UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 14, 1996
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SMC CORPORATION
State of Oregon 0-25146 93-0939076
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
30725 Diamond Hill Road, Harrisburg, Oregon 97446
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(Address of principal executive offices) (Zip Code)
(503) 995 - 8214
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(Registrant's telephone number, including area code)
No Change
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(Former name, former address and former fiscal year, if changed since last
report)
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Item 2. Acquisition of Assets
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Effective June 14, 1996, SMC Midwest, Inc. ("SMC Midwest"), a wholly
owned subsidiary of SMC Corporation (the "Registrant"), purchased from
Honorbuilt Industries, Inc. ("Honorbuilt") certain of the assets used by
Honorbuilt in connection with the production by Honorbuilt of Class C
motorhomes. The purchase of the assets was pursuant to an Agreement for
Purchase and Sale of Business Assets between SMC Midwest and Honorbuilt
dated as of June 14, 1996 (the "Agreement").
The Assets, which are located in Minneapolis, Kansas, include
(a) certain tangible personal property, including equipment, machinery,
fixtures, tools, and parts; (b) certain intangible personal property,
including trade names, trademarks and service marks (including without
limitation the name "El Dorado"), copyrights, trade secrets, technical
know-how, plans, and processes; (c) certain contract rights, including
Honorbuilt's rights as lessee with respect to certain real property;
(d) all inventory ("Inventory"), other than finished goods inventory and
work in process; and (e) certain books and records.
The purchase price for the Assets was $650,000, plus the value of the
Inventory valued at Honorbuilt's cost (to be determined but estimated by
the Registrant to be approximately $280,000), less the amount agreed upon
by SMC Midwest and Honorbuilt to be required by SMC Midwest to satisfy the
unexpired warranty obligations of Honorbuilt with respect to previously
sold El Dorado motorhomes (to be determined but which the Registrant
preliminarily estimates to be approximately $175,000). SMC Midwest will not
be reimbursed by Honorbuilt if the costs to honor unexpired warranty
obligations exceed the estimates of the parties.
SMC Midwest will lease from Honorbuilt real property and improvements
related to the manufacture of motorhomes. The initial lease term will be
for two years, with multiple renewal options at the discretion of SMC
Midwest.
The consideration for the purchase of the Assets will be paid in cash
and will be provided from the Registrant's existing cash balances. The
purchase price for the Assets was determined in negotiations between the
Registrant and Honorbuilt.
For a more complete description of the terms of the acquisition,
reference is made to the Agreement, which is incorporated by reference from
Exhibit 2.1 to this Current Report on Form 8-K as indicated in Item 7
below.
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Item 7. Financial Statement and Exhibits
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(a) Financial Statements of Business Acquired
The Registrant has determined that it is impracticable to provide the
financial statements of the acquired business at the time this Current
Report on Form 8-K is filed with the Securities and Exchange Commission
(the "Commission"). If available, such financial statements will be filed
with the Commission by an amendment of this report no later than 60 days
after the date on which this report must be filed with the Commission.
(b) Pro Forma Financial Information
The Registrant has determined that it is impracticable to provide this
pro forma financial information at the time this Current Report on Form 8-K
is filed with the Securities and Exchange Commission (the "Commission"). If
available, such information will be filed with the Commission by an
amendment of this report no later than 60 days after the date on which this
report must be filed with the Commission.
(c) Exhibits
2.1 Agreement for Purchase and Sale of Business Assets between
SMC Midwest, Inc. and Honorbuilt Industries, Inc., dated as
of June 14, 1996 (the "Agreement").
2.2 List of omitted schedules to the Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: July 1, 1996
SMC CORPORATION
By: PAUL M. BROWN, JR.
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Paul M. Brown, Jr.
Vice President of Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
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2.1 Agreement for Purchase and Sale of
Business Assets between SMC
Midwest, Inc. and Honorbuilt
Industries, Inc. dated as of
June 14, 1996.
2.2 List of omitted schedules to the
Agreement.
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AGREEMENT FOR PURCHASE AND SALE
OF BUSINESS ASSETS
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This Agreement is made and entered into this 14th day of June, 1996,
by and between Honorbuilt Industries, Inc., a Kansas corporation
("Seller"), and SMC Midwest, Inc., a Kansas corporation, or its assigns
("Buyer").
R E C I T A L S:
A. Seller owns and operates a motorhome manufacturing business at the
premises commonly known as 1200 West 10th Street, Minneapolis, Kansas (the
"Motorhome Business").
B. Seller desires to sell certain assets used by Seller in the
operation of its Motorhome Business and Buyer desires to buy such assets.
NOW, THEREFORE, the parties agree as follows:
1. Personal Property to be Purchased and Sold. Seller agrees to sell
to Buyer and Buyer agrees to purchase from Seller, under the terms and
conditions set forth in this Agreement all of the personal property,
tangible and intangible, owned, licensed or leased by Seller and used or
available for use by Seller in connection with the operation of its
Motorhome Business, except for the excluded property described in Section
1.5 below (such property being purchased and sold is hereinafter
collectively referred to as the "Personal Property"), including but not
limited to the following:
1.1 Tangible Personal Property. All of the equipment, machinery,
fixtures, tools, equipment, parts, appliances, furniture, office
supplies, signs, vehicles and other rolling stock, shelving, keys and
other tangible personal property of every kind, character and
description, together with any and all guarantees and warranties by
manufacturers thereon, owned or leased by Seller and used or held for
use in connection with the operation of its Motorhome Business,
including without limitation, the tangible personal property listed on
the attached Exhibit "A"; and
1.2 Intangible Personal Property. All rights to all assumed
business names, trade names, trademarks and service marks (including
without limitation, the name "El Dorado"), all telephone numbers,
prepaid advertising, all copyrights, trade secrets, technical
know-how, plans, processes, procedures, formulas, goodwill and other
intellectual property and other intangible personal property owned or
licensed by Seller and used or held for use in connection with the
operation of its Motorhome Business; and
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1.3 Contract Rights and Leases. All of Seller's rights under
contracts, arrangements, licenses, permits, certificates, agreements,
and leases, including, without limitation: (i) sales orders and
contracts of sale for motorhomes to which Seller is a party and all of
Seller's rights under purchase orders and contracts for the purchase
of motorhomes to which Seller is a party, including those entered into
in the ordinary course of business prior to the closing date; and (ii)
the leases identified in the attached Exhibit "B"; and
1.4 Inventory. All inventory of every kind, including without
limitation, raw materials, spare parts, consumable manufacturing
supplies and regular inventory, owned by Seller and available for use
or sale in connection with the operation of its Motorhome Business,
except as noted in Section 1.5 below ("Inventory"); and
1.5 Books and Records. All books and records, in whatever form or
medium, whether currently in Seller's custody, care and control,
relating to any or all of the personal property described in this
Section 1 and the Owned Real Property described in Section 2 of this
Agreement and the operation thereof, except as noted in Section 1.5
below.
1.6 Excluded Assets. Notwithstanding anything to the contrary
which may be contained herein, the purchase and sale of assets
described herein does not include and Seller specifically retains
ownership of the following assets: cash, finished goods inventory,
work in process, all prepaid amounts and deposits, accounts
receivable, any obsolete or slow moving items of inventory retained by
Seller pursuant to Section 5.2 hereof, that portion, if any, of raw
materials inventory to be retained by Seller and used in completing
and building out work in process as provided for under the terms of
Section 5, and all financial and accounting records, personnel files
and corporate minute books and related files. In addition, those
chassis in connection with which manufacturing has not yet commenced
but which are located on the Owned Real Property are subject to a
floor planning arrangement and are owned by Rusty Eck Ford, Inc. All
such chassis will be purchased by Seller from Rusty Eck Ford, Inc. at
the invoice amount plus carrying cost.
2. Real Property to be Leased with Option to Purchase. Seller is the
owner of the real property described on the attached Exhibit "C" together
with all improvements thereon and all appurtenances thereto (the "Owned
Real Property") and the assignee of the lessee's interest in a certain
Lease Agreement in which Union Pacific Railroad is the Lessor (the
"Railroad Lease"). Seller operates its Motorhome business on and from the
Owned Real Property and the property covered by the Railroad Lease. Seller
has pledged the Owned Real Property as security for an outstanding loan
from the Bennington State Bank (the "Bank Loan") and a Community
Development Block Grant from the City of Minneapolis, Kansas (the "Grant").
The total indebtedness due on the Bank Loan and the
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Grant exceed the fair market value of the Owned Real Property which Seller
and Buyer agree is $350,000.00 as of the date of this Agreement.
2.1 Lease. Seller agrees to lease to Buyer and Buyer agrees to
lease from Seller all of the Owned Real Property, except that portion
of the Owned Real Property on which a sewage lagoon is located as
identified and described on the attached Exhibit "D" (the "Leased
Premises") for an initial two year term on a triple net basis at a
monthly rent of $5,000.00 (the "SMC Lease"). The SMC Lease shall grant
Buyer options:
(i) to renew the lease for two additional terms of 8 years
and then 5 years on the same terms and conditions as the initial
two year term, including rent at the rate of $5,000 per month;
and
(ii) to purchase the Leased Premises for a cash
consideration at any time during the initial or renewal terms at
a purchase price equal to $350,000.
The remaining terms of the SMC Lease shall be those generally included
in a commercial real property lease with an option to purchase
covering commercial real property located in or near Minneapolis,
Kansas. Seller agrees to execute a formal written lease agreement and
an appropriate Memorandum of Lease with Option to Purchase for
recording in the deed records for the county in which the Leased
Premises are located and in any other records required to provide
public notice of the existence and terms of the SMC Lease.
2.2 Non-Disturbance Agreements by Bennington State Bank and City
of Minneapolis, Kansas. Seller agrees to obtain the agreement of the
Bennington State Bank and the City of Minneapolis, Kansas, that the
rights of Buyer under the SMC Lease will be recognized so that in the
event of foreclosure of either mortgage the SMC Lease will remain in
effect according to its terms and Buyer's possession will not be
disturbed as long as Buyer is in compliance with the SMC Lease (the
"Mortgagee Approvals").
2.3 Assignment of Railroad Lease. Seller agrees to assign to
Buyer all of its lessee's interest in the Railroad Lease and to use
its best efforts to obtain Union Pacific Railroad Company's written
consent to such assignment as soon as reasonably possible.
3. Liabilities. Buyer shall assume responsibility for: (i) the
personal property leases identified in Exhibit "B"; (ii) the Railroad
Lease, and (iii) Seller's unexpired warranties as of the date of closing on
new El Dorado motorhomes manufactured and sold by Seller subject to Buyer's
right of reimbursement from the warranty reserve account
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established Paragraph 6.1 of this Agreement. Buyer's covenant under this
Paragraph 3 shall survive the closing.
All other obligations and liabilities of Seller, including but
not limited to any and all product liability claims, shall remain
and be the obligations and liabilities solely of Seller and shall
not be assumed by Buyer.
4. Purchase Price for Personal Property other than Inventory. The
purchase price to be paid by Buyer to Seller for the Personal Property
other than Inventory shall be as set forth on the attached Exhibit "E".
5. Purchase Price for Inventory. On or before June 14, 1996, Seller
and Buyer shall take a physical inventory of all items of Inventory.
5.1 Inventory Other than Obsolete and Slow Moving Items. The
purchase price for all items of Inventory, excluding obsolete and slow
moving items of Inventory, shall be computed at Seller's cost, as
reflected in Seller's records of Inventory at the time the physical
inventory is taken.
5.2 Obsolete and Slow Moving Inventory. The purchase price for
all obsolete and slow moving items of Inventory shall be 20% of
Seller's cost, as reflected in Seller's records of Inventory at the
time the physical inventory is taken. Provided, however, Seller may
remove, at Seller's option, any obsolete or slow moving items of
Inventory from the Owned Real Property at the time of the physical
inventory (the "Removed Inventory") and the value of the Removed
Inventory shall be excluded from the value of the purchased Inventory
and retained by Seller.
The purchase price for the Inventory shall be the sum of the purchase
prices determined under Paragraphs 5.1 and 5.2 above less the value of any
items of Inventory returned by Seller for use in completing and building
out its work in process during the Build Out Period as provided in Section
8. of this Agreement.
6. Payment of Purchase Price. The purchase price for the Personal
Property due by Buyer to Seller shall be paid as follows:
6.1 Warranty Reserve. An amount to be determined by the parties
no later than sixty (60) days following closing shall be deposited
into a warranty reserve account which shall be a Ford Cash Management
Account at Ford Motor Credit in the name of Rusty Eck Ford, Inc. The
amount deposited shall be calculated upon the net warranty expense of
Seller during the sixty (60) day period as a basis for the estimate of
outstanding net warranty expense that would be accruable at closing.
The proceeds of the warranty reserve account shall be
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used to reimburse Buyer for all warranty costs and expenses incurred
by Buyer in honoring Seller's unexpired warranties on the date of
closing on new El Dorado motorhomes manufactured and sold by Seller
("Seller's Remaining Warranty Obligations"). Buyer shall be entitled
to reimbursement monthly for all costs and expenses incurred in
honoring Seller's Remaining Warranty Obligations. Buyer shall provide
Seller with a monthly statement identifying the motorhome on which
reimbursable warranty service was performed during that month and the
costs and expenses charged by Buyer to Seller for such warranty
service. The warranty reserve account shall terminate and the balance,
if any, in the warranty reserve account paid to Seller on the earlier
of: (i) the date the reserve account is exhausted; or (ii) 30 days
after all of Seller's Remaining Warranty Obligations have expired.
Seller and Buyer agree that if Buyer's costs and expenses in honoring
Seller's Remaining Warranty Obligations exceed amount deposited in the
warranty reserve account under the terms of this Paragraph 6.1, the
excess shall be Buyer's responsibility and Buyer shall have no claim
against Seller for the excess. In addition, on 30 days notice to
Buyer, Seller shall be entitled to terminate the warranty reserve
account, withdraw all remaining proceeds in such account, and assume
the obligation for Seller's Remaining Warranty Obligations. In such
event, after the expiration of the 30 day notice, Buyer shall have no
further obligation in connection with Seller's Remaining Warranty
Obligations.
The warranty reserve account shall be used only to reimburse
Buyer for normal warrantable repairs and replacements in accordance
with Seller's standard twelve (12) month/18,000 mile warranty as
consistent with industry practice. Notwithstanding anything to the
contrary contained in this Agreement, no part of the warranty reserve
account shall be used to pay any product liability claim, in whole or
in part, and no provisions in this Agreement shall cause or be
interpreted to cause Buyer to assume any liability or obligation
whatsoever with respect to any product liability claim.
6.2 Balance of Purchase Price. The balance of the purchase price
for the Personal Property, after deducting the warranty reserve
account provided for under Paragraph 6.1, shall be paid as follows:
6.2.1 $500,000 of the purchase shall be paid in cash at the
date of closing; and
6.2.2 The remainder of the purchase price which has not yet
been finally calculated or determined as of the closing (for
example a final valuation of inventory, or the valuation of
certain tooling for which the parties are seeking an appraisal)
shall be first used to fund the warranty reserve account
described under Paragraph 6.1 and any funds then remaining shall
be paid in cash as soon after closing as such amount
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can be finally determined, but in no event later than sixty (60)
days following the date of closing.
7. Noncompetition Agreement. At closing, Seller and Buyer shall
execute the Noncompetition Agreement attached as Exhibit "F".
8. Seller's Completion and Build Out of Work In Process. Seller agrees
to use its best efforts to operate its Motorhome Business in a manner which
will result in there being no work in process existing on the date of
closing. Provided, however, Seller shall have 60 days after the date of
closing to complete its work in process and to vacate the Leased Premises
("Build Out Period"). Seller shall be entitled to occupy the portion of the
Leased Premises identified on the attached Exhibit "G" during the Build Out
Period rent free and to purchase from Buyer existing items of Inventory
reasonably necessary to complete the work in process. The price for any
item of Inventory purchased by Seller to complete its work in process shall
be the same price Buyer paid Seller for such item. The total cost of all
items of Inventory used by Seller to build out its work in process shall be
deducted from the purchase price for the Inventory determined under the
terms of Section 5 of this Agreement, or if such amount has been finally
determined and paid, shall be paid in cash by Seller. In addition, during
the Build Out Period, Seller shall have reasonable access to and use of
office space, continued use of the computer system, use of the telephone,
and such other access to the premises and books and records as is
reasonably necessary in connection with Seller's winding up of its
operations.
9. Covenants of Seller.
9.1 Operation of Seller's Business. Seller covenants that since
June 1, 1996, Seller has not and prior to closing Seller will not,
without the prior written consent of Buyer:
9.1.1 Make any distribution of any of the Personal Property
or Owned Real Property to any shareholder of Seller, except for
expenses paid in the ordinary course of Seller's Motorhome
Business.
9.1.2 Dispose of any of the Personal Property except in the
ordinary course of Seller's Motorhome Business.
9.1.3 Allow any substantial change in Seller's current
insurance coverages.
9.1.4 Knowingly fail to comply with or violate any
applicable federal, state or local statute, law, ordinance or
regulation material to the Personal Property, Owned Real Property
or operations of Seller's Motorhome Business.
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9.1.5 Intentionally engage in any transaction which is not
in the ordinary course of Seller's Motorhome Business.
9.2 Employment Matters. Seller covenants that on or before the
expiration of the Build Out Period provided for under Section 8 of
this Agreement Seller will cease operating Seller's Motorhome Business
and will terminate substantially all of its employees other than its
executive officers. Seller agrees to pay each employee all wages,
commissions, and accrued vacation and sick pay earned up to the time
of termination, including overtime pay, together with all payroll
taxes on all such payments. Provided, however, nothing contained in
this Paragraph 9.2 shall cause Seller to pay any disputed employment
claims which Seller believes, in good faith, lack substance or to
which Seller believes, in good faith, Seller has a valid defense if a
proceeding were brought against Seller. Seller shall furnish Buyer
with documentation substantiating that all such payments have been
made promptly upon request by Buyer.
10. Seller's Representations and Warranties. Seller represents and
warrants to Buyer and covenant to Buyer as follows:
10.1 Organization of Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Kansas, is duly qualified and has all necessary corporate
powers to own and sell its properties and to carry on its business as
now owned and operated by it, and is in good standing in all
jurisdictions in which the nature of its businesses or its properties
are located.
10.2 Authority. The execution, delivery, and performance of this
Agreement have been duly authorized and approved by the Board of
Directors and shareholders of Seller and that this Agreement
constitutes a valid and binding agreement of Seller in accordance with
its terms.
10.3 Personal Property. Seller will have on the date of closing
good and marketable title to the Personal Property, whether tangible
or intangible and all of the Personal Property will be free and clear
of restrictions on or conditions to transfer or assignment, and free
and clear of all liens, claims, pledges, charges, encumbrances,
covenants, conditions and restrictions.
10.4 Condition of Assets. All tangible personal property
constituting a part of the Personal Property will be transferred to
Buyer in a condition equal to the condition existing on June 1, 1996,
ordinary wear and tear excepted.
10.5 Labor Contracts. Seller is not a party to any collective
bargaining or other union agreement related to Seller's Motorhome
Business.
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10.6 Taxes. Seller has filed all domestic and foreign, federal,
state and local tax returns required by law with respect to the
Personal Property and Owned Real Property and has paid all taxes,
assessments and penalties due and payable with respect to the Personal
Property and Owned Real Property and there are no present disputes as
to taxes of any nature payable by Seller as a result of its operation
of the Motorhome Business or its ownership of the Personal Property
and Owned Real Property.
10.7 Liens on Leased Premises. There are no liens on the Leased
Premises other than those securing the Bank Loan and the Grant and a
third lien in favor of Rusty Eck Ford, Inc.
10.8 Litigation. There is no suit, action, arbitration or legal,
administrative or other proceeding, or governmental investigation
pending or, to the best knowledge of Seller, threatened, against or
affecting Seller which also affects the Assets, other than
specifically identified and listed on the attached Exhibit "H".
10.9 Compliance with Laws. To Seller's best knowledge and belief,
Seller has in all material respects complied with and is not in
violation of any applicable federal, state or local statute, law or
regulation (including, without limitation, any applicable
environmental, health, building, zoning or other law, ordinance or
regulation) affecting the Personal Property, Owned Real Property or
Seller's operation of its Motorhome Business.
10.10 No Conflict or Violation. No consent, approval,
authorization, declaration, filing or registration either of or with
any governmental agency or instrumentality or otherwise is necessary
in order to enable Seller to enter into and perform this Agreement.
The execution and delivery of this Agreement in consummation of the
transaction contemplated by this Agreement shall not result in or
constitute any of the following: (i) a default or an event that, with
notice or lapse of time or both, would be a default, breach or
violation of the Articles of Incorporation of Seller, or of any
agreement, instrument or arrangement to which Seller is a party or by
which Seller is bound; (ii) an event that would permit any party to
terminate any agreement with Seller or to accelerate the maturity of
any indebtedness or other obligation of Seller; (iii) the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
on any of the Personal Property or Owned Real Property; or (iv) the
violation of any law, regulation, ordinance, judgment, order or decree
applicable to or affecting Seller, the Personal Property or the Owned
Real Property.
10.11 Hazardous Substances. To Seller's best knowledge,
information and belief there are no Hazardous Substances (as defined
in Paragraph 22.1.2 of this Agreement) located on, upon, or under the
Leased Premises other than those
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reasonably necessary for the operation of Seller's Motorhome Business
and to the best of Seller's knowledge the Leased Premises and Seller's
Motorhome Business are is in full and complete compliance with all
Environmental Laws (as defined in Paragraph 22.1.1 of this Agreement)
and all orders of any and all governmental authorities having
jurisdiction under any such Environmental Laws.
10.12 Brokers and Finders. Seller has not employed any broker or
finder in connection with the transaction contemplated by this
Agreement or taken action that would give rise to a valid claim
against any party for a brokerage commission, finder's fee, or other
like payment.
10.13 Contracts and Leases. All contracts and leases to be
assigned to Buyer under this Agreement are valid and binding upon the
parties thereto. Seller is now, or will be at the time of closing,
current in all payment obligations under all such agreements and
Seller has not received notice that any party to any of the contracts
or leases included in the Personal Property or Leased Premises intends
to cancel or terminate any of these agreements or to exercise or to
not exercise any options of any of these agreements.
10.14 Lease on Leased Premises. Seller has or will have at the
date of closing full power and authority to enter into a valid and
enforceable lease covering the Leased Premises on the terms and
conditions set forth in Paragraph 2.1.
10.15 Accuracy of Representations and Warranties. None of the
representations or warranties made by Seller contains or will contain
any untrue statement of a material fact or omit or will omit or
misstate a material fact necessary in order to make statements not
misleading.
10.16 Insurance other than Products Liability Insurance. Seller
has adequate insurance coverage for the Personal Property and Owned
Real Property and all such insurance is presently in full force and
effect and will remain in full force and effect up to and including
the date of closing.
10.17 Products Liability Insurance. Seller has products liability
insurance coverage in effect with limits of $1,000,000.00 and Seller
will maintain its products liability insurance with equal or greater
coverage in full force and effect for not less than one year after the
date of closing.
11. Buyer's Representation's and Warranties. Buyer represents and
warrants to and covenants with Seller as follows:
11.1 Organization and Valid Existence. Buyer is a corporation
duly organized and validly existing under the laws of the State of
Kansas and has all
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necessary corporate powers to own its assets and to carry on its
business as now owned or operated by it, and is in good standing in
all jurisdictions in which the nature of its business or its
properties are located.
11.2 Authority Relative to Agreement. Buyer has all requisite
power, corporate or otherwise, to execute and deliver this Agreement
and to perform its obligations hereunder. Buyer has taken all action
required under its Articles of Incorporation, its Bylaws and otherwise
to authorize the execution, delivery and performance of this Agreement
and this Agreement constitutes the valid and binding agreement of
Buyer in accordance with its terms.
11.3 No Conflict or Violation. The execution of this Agreement
and the consummation of the transaction contemplated by this Agreement
will not result in or constitute any of the following: (i) a default
or any event that with notice or lapse of time or both, would be a
default, breach or violation of the Articles of Incorporation of Buyer
or any agreement, instrument or arrangement to which Buyer is a party
or by which Buyer is bound; (ii) an event that would permit any party
to terminate any agreement with Buyer or to accelerate the maturity of
any indebtedness or other obligation of Buyer; (iii) the violation of
any law, regulation, ordinance, judgment, order or decree applicable
to or affecting Buyer.
12. Conditions Precedent to Buyer's Obligations. The obligation of
Buyer to effect the closing shall be subject to the satisfaction prior to
or at the closing, of each of the following conditions, any one or more of
which may be waived by Buyer in writing:
12.1 Representations and Warranties of Seller. The
representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects as though the
representations and warranties had been made at closing.
12.2 Covenants of Seller. Seller shall have complied with all
covenants and conditions contained in this Agreement to be performed
or complied with by Seller at or prior to closing and Seller shall not
have violated or shall have failed to perform in accordance with any
covenant contained in this Agreement.
12.3 Conditions of Seller's Motorhome Business and the Personal
Property and Owned Real Property. There shall have been no material
adverse change in the condition or value the Personal Property or
Owned Real Property or in the manner of operation of Seller's
Motorhome Business prior to the closing date, other than those
resulting solely from Seller's decision to cease its operation of its
Motorhome Business and to terminate all of its employees as provided
in Paragraph 9.2 of this Agreement.
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12.4 Consent of Lessors to Assignments. Seller shall have
obtained the consent of all lessors, where required, to Seller's
assignment of all leases to be assigned to Buyer under the terms of
this Agreement.
12.5 SMC Lease. Seller and Buyer shall have entered into the SMC
Lease covering the Leased Premises and Seller shall have obtained the
agreements regarding non-disturbance by the Bennington State Bank and
the City of Minneapolis, Kansas, as required by Paragraph 2.2.
12.6 Authorization By Board of Directors. The execution and
delivery of this Agreement by Seller and the performance of its
agreements hereunder shall have been duly authorized by all necessary
corporate action and Buyer shall have received true and complete
copies of all Board resolutions pertaining to such authorization.
12.7 No Suits or Actions. There shall not be any suit, litigation
or governmental action threatened or pending the outcome of which
would have a material adverse effect on the Personal Property to be
purchased by Buyer or the Leased Premises to be leased by Buyer.
13. Conditions Precedent to Seller's Obligations. The obligation of
Seller to effect the closing shall be subject to the satisfaction prior to
or at the closing, of each of the following conditions, any one or more of
which may be waived by Seller in writing:
13.1 Representations and Warranties of Buyer. The representations
and warranties of Buyer contained in this Agreement shall be true and
correct in all material respects as though the representations and
warranties had been made at closing.
14. Seller's Indemnity. Seller agrees to indemnify, defend and hold
Buyer and its officers, directors, shareholders, agents, successors and
assigns, harmless from and against any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies, including interest, penalties and reasonable attorney's fees,
that Buyer, its officers, directors, shareholders, agents, successors or
assigns shall incur or suffer or which arise, result from or relate to:
14.1 Any breach of, or failure by Seller to perform any of
Seller's representations, warranties, covenants or agreements in this
Agreement or in any certificate, exhibit, document or other instrument
furnished or to be furnished by Seller under this Agreement;
14.2 Any liability of Seller arising prior to or after the date
hereof, related to or affecting any of the Personal Property, Leased
Premises or any
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<PAGE>
interest therein, other than lease payments arising after the date of
closing on the leases set forth in Exhibit "B";
14.3 Any claim asserted against Buyer, directly or indirectly,
arising from or attributable to any employment relationship existing
between any person and Seller, including, without limitation, any and
all claims for back wages, workers' compensation, vacation pay, sick
pay, and any other matter whatsoever; and
14.4 Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
15. Buyer's Indemnities. Buyer hereby agrees to indemnify and hold
Seller and its officers, directors, shareholders, agents, successors and
assigns, harmless from and against any and all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries,
deficiencies, including interest, penalties and reasonable attorney's fees
that Seller or its officers, directors, shareholders, agents, successors or
assigns shall incur or suffer, or which arise, or result from or relate to:
15.1 Any breach of, or failure by Buyer to perform, any of its
representations, warranties, covenants or agreements in this
Agreement; and
15.2 Any liability arising in connection with the conduct of
Seller's business after the closing date.
15.3 Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without
limitation, legal fees and expenses, incident to any of the foregoing
or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
16. Closing.
16.1 Time and Place. This Agreement shall be closed at the
offices of Triplett, Woolf & Garretson, LLP, 151 North Main, Suite
800, Wichita Kansas, on or before the 14th day of June, 1996, or at
such other time as the parties may agree in writing. If closing has
not occurred on or before June 30, 1996, either party may elect to
terminate this Agreement.
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<PAGE>
16.2 Obligations of Seller at Closing. At the closing and
coincidentally with the performance by Buyer of its obligations
described in Paragraph 16.3 below, Seller shall deliver to Buyer the
following:
16.2.1 All bills of sale, assignments, properly endorsed
certificates of title and other instruments and documents of
transfer, in form and substance reasonably satisfactory to
counsel for Buyer, necessary to transfer the Personal Property to
Buyer free and clear of all liens and encumbrances.
16.2.2 The SMC Lease between Seller and Buyer and the non-
disturbance agreements of the Bennington State Bank and the City
of Minneapolis, Kansas.
16.2.3 The assignment of the Railroad Lease and, if
obtained, Union Pacific Railroad Company's written consent to the
assignment.
16.2.4 The Noncompetition Agreement described in Section 7.
16.2.5 The copies of Board resolutions described in
Paragraph 12.6.
16.2.6 Possession of the Personal Property to be conveyed
and the Leased Premises to be leased pursuant to this Agreement.
16.2.7 Any other certificates and documents, including,
without limitation UCC-3 Termination Statements, Satisfaction of
Judgments and Deeds of Reconveyance as may be called for or
necessary under the provisions of this Agreement.
16.3 Obligations of Buyer at Closing. At the closing and
coincidentally with the performance by Seller of its obligations
described in Paragraph 16.2, Buyer shall deliver to Seller the
following:
16.3.1 A cashier's check or certified check in the amount of
the balance of the purchase price due Seller at closing after
deducting from the purchase price the amount to be deposited into
the warranty reserve account.
16.3.2 Any other certificates and documents as may be called
for by the provisions of this Agreement.
17. Remedies. If the transaction contemplated by this Agreement is not
closed because of: (i) the failure of one or more of the conditions
precedent contained in Sections 12 and 13, or (ii) a party's exercise of
the election to terminate granted the
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<PAGE>
parties under the circumstances set forth in Paragraph 16.1, this Agreement
shall be null and void.
If Seller fails or refuses to close this Agreement for any reason
other than the failure of one or more of the conditions precedent contained
in Section 13 or Seller's exercise of the election to terminate granted it
under the circumstances set forth in Paragraph 16.1, Buyer may bring an
action at law or suit in equity to obtain redress, including specific
performance, injunctive relief or any other equitable remedy.
If Buyer fails or refuses to close this Agreement for any reason other
than the failure of one or more of the conditions precedent contained in
Section 12 or Buyer's exercise of the election to terminate granted it
under the circumstances set forth in Paragraph 16.1, Seller may bring an
action at law or suit in equity to obtain redress, including specific
performance, injunctive relief or any other equitable remedy.
18. Prorations. All real and personal property taxes on the Personal
Property and Leased Premises shall be prorated between Buyer and Seller as
of the date of closing.
19. Possession. Seller shall be entitled to possession of the Personal
Property and Leased Premises as of the date of closing.
20. Risk of Loss. The risk of loss, damage or destruction to the
Personal Property and Owned Real Property shall be borne by Seller up to
the time of closing. In the event of any loss, damage or destruction of any
of the Personal Property or Owned Real Property, Seller shall replace the
lost property or repair or cause to be repaired the damaged property to its
condition prior to the damage. If replacement, repairs, or restorations are
not completed prior to closing, then Buyer shall have the option to delay
the closing until the required replacement, repairs or restorations have
been completed by giving Seller written notice of such election.
21. Cooperation and Access. The parties agree to reasonably cooperate
with each other following closing, including allowing each other access to
books and records as reasonably necessary. In addition, during the Build
Out Period and for any period following the Build Out Period necessary for
the winding up of Seller's operations, Buyer will allow Seller reasonable
use of office space, use of the telephone system, and access to the
computer system located at the Leased Premises. In addition, if Seller
elects to have an auction following closing, upon reasonable advance notice
from Seller, Buyer shall allow Seller reasonable use of the main
manufacturing facility for purposes of conducting such an auction sale.
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<PAGE>
22. Miscellaneous.
22.1 Captions. The captions used in this Agreement are for
convenient reference only, are not a part of this Agreement, and are
not to be considered in construing or interpreting this Agreement.
22.2 Incorporation of Exhibits and Recitals. All of the Exhibits
and Recitals to this Agreement are incorporated into this Agreement by
this reference.
22.3 Entire Agreement and Amendments. This Agreement is the
complete and final agreement of the parties and all previous and
contemporaneous understandings and agreements not stated herein are
hereby waived and abandoned by the parties. This Agreement is not
ambiguous and there is no need for parol evidence to interpret its
terms. No supplement, modification or amendment to this Agreement
shall be binding unless executed in writing by all of the parties.
22.4 Notices. Any notice or other communication required or
permitted under this Agreement shall be in writing and shall be faxed
or mailed by certified mail, return receipt requested, postage
prepaid, addressed to the parties at the fax numbers or addresses
appearing on Page 15. All notices and communications shall be deemed
to be given on the date of mailing. The addresses to which notices or
other communications shall be mailed may be changed from time to time
by giving written notice to the other parties as provided in this
Paragraph 22.4.
22.5 Waiver. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver.
No waiver shall be binding unless executed in writing by the party
making the waiver.
22.6 Attorney's Fees. In the event either party defaults under or
breaches this Agreement, such party shall reimburse all reasonable
costs and attorney's fees incurred by the other in connection with the
default or breach. In the event of any litigation or other proceeding,
including any action or participation in or in connection with a case
or proceeding under any chapter of the Bankruptcy Code or any
successor statute, between the parties to declare or enforce any
provision of this Agreement, the prevailing party or parties shall be
entitled to recover from the other party or parties, in addition to
any other recovery and costs, reasonable attorney's fees incurred in
such litigation or other proceeding, in both the trial and in all
appellate courts and post-judgment costs, including attorney's fees.
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22.7 Further Assurances. The parties hereto agree to promptly
make, execute, deliver or cause to be done, executed and delivered all
such other documents, acts and things as the other party reasonably
requests for the purpose of giving effect to this Agreement.
22.8 Nature and Survival of Representations, Warranties and
Covenants. All representations, warranties and covenants made by the
parties in this Agreement shall survive the closing and for one (1)
year thereafter.
22.9 Choice of Forum and Choice of Venue. All disputes and
litigation arising out of this Agreement will be decided by the State
Courts of Kansas.
22.10 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.
22.11 Governing Law. This Agreement shall be governed by the laws
of the State of Kansas.
IN WITNESS WHEREOF, the parties have executed this Agreement this 14th
day of June, 1996.
Buyer: Seller:
SMC Midwest, Inc. Honorbuilt Industries, Inc.
a Kansas corporation a Kansas corporation
By: PAUL M. BROWN, JR. By: FRED M. HILL
---------------------------------- ------------------------------------
Paul M. Brown, Jr. Its PRESIDENT
Chief Financial Officer 1110 Limestone Road
30725 Diamond Hill Road Minneapolis, Kansas 67467
Harrisburg, OR 97446 Fax No. (913) 392-3440
Fax No. (541) 995-1176
PAGE 16 - AGREEMENT FOR PURCHASE AND SALE OF BUSINESS ASSETS
LIST OF OMITTED SCHEDULES TO THE AGREEMENT FOR PURCHASE AND
SALE OF BUSINESS ASSETS BETWEEN SMC MIDWEST, INC. AND HONORBUILT
INDUSTRIES, INC., DATED AS OF JUNE 14, 1996
The Registrant agrees to furnish supplementally a copy of any of the
omitted schedules listed below to the Securities and Exchange Commission
upon request.
Exhibit A - Tangible Personal Property
Exhibit B - Personal Property Leases
Exhibit C - Owned Real Property
Exhibit D - Lagoon Property
Exhibit E - Schedule of Purchase Prices for Personal Property
Exhibit F - Noncompetition Agreement
Exhibit G - Build Out Premises
Exhibit H - Litigation Schedule
