAX RETURNS.
Sellers represent and warrant to Buyer that Sellers shall cause to be
included in tax returns ("Tax Returns") for federal, state and local income,
sales, use, personal property, net worth, franchise, single business tax or any
other tax ("Tax") of the Sellers for all periods ending on or before or which
include the Closing Date, all tax items of the Sellers which are required to be
included therein, shall file timely all such Tax Returns with the appropriate
taxing authorities and shall pay timely all Taxes due with respect to the
periods covered by such Tax Returns. Any Tax Return to be prepared pursuant to
the provisions of this Article X shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns, except
for changes required by changes in law.
10.2 SURVIVAL. Anything to the contrary in this Agreement notwithstanding,
the representations, warranties, covenants, agreements, rights and obligations
of the parties hereto with respect to any Tax covered by this Agreement shall
survive the Closing and shall not terminate until one day after the expiration
of the statute of limitations (including extensions) applicable to such Tax.
Indemnification for Taxes shall be determined as set forth in Article XII.
ARTICLE XI
EMPLOYEE BENEFIT MATTERS
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11.1 EMPLOYEE MATTERS. Except as otherwise indicated in this Article XI,
all capitalized terms used in this Article XI shall be as defined in Section
3.16 or as otherwise defined in this Agreement.
11.2 EMPLOYMENT OF EMPLOYEES. As of the Closing Date, Buyer shall employ
each active employee of the Sellers listed on Section 11.2 of the Disclosure
Schedule and Buyer shall be responsible for all future obligations to such
employees listed on Section 11.2 of the Disclosure Schedule which obligations
occur and result from actions or events which occur after the Closing Date and
relate to Buyer's operation of the Businesses after the Closing Date. For
purposes of the preceding sentences, "active employee" shall mean (i) each
employee who is physically at work on the last work day prior to the Closing
Date and (ii) each employee who is not physically at work on such day solely
because the employee is on employer-approved sick leave, vacation leave, paid
time off, or leave under the Family and Medical Leave Act of 1993. The term
"Employee" as used in this Agreement shall mean each active employee of Sellers
who become employed with Buyer after the Closing Date. Notwithstanding the
foregoing, Buyer expressly reserves the right to evaluate its work force needs
and the work force needs of Buyer and to terminate the employment of any
Employee after the Closing Date.
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11.3 BENEFITS
(a) IN GENERAL. Effective as of the Closing Date: (i) except with respect
to specific written authorization from the Buyer to the Sellers indicating
otherwise, Sellers shall terminate each Plan and Benefit Program or Agreement
listed on Section 3.16 of the Disclosure Schedule, including the Greenfield Die
& Manufacturing Corp. 401(k) Plan (the "401(k) Plan") and the 3-D Engineering,
Inc. Profit Sharing Plan (the "Profit Sharing Plan"). Notwithstanding the above,
the Sellers may elect to maintain the Profit Sharing Plan, the 401(K) Plan, a
Plan, Benefit Program or Agreement listed on Section 3.16 of the Disclosure
Schedule after the Closing Date provided however, the Buyer is not assuming any
liabilities, costs or obligations related to said Profit Sharing Plan, 401(K)
Plan, a Plan, Benefit Program or Agreement. Effective as of the Closing Date,
Buyer shall cause each Employee to be provided with benefits including group
health and workers compensation insurance.
(b) WELFARE PLANS. Effective as of the Closing Date: (i) Sellers shall
terminate, or cease participation as an adopting entity of, as applicable, each
Plan that is a welfare plan (as such term is defined in section 3(1) of ERISA)
and each Benefit Program or Agreement that is a disability welfare plan excluded
as a payroll practice under 29 C.F.R. Section 2510.3-1(b) or a plan entitled to
favorable tax treatment under the Code ("Prior Welfare Plans"), and (ii) Buyer
shall cause each Employee to be covered by each of Buyer's newly established
welfare plans (as such term is defined in section 3(1) of ERISA) that provides
medical, life, or disability benefits ("Buyer's Welfare Plans"), but only to the
extent each such Employee is eligible for coverage under the terms of each such
Buyer Welfare Plan. Effective as of the Closing Date: (i) Prior Welfare Plans
shall be liable for any and all claims for benefits by Employees or former
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employees for covered expenses incurred, or attributable to events that
occurred, on or prior to the Closing Date specifically excluding workers'
compensation claims made on or after the Closing Date, and (ii) Buyer's Welfare
Plans shall be liable for any and all claims for benefits by Employees for
covered expenses incurred after the Closing Date to the extent such expenses are
attributable to events that occurred after the Closing Date. Without limiting
the above, Buyer is not assuming any liabilities or obligations under any
disability plans or Prior Welfare Plans, including any verbal promises for
post-retirement medical benefits.
(C) NONQUALIFIED RETIREMENT AND DEFERRED COMPENSATION PLANS. Effective as
of the Closing Date, Sellers shall (i) terminate, or cease participation as an
adopting entity of, as applicable, all Plans and Benefit Programs or Agreements
that are deferred compensation or retirement plans, including the 401(k) Plan
and the Profit Sharing Plan, ("Prior Retirement Plans") and (ii) cause to be
made all contributions that are required to be made under all Prior Retirement
Plans. Without limiting the above, Buyer is not assuming any liabilities or
obligations of Sellers for any retirement benefits.
(D) VACATION, SICK LEAVE, AND PAID TIME OFF. Effective as of the Closing
Date: (i) Sellers shall terminate, or cease participation as an adopting entity
of, as applicable, all vacation, paid time off, and sick leave programs ("Prior
PTO Plans"), and Sellers shall payout to the appropriate parties all vacation
accrued amounts within a reasonable period of time after the Closing Date and
(ii) Buyer shall cause each Employee to be covered by any program of vacation,
sick leave, and paid time off benefits maintained by Buyer ("Buyer's PTO Plans")
to the extent each such Employee is eligible for coverage under the terms of any
Buyer's PTO Plan. Without limiting the above, Buyer is not assuming any
liabilities or obligation under any Prior
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PTO Plans. Effective as of the Closing Date, (i) Prior PTO Plans shall be liable
for any and all claims for benefits by Employees or former employees for covered
expenses incurred or attributable to events that occurred on or prior to the
Closing Date and Buyer's PTO Plans shall be liable for any and all claims for
benefits by Employees for covered expenses incurred after the Closing Date to
the extent such expenses are attributable to events that occurred after the
Closing Date and relate to Buyer's operation of the Businesses after the Closing
Date.
(e) WORKERS' COMPENSATION. Effective as of the Closing Date: (i) Sellers
shall cause, if applicable and if said coverage is not required hereunder, each
Employee to cease to participate in any program of workers' compensation
subscribed to or maintained by the Sellers ("Prior Workers' Compensation"), and
(ii) Buyer shall cause each Employee to be covered by any program of workers'
compensation, which may be maintained by the Buyer ("Buyer's Workers'
Compensation"). Effective as of the Closing Date: (i) Prior Workers'
Compensation shall be liable for any and all covered claims for workers'
compensation benefits by Employees or former employees to the extent such claims
are for injuries or diseases that commenced or occurred on or prior to the
Closing Date, and (ii) Buyer's Workers' Compensation, if any, shall be liable
for any and all covered claims for workers' compensation benefits by Employees
to the extent such claims are for injuries or diseases that commenced and
occurred after the Closing Date. Section 11.3(e) of the Disclosure Schedule is a
list of all active employees and former employees who filed for Workers'
Compensation benefits which are still active and all persons who have filed
applications which have not been concluded as of the Closing Date.
(f) COBRA. Buyer shall cause to be provided to all former or inactive
employees of Sellers who are on COBRA continuation as of the Closing Date and
who are set
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forth in Disclosure Schedule 11.3(f) sufficient medical, mental health, vision,
dental, and other group health plan benefits to satisfy the obligations, if any,
of Sellers and Buyer under the continuation of coverage provisions described in
Section 4980B of the Code and Sections 601 through 608 of ERISA and any similar
continuation of health coverage provisions under applicable state law. Section
11.3(f) of the Disclosure Schedule is a list of all former and/or all current
but not active, employees of Sellers who are receiving or who are eligible to
receive COBRA benefits as of the Closing Date.
(g) DISABLED EMPLOYEES. Section 11.3(g) of the Disclosure Schedule is a
list of all former, and of all current but not active, employees of Sellers who
are not physically at work because they have been determined to have a
"permanent" or "temporary" disability and are receiving disability benefits.
Unless specifically agreed to in writing by the Buyer, Buyer shall have no
obligation or responsibility with regard to former, or current but not active,
employees set forth on Section 11.3(g) of the Disclosure Schedule and after the
Closing Date and Sellers shall maintain any and all applicable disability
insurance coverage legally required for said former employees or current but not
active employees.
(h) OPTION OF BUYER TO RETAIN COVERAGE. Notwithstanding the provisions of
this Section 11.3, Buyer may direct Sellers, in writing, to not terminate
certain Plans, Benefit Programs or Agreements, Prior Welfare Plans, Prior
Retirement Plans, or Prior Workers' Compensation as Buyer, in its sole
discretion, may select to retain, at Buyer's cost for all future expenses,
liabilities, claims and obligations related to matters incurred and arising
after the Closing Date and related to actions or inactions applicable to said
Plans, Benefit Programs or
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Agreements, Prior Welfare Plan, Prior Retirement Plan Prior Workers'
Compensation after the Closing Date and unrelated to any event or time period
prior to the Closing Date.
11.4 INDEMNITY REGARDING EMPLOYEES, PLANS, AND BENEFIT PROGRAMS OR
AGREEMENTS. In addition to the provisions of Article XII of this Agreement,
Sellers shall retain or assume and be liable for all past, present, and future
obligations and liabilities of Sellers arising out of any law or contract (i)
with respect to each Plan and Benefit Program or Agreement, including the 401(k)
Plan and the Profit Sharing Plan, (ii) with respect to each employee benefit
plan, as such term is described in Section 3(3) of ERISA (including, but not
limited to, any such employee benefit plan that is exempt from some or all of
the provisions of ERISA), which was not sponsored, maintained, or contributed to
by the Sellers but which is or was sponsored, maintained, or contributed to by
any Commonly Controlled Entity either presently or at any time since 1974
("Controlled Group Plan"), if any, and (iii) with respect to all employees and
former employees of Sellers in connection with any event commencing, occurring,
or failing to occur on or prior to the Closing Date, provided however after the
Closing Date, except as specifically provided herein, Buyer shall be responsible
for all obligations to former employees of the Sellers who become Employees of
the Buyer in connection with any event commencing, occurring or failing to occur
and related to Buyers operation of the Businesses after the Closing Date.
Notwithstanding the above, Buyer shall be assuming after the Closing Date the
Sellers State unemployment tax rates applicable to the Businesses. Sellers agree
to indemnify Buyer and its affiliates, directors, officers, and employees with
respect to any loss, liability, assessment, withdrawal liability assessment,
funding deficiency assessment, taxes, interest, penalties, judgments, and
employee benefit claims, (including any and all costs and fees related to
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proceedings establishing such loss, liability, assessment, withdrawal liability
assessment, funding deficiency assessment, taxes, interest, penalties,
judgments, employee benefit claims) arising out of any law or contract, with
respect to (i) each Plan and Benefit Program or Agreement, (ii) each Controlled
Group Plan, if any, and (iii) each employee or former employee of Sellers.
Notwithstanding the provisions of Sections 3.16 and 12.01, the indemnity
provided in this Section 11.4 shall survive this Agreement until one day after
the expiration of any applicable statute of limitations (and extensions) and
shall be in addition to any other indemnities provided in this Agreement, and
shall not be subject to any restrictions imposed in this Agreement upon any such
other indemnities.
ARTICLE XII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
-----------------------------------------------------------
12.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
specifically provided herein, all representations and warranties made by Sellers
in Article III hereof or elsewhere pursuant hereto, or by Buyer in Article IV
hereof or elsewhere pursuant hereto, shall survive the Closing hereunder and any
investigation at any time made by or on behalf of the other party for a period
of thirty (30) month following the Closing, after which all representations and
warranties and agreements made by the parties herein or pursuant hereto shall
expire, terminate and be of no further force and effect and any suit,
proceeding, claim for indemnity or other action by any party against another
based on any alleged breach of any representation, warranty or covenant
contained herein must be brought or made in writing within such thirty (30)
months period provided that the representations contained in Section 3.07 shall
not expire and that the representations, covenants and agreements of the parties
to be performed
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after the Closing including without limitation those set forth in Articles X, XI
and XII hereof shall survive in accordance with their respective terms.
12.02 STATEMENTS AS REPRESENTATIONS. All statements of fact contained
herein or in any certificate, schedule, list, exhibit, document or other writing
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed representations and warranties within the meaning of
Section 12.01 hereof.
12.03 AGREEMENT TO INDEMNIFY. Subject to the conditions and provisions
herein set forth, from and after the Closing, Sellers jointly and severally,
hereby agree from and after the Closing to indemnify, defend and hold harmless
Buyer and each parent or subsidiary of Buyer from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and
attorney's fees, asserted against or imposed upon or incurred by Buyer or any
parent or subsidiary of Buyer resulting from (i) the breach of any
representation, warranty or covenant of Sellers contained in or made pursuant to
this Agreement, (ii) any breach of any covenant or obligation of Sellers
contained herein; (iii) any and all liabilities and obligations of Sellers as of
the Closing Date that are not expressly assumed by Buyer, including, without
limitation, liabilities for Environmental Matters relating to the operation of
the Sellers' Businesses prior to the Closing Date and, (iv) all liabilities and
obligations of Buyer or Sellers (including fines and penalties) for death,
personal injury, other injury to persons, property damage or losses or
deprivations of rights, including, without limitation, any such liabilities or
obligations for failure to warn, resulting from, caused by or arising out of,
directly or indirectly, use of or exposure to any of the products of the
Sellers' Businesses (or any part or element thereof) where the product was
manufactured or where death,
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injury, damages or a loss occurred on or before the Closing Date. Buyer
represents and warrants that it will give Sellers prompt written notice of any
claim with respect to which indemnification will be sought, and Sellers
represent and warrant that they will jointly and severally, at their expense,
defend Buyer in each action relating to any of the foregoing, provided, however,
that Buyer may, at its own expense, retain such additional attorneys as it may
deem necessary, which attorneys will be permitted by Sellers and its attorneys
to observe and/or participate in all aspects of the defense of such action.
Sellers shall have the right, after consultation with Buyer, to resolve and
settle any such claims or actions which result only in the payment of money
damages by Sellers, unless Buyer determines that such settlement would not be in
its best interests or the interests of the Buyer, in which event Buyer shall
promptly release Sellers from any and all liability with respect thereto upon
the payment of the amount of said money damages to Buyer; notwithstanding
anything herein to the contrary, Sellers shall not be liable under this Section
12.03, unless the losses, liabilities, damages, costs and expenses identified in
this Section 12.03 exceed, in the aggregate, One Hundred Thousand Dollars
($100,000.00) in which event the Buyer shall be entitled to recovery (on a
dollar one basis) of all such losses, liabilities, damages, costs and expenses
up to the aggregate amount not to exceed Five Million Dollars ($5,000,000.00).
The preceding sentence regarding threshold and cap amounts shall not apply to
any losses, liabilities, damages, costs or expenses sustained as a result of a
breach of representations contained in Section 3.07, 10.1 and Sections 11.1
through 11.4.
12.04 NOTICE OF CLAIMS. In the event of any claim by Buyer under this
Article XII, whether the claim is made directly by Buyer or by a third party
("Claim"), Buyer shall notify Sellers in writing of said Claim, which notice
shall set forth the basis of the Claim including,
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without limitation, reference to the specific representation, warranty, or
obligation alleged to have been breached and, if then determinable by Buyer, a
reasonable estimate of the amount of loss or damages thereof (or, if in Buyer's
good faith opinion, no such reasonable estimate can then be made by it, the
maximum potential damages that, in Buyer's good faith opinion, might be
sustained in connection with such claim).
12.05 CONDITIONS OF INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations
and liabilities of Sellers under Section 12.05 hereof with respect to Claims for
damages resulting from the assertion of liability and/or loss by third parties
shall be subject to the following terms and conditions:
(a) Buyer will give Sellers prompt written notice of any Claim asserted by
a third-party against or imposed upon or incurred by Buyer or any parent or
subsidiary of Buyer, and Sellers will undertake the defense thereof by
representatives of its own choosing.
(b) In the event that Sellers, within a reasonable time after notice of any
such Claim, fail to defend, Buyer will (upon further notice to Sellers) have the
right to undertake the defense, compromise or settlement of such Claim for the
account of Sellers, subject to the right of Sellers to assume the defense of
such Claim at any time prior to settlement, compromise or final determination
thereof and in connection therewith reimburse Buyer promptly for all
out-of-pocket fees, expenses and losses and employee wages or salaries for time
incurred.
(c) Anything in this Section 12.05 to the contrary notwithstanding, (i) if
there is a reasonable probability that a Claim may adversely affect Buyer or any
parent or subsidiary of Buyer other than as a result of money damages or other
money payments, Buyer shall have the right at its own cost and expense, to
defend, compromise or settle such Claim, and (ii) Sellers
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shall not, without Buyer's written consent, settle or compromise any
Claim or consent to entry of any judgment which does not include as an
unconditional term thereof the release by the claimant or the plaintiff of Buyer
and/or Buyer's parent or subsidiary from all liability in respect of such Claim.
12.06 PAYMENT OF CLAIMS. If at the time of presentation of a Claim of Buyer
for indemnification directly for Buyer or for a third-party, the Indemnity
Escrow Agreement is still in effect, the claim shall be determined and paid as
set forth in the Indemnity Escrow Agreement. If at the time of presentation of a
claim of Buyer for indemnification directly for Buyer or for a third-party the
Indemnity Escrow Agreement has terminated, the claim shall be determined and
paid by agreement of Sellers and Buyer or if the Sellers and Buyer are not able
to agree upon resolution of the Claim, Sellers and Buyer shall submit the matter
to arbitration as set forth in Section 15.07.
12.07 REMEDIES CUMULATIVE. The remedies provided herein shall be cumulative
and shall not preclude Buyer from asserting any other rights or seeking any
other remedies against Sellers or their respective successors or assigns.
12.08 INDEMNIFICATION BY BUYER. Buyer hereby agrees from and after the
Closing to indemnify, defend and hold harmless Sellers and each parent or
subsidiary of Sellers from and against all demands, claims, actions or causes of
action, assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties and attorney's fees, asserted
against or imposed upon or incurred by Sellers from (i) the breach of any
representation or warranty or covenant of Buyer contained in or made pursuant to
this Agreement, (ii) the liabilities and obligations specifically assumed
hereunder by Buyer, or (iii) any liabilities arising from
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Buyer's ownership of the Assets or the operation of the Businesses by Buyer from
and after the Closing. If the Buyer and Sellers are not able to agree upon
resolution of the Claim, Buyer and Sellers shall submit the matter to
arbitration as set forth in Section 15.07.
ARTICLE XIII
TERMINATION
-----------
13.01 METHODS OF TERMINATION. The transactions contemplated herein may be
terminated at any time but not later than the Closing:
(a) By mutual consent of the Buyer and Sellers; or
(b) By the Buyer, at any time on or before the Closing Date, if there is
any material matter made known during due diligence, disclosed by Sellers or
otherwise determined by Buyer which is not acceptable to Buyer, in its sole
discretion, or which cannot be mutually worked out between the Buyer and the
Sellers, including, without limitation the failure to obtain assignment of a
contract of Sellers as set forth in Section 1.01(a)(xvii), the disclosure of
exceptions to any representation or warranty, or any failure to comply with any
pre-closing covenant under Article V of this Agreement.
(c) By the Sellers, at any time on or before the Closing Date, if there is
any material matter made known to Sellers disclosed by Buyer or otherwise
determined by Sellers which is not acceptable to Sellers in their sole
discretion, or which cannot be mutually worked out between the Buyer and the
Sellers.
(d) By the Buyer on the Closing Date, if any of the conditions to Buyer's
obligations provided for in Article IX of this Agreement shall not have been met
or waived in writing by Buyer prior to such date; or
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(e) By the Sellers on the Closing Date, if any of the conditions to
Sellers' obligations provided for in Article VIII of this Agreement shall not
have been met or waived in writing by Sellers prior to such date; or (f) By the
Buyer if the Closing Date has not occurred by November 1, 1996;
or
(g) By the Sellers if the Closing Date has not occurred by November 1,
1996.
13.02 PROCEDURE UPON TERMINATION. In the event of termination by the Buyer
or by the Sellers, or both, pursuant to Section 13.01 hereof, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated, without further action by
Buyer or Sellers. If the transactions contemplated by this Agreement are
terminated and/or abandoned as provided herein:
(a) Each party will redeliver all documents, work papers and other material
of any other party relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party furnishing the same;
(b) All confidential information received by any party hereto with respect
to the business of any other party or its subsidiaries shall be treated in
accordance with Section 7.01 hereof; and
(c) No party hereto shall have any liability or further obligation to any
other party to this Agreement except as stated in subparagraphs (a) and (b) of
this Section 13.02.
ARTICLE XIV
NONCOMPETITION AND OTHER POST-CLOSING COVENANTS
-----------------------------------------------
14.01 NONCOMPETITION. For a period of five (5) years from and after the
Closing Date, Sellers covenant and agree that they shall not, directly or
indirectly, engage in any manner
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whatsoever in any business in competition with the Businesses as they are
conducted immediately prior to the Closing Date either in the United States of
America or any other country.
14.02 INJUNCTIVE RELIEF. Sellers acknowledge that the restrictions
contained in Section 14.01 are reasonable and necessary to protect the
legitimate interests of the Buyer and its affiliates, and that any violations of
any provision of Section 14.01 will result in irreparable injury to Buyer and
its affiliates and that, therefore, Buyer and its affiliates shall be entitled
to preliminary and permanent injunctive relief in any court of competent
jurisdiction and to an equitable accounting of all earnings, profits and other
benefits arising from such violation, which rights shall be cumulative and in
addition to any other rights or remedies to which the Buyer or its affiliates
may be entitled.
14.03 ACCESS TO BOOKS AND RECORDS. From and after the Closing, Buyer agrees
to provide Sellers with access to the books and records of the Businesses as
Sellers shall request in connection with Sellers' reasonable need for such
records in connection with tax or other financial accounting matters.
14.04 BUSINESS NAME. Sellers covenant and agree that Sellers shall not use
the name or terms Greenfield and/or 3-D or any name or terms which may be
confused with or attributed to such names Greenfield and/or 3-D from and after
the Closing Date. Such names and all telephone numbers of Sellers, including 800
numbers shall be assigned to Buyer as of the Closing Date and Buyer shall take
any and all actions which Buyer deems appropriate in connection with said names
and telephone numbers.
14.05 FURTHER ASSURANCES. Sellers will, from time to time after the
Closing, upon the reasonable request of Buyer and at Buyer's expense, execute,
acknowledge, and deliver all
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such further acts, deeds, assignments, transfers, conveyances, and assurances as
may be reasonably required to transfer to and to vest in Buyer all right, title,
and interest of Sellers in and to the Assets and to protect the right, title,
and interest of Buyer in and to all of the Assets.
ARTICLE XV
MISCELLANEOUS PROVISIONS
------------------------
15.01 AMENDMENT AND MODIFICATION. This Agreement may be amended, modified
and supplemented by written agreement of the respective Boards of Directors of
the Sellers and Buyer, or by their respective officers authorized by such Boards
of Directors, at any time prior to the Closing with respect to any of the terms
contained herein.
15.02 WAIVER OF COMPLIANCE. Any failure of Sellers, on the one hand, or
Buyer, on the other, to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by the President or other
authorized officer of Buyer or Sellers, respectively, but such waiver or failure
to insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
15.03 EXPENSES; TRANSFER TAXES, ETC. Whether or not the transactions
contemplated by this Agreement shall be consummated, Sellers agree that all fees
and expenses incurred by them in connection with this Agreement shall be borne
by them and Buyer agrees that all fees and expenses incurred by it in connection
with this Agreement shall be borne by it, including, without limitation as to
Sellers or Buyer, all fees of counsel, actuaries and accountants. Buyer and
Sellers agree that all sales, transfer or other taxes and recording and filing
fees which may be payable in connection with the transactions contemplated by
this Agreement shall be paid
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by Sellers, including the HSR Act filing fee which shall be paid one-half by the
Sellers and one-half by the Buyer.
15.04 BULK SALES LAW WAIVER. Buyer and Sellers agree to waive compliance by
Sellers with the provisions of any "Bulk Sales" Laws of the State of Michigan
which may otherwise be applicable to the transaction contemplated by this
Agreement.
15.05 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or mailed, certified or registered mail
with postage prepaid, or by nationally recognized overnight delivery service:
(a) If to Sellers, to:
Greenfield Die & Manufacturing Corp.
8301 Ronda Drive
Canton, Michigan 48187
Attn: Mr. William G. Fuller, Treasurer
and to:
3-D Engineering, Inc.
c/o Greenfield Die & Manufacturing Corp.
8301 Ronda Drive
Canton, Michigan 48187
Attn: Mr. William G. Fuller, President
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<PAGE> 80
with a copy to:
Chirco, Herrington, Runstadler, Thomas & Morgan, LLP
2833 Crooks Road
P.O. Box 2501
Troy, Michigan 48007-2501
Attn: Daniel E. Chapman
or to such other person or address as Sellers shall furnish to Buyer in writing.
(b) If to Buyer, to:
GDM Acquisition, Inc.
c/o Shiloh Industries, Inc.
P.O. Box 2037
Mansfield, OH 44905
Attn: Robert L. Grissinger and William Burton
with a copy to:
Wegman, Hessler, Vanderburg & O'Toole
6100 Rockside Woods Blvd., Suite #345
Cleveland, OH 44131
Attn: Steven E. Pryatel, Esq.
or to such other person or address as Buyer shall furnish to Sellers in writing.
15.06 ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties, except by
operation of law and except that Buyer may assign its rights, but not its
obligations, under this Agreement to any subsidiary of Buyer. If such assignment
shall be made by Buyer, such subsidiary shall be entitled to all of the rights
and shall assume all of the obligations of Buyer hereunder, PROVIDED, HOWEVER,
that Buyer shall not be released from its
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<PAGE> 81
obligations hereunder by any such assignment and, upon the request of Sellers,
shall confirm in a separate written agreement, reasonably acceptable in form and
substance to Sellers, Buyer's continuing direct obligations hereunder.
15.07 GOVERNING LAW AND VENUE. Except for the resolution of the Working
Capital and Debt Adjustments as set forth in Section 2.04 of this Agreement, any
controversy arising under or out of this Agreement shall be settled by
arbitration in accordance with the governing rules of the American Arbitration
Association as administered through the Cleveland, Ohio office. The commercial
arbitration rules of the American Arbitration Association shall apply and the
controversy shall be governed by the laws of the State of Ohio. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof,
including a federal district court, pursuant to the Federal Arbitration Act. In
preparation for the arbitration hearing, each party may utilize all methods of
discovery authorized by the Ohio Rules of Civil Procedure, and may enforce the
right to such discovery in the manner provided by said Rules and/or by the Ohio
Arbitration Law. The arbitrator may order a pre-hearing exchange of information
by the parties, including, without limitation, production of requested
documents, exchange of summaries of testimony of proposed witnesses and
examination by deposition of witnesses and parties. Unresolved discovery
disputes may be brought to the attention of the arbitrator and may be disposed
of by the arbitrator. The arbitration hearing shall be conducted in Cleveland,
Ohio. The arbitrator shall have the authority to award any remedy or relief a
court of the State of Ohio could order or grant, including, without limitation,
specific performance of any obligation created under this Agreement, the
awarding of the issuance of an injunction or the imposition of sanctions of
abuse or frustration of the
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arbitration process. Judgment upon the award of the arbitrator may be entered in
any court of competent jurisdiction and enforced with full judicial effect
thereafter. All fees and expenses of the arbitration shall be borne by the
parties equally. However, each party shall bear the expense of its own counsel,
experts, witnesses, and preparation and presentations. The arbitrator is
authorized to award any party such sums as shall be deemed proper for the time,
expense, and inconvenience of arbitration, including arbitration fees and
attorney fees.
15.08 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15.09 HEADINGS. The headings of the Sections and Articles of this Agreement
are inserted for convenience only and shall not constitute a part hereof or
affect in any way the meaning or interpretation of this Agreement.
15.10 ENTIRE AGREEMENT. This Agreement, including the Exhibits hereto, the
Disclosure Schedules and the other documents and certificates delivered pursuant
to the terms hereof, set forth the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein, and supersede
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto, including, without limitation, the Letter
of Intent dated July 3, 1996, as amended.
15.11 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any person or
corporation other than the
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<PAGE> 83
parties hereto and their successors or assigns, any rights or remedies under
or by reason of this Agreement.
15.12 EXHIBITS AND SCHEDULES. The exhibits and schedules attached hereto
and the other documents delivered pursuant heretofore hereby made a part of this
Agreement as if set forth in full herein. The Disclosure Schedule and all
Exhibits and Schedules may be updated by Sellers in writing at any time prior to
the Closing Date (i) to reflect events occurring between the date of this
Agreement and the Closing Date and (ii) to correct any prior errors or omissions
provided that if Buyer believes such correction of a prior error or omission is
material, it shall have the right to terminate this Agreement at any time prior
to the Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed all as of the day and year first above written.
In the Presence of: GREENFIELD DIE & MANUFACTURING CORP.
/s/ William G. Peluchiwski By: /s/ William G. Fuller
- ------------------------------ --------------------------------------
Witness William G. Fuller,Treasurer
"Greenfield" or "Seller"
3-D ENGINEERING, INC.
/s/ William G. Peluchiwski By: /s/ William G. Fuller
- ------------------------------ --------------------------------------
Witness William G. Fuller, President
"3-D" or "Seller"
GDM ACQUISITION, INC.
/s/ Phylis D. Johnston By: /s/ Robert L. Grissinger
- ------------------------------ --------------------------------------
Witness Robert L. Grissinger, President
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<PAGE> 84
"Buyer"
-83-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000904979
<NAME> SHILOH INDUSTRIES
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 955,638
<SECURITIES> 0
<RECEIVABLES> 30,076,267
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<INVENTORY> 16,597,768
<CURRENT-ASSETS> 52,558,017
<PP&E> 164,581,332
<DEPRECIATION> 53,899,221
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<CURRENT-LIABILITIES> 21,717,703
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0
0
<OTHER-SE> 120,197,121
<TOTAL-LIABILITY-AND-EQUITY> 167,109,743
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<TOTAL-REVENUES> 163,086,751
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<TOTAL-COSTS> 142,810,083
<OTHER-EXPENSES> (61,555)
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<INTEREST-EXPENSE> 110,558
<INCOME-PRETAX> 20,227,665
<INCOME-TAX> 7,803,833
<INCOME-CONTINUING> 12,423,832
<DISCONTINUED> (10,577,283)
<EXTRAORDINARY> 0
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<NET-INCOME> 1,846,549
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