SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1997
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TRANS-LUX CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-2257 13-1394750
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 Richards Avenue, Norwalk, CT 06856-5090
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 853-4321
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
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On May 1, 1997, a wholly-owned subsidiary, Trans-Lux Midwest
Corporation, acquired the catalog and custom scoreboard sign business
segment of Fairtron Corporation, an Iowa corporation located in Des Moines,
Iowa, which manufactures scoreboard and related signs, pursuant to an
agreement for a cash purchase price of $450,000, noncompete and consulting
fees, assumption of debt and contingent additional purchase price of
$250,000 for an approximate total purchase price of $7.3 million. Current
assets acquired, net of cash received, include approximately $3.8 million
net book value of accounts receivable and inventory. Fixed assets acquired
include land, building, leasehold, machinery and equipment, and intellectual
property. The total cash purchase price is subject to adjustment based on
the April 30, 1997 balance sheet, as provided for in the Purchase of Assets
Agreement. The purchase was financed by working capital and assumption of
debt.
The foregoing is only a brief summary of the Purchase of Assets
Agreement and reference is made to the entire agreement which is filed as an
exhibit to this report.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Business Acquired (to be filed by
amendment within 75 days following May 1, 1997).
(b) Pro Forma Financial Information (to be filed by amendment within
75 days following May 1, 1997).
(c) Exhibits.
10(a) Purchase of Assets Agreement dated as of April 30, 1997
between Trans-Lux Midwest Corporation and Fairtron
Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANS-LUX CORPORATION
By:/s/ Angela D. Toppi
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Angela D. Toppi
Chief Financial Officer
Dated: May 15, 1997
Exhibit 10(a)
PURCHASE OF ASSETS AGREEMENT
AGREEMENT made as of the 30th of April, 1997 between Fairtron
Corporation, an Iowa corporation, l700 Delaware Avenue, Des Moines, Iowa
(hereinafter referred to as the "Seller"), and Trans-Lux Midwest Corporation an
Iowa corporation, c/o 110 Richards Avenue, Norwalk, CT 06856-5090 (hereinafter
referred to as Purchaser").
R E C I T A L S
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A. Seller is engaged in the development and manufacture of equipment
used in the scoreboard and related sign business, including but not limited to
all items included in Seller's catalogs (the "Business") and desires to sell to
Purchaser the said Business and certain of its assets, including the goodwill
of said Business as a going concern.
B. Purchaser desires to acquire the said Business and certain of its
assets, including the goodwill of said Business as a going concern, upon the
terms and conditions and for the purchase price hereinafter more particularly
set forth.
C. Seller, with Purchaser's assistance, has prepared a list of
information of assets, liabilities and other items contained in Schedules to
this Agreement (collectively the "List").
A G R E E M E N T S
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I. Purchase and Sale
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1.01 Seller agrees to sell to Purchaser, and Purchaser
agrees to purchase from the Seller, on the terms and conditions hereinafter
set forth in this Agreement, all of Seller's assets used in or pertaining to
the Business (the "Assets") other than the "Excluded Assets" identified in
Schedules 1.01(b)-(e), (g) and (h) attached hereto. The Assets to be conveyed
to Purchaser include but are not limited to the following:
(a) all of Seller's right, title and interest to the names "Fairtron"
and "Fair-play" and permutations thereof;
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(b) all current assets other than Excluded Assets that are current
assets set forth in Schedule 1.01(b), including but not limited to cash,
receivables, prepaid assets, and inventories, (including work in progress);
(c) all fixed assets including the Delaware Avenue property and Dean
Avenue leasehold and the fixed assets at such locations except those excluded
in Schedule 1.01(c);
(d) all leases and long-term contracts except those excluded in
Schedule 1.01(d);
(e) all other long-term assets except those excluded in Schedule
1.01(e);
(f) all trademarks, trade names, copyrights, patent applications,
patent rights and other intellectual property rights used or pertaining to the
Business, including but not limited to those set forth in Schedule 2.08,
excluding any of the foregoing listed in Schedule 2.08 as used or pertaining
solely to the businesses of Fibrelite Corporation or Seller's Athco division
and not used or pertaining to the Assets and Business being acquired by
Purchaser;
(g) all rights under maintenance, warranty and other similar contracts
except those excluded in Schedule 1.01(g);
(h) all other assets of Seller including unfilled orders, promotional
material and transferable licenses and rights under nondisclosure agreements
listed in Schedule 7.12(b) except those listed as "Excluded Assets" in Schedule
1.01(h). Unless the asset is specifically listed as an Excluded Asset , it is
being conveyed to Purchaser hereunder.
l.02 Purchaser agrees to assume only the following enumerated
liabilities ("Liabilities") of Seller and agrees to indemnify and hold Seller,
its employees, agents and shareholders harmless therefrom, including all costs
and expenses (including reasonable legal fees) of defending against any and all
of such Liabilities:
(a) The bank loan existing with Norwest Bank Iowa ("Norwest") at the
Closing not exceeding the amount of $2,757,712.
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(b) Payment to Seller at Closing to pay officers, employees and former
employees' loans to Seller existing at the Closing not exceeding the amount of
$362,650, as more particularly described in Schedule l.02(b).
(c) The mortgage liability of Seller in respect of the Delaware
property existing at the Closing in the amount of $700,424 at December 3l, l996
less normal scheduled amortization before May l, l997 (the "Effective Date").
(d) Seller's equipment leases set forth on Schedule l.02(d).
(e) Warranty claims made after April 30, l997.
(f) Necessary expenditures under Sections f(i), f(ii) and f(iii) with
respect to conditions existing prior to May l, l997 at Seller's existing
properties being acquired or leaseholds assigned hereunder located in Des
Moines, Iowa, to comply with the laws referred to in Sections f(i), f(ii) and
f(iii) and/or to repair or replace the roof of the Delaware Avenue property, up
to a maximum aggregate amount of expenditures of $200,000.
f(i) Americans with Disabilities Act.
f(ii) the Occupational, Safety and Health Act ("OSHA").
f(iii) environmental protection laws ("EPA"). For purposes hereof, EPA
collectively shall mean and include, without limitation, the federal
Comprehensive Environmental Response, Compensation and Liability Act 42 U.S.C.
S 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. S 6901
et seq., the Clean Air Act, 42 U.S.C. S 7401 et seq., the Clean Water Act, 33
U.S.C. S 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. S 2601 et
seq., the Safe Drinking Water Act, 42 U.S.C. S 300f et seq., and C.G.S. S
22a-114 et seq., and all other federal, state or local laws, rules,
regulations, or ordinances presently in effect or in effect at any later date
relating to the environment and environmental conditions or public health and
safety, including those relating to emissions, discharges, releases or
threatened releases of oil and hazardous substances whether into soil, air or
water.
(g) Other current liabilities set forth in the Final Balance Sheet as
provided in Section 5.0l(b), but excluding those current liabilities set forth
in Schedule l.02(g).
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Except for the Liabilities or as otherwise specifically set forth herein, it is
expressly understood and agreed that Purchaser assumes no liabilities or
obligations of Seller of any kind or nature whatsoever, whether absolute,
contingent, accrued or otherwise, including, but not limited to, any liability
of Seller under any product liability claims based on transactions, events or
facts existing, occurring or arising prior to May l, l997, bulk sales
liability, liabilities incurred with respect to the Athco Division, the
Fibrelite Corporation put options or with respect to the lease dated March 6,
l995 for premises at 1801 Guthrie Avenue, Des Moines, Iowa (the "Guthrie
Leasehold") or sales or other taxes or fees based on the transactions
hereunder. Seller agrees to discharge, defend, indemnify and hold Purchaser,
its employees, agents and shareholders harmless from and against any and all
liabilities of Seller not assumed by Purchaser hereunder (including liabilities
under Section 1.02(f) above in excess of $200,000 in the aggregate), as well as
against all costs and expenses (including reasonable legal fees) of defending
against any and all such liabilities or obligations of Seller.
II. Representations and Warranties of Seller
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Seller covenants, represents and warrants to Purchaser as follows:
2.0l Organization and Standing of Seller. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of Iowa. The
Seller has the power to carry on its business as it is now being conducted and
is duly qualified, licensed or domesticated and in good standing to do business
in each other jurisdiction in which the character of the properties owned or
the nature of the activities conducted makes such qualification, licensing or
domestication necessary. The List sets forth in Schedule 2.0l each
jurisdiction in which the Seller is qualified, licensed or domesticated to do
business as at the date of this Agreement (the "Agreement Date").
2.02 Subsidiaries of Seller. The Seller has no subsidiaries and owns
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no stock or other securities of any other corporation except Fibrelite
Corporation and Seller's Athco division.
2.03 Ownership of Stock. The List sets forth in Schedule 2.03 the
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owners of all the capital stock of the Seller indicated for him or her on the
List, the legal requisite of whom necessary for the approval of this Agreement
have agreed to vote their shares at a special meeting of stockholders of Seller
to be held on or prior to May l, l997 for a proposal approving and ratifying
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by Seller. True and correct certified copies of
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stockholder and Board of Director resolutions have been delivered to Purchaser
simultaneously with the execution of this Agreement.
2.04 Financial Condition and Liabilities. Seller has initialed and
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delivered to Purchaser upon the execution and delivery hereof attached hereto
as Schedule 2.04 financial statements for the Seller consisting of audited
balance sheets and income statements for the Seller as at and for the fiscal
years ended March 31, 1996 and l995 and unaudited balance sheet and income
statement for the nine months ended December 3l, l996. The balance sheets are
correct and complete and present fairly the financial position of the Seller on
the dates indicated, and such income statements are correct and complete, and
present fairly the results of operations of the Seller for the periods
indicated. Such March 3l, l996 and l995 financial statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis. The balance sheet of the Seller as at December 3l, 1996,
is hereinafter referred to as the "Latest Balance Sheet".
The inventories of the Seller, reflected on the balance sheets
delivered hereunder, and the inventories as the same will exist on the Closing,
were and will be on the Closing, good and merchantable and of a quality and
quantity usable and necessary in the ordinary course of business. Items of
inventory of below-standard quality of merchantability, if any, have been
written down to realizable market value, or adequate reserves provided
therefor. The values at which such inventories are carried are at the lower of
net invoiced cost or net realizable market price. No value has been attributed
on said Latest Balance Sheet to any inventory on hand which is obsolete, stale
or excessive. The receivables reflected on such balance sheets resulted from
bona fide sales of goods by the Seller, prior to the date of such balance
sheets, and such accounts receivable and all other receivables reflected on
said balance sheets are good and collectible at the aggregate recorded amounts
thereof and are not subject to defense, counterclaim or offset.
Since February 24, l997, Seller has not committed to any obligation
with any vendor for an amount exceeding $25,000 with such vendor in the
aggregate or extending more than 90 days without receiving the Purchaser's
written approval, if any, except those listed on Schedule 2.04 and which
Purchaser hereby expressly approves.
Except to the extent reflected or reserved against or described in the
Seller's Latest Balance Sheet, or disclosed in this Agreement or on Schedule
2.04 of the List, the Seller had, as of such date, no liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
including, without limitation, tax liabilities due or to become due, whether or
not assessed or determined, for any taxable periods ending on or before the
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Latest Balance Sheet Date. Since the Latest Balance Sheet Date, there has been
no material adverse change in the financial condition, business, prospects,
assets or other properties of the Seller.
All Federal and State tax returns and reports of the Seller required by
the laws of the United States or the State of Iowa, or the laws of any other
jurisdiction, have been or will be duly filed, and all taxes, assessments, fees
and other governmental charges upon the Seller upon, or measured by, any of the
properties, franchises, income or receipts of the Seller, which are or become
due and payable, have been or will be duly and timely paid.
2.05 Location of Assets. The List sets forth in Schedule 2.05 (a) all
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realty, machinery or equipment which, as of the Agreement Date, is owned by or
leased to the Seller; (b) the book value, reserves for depreciation and the net
book value, as at the Agreement Date, of any such realty, machinery and
equipment and depreciation policy with respect to each thereof and, with
respect to all leases, a short description thereof, including terms, expiration
dates, rental, renewal and purchase privileges, if any; (c) a schedule of
accounts, notes and other receivables of Seller as at the Agreement Date, which
accurately sets forth the face amount of each such receivable, the balance
uncollected thereon and whether the same is current or delinquent and, if
delinquent, the extent of such delinquency, and a description of the
collateral, if any, securing each such receivable; and (d) a list of the
composition of the inventories of the Seller, as at the Agreement Date, the
principal locations thereof and the aggregate value thereof at which such
inventories are carried on the books of the Seller.
2.06 Compliance with Law, Litigation. The Seller has complied with all
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laws, ordinances, regulations and orders applicable to its businesses,
including, without limitation, all pertinent state and other laws respecting
employment, employment practices and benefits, terms and conditions of
employment, wages and hours and working conditions including, but not limited
to, OSHA, EPA and the Employee Retirement Income Security Act ("ERISA"). Each
employee benefit plan has been administered in accordance with ERISA, the
Internal Revenue Code of l986, as amended ("Code") and all other applicable
laws No breach of fiduciary duty under Section 404 of ERISA has occurred, no
Prohibited Transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code has been committed, no Reportable Event as defined in ERISA
has occurred and no "accumulated funding deficiency" as defined in Section 4l2
of the Code has been incurred. The Seller has all governmental, union, guild
and other franchises, permits, licenses and authorizations appropriate and
necessary to the conduct of its businesses and all such franchise permits,
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licenses and authorizations are valid and in full force and effect. The Seller
has not engaged in any activity which would cause revocation or suspension of
any such franchise, permit, license or authorization, and no action or
proceeding looking to or contemplating the revocation or suspension of any such
franchise, permit, license or authorization is pending or threatened. The
Seller is not engaged in any unfair labor practices nor have any unfair labor
practice claims ever been lodged against it. Except as set forth in the List,
there are no actions, suits, proceedings, investigations, strikes or labor
disputes pending or threatened against, relating to or affecting the Seller or
its properties or businesses or the transactions contemplated by this
Agreement, by any person, group, union or governmental department, board or
agency, and the Seller is not subject to or in default under any order, writ,
decree or judgment of any court or governmental body. The Seller shall
indemnify and hold Purchaser harmless from and against any loss, damage,
liability or expense (including legal and other fees) incurred or sustained by
Purchaser as a result of or attributable to any actions, suits, proceedings or
investigations, regardless of whether the same are set forth on the List.
2.07 Title to Properties. The Seller has good and marketable title to
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and owns outright and absolutely all of the Assets, real and personal, free and
clear of all liens, mortgages, pledges, leases, easements, conditional sales
agreements, security interests or other encumbrances, charges, liabilities or
claims of any nature or kind whatsoever, except as noted in such Latest Balance
Sheet or disclosed in said List. All properties and assets owned or used by
the Seller in its businesses are in good condition for their intended purpose
and conform with all applicable ordinances and regulations, it being understood
that except as to real estate and as otherwise provided in this Agreement
(including the representations and warranties), such Assets are otherwise being
conveyed "as is", "where is". The buildings owned or leased by the Seller and
the use and occupancy thereof comply in all material respects with all
applicable zoning and municipal ordinances, and the Seller is not in violation
of any applicable building code or regulation. The Seller has duly complied
with and its facilities, business, assets, property, leaseholds and equipment
are in compliance with the provisions of all laws, statutes, ordinances and
code relating to the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing, handling,
production or disposal of any hazardous wastes or substances and there are no
outstanding citations, notices or orders of noncompliance issued to the Seller
or relating to its business, assets, property, leasehold or equipment under any
such laws, rules or regulations. Fibrelite Corporation owns no fixtures and
has no interest in the Assets.
2.08 Patents, Trademarks, Copyrights and Licenses. The Seller is the
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sole and exclusive owner free of claims of others of the patents, patent
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applications, patent rights, trademarks, trade names and copyrights set forth
on Schedule 2.08 of the List. The Seller is not a party to any contract for
the sale or purchase of any patent, patent application, patent rights or patent
licenses, nor is the Seller a party to any royalty or license agreement, except
as set forth on the List. The List sets forth all trademarks and trade names
of the Seller, all of which have been duly and properly registered under all
applicable fictitious name statutes and other applicable registration laws and
regulations, and a list of all licenses held by the Seller or its employees for
the benefit of the Seller authorizing performance by the Seller of work in the
areas or localities set forth in such List, all of which licenses are valid and
subsisting. The Seller and its employees have in all material respects
performed all of their obligations under such licenses. The Seller owns or
possesses adequate and valid licenses or other rights in full force and effect
to use all patents, patent applications, trademarks, trade names, copyrights,
inventions, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information systems or procedures),
licenses and other franchises and technology (collectively "Intellectual
Property Rights") used in the conduct of its businesses as now operated by it
and the Seller has not received any notice of conflict with the asserted
Intellectual Property Rights of others. The Seller is not using in any aspect
of its businesses any patents, patent applications, trademarks, trade names,
copyrights, inventions, service marks, service names or other Intellectual
Property Rights in any manner except as set forth in the List, and the Seller
does not require any other licenses nor is the Seller required to pay royalties
or other fees on any licenses required to carry on its businesses in the manner
in which it now conducts the same.
2.09 Performance of Contracts. The Seller has performed all
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obligations required to be performed by it, and is not in default under any
contract, lease, license or other document to which it is a party or to which
any of its assets are subject, and the Seller does not know of any event which,
with the passage of time or the giving of notice, or both, would constitute a
default under any thereof, excluding accounts payable past due which have been
disclosed to Purchaser and except for pending litigation as each is disclosed
in Schedule 2.09. All such contracts, leases, licenses and other documents are
in full force and effect and constitute legal, valid and binding obligations of
the respective parties thereto. All completed contracts and all development
contracts have been and are being performed in accordance with the terms
thereof and the required specifications and materials and meet minimum industry
standards in all respects. Warranty or other reserves with respect to all such
contracts are adequate to meet any necessary corrective actions.
2.10 Contracts. Except as described in Schedule 2.l0 of the List, the
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Seller is not a party to any written or oral (a) contract for the employment of
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any officer or individual or any pension, profit-sharing, bonus, retirement,
stock option or similar incentive or deferred compensation plan or arrangement
in effect with its officers, employees or others; (b) contract for the
acquisition of real estate or other fixed assets; (c) financing arrangement
involving the mortgaging, pledging or other hypothecation of assets or
involving a borrowing; (d) contract with any labor union; (e) contract,
commitment or other arrangement continuing for more than three (3) months or
providing for the future purchase of materials or supplies; (f) contract for
the performance of work, labor or services, (g) sales agency, representation,
dealer, distribution, management or other similar contracts; (h) contract with
any governmental authority, or commission agent; (i) any contract, arrangement
or understanding under which the Seller has assumed, guaranteed, endorsed or
otherwise become liable in connection with the obligation of any person, firm
or corporation; (j) contract with any of Seller's stockholders or their
affiliates; or (k) any contract not included in any of the foregoing which is
material and was not made in the ordinary and usual course of business of the
Seller as conducted at the Agreement Date. True and complete copies of all
contracts, leases, licenses and other documents described in the List, shall be
initialed by the Seller and delivered to Purchaser upon the execution and
delivery hereof.
2.11 Directors and Officers, Banks, Power of Attorney. The List sets
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forth in Schedule 2.11 (a) the names of all directors and officers of the
Seller, (b) the name and address of each bank in which the Seller has one or
more accounts and (c) the names of all persons holding tax or other powers of
attorney from the Seller and a summary statement of the terms thereof.
2.12 Insurance. The insurance coverage of the Seller is, and will be
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through the Closing, adequate for all normal risks incident to the Seller's
businesses. All such policies are in full force and effect and the Seller is
not in default under any of them.
2.13 Employee Relations. Except as set forth in Schedule 2.l3 of the
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List referred to in Section 1.01 hereof, the Seller is not a party to any
collective bargaining agreement. There are and have been no strikes, lockouts,
other work stoppages, picketing or labor disputes during the past five (5)
years in which the Seller or any of its premises are or were involved, and no
event has transpired which has had or will have a material adverse effect on
the relationship between the Seller and its employees. There are no oral or
written contracts, agreements or arrangements obligating the Seller to increase
the compensation or benefits paid or payable to any of its employees being
retained by Purchaser now or at any future time.
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2.14 Transactions Since Latest Balance Sheet Date. The Seller has not,
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since the Latest Balance Sheet Date, (a) issued or agreed to issue any stock,
bonds, or other corporate securities, including securities convertible into
stock; (b) declared or made any payment, dividend or distribution to
stockholders or purchased or redeemed any shares of its capital stock; (c)
mortgaged, pledged or subjected to lien, charge or any other encumbrance any of
its assets, tangible or intangible, except as required by any existing
contracts or agreements described in this Agreement or in the List; (d)
suffered any damage or loss, whether or not covered by insurance, materially
affecting its property or business; (e) sold or transferred any of its assets
except in the ordinary and usual course of its business as conducted at the
Latest Balance Sheet Date, or except as required by any existing contracts or
agreements described in this Agreement or in the List; (f) paid to any officer,
employee or any other person any extra compensation or bonus, or made any
arrangement or commitment therefor, or increased the salary or other
compensation of any officer or other executive employees; (g) sold, licensed,
assigned or transferred any Intellectual Property Rights; or (h) incurred any
material obligations or liabilities, absolute or contingent, except in the
ordinary and usual course of business or pursuant to existing contracts and
agreements described in this Agreement or in the List. Notwithstanding the
foregoing, it is expressly understood and agreed Purchaser is not obtaining the
Athco Division or Fibrelite Corporation nor the Guthrie Leasehold as disclosed
in Schedules 1.0l(b)-(e), (g) and (h) and Schedule 2.08 and Seller may retain
or dispose of such items subject to Section 7.l0 with respect to the Athco
distributor agreement, and Section 7.ll with respect to the Fibrelite
development agreement.
2.15 Right to Sell, Corporate Records. This Agreement is a valid and
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binding obligation of the Seller enforceable in accordance with its terms.
There are no provisions of the articles of incorporation or by-laws of the
Seller or of any agreement to which any of the Seller's stockholders is or are
parties or to which the Seller is a party, which prohibit, limit or otherwise
affect the right, power and authority of Seller to execute this Agreement or to
consummate the transactions contemplated hereby. No consent or approval of any
party or governmental authority is necessary for the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
The Seller has all requisite corporate power and authority to own and operate
its properties and to carry on each and every phase of its business.
2.16 Events Subsequent to Agreement Date. The Seller will promptly
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advise Purchaser in writing of the occurrence of any events which come to the
knowledge of Seller after the Agreement Date and prior to or on the Closing
Date relating to any of those matters which are the subject of the covenants,
representations and warranties of the Seller contained in Section 2.01 to 2.15,
inclusive.
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2.17 Employee Benefits. Seller shall have full responsibility for the
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payment of all compensation and other benefits accruing (i) to all its
employees prior to May l, l997, including but not limited to accrued vacation,
40l(k) and sick leave liability, and (ii) to any of its employees who are not
employed by Purchaser on the Closing Date, including liability for any and all
severance pay which may become payable to employees of Seller who are not
employed by Purchaser at the Closing Date. Purchaser shall have no
responsibility for any compensation, employee benefits or severance pay for any
employees of Seller who are not employed by Purchaser. At Seller's request and
expense, Purchaser will continue to administer COBRA for terminated employees.
2.18 General. No representation or warranty by the Seller in this
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Agreement, or in any List or other documents furnished or to be furnished to
Purchaser pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading. The Seller has herein disclosed
to Purchaser all facts material to the financial condition, assets, prospects
and businesses of the Seller.
The covenants, representations and warranties of the Seller contained
in this Agreement shall be true and correct in all respects as of the Closing
Date with the same force and effect as if given and made on and as of the date
and time of Closing, and such covenants, representations and warranties shall
survive the Closing and the consummation of the transactions contemplated by
this Agreement notwithstanding any investigation or examination made for or on
behalf of Purchaser or the acceptance by Purchaser of any certificate or
opinion furnished in connection with or at the Closing. In addition to all
other rights Purchaser might have, the Seller shall defend, indemnify and hold
Purchaser harmless from and against any loss, damage or expense (including
legal or other fees) incurred or sustained by Purchaser as a result of or
attributable to any misrepresentation or breach of any covenant, representation
or warranty given or made by Seller and against any loss, damage or expense
(including legal and other fees) which would not have been incurred or
sustained by Purchaser if such covenants, representations and warranties had
been true and correct. In addition to all other rights and remedies Purchaser
may have, Purchaser shall have the right to offset any claims under this
Agreement against any payments due to Seller under this Agreement.
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III. Access, Information and Cooperation
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3.01 Access and Information. The Seller shall give or cause to be
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given to Purchaser and to Purchaser's counsel, accountants, engineers and other
representatives, full access during normal business hours throughout the period
prior to the Closing to all of the Seller's properties, books, contracts,
commitments and records, and shall furnish Purchaser during such period with
all such information concerning the Seller's affairs as Purchaser may
reasonably request, it being distinctly understood and agreed, however, that
such investigations as may be made by Purchaser in accordance herewith or
otherwise shall not be deemed in any way in derogation or limitation of the
covenants, representations and warranties made by the Seller in this Agreement,
and that the consummation by Purchaser of the transactions contemplated by this
Agreement shall be conclusively deemed to have been in reliance upon the
covenants, representations and warranties made in this Agreement by the Seller.
IV. Representations and Warranties of Purchaser.
-------------------------------------------
Purchaser represents and warrants to the Seller as follows:
4.01 Purchaser is a corporation duly organized and validly existing
under the laws of the State of Iowa, and is legally able to enter into and
perform this Agreement, and this Agreement and each of the transactions
contemplated herein has been duly authorized by all necessary corporate action
of Purchaser.
V. Transfer and Payment for Assets.
-------------------------------
5.01 Transfer, Payment and Escrow. (a) In full payment for the sale,
----------------------------
transfer, assignment and delivery to Purchaser of the Assets as hereinabove set
forth, and in full consideration therefore, Purchaser, subject to all of the
terms and conditions of this Agreement, will pay to Seller $450,000 ("Purchase
Price") subject to adjustment as hereinafter provided, as follows:
(i) $250,000 by wire transfer to Norwest Bank for account of Fairtron
Corporation, account No. 3001133271.
----------
(ii) $200,000 by check or wire transfer to Weisman Celler Spett &
Modlin, P.C. as Escrow Agent ("Escrow Agent") to be held in escrow ("Escrow")
in accordance with the escrow agreement ("Escrow Agreement") referred to in
Section 7.l3 as partial security against breaches of Seller's representations,
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warranties and covenants in Article II asserted by Purchaser during the period
ending December 3l, l997.
(b) Promptly after March 3l, l997 Seller will cause Deloitte & Touche
LLP ("D&T") at Seller's expense, to make an examination in accordance with
generally accepted accounting principles of the balance sheet of Seller as of
March 3l, l997 and of Seller's income and loss for the twelve (l2) months ended
March 3l, l997. Purchaser shall also prepare a balance sheet as of April 30,
l997 (the "Final Balance Sheet") except the principles used to determine the
Latest Balance Sheet shall be applied in the Final Balance Sheet to determine
the Difference as defined in Section 5.0l(c) below In the event the Seller
disagrees with the Final Balance Sheet, any such dispute shall be submitted to
D&T who shall conduct at Purchaser's expense an audit of such Final Balance
Sheet using the principles used to determine the Latest Balance Sheet. Seller
shall fully cooperate with D&T and shall furnish such auditors with such
documents and representations as they shall require in connection with such
audit. Seller is aware such cooperation by Seller is a material element of the
transactions contemplated hereunder and Purchaser would not proceed hereunder
without Seller's agreement to cooperate.
(c) The Purchase Price shall be appropriately adjusted on a dollar for
dollar basis to the extent that the Final Balance Sheet shows an increase or
decrease in (x) the amount of current assets (adjusted by items excluded in
Schedule 1.01(b)) less current liabilities (adjusted by items excluded in
Schedule l.02(g) as compared to (y) the amount of $1,671,566 (which has already
been adjusted for the same excluded items) The increase or decrease between the
amounts in (x) and (y) is referred to as the "Difference". If the Final
Balance Sheet shows an increase in the Difference, then Purchaser shall within
five (5) days following the final determination of the Final Balance Sheet wire
such increase to the bank account set forth in Section 5.0l(a)(i) above. If
the Final Balance Sheet shows a decrease in the Difference, then Purchaser
shall direct the Escrow Agent to wire the amount of the decrease in the
Difference to Purchaser's bank account. If the decrease is more (the "Excess")
than the escrow fund plus the accrued interest thereon, Seller shall remain
fully liable to Purchaser for any such Excess. The Escrow Agent shall retain
the balance of the escrow fund plus accrued interest thereon after such
payment.
(d) Any determination by D&T hereunder with respect to the Final
Balance Sheet shall be final and binding on the parties.
(e) In the event Purchaser determines there are any breaches of
Seller's representations, warranties and covenants in this Agreement, Seller
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and Purchaser shall discuss such claim in good faith. To the extent Seller and
Purchaser agree on the amount of any claim, they shall jointly direct the
Escrow Agent to pay the agreed amount out of the escrow fund to Purchaser.
Purchaser may at any time notify the Escrow Agent of such claims. If at
December 3l, l997 there are no claims received by the Escrow Agent, it shall
wire the balance of the escrow fund including any accrued interest to Seller's
bank account on January 2, l998. If there are any claims, the Escrow Agent
will wire to Seller's bank the amount of the escrow fund less the amount of the
claims which the Escrow Agent shall continue to hold in Escrow, promptly after
January 2, l998 and the parties shall submit the dispute to binding arbitration
in accordance with the commercial rules of the American Arbitration Association
in Chicago, Illinois before a single arbitrator. The parties shall share the
costs of the arbitration and each party shall pay its own legal and other
expenses. The decision of the arbitrator must be in writing and set forth the
basis for the award. The Escrow Agent shall be entitled to rely on a copy of
the award in making the final payments from the escrow fund. Interest in the
escrow fund shall be paid pro rata to the parties in the same proportion as the
final payments from the escrow fund based on the award.
(f) The payment to Seller of any amounts under the escrow fund shall
not constitute a release by Purchaser of any claims against Seller, Seller to
remain fully liable for all claims and adjustments under this Agreement.
5.02 Contingent Payment. During the five (5) year period commencing as
-------------------
of May l, l997, Purchaser shall pay to Seller an amount equal to 4% of
Purchaser's annual catalog sales (as determined in accordance with generally
accepted accounting principles) of scoreboard and related signs exceeding
$8,000,000 for each twelve (l2) month period, not to exceed (i) $l00,000 for
any twelve month period ending April 30 in such five (5) year period, and (ii)
a maximum aggregate amount of $250,000 for such payments under this Section
during such five (5) year period ending April 30, 2002. Until Purchaser has
paid the maximum contingent obligation of $250,000 hereunder, Purchaser shall
submit a report of such outdoor sign catalog sales within 90 days after the end
of each such period ending April 30 accompanied by payment, if any, due Seller
under this Section. Seller may have D&T at Seller's expense examine
Purchaser's records on at least ten (l0) days notice for any such completed
twelve (l2) month period following receipt of Purchaser's report. Such
examination may take place only once for any period which examination shall not
extend for more than five (5) consecutive business days and no examination may
take place later than two (2) years following Seller's receipt of such report.
Annually, as part of Purchaser's audit, at Seller's request and expense, D&T or
other independent public accountant of Purchaser, will provide Seller with a
report of such sign catalog sales by Purchaser so that Seller can confirm the
information otherwise provided by Purchaser.
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5.03 Closing Adjustments. The sale and transfer shall take place as of
-------------------
the close of business on April 30, l997, effective May l, l997.
VI. Action by Seller Prior to Closing.
---------------------------------
6.01 Prohibited Actions. From and after the Agreement Date to and
------------------
including the Closing, the Seller shall not take any action of the kind
described in Section 2.14 hereof. The Seller shall not take any action which
would cause any of the covenants, representations or warranties of the Seller
contained in this Agreement not to be true and correct in all material respects
as of the Closing, or which would result in a breach or non-performance of any
of the Seller's agreements or obligations contained in this Agreement.
Additionally, but not in limitation of the foregoing Seller will (i) not commit
to any obligation or series of obligations prior to Closing with any vendor for
an amount exceeding $25,000 with such vendor in the aggregate or extending more
than 90 days without first obtaining written approval from Purchaser, (ii) act
in good faith in all dealings during the transition, make all required mortgage
and other payments in the ordinary course of business, not make any unusual or
special deals or engage in other transactions outside the ordinary course of
business or change compensation of personnel who may be retained by Purchaser
without first obtaining written approval from Purchaser, and (iii) continue to
operate the business in the ordinary course and in an efficient manner in order
to transfer it as a going concern and there will be no material adverse change
or litigation with respect to the business and Assets being acquired by
Purchaser prior to Closing.
VII. Conditions to Obligations of Purchaser.
--------------------------------------
The obligations of Purchaser to close are, at its option, subject to
the following conditions:
7.01 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of the Seller to Purchaser contained in this Agreement shall in all
material respects be true and correct as of the time of Closing, with the same
force and effect as though such had been made and given at that time and shall
survive the Closing irrespective of any release of escrow funds and Purchaser's
due diligence review with respect thereto. The Seller shall otherwise have
fully complied with and performed all of its obligations hereunder. Purchaser
shall have received a certificate to the foregoing effect signed by the Seller.
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7.02 Legal Opinion. There is delivered to Purchaser on the Closing the
-------------
favorable opinion of Belin Lamson McCormick Zumbach Flynn, counsel for the
------------------------------------
Seller dated as of the Closing Date, in form and substance satisfactory to
Purchaser's counsel, as to the matters specified in Section 2.01, 2.02, 2.03,
and 2.15 hereof. Such opinion shall also state that such counsel does not know
or have any reasonable grounds to know of any litigation, proceeding or
governmental investigation pending or threatened against or related to the
Seller, its properties or businesses, except as set forth in the List.
7.03 Casualty Losses. At or prior to the time of Closing, the Seller
---------------
shall not have sustained any loss, whether or not insured, by reason of
physical damage to any of its assets or properties caused by fire, flood,
accident, explosions or other calamity which would impair the carrying on of
its business in the normal and regular course.
7.04 Corporate Changes. At the Closing Date, the Seller shall take or
-----------------
cause to be taken such action to change Seller's name to a name dissimilar to
Seller's present name as set forth in Schedule 7.04 and the adoption of such
other resolutions by the Seller's Board of Directors and stockholders as
Purchaser may request including any thereof consenting to a change of name of
Purchaser.
7.05 Continuity of Management and Operation. To insure continuity of
--------------------------------------
executive management and direction of the Seller's business acquired by
Purchaser, the four (4) employees designated in Schedule 7.05 of the List as
employees who will enter into employment agreements shall, prior to the time of
Closing but contingent to such Closing, enter into employment agreements with
the Purchaser upon the terms and conditions set forth in the form of agreement
set forth in Schedule 7.05. The Seller shall, except as otherwise requested by
Purchaser, use its best efforts (without making any commitment on Purchaser's
behalf) to preserve its business organization intact; to keep available to the
Purchaser the services of its officers and employees; to preserve for the
Seller the good will of its businesses and to continue the businesses of the
Seller in regular course.
7.06 Consents. There is delivered to Purchaser on the Closing evidence
--------
of all bank or other mortgagee, landlord and governmental consents and
approvals to the transactions to be effected pursuant hereto, which are
necessary to permit the valid transfer of the Assets of the Seller to
Purchaser.
7.07 Action or Proceeding. No suit, action or proceeding, or
--------------------
governmental investigation, against or concerning, directly or indirectly,
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<PAGE>
Purchaser or Seller, or any of its or their properties shall have been
instituted or reinstituted, nor shall any basis therefore have arisen, that
might eventuate in an order or judgment of any court or administrative agency
which, in the opinion of Weisman Celler Spett & Modlin, P.C., renders it
impossible or inadvisable for Purchaser to consummate the transactions
contemplated by this Agreement.
7.08 Satisfaction of Counsel for Purchaser. All transactions
-------------------------------------
contemplated hereby, and the form and substance of all legal proceedings and of
all papers used or delivered hereunder, shall be satisfactory to counsel for
Purchaser, to the extent requested by Purchaser.
7.09 Consents of Purchaser's Lender. Purchaser shall have received the
------------------------------
consent of First Union Bank of Connecticut to the transactions to be effected
hereto.
7.l0 Athco Dealer Agreement. Simultaneous with the Closing, Athco will
----------------------
enter into an agreement with Purchaser to distribute Purchaser's signs in form
annexed hereto as Schedule 7.l0.
7.11 Fibrelite Development Agreement. Simultaneous with the Closing,
-------------------------------
Fibrelite Corporation or its successor will enter into an option agreement with
Purchaser in form annexed hereto as Schedule 7.11.
7.l2 Jacques Foster and other Agreements. Simultaneous with the
-----------------------------------
Closing, (a) Jacques Foster will enter into a consulting noncompete agreement
in form of Schedule 7.l2(a) and (b) Seller shall assign its rights under any
nondisclosure agreement executed by individuals set forth in Schedule 7.l2(b).
7.l3 Escrow Agreement. Simultaneous with the Closing, the Seller,
----------------
Purchaser and Escrow Agent will enter into the Escrow Agreement in the form
initialed by the parties on the execution of this Agreement.
7.14 Miscellaneous. In the event that the conditions set forth in this
-------------
Article VII have not been fulfilled and satisfied, Purchaser, in addition to
any other rights which it may have available to it, shall have the right to
proceed with the transactions contemplated hereby.
17
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VIII. Conditions to Obligations of Seller.
-----------------------------------
The obligations of the Seller to close hereunder are, at its option,
subject to the following condition:
8.01 Truth of Representations and Warranties. The representations and
---------------------------------------
warranties of Purchaser contained in Article IV hereof shall in all material
respects be true and correct as of the time of Closing and with the same force
and effect as though such had been made at that time and Purchaser shall have
fully complied with and performed all of its other obligations hereunder.
8.02 Release of Guaranty. The guaranty by Jacques Foster of the bank
-------------------
loan of Norwest Bank to Seller shall be released. Purchaser shall use good
faith efforts to have Mr. Foster released of his guaranty of other Liabilities
expressly assumed by Purchaser, but this is not a condition.
8.03 Guaranty of Payments. Trans-Lux Investment Corporation shall
--------------------
guaranty the payment of the (x) increase in the Difference, if any, under
Section 5.0l(c), (y) contingent payment under Section 5.02 and (z) amounts
payable under Schedule 7.l2(a), the Jacques Foster Agreement.
8.04 Legal Opinion. There is delivered to Seller on the Closing the
-------------
favorable opinion of Weisman Celler Spett & Modlin, P.C., counsel for
Purchaser, as to the matters specified in Section 4.0l.
IX. Benefit of Nonassignable Contracts
----------------------------------
9.0l Nothing contained in this Agreement shall be construed as an
attempt to agree to assign any contract, license, lease or other asset which is
in law nonassignable without the consent of the other party or parties thereto
unless such consent shall be given. In order that the value and benefits of
any such contract, license, lease and other asset (which is not so assignable)
included within the Assets be transferred to Purchaser and all claims and
demands therein may be realized, Seller hereby covenants with Purchaser that it
will, at the request of Purchaser and at Purchaser's expense for any out-
of-pocket costs of Seller, take all such reasonable action and do or cause to
be done all such things as shall be reasonably necessary or proper (i) in order
that the rights and obligations with respect to the Assets under such
contracts, licenses, leases and other assets shall be preserved and Purchaser
shall realize the values and benefits thereof, including, but not limited to,
performing any such contract, license or lease in Seller's name for the benefit
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<PAGE>
of Purchaser, using any available required Assets which Purchaser then owns at
no charge, and (ii) to facilitate the collection of the moneys due and payable
with respect to the Assets, Seller shall hold all such monies with respect to
only the Assets when and as received in trust for the benefit of, and shall
immediately pay the same over to Purchaser.
X. Closing Date.
------------
10.01 The closing of the transactions contemplated hereby (herein
sometimes referred to as the "Closing" or "Closing Date") shall take place at
the offices of Belin Lamson McCormick Zumbach Flynn, 2000 Financial Center, Des
Moines, Iowa at 10 o'clock in the forenoon on or about April 30, l997 effective
May 1, 1997, or such other reasonable date upon which the parties shall agree
to suit the convenience of each other.
10.02 Delivery by Seller to Purchaser. At or prior to Closing, subject
-------------------------------
to the terms and conditions of this Agreement, the Seller will deliver or cause
to be delivered to Purchaser:
(a) All such deeds, bills of sale, assignments, instruments,
documents and books and records as in the opinion of counsel to Purchaser may
be necessary or desirable in order to evidence or perfect the sale, assignment,
transfer and conveyance of all of the properties and assets sold by Seller to
Purchaser hereunder. Seller further agrees that it will execute and deliver to
Purchaser, after the Closing Date, such other instruments and documents, and do
and perform all such other acts, as may be requested by Purchaser or its
counsel fully to convey and transfer to and vest in Purchaser and protect its
right, title and interest in and enjoyment of all properties and assets of
Seller intended to be transferred to Purchaser pursuant to this Agreement.
Concurrently with the time of Closing effective May 1, 1997, exclusive
possession of all of the Assets sold hereunder shall be delivered to
Purchaser's representatives by Seller and at Seller's cost and expense.
(b) The opinion of Messrs. Belin Lamson McCormick Zumbach
Flynn, Esqs., counsel for the Seller, required by Section 7.02 hereof;
(c) The certificates, opinions, consents, and agreement and
documents required by Article VII hereof.
10.03 Delivery by Purchaser to Seller. On May 1, 1997, subject to the
-------------------------------
terms and conditions of this Agreement and the delivery by the Seller of the
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items referred to in Section l0.02, Purchaser will pay to the Seller the
consideration which is to be paid or delivered to Seller on the Effective Date
of the Closing and enter into the consulting noncompete agreement with Jacques
Foster referred to in Section 7.l2.
XI. General Provisions.
------------------
11.01 Services. Seller agrees to indemnify Purchaser and hold
--------
Purchaser harmless from and against any and all liabilities to any persons
claiming brokerage commissions or finders fees on account of services rendered
in connection with this Agreement or the transactions contemplated hereby
including but not limited to Business Capital Corporation whose fee will be
paid by Seller.
11.02 Restrictive Covenant. Seller agrees that, from and after the
--------------------
Closing, it will not for a period of eight (8) years thereafter, unless with
Purchaser's prior written consent, directly or indirectly own, manage, operate,
join, control or participate in or be connected as a joint venturer or
otherwise with any company engaged in any business in competition with the
businesses of the Seller as of the date hereof or as of the Closing Date,
acquired by Purchaser (but excluding herefrom any distribution of Purchaser's
signs by the Athco division of Seller or Fibrelite Corporation's development of
the Fibrelite Product as defined in Schedule 7.11 ). Seller further agrees
that it will not at any time knowingly divulge, furnish or make accessible to
any third party or organization any confidential information concerning the
Seller or any aspect of its businesses, including, without limitation,
confidential methods of operation and organization, confidential sources of
supply and customer lists. Seller acknowledges that the remedy at law for any
breach by it of the foregoing will be inadequate and that Purchaser shall be
entitled to injunctive relief, in addition to any remedies at law, for any
breach or threatened breach of the covenants contained in this Section 11.02.
11.03 Notice. Any notices given by Purchaser to the Seller hereunder
------
shall be sufficient if sent by certified mail, return receipt requested, to the
Seller at the address set forth above with a copy to Belin Lamson McCormick
Zumbach Flynn, 2000 Financial Center, Des Moines, Iowa 50309-3989, Att: Thomas
E. Flynn, Esq. . Any notices given by the Seller to Purchaser hereunder
shall be sufficient if sent by certified mail, return receipt requested, to
Purchaser, Att: President, with a copy to Weisman Celler Spett & Modlin, P.C.,
445 Park Avenue, New York, New York 10022, Att: Howard S. Modlin, Esq..
11.04 Entire Agreement. This Agreement shall be binding upon and inure
----------------
to the benefit of the Seller and Purchaser and their respective successors and
20
<PAGE>
assigns. This instrument contains the entire agreement of the parties and may
not be changed or modified except in writing, signed by the parties.
IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first above written.
FAIRTRON CORPORATION
By:/s/ Jacques Foster
----------------------------
Title
TRANS-LUX MIDWEST CORPORATION
By:/s/ Angela D. Toppi
----------------------------------
SVP Title
d:\f0381\purassets-agr.doc
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